Hazmat Haulers Face Larger Penalties Following Passage of New Highway Law

This story appears in the Aug. 13 print edition of Transport Topics.

Motor carriers and shippers cited for hazardous materials violations face far greater penalties following the passage of the new federal highway reauthorization law.

A provision in the legislation signed into law last month by President Obama allows the Pipeline and Hazardous Materials Safety Administration to assess fines of up to $75,000 per day, per violation, from the former $50,000 limit.

In cases of death, severe injury, serious illness or substantial property damage, PHMSA can fine a carrier or shipper up to $175,000 per day, per violation, an increase from the former $100,000 ceiling.

PHMSA regards serious incidents as those in which a fatality or major injury was caused by the release of a hazardous material, the evacuation of 25 or more people was required as a result of release of a hazardous material or exposure to a fire and it caused the closure of a major transportation artery.

A PHMSA spokesman said the agency had sought the increase since Congress passed the previous highway bill in 2005.

“PHMSA wanted the flexibility to deal with those relatively few cases where we considered that the circumstances, and sometimes actual consequences of a violation justified a penalty greater than the statutory maximum,” said Gordon Delcambre Jr. “When we find that hazmat safety regulations are not being followed, we now have increased civil penalty authority for those

carriers/shippers that violate and/or obstruct the law.”

During 2011, members of regulated hazmat industries, including shippers and carriers, were assessed civil penalties totaling $2.1 million in 388 cases.

In 2011, the highest single penalty — $50,000 — went to Visionary Solutions LLC, Oak Ridge, Tenn., for a “serious incident inspection,” PHMSA said.

In 2010, a total of $1.5 million was assessed in 510 cases. The largest penalty was for $229,050 in connection with an “accident/failure investigation” assessed against Airgas South, Miami.

Although the hazmat industry believes that maximum penalties are rarely imposed by the agency, there is widespread concern that because the ceiling will be raised, the typical penalty assessed also will increase, said Cynthia Hilton, executive vice president of the Institute for Explosives Makers.

“There has been no evidence that PHMSA was bumping up against the ceiling and needed to raise the ceiling to accommodate the violations that they’re seeing now,” Hilton told Transport Topics. “However, the Senate did hear our concerns and did not raise the maximums as much as the administration had requested.”

Boyd Stephenson, director of hazmat policy for American Trucking Associations, said ATA did not support increasing the maximum hazmat penalties.

“We thought that the current hazmat penalties were more than adequate. The fact of the matter is that the industry is incredibly safe,” Stephenson said.

But the bill may end up costing haulers.

“Even with the greatest of care, there is a chance that you will make a mistake and end up with a fine,” Stephenson told TT. “At the end of the day it’s almost impossible to prevent violations, despite the fact that we make great, great efforts to do so.”

John Conley, president of National Tank Truck Carriers, agrees that penalties are likely to increase.

“My initial reaction was that we rarely see violations that are so serious that they would even take us to the current maximum,” Conley said. “It’s not something that we’re going to get bent out of shape on. But I didn’t really see a rationalization other than we haven’t raised them for a while.”

Hazmat haulers have a “pretty good safety record,” Conley said.

“They have to, and they should have to,” he added. “But if you do something that would bring it to the current maximum, let alone the new maximum, I’ve got a feeling you’ve got a lot bigger problem than what a PHMSA fine is going to bring.”

The new law also removed the $450 minimum civil penalty amount, except for training violations, Delcambre said.