Hazardous Materials Regulations; Penalty Guidelines

DEPARTMENT OF TRANSPORTATION

Research and Special Programs Administration

49 CFR Part 107

[Docket No. HM-207D; Amdt. No. 107-33]

RIN 2137-AC60

Hazardous Materials Regulations; Penalty Guidelines

AGENCY: Research and Special Programs Administration (RSPA), DOT.

ACTION: Final rule.

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SUMMARY: In this final rule, RSPA is publishing its hazardous material

transportation enforcement civil penalty guidelines. This action

provides the regulated community and the general public with guidance

as to the factors RSPA considers in its hazmat penalty assessment

process.

EFFECTIVE DATE: This rule is effective April 7, 1995.

FOR FURTHER INFORMATION CONTACT: John J. O'Connell, Jr., Office of

Hazardous Materials Enforcement, (202) 366-4700; or Edward H.

Bonekemper, III, Office of Chief Counsel, (202) 366-4400, Research and

Special Programs Administration, U.S. Department of Transportation, 400

Seventh Street, SW., Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION:

I. Background

In response to a request contained in Senate Report 103-150 that

accompanied the Department of Transportation and Related Agencies

Appropriations Act, 1994, RSPA is publishing its hazardous material

transportation (hazmat) enforcement civil penalty guidelines as an

appendix to its regulations. This action will provide the regulated

community and the general public with information concerning how RSPA

generally begins its hazmat penalty assessment process and types of

information that respondents in enforcement cases should provide to

justify reduction of proposed penalties.

RSPA enforcement personnel and attorneys use these guidelines as a

partial means of determining a baseline civil penalty for selected

violations of the Hazardous Materials Regulations (HMR; 49 CFR Parts

171-180), or the Federal hazardous material transportation law (Federal

hazmat law), 49 U.S.C. 5101 et seq. (formerly the Hazardous Materials

Transportation Act (HMTA), 49 App. U.S.C. 1801 et seq.).

Because these guidelines are non-binding and are periodically

updated, they are being published as an informational appendix to the

enforcement regulations, Subpart D of Part 107 in Title 49 of the Code

of Federal Regulations (CFR). They are being published without public

notice or comment because they are merely informational, are not

finally determinative of any issues or rights, and do not have the

force of law. Because these guidelines are merely a general statement

of agency policy and practice and because they impose no requirements,

no notice of proposed rulemaking is necessary.

This rule publishes the guidelines as they existed on January 18,

1995. In any particular case, the Office of Hazardous Materials

Enforcement will use the version of the guidelines in effect at the

time of its referral of a matter to the Office of the Chief Counsel for

possible issuance of a notice of probable violation (NOPV). However,

since the guidelines are not legally binding, later changes in the

guidelines may be considered in a particular case before a final order

is issued.

On November 16, 1990, Congress amended the HMTA by passing the

Hazardous Materials Transportation Uniform Safety Act of 1990 (HMTUSA;

Public Law 101-615); in HMTUSA, Congress increased the maximum

penalties for HMTA and HMR violations from $10,000 to $25,000 per

violation per day. The guidelines reflect the culmination of a five-

year program under which RSPA increased the baseline penalty for most

violations by 20 percent per year (on November 16 of each year between

1990 and 1994) to effect Congress' 1990 increase of the maximum penalty

for hazmat violations.

These guidelines are a preliminary assessment tool used by RSPA

personnel, and they create no rights in any party. They contain

baseline amounts or ranges for violations that frequently have been

cited in RSPA hazmat NOPVs. When a violation not described in the

guidelines is encountered, it sometimes is possible to determine a

baseline penalty by analogy to a similar violation in the guidelines.

Even when the guidelines are applicable to a violation, the use of

the guidelines is only a starting point. They promote consistency and

generally are used to provide some standard for imposing similar

penalties in similar cases. However, no two cases are identical, and

ritualistic use of the guidelines would produce arbitrary results and,

most significantly, would ignore the statutory mandate to consider

several specific assessment criteria. Therefore, regardless of whether

the guidelines are used to determine a baseline amount for a violation,

RSPA enforcement and legal personnel must apply the statutory

assessment criteria to all relevant information in the record

concerning any alleged violation and the apparent violator. These

criteria are in 49 U.S.C. 5123 and 49 CFR 107.331.

The criteria that RSPA applies are the nature, extent,

circumstances, and gravity of each violation; the degree of the

violator's culpability; the violator's history of prior violations (if

any); the violator's ability to pay; any effect of the penalty on the

violator's ability to continue to do business, and other matters that

justice requires. The baseline amount or range is an initial reflection

of the nature, extent, circumstances, and gravity of the violation as

compared with other types of violations. This amount then may be

modified on the basis of case-specific information on nature, extent,

circumstances, and gravity, as well as information with respect to the

other enumerated factors.

