[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                   THE DEPARTMENT OF TRANSPORTATION'S
            OVERSIGHT AND MANAGEMENT OF HAZARDOUS MATERIALS
                     SPECIAL PERMITS AND APPROVALS

=======================================================================

                               (111-105)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             April 22, 2010

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure




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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York          Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee               VACANCY
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
VACANCY

                                  (ii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Quarterman, Hon. Cynthia L., Administrator, Pipeline And 
  Hazardous Materials Safety Administration......................     8
Scovel, III, Hon. Calvin L., Inspector General, U.S. Department 
  of Transportation..............................................     8
Weimer, William A., Vice President and General Counsel, Phantom 
  Fireworks......................................................    40

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    53
Graves, Hon. Sam, of Missouri....................................    54
Johnson, Hon. Eddie Bernice, of Texas............................    61
Mitchell, Hon. Harry E., of Arizona..............................    65
Richardson, Hon. Laura, of California............................    66

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Quarterman, Hon. Cynthia L.......................................    69
Scovel, III, Hon. Calvin L.......................................    90
Weimer, William A................................................   115

                       SUBMISSIONS FOR THE RECORD

Graves, Hon. Sam, a Represnetative in Congress from the State of 
  Missouri, letter from Eric J. Garrett, President, Garett's 
  Worldwide Enterprises, LLC.....................................     6
Quarterman, Hon. Cynthia L., Administrator, Pipeline And 
  Hazardous Materials Safety Administration:.....................
      Response to request for information from Rep. Garamendi, a 
        Representative in Congress fromt the State of California.    36
      Response to request for information from Rep. Oberstar, a 
        Representative in Congress from the State of Minnesota:..
          Foreign fitness........................................    32
          Permit processing......................................    19
          PHMSA inspection policies..............................    39
          Questions for the Record...............................    85
          Volume of fireworks applications.......................    13
      Response to request for information from Rep. Shuster, a 
        Representative in Congress from the State of Pennsylvania    23
Scovel, III, Hon. Calvin L., Inspector General, U.S. Department 
  of Transportation, response to request for information from 
  Rep. Oberstar, a Representative in Congress from the State of 
  Minnesota......................................................   105
Weimer, William A., Vice President and General Counsel, Phantom 
  Fireworks, supplement to written testimony.....................   122

                        ADDITIONS TO THE RECORD

American Pyrotechnics Association, Julie L. Heckman, Executive 
  Director, letter...............................................   144
Institute of Makers of Explosives, Cynthia Hilton, Executive Vice 
  President, letter..............................................   152

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HEARING ON THE DEPARTMENT OF TRANSPORTATION'S OVERSIGHT AND MANAGEMENT 
          OF HAZARDOUS MATERIALS SPECIAL PERMITS AND APPROVALS

                              ----------                              


                        Thursday, April 22, 2010

                   House of Representatives
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The Committee met, pursuant to call, at 10:30 a.m., in room 
2167 Rayburn House Office Building, the Honorable James 
Oberstar [Chairman of the Full Committee] presiding.
    Mr. Oberstar. The Committee on Transportation and 
Infrastructure will come to order. Apology from the Chair for 
our late beginning here; I had unexpected, unanticipated 
meetings, events intervene.
    Mr. Shuster is concerned that the witness from the 
Fireworks Association be heard, and we will move as quickly as 
we can or, in the procedure that we have customarily held, to 
have the Government witnesses first and then the industry 
response, so we will do our best to get to the industry 
witness.
    The role of oversight in the House of Representatives took 
a very new and significant turn in 1959, when then Speaker Sam 
Rayburn designated my predecessor, John Blatnik, to chair a 
special investigating committee on the Federal Aid Highway 
Program to oversee the early going of that program to ensure 
that the money was well and wisely spent, that States had 
internal audit and review procedures to preempt against fraud, 
corruption in the program.
    And it was a wise decision, well timed, and Mr. Blatnik and 
the staff of former ex-FBI personnel from the Senate Rackets 
Investigating Committee did a superb job. Thirty-six people 
went to Federal and State prison, and every State since then 
has had internal audit and review procedures and the highway 
program is held in the highest repute.
    Our hearing today continues the long history of in-depth 
investigations and oversight of the responsibilities of our 
Committee in the transportation arena. It was last September 
that I held a hearing on an investigation conducted by 
Committee staff by the Department of Transportation's Inspector 
General of the Pipeline and Hazardous Materials Safety 
Administration which revealed a startling number of failures to 
PHMSA to follow Federal law, as well as outright neglect in 
regulating the transportation of hazardous materials.
    Complacency and neglect permeated the culture of PHMSA, 
which is also something that I found nearly 20 years earlier 
with the pipeline explosion in Mounds View, Minnesota, and the 
subsequent inquiry that I conducted as chair of the 
Investigations and Oversight Subcommittee of the Pipeline 
Safety Administration. They were anything but safe. They were 
poorly administered and their administrator did not have a 
culture of safety nor an understanding of safety. Much remained 
the same. PHMSA was plagued by a belief that the agency should 
make things as easy as possible for the industry that it was 
charged with regulating.
    Fortunately, Deputy Secretary of Transportation John 
Porcari took action, addressing our concerns, directed PHMSA to 
develop a comprehensive action plan for handling special 
permits and approvals, directed PHMSA to begin implementing the 
plans, invited our staff and the Inspector General to his 
office for regular briefings on PHMSA's progress.
    There is a new administrator of PHMSA, Ms. Quarterman, 
unfortunately, she was not sworn in until November 16 of 2009, 
but she has been actively engaged with the changes in their 
procedures and moving it ahead. The purpose of this hearing is 
to see how far ahead we have moved.
    The Inspector General has released the final report, and 
that will be the first subject of today's hearing. It 
reiterates the concerns I had then, that PHMSA was not 
reviewing applicant safety history; was granting special 
permits and approvals without sufficient data or analysis; 
failed to consult and coordinate with FAA, with Federal Motor 
Carrier Safety Administration prior to granting permits; that 
PHMSA was granting permits to entire trade associations, giving 
blanket authorization to thousands of member companies without 
assessment of their individual safety histories.
    On August 14, PHMSA issued a policy statement clarifying 
that special permits and approvals are issued to individual 
members, not to associations. Yet, since that time, ten special 
permits and two approvals have been made to trade associations 
with no safety fitness reviews of the individual members of the 
association. PHMSA claims it was a short-term fix, but many of 
those permits and approvals were not set to expire until 2015. 
That doesn't seem like a short-term fix to me.
    So we will proceed with the hearing this morning and the 
Chair now recognizes the gentleman from Pennsylvania, Mr. 
Shuster.
    Mr. Shuster. Thank you, Mr. Chairman.
    Welcome our witnesses here today to the hearing for PHMSA, 
and we are looking forward to getting an update on the work 
that is happening there.
    Ms. Quarterman, it is good to see you again.
    Also, as mentioned, we have a second panel. I will just 
take a brief opportunity to introduce them. Mr. William Weimer, 
who is the Vice President and General Counsel of Phantom 
Fireworks, which is headquarters in Youngstown, Ohio. He also 
serves as the President of the American Pyrotechnics 
Association, the principle safety and trade association for the 
fireworks industry.
    Phantom Fireworks also has retail locations nationwide, 
including a consumer fireworks showroom in my home State of 
Pennsylvania, Warfordsburg, Pennsylvania, which I pass on my 
way. I keep saying I am going to stop in there one day, 
although I don't think I am allowed to buy fireworks, being a 
resident of Pennsylvania. So I will come in and, I guess, just 
look around the showroom.
    So welcome, Mr. Weimer. I know you have extensive knowledge 
and I know you all have some things you want to say today on 
how PHMSA's processing of special permits is going to affect 
your industry, and it will be valuable testimony for us.
    Clearly, our Committee majority staff has uncovered some 
shortcomings with PHMSA, processing of special permits and 
approvals. Fortunately, none of these problems with PHMSA's 
paperwork has contributed to an accident. Hazardous materials 
make up nearly a third of freight time miles in this Country 
and accidents are incredibly rare. A person is four times more 
likely to get struck by lightning than to be killed by a hazmat 
transportation accident.
    I do believe these paperwork issues deserve attention, but 
I am becoming increasingly concerned about the effect of the 
congressional spotlight on PHMSA's ability to quickly process 
special permits and approvals. Industry needs these permits and 
approvals in order to do business, and it is apparent that 
PHMSA is becoming so knotted up in red tape that it is not 
keeping pace with the needs of industries that it regulates.
    Hazmat transportation is remarkably safe considering the 
intrinsic danger in moving volatile products, but I understand 
and appreciate the desire to make things even safer. However, 
we absolutely cannot afford to disrupt commerce by over-
regulating these businesses. The paperwork problems identified 
by the Department of Transportation IG are occurring within 
PHMSA. This is not a case where industry has done anything 
questionable. And considering that we are in the early stages 
of a long overdue economic recovery, jeopardizing these 
companies' ability to get back to business and create jobs, I 
believe, is a huge mistake.
    Mr. Weimer has told us that the slow-down in PHMSA is 
already having a significant impact in his business and on the 
entire fireworks industry. The disruption means that new types 
of fireworks will probably not be available for the 4th of July 
celebrations this year. The Chinese fireworks manufacturers are 
stuck in the record backlog of approvals of PHMSA and, as a 
result, the fireworks industry may not be able to offer a 
single new product for sale this year.
    Additionally, because in many cases U.S. companies are 
forced to pay for products sitting in Chinese warehouses that 
cannot be imported, many of the small family companies that 
represent the vast majority of the fireworks business in the 
U.S. are not expected to survive.
    And it is not just the fireworks supply that PHMSA is 
impacting. Special permits and approvals are needed for 
thousands of goods and activities. The explosives industry that 
we rely on for construction and mining is being disrupted. Our 
agriculture industry may be harmed because fertilizer requires 
special permit approvals. So what I am most interested in 
hearing about today from PHMSA is what they are doing to get 
through the backlog of these special permits and approvals, and 
how can we ensure these delays will not continue.
    I would also like to hear from PHMSA what PHMSA is doing to 
reduce the number of special permits that are needed. Many of 
these activities that require a special permit, are decades 
old, and should be moved under hazmat regulations so permits 
are no longer required. The fewer special permits that are 
needed to be processed, the more streamlined the system will 
become.
    Finally, I want to take a moment to recognize my colleague, 
Mr. Graves, from Missouri, who has taken a special interest in 
this issue and proposed an amendment to the special permits 
provision in the hazmat bill we had before the Committee last 
year, so I know he has a few words to say about it.
    Again, thank you, witnesses, for being here today, and 
thank you, Mr. Chairman.
    Mr. Oberstar. The gentleman from Missouri is recognized.
    Mr. Graves. Thank you, Mr. Chairman. I appreciate very much 
you and Ranking Member Mica holding this important hearing 
today, and I want to welcome both of our panelists here, 
particularly Mr. Weimer, who is the Vice President and General 
Counsel of Phantom Fireworks. He is going to give us some 
extensive knowledge on this issue.
    I also appreciate the efforts of you, Mr. Chairman, and 
Ranking Member Mica and your staffs for continuing to work with 
me on the issues related to the special permits.
    Back in November of last year, if you remember, I offered 
an amendment during the markup of the Hazardous Materials 
Safety Act to require that PHMSA initiate a formal rulemaking 
process to establish the standards for determining the fitness 
of applicants for special permits or approvals, rather than the 
regulatory guidance process called for in the bill.
    We were unable to find a solution at the time, and I remain 
confident that we are eventually going to find that. Due to 
last year's------
    Mr. Oberstar. Would the gentleman yield?
    Mr. Graves. Yes.
    Mr. Oberstar. I have asked the Administration to respond to 
those issues and give us an update at this point, and I look 
forward to hearing what they have to say. We will continue to 
work with the gentleman on this matter.
    Mr. Graves. And for that, Mr. Chairman, I truly am 
appreciative, again, of you working with us on this and trying 
to work it out.
    Due to last year's debate, I find this hearing to be 
completely timely and necessary, absolutely necessary. The 
concerns that prompted my amendment haven't abated. The 
standards appear to be unevenly applied; they create 
unreasonable processing delays, contributing to job and 
business opportunity loss; and, most importantly, the 
performance thresholds embedded in these new invisible 
standards are completely unknown to the industry, whose ability 
to continue operating is wholly dependent upon conformity with 
the standards.
    When I spoke with PHMSA officials, I was surprised to hear 
about the large number of backlog of unprocessed fireworks 
approvals, which was mentioned--5,700 which were pending in 
December 2009. I was encouraged to learn that PHMSA has taken 
an all-hands-on-deck approach and dedicated personnel and 
resources to eliminate the backlog, and I am interested to hear 
today from PHMSA on how much progress has been made and how 
many unprocessed approvals and permits there are.
    It is my understanding that the backlog has its roots in 
the audit that was performed by the Inspector General, and 
prior to the audit approvals were usually processed within 90 
to 100 days, and there were only slightly over about 500 
unprocessed fireworks approvals. Now we have heard reports of 
approval times which have grown exponentially, and this is an 
industry that is completely dependent on those authorizations. 
I want to know what happened.
    This year, due to the backlog, the fireworks industry will 
certainly not be able to sell any new products, as was pointed 
out, and this is a huge, huge problem.
    But having said all this, I hope we can find answers and 
solutions to these concerns. We shouldn't lose sight of the 
fact that the commerce of hazardous materials has been carried 
out with a remarkable level of safety and PHMSA deserves the 
credit for its role in that achievement. If there is anything I 
can do and this Committee can do to help PHMSA perform this 
vital function, please let me know.
    But I would, real quick, so we can move forward, I would 
like to submit for the record a letter from Mr. Eric Garrett, 
who is President of Garrett's Worldwide Enterprises. It is a 
letter he wrote to PHMSA; it lays things out in a very real 
live manner and is very straight and to the point. And I also 
would like to submit for the record, get unanimous consent for 
questions that I have, some public questions for PHMSA if we 
don't get a chance due to time. But I would like to submit 
those questions for the record to them for response.
    Those are two unanimous requests.
    Mr. Oberstar. Without objection, so ordered.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6160.015
    
