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Auditing Your Hazmat Shipping O ti

© Lion Technology Inc. 14-1103

OperationsScott C. Dunsmore, CET

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Hazmat Enforcement

Texas chemical company – $15,585

• Offered Class 3 materials in unauthorized packaging

• Indicated “RQ” on shipping papers


Indicated RQ on shipping papers when no reportable quantity present

• Failed to close packages in accordance with manufacturer’s instructions

• Emptied packages from within transport vehicle

Hazmat Enforcement

Oregon grain shipper – $16,425

• Offered anhydrous ammonia in unauthorized packages

• Failed to provide a Proper Shipping Name/shipping


Failed to provide a Proper Shipping Name/shipping description

• Emptied packages from within transport vehicle

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Hazmat Enforcement

Illinois fertilizer company – $10,357

• Failed to provide a proper shipping description

• Failed to submit a Hazardous Material Incident Report (Form 5800 1)


Report (Form 5800.1)

• Failed to provide initial and recurrent hazmat employee training

Hazmat Enforcement

Texas chemical company – $13,040

• Failed to provide a proper shipping description

• Failed to properly mark hazmat packages

F il d t t / i t i h t


• Failed to create/maintain hazmat employee training records

• Marked packages as “ORM-D” when no ORM-D present

• Failed to close packages in accordance with manufacturer’s instructions

Civil Penalties

For “knowing” violations

• ≤ $75,000/day/violation

• ≤ $175,000/day/violation if significant

≥ $450/d / i l ti f f il t t i


[49 USC 5123(a)]

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• ≥ $450/day/violation for failure to train

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Criminal Penalties

“Knowing and willful” violations

• ≤ $250,000/incident

• ≤ 5 years imprisonment

≤ $500 000/d /i id t f


[49 USC 5124, 18 USC 3571]

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• ≤ $500,000/day/incident for organizations

Players

• PHMSA

– Through its five regional offices

– Primarily target packaging manufacturers

M d l i l i t


• Modal agencies also inspect

– FAA

– FMCSA

– FRA

– USCG

An… audit is the principle management tool for taking inventory of a company’s (hazmat shipping) assets and liabilities.*

Why Audit?


[*Adapted from Thomas H. Truitt, Attorney; Wald, Harkrader & Ross]

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Benefits to Auditing

Quantifiable benefits include:

• Improved compliance record

• Improved incident/accident statistics

D i b i di ti


• Decrease in business disruption

Benefits to Auditing

Unquantifiable benefits include:

• Improved reputation

• Favorable publicity

I d l t l ti hi


• Improved regulator relationships

• Knowledge of job performance measure

• Feeling of management support

7 Steps of a Successful Audit

1. Plan

2. Physical “walk-through”

3. Document review

4 D b i f


4. De-brief

5. Review

6. Report

7. Follow-up

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Step 1: Planning

This most important step may include:

• Defining the expected outcomes

• Delineating the scope

S l ti th dit ( )


• Selecting the auditor(s)

• Becoming familiar with the target facility

• Conducting a pre-document review

Defining the Expected Outcomes

“Begin with the end in mind”— Stephen Covey, author

“The key value is to prevent problems from erupting i t i i b f t t ”


into crisis before management can act.”— M.D. Throdahl, former Senior VP, Monsanto Company

Defining the Expected Outcomes

• What is the facility looking to determine?

• Assurance of compliance to hazmat shipping requirement(s)

− Comprehensive


Comprehensive

− A specific material/logistics component

• Adherence to a management system

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Planning Considerations

Possible questions to ask during the planning stage include:

• Is this a one-time action or part of a recurring program?


g

• What are the expectations of senior management?

• What will be the measures of success?