[[Page 12140]]

Corrective action taken by a violator to prevent a recurrence of

similar violations is a major consideration under ``other matters that

justice requires.'' Application of the statutory assessment criteria

may increase or decrease the baseline penalty amount or range. The two

economic criteria, however, are only used to decrease penalties and are

not used to increase penalties. Conversely, a violator's history of

prior violations is used only to increase a penalty.

As discussed more fully below, the guidelines are not binding on

RSPA or Department of Transportation personnel. Enforcement personnel

and staff attorneys generally use the guidelines as a starting point

for penalty assessment. However, they, the Chief Counsel,

administrative law judges (ALJs), and the RSPA Administrator may

deviate from the guidelines where appropriate, and are legally bound

only by the statutory assessment criteria.

RSPA is aware of a recent decision by the United States Court of

Appeals for the District of Columbia Circuit ruling that a Federal

Communications Commission (FCC) civil penalty schedule used in its

forfeiture proceedings may not be published as a policy statement, but

must be issued as a rule in accordance with the public notice and

comment requirements of the Administrative Procedure Act, 5 U.S.C. 553

(b), (c). United States Telephone Ass'n v. FCC, 28 F.3d 1232 (D.C. Cir.

1994). RSPA has reviewed the Court's decision, as well as the FCC

schedule and procedures that were the subject of the ruling, and

believes that the ruling is not applicable to the RSPA guidelines.

A respondent has no right to be heard in an FCC forfeiture

proceeding other than by the FCC Bureau that initiates the forfeiture

action. The Bureau begins a proceeding by issuing a forfeiture order.

47 CFR 1.80(f). The respondent is permitted a written reply, and the

Bureau issues a final administrative determination. Id. A hearing

before an ALJ may be held, but solely at the Bureau's discretion, 47

CFR 1.80(g); the regulations themselves state that normally the matter

will be heard by an ALJ only when it arises in conjunction with other

proceedings for which a formal hearing is required, id. When a hearing

is held, the decision of the ALJ is subject to Bureau review and

approval. 47 CFR 1.273, 1.282. The FCC schedule governs the Bureau's

penalty determination, whether following a respondent's written reply

or in reviewing an ALJ decision. Thus, a respondent, even where it

fully exercised its procedural rights, would be assessed a penalty

determined according to a methodology that it had no opportunity to

contest. It is firmly established that a standard must be issued as a

rule if it is ``finally determinative'' of a respondent's obligations.

E.g., Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533, 537 (D.C.

Cir. 1986).

In contrast, the RSPA guidelines are used by the RSPA Office of the

Associate Administrator for Hazardous Materials Safety (OHMS), at a

staff, level to assist in developing recommended proposed penalties in

enforcement cases. On receiving an NOPV setting forth the penalty, a

respondent may demand a formal hearing before an ALJ. 49 CFR 107.319.

The OHMS and RSPA's Office of Chief Counsel will employ the guidelines

to determine the penalty for which it will argue before the ALJ;

nonetheless, the ALJ is not bound by the guidelines, and retains his or

her essential discretion.

An ALJ decision that is not appealed is a final administrative

action. 49 CFR 107.323. A decision that is appealed is reviewed by the

RSPA Administrator. 49 CFR 107.325. On review of an ALJ decision, the

Administrator, as well, is not bound by the OHMS guidelines.

Accordingly, the guidelines do not ``finally determin[e]'' a

respondent's penalty obligation; a respondent that objects to the

proposed penalty has the right to contest the penalty fully before the

administrative decisionmaker. The administrative decisionmaker remains

``free to exercise his [or her] informed discretion.'' Guardian Fed.

Savings & Loan Ass'n v. Federal Savings & Loan Ins. Corp., 589 F.2d

658, 666, 668 (D.C. Cir. 1978).

In addition, the FCC schedule and the RSPA guidelines differ

significantly in the degree to which they permit deviation in their

use. The USTA court, citing the proposition that the policy/rule

distinction turns on ``an agency's intention to bind itself to a

particular legal policy position,'' 28 F.3d 1234, found that in over

300 cases, the FCC followed its fine schedule essentially without

exception, id. at 1234-35.

The OHMS guidelines, as opposed to a penalty schedule, consist of a

listing of violations and the baseline penalty, or range of penalties,

proposed for each as of November 16, 1994, as well as an explanation of

the methodology OHMS generally uses to modify the baseline proposed

penalty on the basis of case-specific factors required to be considered

under 49 U.S.C. 5123(c) and 49 CFR 107.331. The guidelines presuppose

flexibility in their application; beyond that, the OHMS or, where

respondent has waived formal hearing, the order of the Chief Counsel

imposing a penalty, often has gone beyond the boundaries of the

guidelines as warranted by particular evidence from or arguments of a

respondent. RSPA expects to publish revised guidelines annually.

