[Federal Register Volume 77, Number 129 (Thursday, July 5, 2012)]
[Proposed Rules]
[Pages 39662-39666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16177]



Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 171, 173, and 178

[Docket No. PHMSA-2011-0143 (HM-253)]
RIN 2137-AE81

Hazardous Materials; Reverse Logistics (RRR)

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 

ACTION: Advance notice of proposed rulemaking (ANPRM).


SUMMARY: PHMSA is publishing this ANPRM to identify ways to reduce the 
regulatory burden for persons who ship consumer products containing 
hazardous materials in the ``reverse logistics'' supply chain. Reverse 
logistics is the process that is initiated when a consumer product goes 
backwards in the distribution chain. It may be initiated by the 
consumer, the retailer, or anyone else in the chain. Therefore, the 
process may involve consumers, retailers, manufacturers, and even 
disposal facilities. Following this ANPRM, PHMSA anticipates publishing 
an NPRM that will propose to simplify the regulations for reverse 
logistics shipments and provide avenue means for regulatory compliance 
that maintains transportation safety. This action is part of DOT's 
retrospective plan under EO 13563 completed in August 2011 DOT's plan 
is available at: http://www.dot.gov/open/docs/dot-final-rrr-plan-08-23-2011.pdf. To fully engage the broad spectrum of stakeholders affected 
by reverse logistics, this ANPRM solicits comments and input on several 
questions in the context of reverse logistics. Any comments, data, and 
information received will be used to evaluate and shape the proposals 
in the NPRM.

DATES: Comments must be received by October 3, 2012.

ADDRESSES: You may submit comments identified by the docket number 
PHMSA-2011-0143 (HM-253) by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
     Fax: 1-202-493-2251.
     Mail: Docket Management System, U.S. Department of 
Transportation, Dockets Operations, M-30, Ground Floor, Room W12-140, 
1200 New Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation To Docket 
Operations, M-30, Ground Floor, Room W12-140 in the West Building, 1200 
New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal Holidays.
    Instructions: All submissions must include the agency name and 
docket number (PHMSA-2011-0143) or RIN (RIN 2137-AE81) for this notice 
at the beginning of the comment. Note that all comments received will 
be posted without change to the docket management system, including any 
personal information provided. If sent by mail, comments must be 
submitted in duplicated. Persons wishing to receive confirmation of 
receipt of their comments must include a self-addressed stamped 
    Docket: For access to the dockets to read background documents or 
comments received, go to http://www.regulations.gov or DOT's Docket 
Operations Office (see ADDRESSES).
    Privacy Act: Anyone is able to search the electronic form of any 
written communications and comments received into any of our dockets by 
the name of the individual submitting the document (or signing the 
document, if submitted on behalf of an association, business, labor 
union, etc.). You may review DOT's complete Privacy Act Statement in 
the Federal Register published on April 11, 2000 [45 FR 19477] or you 
may visit http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Steven Andrews, Office of Hazardous 
Materials Standards, Pipeline and Hazardous Materials Safety 
Administration, U.S. Department of Transportation, 1200 New Jersey 
Avenue SE., Washington, DC 20590-0001, telephone (202) 366-8553.


I. Background

    In general, ``reverse logistics'' pertains to the safe return of 
goods from the marketplace to the original vendor, manufacturer, or 
supplier. Reverse logistics of hazardous materials affects many 
industries including high-tech, retail, medical, pharmaceutical, 
automotive, and aerospace. In effect, reverse logistics is the supply 
chain in reverse. PHMSA is publishing this ANPRM to identify possible 
ways to reduce the regulatory burden on retail outlets that ship 
consumer products containing hazardous materials in the ``reverse 
logistics'' supply chain. PHMSA is looking to evaluate the shipment of 
``reverse logistics'' by

[[Page 39663]]

highway, rail, and vessel. In addition, PHMSA received two petitions 
from industry regarding the shipping requirements for ``reverse 
logistics'' shipments. These petitions are outlined as follows:


