CSA Scores May Affect Special Permits

New policies implemented by the U.S. Department of Transportation (DOT) may affect the ability of GAWDA members to obtain new or renewed special permits for transportation of hazardous materials. Under procedures first set out in November 2009, the Pipeline and Hazardous Materials Safety Administration (PHMSA) now requires coordination with the relevant modal agency within DOT to determine the fitness of an applicant for a special permit.

For special permits affecting shipments by truck, that means PHMSA will coordinate with the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA will then review the company’s citation and crash history under the new Compliance, Safety and Accountability (CSA) program. If the company’s CSA record shows a pattern of motor carrier safety violations or crashes, the FMCSA may recommend that PHMSA deny the request for a special permit.

According to the agency’s internal procedures, the FMCSA’s standard for this review is to determine the “safety fitness of the motor carrier in the context of (its) ability to safely carry out the terms of the special permit.” Bulk quantities and higher hazard materials will typically draw additional scrutiny. Moreover, PHMSA now requires all separately incorporated entities within a corporate family to hold their own special permits or have party status to another affiliated corporation’s special permits; this requires each member of a corporate family to have a unique fitness evaluation.

Recently, a client had a holding company with a special permit up for renewal; the special permit allowed for transportation of certain hazardous materials by private motor carrier. The parent company had three wholly owned subsidiaries, each with its own fleet of trucks. On previous renewals, the parent obtained the renewal, and the subsidiaries transported the product in their trucks. On the most recent renewal, however, PHMSA required each of the subsidiaries to apply for party status to the parent’s special permit, which required a separate fitness evaluation of the three subsidiaries and an evaluation by the FMCSA.

The FMCSA’s review of the subsidiaries’ records found significant deficiencies in regulatory compliance, and FMCSA recommended that all three applications for party status be denied. For example, FMCSA noted that two of the companies had “alerts” in their cargo-securement BASIC scores, and that all three had an out-of-service rate for hazardous materials inspections above the national average. Although two of the companies had satisfactory safety ratings issued by the FMCSA, those ratings were not considered an indication of safety fitness because they were more than ten years old.

To plead their case, the parent company’s CEO and general counsel were required to meet with PHMSA and FMCSA officials at DOT headquarters in Washington, D.C. The company set out a remediation and retraining plan that adopted safety policies to address the repeat violations in the CSA scores and included retraining of all hazmat employees. The company also terminated four senior employees who had been responsible for safety and DOT regulatory compliance.

Based on these remedial steps, PHMSA approved the party status for the three motor carrier subsidiaries, but stated that each of the subsidiaries would receive a Compliance Review from FMCSA in the next few months to ensure that the remedial program remained in place. In a follow-up conversation, the PHMSA official said that the subsidiaries would not have received the requested party status if the parent company’s response had not been so comprehensive and professional.

CSA data are updated by FMCSA each month and include a rolling two years of citations and crash history. GAWDA members should review their CSA data at least quarterly for two reasons: (1) to ensure that the list of citations is accurate (you may challenge improper or inaccurate citations through the DataQ process); and (2) to address any safety management issues indicated by repeat or serious violations. The information is there for your use, and you ignore it at your company’s peril.Gases and Welding Distributors Association

Richard P. Schweitzer Meet the Author
GAWDA’s Government Affairs & Human Resources Legal Consultant Richard P. Schweitzer, Esq., is president of Richard P. Schweitzer, PLLC in Washington, D.C. Members can reach him at 202-223-3040 and rpschweitzer@rpslegal.com.