New Hazmat Rules for Shippers

Tomorrow, the Pipeline and Hazardous Materials Safety Administration (PHMSA) will publish a new revision to the United States Hazmat rules.  The new revision is intended to better harmonize United States Hazmat rules with the ICAO Technical Instructions for Shipping Dangerous Goods.  The Technical Instructions are republished by IATA as the IATA Dangerous Goods Regulations and are widely used in the aviation community.

Those who work with standards for cylinders, and those who fill, or service/requalify, cylinders, will want to review these changes carefully.

The changes also better clarify how to identify certain types of vehicles, including remote control aircraft.

Lithium battery special conditions (e.g. special conditions 181-182) are updated.  Section 173.185, which provides the packaging instructions for lithium cells and batteries, is also updated.  Be sure you follow the new labeling and marking requirements!

The new US Lithium Battery Label is authorized for use immediately in 2017

Shippers subject to U.S. jurisdiction are permitted to voluntarily comply with the new rules as of January 1, 2017 (yes, that is three months before the final rule was published).  The mandatory compliance date will be January 1, 2018.

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License Issues for Distributors of Explosive Materials

We often receive questions from distributors about their obligations to comply with regulations beyond those of the FAA or industry standards specifically addressing the aerospace distribution community. In many of these cases, distributors may not be perfectly clear on how to comply with certain regulations, or that those regulations even exist. Some examples of these scenarios include export licensing requirements, export reporting requirements, and hazmat or dangerous goods shipping requirements.

Recently, we have received a number of questions regarding regulatory requirements surrounding explosives regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  Some people are not even aware that regulated explosive materials are present in a variety of aircraft parts or that they may be handling these parts or that the ATF imposes license and permit requirements on a wide range of people who handle such explosives. It is therefore important to understand what ATF licensing obligations apply when distributors are handling explosive materials.

In general, anyone who imports, manufactures, or deals in explosive materials must obtain a license from the ATF. Because “dealing” under the regulation means distributing explosive materials at wholesale or retail the license requirement casts an extremely wide net that encompasses any type of sales model.

The ATF explosives license is obtained by applying to the ATF using forms ATF F 5400.13, ATF F 5400.28 to identify employees authorized to possess explosive materials as applicable, and submitting the appropriate fee. Each license is valid for three years.

So where do regulated explosives appear in aircraft parts? Frequently explosives will appear in safety apparatus.  Fire suppression systems may contain explosive actuators (or “squibs”); similarly, emergency escape systems like door slides may also contain explosive squibs. Other articles that may contain explosives include the flares or other signaling devices found in survival kits. These explosives may be present in certain assemblies and components, so it is important to identify and ship them properly once they have been identified.

Although regulated explosive materials generally required the distributor to have a license in order to deal in those products, certain aviation articles may be exempted from the regulations. These exemptions are typically sought by the manufacturer of a particular article and when granted are specific to the article by part number. One common example of articles often subject to exemption is signaling devices.

Unfortunately, the ATF does not offer a searchable database of issued exemptions, but instead recommend that manufacturers provide a copy of the exemption with their exempted products. As a matter of practice, however, this is not always done, whether because the manufacturer is unaware that they are permitted to do provide the exemption, are unaware that the exemption follows the product, or even possibly for competitive reasons.  The net result is that some distributors may be handling exempt materials as though they were subject to the ATF licensing requirements. When dealing with exempt materials it is important to remember that it is the article itself that is exempted, and the exemption is not limited only to the manufacturer, so everyone can take advantage of the product’s exemption.

Finally, it is important to remember that the ATF licensing regime is separate from DOT hazmat shipping regulations.  An explosive article can be exempt from the ATF licensing provisions but still be regulated as a class one explosive for the purposes of hazmat shipping. It is always necessary to ensure compliance to each applicable regulatory regime, and that separate regulatory regimes are not necessarily consistent.

