This article examines PHMSA’s recent proposal to revise the HMR to allow DOT-approved fireworks certification agencies; see PHMSA 2010-0320 (HM-257), Fed. Reg. Vol. 77, No 169, 52636 et seq..

PHMSA is seeking comments regarding whether a two-track approach to securing approvals of explosives is both warranted and practical.  One track is the current PHMSA approvals process, while the second track involves submitting applications for approvals to a DOT-approved FCA.   Importantly, FCAs will be empowered to issue approvals on their own accord which, presumably, have the same force and effect of an approval issued from PHMSA; however, for purposes of differentiation, approvals issued by the FCA will have the prefix ‘FX’ followed by 6 digits (unlike current 10 digits employed by PHMSA, which will continue).  For example, FX123-456 indicates the DOT-approved FCA assigned ‘123’ conducted the review and certification, while the ‘456’ signifies the numbering sequence applied by the FCA.

Introduced as an approved alternative method to securing EX approvals, PHMSA’s actions will necessitate the creation of another cottage industry exclusive to fireworks, with the consequent costs to be borne solely by the fireworks industry.  That for-profit industry will be the Fireworks Certification Agency (FCA).  It is worthy to note that if the proposal is approved the government will be generating private sector jobs (that will perform roles similar to their public sector counterparts).

The proposal contemplates FCAs operating in tandem, and in conjunction, with the prevailing PHMSA approval process.  Curiously, while PHMSA contends that the FCAs can be more responsive it is unable to provide anything in support other than pure conjecture.  Indeed, this specific assertion is seemingly undermined by PHMSA’s recent public disclosure that it has significantly reduced the backlog in applications, with the approximate review time per application currently at 120 days (NPRM at 52639).  PHMSA also acknowledges that applications are rejected, for the most part, due to the applicant’s failure to submit a complete and accurate document and, here, the creation of a network of FCAs will not in and of itself cure or even reduce customer error and the consequent delays.  Only rigorous customer education and training, paired with clear and easy to fill applications, can reduce customer errors; otherwise, the creation of DOT-approved FCAs will, in many respects, only shift the problem from PHMSA to the private sector.

In my opinion, a plain reading of the NPRM provides the distinct impression that PHMSA is discouraging the use of the current approval method in favor of the private sector.  However, all of this outsourcing comes at a steep price; in gross numbers, PHMSA estimates that members of the fireworks industry will spend between $4 million and $7 million annually (NPRM at 52638).  What used to be obtained from PHMSA for free (albeit the process is, at times, less than optimal) is now estimated to cost $700 per approval application, although the marketplace will ultimately determine the value.  In sum, due to certain inefficiencies in the governmental agency financed by taxpayer dollars PHMSA has determined that it is wiser, and safer, to outsource the approvals process, presumably leaving PHMSA to focus on other matters, such as enforcement.  To summarize, a free-based model becomes a fee-based model.

It should be obvious to the casual observer that a marketplace of FCAs– populated by a host of competitors all offering the same service– will, necessarily, spawn a spectrum of service providers with, unavoidably, differing levels of skills, tolerances, judgment, expertise, competency and, importantly, speed (efficiency).  To deter abuse or misuse, PHMSA is expected to both monitor and audit the FCAs and, if required, overrule any improperly issued approvals and certificates.  Indeed, there are no assurances that PHMSA will not eliminate FCAs if the program is not, in PHMSA’s opinion, successful; the FCA as a whole is only as good as its weakest link.  The status quo had relied upon this monopolistic model, whereby approvals emanate from only one, presumably uncompromising, source that is seemingly inscrutable as well as unconcerned about speed, i.e., PHMSA Office of Hazardous Materials Permits and Approvals.  Whereas at all times in a monopoly fault and blame starts and ends with PHMSA, PHMSA now proposes spreading responsibility amongst a constellation of profit-making businesses.  The new model proposed by PHMSA will inevitably lead to inconsistencies by and between PHMSA and one or more FCA which, in turn, can only lead to the generation of additional layers of disputes and, regrettably, lawsuits.

In light of the multitude of safety issues inherent with hazardous materials extreme caution should be exercised whenever a gate-keeping activity that, traditionally, had been performed by the government—and financed by taxpayer dollars—is outsourced to private industry.  Arguably, approving applications relating to explosive devices is a gate-keeping activity that merits both extreme caution and stringent oversight and, consequently, the interests of private industry customarily takes a back-seat where issues relating to national and local safety are involved.

While, admittedly, the current system needs improvement, the solution may have more to do with inadequate staffing and customer training, rather than inadequate standards, measures and processes.


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