______________________________
                              )					  
In the Matter of STREM        )
       CHEMICALS, INC.,       )
                              )     Ref. No. 99-052-BMS-EA 
                              )   
Respondent.                   )
______________________________)

On March 23, 2000, the Chief Counsel of the Research and Special Programs Administration (RSPA), U.S. Department of Transportation, issued an Order to Strem Chemicals, Inc. (Respondent) assessing a penalty in the amount of $19,000 and finding that Respondent had knowingly committed the following violations of the Hazardous Materials Regulations (HMR), 49 C.F.R. Parts 171-180:

Violation No. 1 - Offering for transportation in commerce hazardous materials, pyrophoric liquids, organic, n.o.s., and dimethylzinc, spontaneously combustible materials, in unauthorized non-UN standard packagings, in violation of 49 C.F.R. ßß 171.2(a), 173.22(a), 173.24(d)(1), and 173.181.

Violation No. 2 - Representing, marking, and certifying fiberboard boxes marked UN4G/X40/S/96/USA/NTS2137 as meeting the requirements of the HMR, when proper design qualification testing had not been conducted, in violation of 49 C.F.R. ßß 171.2(c), 178.601(d), 178.603(a), and 178.606(a).

Violation No. 3 - Representing, marking, and certifying wooden boxes marked UN4C1/X40/S/94/USA/NTS2137 as meeting the requirements of the HMR, when design qualification testing had not been conducted and when test records had not been maintained, in violation of 49 C.F.R. ßß 171.2(c), 178.601(d), 178.601(l), 178.603(a), and 178.606(a).

Violation No. 4 - Representing, marking, and certifying fiberboard boxes marked UN4G/X40/S/96/USA/NTS2137 and wooden boxes marked UN4C1/X40/S/94/USA/NTS2137 as meeting the requirements of the HMR, when the certification on the boxes included an unauthorized symbol which referred to a manufacturer or packaging certifier other than the company (Respondent) that actually manufactured or certified the packagings, in violation of 49 C.F.R. ßß 171.2(c), 171.2(f)(1), 178.2(b), and 178.503(a)(8).

The Order, which is incorporated herein by reference, modified the $25,110 civil penalty originally proposed in the January 29, 1999 Notice of Probable Violation. By its letter dated April 13, 2000, Respondent submitted a timely appeal of the Order.

In the Order, the Chief Counsel found that Respondent had shipped several different Packing Group I spontaneously combustible materials in outer wooden and fiberboard boxes that Respondent had improperly marked as meeting the UN performance standards in the HMR in the following respects:

--Design qualification testing had not been conducted on the wooden box manufactured by Hanson Box Company in 1994. Although Respondent claimed that a similar box manufactured by White Hat Farms had been tested by National Technical Systems/Northeast (NTS) in 1989, the Hanson box was a different packaging and full design qualification testing was required. 49 C.F.R. ß 178.601(c)(4).

--The design qualification testing which NTS had conducted on the fiberboard box in August 1996 was performed at 6 pounds (2.73 kg) with solid contents and 7 pounds (3.18 kg) with liquid contents, but the box was certified to a gross mass of 40 kg (or more than 88 pounds). In addition, not enough samples of the fiberboard box were subjected to the stacking test.

--The UN certification markings on both the wooden and fiberboard boxes included "NTS2137" to indicate the person certifying compliance with the UN performance standards, but NTS had never authorized Respondent to identify NTS (in any manner) as a person certifying compliance with the UN performance standards. In addition, "NTS" is not an authorized symbol, and Respondent was required to include its own name and address in the UN certification marking. 49 C.F.R. ßß 178.503(a)(8).

In its appeal, Respondent contended only that it is being "too severely punished" for these violations. It also asked me to hold a hearing on its appeal, but RSPA's procedural regulations do not provide for a hearing on an appeal. 49 C.F.R. ß 107.325. In a further letter, Respondent stated it considered "the magnitude of this fine and its status as a Prior Violation for a period of five years to be unduly harsh for a small business which intended to do the right thing from the start." According to Respondent, it has 36 employees, and a "significant percentage" of them are chemists (seven with Ph.D. degrees).

Respondent stated that it has seven employees in its warehouse, headed by a warehouse supervisor who has worked for Respondent for 15 years and "taken many courses involving the shipment of hazardous materials, has studied the regulations, and has recently become qualified to train" Respondent's other hazmat employees. Respondent indicated that its warehouse supervisor also obtains information from "outside contacts with [the Hazardous Materials Advisory Council] and others that he has built up over the years." Nonetheless, Respondent asserted that it does not

have the in-house resources as I am sure is the case with many small businesses, to sift through the complex, sometimes confusing regulations published by your department (and others). We take our obligations seriously and have made a good faith effort to comply with the DOT regulations. Unfortunately, our limited resources do not always allow us the same advantages as are experienced by much larger companies with entire departments devoted to regulatory compliance.