    Mr. Graves. Thank you, Mr. Chairman. I yield back.
    Mr. Oberstar. I want to limit the number of statements. I 
know everybody has something to say, but during the questioning 
period we will have plenty of time.
    Ms. Brown, you have been engaged in this, and I yield to 
you.
    Ms. Brown. Thank you, Mr. Chairman. First of all, let me 
thank you for your strong commitment and oversight for our 
Committee. The regular hearing this Committee has held on the 
Recovery Act has ensured that the infrastructure spending has 
been done on schedule is and creating jobs, and I want to thank 
you, Mr. Chairman, for that.
    It is crucial that the Pipeline and Hazardous Materials 
Safety Administration perform its due diligence in the 
oversight of all the programs under its jurisdiction, and 
safety must be the top priority. It is important for the 
agencies to have clearly defined guidance for classifying and 
approving explosives, and they must conduct proper and timely 
safety review of both permit holders and the organizations the 
agency certify.
    In reviewing the material that was prepared for this 
hearing, I have become fearful for my constituents and for the 
American public. This is entirely unacceptable for the agency 
that is tasked with testing and permitting dangerous materials. 
It is clearly time to make major changes at the agency both 
with regard to policy and personnel.
    I often say and believe that the strengthen of the wolf is 
in the pack, and I would encourage PHMSA to work more closely 
with the other agencies to root out the bad apples and ensure 
that they properly follow the regulations. If not, they should 
no longer transport dangerous materials. The agency must crack 
down on its own employees and contractors who fail to follow 
regulations and override science-based decisions.
    I think that the Administrator, who I met with, is sincere 
in her efforts to ensure that the Pipeline and Hazardous 
Materials Safety Administration is operating with clear 
guidelines and proper oversight. I believe that if the agency 
is running properly, it can protect the safety of the American 
public without endangering commerce.
    I want to welcome our distinguished guests and thank them 
for joining us today. It has been six months since our last 
oversight hearing, and I am anxious to hear what improvements 
the agencies have made in permitting process.
    I yield back the balance of my time.
    Mr. Oberstar. I thank the gentlelady.
    Mr. Sires, you are recognized briefly.
    Mr. Sires. Thank you, Mr. Chairman, for giving me the 
opportunity and thank you for holding this hearing.
    I represent a district in New Jersey that is very, very 
densely populated. What has happened now is that the tracks run 
along residential areas. Two summers ago we had a problem; we 
had, at the fifth largest city in New Jersey, Woodbridge, New 
Jersey, we had a derailment. As the emergency responders went, 
they had a problem with what was in the train. The mayor called 
me up; he did not want to send the firemen, he did not want to 
send anybody in there for the concerns that we have for what 
was in the train.
    So one of the suggestions that I would suggest--I know you 
have made a number of them--since we have such rails close to 
residential areas, there has to be a way that, when there is a 
derailment, the substance in the train is known right away to 
the communities. You don't want somebody responding when they 
are going to put their lives in peril. So I don't know how you 
do that, but that would be a suggestion, because the mayor 
called me up; he was very concerned and they could not 
determine what was in that train for a long time.
    For the most part, everything gets through perfectly fine, 
but this one derailment brought that issue.
    Thank you very much, Mr. Chairman. I don't want to take too 
much of your time.
    Mr. Oberstar. Thank you very much for that personal witness 
and testify.
    Mr. Scovel, we will begin with you. Your report is very 
thorough, very timely, very important for us, and you are now 
recognized.

  TESTIMONY OF THE HONORABLE CALVIN L. SCOVEL, III, INSPECTOR 
 GENERAL, U.S. DEPARTMENT OF TRANSPORTATION; AND THE HONORABLE 
 CYNTHIA L. QUARTERMAN, ADMINISTRATOR, PIPELINE AND HAZARDOUS 
                MATERIALS SAFETY ADMINISTRATION

