• PHMSA Issues Final Rule Prohibiting Hazmat Operations By Persons With Unpaid Civil Penalties
  • August 12, 2014
  • Law Firm: Sutherland Asbill Brennan LLP - Washington Office
  • Yesterday, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a final rule prohibiting companies who fail to pay a civil penalty as ordered, or who fail to abide by a payment agreement, from performing activities regulated by the Hazardous Materials Regulations (49 CFR Parts 171-180) until payment is made.  The rulemaking was conducted pursuant to the Moving Ahead for Progress in the 21st Century Act, which amended the Federal Hazardous Material Transportation Law (49 U.S.C. 5101 et seq.) to prohibit a person from engaging in hazardous materials operations if that person has failed to either pay a civil penalty or failed to arrange and abide by a payment plan, beginning on the 91st day after the payment due date specified by the order or payment plan, unless the person has filed a formal administrative or judicial appeal of the penalty.

    Under the provisions of the final rule, the agency that issued the final order outlining the terms and outcome of the enforcement action—PHMSA, the Federal Aviation Administration, the Federal Motor Carrier Safety Administration, or the Federal Railroad Administration—will send the respondent a Cessation of Operations Order (COO) if payment is not received within 45 days after it is due.  The COO would notify the respondent that it must cease hazardous materials operations on the 91st calendar day after failing to make payment in accordance with the final order or payment plan unless payment is made.  A respondent can appeal the COO within 20 days of receipt according to the issuing agency’s procedures, but only to show proof of payment or an emergency stay issued by a federal district court with jurisdiction, not to re-argue the merits of the penalty assessment.

    The final rule explains, “PHMSA believes that persons who fail to comply with the Hazmat Law and fail to pay civil penalties are not fit to transport hazardous materials, as they are more likely to jeopardize public safety and/or the environment.  This final rule and underlying legislation may encourage companies that disregard the HMR to exit the hazardous materials arena because continuing hazardous materials transportation after a COO is punishable by additional penalties and criminal prosecution.”

    The final rule is available here and will become effective on September 8, 2014.