______________________________
                              )                                   
In the Matter of GLH          )
INDUSTRIES, INC.,             )     Ref. No. 99-255-SB-SO
                              )
Respondent.                   )
______________________________)

On September 7, 1999, the Chief Counsel, Research and Special Programs Administration (RSPA), U.S. Department of Transportation (DOT), issued an Order to GLH Industries, Inc. (Respondent) assessing a penalty in the amount of $4,950 for four violations of the Hazardous Materials Regulations (HMR), 49 C.F.R. Parts 171-180.

The Order, which is incorporated herein by reference, found that Respondent knowingly offered for transportation in commerce a corrosive liquid, acidic, inorganic, n.o.s. (containing hydrofluoric acid) in two different unauthorized non-bulk packagings (violation No. 1), one of which did not have the required "CORROSIVE" hazard warning labels (violation No. 2), accompanied by a shipping paper that lacked a shipper's certification and listed an emergency response telephone number that was not monitored at all times the hazardous material was in transportation (violation No. 3), and that Respondent had failed to train an employee who performed functions subject to requirements in the HMR (violation No. 4), in violation of 49 C.F.R. ßß 171.2(a), 172.204(a) & (d), 172.400, 172.604(a), 172.702(a) & (b), 172.704(a), 173.22(a)(2), 173.24(c), and 173.202.

Based on Respondent's size, its financial condition, and evidence of the prompt actions it had taken to correct these violations, the Order reduced the $14,040 civil penalty originally proposed in the May 29, 1999 Notice of Probable Violation (Notice) and provided that Respondent could pay the $4,950 penalty in 33 monthly installments of $150 each. In a September 23, 1999 letter, Respondent submitted a timely appeal of the Order.

According to its appeal letter, Respondent manufactures janitorial and automotive cleaners and was started by its owner-president in October 1997. It stated that, when it started, its products consisted of unregulated hand soaps, dish detergents, car washes and all-purpose cleaners. Respondent also explained that, sometime later, it began to produce an aluminum cleaner at its customers' request, for use in washing trailers and wire wheels on automobiles. Respondent indicated that these violations occurred during its first shipment of this aluminum cleaner in July 1998, in the same "containers we kept in stock and had been using since starting the company," i.e., five polyethylene 5-gallon pails and six fiberboard boxes, each containing four inner one-gallon plastic bottles.

Respondent admitted in its appeal letter that it knew that its aluminum cleaner contained acid and required a "CORROSIVE" hazard class warning label. It indicated that the 5-gallon pails in this shipment lacked "CORROSIVE" labels because of "human error by the young man in the plant," one of Respondent's two college student employees. Respondent stated that this employee "was told and shown what to do and how to do it." Respondent previously admitted to RSPA's inspector that it had not given its employees any formal hazmat training.

Respondent also stated that, when it shipped its aluminum cleaner in July 1998, it "had no idea that special packaging requirements" applied to shipments of a corrosive liquid. Respondent said that it used its "standard Bill of Lading" when it shipped the aluminum cleaner, and it was "not aware that the shippers certification statement was required." It stated that it had typed its telephone number on the bill of lading "as the emergency response telephone number not knowing the emergency response number was required to be monitored at all times."

Respondent contends that it cannot pay the penalty assessed in the Order and asked that no civil penalty be imposed.

in light of the fact that what was done was not intentional; that there was absolutely no injury or damage or even a hint of a problem with the packaging used; and the state of GLH's financial condition.

These violations, which Respondent has not contested (other than a claim that it did not "knowingly" violate the HMR) are serious. Because the pails and boxes were not manufactured to authorized UN performance standards, there was no assurance that they would retain their contents under normal conditions of transportation. The absence of a hazard class warning label deprived emergency response personnel of the first information about the presence of hazardous materials, in the event of an incident. An emergency response telephone number is of no use if it is not monitored when the hazardous material is in transportation. And the failure to train hazmat employees leads to substantive violations of the HMR, as in this case.

Respondent's argument that it did not "knowingly" violate the HMR must be rejected. As set forth in 49 U.S.C. ß 5123(a)(1) and explained in the Notice, "A person acts knowingly when--(A) the person has actual knowledge of the facts giving rise to the violation; or (B) a reasonable person acting in the circumstances and exercising reasonable care would have that knowledge." It is clear that Respondent knew or should have known the facts surrounding these violations: that the pails and boxes did not have any UN certification marking; that the pails did not have a "CORROSIVE" label; that the shipping paper did not have a shipper's certification; that the telephone number was not monitored at all times the hazardous material was in transportation; and that its employee had not received hazmat training.

Respondent was not completely ignorant of requirements in the HMR. Its aluminum cleaner and another hazardous material were correctly described on the bill of lading. It correctly marked the pails and fiberboard boxes with the proper shipping name, hazard class, identification number, and packing group of the aluminum cleaner. It knew that hazard class warning labels were required to be affixed to the pails and boxes. And it knew that an emergency response telephone number was required on the shipping paper (even if it did not make the logical conclusion that the number would not be useful unless it was monitored at all times that the hazardous material was in transportation).

In this context, it would be difficult to find that Respondent was justified in stating that it had no knowledge of what it calls the "special packaging requirements" in the HMR, or in stating that its employee needs no more training than just "being shown what to do and how to do it." Because it shipped a hazardous material, Respondent was required to learn and follow the regulations, not the least of which required Respondent to properly train its hazmat employees (including its president). Although Respondent ordered a CD-ROM training module from RSPA shortly after the August 17, 1998 inspection, it appears that Respondent's president did not attend a formal training session and create training records for himself until February 1999.

