More and more high profile public companies are being required to pay stiff administrative fines to the Federal Aviation Administration ("FAA") for improperly shipping ordinary commercial products such as paint, aerosol cans, or even certain types of medical equipment. In many cases the improper shipment appears to be nothing more than a "paper" violation - a mere labeling oversight that harms neither persons nor property. However, in an alarming number of instances this summer, these violations have resulted in six figure administrative penalties from the FAA.
In the wake of the 1996 ValuJet disaster over the Florida Everglades, FAA has increased its "dangerous goods" staff by 500%, and specifically targeted persons or companies that offer such goods for commercial shipment. With a $27,500 maximum civil penalty for each violation as well as the specter of criminal liabilities, careful attention to this complex area of federal law is a must for any corporate compliance program.
What Is a "Dangerous Good" and Who Is Subject to These Regulations?
The Department of Transportation's ("DOT's") Hazardous Materials Regulations ("HMR") regulate the shipment of dangerous goods (also known as "Hazmat"). The HMR define dangerous goods as substances or materials that are capable of posing an unreasonable risk to health, safety or property when transported in commerce. Items that are either flammable, combustible, explosive, corrosive, poisonous, infectious, oxidizing, radioactive, or which are a compressed gas typically meet this definition. In addition to the myriad of raw chemicals and commercial chemical compounds that are typically classified as dangerous goods (such as acids, ammonia, butane, and chlorine), the following are examples of finished items that can also be considered "dangerous goods" under the HMR:
- Aerosol cans
- Certain Medicines, Cosmetics and Perfume Products
- Manufactured Articles Containing Mercury
- Cigarette Lighters
- Adhesives
- Alcohol Products (including certain beverages)
- Miscellaneous Petroleum and Vinyl Products
- Fire Extinguishers
- Paints, Lacquers, Dyes and Inks
- Anti-freeze
- Cleaning Compounds and Disinfectants
- Weapon Cartridges
- Turpentine
- Miscellaneous Batteries and Battery Fluids
- Pest Control Products
- Flares and Certain Projectiles
The HMR also applies to most hazardous wastes regulated under state and federal environmental laws. The regulations specify, among other things, the modes of transportation (e.g., passenger aircraft) that are permitted for a particular dangerous good. The FAA, which is part of DOT, handles enforcement of the HMR for air shipments.
Of particular significance is the fact that the HMR applies not only to carriers such as Federal Express or United Parcel Service, but also to persons or businesses (even including retail stores) that offer dangerous goods for shipment in commerce. Thus, in any circumstance where a dangerous good is shipped, both the person offering the dangerous good (e.g. the manufacturer or seller of the dangerous good) and the carrier are responsible for meeting the HMR requirements.
Key Regulatory Requirements for Companies That Offer Dangerous Goods for Shipment
While the only way to properly assess the applicability of the HMR to a company's business activities is through a careful evaluation of the items shipped, the mode of transport used, and the relevant sections of the HMR, the following is a general overview of regulatory responsibilities that are particularly important to entities that offer dangerous goods for shipment in commerce:
- Materials Classification: The HMR divide all dangerous goods into discrete hazard classes and hazard class divisions. The HMR also provide detailed criteria describing when a particular item meets a hazard class or division, such as temperature flash-point for flammable liquids.
- Packaging Requirements: The HMR specify the types of inner and outer packagings required for shipping dangerous goods. Packaging requirements vary significantly, and depend upon the quantity and nature of dangerous goods and mode of transportation.
- Hazard Communication: The linchpin for the HMR system is hazard communication. There are standardized formats for identifying and describing dangerous goods on both shipping papers and packaging exteriors in the form of special phrases, numeric codes, and package marking and labeling. Hazard communication requirements can vary based on the nature of the dangerous good and transport modality.
- Incident Reporting: The entity offering dangerous goods for shipment must provide emergency response information and a telephone number to be used in the event of an accident or spill.
- Hazmat Training: HMR require general awareness and function-specific Hazmat training for every employee involved in shipping dangerous goods. Under the HMR, the employer is responsible for providing Hazmat training and keeping records of training certification. Employees must receive training every three years.
In short, when a company offers a dangerous good for shipment, the company must properly identify and package the item, convey the nature of the hazard associated with the item to the shipper via appropriate codes and symbols, provide emergency response information in the event of an incident, and make sure that the person offering the item for shipment has the requisite Hazmat training.
Material Based Exceptions
The HMR also includes numerous exceptions and opportunities for reclassification (especially for items that meet the HMR definition of "Consumer Commodity") that may significantly reduce the regulatory requirements for a particular shipment. Furthermore, DOT accepts petitions for exemptions from the HMR in certain circumstances.
Conclusion
If you have any questions about whether goods shipped in commerce are deemed "dangerous" under federal law and/or regulations governing the transportation of dangerous goods, please contact competent counsel.