II. Rulemaking Analyses and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

This final rule is not considered a significant regulatory action

under section 3(f) of Executive Order 12866 and, therefore, was not

subject to review by the Office of Management and Budget. This rule is

not significant under the Regulatory Policies and Procedures of the

Department of Transportation (44 FR 11034). The economic impact of this

final rule is minimal to the extent that preparation of a regulatory

evaluation is not warranted.

Executive Order 12612

This final rule has been analyzed in accordance with the principles

and criteria contained in Executive Order 12612 (``Federalism''). The

Federal hazardous materials transportation law contains an express

preemption provision (49 U.S.C. 5125(b)(1)) that preempts State, local,

and Indian tribe requirements on certain covered subjects unless they

are ``substantively the same'' as the HMR. Covered subjects are:

(i) The designation, description, and classification of hazardous

materials;

(ii) The packing, repacking, handling, labeling, marking, and

placarding of hazardous materials;

(iii) The preparation, execution, and use of shipping documents

pertaining to hazardous materials and requirements respecting the

number, content, and placement of such documents;

(iv) The written notification, recording, and reporting of the

unintentional release in transportation of hazardous materials; or

(v) The design, manufacturing, fabrication, marking, maintenance,

reconditioning, repairing, or testing of a package or container which

is represented, marked, certified, or sold as qualified for use in the

transportation of hazardous materials. The Federal hazardous materials

transportation law (49 U.S.C. 5125(b)(2)), as amended, provides that if

DOT issues a regulation concerning any of the covered subjects after

November 16, 1990, DOT must determine and publish in the Federal

Register the effective date of Federal preemption. The effective date

may not be earlier than the 90th day following [[Page 12141]] the date

of issuance of the final rule and not later than two years after the

date of issuance. This final rule is an informational appendix and

imposes no requirements. Thus, preparation of a federalism assessment

is not warranted.

Regulatory Flexibility Act

I certify that this final rule will not have a significant economic

impact on a substantial number of small entities. This rule applies to

shippers and carriers of hazardous materials, some of which are small

entities; however, there is no economic impact.

Paperwork Reduction Act

There are no new information requirements in this final rule.

List of Subjects in 49 CFR Part 107

Administrative practices and procedure, Hazardous materials

transportation, Packaging and containers, Penalties, Reporting and

recordkeeping requirements.

In consideration of the foregoing, 49 CFR part 107 is amended as

follows:

PART 107--HAZARDOUS MATERIALS PROGRAM PROCEDURES

1. The authority citation for part 107 continues to read as

follows:

Authority: 49 U.S.C. 5101-5127, 44701; 49 CFR 1.45 and 1.53.

2. Appendix A is added to subpart D of part 107 to read as follows:

Appendix A to Subpart D of Part 107--Guidelines for Civil Penalties

I. This appendix sets forth the guidelines used by the Office of

Hazardous Materials Safety (as of January 18, 1995) in making

initial baseline determinations for recommending civil penalties.

The first part of these guidelines is a list of baseline amounts or

ranges for probable violations frequently cited in enforcement

reports referred for action. Following the list of violations are

general guidelines used by OHMS in making initial penalty

determinations in enforcement cases.

II. List of Frequently Cited Violations

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Violation description Section or cite Baseline assessment

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Part 107--Requirements

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Failure to register as a carrier or shipper of 107.608............................. $1,500

hazardous material.

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Part 171--Requirements

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Failure to inform foreign shipper and U.S. 171.12(a)........................... 7,200

forwarding agent of 49 CFR requirements applying

to a shipment within the U.S.

Failure to file a DOT 5800.1 Hazardous Materials 171.16.............................. 3,100

Incident Report within 30 days following an

unintentional release of hazardous materials in

transportation.

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Part 172--Requirements

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Shipping Papers (Secs. 172.200-172.205):

Failure to execute a shipping paper for a 172.201............................. 5,200

shipment of hazardous materials.

Failure to follow one or more of the three 172.201(a)(1)....................... 1,200

approved formats for listing hazardous

materials on a shipping paper.

Failure to include a proper shipping name in 172.202............................. 1,850

the proper shipping description.

Failure to included a hazard class/division 172.202............................. 1,850

number in the proper shipping description.

Failure to include the identification number in 172.202............................. 1,200

the proper shipping description.

Using an incorrect identification number in the 172.202............................. 1,850

proper shipping description.

Using an incorrect identification number in the 172.202............................. 2,500

proper shipping description, that changes the

required response information.

Using a shipping description that is mostly 172.202............................. 1,000

correct, but includes extra or incorrect words.

Using a shipping description that includes 172.202............................. 850

additional unauthorized information.

Using a proper shipping description not in 172.202............................. 500

required sequence.

Using a shipping description that is missing 172.202............................. 3,100

two required elements.

Using a shipping description where more than 172.202............................. 4,300

two required elements are missing.

Using a shipping name and hazard class that is 172.202............................. 3,700

incorrect, such that the material is

misdescribed.

Using a shipping name and hazard class that is 172.202............................. 6,200

incorrect, such that a material is

misclassified.