Overlapping regulatory regimes—ATF, DOT, FAA, BIS, DDTC, OFAC—can become quite confusing.  When in doubt about your licensing and compliance regulations always remember to consult an attorney who can help you make sense of these conflicting regimes and develop systems to help your business ensure ongoing compliance.

If you have questions about your compliance obligations be sure to visit us while you are at the ASA conference in Las Vegas, June 26-28!

Hazmat Alert: Is the Government at Your Door?

The Department of Transportation conducts audits of hazmat compliance at facilities that ship hazardous materials (hazmat).  Because many aircraft parts are hazmats, aircraft parts distributors may find themselves the targets of such investigations.

Over the past 20 years, we have been contacted about hazmat audits being conducted by RSPA personnel (the predecessor to PHMSA), FAA personnel, and even TSA personnel.  It appears that many of these audits are generated by identifying hazmat shipments carried by a carrier (like an air carrier) and then following up on the shipments at their shipping-source.  So if you ship a hazmat, then there is a chance you could be targeted in a random audit.

Many aircraft parts distributors have found these audits to be quite innocuous.  The agent usually wants to see shipping records and may have questions about subjects like training records.  We’ve gotten calls from companies who lost their training records and needed them faxed over immediately in order to satisfy an auditor (when we perform hazmat training, we keep our records for three years so we can justify replacement certificates if they are needed).  Despite the generally innocuous nature of these audits, every fact pattern and every government audit is different, so you should use your own judgment when considering how to respond to the agent who arrives to perform the audit.

You Have a Right to Know

Sometimes the audits are not random – sometimes they are a follow-up of an allegation and they have a specific purpose.  If there is a specific purpose to the investigation, such as a follow-up to a reported hazmat incident, then any person subject to the investigation has the right to know the purpose of the investigation (“the general purpose for which the information or evidence is sought”).  49 C.F.R. sec. 107.305(c).  In our experience, many of these ‘surprise’ visits are really just random inspections.  If that is the case, then he investigator will usually be happy to tell you that in response to your inquiry.

What if they are Investigating a Specific Occurrence?

If the inspection is associated with a specific investigation, then you should seek the advice of an attorney.  Penalties for hazmat infringement can be very high, so anything you can do to defend against, or mitigate, the penalty is good.  And you do not want to suffer a recurrence so you should be examining how to restructure your system to prevent regulatory infringements and other risks.

If an investigation reveals that there was no violation, or that no further action is necessary or warranted, then the person being investigated will be notified when the investigative file is closed.  49 C.F.R. sec. 107.305(d).  This affirmative regulation is actually a great thing for the public, and I wish more agencies would include requirements like this one.

Do I Have to Participate in an Investigation?

Questions about issues like participation help illustrate why it is so important to coordinate with a lawyer.  The regulations require shippers, carriers, package owners (which could include a recipient), package manufacturers/certifiers, repair facilities, and persons reporting hazmat incidents to cooperate in investigations.  Under the regulations, these persons are required to provide certain access to records and information pertaining to the subject of the investigation, and also provide reasonable assistance to the investigator.  49 C.F.R. sec. 171.21(a).  However, these requirements could conflict with a person’s fourth and fifth amendment rights in some circumstances, so careful analysis of the facts is required.

There are additional regulatory requirements imposed on persons who are required to file hazmat incident reports.  They are generally required to respond to such inquiries within 30 days after receipt. This requirement can also conflict with other rights so consulting with a lawyer can be helpful.

Can Factory New Parts Be Hazmat?

Recently, an ASA member asked me whether factory new parts could be hazardous materials.  This is an important question because if the parts are treated as hazardous materials, then they must be shipped in compliance with the hazardous materials regulations.

The answer to the question depends on whether the units have hazardous materials (or dangerous goods) in them when they are shipped.

Some factory new parts are intrinsically hazardous materials.  A factory new self-inflating life raft is likely to be considered a hazardous material because it has a compressed gas cylinder in it, and this makes it a “life saving appliance, self inflating” which is regulated under UN number 2990.

