Small businesses to see 50% increase in hazardous materials registration fees under proposed changes

Carriers who haul hazardous materials could soon see rates increasing for the federal registration and fee assessment program.

In a notice of proposed rulemaking that was published in the Federal Register on Friday, May 24, the Pipeline and Hazardous Materials Safety Administration announced proposed changes to the national hazardous materials transportation registration and fee program.

Since 2010, the annual registration fee has been set at $250 for small businesses and not-for-profit organizations and at $2,575 for large businesses. A $25 processing fee is assessed for all registrants.

Under the proposal, fees for small businesses and not-for-profit organizations would increase to $375 annually. Fees for large businesses would increase by $425 to $3,000 per year, the maximum allowed by current federal statutes.

Carriers can pay up to three years of registration fees in advance. For those who have paid for years that may be impacted by the proposed changes, the agency said that if approved, “additional fees may be required for registration years paid in advance at the lower levels in effect at the time of payment.”

The public will have through Aug. 22 to comment on the proposed rulemaking. To file comments, go to the Regulations.gov website and enter Docket No. PHMSA-2022-0033.

The reason for the hazardous materials fee increase

The purpose of the federal registration program is to “fund the Hazardous Materials Emergency Preparedness grants program and any additional related activities and to gather information regarding the transportation of hazardous materials.”

The 2021 infrastructure law increased the amount of funding for the grants by $18.5 million, creating a substantial gap in the available dollars for the program and leaving the agency responsible for finding ways to make up the difference.

According to data from PHMSA, the total funds from all registrants – excluding processing fees – were approximately $24.6 million for the 2022-23 registration year, well short of the $46.8 million specified for emergency preparedness grants in the infrastructure law.

“To achieve full funding of the grants program at the increased amount, PHMSA will need to adjust the fees for the national hazardous materials transportation registration and fee program,” the agency said.

Impacts on small-business truckers

In September 2022, the agency submitted an advance notice of proposed rulemaking outlining several potential changes that could help to adequately fund the Hazardous Materials Emergency Preparedness grant program.

Citing concerns for small business truckers, which comprise 79% of the 32,202 hazardous material registrants that year, the Owner-Operator Independent Drivers Association filed comments in opposition in December 2022.

“Most of OOIDA’s members are single-truck owner-operators who manage all aspects of their business operations,” the Association wrote. “Another increase in small-business regulatory fees would further disadvantage individuals who in many cases are already operating on much thinner margins compared to larger, corporate carriers.”

Regardless of its opposition, the Association acknowledged the need for the agency to increase fees to provide sufficient funding for the grant program.

“OOIDA agrees with this direction and will continue working with PHMSA and Congress moving forward,” the Association said, “but we will not support any increase to existing fees on small-business truckers.”

The agency said it was “encouraged” by Congress to ensure small businesses would not be disproportionately affected by “reasonable, limited fee changes” under the proposal.

In its report, PHMSA acknowledged that on the surface, a 50% fee increase for small businesses may seem disproportionate to the 16% increase for large businesses, but it noted the actual dollar amount of the rate hike for large businesses is three-and-half times the one for small businesses.

Despite this attempt to spin a negative into a positive, the agency said it was ultimately constrained by the current statutory limits.

“PHMSA remains hopeful that Congress will raise the $3,000 statutory cap, allowing for future adjustments to large businesses to make the fee distribution even more equitable and allowing PHMSA to collect and expend the authorized funding level of $46 million.”

Other proposed hazardous materials changes

In addition to the planned rate hikes, PHMSA also proposed implementing an electronic-only registration fee payment – eliminating check-by-mail options for carriers completing the registration process. The agency suggested amending the statutes to remove all references to payments made by certified check, cashier’s check, personal check or money order.

Additionally, PHMSA has proposed revisions to the statutory requirements to “clarify that both an electronic and paper form for the Certificate of Registration is acceptable provided the Certificate of Registration can be made available upon request to authorized personnel or DOT enforcement personnel.” LL