The USDOT/PHMSA makes policy decisions everyday, but most of them are not published in the Federal Register. Some of the decisions that are made by policy makers at PHMSA clearly show little if any understanding of the fireworks industry and its operations. Investigators will be sent out to importers and other companies to examine the DOT/PHMSA "paperwork" and find errors or violations. These field investigators then issue "Exit Briefings" that detail the violations that they found and could serve as the basis for future monetary sanctions.
As attorneys that have represented fireworks companies for over a quarter of a century, we have found that the field investigators decisions do not always translate into an automatic fine and enforcement action. Many times the USDOT/PHMSA attorneys have to review the material and then can not justify the actions of the field investigators. There are many occasions when the USDOT/PHMSA attorneys will file Notice of Probable Violations only to dismiss them when the full story is explained to them. We have had a few occasions recently where the USDOT/PHMSA attorneys have dropped cases or made policy decisions because the field or internal positions were not correct. Here are a few that we have experienced in the last couple of months:
1. USDOT/PHMSA can not Impose Sanctions on Broker. We have had 3 cases in the past several months where USDOT/PHMSA has attempted to impose significant monetary sanctions against Brokers in China or Hong Kong. In one matter the USDOT/PHMSA asked for a fine of over $300,000 because of supposed EX and shipping issues.
Under the DOT regulations, a person that is not involved in the shipping or pre-transportation process can not be held responsible for any violations. 49 CFR sec. 171(a)(1 and 2). The regulations spell out several specific functions that a person or entity must perform before they can be held responsible. The DOT/PHMSA investigators do not fully understand the entire process in China and believe that the Broker is the entity that actually physically loads the container, issues the documents, determines the EX numbers to be assigned and is intimately involved in the process. What I really think happens is that the Broker is the only entity that the DOT/PHMSA can attack in the process.
What happens in these cases, the DOT/PHMSA attorney was provided details of the entire process and how shipments really work. Once they understood that the Broker is not defined in the regulations as meeting this criteria, the cases are quickly dropped. The Brokers were not fined any amount from the USDOT/PHMSA.
This could mean that enforcement actions against Brokers in the future could diminish.
2. Finale Chains and EX Approvals. For the past several months, the USDOT/PHMSA investigators have created violations for chained finale shells that exceed the number of shells on the approval documents. For example if a manufacturer had approval for 10-3" shells in a chain and shipped a chain of 24, then the uninformed investigator would create a violation. This has caused some turmoil in the supply process.
The basis for the "violation" was that the approval said 10 shells and there are 24 shells in this chain and therefore it is a "new explosive" and needs its own EX number. This clearly shows a complete lack of understanding of the regulations and what constitutes a "new explosive". 49 CFR sec. 173.56(a) has this definition. A "new explosive" is one that has had a change in formulation or design "so as to alter the properties of the explosive...". Furthermore, the explosive must have a difference in hazard characteristics from the explosive previously approved. Adding some additional shells to the chain does not meet this definition. The investigators are not properly trained nor do they understand the physical and chemical properties of the devices. They arbitrarily determine that if the approval is for 10 and the chain has 24, then this is a "new explosive". To them, it does not matter how the devices are packed or sold. One field investigator in the Midwest did not care what the regulations stated, how the devices were packed or that APA 87-1, sec. 4.4 approves combination devices. Luckily he was set straight, but he still refuses to withdraw the "violation" on his Exit Brief.
Once again the attorneys had to file a Notice of Probable Violation and then be educated on this entire process. The technical people at the DOT admitted that this particular device with the increased number of shells in the chain really was not a "new explosive" and the violations were withdrawn.
3. Shells or devices that have "color" issues will not serve as a basis for a violation. Another popular violation topic was the issue of different colors from the approval document. A field investigator may find that a device is described as "purple changing to gold brocade" and the approval document only allows red, blue, orange, silver, gold or yellow. The field investigator immediately seizes upon a "violation" because the color purple was not "approved". This has caused all sorts of turmoil in the manufacturing and importation areas.
Once again, the field investigators training has failed them and maybe a refresher in elementary art might be appropriate so that they understand the difference in "primary", "secondary" or "tertiary" colors. Maybe better yet, lets get them some simple color wheels so they understand that red and blue can make purple or that blue and yellow will make green.
The USDOT/PHMSA attorneys will not proceed with Notice of Violations for matters involving a difference of color only on shells or devices. This means that if a note is received from a field investigator that says that the "color is not approved" then there will be no violation and that should be withdrawn. Some field investigators are stubborn and even when told this refuse to admit their error.
These are some important and changing decisions from USDOT/PHMSA that everyone in the fireworks industry has suffered through these past few years. The arbitrariness of the inspection process, the decisions that are made on the "fly" by field investigators has caused a great deal of turmoil because PHMSA needs to justify its own prior actions.
If you are faced with a DOT/PHMSA or even a DOT/FMCSA audit or review, you have the right to contact an attorney and discuss the matter with them, during the course of the Audit. You also have the right to close at the end of your normal business day and not incur overtime expenses.
If you have questions or a situation arises during the course of an audit, call us at 800-481-0900. Ask for John Brooke or John Stevens.
Thank you.
John H. Brooke
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