    Mr. Scovel. Mr. Chairman, Ranking Member Graves, Members of 
the Committee, thank you for inviting me here today to discuss 
PHMSA's Special Permits and Approvals Program.
    We have evaluated this program over the past two years and 
reported weaknesses with how PHMSA authorizes and oversees 
these exemptions to the hazardous materials regulations. In 
response, PHMSA has developed commendable action plans to 
address our safety concerns and we have ongoing work to monitor 
its progress. Today I will discuss PHMSA's execution of the new 
safety measures and emerging safety issues that may indicate 
critical operational gaps.
    First, PHMSA's action plans included new policies and 
procedures to better assess applicant fitness and level of 
safety, avoid blanket authorizations to trade associations, and 
improve interagency coordination. While PHMSA has begun several 
of these steps, they are not yet being executed properly or 
consistently.
    We looked at 20 special permits issued since January and 
found that PHMSA's evaluations of applicants fell short in 
several instances. For example, 4 did not have well founded or 
well supported fitness determinations, and all 20 lacked 
support for an equal level of safety. This is despite the fact 
that most were renewals based on evaluations PHMSA had done 
years ago. Even when poor fitness was noted, the permits were 
still issued. For example, for one renewal, PHMSA's specialist 
determined that the applicant was unfit based on safety 
history. The fitness problems he cited went uncorrected, by 
PHMSA still renewed the permit.
    We also looked at 22 approvals and found applicant fitness 
determinations were similarly lacking or overlooked for nearly 
half of them. In addition, PHMSA granted three special permits 
and four approvals to trade associations without any fitness 
checks of their member companies, several of which had poor 
safety histories.
    We also found cause to question the reliability of safety 
history information PHMSA uses to assess applicants. For 
example, we examined again the safety of a company we first 
reviewed in 2008. In 2008, we found 53 incidents, but this year 
we found only 15 incidents listed in PHMSA's recently deployed 
database. Given these discrepancies, PHMSA should conduct a 
data quality check.
    PHMSA's continued lack of coordination with other agencies 
exacerbates these weaknesses. These agencies may have critical 
safety data on applicants seeking a permit. Yet, for 18 of the 
20 special permits and 18 of the 22 approvals we examined, 
there was no coordination. One approval allowed shipment of 
prototype lithium batteries aboard cargo aircraft, a 
longstanding safety concern of FAA and NTSB.
    I will now address emerging safety issues we identified 
earlier this month regarding PHMSA's process for explosive 
classification approvals.
    Specifically, PHMSA has not formalized its guidance manual 
for examining and classifying explosive hazardous materials. 
This has led to varying definitions within PHMSA and industry 
of what constitutes a new explosive, how the regulations apply, 
and when testing is required. We also found that PHMSA did not 
follow regulations when it reclassified a device from explosive 
to non-explosive, allowing it to be transported on passenger 
and cargo aircraft. PHMSA did so without a report from one of 
its authorized testing labs, which is required by law. Instead, 
PHMSA accepted a copy of a different company's lab report for a 
different product.
    PHMSA chemists had disagreed, at the start of this case, on 
whether the product should be reclassified, and our review of 
the matter determined that PHMSA did not have a formal or 
objective process for resolving such internal safety conflicts. 
In response to our findings, PHMSA has established a separate 
safety review board to better oversee internal complaints and 
reviews.
    Finally, our advisory noted that PHMSA had not conducted 
safety inspections at any of its explosives testing labs over 
the past 10 years. PHMSA did not question labs that failed to 
submit annual activity reports and compliance certificates 
required by regulation. For example, we found that two labs had 
subcontracted their responsibilities to other companies that 
manufacture explosives, which is a direct conflict of interest. 
In response, PHMSA has developed new guidelines and a review 
team to strengthen its oversight of testing labs.
    In closing, we recognize that PHMSA's safety procedures are 
new and it will take time to fully and effectively implement 
them. We are encouraged by PHMSA's response to our concerns and 
its recent effort to establish a quality assurance team to 
assess whether agency personnel comply with all steps in the 
special permit and approval process. We will continue to 
monitor PHMSA's progress and its means to measure 
effectiveness.
    Mr. Chairman, this concludes my statement. I would be happy 
to address any questions you or Members of the Committee may 
have.
    Mr. Oberstar. Thank you very much, Mr. Scovel. Your entire 
statement, of course, will appear in the record in full.
    Ms. Quarterman, welcome and congratulations on your 
appointment and your taking office. We look forward to your 
statement.
    Ms. Quarterman. Thank you. Good morning. Chairman Oberstar 
and distinguished Members of the Committee, on behalf of 
Secretary LaHood, I appreciate the opportunity to discuss the 
progress the Pipeline and Hazardous Materials Safety 
Administration has made in addressing concerns identified by 
this Committee and the Department's Inspector General relating 
to the Special Permits and Approvals Program.
    Safety is the Department's number one priority and it is my 
number one priority as well. I can assure you that PHMSA's new 
leadership team and staff are committed to that priority and 
are working hard to improve the program. PHMSA is in the 
process of implementing comprehensive action plans to improve 
the Special Permits and Approvals Program. We have already 
begun to see some progress, but the issues that have been 
raised by this Committee and the IG were created over nearly a 
decade and will take some time to correct. However, we have set 
a new course for PHMSA that focuses on safety.
    As the Committee is aware, in late July 2009, the IG issued 
a Management Advisory relating to PHMSA's oversight of the 
Special Permits Program and recommended immediate action to 
prevent unsafe operators involving the transportation of 
explosives under four special permits. DOT responded 
immediately by developing an aggressive action plan that 
included 21 deliverables. PHMSA completed implementation of all 
the deliverables with specific target dates in that plan by 
February 5th of this year. Some commitments were longer term 
and we are developing plans for staffing and resources that 
will enable PHMSA to progressively improve those programs.
    Although the Management Advisory primarily focused on the 
Special Permits Program, PHMSA also addressed the policies and 
processes for issuing approvals and finalized an internal 
action plan to improve that program on December 4th, 2009. The 
approvals action plan identified 17 deliverables. PHMSA has 
delivered on all the deliverables to date and is on target to 
deliver all planned deliverables, with the exception of 
eliminating the approvals backlog by April 15th.
    In spite of our inability to clear the backlog of 
approvals, we have made steady progress toward significantly 
reducing that number. Indeed, we have eliminated the backlog in 
special permits except for those applicants whose permit has 
been flagged for further safety fitness review.
    The IG issued its final report on Special Permits and 
Approvals Program this March. PHMSA has successfully addressed 
half of the ten recommendations identified there. With respect 
to the other five recommendations:
    First, PHMSA has finalized and is in the process of fully 
implementing three different action plans.
    Second, PHMSA is in the process of devising a plan to 
address the issue of special permits formerly issued to 
associations. As you know, last year a stop gap measure was 
implemented to reissue those special permits to association 
members. The next step is to require the individual companies 
affected to reapply under the new policy guidelines that 
require evaluating a company's fitness and level of safety.
    An online application will become available on May 1st. We 
expect to begin the reapplication process for individual 
business entities then. We anticipate tens of thousands of 
applicants from this process, which has the potential to dwarf 
the current backlog.
    Third, PHMSA is also in the process of continuing to refine 
its definition of what constitutes an applicant's fitness.
    Fourth, PHMSA is conducting and preparing complete 
evaluations that document that the level of safety being 
proposed in a special permit is as safe as or safer than the 
regulatory requirements.
    And finally, fifth, PHMSA has established time frames for 
resolving and implementing longstanding safety concerns, such 
as those related to lithium batteries and wet lines.
    On April 7th of this year, the IG issued a second 
Management Advisory relating to PHMSA's oversight over the 
Explosives Classification Approvals Program. That report 
focused on the process for reviewing and authorizing those 
approvals and the oversight of explosive testing agencies.
    PHMSA has already given immediate attention to those issues 
by issuing standard operating procedures for those approvals in 
January; establishing special requirements for inspection, 
management, and oversight of approved explosive testing 
agencies in March; and establishing a strike force of 
inspectors and scientists who created a detailed protocol and 
visited and reviewed each explosives testing lab.
    In summary, PHMSA has taken swift and aggressive action to 
address all the concerns identified by the IG and this 
Committee. It took many years of neglect for the program to 
arrive where it is today, and the changes we have proposed to 
make will not happen overnight and we expect continual 
challenges along the way. But successful implementation of 
these action plans is one of my highest priorities.
    In closing, I want to thank this Committee and its staff 
for the detailed work it has done to highlight the problems 
with these programs and its assistance in securing additional 
resources to fix the problems. Thank you. I look forward to 
answering any questions you might have.
    Mr. Oberstar. Thank you very much for a very detailed 
response, a very thorough presentation and for your rigorous 
work on following through on the various deliverables. It is 
the first time we have had this complete a presentation from 
PHMSA. You mentioned backlog and the fireworks industry--well, 
I don't think he is speaking for the association, he is 
speaking for himself, but the witness said that there is a 
backlog of up to two years.
    What is the backlog that you inherited when you took 
office, of all of the requests submitted? We have a listing of 
approvals going back ten years, but what is the backlog?
    Ms. Quarterman. Well, I don't know exactly how many we 
inherited, but I can tell you that we haven't been there for 
two years, so we inherited at least a year and a half of that, 
and we have been processing approvals in record time.
    If I can address the question of the backlog. In December, 
several associations asked for a meeting with me with respect 
to the backlog, specifically, those related to fireworks and 
the coming 4th of July, and we made a commitment then that we 
would do our very best to process those things as soon as 
possible, and that is how the April 15th internal target date 
came about. We immediately increased the staff there by 50 
percent and trained a number of new people on the new 
processes. But you have to understand that there are new 
processes that have added additional time to examining 
approvals. Despite that, we have been able to significantly 
decrease the backlog.
    There was a backlog when we started; it increased during 
the time of responding to the IG and this Committee's concerns 
and putting in place new standard operating procedures, but 
when we started in January and added more staff, there was 
about 5600 approvals waiting to be processed. Today there are 
2600, approximately. And of those about 40 percent have 
actually been completely processed.
    We have found a bit of a bottleneck in our own process. We 
require a signature of a higher authority once they have been 
reviewed, just to make sure that everything is appropriate. 
About 40 percent of those are in that bottleneck and we are 
working to identify additional resources to try to clear that 
bottleneck up.
    Sixteen percent of those are in the middle of fitness 
review, something that we think is absolutely important and we 
don't want to short-circuit that. Another 13 percent are 
pending additional information. Only about 30 percent of that 
current backlog is still in the process of being reviewed. We 
have been processing about 1,000 approvals a month with our 
additional resources, and we are having 12 new people start on 
Monday.
    Mr. Oberstar. By new resources you mean more people.
    Ms. Quarterman. Yes.
    Mr. Oberstar. The term resources is sort of a euphemism. 
When we mean people, I think that is important to state.
    Ms. Quarterman. People.
    Mr. Oberstar. I understand from the documents that your 
agency submitted to Committee staff, which I have reviewed, 
that there are 1,100 fireworks approvals already completed, but 
5,000 submitted. Is that a number above previous years, the 
submissions? Is that about in line?
    Ms. Quarterman. I know that the trend has been going up. I 
can ask the staff to look at that and give you an absolute 
response.
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    [GRAPHIC] [TIFF OMITTED] T6160.018
    
