United States Court of Appeals for the Fifth Circuit ____________ United States Court of Appeals Fifth Circuit

No. 24-60230 FILED July 30, 2024 ____________ Lyle W. Cayce MCR Oil Tools, L.L.C., Clerk

Petitioner,

versus United States Department of Transportation; Pete Buttigieg, Secretary, U.S. Department of Transportation; Pipeline and Hazardous Materials Safety Administration; William S. Schoonover, in his official capacity as Associate Administrator of Hazardous Materials Safety, Pipeline and Hazardous Materials Safety Administration,

Respondents. ______________________________

Petition for Review of an Order of the Department of Transportation, NTSB Agency No. 49 CFR 171–80 ______________________________ Before Smith, Engelhardt, and Ramirez, Circuit Judges. Jerry E. Smith, Circuit Judge: MCR Oil Tools (“MCR”) petitions for review of an action of the Pipeline and Hazardous Materials Safety Administration (“PHMSA” or the “agency”) that determined that MCR lacked the requisite approval to trans- Case: 24-60230 Document: 74-1 Page: 2 Date Filed: 07/30/2024

No. 24-60230

port, and therefore sell, a product accounting for most of its revenue. That determination is arbitrary and capricious thrice over. For start- ers, it misinterprets the law. Additionally, its reasoning lacks adequate sub- stantiation. Finally, the agency reached a conclusion that was directly con- tradicted by the evidence. We grant the petition for review, vacate the challenged action, and remand.

I. The Hazardous Materials Transportation Uniform Safety Act (“HMTA”) regulates the transportation of hazardous materials. Among other things, HMTA delegates to the Secretary of Transportation the duty to “prescribe regulations for the safe transportation . . . of hazardous material in intrastate, interstate, and foreign commerce.” 49 U.S.C. § 5103(b)(1). PHMSA, 1 acting per that authority, 2 promulgated a set of rules known as the Hazardous Materials Regulations (“HMR”). 49 C.F.R. §§ 171.1– 180.605. Part 173 of the HMR defines “hazardous materials for transpor- tation purposes” and specifies requirements for “preparing hazardous mate- rials for shipment by air, highway, rail, or water, or any combination thereof.” 49 C.F.R. § 173.1(a). “In general,” its provisions are “based on UN Recom- mendations” and “consistent with international regulations issued by the International Civil Aviation Organization [(“ICAO”)].” Id. § 173.1(c). Section 173.50(a) defines, for purposes of the HMR, an “explosive” _____________________ 1 PHMSA is an operating administration within the Department of Transportation (“DOT”). 2 “The Secretary delegated authority to issue regulations for the safe and secure transportation of hazardous materials in commerce to [PHMSA].” 49 C.F.R. § 171.1; see 49 C.F.R. § 1.53 (delegation).

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as any substance or article, including a device, which is designed to function by explosion (i.e., an extremely rapid release o