    PHMSA received a petition from the Council on the Safe 
Transportation of Hazardous Articles Inc. (COSTHA) outlining issues 
related to hazardous materials and ``reverse logistics.'' In its 
petition for rulemaking (P-1528), COSTHA proposed that the HMR include 
a definition for ``reverse logistics'' in Sec.  171.8 and add a new 
section, Sec.  173.157 to outline the general requirements and 
exceptions for hazardous materials shipped in the context of ``reverse 
logistics.'' In its petition COSTHA identified an unquantifiable 
exposure to risk presented through undeclared hazmat from retail 
outlets. This includes retail operations that unknowingly return 
articles containing hazardous materials to the product manufacturing 
that are potentially compromised. The purpose of this ANPRM is to 
gather data on how these hazardous materials are shipped with respect 
to ``reverse logistics.''
    COSTHA noted that hazardous materials commonly shipped from 
distribution centers to various retail outlets are often shipped under 
the ORM-D exception. PHMSA notes that the ORM-D exception allows for a 
hazardous material, which is a limited quantity and which meets the 
consumer commodity definition, to be reclassified as an ORM-D and 
assigned a consumer commodity shipping name. However, in a final rule 
issued under docket HM-215K (76 FR 3308, January 19, 2011), PHMSA began 
phasing out the ORM-D hazard class. Based on the final rule, the phase-
out of the ORM-D system will be completed on December 31, 2014. Those 
materials previously shipped under the ORM-D hazard class may be able 
to be shipped as consumer commodities under the appropriate limited 
quantities exception in part 173.
    COSTHA has indicated that a significant volume of these hazardous 
materials are returned to the retail outlet by the customer. PHMSA 
believes based on its enforcement experience that significant 
quantities of these returned hazardous materials may be in damaged 
packaging or even leaking prior to their shipment back to the return 
center. If this is the case, the materials must be repackaged and 
shipped as fully regulated hazardous materials under the HMR. The HMR 
generally defines a ``hazmat employee'' as a person employed on a full-
time, part time, or temporary basis by a hazmat employer and who in the 
course of such full time, part time or temporary employment directly 
affects hazardous materials transportation safety. However, PHMSA 
recognizes that most retail employees or other related employees are 
not readily identifiable as ``hazmat employees'' as defined by Sec.  
171.8 of the HMR. Consequently this results in employees that often 
lack sufficient training and qualifications to classify, package, mark, 
label, and ship hazardous materials. This may result in unsafe shipping 
practices (e.g., hazardous materials shipped in containers that are not 
designed for the safe transportation of hazardous materials.) These 
occurrences are often exacerbated by hazardous materials being 
improperly segregated in packages. COSTHA also noted that equipment 
powered by internal combustion engines may be returned to retail 
outlets after being used and may contain residual fuel, posing a 
hazardous materials risk.


    PHMSA received a petition (P-1561) from the Battery Council 
International (Battery Council). In its petition, the Battery Council 
requests that PHMSA allow the shipment of used batteries from multiple 
shippers on a single transport vehicle under the exception provided in 
Sec.  173.159(e). The Battery Council notes in their petition that 
currently the exception in Sec.  173.159(e) does not clearly allow for 
shipment of used batteries from multiple shippers for the purposes of 
recycling. The petition also notes that, when this regulation was 
written in 1969, it was not common practice for battery to be recycled 
using multiple shippers. PHMSA believes that the collection of these 
used batteries for return, disposal, or recycling falls within the 
realm of ``reverse logistics.'' Currently Sec.  173.159(e)(4) prevents 
a battery recycler from picking up shipments of used batteries from 
multiple locations. In looking at incident history, PHMSA has not 
identified any significant incidents involving the shipment of wet lead 
acid batteries. PHMSA believes that modifying this section to allow 
battery recyclers to pick up wet lead acid batteries from multiple 
locations will likely reduce the number of battery shipments on the 
highway and thus reduce the likelihood of an accident involving hazmat.