It is difficult to accept Respondent's position in light of the evidence that it knew enough to (1) have its packagings tested in 1989, and (2) have the fiberboard box retested in 1996. The absence of any indication of the certification marking in NTS' 1996 test report for the fiberboard box is consistent with statements of NTS that it never assumed responsibility for certifying these packagings or told Respondent what UN certification markings to put on these packagings. Both the objective evidence and NTS' statements are in conflict with Respondent's claim that NTS supplied it with the UN markings (based on the 1989 testing), and Respondent cannot produce any records for the 1989 testing.

Respondent's use of packagings certified to the UN performance standards created an obligation on its part to know what the UN certification marking actually means. Yet, Respondent had no explanation for the "X40" marking on the fiberboard box, which is a certification that the box had been tested with a gross mass of 40 kg (although the size of the fiberboard box made it unlikely that it could hold that much weight). Nor could Respondent provide any explanation for its position that NTS' 1989 testing of the White Hat wooden box remained valid for the Hanson box manufactured in 1994.

A general argument that the HMR are "complex" is not sufficient, especially in view of the claimed experience and training for Respondent's warehouse supervisor. The HMR's provisions on the UN performance standards and testing of non-bulk packagings are detailed but very straightforward. Any person responsible for selecting the proper packaging for shipping a hazardous material must be trained in the requirements applicable to selecting that packaging, including the requirements for design qualification and periodic testing of the packaging and the meaning of the UN certification marking. If Respondent's warehouse supervisor has taken hazmat training courses and studied the HMR, he should have been fully aware of these basic requirements.

These violations are serious. They involve Packing Group I materials that are spontaneously combustible, so that any failure of the packagings to contain these materials during transportation will present a severe risk to the persons handling them or those responding to an incident. Because it had not been tested, there was no assurance that the Hanson wooden box would adequately contain its contents during normal conditions of transportation. In contrast, it appears that the fiberboard box was actually tested in 1996 for the weight that Respondent normally shipped in it, even though it had this box marked as qualified for 40 kg.

In the Order, the small size of Respondent's business and its prompt actions to correct these violations were fully considered. However, I am not sure that the Order gave sufficient consideration to the fact that Respondent seems to have used the fiberboard box only for the weight to which it was tested in 1996, or to the overall relationship between the certification, shipping and marking violations.

Respondent used packagings that were not authorized for shipping these hazardous materials because the packagings had not been properly tested. It compounded this wrong by marking the packagings as meeting the UN performance standards and identifying another company as certifying compliance with the UN performance standards. These could be considered as six separate violations, three for each of the two packagings, even though they were alleged in the Notice as four violations.

The statutory minimum penalty of $250 per violation, or a total of $1,000 for the four violations alleged in the Notice, cannot be justified in this case. Had Respondent simply used untested packagings (that were not marked as meeting any UN performance standard), an appropriate baseline penalty under RSPA's penalty guidelines would be $11,250 (before consideration of the company's size and corrective actions). A similar baseline penalty of $13,500 would be appropriate for Respondent's improper certification of both packagings, and $9,000 would be appropriate for its identification of another company as certifying compliance with the UN performance standards, if these violations were not all related to each other.

I have given further consideration to all the circumstances of this case, including the serious nature of the violations and the fact that these violations appear to represent parts of an overall wrong with respect to two different packagings. I have also considered Respondent's corrective actions, and its small size but healthy finances. Based on all these matters, I am reducing the total penalty to $15,250, allocated to the violations in this case as follows:

Violation No. 1 - $3,250, as set forth in the Order;
Violations Nos. 2 and 3 (combined) - $9,000, reduced from $9,450 in the Order;
Violation No. 4 - $3,000, reduced from $6,300 in the Order.

I have determined that there is sufficient information to warrant mitigation of the civil penalty assessed in the Chief Counsel's Order. I find that a civil penalty of $15,250 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 size, Respondent's ability to pay, the effect of a civil penalty on Respondent's ability to continue in business, and all other relevant factors.

Therefore, as modified herein, the Order of March 23, 2000, is affirmed as being supported by the record and in accordance with the assessment criteria prescribed in 49 C.F.R. ß 107.331.

Due Date. Respondent must pay this $15,250 civil penalty within 30 days of the date of this Action on Appeal.

Payment Method. Respondent must pay the civil penalty by 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.

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. ß 3717, 4 C.F.R. ß 102.13, and 49 C.F.R. ß 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. 4 C.F.R. ß 102.3.

Under the Debt Collection Act (see 31 U.S.C. ß 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.

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

/s/ Kelley S. Coyner
Kelley S. Coyner
Administrator

Date Issued: July 14, 2000

Enclosure

CERTIFIED MAIL - RETURN RECEIPT REQUESTED