August 19, 2016 by John Nicholson
The Office of Inspector General for the U.S. Department of Transportation (U.S. DOT) earlier this year recommended more aggressive enforcement of federal regulations governing the shipment of hazardous material by rail. The U.S. DOT Report, entitled U.S. FRA’s Oversight of Hazardous Materials Shipments Lacks Comprehensive Risk Evaluation and Focus on Deterrence, was generally critical of the U.S. FRA’s enforcement efforts with respect to hazmat shipments.
The U.S. DOT report concludes that “FRA pursues limited civil penalties for violations of hazardous materials regulations and, despite departmental requirements in several DOT Orders, does not refer cases … for criminal investigation,” meaning that “penalties have little deterrent effect, and criminal penalties are not being pursued.” In particular, the report notes that only 4 percent of violations resulted in penalties.
Based on these and other findings, OIG recommends that FRA intensify its hazmat enforcement efforts by increasing civil penalties and “require(ing) all staff, including inspectors, to directly report to OIG all suspected criminal violations.” An FRA memorandum appended to the report indicates FRA’s “concur(rence) with OIG’s recommendations as written,” and sets “target action dates for completing the recommendations” between Aug. 15, 2016, and March 15, 2017.
In response, U.S. Federal Railroad Administration agreed (U.S. FRA) has made the commitment to making it easier for inspectors and agency lawyers to initiate criminal investigations, and to impose more and higher civil penalties.
As a result of the new commitment on enforcement made by the U.S. FRA, higher fines and even criminal investigations relating to the shipment of hazardous material by rail may be forthcoming.
Under regulations enforced by the U.S. FRA, individuals who willfully or recklessly violate federal hazardous materials regulations face criminal fines of up to $175,000 and 10 years in prison. Companies also can be charged criminally for violations by their employees. These criminal penalties have long been on the books, but have seldom or never enforced.
In 2015, the U.S. FRA issued 1,670 recommended hazmat violations, including 883 violations against non-railroad hazmat shippers, resulting in more than $4 million in civil penalties. However, no hazmat violations were referred to U.S. Department of Justice for criminal prosecution.
U.S. FRA’s newly invigorated enforcement policy could result in greater U.S. Department of Justice involvement in civil and criminal litigation over hazmat violations. The best defence from prosecution for railroads and shippers is to have a top rate hazmat training and compliance program.