Other articles, though, may be conditional hazmats.  That is, the article may or may not be a hazardous material depending on whether the unit has yet had hazardous material introduced into it.  Fuel system components can be a good example.  After they have had fuel run through them, the fuel residue generally makes the fuel system component a hazardous material (known as “dangerous goods in apparatus”).  But before fuel has ever run through the fuel system component, it may not be a hazardous material.

Reading that last sentence, you may be expressing frustration over a lawyer’s unwillingness to commit.  “[I]t may not be a hazardous material”?  How about taking a stand?

But with some engine components, even a factory new and unused part might be a hazardous material.  Even without fuel residue, new parts and overhauled parts may contain a preservative or calibration fluid that is a hazardous material.  The preservative may be treated as a “petroleum distillate” that is regulated under UN 1268.  Even if the amount that remains is only a tiny residue, this residue in an engine part will cause the engine part to be treated as a “dangerous goods in apparatus.”

One important rule of thumb is that if you can smell a substance in the aircraft part, then there is at least an appreciable residue that remains (that’s what you are smelling).  And if that residue is a hazardous material then the larger article is likely to be regulated as a hazardous material if it is shipped with the hazardous residue.

The best source of information about what is in you parts is going to be the manufacturer, who can tell you what chemicals or other hazards might be found in their part.

Once you’ve identified the chemical(s), the best source of information about the chemical is the manufacturer of the chemical (and their MSDS).  This is usually idfferent from the “OEM of the part.  I once encountered a calibration fluid that the engine OEM said was not a hazmat, but the label on the chemical’s packaging specified that the chemical was, in fact, a hazmat.  We double-checked with the chemical manufacturer and confirmed that the fluid was a hazmat.  So research carefully, and be sure to check what you learn!

Late Civil Penalty Payments Could Halt Your Business

The FAA issues civil penalties.  Sometimes the amount is low and the company agrees to pay the civil penalty even in cases where the penalty is undeserved.  But what happens if you are late paying a civil penalty?  In the past, the U.S. government would become a creditor like any other (albeit one with a lot of lawyers on staff); but after September 7, 2014, the regulations will prevent you from engaging in certain activities if you fail to pay your civil penalty in a timely fashion:

49 C.F.R. Sec. 109.101
* * *
(b) Failure to pay civil penalty in full. A respondent that fails to pay a hazardous material civil penalty in full within 90 days after the date specified for payment by an order of the … Federal Aviation Administration … is prohibited from conducting hazardous materials operations and shall immediately cease all hazardous materials operations beginning on the next day (i.e., the 91st). The prohibition shall continue until payment of the penalty has been made in full or at the discretion of the agency issuing the order an acceptable payment plan has been arranged.

This means that if you are late paying a civil penalty, shipping a hazmat aircraft part would become a violation that warrants a separate civil penalty (even if the shipment is otherwise proper)!

How broad is this limit?  For some aircraft parts distributors, this could be very broad indeed because many aircraft parts are regulated as hazmats.  The preamble to the new rule clarifies that this is intended to halt any activity regulated under the hazardous materials regulations.  This would include shipping of aircraft parts that are regulated as hazmats (also known as dangerous goods).  This includes obvious hazmats like explosive squibs and chemical oxygen generators  but it also includes less obvious articles like:

  • compressed gas cylinders
  • engine and fuel system parts with fuel residue
  • passenger service units with installed oxygen generators
  • avionics or data recorders with back-up batteries
  • batteries
  • self-inflating articles like slides, rafts and life preservers
  • many first aid kits

This highlights the importance of (1) mounting an effective defense to proposed hazmat civil penalties, and also (2) paying civil penalties that have become final in a timely fashion.  Note that appealing the ruling DOES NOT stay the execution of this provision, so if you appeal the ruling, then you will have to ask the appellate court to grant a stay.