    Mr. Oberstar. The witness from the Phantom Fireworks 
Company writes in his submission to the Committee they, ``like 
hundreds of consumer fireworks retailers and professional 
fireworks display companies will not have one new fireworks 
product to offer in the professional displays or in our retail 
facilities because our EX applications have been pending review 
and approval for an unforeseen and seemingly excessive amount 
of time, ranging from months to two years.'' Do you have a 
comment on that?
    Ms. Quarterman. My comment goes to what I said initially, 
which is that we are trying to process these as thoroughly and 
quickly as is humanly possible. It takes a great deal of time 
to do this and we are committed to getting them--with respect 
to the ones that are in the midst of a more thorough safety 
fitness review, I think the Committee wants to make sure that 
we do all of our due diligence there, and we are not going to 
rush those. We are not going to rush anything.
    Mr. Oberstar. Well, there are also press reports that I 
have followed from China--I follow events from China rather 
carefully--that ports have been closed over the last two years 
because of labor problems and that there are labor problems at 
the site of Chinese fireworks manufacturers because workers are 
unwilling to do this kind of work, and only one shipping 
company that we have received information on is willing to 
transport fireworks to the U.S. Does that have an effect on the 
ability of the industry to------
    Ms. Quarterman. I would certainly think so.
    Mr. Oberstar. Mr. Graves offered an amendment at our 
Committee markup last December that would require PHMSA to 
develop and implement a rulemaking to specify the factors and 
criteria for the conduct of safety fitness reviews. We have 
talked with the Department previous to your service and since 
your swearing in on this matter. Are you making progress on and 
can you report to us on responding to that issue raised?
    Ms. Quarterman. Yes. As a general matter, the Department 
issues a rulemaking in the instance that there is a substantive 
change to the law or proceedings. In this instance, the fitness 
review standards that we are putting in place are really 
internal interpretive documents. These are how we will 
interpret and process a fitness review application. They did 
not qualify what ordinarily goes through a rulemaking process.
    However, having said that, when I met with representatives 
from the associations, I informed them that we have an open 
door and we truly believe in the notion of open government. 
Therefore, all the standards that we have put in place will be 
put up on the Web and we welcome their review of those 
standards and their comments, and we will incorporate them as 
we see appropriate.
    Mr. Oberstar. Thank you.
    Mr. Scovel, you have specified in your completed report and 
in your presented testimony that PHMSA continues to grant 
``blanket authorizations'' for special permits and approvals to 
trade associations without verifying individual member 
companies' fitness to carry out the terms and conditions of the 
permit. This is after the Department testified last year that 
no permits will be issued to associations. Why is this practice 
continuing?
    Mr. Scovel. Well, Mr. Chairman, we heard from the 
Administrator this morning that the agency views the practice 
of continuing to issue blanket authorizations to trade 
associations as an interim measure in order to essentially buy 
time, it sounds like, for the agency to complete its backlog, 
get its application process online and be prepared to accept 
and process what appeared to be literally tens of thousands of 
individual applications from members of trade associations who 
formerly had received these blanket authorizations.
    You are correct, sir, back at the last hearing, Deputy 
Secretary Porcari very forthrightly stated--and I am referring 
to page 36 of the hearing record--``Mr. Chairman, no permits 
will be issued to associations. We are in the process, as part 
of the action plan, of making it clear that permits are not 
issued to associations. After appropriate review, they are 
issued to companies.'' And at that time PHMSA had reissued 
special permits to associations, plus members, in an effort to 
make clear that members, not just associations, were in receipt 
of those special permits.
    Our work has shown, sir, however, that between the period 
of January 1st, 2010, and March 31st of this year the agency 
granted seven more such permits and authorizations to trade 
associations. Uncertain why again, sir, unless it is as an 
interim measure, but in light of the Deputy Secretary's 
statement to the Committee that the practice was to cease, it 
is puzzling, frankly.
    The bottom line, sir, is that the agency owes the American 
public, in fulfilling its safety responsibility, an individual 
determination of member fitness to carry out the activity that 
is authorized in the special permit. By continuing to grant 
special permits to trade associations, the Department and the 
agency, unfortunately, is not fulfilling that responsibility.
    Mr. Oberstar. Thank you for that objective assessment and 
analysis. There is no other arena of safety that I know where 
an association conducts safety reviews for its members.
    Ms. Quarterman, can you assure us that you will not be 
issuing more association permits?
    Ms. Quarterman. Well, let me begin, Mr. Chairman, by saying 
that I think it is absolutely unconscionable that associations 
have been granted special permits and approvals in this manner. 
It is completely inappropriate; it should have never happened. 
Given that it has happened, we have to determine how to deal 
with that.
    In September, the determination was made that, in the 
short-term, those permits that had been granted to associations 
would be revised to say the members of associations. To my 
knowledge, no additional permits have been granted that only 
deal with associations; I believe all the ones that have been 
issued relate to members of associations.
    But that is not enough and we recognize that. The plan has 
been that, beginning on May 1, when we finally have an online 
application process, applications by which all of these 
association members can individually put in their application--
and they can't do it without completely filling in the form and 
giving us all the information that we need--that we will then 
begin to try to process those.
    Hopefully most of the backlog will be gone by then. As we 
know, there is still some, but most of the backlog will be gone 
and we can begin to process what we expect to be a huge number 
of applications.
    In addition to that, we are looking, as you know, very, 
very closely at the notion of incorporating these special 
permits into the existing regulations. In my view, we should 
make special permits special again; there should not have come 
to the point in time where there were so many special permits 
being issued. Many of these issues have been outstanding for 
years and they should have been incorporated into regulations.
    We are in the process of looking at the special permits 
that have been formerly issued to associations to ensure that 
those special permits--to determine whether they can be put 
into the regulations. We think between 66 and 75 percent of 
those permits that were given to associations can be 
incorporated into the regs, hopefully very, very soon, so that 
we can scale back the number of special permits that are 
necessary in general.
    But, Mr. Chairman, I give you my commitment that in April 
we will begin the long process of going through all of these 
association-related special permits, regardless of what the 
face of those documents may say about their term. That is our 
plan.
    Mr. Oberstar. Thank you very much. I see the beginning of 
an agency culture of safety taking shape under your leadership 
and a huge backlog of work to be accomplished. The advocates 
for industry, no matter what industry it is, always tell this 
Committee, well, you know, we haven't had an accident, this is 
very safe, we haven't had a fatality, until a fatality occurs.
    And the way we assure that there are no fatalities or 
injuries, or get them down as close to zero as possible, is to 
have a corporate culture of safety--safety begins in the 
corporate boardroom--and an agency oversight culture of safety, 
so that we put in place the procedures, the processes that 
assure that all the responsibilities are begin carried out in 
the public interest for the safety of the public.
    Now I yield to Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman. I appreciate it.
    Ms. Quarterman, once the backlog is addressed, can we 
expect a backlog of this magnitude to happen again?
    Ms. Quarterman. I should certainly hope not. Our plan, as I 
mentioned, is to incorporate as many of the special permits 
that are currently out there into regulations as possible. We 
have identified about 80 special permits already that can go 
into the regs. We have, thanks to the work of this Committee, 
also obtained additional people and dollar resources to help 
going forward in the future. We expect 12 new people to start 
on Monday. In the fiscal year 2010 budget, we were given 16 and 
12 of those are starting.
    In addition to that, I think we need to, once we have 
resolved the current backlog issue, look very closely at some 
of the current practices and provisions, and begin to figure 
out how we can do these things better. We are automating as 
much of our process as possible, but that is a long-term plan.
    Mr. Graves. I worry a little bit about--and I know part of 
what you have is you inherited. Before the audit you had about 
500 in the backlog. Then you got up to 5600 you said. Now you 
are down to about 2400, which is still a tremendous backlog. 
And this is an industry that is extremely dependent on timely 
approval.
    Now, you made the statement just a little bit ago I am not 
going to rush these applications. Nobody is asking you to be 
less--and I think it is fantastic that we are going to be more 
safe. As the Chairman pointed out, you can always be safety 
conscious. But we shouldn't lose sight of the fact that the 
Government still has an obligation to do this stuff in a timely 
manner. Nobody is asking you to sidestep the process.
    But when you say I am certainly not going to rush, it 
almost takes the tone that I am going to do it in my own sweet 
time, and that is the wrong--and I am not criticizing you, I am 
just saying don't bleed over into that, because you have an 
obligation to the American people, yes, but you also have an 
obligation to your customer, and that is an industry that is 
highly dependent on a timely approval process.
    And it is not just in fireworks. I have the ATK 
manufacturing facility in my district. They are extremely 
concerned about this. We have anhydrous. We are right in the 
middle of putting on anhydrous right now, ammonia, in 
agriculture; and I am hearing complaint after complaint after 
complaint about this process, which creates even bigger 
problems. If we can't get enough approvals out there, then we 
bleed over into hours of service because we have less drivers 
out there being able to move material. It is just a big 
problem.
    But I encourage you, please think about the incredible 
problems you can create if you don't get those applications 
taken care of in a timely manner. We have already heard and we 
know that the fireworks industry, at least, are going to be 
working with old product, and it is an industry that is 
constantly changing its themes, constantly changing its 
marketing, and you have to get approvals for new product, and 
it creates a whole lot of problem.
    It is also an industry that comes and goes very quickly. 
What I mean by that is we are moving right in the process of 
trying to move product around the Country, and after July 4th 
it just quits. It absolutely just quits. So there is a limited 
amount of time or money to be made in a very short period of 
time, and it is dependent heavily, again, on the Government, 
and the Government needs to be responsive to the folks that 
depend on it.
    So I encourage you. I like what you are saying about being 
safety conscious and moving in that direction, but we have to 
do this quicker. And that doesn't mean you have to sidestep it; 
you just have to do it quicker.
    Ms. Quarterman. Can I respond?
    Mr. Graves. Yes.
    Ms. Quarterman. I agree with you, and I didn't mean to 
suggest that we don't think it is important to process those 
applications. That is why we put in the additional 12 staff 
people at the beginning of the year. And in terms of being able 
to do all of the steps that have been required, I would just 
point to the fact that we are doing those now, when they 
haven't been done in the past.
    For example, since the beginning of the year, we have done 
close to 7,000 computer fitness reviews, we have done 400 
second-level fitness reviews, and about 70 onsite inspections. 
And this compares to about, I would say, less than 100 in 2008. 
So we are doing these things.
    Mr. Graves. Well, I look forward to working with you and 
look forward to resolving a lot of these issues.
    Thank you, Mr. Chairman. I appreciate it.
    Mr. Oberstar. Mr. Graves mentioned movement of anhydrous 
ammonia, and all of us from farm districts would be concerned 
about that. What are the factors involved in a review of a 
permit for anhydrous ammonia and how much time does it take to 
process such a permit request?
    Ms. Quarterman. I would have to get the details on that for 
you and respond in writing, Mr. Chairman.
    Mr. Oberstar. It would be important to do that within a 
week.
    Ms. Quarterman. Absolutely.
    Mr. Oberstar. Get that to us and we will share it with Mr. 
Graves and with all Members of the Committee.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6160.019
    
    Ms. Brown.
    Ms. Brown. Mr. Chairman, I am just going to follow up on 
your question that you asked.
    As late as April 2010, you issued blanket approvals, and I 
am more than concerned about the associations, I am more 
concerned about the history and disqualifying people that don't 
have good safety records. Can you explain what procedures are 
you all putting in place? It is not just saying if an 
association has an A rating and their participants have an A 
rating, that is one thing. But if you have people that have 
poor histories, then, to me, those are the ones that need to be 
flagged.
    Ms. Quarterman. I share your concern. And with respect to 
the permits that had formerly been issued to associations, in 
the interim period they were reissued to the members of the 
associations so that, at least from a legal perspective, we had 
the appropriate chain who was responsible legally for those 
things. Going forward, beginning in May, they will go through 
the entire process, which includes the safety analysis and the 
safety fitness checks, and everything that anybody who asks for 
an approval might be required to do.
    Ms. Brown. Would you please respond, sir?
    Mr. Scovel. Thank you, Ms. Brown. I have some information 
that may shed further light on your question, as well as Mr. 
Graves' and Mr. Oberstar's concern. In reviewing the issuance 
of special permits, since the hearing last September, when the 
Deputy Secretary said that that practice would stop, my staff 
uncovered that, on March 10th of 2010, the agency issued a 
special permit authorizing the transport of drums containing 
ammonia solutions, a poisonous and flammable substance, to an 
association upon the association's request. Nineteen members 
were included in that issuance and they are now authorized to 
do this.
    We reviewed the paperwork behind that application and found 
that an association representative stated that 35,000 shipments 
had taken place in the preceding four years with no incidents. 
We ran some checks on some of the member companies of the 
association and identified one member company who had had 17 
incidents, 7 of which were serious, and 11 violations, all 
within the last four years.
    I think this illustrates the very pernicious influence 
aspects of what Administrator Quarterman has properly called an 
unconscionable practice of issuing special permits and 
approvals upon request by associations.
    Ms. Brown. Mr. Chairman, I think that is the crux of our 
problem there.
    Mr. Oberstar. It certainly is, and you have been on this 
right from the very beginning, and I appreciate your continued 
persistence, and that of the IG and our new Administrator to 
address this issue, and eventually, with continued work, they 
will work their way through this and we are not going to have 
these associations self-regulating.
    Ms. Brown. Well, I am going to yield back my time because I 
know other Members have questions, but I will submit my 
additional questions for the record.
    Mr. Oberstar. I thank the gentlewoman.
    Before I recognize Mr. Shuster, I would just like to 
announce that I have invited Mr. Wilson, a colleague from Ohio, 
to join us during the hearing. A Member from another Committee 
is interested in the work of our Committee and to sit with 
Members, but not to participate or to ask questions.
    Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman. I appreciate what is 
happening at PHMSA with improvements to the process, or 
attempting to make those improvements to create a culture of 
safety is important, but many of these companies already have 
cultures of safety, and that is why there are so few--so rare, 
I should say, accidents with the movement of many, many of 
these products.
    My question, though, is to Mr. Scovel. On July 28th, 2009, 
and then April 7th, 2010, a Management Advisory was issued by 
the Office of Inspector General that identifies weaknesses in 
PHMSA's process for its Special Permits and Approvals Program. 
Have you identified any fatalities, injuries, or property 
damage from those weaknesses?
    Mr. Scovel. We have not, sir. Those were not included in 
the scope of our reviews of the Special Permits and Approvals 
Program.
    Mr. Shuster. Not in your scope. Is that something in the 
future that you will look at?
    Mr. Scovel. We could, upon request of the Committee, most 
certainly.
    Mr. Shuster. It would seem to me--again, as I continue to 
make the point that we need to improve what PHMSA does, but to 
date these companies, these corporations, these industries are 
very safe in what they are doing, which I appreciate.
    Ms. Quarterman, in your testimony you mentioned that PHMSA 
has met or is on target to meet all planned deliverables in the 
approvals action plan with the exception of eliminating the 
approvals backlog by April 15th. When do you expect to resolve 
that? I think you started to answer that; I don't know if we 
got a date out of you when you believe that you are going to 
resolve that heavy backlog.
    Ms. Quarterman. We have not set a date on that as of yet. I 
would estimate that with about 2,600 approvals and we are 
processing about 1,000 a month, that it should be done within 
the next three or four months. I have to say, when we started 
this, my staff thought that we might be done in December, and 
we suggested that April was the better target date. So we are 
working as hard as we can.
    Mr. Shuster. Are you giving any priority to the fireworks 
industry, seeing as though they have, pretty much we know, date 
certain that July 4th is when all their products are sold to 
meet that time line?
    Ms. Quarterman. Yes, we are well aware of that and we have 
talked with members of the association about sending us 
information about high priority approvals, and have been 
processing those as soon as we can. Some of them may be stuck 
in the fitness review, and that is something that we just have 
to do.
    Mr. Shuster. Again, I think Mr. Graves made the point there 
are going to be jobs out there that are going to be lost if we 
don't get these things moving. Some of these companies, again, 
as we have pointed out, are not going to survive.
    It is also my understanding that the consumer fireworks are 
subject to very detailed construction performance chemical 
composition limits, labeling requirements by the Consumer 
Products Safety Commission, and recently mandated to undergo 
third-party testing to ensure compliance. Given all of these 
requirements, what does PHMSA's testing requirements 
classifying these products for transportation add in terms of 
safety?
    Ms. Quarterman. Well, I think they add a great deal. We 
have existing requirements under the regs that companies have 
to meet in order to transport these materials. I am not 
familiar with the standards that are required by the Consumer 
agency. We would be happy to take a look at those to ensure 
that there is no overlap. We certainly don't believe that two 
agencies should be doing exactly the same thing. Our focus is 
on transportation, and we look very closely at the safety 
record of people who are transporting these goods, the number 
of incidents, how they have complied with enforcement measures. 
But I would be happy to take that as an action item.
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    [GRAPHIC] [TIFF OMITTED] T6160.020
    