Failure to include the total quantity of 172.202(c).......................... 430

hazardous material covered by a shipping

description.

The letters ``RQ'' are not used in the shipping 172.203(c)(2)....................... 500

description to identify materials that are

hazardous substances.

Failure to include a required technical name in 172.203(k).......................... 1,200

parentheses for a listed generic or ``n.o.s.''

material.

Failure to list an exemption number as part of 172.203(a).......................... 1,200

the required shipping description.

Failure to include the required shipper's 172.204(a).......................... 1,800

certification on a shipping paper.

Failure to execute the required shipper's 172.204............................. 1,000

certification on a shipping paper.

Emergency Response Information Requirements (Secs.

172.600-172.604):

Providing or listing incorrect emergency 172.602............................. 2,600

response information with or on a shipping

paper (if significant difference in response).

Providing or listing incorrect emergency 172.602............................. 1,300

response information with or on a shipping

paper (if no significant difference in

response).

Failure to include an emergency response 172.604............................. 2,600

telephone number on a shipping paper.

Failure to have the emergency response 172.604............................. 1,300

telephone number monitored while a hazardous

material is in transportation.

Listing a fraudulent emergency response 172.604............................. 3,700

telephone number on a shipping paper.

[[Page 12142]]

Listing an emergency response telephone number 172.604............................. 1,300

on a shipping paper that is not working or is

incorrect.

Failure to provide required technical 172.604............................. 2,600

information when the listed emergency response

telephone number is contacted.

Package Marking Requirements (Secs. 172.300-

172.338):

Failure to mark the required identification 172.301(a).......................... 1,200

number on a package.

Marking an incorrect identification number on a 172.301(a).......................... 1,850

package.

Marking an incorrect identification number on a 172.301(a).......................... 2,500

package that changes the appropriate emergency

response information.

Failure to mark the required shipping name on a 172.301(a).......................... 2,500

package.

Failure to mark the required shipping name and 172.301(a).......................... 4,200

identification number on a package.

Marking a package with an incorrect shipping 172.301(a).......................... 5,000

name and identification number.

Marking a package with an incorrect shipping 172.301(a).......................... 2,500

name and identification number that does not

affect emergency response information/actions.

Failure to include the required technical 172.301(c).......................... 1,200

name(s) in parentheses for a listed generic or

``n.o.s.'' entry.

Failure to mark a package containing liquid 172.312............................. 3,700

hazardous materials with required orientation

marks.

Failure to mark a package containing liquid 172.312............................. 4,200

hazardous materials with required orientation

marks, when inside packagings have vented

closures.

Package Labeling Requirements (Secs. 172.400-

172.450):

Failure to label a package, when required...... N/A................................. 4,300

Placing a label in a package when the label N/A................................. 5,000

represents a hazard other than the actual

hazard presented by the hazardous material in

the package.

Placing a label not conforming to size N/A................................. 1,000

requirements on a package.

Placing a label on a package that does not 172.401(a).......................... 1,300

contain a hazardous material.

Placing a label that does not meet color N/A................................. 600 to 2,500

specification requirements on a package.

Failure to place a required subsidiary label on N/A................................. 2,500

a package, when required.

Failure to provide an appropriate division N/A................................. 5,200

number on an explosive label.

Placarding Requirements (Secs. 172.500-172.560):

Failure to placard a freight container N/A................................. 500 to 7,500

containing hazardous materials.

Failure to properly placard a freight container 172.504............................. 8,650

containing Division 1.1, 1.2, or 1.3 (Class A

or B) explosives.

Training Requirements (Secs. 172.700-172.704):

Failure to train hazmat employees in the three 172.702............................. 1,500 to 25,000

required areas.

Failure to train hazmat employees in one of the 172.702............................. 500 and up

three required areas.

Failure to train hazmat employees in two of the 172.702............................. 1,000 and up

three required areas.

Failure to maintain training records........... 172.702............................. 500 and up

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Part 173--Requirements

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Overpack Requirements (Sec. 173.25):

Failure to mark an overpack with a statement 173.25(a)(4)........................ 3,100

indicating that the inside packages comply

with prescribed specifications when

specification packaging is required.

Reconditioner Requirements (Sec. 173.28):

Representing, marking, or certifying a drum as 173.28(m)(3)(ii)\1\................. 5,200 to 7,200

a reconditioned DOT packaging, when the drum

did not meet a DOT specification.

Marking an incorrect registration number on a 173.28(m)(3)(ii)\1\................. 1,550

reconditioned packaging.

Failure to properly conduct alternate leakage 173.28(m)(2)\1\..................... 5,000

test.

Representing, marking, or certifying a drum as 173.28(o)(1)\1\..................... 1,000

altered from one specification to another,

when the drum had not actually been altered.

IM Portable Tank Requirements (Sec. 173.32c):

Offering a hazardous material for 173.32c(a).......................... 5,200 to 7,200

transportation in an IM portable tank equipped

with bottom outlets, when the material

contained is prohibited from being offered in

this type of packaging.