49 C.F.R. Sec. 109.101
* * *
(d) Appeals to Federal Court. If the respondent appeals an agency order issued pursuant to Sec. 109.103 to a Federal Circuit Court of Appeals, the terms and payment due date of the order are not stayed unless the Court so specifies.

The new provisions are published in today’s Federal Register at http://www.gpo.gov/fdsys/pkg/FR-2014-08-07/html/2014-18617.htm

Hazmat Registration – Does the Mandate Apply to You?

One of our members recently asked “what is the PHMSA registration program for hazmat shippers?”

PHMSA is the Pipeline and Hazardous Materials Safety Administration.  It is the government entity that establishes hazmat safety regulations for the United States.  As the agency’s name implies, it has responsibility for more than just hazmat regulation.  PHMSA shares enforcement responsibility for the hazmat rules with the modal agencies (like the FAA).  As a consequence, violations of hazmat rules that occur in the context of aviation are often handled by the FAA’s investigators and lawyers, rather than by PHMSA personnel.

PHMSA has a program that requires certain hazmat shippers and carriers to register with the government. They pay a fee and that fee is used for government grants (distributed to states and Indian tribes) for hazmat emergency response planning and training.

So, who must register?  Anyone who offers any of the following hazmats for shipment generally must register with PHMSA (this would also include hazardous wastes; the rule also applies to transporters):

  • Highway route controlled quantity of a Class 7 (radioactive) material
  • More than 25 kilograms (55 pounds) of a Division 1.1, 1.2, or 1.3 (explosive) material
  • More than one liter per package of toxic inhalation hazard material (hazard zone “A” material)
  • Bulk-packaged hazardous material in a packaging having a capacity equal to or 3,500 gallons for liquids or gases or more than 468 cubic feet for solids
  • A placarding-required package with gross weight of 5000 pounds or more
  • Any package that requires placarding

Most aircraft parts distributors are not within the class of parties that need to register with PHMSA.  This is because typical hazmats found in aircraft parts are usually not shipped in ways that would meet one of the required categories for registration.  However, if your business model includes any of the above categories, then you should make sure that you are registered with PHMSA.

ASA to Announce 2014 Workshop Schedule

ASA will soon be announcing the 2014 Workshop schedule.  The workshops change every year, but they are generally focused on identifying the regulations and policies that aircraft parts distributor need to know in order to remain successful n the industry.  In the past, we have addressed topics like:

  • AC 00-56/ASA-100
  • aircraft parts documentation topics (like the 8130-3 tag)
  • approved and unapproved parts
  • counterfeit parts identification
  • distinguishing Commerce-Department-controlled parts from ITAR-controlled parts
  • export out of the United States (BIS, DDTC and OFAC regulations)
  • FAA regulations that affect parts transactions
  • EASA regulations that affect parts transactions
  • hazmat identification in aircraft parts
  • import into the United States
  • liens and other security interests
  • “magic words” for quotes and purchase orders
  • quality assurance
  • safety management systems
  • standard parts and commercial parts
  • using commercial documents to protect your right to get paid

We are just beginning to draft the 2014 workshop.  This is your opportunity to influence the syllabus and make sure we are teaching the subjects that you want to hear about.  Send me a note if you would like to suggest a topic for the 2014 workshop.

ASA’s workshops are subsidized by the Association so the registration fees are very inexpensive. This is an excellent opportunity to introduce new employees to new concepts that they need to understand and for more seasoned employees to ask questions and get answers about the details of compliance and aviation distribution business.  We particularly recommend the class for quality, shipping/receiving and sales people.  We love hearing from sales people that a better understanding of the regulations and policies helped them cement a sale that was falling apart, or helped prevent them from making a mistake on the details of a sale.

Will we be in your city?  This year, ASA is planning to hold workshops in Atlanta, Los Angeles, Phoenix, Seattle and South Florida.  More cities may be announced later.  If we are not in your city, then we would love to see you in a neighboring city!

Dates are not yet set, as we attempt to firm things up with local hotels, but we hope to announced a more formal schedule very soon.

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