On Oct. 2, 2008, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued a Notice of Proposed Rulemaking to implement and delegate inspection, investigation, and enforcement authority conferred on the Secretary of Transportation by the Hazardous Materials Transportation Safety Reauthorization Act of 2005 (“Act”). The proposed rule would greatly expand agencies’ authority to inspect shipments suspected of containing Hazardous Materials1 without first obtaining a court order. Companies whose business could be affected by this expanded inspection power must submit comments on or before Dec. 1, 2008, in order to ensure their views are expressed to PHMSA before the proposed rule becomes final.

Overview

The DOT has authority to issue hazardous material regulations to enforce the Federal Hazardous Material Transportation Law (“Hazmat Law”). In turn, the Secretary of Transportation delegated inspection and enforcement authority to PHMSA, Federal Aviation Administration (“FAA”), Federal Railroad Administration (“FRA”), Federal Motor Carrier Safety Administration (“FMCSA”), and the U.S. Coast Guard. The procedures set out in the proposed rule will apply to hazardous materials safety compliance and enforcement activities conducted by PHMSA, FAA, FRA, and FMCSA. The intent of the proposed rules is to enhance DOT’s ability to respond immediately and effectively to threats caused by hazardous materials.

Under the current rules, the four agencies within the DOT cannot take action against hazmat violations until DOT coordinates with the Department of Justice (“DOJ”) to file a civil action against an offending party and seek a restraining order. The proposed rule is intended to streamline administrative remedies to enhance DOT’s ability to respond to the threats posed by hazardous material shipments. Specifically, the proposed rules will allow PHMSA, FAA, FRA, and FMCSA to inspect packages, remove packages from transportation, and issue emergency orders when a shipment is determined as unsafe or non-compliant.

Expanded Inspection Powers

The proposed procedures do not depend on carriers’ consent of assistance in opening packages. Packages subject to inspections include overpacks, outer packaging, freight containers, and other packaging components not immediately adjacent to the alleged hazardous materials. PHMSA seeks comments concerning implementation of its enhanced inspection authority under the proposed rule.

The Inspection Procedures in Practice

In addition, PHMSA seeks comments concerning the temporary detention and inspection of suspicious packages. PHMSA proposes to allow inspectors to detain and remove a package from transportation if the inspector records his “objectively reasonable and articulable belief” that the package poses an imminent hazard. The proposed rule defines “objectively reasonable and articulable belief” as “a belief based on particularized and identifiable facts that provide an objective basis to believe or suspect that a package may contain a hazardous material.” Thus, while the definition of the standard that justifies inspecting cargo is infused with language regarding objective reasonableness, whether the standard is met in particular cases will largely depend upon the subjective judgments of individual inspectors.

PHMSA also proposes to grant PHMSA, FAA, FRA, and FMCSA inspectors the authority to order persons in possession of, or responsible for, the package to transport the package and its contents to a facility for purposes of examination and analysis of its contents. This broad proposal encompasses all packages, not merely those for which opening of contents is authorized.

In cases where a package initially thought to pose an imminent hazard is found to pose no such threat, PHMSA proposes to require inspectors to assist in reclosing the package and returning it to the person from whom it was obtained. The reclosing of the package will be in accordance with either the manufacturer’s closing instructions or an alternative method approved by PHMSA. However, if a package initially thought to pose an imminent hazard is found to indeed pose such a threat, PHMSA proposes procedures to permanently remove the package from transportation by issuance an out of service (“OOS”) order. Only after a package is brought into compliance with all regulatory requirements will it be returned to transportation and commerce.

Further Rules Regarding Conditions or Practices

Additionally, PHMSA seeks comments on the issuance of emergency orders to address unsafe conditions or practices that pose threats of imminent safety hazards. PHMSA proposes to allow PHMSA, FAA, FRA, and FMCSA to issue emergency orders without coordinating such actions with the DOJ. Moreover, the agencies will be able to issue emergency orders without advanced notice or the opportunity to be heard. Emergency orders can be issued for any non-compliant shipment or unsafe condition and can impose emergency restrictions, prohibitions, and recalls on such packages and shipments.

Significance

PHMSA’s proposed rulemaking should be of great interest to all companies that ship hazardous materials, in addition to all carriers involved in the transport of hazardous materials.