II. Analysis of the Problem

    Under the current HMR, consumer products that are no longer 
suitable for retail sale are considered fully regulated. This presents 
a problem to retail outlets in that many may not have the necessary 
training or resources to handle fully regulated hazardous materials. 
PHMSA is looking to identify ways to potentially reduce the regulatory 
burden associated with the return of these hazardous materials in the 
``reverse logistics'' supply chain, while at the same time ensuring 
their safe transportation.
    According to the Reverse Logistics Association (RLA), the process 
of reverse logistics represents 3-15% of the Gross Domestic Product, 
which is estimated between $360 billion and $1.8 trillion. Retail 
outlets often accept returns of hazardous materials from customers that 
are ultimately shipped back to distribution centers. Retail sales of 
goods are a primary driver of goods returned. According to the 2007 
Economic Census, wholesale trade in the U.S. reached $6.5 trillion (a 
40% increase from the 2002 census) among 435 thousand establishments 
and 6.2 million employees, while retail sales reached $3.9 trillion (a 
28% increase among 1.1 million establishments and 15.5 million 
    In addition, we anticipate that online transactions will cause the 
quantity of reverse logistics shipments to increase. Data indicate that 
online purchases of hazardous materials have increased. The National 
Retail Federation reported that in 2010, over 48% of all retail goods 
(by value) were purchased from on-line providers with an average return 
rate of 8%. Third-party logistics providers estimate that up to 7% of 
an enterprise's gross sales are return costs. The third-party logistics 
providers themselves earn 12% to 15% in profits on this business. PHMSA 
is concerned that customers may often return opened or damaged packages 
containing hazardous materials without any regard for the HMR. This 
ANPRM seeks comment on whether additional language is needed to clarify 
how returns of hazardous materials purchased online should be handled.
    The rapidly expanding market for consumer electronics is another 
topic of interest with respect to the ``reverse logistics'' supply 
chain. As emerging technologies come online, there are an ever 
increasing number of batteries that come along with consumer devices. 
As the batteries in these devices become unusable, PHSMA expects to see 
large quantities of batteries being returned to retail outlets. PHMSA 
seeks comment on this assumption. This ANPRM is seeking comment on how 
the retail industry should handle the recycling or disposal of these 
batteries for use in consumer electronics.

[[Page 39664]]

    In all of these scenarios, PHMSA enforcement efforts have shown 
that hazardous materials that are returned to the distribution centers 
or retail outlets are shipped in ways that are inconsistent with the 
requirements of the HMR. Often, these materials and packages may be 
damaged or compromised. Very often, the employees at the retail outlets 
responsible for packing and shipping these materials have little or no 
hazardous materials training. This may result in inadequate packaging 
and hazard communication. Below we identify potential problems that may 
be attributed with the reverse logistics of hazardous materials:
    1. Lack of hazardous materials training by the employees at the 
retail outlet;
    2. Different packaging from the original packaging being used to 
ship the material;
    3. Lack of knowledge about the hazard class by the employee;
    4. Potential for hazardous materials to be subject to Environmental 
Protection Agency (EPA) waste manifest rules;
    5. Items that were once classified as consumer commodities may no 
longer meet that exception;
    6. Undeclared hazardous materials may be shipped within the stream 
of commerce;
    7. Properly-marked and labeled original packaging is being 
improperly re-used to ship returned products that are either not 
hazardous materials or hazardous materials for which said packaging is 
not authorized; and
    8. These shipments may not be accompanied by appropriate hazardous 
communication, such as shipping papers, emergency response numbers, 
placards, labels, markings, and other requirements of the HMR.
    PHMSA believes that its enforcement data show that ``reverse 
logistics'' issues involving hazardous materials will continue to rise 
with the increased consumption of goods in a growing economy. PHMSA 
believes it could be beneficial to identify those areas where PHMSA and 
the regulated community can work together to facilitate the movement of 
hazardous materials in the ``reverse logistics'' supply chain. This 
could include identifying whether or not there are actually safety 
concerns involving ``reverse logistics'' for the transport of hazardous 
materials as well as identifying potential solutions moving forward.
    PHMSA invites comments on the data and information contained in 
this section. How can we work together to better facilitate the 
movement of hazardous materials in the ``reverse logistics'' supply 
chain? What data is available regarding the current and anticipated 
future number of reverse logistic shipments for hazardous materials?