    [GRAPHIC] [TIFF OMITTED] T6160.021
    
    Mr. Shuster. And a final question quickly. I think you have 
answered it, but changing the regs to include some of these 
special permits into the regs to make it easier, to make it a 
little quicker, is that something that I hear you saying you 
are doing, you are changing the regs to try to take into 
consideration the different things that are happening in these 
industries that make it safer and easier?
    Ms. Quarterman. Absolutely. We are in the process of doing 
that.
    Mr. Shuster. Thank you very much.
    Mr. Oberstar. The Chair now recognizes Mrs. Napolitano.
    I would note that the bells rang for a vote; we have 13 
minutes remaining. We can go for several more witnesses.
    Mrs. Napolitano. Thank you, Mr. Chair.
    I cannot agree more that this is a very, very critical 
issue for a lot of us, and I connect myself with the remarks of 
Mr. Sires, that we are in LA. There is no open land, so we are 
very critically impacted if there are derailments, and in the 
past I have made it quite clear that there have been issues of 
placarding, that there have been issues of the safety training 
of the employees, all of that.
    Mr. Shuster was referring to the economy and the jobs that 
could be lost and the imports, I am concerned as well about the 
imbalance of trade with China. We are getting more goods in 
here and not really getting the right tariffs form, which has 
nothing to do with this.
    However, when you have employees who actually bypass a 
system, are you going back and retraining the employees or 
putting in their record somewhere so that you know the next 
time something happens, that you are able to go back and charge 
those employees with something in the record, if nothing else? 
Because they are not doing the general public any good if they 
continue on the same track based on the last Administration's 
way of doing business.
    Ms. Quarterman. Absolutely. I think if you look at PHMSA 
now, you will see an entirely new cast of characters. We are in 
the process of implementing these new standards of operating 
procedures; they are less than six months old. My personal 
standard is zero errors. We are not at zero yet and, because of 
that, we have put in place a quality assurance program where we 
are going back behind ourselves, in terms of the things that 
have been issues, to determine whether or not there were 
mistakes made where safety fitness reviews were not done, 
coordination was not done when it should have been, and that 
kind of thing. So far we have seen about a 3 percent error 
rate. We are going to correct that. And it is pretty clear who 
is responsible------
    Mrs. Napolitano. So you are taking those steps?
    Ms. Quarterman. It is pretty clear in the process who is 
responsible for what, so if we see somebody who doesn't get it, 
they will.
    Mrs. Napolitano. Mr. Scovel, the young lady has testified 
that they have moved out on those actions to address those 
recommendations. It probably has been asked in a different way 
and work on the five has been completed. But are these actions 
enough to be able to address your recommendations? And of those 
five remaining, what do you consider to be most critical that 
PHMSA should focus on?
    Mr. Scovel. Thank you, Mrs. Napolitano. PHMSA has made 
admirable progress on five of our ten recommendations that were 
issued in our March report. Five do remain open. I would 
identify three as the most significant in my mind. The first 
has to do with resolving the situation regarding issuance of 
special permits and approvals to trade associations. Ms. 
Quarterman has addressed that question several times this 
morning.
    Number two would be fitness determinations. The point has 
been made this morning that PHMSA is in the process of refining 
its definition of what constitutes an applicant's fitness to 
conduct the activity authorized by the special permit or 
approval. That needs to be finalized and brought to bear.
    We have found, however, that fitness determinations have 
not been consistently and properly implemented in the three 
month period that we evaluated. We commend the agency, however, 
for its recent adoption of the quality assurance team that 
Administrator Quarterman mentioned just a minute ago, following 
behind on themselves to make sure that they drive their error 
rate to zero.
    We would also commend the agency's attention their 
database. The Hazardous Material Intelligence Portal, which was 
recently rolled out, it is a tremendous start, however, we have 
found data inconsistencies and inaccuracies between that 
database and others maintained in other operating 
administrations within the Department, and those inaccuracies 
cause us to question the utility of PHMSA's HIP database in 
making the fitness determinations. So that certainly requires 
the agency's continued attention.
    Mrs. Napolitano. PHMSA?
    Ms. Quarterman. With respect to those three items, I think 
there is associations I have addressed a couple of times, and 
we don't have much time on that. With respect to the last item, 
which is IT resources, we have come a long, long ways from 
where we were, which was nowhere, basically, on the data front. 
We have a five-year program for improving our data resources. 
The Hazardous Materials Intelligence Portal, HIP, which Mr. 
Scovel referred to, is something that is very, very impressive. 
It is not perfect. We actually have data from 20 different 
Federal agencies on all of their inspection and enforcement 
activities that we can view.
    Mrs. Napolitano. OK, but do you communicate with them? Do 
you share information? Do you ask for information?
    Ms. Quarterman. Oh, absolutely. They are using it as well. 
All of 20 agencies have input their data; they are keeping it 
up to date. They are using it for their own operations, and it 
is, in fact, a finalist for a Government-wide award.
    Mrs. Napolitano. I think my time is done.
    Thank you, Mr. Chair.
    Mr. Oberstar. The gentlewoman's time has expired.
    The Chair recognizes Ms. Edwards of Maryland.
    Ms. Edwards. Thank you, Mr. Chairman, and I will try to go 
quickly.
    Thank you for your testimony. We have heard from PHMSA in 
this process several times even since my service on the 
Committee, and it is actually really positive to hear that 
there is a real commitment to safety and to evaluating safety, 
and that was certainly a promise that was made to us by Deputy 
Secretary Porcari the last time he was here.
    I have a question. I am trying to get to whether the 
special permitting process is really special, because it has 
seemed that it is the rule and there is not anything special. 
So I wonder if you could tell me that in the backlog that you 
are processing, especially with respect to trade associations, 
if I am a trade association and I have been operating and have 
had a mixed kind of safety record or an unknown safety record, 
what is it that, in the current process, keeps me from hiding 
behind the trade association to continue operating unsafely?
    Ms. Quarterman. Beginning on May 1, we will require that 
every individual entity that has previously been operating 
under an association or a members of association permit would 
apply individually, and part of that process is to go through 
each individual company's record of safety and incidents and 
compliance. So that is what would prevent that from happening.
    And in terms of making special permits special, that is 
something that I share with you completely, and that is why we 
are in the process of trying to turn as many of the special 
permits that have become just regular operating procedures for 
the Government over the past several years into regulations and 
remove them out of that special permit column, where they 
shouldn't be.
    Ms. Edwards. So in the ones that were renewed where the 
trade association had the permit and then the renewal process 
was issuing to members, if I were to go through each one of the 
files of those members, is there some sort of common 
documentation currently that tells me about their safety so 
that I could compare apples to apples even within a sector?
    Ms. Quarterman. Not currently. That is what we are doing 
beginning in May.
    Ms. Edwards. Then I would just like to ask you on the 
permits that you have reviewed, there is still a highlight in 
the Inspector General's report regarding the coordination with 
the impacted mode of transportation. What is it in your action 
plan that changes that so that the authority for the mode of 
transportation has some point of contact that is documented 
with respect to the issuance of a permit?
    Ms. Quarterman. One of the items in the first and the 
second action plan was to create a coordination vehicle and 
document about how coordination should happen in the future 
with respect to reviews of special permits and approvals. We 
have met with all the modes who are impacted and have come up 
with guidelines about when it is appropriate to coordinate with 
those agencies and when it is not.
    Many of the agencies are not interested in coordinating on 
certain issues, for example, when there is a party to special 
permit or approval, and many of the instances that Mr. Scovel 
cites in his testimony as being instances where we failed to 
coordinate when we were supposed to--and I think perhaps all of 
them--relate to those instances where the mode itself has not 
asked for coordination to occur.
    Ms. Edwards. But shouldn't there be something affirmative 
in the file, in the record where the mode of transportation 
actually signs off on whether or why it is decided that there 
is no need to coordinate?
    Ms. Quarterman. Yes, and there is. And we are actually in 
the process of developing memorandums of understanding with 
each of the modes, and we will ask them again do you really not 
want to coordinate on these issues, since the Inspector General 
believes that we should. We certainly can't force them to 
coordinate with us on these particular kinds of special permits 
or approvals, but we can raise it with them and say the 
Inspector General believes that it is important that you take a 
second look at these; perhaps you should consider coordination 
on those as well.
    Ms. Edwards. But where there is a safety impact, whether 
the agency wants to coordinate or not, why would that matter?
    Ms. Quarterman. I can't speak------
    Ms. Edwards. My time has run out and I know we have to 
vote.
    Ms. Quarterman. Yes, I can't speak for the other agencies 
on that, sorry.
    Ms. Edwards. Thank you.
    Mr. Oberstar. I thank the gentlewoman.
    We have one minute remaining on the vote ordering the 
previous question on a motion to instruct, so the Committee 
will stand in recess until after this vote and come back as 
soon as possible. We have this vote on the motion and we have 
three other votes, so this could be about a half hour recess of 
the Committee. We stand in recess.
    [Recess.]
    Mr. Oberstar. The Committee will resume its sitting. 
Unfortunately, we had some additional votes unexpected when the 
Committee recessed, so it took us longer than announced at the 
moment of recess.
    I want to come back, Ms. Quarterman, to the amendment 
proposed by Mr. Graves, but withdrawn at our Committee markup 
in December, to require PHMSA to develop and implement a 
rulemaking to state specific factors and criteria to be used in 
safety fitness reviews for special permits and for approvals. 
You started responding to that, but I think you got sidetracked 
with something else.
    But come back to, now, you are revamping the whole agency. 
You brought in 12 new people. That brings your total to what, 
36 or so personnel to conduct permit reviews, to expedite the 
process. I am sure it took a period of time for training those 
personnel to understand the job they must do and bring them up 
to speed.
    But so that there is continuity and reliability in 
measurement, do you believe it is necessary, as Mr. Graves 
proposed, and have you undertaken to establish criteria for 
these fitness reviews?
    Ms. Quarterman. Yes.
    Mr. Oberstar. And has it been done in the form of a 
rulemaking within the agency?
    Ms. Quarterman. Yes, we have established criteria. As I 
mentioned earlier, the question of whether something should or 
should not be a rulemaking is one of whether it is something 
that affects our internal processes or one that is really 
regulating the industry or the constituents outside. In this 
instance, it is our view that this is something that relates to 
the internal processes within PHMSA and is not appropriate for 
rulemaking.
    But having said that, we have established criteria, many of 
them, and we are happy to share those. In fact, we will put 
them on the website so that people can look at them and comment 
on them and we can improve them going forward. I don't believe 
it is necessary to have a rulemaking about how we do our 
business inside.
    Mr. Oberstar. Well, I think that is something that we will 
want to pursue. The criteria that you now have that are 
obviously in some, I would imagine, in some written form for 
guidance members, I think it would be useful for us to have, 
not in a hearing setting, but at a meeting, conference type 
meeting with Mr. Graves and others who are interested so that 
they can see and we can determine whether anything additional 
is needed.
    Ms. Quarterman. I think that is a fantastic idea. We would 
love to do that.
    Mr. Oberstar. And I will convene such a meeting with 
participation of Mr. Graves, Mr. Shuster, and Members on our 
side.
    In the testimony of the witness on behalf of fireworks, Mr. 
Weimer, their general counsel says--I am trying to find the 
specific location--a single factory may make a particular 
specific product, wrap it with different labels or half dozen 
different U.S. importers. They are importing the exact same 
product by the exact same factory, but since each importing 
company's product has a different name and different packaging, 
each importing company must apply to PHMSA for a separate and 
unique EX number for each of these functional identical 
products. This results in time, effort, money wasted, expense 
by Government and industry.
    Is that exact? That is, I think what he is getting at here 
is a request that PHMSA somehow make a determination that a 
particular factory makes a particular product for a number of 
U.S. Companies, wraps it in different labels, so all of those 
should be considered as one product.
    Ms. Quarterman. Well, I was struck by that testimony as 
well and took it as an action item on ourselves to further 
investigate exactly what he is talking about. If it is in fact 
the same company, the same product, and all there is is a label 
change and we are requiring five or six different processes 
because of that, maybe we should look at that closely to see 
whether there could be some streamlining.
    But, as with anything, the devil is always in the details, 
but we really have to look and see exactly what he has 
expressed there. If there are different companies at different 
locations doing this, then absolutely I think they need to be 
applying for different permits.
    Mr. Oberstar. Well, that validation would require sending 
inspectors to China, I would think, to the manufacturing 
facilities there.
    Ms. Quarterman. Yes. That is not something that we haven't 
gotten into yet today, but it is certainly a huge issue that we 
want to address going forward, because the question of doing 
foreign fitness checks is one that, in my mind, is absolutely 
something that needs to be done on a very thorough basis, that 
requires resources additional to what we have, and given the 
number of fireworks that are entering this Country from China, 
a lot more can and should be done.
    Mr. Oberstar. That could be a very difficult problem. We 
have a similar issue in aviation, where--and Mr. Scovel knows 
this well--with foreign repair stations. U.S. rules require 
inspection of those facilities, periodic inspections, and also 
action to validate the criminal background checks of airline 
mechanics, drug and alcohol testing, and procedures that are 
used to certify the site certified by the foreign host 
government of the site of that repair station, and to validate 
that it is in compliance with U.S. standards.
    Well, to do all those things requires permission of the 
host country to come in and do that inspection, and in the 
aviation sector we just simply say, if you don't let our people 
in, then those aircraft can't be maintained there or admitted 
into the U.S. airspace. You want aircraft to fly in U.S. 
airspace, you comply with our rules.
    Well, China is a little different. They don't particularly 
warm to ideas of foreign inspectors on their soil, so give me 
your reaction to that.
    Ms. Quarterman. Well, I agree with you 100 percent. I think 
it is an extremely thorny question. We are trying to work with 
it on a country-to-country basis. We do have a relationship 
with China and we are working with them to explain to them what 
our rules and regulations say, and hope that they will begin to 
adopt some of that. But, again, I think this is an area where 
we need to spend a lot more time examining how things should be 
done in the future.
    Mr. Oberstar. From the website of one of the industry's 
members, fireworks association members, is the following very 
instructive report: ``A number of factors in China''--quoting 
from their website--``have accumulated over recent years to 
pose big challenges for our industry, said Pyrotechnical 
President Steven Vitale. Exchange rates, taxes, fireworks 
classification, shipping costs affect all of us in the 
fireworks business.''
    It goes on to say ``The fireworks supply chain depends 
heavily on China and its economy. These changes were all 
foreseeable, but the timing and cumulative effect are creating 
a perfect storm.''
    So then he goes on to list a number of items: shipping 
costs, materials and labor, exchange rate, China's tax rebates, 
fireworks classification changes, and warehouse fires. Chinese 
news reported a series of explosions in the shipping port of 
Sanshui caused by a fire that spread through 20 fireworks 
warehouses.
    I won't go on reading; I will include the whole document 
for the Committee record. There were other reports of 
explosions in Chinese factories. It shows that there are some 
serious safety concerns at the point of manufacture just on 
these at least three major reports since the beginning of this 
year, including this one from an industry member website.
    Are you following those items?
    Ms. Quarterman. I have not personally been following them; 
hopefully, someone within PHMSA has been. If they haven't, I 
will ensure that they do in the future.
    Mr. Oberstar. Well, I invite your staff to do that, to 
check on this, because this is in the chain of the manufacture 
of the product that finds its way into the U.S. marketplace, 
and you may be simply--your agency may simply be reviewing the 
end product of this chain, but if you aren't reviewing the 
beginning of the process, then your inspection and validation 
and permitting may be lacking.
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    [GRAPHIC] [TIFF OMITTED] T6160.023
    
