Thursday, August 6, 2015

MITIGATING CIVIL PENALTIES ISSUED BY THE FAA FOR HAZARDOUS MATERIALS (HAZMAT) OR DANGEROUS GOODS (DG) VIOLATIONS

DANGEROUS GOODS SYMPOSIUM FOR INSTRUCTORS
MITIGATING CIVIL PENALTIES ISSUED BY THE FAA FOR HAZARDOUS MATERIALS (HAZMAT) OR DANGEROUS GOODS (DG) VIOLATIONS



BY

Peter Quinter
Customs and International Trade Attorney

GrayRobinson, P.A.
333 SE 2nd Avenue, Suite 3200
Miami, FL 33131

Office (305) 416-6960
Mobile (954) 270-1864
Peter.Quinter@gray-robinson.com


Mr. Quinter has successfully resolved dozens of proposed penalty cases for violations of shipments by air which were issued by the Federal Aviation Administration (FAA) through its many Offices of Regional Counsel at locations throughout the United States.

OUTLINE
Introduction

The Federal Aviation Administration (FAA) has the authority to enforce the Hazardous Materials Regulations (HMR) at 49 CFR Parts 171 to 185, including issuing civil monetary penalties against violators. An understanding of the HMR, the procedures used by the FAA to issue the violation notices, the alternative procedures to respond to a proposed penalty notice, and the factors used by the FAA in determining the amount of the penalties will assist shippers, carriers, and other companies which are involved in the logistics of transporting hazardous materials to mitigate such penalties.

I.          Legal Sources

A.  Federal Hazardous Materials Transportation Law, 49 U.S.C. §§ 5101-5127

1.  49 U.S.C. § 5123 — civil penalty

a.  "knowing" violation. A person acts knowingly —
i. when the person has actual knowledge of the facts giving rise to  the violation; or
ii. a reasonable person acting in the circumstances and exercising reasonable care would have that knowledge.

NOTE: A carrier knowingly violates the HR. when the carrier accepts or transports a hazardous material with actual or constructive knowledge that a package contains a hazardous material not properly packaged, marked, labeled, or described on a shipping paper as required by the HMR.

b.         Amount of penalty —

i.  Up to $50,000 per violation for violations occurring on or after August 10th, 2005 (typical amount is $47,250)

ii.  Up to $100,000 per violation if the violation results in death, serious illness, or severe injury to any person or substantial destruction of property.

2.         49 U.S.C. 5124 - criminal penalty up to $500,000 and 5 years in prison

Requires evidence of both knowledge of the hazardous materials laws and regulations and an intent to violate them.

B.        Hazardous Materials Regulations (HMR), 49 CFR Parts 171-178
          
1.  Common Shipper Violations

                        a.  Undeclared HAZMAT aboard an aircraft
b.  Misdeclared HAZMAT aboard an aircraft

NOTE:  Shipper’s Declaration for Dangerous Goods states:

“I hereby declare that the contents of this consignment are Ally and accurately described above by the proper shipping name, and are classified, packaged, marked labeled/placarded, and are in all respects in proper condition for transport according to applicable international and national governmental regulations."

2.         Common Air Carrier Violations

a.  Improper acceptance of HAZMAT for air transportation
b.  Failure to notify FAA properly of incident/discrepancies in HAZMAT shipment.

See 49 CFR 175.31. Must notify nearest FAA Civil Aviation Security Field Office by telephone as soon as practicable.

NOTE: 49 CFR Part 175 violations certainly apply to "aircraft operators", but also to air freight forwarders, even ground handling crews.

C.  FAA Investigative and Enforcement Procedures, 14 CFR Part 13

III.       Criteria Used by FAA to Assess Amount of Penalty

A.  Nature, circumstances, extent, and gravity of the violation, the degree of culpability of the violator, any history of past violations, the ability to pay, any effect of the ability to continue to do business, and other matters as justice requires.

B.  Hazardous Materials Sanction Guidance Matrix Similar penalties should be imposed in similar cases, yet each case must be evaluate on its own facts.

C.        Guidelines for Civil Penalties, 49 CFR Part 107, Subpart D, Appendix A

D.        Good Arguments

1.         Prompt, corrective action is critical

2.         Violation occurred because of reasonable reliance on incorrect information from another source.

3.         Small Business Regulatory Enforcement Fairness Act.
          
IV.       FAA Penalty Procedures

            A.        Notice of proposed civil penalty

B.        Not later than 30 days after receipt of the notice of proposed civil penalty, the person charge with a violation shall respond.

1.         Pay in full, or.
                                  
2.         Submit written information, including documents and witness statements, demonstrating that a violation of the regulations did not occur or that a penalty or the amount of the penalty is not warranted by the circumstances, or.

