_________________________________
                                 ) 
In the Matter of                 )
METCO SUPPLY, INC.,              )		Ref. No. 98-319-SB-EA
                                 )
Respondent.                      )
_________________________________)

Background

On August 6, 2002, the Chief Counsel, Research and Special Programs Administration (RSPA), U.S. Department of Transportation, issued an Order to Metco Supply, Inc. (Respondent) assessing a penalty in the amount of $4,000, payable in 25 monthly installments of $160 each, for the following violations of the Hazardous Materials Regulations (HMR), 49 C.F.R. Parts 171-180:

Violations Nos. 1-3 (combined) - Offering for transportation in commerce a hazardous material, paint, when Respondent failed to provide a proper shipping paper, failed to properly mark packagings, and failed to label packagings, thereby creating an undeclared shipment, in violation of 49 C.F.R. §§ 171.2(a), 172.200(a), 172.201(d), 172.202(a)(1) - (a)(4), 172.204(a), 172.300(a), 172.301(a)(1), 172.312(a)(2), 172.400(a)(1), 172.600(c), and 173.25(a).

Violation No. 4 - Allowing employees to perform functions subject to the HMR when those employees had not been given function-specific training and records of general awareness and safety training had not been created and retained, in violation of 49 C.F.R. §§ 172.702(b), 172.702(d), 172.704(a)(2), and 172.704(d).

In the Order, which is incorporated herein by reference, RSPA's Chief Counsel reduced the $7,875 civil penalty originally proposed in the September 28, 1998 Notice of Probable Violation (Notice).

By its letter dated August 29, 2002, Respondent submitted a timely appeal of the Order.

Discussion

In its appeal, Respondent stated that it wished to present to a jury "the facts and other relevant factors regarding this case." It asserted that the Order did not adequately consider the statutory criteria for setting a civil penalty for the violations in this case, which it stated was "an isolated incident" and "not willful, repeat and or serious violations." According to Respondent, Congress did not intend "to impose civil penalties of these amounts, particularly to small businesses." Respondent also stated that it "is no longer and will never even consider handling hazardous material products again."

This case arises out of Respondent's shipment of four one-gallon cans of semi-gloss clear wood finish from its facility in Leechburg, Pennsylvania to Northpoint High School, in Northpoint, New York. According to the Material Safety Data Sheet (MSDS) prepared by the product's manufacturer, Deft, Inc., the proper shipping name for this product is "Paint," the UN identification number is 1263, and the hazard class is "3 " for "flammable liquid." Deft's MSDS states this wood finish has a flash point of 53º, which makes it a Packing Group II hazardous material.

At Northpoint High School, RSPA's inspector observed that the outer fiberboard box in which Respondent had shipped this product had no indication that it contained a hazardous material; the box was not marked with the proper shipping name and identification number of this material, and it did not have a hazard class warning label. This box also did not have the required orientation arrows. However, inner fiberboard boxes (each containing two one-gallon cans) were marked with the proper shipping name, the UN identification number, and orientation arrows (that varied from the required format), and the inner boxes had a "COMBUSTIBLE LIQUID" hazard class warning label. At the high school, RSPA's inspector was told that the only document that came with this shipment was Respondent's "packing list" (in a pouch on the outside of the package), which listed "Deft Semi-Gloss Finish-Gallon" and a second product, but did not describe this product as hazardous or contain emergency response information, an emergency response telephone number, or a shipper's certification.

During the follow-up inspection at Respondent's facility, the company's representative stated that he was not sure what happened with this shipment, but that this appeared to be an isolated incident when an employee over-packed the manufacturer's packagings and later forgot that there was a hazardous material inside. Respondent stated that the practice of his company was to:

-always over-pack the manufacturer's paint packages, and that its employees are instructed to duplicate the labels and markings on the outer packaging.

-mark the "Hazardous Materials" block on the United Parcel Service (UPS) pick-up records and attach the UPS five-part shipping paper to the outside of the box.

On the UPS pick-up record of this shipment, the "Hazardous Material" block was not marked. For comparison, Respondent provided RSPA's inspector a sample bill of lading and UPS pick-up record for another shipment, where the material was properly described on the bill of lading and the "Hazardous Material" block was marked on the UPS pick-up record (although the bill of lading did not contain the required emergency response information and telephone number). Respondent also stated that the company provides its employees with safety and general awareness training when they start, and that they also learn from UPS, but that there was not a structured program to cover packaging and preparation of hazardous materials for shipment and that the company did not maintain training records.

