As you may know, the United States Department of Transportation (DOT) published a Notice of Proposed Rulemaking (NPRM) on January 11th, 2010 aimed at creating more strict regulations governing the air transportation of lithium cells and batteries in the United States. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is the organization within the DOT responsible for drafting the proposed rule. The proposal comes in reaction to pressure from the Air Line Pilots Association (ALPA) which is concerned with the safety of flights containing commercial shipments of lithium batteries due to recent air transportation incidents involving lithium batteries.

There was a public comment period, which lasted from January 11th to March 12^th, 2010. ICCNexergy was among the approximately 115 organizations to submit comments, of which only five are in full agreement with the proposed rule. The PHMSA has since reviewed the comments and submitted a final rule to the White House Office of Management and Budget (OMB) on October 1st. The latest report from the DOT projects White House OMB clearance on February 2^nd, and final rule publication on the 9^th. The latest report also includes a new NPRM for the Transportation of Lithium Batteries due to be published on April 19^th, 2011. The new NPRM publication date will be followed by a 30-day public comment period. This is a possible indication that the upcoming final rule will be much less stringent than originally expected, and the new NPRM will attempt to build on the final rule.

What ICCNexergy is doing to Protect Our Customers

Since November 2009, ICCNexergy has taken many steps to minimize the impact of the rulemaking on our customers. We have sent multiple letters to our customers to raise awareness, review the highlights and provide instruction for submitting comments to the PHMSA. In March 2010, ICCNexergy submitted comments contesting the majority of the proposed rule. ICCNexergy continues to work with and support the Rechargeable Battery Associate (PRBA), who has taken the lead role in a lobbying effort to minimize the economic impact of the rulemaking. Finally, ICCNexergy continually monitors the latest developments to ensure our customers have the most up to date information.

When the final rule is published, rest assured that ICCNexergy will be fully prepared to support our customers by implementing the proper procedures to ensure our shipments comply with the latest regulations. It is our goal to make this transition as painless as possible.

List of Key Issues

The following was interpreted by the PRBA and is not intended to be an all-inclusive list of issues. The intent is to point out regulations that may pose the largest impact. For a complete understanding of the proposed regulations, please review the Notice of Proposed Rulemaking.