3.         Request informal, telephonic conference with an attorney from the Office of Chief Counsel, FAA, or.

4.         Make a written monetary counter-offer, or.

5.         Request a formal hearing with an Administrative Law Judge.

NOTE:  All contact regarding the proposed penalty and penalty with be with an attorney from Regional Counsel’s Office of the FAA, who acts on behalf of the Federal Agency.

V.     Conclusion

With 1.2 million daily movements of HAZMAT in the United States and 100,000 daily shipments by air in the United States, even with the best of intentions by most companies, there are bound to be companies that intentionally, recklessly, or negligently violate the HMR. Even the most diligent companies will inevitably violate the HMR, even only accidentally and in a minor way.

The May 1996 crash of ValuJet in Miami in May 1996 is a reminder of the seriousness with which the international HAZMAT organizations, the United States Government, and the HAZMAT private industry must continue to make the transportation of hazardous materials safe and secure for all of us. Not committing a violation is the best thing to do, but once a violation occurs, properly explaining all the facts and circumstances to the FAA investigator and to the attorney from the Regional Counsel's Office of the FAA may get the penalty cancelled or significantly reduced.

Tuesday, April 28, 2015

CBP Doubles the Penalties Against U.S. Companies, Says Commissioner

At the National Customs Brokers and Forwarders Association of America (NCBFAA) Annual Conference held in Orlando, Florida, last week, U.S. Customs and Border Protection (CBP) Commissioner Kerlikowske made some surprising comments in his prepared remarks.

Regarding the topic of "Trade Enforcement" by CBP, the Commissioner stated:

Even before my confirmation as Commissioner last year, I heard from trade and Congressional leaders about the importance of enforcing U.S. trade laws, and the critical role CBP plays in protecting American business and the U.S. market. I recognize those concerns, and we have made some important strides.

For example, CBP and Immigration and Customs Enforcement, Homeland Security Investigations (ICE/HSI) continue to enhance training, processes, and operations to attack smuggling and explosive growth in shipments of counterfeit goods, many of which pose serious threats to public health, safety and both national and economic security.
And here is where it gets really interesting; where the rubber meets the road. Commissioner Kerlikowske exclaimed:   

As a result, trade penalty assessments have increased by 140 percent from $385 million in Fiscal Year 2011 to $926 million in Fiscal Year 2014.

That is astounding!

It was obvious to me from the work I handle with the Fines, Penalties and Forfeitures Offices around the country on behalf of clients with penalties, seizures, and liquidated damages claims assessed by CBP against importers, exporters, trucking, ocean carriers, and airlines that CBP was more aggressive, but more than doubling the penalties in a few years seems over the top. 

Peter Quinter, Chair
Customs and International Trade Law Group
GrayRobinson, P.A.
333 SE 2nd Ave.
32nd Floor
Miami, Florida 33133

office (305) 416-6960
mobile (954) 270-1864
Skype Peter.Quinter1
email Peter.Quinter@Gray-Robinson.com

Saturday, April 18, 2015

Peter Quinter is running the Boston Marathon this Monday, April 20, 2015!

Dear Readers,

Been training for 6 months to run my first 26.2 mile marathon.  Doing it with my wife, Sandy, in my hometown of Boston, Massachusetts.  Wish me luck!

Tuesday, August 5, 2014

Seized and Forfeited Property for Sale at Auction - Psst, Want a Great Deal?

Do you ever wonder what happens to the millions of dollars of merchandise that is seized by U.S. Customs and Border Protection (CBP)?

After it has been seized and forfeited (i.e. becomes the property of the United States Government), it is auctioned by the U.S. Department of the Treasury. General property (cars, boats, planes, jewelry, coins, toys, electronics, laptops, etc.) are auctioned regularly at 3 locations in the United States - Dayton, New Jersey, Pompano Beach, Florida, and Riverside, California. Buyers can get some absolutely fabulous deals, but buyer beware. Cash and credit cards are accepted. Anything purchased for $10,000 or less must be paid in full promptly. Anything over $10,000 must be paid in full within 2 business days by 4:00 p.m.,and wire transfers are then acceptable.

The next U.S. Department of the Treasury auction is August 20, from 9:00 a.m.to 4:00 p.m., in Florida. The exact address is 2951 NW 27th Avenume, Pompano Beach, Florida 33069. Inspection of items is allowed prior to the start of the auction, and you must register prior to submitting any bid. I encourage serious bidders or buyers to read the "Sale of Government Property General Sales Terms and Conditions". See you at the auction on August 20. I might buy that Rolex watch I have been dreaming about.