III. Issues To Be Considered

    As previously noted, the purpose of this ANPRM is to invite 
comments on ``reverse logistics.'' PHSMA is considering a definition 
for ``reverse logistics'' and a possible new section in the HMR that 
will clearly identify the regulatory responsibilities of the shipper. 
To assist PHMSA in getting valuable data and information from 
commenters, we have compiled questions pertaining to the ``reverse 
logistics'' process and welcome input from all interested parties. 
Below we outline the key issues identified above:

A. Define Reverse Logistics

    PHMSA is considering a regulatory definition for ``reverse 
logistics.'' The definition would likely be added to 49 CFR 171.8. It 
would clearly define the term ``reverse logistics.'' Generally, 
``reverse logistics'' is thought of as the flow of surplus or unwanted 
material, goods, or equipment back to the firm, through its logistics 
chain, for reuse, recycling, or disposal. By defining ``reverse 
logistics'' in the HMR, PHMSA will identify how it can assist the 
regulated community in ensuring the safe and swift movement of these 
materials in the ``reverse logistics'' supply chain.

B. Create a Section Pertaining to the Shippers' Responsibilities With 
Respect to Reverse Logistics

    PHMSA is considering adding a section outlining the shippers' 
responsibilities with respect to ``reverse logistics.'' PHMSA believes 
a section outlining the regulations for materials meeting the 
definition of ``reverse logistics'' should address:
    1. Classification of materials under the definition of ``reverse 
    2. Training requirements for employees who handle materials under 
``reverse logistics;'' and
    3. Packaging approved for the shipment of hazardous materials under 
``reverse logistics.''
    PHMSA believes that, by outlining the responsibilities of shippers 
with respect to reverse logistics, it will contribute to the safe and 
efficient movement of these materials in commerce. Do commenters agree 
that outlining the responsibilities of the shippers with respect to 
reverse logistics will promote safe and efficient movement of these 
materials? Would regulated entities incur documentation costs to 
develop and maintain risk assessments and operational procedures? If 
so, what is a fair estimate of the potential costs?

C. Questions and Solicitation for Public Comment

    PHMSA is considering regulatory relief for ``reverse logistics.'' 
We have developed the following questions to solicit comments on the 
key issues, please provide sources for your data when available:
    1. What are the types of hazardous materials and quantities that 
are frequently returned?
    2. What is the volume of returns? Is there a ``rule-of-thumb'' 
metric--e.g., 10% of retail sales are returned?
     What is the current volume returned by private citizens?
     What is the current volume returned by other businesses?
     What are the most widely-used methods of return (U.S. 
Mail, Walk-ins, Commercial Carriers, etc.)?
    3. Are returns directed to a disposal facility of the original 
    4. Should returns be the responsibility of the manufacturer?
    5. To what extent should retail employees who package hazardous 
materials for shipments back to the distribution centers be subject to 
the training requirements in 49 CFR part 172, subpart H? Are retail 
employees currently being trained for the shipment of hazardous 
materials under 49 CFR part 172, subpart H?
    6. Are hazardous materials being properly segregated as required by 
Sec.  177.843 of the HMR when being shipped from retail outlets to 
their distribution centers? How are they being segregated?
    7. Should certain hazard classes/divisions be excluded when 
considering regulations for ``reverse logistics?'' If so, why?
    8. Should PHMSA define specification packages for materials shipped 
under ``reverse logistics''? If so, why?
    9. Are shipping and distribution companies assuring the safety of 
their employees and the public when allowing drop-box hazardous 
material returns? If so, how?
    10. What precautions, if any, are these companies taking to avoid 
the mixing of hazardous materials and contamination of other packages 
that might contain hazardous materials and/or non-hazardous materials?
    11. What role(s) do 3rd party logistics providers \1\ play in the 
reverse logistics process, if any?

