______________________________
                              )					  
In the Matter of GULF WIDE    )
   SAFETY SYSTEMS, INC.,      )
                              )     Ref. No. 97-100-CR-SW 
Respondent.                   )
______________________________)

On March 27, 1998, the Chief Counsel, Research and Special Programs Administration (RSPA), U.S. Department of Transportation (DOT), issued an Order to Gulf Wide Safety Systems, Inc. (Respondent) assessing a penalty in the amount of $11,000 for a violation 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 represented, marked, and certified DOT exemption cylinders as having been successfully retested in accordance with the HMR, when Respondent failed to retest the cylinders, did not hold a retester's identification number (RIN) issued by RSPA, and marked another company's RIN on the cylinders, in violation of 49 C.F.R. §§ 171.2(c), 173.34(e)(1)(i) & (ii), and 173.34(e)(2)(i). The Order modified the $15,850 civil penalty originally proposed in the May 30, 1997 Notice of Probable Violation (Notice).

By letter dated April 20, 1998, Respondent submitted a timely appeal of the Order.

During an inspection at Respondent's facility, Respondent's president admitted to RSPA's inspector that, in December 1996, a "one-time helper" had applied the labels to two DOT exemption

E-8059-4500 cylinders which showed the RIN issued to Welding Supply House, Inc., a registered retest facility. At the time, Respondent was not registered with RSPA as a qualified cylinder retest facility. Respondent's president also admitted that the two cylinders had not been hydrostatically retested, and Respondent's records indicate that these two cylinders were supposed to have been condemned because of bad threads on the neck of each cylinder. Nonetheless, Respondent's president then took the cylinders to another facility to be refilled with compressed air.

These violations came to RSPA's attention only because the facility to which the cylinders were taken for refill became suspicious of the RIN marking and contacted Welding Supply House. The latter company contacted RSPA after confirming that it had not retested these cylinders or applied the label marking. Welding Supply House also advised RSPA that its equipment would not allow retesting cylinders with 4500 psi service pressure.

Respondent has since registered with RSPA and obtained a RIN in order to requalify DOT specification and exemption cylinders. Following issuance of the Notice, Respondent provided documents to confirm its implementation of safety standards and procedures covering the availability and use of personal protection equipment; hazmat employee training covering hydrostatic retesting, State Fire Marshal certification, and International Standards Organization (ISO) 9001; and procedures for storing and tracking flammable materials, including hazardous wastes. Respondent also stated that it has hired an employee with 20 years' experience in fire detection and safety to help it implement safety procedures and standards.

Respondent asked that the $15,850 penalty proposed in the Notice be reduced to $3,000, to consider its financial condition and its expenses "to improve the quality and standards of our company." It has provided December 31, 1996 and 1997 financial statements, as well as documents showing that it had spent approximately $21,000 to purchase hydrostatic retest equipment and for training and inspection in order to obtain its RIN and State licensing. Respondent also stated that it had spent an additional $2,500 to develop and implement its safety standards and procedures, including ISO 9001 certification. It provided documents on loans to acquire a used truck and its hydrostatic retest equipment.

Based on Respondent's corrective actions and its financial condition, the Chief Counsel reduced the proposed penalty by more than 30% in the March 27, 1998 Order, to $11,000. Under RSPA's penalty guidelines, 25% is the maximum reduction for corrective actions alone (without considering a company's financial condition).

In its appeal letter, Respondent stated only that it had not "knowingly and/or intentionally violated any federal law as is required as per the applicable statute and/or regulations." Respondent made no other argument and provided no additional information.

Under 49 U.S.C. § 5123(a)(1), civil penalties are assessed when a person "knowingly violates" the Federal hazardous material transportation law or the HMR. A person acts "knowingly" when "the person has actual knowledge of the facts giving rise to the violation" or "a reasonable person acting in the circumstances and exercising reasonable care would have that knowledge." Id. In this case, the evidence shows that Respondent (including its president and its one-time helper) knew or should have known that Respondent did not hold a RIN issued by RSPA, the RIN marked on these cylinders was assigned to another company, these cylinders had not been hydrostatically retested, and the cylinders were supposed to have been condemned. This is sufficient to support the finding in the Order that Respondent knowingly committed this violation. It is not necessary to find that Respondent intentionally violated the HMR, although the admissions of Respondent's president and the additional evidence in this case might well support such a finding.

Properly reinspecting and retesting cylinders is the only means to assure that they are safe for continued service. The potential risks in this case were increased because a visual inspection indicated that the cylinders should have been condemned, according to Respondent's records. Only the suspicions of the refill facility prevented these cylinders from being refilled with compressed air and used. Because it had not registered with RSPA to obtain a RIN, Respondent had not been inspected by an independent inspection agency to assure that Respondent understood the requirements and procedures for properly reinspecting and retesting cylinders. Its use of another company's RIN can make it impossible to determine which company certified a cylinder as qualified for continued service.

The seriousness of this violation justifies the $11,000 penalty assessed in the Order. Respondent failed to provide any additional information in support of its appeal. As noted in the Order, most of Respondent's expenses "to improve the quality and standards of our company" appear to have been necessary to obtain its RIN and legally engage in cylinder retesting and related operations, or constituted "start-up" costs of a new company that began operations in 1995, according a Dun & Bradstreet report. These expenditures do not warrant a reduction of the penalty assessed in the Order. Respondent's financial statements show net income of more than $30,000 in both 1996 and 1997. As of December 31, 1997, it had positive net worth, current assets in excess of current liabilities, and cash in excess of the penalty assessed in the Order.

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 $11,000 is appropriate in light of the nature and circumstances of these violations, their extent and gravity, Respondent's culpability, Respondent's lack of prior 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.

Therefore, the Order of March 27, 1998, 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 must be made 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).

If the $11,000 civil penalty is paid within 30 days of the date of issuance 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 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.

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

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

Date Issued: October 29, 1998

Enclosure

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Original to:	Richard A. Spears, Esq. 211 East Main Street P.O. Box 11858 New Iberia, LA 70562-1858
Copy to:	Mr. Gary W. Senterfitt President Gulf Wide Safety Systems, Inc. P.O. Box 61886 Lafayette, LA 70596-1886