In its March 5, 1998 letter to RSPA's inspector, Respondent acknowledged that "one got away from us" when this shipment went out without the required markings and label on the outer packaging. It noted that, when the company's employees 'double-box' a package for protective purposes, a human being must remember to re-label and remark the box. I am looking at ways to eliminate the possibility of human error by having computer generated hazardous shipping paperwork with every order." Respondent also stated that it had discussed with a UPS manager that drivers were not always picking up shipping papers. With regard to training, it stated that the company had "always trained each employee one on one with the warehouse supervisor," but that "we did not document the time and place at which the individual training sessions occurred."

In the November 3, 1998 response to the Notice, Respondent again stated that this was "an isolated incident." It could not provide a "definite explanation of how that Northpoint High School UPS shipment got passed in our system," and speculated that markings and labels might possibly have been removed at the high school before RSPA's inspector observed the package. It noted that Respondent had made another shipment containing hazardous materials on the same day as the shipment to Northpoint High School, and it provided a copy of the UPS pick-up record with the "Hazardous Materials" block marked. Respondent also provided documents showing that it has satisfactorily corrected the violations alleged in the Notice, including (1) a sample bill of lading revised to include the packing group of each hazardous material and an emergency response telephone number, (2) sample computer-generated shipping documentation that it is now using for UPS shipments, (3) a revised packing list format on which hazardous materials are listed in lower case (to "stand out") after the designation "hm," and (4) training materials and tests that it is using to provide hazmat training to its employees. Respondent also provided copies of year-end balance sheets covering 1993-1997 and stated that it is a small company that could not pay its employees a year-end bonus if it has to pay the penalty proposed in the Notice.

With its November 18, 1999 letter, Respondent provided further financial information covering 1997 and 1998, revised records of hazmat employee training, and a sample bill of lading marked to make a minor correction with respect to the placement of the technical name of a hazardous material until it could have new forms printed. However, Respondent declined to provide more current financial information in response to requests during the March-June 2002 period. After its appeal, Respondent again declined an invitation to provide more current information on the size of its company and its financial condition, a printed product catalog, and additional explanation of statements in its appeal letter concerning the nature and circumstances of these violations and the intent of Congress to impose civil penalties on small businesses. In its November 1, 2002 letter, Respondent again stated that it preferred to "present all relevant information for a jury to decide the outcome of this case."

The intent of Congress is clearly expressed in the law. First, there is no right to a jury trial in an administrative proceeding to impose a civil penalty for a violation of the HMR. While there is a right to "notice and an opportunity for a hearing" before assessment of a civil penalty, 49 U.S.C. § 5123(b), Respondent failed to exercise its right to a hearing before an administrative law judge when it did not request a hearing in its written response to the Notice. See 49 C.F.R. § 107.313(b). Thus, Respondent never had a right to a jury trial in this matter, and it waived its right to a hearing before an administrative law judge some four and one-half years ago.

Second, Congress has provided for substantial civil penalties for violations of the HMR. The maximum civil penalty was originally set at $10,000 per violation in 1975, and then raised to $25,000 (with a minimum penalty of $250) in the 1990 amendments to the law. More recently, in the Debt Collection Improvement Act of 1996, Congress has required Federal agencies to periodically adjust civil penalties to consider the effects of inflation, so that the maximum civil penalty is now $27,500 per violation (and a further increase is due). In 1996, Congress also specified that a policy of waiving civil penalties for small businesses should not apply to "violations that pose serious health, safety or environmental threats." Section 223(b)(6) of the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. 104-221, 110 Stat. 862 (Mar. 29, 1996).

Any undeclared shipment of a hazardous material poses a serious safety threat. Without the required markings and label on the outer packaging, or a proper description on an accompanying shipping paper, the carrier and the recipient have no information to alert them of the presence of a hazardous material and the proper handling procedures to prevent harm. In this case, the shipment of a flammable liquid to a high school increased the potential for harm if the shipment were mishandled by a student. In addition, with an undeclared shipment, an emergency responder has no warning about the dangers posed by the hazardous material in the event of an accident or any damage to the shipment. The extent and gravity of the violations in this case warrant a substantial penalty, even if this particular undeclared shipment was an isolated incident and not reflective of Respondent's general compliance with the HMR.