For any questions or comments about seizures or forfeitures, please contact me directly at:

Peter Quinter, Chair
Customs and International Trade Law Group
GrayRobinson, P.A.
1221 Brickell Ave.
16th Floor
Miami, FL 33131

office (305) 416-6960
mobile (954) 270-1864
email Peter.Quinter@Gray-Robinson.com
Skype Peter.Quinter1

Monday, July 21, 2014

C-TPAT Annual Meeting by CBP in San Antonio, Texas, on August 26-28, 2014

Peter Quinter
Customs and International Trade Attorney

U.S. Customs and Border Protection (CBP) has announced its annual meeting of the Customs-Trade Partnership Against Terrorism (C-TPAT) will take place at the beautiful JW Marriott in San Antonio, Texas. There will be two separate sessions each lasting 2 days. For more information regarding the 2014 C-TPAT National Conference, please click here.

With over 11,000 members, the real questions that companies, and executives who lead those companies, are asking is whether the time and expense of becoming and then staying a member of C-TPAT, is worth it. For some companies, the answer is a definite yes because either they have been directly or indirectly strongly recommended by CBP that they should be a C-TPAT member, some are advised by their customers that they should be a C-TPAT member, and others just think strengthening their companies' international supply chains is a darn good idea, whether or not there is any deterrent effect upon potential terrorists.

The concern that I hear often from executives in international logistics is that there is not enough benefit to importers, ocean carriers, and customs brokers for membership in C-TPAT. As a "trusted trader" one would expect expedited shipments, yet CBP has been reluctant to share data that establishes that C-TPAT members' cargo is cleared any faster than non C-TPAT members. C-TPAT members have their cargo examined and detained by CBP, or other Federal agencies. When such cargo is detained, often CBP provides no explanation for such examinations which are costly both in terms of expense and delay.

I encourage companies that can qualify to participate in C-TPAT, but first do a cost benefit analysis.

For any questions about C-TPAT or CBP generally, contact me at:

Peter Quinter, Chair
Customs and International Trade Law Group
GrayRobinson, P.A.
1221 Brickell Ave., 16th Floor
Miami, FL 33131

Office (305) 416-6960
Mobile (954) 270-1864
email Peter.Quinter@Gray-Robinson.com
Skype Peter.Quinter1

Tuesday, June 3, 2014

The Global Entry Program by U.S. Customs and Border Protection - The Good, The Bad, and The Ugly

Over 1 million people are currently enrolled in the Global Entry program of U.S. Customs and Border Protection (CBP). According to CBP, 96% of the members are from the United States, but as of 2013, nationals from other countries are also accepted into this worthwhile program, including Germany, Mexico, Qatar, Netherlands, Panama, Korea, and the United Kingdom. Currently, Global Entry kiosks are located at 31 airports in the United States, and 10 pre-clearance airports in Canada and Ireland.

Global Entry is a way for CBP to facilitate or expedite the international arrival and clearance process for the almost 1,000,000 international passengers who attempt to enter the United States each day. Members approved into Global Entry are determined to be "low risk". Applicants must submit an online application, pay a fee, have the information vetted by CBP, and undergo an in-person interview by a CBP officer.

The United States Government Accountability Office (GAO) recently completed a critical analysis of Global Entry and CBP's other "Trusted Travelers" programs, and issued a May 2014 Report to Congress. While the GAO Report was generally complimentary, it was very critical of the discrepancies that occured among CBP interviewers for Global Entry applicants. GAO stated that "interviews may not be conducted consistently across enrollment centers" resulting in the denial of otherwise qualified applicants. According to CBP, approximately 5% of applicants are denied membership into Global Entry. Appplicants whose applications are denied are to be notified by email of the denial. Denied applicants can reapply for a trusted traveler program or request reconsideration of the denial to be trusted traveler Ombudsman.

Persons with felony convictions are automatically denied, however, applicants with misdemeanors may be considered for inclusion in some cases, depending on how recent the convictions were, the overall number of misdemeanor convictions, and the applicant's nationality. According to the GAO Report, approximately 40% of the appeals to the Ombudsman were granted, allowing the applicant membership into Global Entry, however, the appeal processing time is 5 months.

My take is this - Global Entry is awesome! I just returned from Colombia to Miami International Airport, went to the Global Entry kiosk, answered a few questions on the machine, had the "ticket" printed, skipped the long line waiting for a CBP officer, and handed my ticket to the CBP officer as I walked out the door. Total time was only a few minutes. Anyone who can qualify should apply immediately. Any applicants who are initially denied should appeal to the Ombudsman after consulting with an attorney or other person who is very knowledgeable about the customs laws and regulations, including the Global Entry process.

Peter Quinter, Chair
Customs and International Trade Law Group
GrayRobinson, P.A.
1221 Brickell Avenue
16th Floor
Miami, Florida 33131

Peter.Quinter@Gray-Robinson.com


Office (305) 416-6960
Mobile (954) 270-1864
Skype Peter.Quinter1