Offering an IM portable tank for transportation 173.32c(c).......................... 5,000

that has not been visually inspected within

last 2\1/2\ years per 173.32b(b).

Offering an IM portable tank for transportation 173.32c(c).......................... 6,200

that has not been hydrostatically retested in

last five years per 173.32b(a).

Offering an IM portable tank for transportation 173.32c(c).......................... 12,500

that has not been visually or hydrostatically

tested as required, or failing to remove the

safety relief valves during testing.

Failure to provide the required outage for a 173.32c(k).......................... 15,500

shipment of hazardous materials, that results

in the release of hazardous materials.

Cylinder Retesters (Secs. 173.23, 173.34, and

173.302):

Failure to remark an aluminum exemption 173.23(c)........................... 2,100

cylinder as a DOT 3 AL.

Certifying or marking as retested a 173.34.............................. 5,200 to 7,200

nonspecification cylinder.

Marking a cylinder in or on the sidewall area 173.34(c)(1)........................ 8,650

when not permitted by the applicable

specification.

Failure to maintain legible markings on a 173.34(e)........................... 1,200

cylinder.

Failure to perform hydrostatic retesting at the 173.34(e)........................... 2,100 to 5,200

minimum of 5/3 times the service pressure, or

at the minimum specified test pressure.

Failure to perform visual external examination. 173.34(e)(1)........................ 3,100

[[Page 12143]]

Failure to perform visual internal examination. 173.34(e)(1)........................ 3,600

Failure to perform both visual external and 173.34(e)(1)........................ 4,200

visual internal examinations.

Inability to conduct a complete visual 173.34(e)(1)........................ 3,100

examination due to: excess paint build-up on a

cylinder; failure to remove banding; failure

to remove a permanent attachment; or failure

to remove a plastic attachment that has torn

or cracked.

Failure to have a retester's identification 173.34(e)(1)(i)..................... 3,600

number (RIN).

Failure to have current authority due to 173.34)e)(1)(i)..................... 2,500

failure to renew a retester's identification

number.

Failure to have a retester's identification 173.34(e)(1)(i)..................... 7,200

number and marking another RIN on a cylinder.

Marking a RIN before successfully completing a 173.34(e)(1)(ii).................... 3,100

hydrostatic retest..

Marking a cylinder as having been retested 173.34(e)(1)(ii).................... 8,650

without performing retest.

Performing hydrostatic retesting without 173.34(e)(3)........................ 2,100 to 5,200

demonstrating the accuracy of the testing

equipment.

Failure to hold hydrostatic test pressure for 173.34(e)(3)........................ 3,100

30 seconds or sufficiently longer to allow for

complete expansion.

Failure to perform a second retest, after 173.34(e)(3)........................ 3,100

equipment failure, at a pressure of 10% more

or 100 psi more, whichever is less.

Exceeding 90% of test pressure prior to 173.34(e)(3)........................ 850

conducting test.

Failure to condemn a cylinder with permanent 173.34(e)(4)........................ 6,000

expansion of 10% or greater (5% for certain

exemption cylinders); failure to condemn

cylinders with evidence of internal or

external corrosion, denting, bulging, or rough

usage.

Marking an FRP cylinder with steel stamps in Applicable Exemption................ 8,650

the FRP area of the cylinder such that the

integrity of the cylinder is compromised.

Failure to keep records of cylinder 173.34(e)(5)........................ 4,200

reinspection and retest.

Failure to keep accurate records of cylinder 173.34(e)(5)........................ 1,000 to 3,100

reinspection and retest.

Improper marking of the RIN or retest date on a 173.34(e)5)......................... 1,550

cylinder.

Marking a DOT 3HT cylinder with a steel stamp 173.34(e)(13)(iv)................... 5,200 and up

other than a low-stress steel stamp.

Marking a ``+'' sign on a cylinder without 173.302(c)(3)....................... 3,000 to 4,300

determining the average or maximum wall stress.

Representing, marking, or certifying a cylinder N/A................................. 4,300 to 6,000

as meeting the requirements of an exemption,

when the cylinder was not maintained or

retested in accordance with the exemption.

Rebuilder Requirements (Sec. 173.34):

Representing a DOT-4 series cylinder as meeting 173.34(l)........................... 7,200

the requirements of the Hazardous Materials

Regulations without being authorized to do so

by the Associate Administrator for Hazardous

Materials Safety.

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Part 178--Requirements

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Third-Party Packaging Certifiers (General):

With testing completed, TPPC's certification N/A................................. 2,100

directs manufacturer to improperly mark a

packaging (e.g., steel drum to be marked UN

4G).

Manufacturers (General):

Failure to conduct drop testing from required N/A................................. 4,200

distance.

Manufacturing, marking, certifying, or selling N/A................................. 5,200 to 8,650

a package marked to a specification, UN

standard, or an exemption when applicable

requirements are not met.