    Mr. Scovel, do you have any comments on that?
    Mr. Scovel. I would agree with you and with the 
Administrator that that does seem to be certainly within the 
manufacturing chain something for the shipper and the importer 
to account for. We recognize the resource limitations that the 
agency is operating under if they are now to be expected to 
inspect multiple distant manufacturing points overseas.
    Mr. Oberstar. Thank you. I will withhold at this point and 
yield to Mr. Garamendi. Thank you for being here and for your 
patience.
    Mr. Garamendi. Mr. Chairman, thank you very much for the 
opportunity.
    Ms. Quarterman, how is it that you always seem to wind up 
in a most difficult job? In the mid-1990's, as I recall, at the 
Department of Interior, you wound up in an equally difficult 
job trying to straighten out some difficulties that were 
occurring there. It is good to see you back taking care of a 
very important task, and I wish you well at it. And to be able 
to work with you once again, although on the other side of the 
table, is going to be a pleasure for me.
    My question has to go to the association issues which were 
raised so many times in the early part of this hearing. Who are 
these associations? There must be more than one. Who are they 
and are these members of the association under State regulation 
in any way?
    Ms. Quarterman. I don't have a complete list of all the 
associations; I know one, for example, is COSHTA. And whether 
they are subject to any State regulations, not as relates to 
hazardous materials transportation, the issues that we are 
dealing with here I can provide you with a list, if you would 
like.
    Mr. Garamendi. Perhaps the IG has some information.
    Mr. Scovel. I do have a list. I can read them for you in 
the record, sir, or the agency could respond to you for the 
record. Whatever is most convenient for you.
    Mr. Garamendi. Just put it in the record; I don't need it 
right now.
    But my point here is that my recollection, for example, in 
California is that some of these associations are regulated at 
the State level, in the transportation, specifically. And then 
the question is, is it therefore not possible that some of the 
regulatory and oversight work done at the Federal level could 
be handled by the State, and then you could review the State. 
In other words, shift some of those individual business reviews 
off to the State and share this responsibility.
    Ms. Quarterman. Well, I think there certainly is a role 
that the State can play, and one that they have done to a 
certain extent, but not as much as we would like to see going 
forward, and that is on the front end, on the enforcement end, 
working with us to extend our current resources, inspection 
team on enforcement. We also work with them on what I consider 
the last end of the process, which is emergency response. We 
want to get it before we get into an emergency situation. But I 
think we can do more in that interim level.
    Mr. Garamendi. I am thinking specifically about 
transportation here, but I think it is also true in the 
agricultural sector, certainly for California, that those 
members of the association that are in those States that have a 
high level of review and criteria may be possible to shift to 
those States or accept from those States the review that 
currently you are doing and probably with limited staff to get 
that job done. I was thinking about the very large numbers in 
the earlier testimony that it may be possible. Could you look 
into that and if it makes any sense? I will certainly try to 
help you with California, with which I am somewhat familiar.
    Ms. Quarterman. Absolutely I will look into that. One thing 
we mentioned earlier, the IT, the HIP, where we have 20 Federal 
agencies putting in their enforcement data and all that. It 
would be great if we were to get State data in there as well, 
so we know even more to leverage the resources that exist. But, 
yes, I will look into that for you. And thank you for your kind 
comments.
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    Mr. Garamendi. Well, it has been a pleasure working with 
you in the 1990's, and it will be today also. Thank you very 
much.
    Mr. Chairman, I yield back my time. And my apologies for 
having to leave; there is another matter I must attend to.
    Mr. Oberstar. Quite all right. I had to absent myself to 
greet a friend, a constituent, and a State legislator.
    Ms. Quarterman, I want to understand better. When you send 
investigative staff out to do compliance reviews, what is the 
composition of the staff? How much time do they spend? What 
information are they looking for? How much hands-on time do 
they spend?
    Ms. Quarterman. The composition of the current staff is 
about--we started out with about 35 inspectors and now we have 
several more added to that team, and they are very well 
experienced in hazardous material issues, and I think the 
amount of time that they stay depends on the size of the 
company that they are asked to review.
    Mr. Oberstar. And do they make site visits? What do they 
look for? What is the nature of the site visit?
    Ms. Quarterman. Yes, they do make site visits. Sometimes, 
before they go, they get information about what the policies 
are with respect to hazardous materials by an individual 
company, but once they are there they dig further into that 
information onsite.
    If you would like for us to put together, as part of the 
fitness review conference, a sort of 101 about inspection, we 
would be happy to do that.
    Mr. Oberstar. I think that would be very important.
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    [GRAPHIC] [TIFF OMITTED] T6160.026
    
    Mr. Graves, in your absence, I asked Ms. Quarterman to 
document the issues that you raised and that were raised in 
your proposed amendment about factors and criteria, and that I 
would then convene a Committee meeting with you, Mr. Shuster, 
and whomever else, and Members on our side, and have an open 
and frank discussion about it and assess the status of their 
progress on this matter.
    Mr. Graves.
    Mr. Graves. Just thank you, Mr. Chairman. I appreciate that 
and I look forward to it.
    Mr. Oberstar. I have a number of other questions, but I 
don't think that I will pursue those at this moment.
    I would like, Mr. Scovel and Ms. Quarterman, for you to 
remain through the next panel; we may want to ask you to 
respond to any questions that they might raise. So we hold you 
dismissed at this point.
    Now Mr. Weimer, Vice President and General Counsel, Phantom 
Fireworks, Buck Valley Road in Warfordsburg, Pennsylvania. Your 
full testimony will be included in the record, and you may take 
such time as you require to make your presentation.