1. Eliminates exception for smaller lithium ion and lithium metal cells and batteries and nearly all equipment packed with or containing them when shipped by air. The only exceptions from regulation are smaller cells and batteries and equipment packed with or containing them when transported by motor vehicle, rail car or vessel. Virtually all packages of batteries or equipment shipped by motor vehicle, rail car or vessel would need to be marked (“LITHIUM BATTERIES – FORBIDDEN FOR TRANSPORT ABOARD AIRCRAFT”). Only equipment packed with or containing lithium ion or lithium metal cells or batteries with a lithium content of not more than 0.3 grams or a Watt-hour rating of not more than 3.7 Wh (about the size of a small cell phone) would be excepted from this marking requirement. (49 C.F.R. 173.185(d))
2. Applies new packaging requirements on shipments of equipment that contain lithium ion or lithium metal cells or batteries, as well as on batteries. For batteries contained in equipment, the proposed regulation would require strong outer packaging that is waterproof or is made waterproof through the use of an inner packaging or a liner, unless the equipment is made waterproof by nature of its construction. These requirements would apply regardless of the mode of transportation (air, ground, etc.) and would apply to all equipment containing lithium ion or lithium metal cells or batteries unless the cells or batteries have a lithium content of not more than 0.3 grams or a Watt-hour rating of not more than 3.7 Wh. The ICAO Dangerous Goods Panel agreed in October 2009 to remove this waterproof packaging requirement from the ICAO Technical Instructions. For batteries shipped by air, requires UN specification packaging that meets the Packing Group II performance level. (49 C.F.R. 173.185(a)(2)(ii) and 49 C.F.R. 173.185(c))
3. Requires employees who ship lithium ion and lithium metal cells and batteries and equipment packed with or containing them, including excepted batteries and equipment, to receive hazardous materials training. This requirement would not apply to employees who ship only equipment packed with or containing lithium ion or lithium metal cells or batteries with a lithium content of not more than 0.3 grams or a Watt-hour rating of not more than 3.7 Wh. (49 C.F.R. 173.185(d))
4. Places restrictions on where shipments of lithium ion and lithium metal cells and batteries and equipment can be stowed on aircraft. Shipments must be stowed in accessible manner, in FAA approved container or Class C compartment. (Lithium metal batteries would still be prohibited on passenger aircraft.) These restrictions will make it much more difficult and expensive to transport these materials by air. The requirements would apply to all aircraft operating to, from or within the U.S. as well as to U.S. registered aircraft operating anywhere in the world. Limitations would not apply to equipment packed with or containing lithium ion or lithium metal cells or batteries with a lithium content of not more than 0.3 grams or a Watt-hour rating of not more than 3.7 Wh. (49 C.F.R. 175.75)
5. Imposes testing and battery design criteria inconsistent with the UN Manual of Tests and Criteria, ICAO Technical Instructions and IMDG Code. (49 C.F.R. 173.185(a)(1)(i)(A)(1); 49 C.F.R. 173.185 (a)(1)(i)(A)(2) and 49 C.F.R. (a)(1)(i)(B)(iii))
6. Prohibits shipping by air and vessel lithium ion and lithium metal cells or batteries that have been damaged, identified as defective or are otherwise being returned to the manufacturer for safety reasons. The proposal is inconsistent with an analogous provision in the ICAO Technical Instructions, which applies only to “cells and batteries identified by the manufacturer as being defective for safety reasons, or that have been damaged, that have the potential of producing a dangerous evolution of heat, fire or short circuit.” (49 C.F.R. 173.185(g))
7. Prohibits passengers from placing spare “dry cell” batteries in checked baggage. (49 C.F.R. 175.10 )

Notable Activities

January 11th, 2010 – The PHMSA publishes a Notice of Proposed Rule Making.

March 12th – Public comment period ends despite multiple requests by the industry for an extension.

March 12th – The PRBA submits an independent economic analysis showing that the PHMSA grossly underestimates the economic impact of the proposed rule.

April 7th – The PRBA sends a letter to the US DOT’s Office of General Counsel pointing out the legal obligations with which the PHMSA must comply.

May 7th – The European Union files comments challenging the majority of the proposed rule.

May 24th – 28 members of congress sign a letter sent to US DOT Secretary Ray LaHood. The letter states the following: “We are concerned that the solution proposed in this NPRM may not solve the problem it is intended to fix.” Also: “The NPRM also appears to grossly underestimate the additional cost of these new regulations on American businesses.”

July 29th – The PHMSA holds a meeting with the PRBA to question the independent economic analysis, during which, it becomes clear that the PHMSA did not realize the proposed rule would have such a negative economic impact.

September 3rd – A UPS cargo plane crashes in Dubai. It is unknown what caused the fire, but lithium batteries and electronics were confirmed to be in the cargo hold. Tragically, neither pilot survived and the plane was incinerated. In reaction, it is possible the PHMSA will issue an Interim Final Rule (IFR) prior to issuing a Final Rule.

October 1st – The PHMSA submits a Final Rule to the White House Office of Management and Budget (OMB) for review.

October 8th – The FAA issues a Safety Alert for Operators (SAFO) in reaction to the Dubai plane crash.

November 16^th and 23^rd – Officials from Japan and Korea meet with the White House OMB to discuss the negative economic impact of the rulemaking.

January 3^rd, 2011 – The latest report from the DOT projects White House OMB clearance on February 2^nd, and final rule publication on the 9^th. The latest report also includes a new NPRM for the Transportation of Lithium Batteries.

DISCLAIMER: This notice is intended to give you a general awareness of the proposed lithium battery transportation regulations and does not constitute legal advice. The actual Final Standards, when published, in the original language should be reviewed and used for all business, legal, and product compliance purposes.