Certifying a packaging as meeting a UN standard N/A................................. 6,000 to 10,800

when design qualification testing was not

performed.

Failure to conduct periodic testing on UN N/A................................. 5,000 to 8,650

standard packaging.

Failure to properly conduct design N/A................................. 4,200

qualification or periodic retesting for UN

standard packaging.

Marking, or causing the marking of, a packaging N/A................................. 7,200

with the symbol of a manufacturer or packaging

certifier other than the company that actually

manufactured or certified the packaging.

Failure to keep and maintain records of design 178.601(k)(1)....................... 4,200

qualification testing.

Failure to keep and maintain records of 178.601(k)(2)....................... 4,200

periodic retest.

Manufacturing DOT specification packaging after N/A................................. 3,000 and up

October 1, 1994.

Manufacturer Requirements--Fiberboard Boxes:

Manufacturing, marking, certifying, or selling N/A................................. 4,300 to 7,200

a package marked to a specification, UN

standard, or an exemption when applicable

requirements are not met.

Certifying packaging as meeting UN 4G standard N/A................................. 4,300

when it was not properly conditioned before

design qualification testing.

Failure to properly mark a fiberboard box...... N/A................................. 1,200

Manufacturing Requirements--UN 1H1 Drums:

Failure to properly conduct alternate N/A................................. 4,200

leakproofness test.

Manufacturing Requirements--DOT High-Pressure

Cylinders:

Manufacturing, representing, marking, N/A................................. 6,000 to 10,800

certifying, or selling a DOT high-pressure

cylinder that was not inspected and verified

by an approved independent inspection agency.

Manufacturing Requirements--Spec. DOT 39 Cylinders:

Failure to have a registration number/failure N/A................................. 3,700

to mark it on the cylinder.

Marking another company's number on a cylinder. N/A................................. 5,000

[[Page 12144]]

Failure to mark the date of manufacture or lot N/A................................. 3,100

number on a cylinder.

Failure to have a chemical analysis performed N/A................................. 5,000

in the U.S. for a material manufactured

outside the U.S./failure to obtain a chemical

analysis from the foreign manufacturer.

Failure to conduct a complete visual internal N/A................................. 3,500 to 5,200

examination.

Failure to conduct a flattening test........... N/A................................. 5,200

Failure to conduct a burst test................ N/A................................. 5,200

Failure to properly conduct required test...... N/A................................. 4,200

Failure to maintain a required inspector's N/A................................. 5,200

report.

Failure to maintain an accurate inspector's N/A................................. 1,200 to 3,700

report.

Manufacturing Requirements--DOT 4B Cylinders:

Failure to conduct a hydrostatic test by water 178.50-14........................... 5,200

jacket method on one cylinder out of each lot

of 200 or less.

Failure to conduct a flattening test........... 178.50-15........................... 5,200

Failure to conduct physical testing............ 178.50-16........................... 5,200

Failure to properly conduct required test...... N/A................................. 4,200

Failure to maintain the required Inspector's N/A................................. 5,200

report.

Failure to maintain an accurate Inspector's N/A................................. 1,200 to 3,700

report.

Manufacturing Requirements--Steel Drums:

Failure to pass testing conducted in plant..... N/A................................. 5,200 and up

Failure to properly conduct ``solution over N/A................................. 3,500 to 5,000

partial seams'' test.

Failure to retain chime cuts when conducting N/A................................. 3,100

``solution over partial seams'' testing.

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Other Requirements

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Offeror Requirements (General):

Offering a hazardous material for N/A................................. 5,200 to 8,650

transportation in an unauthorized,

nonspecification, or nonstandard packaging.

Offering a hazardous material for N/A................................. 4,300

transportation in an unauthorized,

nonstandard, or nonspecification inner package.

Offering a hazardous material for N/A................................. 10,400

transportation in a packaging that leaks

during conditions normally incident to

transportation.

Offering a hazardous material for N/A................................. 5,200 to 8,650

transportation that is covered by an

exemption, without complying with its terms.

Offering a hazardous material for 171.14.............................. 3,000 and up

transportation in a packaging marked as

manufactured to a DOT specification where that

packaging was manufactured after October 1,

1994.

Offeror requirements (Class 1 (Explosives)):

Failing to mark the ``EX'' approval number on a 172.320............................. 1,200

package containing an explosive.

Offering an unapproved explosive for 173.54(a) and 173.56(b)............. 10,000 to 25,000

transportation.

Offering a leaking or damaged package of 173.54(c)........................... 10,000 to 25,000

explosives for transportation.

Offering a Division 1.3 (Class B) explosive for N/A................................. 8,400 and up

transportation that is misclassified as

Division 1.4 (Class C) explosive.

Offeror Requirements (Class 3 (Flammable Liquid)):

Using an incorrect marking for the flashpoint 173.118(b)\1\....................... 1,000

in order to be excepted from specification

packaging, for a flammable liquid with a flash

point of 73 deg. Fahrenheit or higher.