    \1\ The Reverse Logistics Association (RLA) defines 3rd party 
logistics providers as entities who ``provide services for OEMs, 
ODMs and Branded Companies. Some of these services include, but are 
not limited to: Repair, customer service, parts management, end-of-
life manufacturing, returns processing order fulfillment, help desk, 
and many aspects of field service repair.''


[[Page 39665]]

    12. Have any specific safety risks been observed in returns of 
hazardous materials products that need to be addressed through 
rulemaking? If so, how should they be addressed and why?
    13. How does the regulated community currently handle hazardous 
materials that are imported and must then be shipped back in the 
``reverse logistics'' supply chain?
    14. What data is available regarding the current and anticipated 
future number of reverse logistic shipments for hazardous materials?
    15. Should PHMSA define ``reverse logistics''? If so, to what 
extent should PHMSA define types of shipments that would receive a 
relaxation under the HRM for ``reverse logistics'' shipments?
    If commenters suggest modification to the existing regulatory 
requirements, PHMSA requests that commenters be as specific as 
possible. In addition, PHMSA requests commenters to provide information 
and supporting data related to:
    1. The potential costs of modifying the existing regulatory 
requirements pursuant to the commenter's suggestions.
    2. The potential quantifiable safety and societal benefits of 
modifying the existing regulatory requirements.
    3. The potential impacts on small businesses of modifying the 
existing regulatory requirements.
    4. The potential environmental impacts of modifying the existing 
regulatory requirements

IV. Regulatory Issues

A. Executive Order 12866, Executive Order 13563, and DOT Regulatory 
Policies and Procedures

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') require agencies 
to regulate in the ``most cost-effective manner,'' to make a ``reasoned 
determination that the benefits of the intended regulation justify its 
costs,'' and to develop regulations that ``impose the least burden on 
    Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility. This rule has been designated a ``significant 
regulatory action,'' although not economically significant, under 
section 3(f) of Executive Order 12866. Accordingly, the rule has been 
reviewed by the Office of Management and Budget (OMB). The ANPRM is 
considered a significant regulatory action under the Regulatory 
Policies and Procedures order issued by the Department of 
Transportation [44 FR 11034].
    Executive PHMSA invites comments on this section. How should we 
approach the ``reverse logistics'' issue to ensure that we regulate in 
the ``most cost-effective manner?'' Please provide any cost or benefit 
figures to support that approach along with any sources that were used 
to obtain the information.

B. Executive Order 13132

    E.O. 13132 requires agencies to assure meaningful and timely input 
by state and local officials in the development of regulatory policies 
that may have a substantial, direct effect on the states, on the 
relationship between the national government and the states, or on the 
distribution of power and responsibilities among the various levels of 
government. We invite state and local governments with an interest in 
this rulemaking to comment on any effect that revisions to the HMR 
relative to reverse logistics may cause.

C. Executive Order 13175

    E.O. 13175 requires agencies to assure meaningful and timely input 
from Indian tribal government representatives in the development of 
rules that ``significantly or uniquely affect'' Indian communities and 
that impose ``substantial and direct compliance costs'' on such 
communities. We invite Indian tribal governments to provide comments if 
they believe there will be an impact.

D. Regulatory Flexibility Act, Executive Order 13272, and DOT Policies 
and Procedures

    Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et 
seq.), we must consider whether a rulemaking would have a significant 
economic impact on a substantial number of small entities. ``Small 
entities'' include small businesses, not-for-profit organizations that 
are independently owned and operated and are not dominant in their 
fields, and governmental jurisdictions with populations under 50,000. 
If you believe that revisions to the HMR relative to reverse logistics 
would have a significant economic impact on a substantial number of 
small entities, please submit a comment to explain how and to what 
extent your business or organization could be affected and whether 
there are alternative approaches to this regulations the agency should 
consider that would minimize any significant impact on small business 
while still meeting the agency's statutory objectives
    Any future proposed rule would be developed in accordance with 
Executive Order 13272 (``Proper Consideration of Small Entities in 
Agency Rulemaking'') and DOT's procedures and policies to promote 
compliance with the Regulatory Flexibility Act to ensure that potential 
impacts on small entities of a regulatory action are properly 

E. Paperwork Reduction Act

    Section 1320.8(d), Title 5, Code of Federal Regulations requires 
that PHMSA provide interested members of the public and affected 
agencies an opportunity to comment on information collection and 
recordkeeping requests. It is possible that new or revised information 
collection requirements could occur as a result of any future 
rulemaking action. We invite comment on the need for any collection of 
information and paperwork burdens, if any.