  TESTIMONY OF WILLIAM A. WEIMER, VICE PRESIDENT AND GENERAL 
                   COUNSEL, PHANTOM FIREWORKS

    Mr. Weimer. Thank you, Mr. Chairman, Mr. Graves. I 
appreciate the opportunity to be here today. My name is William 
Weimer. I am vice president of Phantom Fireworks, headquartered 
in Youngstown, Ohio. I also happen to be serving as President 
of the American Pyrotechnics Association.
    Phantom is the largest retailer of consumer fireworks in 
the United States, operating more than 1200 permanent and 
temporary fireworks sales facilities nationwide, including 
permanent facilities in 14 congressional districts represented 
by Members of this Committee. We employ over 400 full-time 
employees, and that number swells to about 2,400 during our 4th 
of July season.
    I am a private businessman. I came to Washington to testify 
today to convey our concerns regarding the unusual and 
significant delays in the issuance of the approvals. The delays 
have already substantially impacted the upcoming Independence 
Day holiday for my company and the entire industry.
    In order to ensure transport safety, all fireworks are 
required to have an approval issued by DOT, PHMSA. Ninety-eight 
percent of the firework approvals issued by PHMSA are done in 
accordance with procedures set forth in the APA Standard 87-1, 
which details manufacturing and performance requirements and is 
adopted by reference in Title 49 of the Code of Federal 
Regulations.
    Over the years, PHMSA has approved and assigned thousands 
of approvals for individual firework devices, and the safety 
record of firework products in transportation is excellent. The 
chemical formulations and manufacturing techniques for 
fireworks have changed very little in the past century. A 
company must apply for a separate and unique approval for each 
functionally identical product. Even a simple label change or 
name change now requires a new EX approval.
    This year, Phantom Fireworks and hundreds of consumer and 
professional display companies will not have new products to 
offer our customers due to the backlog approvals process. Many 
warehouses in China are full of products awaiting export to the 
United States. In many instances, American importers are 
required to pay for the product in advance, which means that 
not only are the products tied up, but significant capital of 
American companies is tied up. The severe approval delays have 
put a significant burden on these small companies.
    The backlog in fireworks approvals reached an all-time high 
of approximately 5,700 in December of 2009, compared to only 
508 in December of 2008, a thousand percent difference. 
According to a recent review by my staff of the approvals 
database, there remained approximately 4,600 applications 
pending for fireworks. I was gratified today to hear 
Administrator Quarterman indicate that that number is down to 
2,600. That is indeed good news. And in that context, we 
certainly applaud the efforts of Administrator Quarterman and 
the PHMSA personnel to create new policies to address these 
concerns that have been raised in the OIG audit.
    However, it may be, with respect to approvals, that too 
much emphasis was placed on creating plans and policies 
responsive to the Inspector General and not continuing to 
process approvals and keeping commerce alive. We are encouraged 
by the recent announcement of the new online approvals process. 
Without approvals, our products simply cannot be imported and 
transported. Many smaller companies have been forced to reduce 
their workforces because of this situation with the approvals.
    Now, in addition to the issues regarding the pending 
approvals, we respectfully urge PHMSA to revisit its new policy 
regarding expiration of the approvals. The expiration policy 
was initiated by administrative fiat, not pursuant to any law 
or regulation. While some reasonable expiration policy may be 
appropriate, a five-year expiration date is not. There are no 
safety reasons to have these approvals expire in five years, an 
arbitrary time period. We hope PHMSA will grant an immediate 
extension on all expiring approvals until this expiration 
policy is revisited.
    Finally, Mr. Chairman, we are very concerned about the 
criteria that will be utilized in making the fitness 
determinations now included as part of the approvals process. 
We would expect an appropriate and open process that includes 
notice of a rulemaking and an opportunity for stakeholders to 
be heard. We are especially concerned about the effect of the 
fitness determinations on the foreign entities.
    We are absolutely committed to ensuring safety in the 
manufacture and transport of our products. We actively promote 
fireworks safety in the use of the products to the millions of 
families across America who buy fireworks to celebrate the 
cherished tradition of freedom on Independence Day. Our 
industry is anxious to work in a cooperative fashion with PHMSA 
to streamline the process and to reduce the backlog of 
approvals without in any way compromising safety. We remain 
hopeful that the approvals process will improve rapidly so that 
the fireworks industry can continue to delight American 
families and retain the important tradition of celebrating with 
fireworks on the 4th of July.
    I thank you for the opportunity to address the Committee 
and I am happy to respond to any questions.
    Mr. Oberstar. Thank you for your testimony and for spending 
all this time to come here and be with us on this very 
important subject matter. As you heard and as you noted in your 
testimony, PHMSA is making substantial changes in the way it 
proceeds. They are a much more compliant agency than any time 
in my--let me see, 1985--25 years experience with this agency. 
At one time we had an administrator who had no idea how to 
define safety, no idea how to practice safety. That person left 
and then was brought back by a subsequent administration and 
continued to administer the agency in a haphazard manner, I 
would say.
    I think Ms. Quarterman is right at the agency. I think the 
work of the Inspector General has found shortcomings and 
failings in the previous operation of the agency and some 
shortcomings in the current functioning of the agency. As they 
add staff, as they work on their backlog and draw this down, 
this agency will be much more responsive in carrying out its 
duties and carrying out the safety fitness reviews.
    Have you had a safety fitness review at your facility?
    Mr. Weimer. I am sorry, I have no knowledge of that. We 
have never had PHMSA visit our facility to do any type of 
inspection.
    Mr. Oberstar. Do you know of members of your association 
who have been flagged for safety violations?
    Mr. Weimer. Oh, I am sure there are members of our industry 
who, from time to time, have had safety regulations. Whether 
that is in the context of this fitness review, I don't think.
    Mr. Oberstar. Now, I raised with Ms. Quarterman the issue 
that you cited about the manufacture--here it is--a specific 
product made by one company in China for several customers in 
the U.S. packaged differently, and I think her response was 
quite--showed understanding of your concerns and of the 
problems you have faced or might face with this. But would you 
agree that if the product is made at different companies in 
China, that each one of those, even though it is the same 
product made by other companies, should be individually 
reviewed?
    Mr. Weimer. I do. If they are made by different 
manufacturers, I absolutely agree with that.
    Mr. Oberstar. Do you have a suggestion as to how the agency 
could help, as Ms. Quarterman was suggesting they could, verify 
that in any given factory in China, PHMSA could validate the 
production of a particular product with different labels? Do 
you see any difficulty in accomplishing that objective?
    Mr. Weimer. I think it is a matter of visiting the 
factories. We have done that before with other Federal 
agencies. Consumer Product Safety Commission has been to China 
and visited factories, and I am sure that the factories would 
be happy to receive PHMSA representatives.
    Mr. Oberstar. And you don't see any problem with your 
producer companies in China providing access to------
    Mr. Weimer. Mr. Chairman, to use your analogy regarding the 
airline industry, if we tell the factories we can't buy your 
products unless you allow the representatives to tour your 
factory, they will allow them to tour.
    Mr. Oberstar. Thank you. We will proceed with that.
    Mr. Graves?
    Mr. Graves. Thank you, Mr. Chairman. You actually asked one 
of my questions. I was going to go down that line and see just 
what it would take to be able to get some sort of--you know, a 
Roman candle is a Roman candle. If we can just figure out how 
to do that. And I hope that the factories are going to be open 
to that. I am assuming the United States has to be the biggest 
customer out there of fireworks in China, and they have to have 
our business. Is that the case?
    Mr. Weimer. It is one of the biggest consumers. Actually, 
China itself has become a consumer recently, but the United 
States, I believe, remains the largest consumer of fireworks.
    Mr. Graves. I would expect that we could use that as a 
little bit of a lever to gain access.
    Another question. You mentioned in your testimony that you 
are concerned about the new approvals expiration policy. Can 
you tell me what the average shelf life of fireworks are? Do 
they expire? And that has obviously been a concern with using. 
We keep talking about how much of a problem we are going to 
have this year as a result. Can you kind of go into that a 
little bit more detail?
    Mr. Weimer. Yes, sir. The shelf life of the product is 10, 
12 years, easy. As long as the product is kept dry and doesn't 
get wet, it can be used 10, 12 years, easy. So my problem with 
a five-year expiration policy is that redlines the shelf life 
of the product. We actually are purchasing products with longer 
shelf lives.
    There is another aspect of DOT regarding boxes. Boxes, when 
you have boxes tested every two years, any boxes manufactured 
during that two-year period under that approval have a cradle 
to grave useful life and are permitted to be used beyond the 
two-year expiration.
    So, in our case, with the expirations, we have products in 
our warehouse now that had EX numbers approved more than five 
years ago that--if what I understand from the agency is correct 
and there is just a blanket expiration now of every EX number 
five years or older, which is what I was told last week--we 
have products in our warehouse that will have to sit there this 
4th of July, and, to compound the problem, we have no new 
products in our catalog this year. And then we are going to 
have a lot of old products that we can't move until the EX 
numbers are reissued, reapproved, or extended.
    Mr. Graves. I appreciate that, Mr. Weimer. I assume that--
obviously, your industry is very interested in safety also, as 
is everyone.
    Mr. Weimer. We spend a lot of time on safety. And, if you 
think about it, if somebody uses our products with bad 
experiences, they are not going to come back and buy more. So 
of course we do everything we can to promote safety with the 
trade organization. We have a special organization that gets 
the safety message out, the National Council on Fireworks 
Safety. Most fireworks companies hand out safety tips with the 
sales. So we are very concerned about safety.
    Mr. Graves. I appreciate that. This industry is 
extraordinarily important to my State of Missouri, as it is to 
many, many other States. There are a lot of jobs involved. And 
I think the Government should be responsive to the public's 
needs and also to the industry's needs, because it is having an 
effect on your ability to operate, and I am going to be working 
real hard with the Chairman and the Ranking Member to try to 
solve this problem that is out there and cleaning this up so we 
can get back to business.
    But I do appreciate your being here and, to echo the 
Chairman's words too, obviously, a vote was in the middle, and 
I apologize for you having to sit there and wait on us.
    Mr. Weimer. Thank you, Congressman Graves.
    Mr. Oberstar. The issue you raised is a very important one; 
I made note of it. At an appropriate time, after all Members 
have had questions asked and responded, I will ask Ms. 
Quarterman to respond.
    Mr. Altmire.
    Mr. Altmire. Thank you, Mr. Chairman. Similar to my friend, 
Mr. Graves, this is a large industry in my district as well, 
and, as I am sure Mr. Weimer knows, we like to refer to 