Offering a flammable liquid with a flash point 173.119(a)(3)\1\.................... 6,200

below 20 deg. Fahrenheit for transportation in

an unauthorized DOT 17E drum (20/18-gauge v.

18-gauge).

Offering a flammable liquid with a flash point N/A................................. 3,600 to 5,200

of 73 deg. Fahrenheit or above in

nonspecification packaging, without marking

the flash point or an indication that it was

at or above 73 deg. Fahrenheit on the

packaging.

Offeror Requirements (Division 6.1 (Poisonous

Liquids)):

Offering a poisonous liquid for transportation 173.346(a)(26)\1\................... 5,200

in a DOT 12A fiberboard box that was tested as

required by Sec. 178.210-10.

Offeror Requirements (Class 7 (Radioactive

Materials)):

Failure to have a valid U.S. NRC approval 173.415(c).......................... 4,300

certificate authorizing the use of a packaging

as Type B (never having obtained one).

Failure to have a valid U.S. NRC approval 173.415(c).......................... 3,500 and up

certificate authorizing the use of a packaging

as Type B (previously had one, but now

expired).

Offeror Requirements (Portable or IM Tanks):

Offering a hazardous material for 173.32(e)(1)(ii).................... 6,200

transportation in a DOT 57 or exemption

portable tank that is out of test.

Offering a compressed gas for transportation in 173.32(e)(l)(i) 173.315(a).......... 5,200 to 8,650

a DOT 51 portable tank that is out of test

(may be higher if offeror is also owner and

portable tank has not been tested at all, or

not for a long time).

Offeror Requirements (Cylinders):

Offering a compressed gas for transportation in 173.301(c).......................... 5,200 to 8,650

a cylinder that is out of test (may be higher

if offeror is also owner and cylinder has not

been retested at all, or not for a long time.

Failure to check each day the pressure of a 173.303(d).......................... 4,200

cylinder charged with acetylene that is

representative of that day's compression,

after the cylinder has cooled to a settled

temperature, or failure to keep a record of

this test for at least 30 days.

[[Page 12145]]

Offering a mixture of a non-hazardous material 173.1200(a)(ii)(E).................. 6,200

and a compressed gas as an ORM-D without

properly determining the internal pressure at

equilibrium in a water bath heated to 130 deg.

Fahrenheit.

Carrier Requirements:

Transporting railway track torpedoes outside of N/A................................. 6,000

flagging kits, in violation of E-7991.

Transporting explosives in a motor vehicle 177.835(i).......................... 5,200

containing metal or other articles or

materials likely to damage such explosives or

any package in which they are contained,

without segregating in different parts of the

load or securing them in place in or on the

motor vehicle and separated by bulkheads or

other suitable means to prevent such damage.

Exemptions:

Requested renewal of an exemption prior to N/A................................. 2,500

expiration, but shipped after expiration.

Offered or transported a packaging or otherwise N/A................................. 2,900

performed a function covered by an exemption

after an exemption had expired (less than one

year).

Offered or transported a packaging or otherwise N/A................................. 3,600 to 7,200

performed a function covered by an exemption

after an exemption had expired (more than one

year).

----------------------------------------------------------------------------------------------------------------

\1\Cite refers to provisions in effect September 30, 1991 (see 49 CFR Part 173, revised as of October 1, 1990).

III. Consideration of Statutory Criteria

A. These guidelines are used by the Office of Hazardous

Materials Safety (OHMS) in setting initial proposed penalties for

hazmat violations. They indicate baseline amounts or ranges for

probable violations frequently cited in enforcement reports and set

forth general OHMS policy for considering statutory criteria.

B. The initial baseline determination partially considers the

nature, extent, circumstances, and gravity of the alleged violation.

That determination then is adjusted to consider all other evidence

concerning the nature, extent, circumstances, and gravity of the

alleged violation; degree of culpability; history of prior

violations; ability to pay; effect of the penalty on ability to

continue to do business; and such other matters as justice may

require (a major component of which is corrective action taken by a

respondent to prevent a recurrence of similar violations). In making

a penalty recommendation, the baseline or range may be increased or

decreased on the basis of evidence pertaining to these factors.

C. The following miscellaneous factors are used to implement one

or more of the statutory assessment criteria.

IV. Miscellaneous Factors Affecting Penalty Amounts

A. Corrective Action

1. A proposed penalty is mitigated for documented corrective

action of alleged violations taken by a respondent. Corrective

action may occur: (1) After an inspection and before a Notice of

Probable Violation (NOPV) is issued; (2) on receipt of an NOPV; or

(3) after receipt of an NOPV (possibly after it is solicited by an

RSPA attorney). In general, corrective action may reduce a penalty

up to 25%. Mitigation may be taken into account in the referral memo

or may be recommended prior to issuance of an Order by RSPA's Chief

Counsel.