In the Order, the Chief Counsel substantially reduced (by almost 50%) the penalty initially proposed in the Notice, and the portion of the total penalty allocated to the less serious training violation (No. 4) was reduced to $300 (close to the $250 minimum). These reductions, and also the provision for paying the total $4,000 penalty in 25 monthly installments, were based on the small size of Respondent's company and its financial condition (as reflected in the 1993-98 financial statements), as well as the actions it has taken to correct these violations and to prevent future violations of the HMR. This reduction was generous in light of Respondent's refusal to provide more current information in this regard, both before issuance of the Order and after Respondent's appeal. Moreover, its statement that it no longer handles hazardous materials is in conflict with information available on Respondent's internet web site that it sells to educational institutions and its product line includes a variety of enamel paints, lacquers, solvents, and thinners which appear to be hazardous and regulated by the HMR in transportation.

Findings

I have determined that there is not sufficient information to set aside the findings of violation or warrant reduction of the civil penalty assessed in the Chief Counsel's Order. I find that a civil penalty of $4,000 is appropriate in light of the nature and circumstances of these violations, their extent and gravity, Respondent's culpability, Respondent's lack of prior violations, Respondent's ability to pay, the effect of a civil penalty on Respondent's ability to continue in business, and all other relevant factors. The total penalty is allocated to the two violations as follows:

Violations Nos. 1-3 (combined) - $3,700
Violation No. 4 - $300.

Therefore, the Order of August 6, 2002, 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.

Payment

Due Date. Respondent may pay the civil penalty in 25 monthly installments of $160 each. The first $160 installment is due within 30 days of the date of this Action on Appeal and a further $160 is due each 30 days thereafter until the entire amount is paid. If Respondent defaults on any payment of this payment schedule, the entire amount of the remaining civil penalty shall, without further notice, become immediately due and payable as of the date that the first installment is due.

Payment Method. Respondent must pay the civil penalty by (1) wire transfer, (2) certified check or money order, or (3) credit card via the Internet:

1. Wire Transfer.

   Detailed instructions for sending a wire transfer through the Federal Reserve Communication System (Fedwire) are contained in the enclosure to this Acton on Appeal. Please direct questions concerning wire transfers to:

   Financial Operations Division (AMZ-120)
   Federal Aviation Administration
   Mike Monroney Aeronautical Center
   P.O. Box 25770
   Oklahoma City, OK 73125
   Telephone No. 405-954-4719.

2. Check or Money Order.

   Make your check or money order payable to "U.S. Department of Transportation" (include the Ref. No. of this case on the check or money order) and send it to:

   Chief, Financial Operations Division (AMZ-120)
   Federal Aviation Administration
   Mike Monroney Aeronautical Center
   P.O. Box 25770
   Oklahoma City, OK 73125.

3. Credit Card.

   To pay electronically using a credit card, visit the following website address and follow the instructions:

   http://hazmat.dot.gov/hmenforce.htm

Interest and Administrative Charges. If Respondent pays the civil penalty by the due date, no interest will be charged. If Respondent does not pay by that date, the FAA's Financial Operations Division will start collection activities and may assess interest, a late-payment penalty, and administrative charges under 31 U.S.C. § 3717, 31 C.F.R. § 901.9, and 49 C.F.R. § 89.23.

The rate of interest is determined under the above authorities. Interest accrues from the date of this Action on Appeal. A late-payment penalty of six percent (6%) per year applies to any portion of the debt that is more than 90 days past due. The late-payment penalty is calculated from the date Respondent receives this Action on Appeal.

Treasury Department Collection. FAA's Financial Operations Division may also refer this debt and associated charges to the Department of the Treasury for collection. The Department of the Treasury may offset these amounts against any payment due Respondent. 31 C.F.R. § 901.3.

Under the Debt Collection Act (see 31 U.S.C. § 3716(a)), a debtor has certain procedural rights prior to an offset. The debtor has the right to be notified of: (1) the nature and amount of the debt; (2) the agency's intention to collect the debt by offset; (3) the right to inspect and copy the agency records pertaining to the debt; (4) the right to request a review within the agency of the indebtedness; and (5) the right to enter into a written agreement with the agency to repay the debt. This Action on Appeal constitutes written notification of these procedural rights.

Final Administrative Action

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

/s/ Samuel G. Bonasso
Samuel G. Bonasso
Acting Administrator

Date Issued: : June 9, 2003

Enclosure

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Original to:

Mr. John Tague
Vice President
Metco Supply, Inc.
81 Kiski Avenue
Leechburg, PA 15636