F. National Environmental Policy Act

    The National Environmental Policy Act of 1969, 42 U.S.C. 4321-4375, 
requires federal agencies to consider the consequences of major Federal 
actions and prepare a detailed statement on actions significantly 
affecting the quality of the human environment. Under regulations 
promulgated by the Council on Environmental Quality (CEQ), a federal 
agency may prepare an environmental assessment to determine whether it 
should prepare an environmental impact statement for a particular 
action. 40 CFR 1508.9(a). The environmental assessment should (1) 
briefly discuss the need for the proposed action, alternatives to the 
proposed action, and the probable environmental impacts of the proposed 
action and alternatives; and (2) include a listing of the agencies and 
persons consulted. 40 CFR 1508.9(b). PHMSA welcomes any data or 
information related to environmental impacts that may result from a 
reverse logistics rulemaking.

G. Privacy Act

    Anyone is able to search the electronic form of any written 
communications and comments received into any of our dockets by the 
name of the individual submitting the document (or signing the 
document, if submitted on behalf of an association, business, labor 
union, etc.). You may review DOT's complete Privacy Act

[[Page 39666]]

Statement in the Federal Register published on April 11, 2000 (65 FR 
19477) or you may visit http://www.dot.gov/privacy.html.

H. Executive Order 13609 and International Trade Analysis

    Under E.O. 13609, agencies must consider whether the impacts 
associated with significant variations between domestic and 
international regulatory approaches are unnecessary or may impair the 
ability of American business to export and compete internationally. In 
meeting shared challenges involving health, safety, labor, security, 
environmental, and other issues, international regulatory cooperation 
can identify approaches that are at least as protective as those that 
are or would be adopted in the absence of such cooperation. 
International regulatory cooperation can also reduce, eliminate, or 
prevent unnecessary differences in regulatory requirements.
    Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as 
amended by the Uruguay Round Agreements Act (Pub. L. 103-465), 
prohibits Federal agencies from establishing any standards or engaging 
in related activities that create unnecessary obstacles to the foreign 
commerce of the United States. For purposes of these requirements, 
Federal agencies may participate in the establishment of international 
standards, so long as the standards have a legitimate domestic 
objective, such as providing for safety, and do not operate to exclude 
imports that meet this objective. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards.
    PHMSA participates in the establishment of international standards 
in order to protect the safety of the American public, and we have 
assessed the effects of the proposed rule to ensure that it does not 
cause unnecessary obstacles to foreign trade. Accordingly, this 
rulemaking is consistent with E.O. 13609 and PHMSA's obligations under 
the Trade Agreement Act, as amended.

I. Statutory/Legal Authority for This Rulemaking

    49 U.S.C. 5103(b) authorizes the Secretary of Transportation to 
prescribe regulations for the safe transportation, including security, 
of hazardous materials in intrastate, interstate, and foreign commerce. 
Our goal in this ANPRM is to gather the necessary information to 
determine a course of action in a potential Notice of Proposed 
Rulemaking (NPRM) associated with the issue of reverse logistics for 
the transportation of hazardous materials.

J. Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN contained in the heading of 
this document can be used to cross-reference this action with the 
Unified Agenda.

    Issued in Washington, DC, on June 27, 2012 under authority 
delegated in 49 CFR part 106.
William Schoonover,
Deputy Associate Administrator for Field Operations, Pipeline and 
Hazardous Materials Safety Administration.
[FR Doc. 2012-16177 Filed 7-3-12; 8:45 am]