2. The two primary factors in determining the penalty reduction

are extent and timing of the corrective action. In other words,

mitigation will be determined on the basis of how much corrective

action was taken and when it was taken. Systemic action to prevent

future violations is given greater consideration than action simply

to remedy violations identified during the inspection.

3. Mitigation is applied to individual violations. Thus, in a

case with two violations, if corrective action for the first

violation is more extensive than for the second, the penalty for the

first will be mitigated more than that for the second.

B. Respondents That Re-Ship

A shipper that reships materials received from another company,

in the same packaging and without opening or altering the package,

independently is responsible for ensuring that the shipment complies

with Federal hazmat law, and independently may be subject to

enforcement action if the package does not comply. Nevertheless, the

reshipper is considered to have a lesser level of responsibility for

compliance in those respects in which it reasonably relies on the

compliance of the package as received. In most cases of this type,

OHMS will discount the applicable baseline standard by about 25%.

The specific knowledge and expertise of all parties must be

considered in discounting for reliance on a prior shipper. This

discount is applied before any consideration of mitigation based on

corrective action.

C. Penalty Increases for Multiple Counts

Under the Federal hazmat law, 49 U.S.C. 5213(a), each violation

of the HMR and each day of a continuing violation (except for

violations pertaining to packaging manufacture or qualification) is

subject to a civil penalty of up to $25,000. Absent aggravating

factors, OHMS, in its exercise of discretion, ordinarily will apply

a single penalty for multiple counts or days of violation. In a

number of cases, particularly those involving shippers, an inspector

may cite two or more similar packaging violations for different

hazardous materials. For example, the inspector may cite the same

marking violation for two or more packages. OHMS usually will

consider those additional violations as counts of the same violation

and will not recommend multiples of the same baseline penalty.

Rather, OHMS usually will recommend the baseline penalty for a

single violation, increased by 25% for each additional violation.

D. Financial Considerations

1. Mitigation is appropriate when the baseline penalty would (1)

exceed an amount that the respondent is able to pay, or (2) have an

adverse effect on the respondent's ability to continue in business.

These criteria relate to a respondent's entire business, and not

just the product line or part of its operations involved in the

violation(s). Beyond the overall financial size of the respondent's

business, the relevant items of information on a respondent's

balance sheet include the current ratio (current assets to current

liabilities), the nature of current assets, and net worth (total

assets minus total liabilities).

2. These figures are considered on a case-by-case basis. In

general, however, a current ratio close to or below 1.0 means that

the company may have difficulty in paying a large penalty, and may

justify reduction of the penalty or an installment payment plan. A

small amount of cash on hand representing limited liquidity, even

with substantial other current assets (such as accounts receivable

or inventory), may warrant a short-term payment plan. Respondent's

income statement also will be reviewed to determine whether a

payment plan is appropriate.

3. Many companies are able to continue in business for extended

periods of time with a small or negative net worth, and many

respondents have paid substantial civil penalties in installments

even though net worth was negative. For this reason, negative net

worth alone does not always warrant reduction of a proposed penalty

or even, in the absence of factors discussed above, a payment plan.

4. In general, an installment payment plan may be justified

where reduction of a proposed penalty is not, but the

appropriateness of either (or both) will depend on the circumstances

of the case. The length of a payment plan should be as short as

possible, but the plan may consider seasonal fluctuations in a

company's income if the company's business is seasonal (e.g.,

swimming pool chemical sales, fireworks sales) or if the company has

documented specific reasons for current non-liquidity.

5. Evidence of financial condition is used only to decrease a

penalty, and not to increase it. [[Page 12146]]

E. Penalty Increases for Prior Violations

1. The baseline penalty presumes an absence of prior violations.

If prior violations exist, generally they will serve to increase a

proposed penalty. The general standard for increasing a baseline

proposed penalty on the basis of prior violations is as follows:

a. One prior case--25% increase over the pre-mitigation recommended

penalty

b. Two prior cases--50% increase over the pre-mitigation recommended

penalty

c. Three prior cases--75% increase over the pre-mitigation

recommended penalty

d. Four or more prior cases--100% increase over the pre-mitigation

recommended penalty

2. A case of prior violations closed more than five years

previously normally will not be considered in determining a proposed

penalty.

F. Penalty Increases for Use of Expired Exemptions

Adjustments to the base line figures for use of expired

exemptions can be made depending on how much material has been

shipped during the period between the expiration date and the

renewal date. If the company previously has been found to have

operated under an expired exemption, the penalty is normally

doubled. If the company has been previously cited for other

violations, the penalty generally will be increased by about 25%.

Issued in Washington, DC on February 27, 1995 under authority

delegated in 49 CFR part 1.

Ana Sol Gutierrez,

Deputy Administrator, Research and Special Programs Administration.

[FR Doc. 95-5179 Filed 3-3-95; 8:45 am]

BILLING CODE 4910-60-P