In any event, the "knowingly" standard in the law relates only to actual or constructive knowledge of the facts. As stated in the Notice, "There is no requirement that [Respondent] actually knew of, or intended to violate requirements in the Federal hazardous material transportation law or the HMR."

The penalty assessed in the Order was based on the assumptions that Respondent did not consciously intend to violate the HMR and that there had been no release of the corrosive liquid from the packagings. If there had been evidence of intentional violations or any release of hazardous materials to the environment, higher penalties would have been proposed in the Notice.

The Order also considered Respondent's prompt actions to correct these violations and prevent future violations of the HMR. The penalty initially proposed in the Notice reflected a reduction of more than $3,500 from the amounts set forth in RSPA's penalty guidelines, based on the evidence of corrective actions initially provided to RSPA's inspector. Respondent's corrective actions, including the additional information submitted in response to the Notice, were also considered in the Order, where the proposed penalty was reduced by more than $9,000, to $4,950.

At each stage of this proceeding, Respondent has asserted that it cannot pay the penalty proposed in the Notice or assessed in the Order, even in monthly installments. It provided a copy of its tax return for its fiscal year ending January 31, 1999, which shows that the company lost money during its first two years. Unaudited figures for the February-September 1999 period show a very small profit and appear to confirm the statements in Respondent's December 17, 1999 letter that its business is seasonal, "with the winter months of December, January, and February being the down months." Respondent emphasizes that cash flow has been "a major problem since the company's inception," and it provided evidence that one of its suppliers is no longer extending credit to Respondent.

The Chief Counsel has already reduced the possible penalty by more than 70%, from $17,750 under RSPA's penalty guidelines to $4,950 as assessed in the Order. The only issue in this appeal is whether, and to what extent, the penalty assessed in the Order should be further reduced because of Respondent's size and financial condition. I cannot grant Respondent's request to impose no penalty at all. Once a finding is made that these violations were committed, I must impose a minimum civil penalty of $250 per violation under the Federal hazardous material transportation law. 49 U.S.C. ß 5123(a)(1).

In this case, multiple violations have actually been combined to Respondent's benefit. Violation No. 1 involves two different unauthorized packagings, pails and boxes. Violation No. 3 involves two different problems, the lack of a shipper's certification on the bill of lading and the failure to monitor an emergency response telephone number. And violation No. 4 only considers Respondent's failure to train one employee, although it appears that none of the three employees (including Respondent's president) had been properly trained.

In this case, imposing a penalty greater than the minimum is also consistent with the requirement in the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) for a policy or program for "the reduction, and under appropriate circumstances for the waiver, of civil penalties for violations . . . by a small entity." Pub. L. 104-121 ß 223(a), 110 Stat. 862 (March 29, 1996). Because Respondent's violations posed "serious health, safety or environmental threats," this case may be excluded from RSPA's SBREFA policy or program altogether. SBREFA ß 223(b)(5). The fact that Respondent seems to have been aware of many of the HMR's requirements also raises questions whether Respondent truly made a good faith effort to learn and comply with the HMR. See SBREFA ß 223(b)(6). Nonetheless, Respondent's small size was one of the bases for the significant reduction of the penalty in the Order, from the amount proposed in the Notice.

The serious nature of these violations warrants more than the minimum penalty. This is especially true with respect to violation No. 1, involving Respondent's failure to use authorized pails and boxes to ship its aluminum cleaner, and violation No. 2, regarding its failure to apply hazard warning labels to the pails. Under all the circumstances present here, I find that Respondent's size and financial condition justify further reducing the total civil penalty in this case to $3,000, allowing Respondent to pay this penalty in installments of $150 per month, and delaying the first payment until May 1, 2000, when Respondent should be well past its slower winter period. The total penalty is allocated to the four violations as follows:

Violation No. 1 - $1,500, reduced from $7,000 in the Notice,
Violation No. 2 - $900, reduced from $4,000 in the Notice,
Violation No. 3 - $300, reduced from $1,840 in the Notice,
Violation No. 4 - $300, reduced from 1,200 in the Notice.

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 $3,000 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 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 September 23, 1999, is affirmed as being substantiated in the record and as being in accordance with the assessment criteria prescribed in 49 C.F.R. ß 107.331.

Respondent may pay this penalty in 20 monthly installments of $150 each. The first $150 payment is due on May 1, 2000, and each succeeding payment is due every 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 action, become immediately due and payable as of the date the first installment is due.

Each installment payment must be made in one of the following two 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 Order. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ-320), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 25770, Oklahoma City, OK 73125 (Telephone 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 Financial Operations Division (AMZ-320), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 25770, Oklahoma City, OK 73125.

If Respondent pays the $3,000 civil penalty according to the terms of this Action on Appeal, no interest will be charged. If, however, the civil penalty is not paid as required, it becomes a debt owed to the United States. The Chief of 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. ß 3717, 4 C.F.R. ß 102.13, and 49 C.F.R. ß 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 than 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 these amounts against any payment due Respondent. 4 C.F.R. ß 102.3.

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

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

ate Issued: March 29, 2000
Enclosure

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Original to:

Mr. Vince Armistead, President
GLH Industries, Inc.
P.O. Box 870487
Stone Mountain, GA 30087