______________________________
                              )					  
In the Matter of Demosha      )
Chemicals Limited             )
                              )     Ref. No. 97-149-FSD-SW 
Respondent.                   )
______________________________)

On November 3, 1998, the Office of the Chief Counsel of the Research and Special Programs Administration (RSPA), U.S. Department of Transportation (DOT), issued an Order to Demosha Chemicals Limited (Respondent) assessing a penalty in the amount of $3,000 and finding that Respondent had knowingly committed the following violation of the Hazardous Materials Regulations (HMR), 49 C.F.R. Parts 171-180:

Offering for transportation in commerce a hazardous material, sodium hydrosulfite, a spontaneously combustible material, in unauthorized nonspecification, nonstandard packagings, 49 C.F.R. §§ 171.2(a) and 173.212 (as authorized on and after January 1, 1991) or, alternatively, 49 C.F.R. §§ 171.2(a) and 173.204(a) as authorized until October 1, 1996).

The Order, which is incorporated herein by reference, modified the $6,925 civil penalty originally proposed in the July 25, 1997 Notice of Probable Violation (Notice). By a December 8, 1998 letter, Respondent submitted a timely appeal of the Order.

Respondent is a foreign corporation that exports hazardous materials as part of its business activities. On March 11, 1996, during the course of a compliance inspection at a U.S. facility, RSPA inspectors discovered nonspecification, nonstandard, open-head steel drums that had been shipped by Respondent.

Respondent has not denied the violation. In its November 27, 1997 and June 15, 1998 responses to the Notice, Respondent requested that it be given a warning letter for the violation, rather than be assessed a civil penalty. Respondent stated that it was not required to use UN standard packaging for shipments within India and that it had relied entirely on the drum manufacturer to ensure that the drums were in compliance with all of the requirements.

In its initial response, Respondent claimed that the drums had been tested to the proper UN standard and that only the UN marking was missing. Respondent provided a certificate from the drum manufacturer as verification that the drums had been tested. However, the certificate indicated that the stacking test had not been performed at the proper height. In a subsequent letter, Respondent acknowledged that the stacking test had not been properly completed, but argued that the drop test "is more important from [a] safety point of view". Respondent provided documentation that it had begun using appropriate UN standard drums and stated that it had instructed its quality control department to ensure that all requirements are followed. In addition, Respondent indicated that it had begun randomly testing drums at its facility prior to filling the drums with a hazardous material.

Respondent also requested relief from the proposed civil penalty based on its current financial status. Respondent provided a copy of its 1996-97 annual report as documentation of its weak financial condition. Based on the information contained in Respondent's letters, the penalty proposed in the Notice was reduced to $3,000, payable in six monthly installments of $500 each.

In its appeal, Respondent again requested that it be issued a warning letter, rather than a civil penalty. Respondent stated that it was now using appropriate UN standard drums. Respondent argued that the fact that the previous drums had not been tested at the proper height did not prove that the drums would have failed if the stacking test had been properly conducted. Furthermore, Respondent claimed that similar drums had subsequently passed the stacking test at the required height.

RSPA does not dispute the fact that the drums might have passed the stacking test if they had been properly tested or that similar drums did subsequently pass the stacking test. However, because the drums had not been properly tested, Respondent could not be certain of the drums' integrity prior to offering them for transportation. The HMR does not require that a package actually fail before there is a violation of the regulations. The fact that the drums were offered prior to being properly tested is itself a violation of the HMR.

Respondent also argued that the failure to place the UN certification marking on the drums is a "legal lapse for which a ‘warning' letter should be considered rather than a huge amount of penalty." RSPA does not agree. As stated in the Chief Counsel's Order, the UN certification marking is required as a certification that performance testing was successfully performed and without the UN certification marking a package does not meet the performance standard and is not authorized for transportation of a hazardous material.

However, the fact that the drums had actually been tested to the UN 1A2 performance standard and had passed the drop test, but not the stacking test to the height required, does reduce the seriousness of the violation. This fact was considered in determining the civil penalty amount assessed in the Chief Counsel's Order.