Legal Aspects of the Planning Step

The facility should also determine:

• Reporting protocols

− Written and/or oral

D t t ti


− Document retention

• Amount of legal oversight

Delineating the Scope

• Obtain the expected results by the most efficient, cost-effective means

• Approaches:

− Prototype or


Prototype, or

− Comprehensive

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Selecting the Auditor(s)

The audit team’s effectiveness will be dependent on an understanding of the company’s:

• Structure

• Processes


Processes

• Management philosophy

Selecting the Auditor(s)

• Assure adequate coverage of expertise in:

− Applicable requirements, and

− Operations (practices, procedures, policies)

D t i h th t


• Determine whether to use in-house staff or third-party auditors

Pre-documentation Review

Benefits:

• Increase familiarization with facility:

− Shipping modes

N b f h t /f


− Number of hazmats/frequency

• Expedite certain aspects of audit

• Identify areas to focus on during audit

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Pre-documentation Review

Possible documents to include in pre-document review:

• Facility questionnaire

• Classification records/supporting documents

Shi i


• Shipping papers

Assessment Categories

Hazmat shipping audit elements fall into one of three categories:

1. Material-related assessments

2 Packaging assessments


2. Packaging assessments

3. Documentation assessments

Material-related Assessments

• Are the materials properly classified?

• Are the correct Proper Shipping Names assigned?

• Has the facility accounted for the “ancillaries”?

H d t


− Hazardous waste

− Hazardous substance

− Marine pollutant

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Packaging Assessments

May include one or more of the following:

• Packaging authorization (in theory and practice)

• Manufacturers’ instructions

P k bl t


• Package assembly components and tools

• Filling/closure

• Marking and labeling

• Loading/unloading

Documentation Assessments

Documents to be review may include:

• Shipping papers / Shipper’s Declarations / Hazardous Waste Manifests

• Emergency response


Emergency response information

• Registrations

• Training records

• Security plans

Step 2: Physical Walk-through

“What you don’t know will hurt you.”

— F. Friedman, Vice President, Occidental Petroleum Corporation, 1983


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Step 2: Physical Walk-through

• Use of a “function-specific” approach allows for assessment of:

− Compliance of the overall process

− Individual hazmat employee performance


Individual hazmat employee performance

• Design tools around planned audit approach

− Checklists

− Photos

Package Preparation

Take note of:

• Presence/accessibility of package closure instructions and closure tools


• Material (may need to confirm proper marks and packaging type after document review)

• Specific employees performing the task(s)

Step 3: Document Review

“No job is done until the paperwork is complete.”

— Author unknown


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Shipping Papers

• May be part of the pre-document review

• Predicated upon knowledge or acceptance of assigned Proper Shipping Names

• Look for:


Look for:

− Complete and proper descriptions (watch for required add-ons)

− Emergency response number

− Emergency response information

Training Documents

• Review training documentation for:

− General completeness, and

− Individual accuracy (best done after walk-through step)


walk-through step)

Classification Documents

• Proper classification verification requires special competencies

• Auditors can look for clues, regardless

• If in doubt write it down (can be


If in doubt, write it down (can be checked during Step 5)

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Security Plan

• This document should be available on a need-to-know basis.

• Auditor should know what is expected and his/her limitations—will he/she be verifying the plan:


y g

− Exists when required, or

− Contains all the required elements, or

− Has adequate security measure based on assessed risks

Step 4: De-Brief

• Work out in Step 1 who will participate

• This is the time to:

− Provide a general summation of findings and observations


and observations

− Seek clarification

− Review next steps and deadlines

Step 5: Review

• Evaluate notes

• Thoroughly research through primary sources, first and foremost

• This should not be a solo project – peer review!


This should not be a solo project peer review!

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Step 6: Report

“Vigorous writing is concise…. This requires not that the writer make all sentences short, or that he avoid all detail and treat his subject only in outline, but that every word tell.”

Willi St k J El t f St l


— William Strunk, Jr., Elements of Style

Step 6: Report

• Format will be determined in planning step

• Observed deficiencies should be:

− Clearly described, and

S t d b ifi t d d( )


− Supported by specific standard(s)

• Observe all agreed-upon reporting protocols

Step 7: Follow-Up

• Purpose:

− Close open items

− Assure practices have been updated to expected standard


updated to expected standard

− Determine if new “corrective actions” are needed

• Will the follow-up will be formal or informal?

• Starts the planning for the next cycle of audits

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Thank You for Attending

Enjoy the rest of the conference!

You may reach me at:


You may reach me at:

[email protected]

973-383-0800

www.Lion.com