Finally, Respondent contended that it did not knowingly commit the violation. Respondent stated that it offered the shipment based on a passing report from the drum manufacturer and that the shipment "would not have left our factory in absence of or Negative findings in the report."

As explained in the Notice, the "knowingly" standard is defined in 49 C.F.R. § 107.3 as "... acting or failing to act while (1) Having actual knowledge of the facts giving rise to the violation, or (2) Having the knowledge that a reasonable person acting in the same circumstances and exercising due care would have had." Respondent need not actually know of or intend to violate the regulations. Part of Respondent's business is to export hazardous materials. It is not unreasonable to expect a business to be aware of and in compliance with the various regulations that govern the business' activities. In this case, it is obvious that sodium hydrosulfite, a spontaneously combustible material, is a regulated material and, therefore, Respondent should have been aware of the requirements for shipping the material.

Concerning the civil penalty assessed in the Order, Respondent requests that the penalty be waived because it is from an economically poor country and such a penalty would have a harsh impact on Respondent. Respondent also indicated that it would require three to six months before it could get permission from the Indian Government to pay any penalty amount.

Respondent's corrective actions and financial status were properly and appropriately considered in the Order, and the penalty originally proposed in the Notice was reduced by approximately 56% to $3,000. Respondent's corrective actions and financial condition cannot justify completely waiving the penalty in this case.

I have determined that there is not sufficient information to warrant mitigation of the civil penalty assessed in the Chief Counsel's Order. I find that a civil penalty of $3,000, payable in six monthly installments of $500, is appropriate in light of the nature and circumstance of this violation, its extent and gravity, Respondent's culpability, Respondent's lack of prior offenses, Respondent's ability to pay, the effect of a civil penalty on Respondent's ability to continue in business, and all other relevant factors.

However, Respondent's first payment will not be due for 180 days from receipt of this Action on Appeal, in order to allow Respondent sufficient time to obtain permission from the Reserve Bank of India to transfer the funds.

Therefore, the November 3, 1998 Order is affirmed as being substantiated in the record and as being in accordance with the assessment criteria prescribed in 49 C.F.R. § 107.331.

Respondent must make each monthly payment in either of the following ways:

(1) by wire transfer, through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure to this Action on Appeal. Questions concerning wire transfers should be directed to: Ms. Valeria Dungee, Financial Operations Division, Federal Aviation Administration, Mike Monroney Aeronautical Center, AMZ-320, P.O. Box 25770, Oklahoma City, OK 73125 (Telephone No. 405-954-4719); or

(2) by sending a certified check or money order (containing the Ref. No. of this case) payable to "U.S. Department of Transportation" to the Chief, Financial Operations Division, Federal Aviation Administration, Mike Monroney Aeronautical Center, AMZ-320, P.O. Box 25770, Oklahoma City, OK 73125.

If the $3,000 is paid in accordance with the terms of this Action on Appeal, no interest will be charged. If, however, the civil penalty is not paid by that date, the Financial Operations Division of the Federal Aviation Administration will assess interest and administrative charges, and initiate collection activities on the debt and those charges. Interest on the debt will accrue from the date of issuance of this Action on Appeal at the applicable rate in accordance with 31 U.S.C. § 3717, 4 C.F.R. § 102.13, and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late-payment penalty of six percent (6%) per year will be charged on any portion of the debt that is more that 90 days past due. This penalty will accrue from the date this Action on Appeal is received. This debt and associated charges are also subject to referral to the Department of the Treasury for collection, and the Department of the Treasury may offset this amount against any payment due Respondent. 4 C.F.R § 102.3.

This decision on appeal constitutes the final administrative action in this proceeding.

/s/ Stephen Van Beek for
Kelley S. Coyner
Administrator

Date Issued: June 1, 1999

Enclosure

REGISTERED MAIL - RETURN RECEIPT REQUESTED

Original to:

Mr. Gautan B. Shah
Managing Director
Demosha Chemicals Limited
105-A, Mittal Tower
210, Nariman Point
Mumbai-400 021
India