ourselves as the fireworks capital of America, and with good 
reason, because it has such an economic impact on the district 
that I represent. I appreciate your being here to offer the 
insight of the industry and your own personal experiences to 
add that to the debate that we are having here in this 
Committee and in the Congress.
    I was particularly concerned about issues affecting China. 
We deal with the Chinese on a variety of issues with currency 
manipulation and trade issues and manufacturing and the steel 
industry in Western Pennsylvania, but in the industry that we 
are talking about today, the fireworks industry, since most 
fireworks are manufactured in China, I was wondering if Mr. 
Weimer could talk about what level of quality control or 
oversight does your company have to ensure the products are 
manufactured to specification, compliant with U.S. regulations 
and, most important, are safe to use?
    Mr. Weimer. Congressman Altmire, we spend a lot of time on 
safety in China before the products leave China. Our company 
has two offices in China; we have four full-time employees who 
deal with logistics. But, more important, in Hunan, the 
province that makes probably 65 to 75 percent of the world's 
fireworks, we have people who go into the factories and work on 
quality control with the factories.
    But, moreover, once the product is finished, there is an 
organization called the American Fireworks Standards 
Laboratory, AFSL, headquartered in Bethesda. AFSL is 
essentially the underwriters laboratory of the fireworks 
industry, and the exact same rules that PHMSA is concerned 
about when they issue EX numbers, the APA Standard 87-1, those 
are the standards that are actually tested at the factory level 
in China. Each factory has a room that is given to the testing 
agency; they do functional tests, shoot the product.
    There are, I think, 18 different points that are tested. 
They slice the products open; they weigh the content, the 
pyrotechnic composition; and it is all a matter of making sure 
that the products comply with the standards set forth in the 
Code of Federal Regulations, both Title 49 and 16, which is the 
CPSC section. And if the products, if one product out of the 
case lot that is tested--and there are 15 items tested in a 
case lot--if one item fails, the case lot cannot be exported.
    And then our company goes one step further. Once the 
products are received in the United States, we test ourselves. 
And I have to admit to you that human frailty as it is, every 
once in a while a product gets through that doesn't meet the 
standards, and over the past years--it hasn't happened in a 
couple of years, but we have failed items and we have 
instituted product recalls on our own to the CPSC when we have 
found, in our own testing, that the products fail for whatever 
reason.
    Mr. Altmire. Thank you.
    Lastly, Mr. Chairman, I wanted to ask--and I apologize if, 
in the interval, when we were running for the vote, if you 
addressed this, but I had a particular concern about expiration 
dates and I wondered if you could talk about what has been the 
impact of PHMSA's policy to add expirations to approvals.
    Mr. Weimer. We are not 100 percent sure what that policy 
is. We know that some of the new approvals have specific 
expiration dates, but the old products that have no expiration 
dates, those are the ones that are at issue. And if what I was 
told last week is accurate and that arbitrarily any product, 
any approval five years or older has expired, it is going to be 
a major problem until those are renewed. We will definitely 
have transportation issues this 4th of July.
    Mr. Altmire. Great. Thank you very much for your testimony.
    Mr. Oberstar. Mr. Weimer, you talked about the similar or 
identical product being produced at different sources, but it 
is commonly known that there are different chemical 
compositions in the manufacture of fireworks, and if one plant 
manufactures a Roman candle with one chemical composition and 
another one manufactures it with a different chemical 
composition, shouldn't those two be treated separately?
    Mr. Weimer. They absolutely should, and that is really not 
what we are talking about, because you can get a Roman candle 
that is green and one that is red, and those are obviously 
different chemical compositions. But prior administration 
changed the rule. It used to be that when a factory made a 
particular product, that it wrapped with different packaging 
for five or six different companies and sold them the exact 
same product, those were all shipped under the same EX number; 
and several years ago PHMSA took a posture where each item that 
had a different name had to have its own unique number, and 
that is the issue that I spoke to.
    Mr. Oberstar. All right, I will ask Ms. Quarterman to make 
note of that and invite her back to respond.
    You also state in your testimony, ``innovation is being 
stymied by the cumbersome process.'' And you also say that 
family recipes have changed little in the past century. I was 
fascinated about a year or so ago with a program on the Science 
Channel that traced the history of fireworks and had a splendid 
presentation by an Italian family that had a recipe for their 
fireworks.
    My mother was Italian, so my ears perked up not only 
because of the subject matter, because Italians are very good 
at making fireworks. John Adams would be very proud of them. 
And I hope your industry somewhere erects a monument to John 
Adams, who, on the signing of the Declaration of Independence, 
wrote to wife Abigail saying that this day should be celebrated 
from coast to coast with manifestations, illuminations, and 
fireworks, giving birth, I think, to your industry.
    At any rate, family recipes are closely held; they are 
closely guarded secrets, according to this program. They change 
little from generation to generation. And when they change, 
they are also closely guarded changes. So I wonder. Explain to 
me how this review of the procedures can stifle innovation.
    Mr. Weimer. Mr. Chairman, I appreciate your acknowledgment 
of John Adams; I quote him annually around the 4th of July. 
This is a unique industry. There really are two parts to our 
industry. My company is in the consumer firework business. We 
sell backyard fireworks that are regulated by the Consumer 
Product Safety Commission. The show you saw talked about 
professional fireworks regulated by ATF. It is a whole 
different animal.
    And those family recipes are closely guarded secrets until 
they need an EX number for the product, and then part of the 
requirement to get the approval at PHMSA is to submit to PHMSA 
not only a diagram of the product, but a breakdown of each 
composition used in the product, down to chemicals and 
percentages of each chemical in the composition.
    There are also ways that you can take those chemicals 
within a product and arrange them differently that give you 
different types of displays. And I think probably, because of 
the PHMSA requirement, the closely guarded secret was the 
methodology of putting it together, not necessarily the 
composition itself.
    Mr. Oberstar. But the innovation, if any, is being done in 
China, unless your members are providing specifications for the 
manufacturer of the fireworks to their particular interest or 
needs. Is that correct?
    Mr. Weimer. Well, what we do, Mr. Chairman, when we visit 
China on our buying trips, we actually have the products 
demoed; we review the products with the manufacturers; we tell 
them we need more crackle in this one, we need more blue in 
this one, and the products are made to our specifications. My 
comment about stifling innovation at this point is that we have 
no new products this year. Because of the approvals hangup, we 
are not able--and our catalog goes out, for instance, the first 
week of May. The catalog obviously had to be put to press a 
month ago, and there are no new products in the catalog. We 
will have no new products in our line this year, as will most 
of the firework companies.
    Mr. Oberstar. On June 25th last year PHMSA investigated 
your facility superstore in New Freedom, Pennsylvania, and from 
their cite, their documentation, reported that Phantom was 
transporting fireworks without an approval and, therefore, 
without appropriate testing of fireworks by a PHMSA-approved 
laboratory. Do you think that is unreasonable?
    Mr. Weimer. In this particular case, violently 
unreasonable. What happened in that case, an investigator came 
in to that particular facility looking for a specific product, 
found the product. The product was not defective, as he thought 
it was. But as inspectors are wont to do, he looked around the 
place, and what he found was green safety fuse, a product that 
is used in every single firework item manufactured, and we sell 
a 10-foot length of green safety fuse. There was an expired EX 
number.
    We never got notification that it was expired. The PHMSA 
database had the EX number live. Yet, we were written up for 
transporting the product without a valid EX number. The remedy 
that we were told that would solve the problem was to file for 
a new EX number, which we did on October 8th.
    Mr. Oberstar. Has that been processed?
    Mr. Weimer. It has not.
    Mr. Oberstar. All right, I am going to invite Ms. 
Quarterman and Mr. Scovel back.
    Ms. Quarterman, there are a number of issues raised. You 
have made note of them, you and your staff. I want to hear your 
response, and we may have an exchange with Mr. Weimer. This is 
your opportunity on both sides to address these issues.
    Ms. Quarterman. Well, Mr. Chairman, I just want to go back 
to my opening statement. The first thing I said is safety is 
the Department's number one priority, and for me it is job one. 
That is so, so important to understand when we are talking 
about the backlog with respect to special permits and 
approvals. I know we are probably talking about special 
approvals here, but with respect to special permits, just to 
remind everyone, these are instances when companies are coming 
in to ask for an exception to a rule. We are doing our best, as 
I have told you, to add resources to review those special 
permits, but it is, in effect, a request to deviate from the 
rule.
    Now, with respect to approvals, over the break I had an 
opportunity to talk to some of my staff about the current 
statistics, and it turns out that I erred in the wrong 
direction for us about the current backlog with respect to 
approvals. We are actually at about 1,700 approvals pending. 
And how does that compare to years past? We, on average, have 
about 2,000 approvals pending at any one time before we took 
over, so we are actually doing better than in past periods 
under much more lax circumstances in terms of reviews. And we 
are moving forward very, very quickly, I believe.
    In addition to that, as a part of our review of the current 
approvals over this year, we have gone from a denial or 
rejection rate of 8 percent in the prior year to 29 percent 
today. So I want you to know that we are taking this very 
seriously. We are looking very closely at these approvals. So 
even though the backlog is moving, it may not be moving in the 
direction that people would want because of that.
    Finally, I would add all the conversation about China, the 
information that you brought to bear about some of the problems 
that are happening in the plants back in China are really of 
great concern to me, and I think we need to take a second look 
at how we handle our foreign fitness determinations. And I am 
so happy to hear that Mr. Weimer had opened up his plant to us. 
I would hope that the members of APA, the association, would 
ask their other members for a similar offer to come and visit 
them and do some onsite fitness determinations there.
    I guess finally the question of expiration dates.
    Mr. Oberstar. Shelf life.
    Ms. Quarterman. The shelf life and the expiration date on 
approvals. This is something that our staff has been talking to 
members of the explosives industry about and they are in the 
process of trying to figure out what exactly the issues from 
their standpoint and assist to the extent that we can.
    But from our standpoint, again, safety is job one. I cited 
to you the statistics about the safety fitness reviews that had 
been done in the past period, less than 100 compared with over 
7,000 now. All of these things that are expiring have not been 
subject to those safety fitness reviews, so we need to take 
that into account and make sure that we do do that going 
forward.
    Thank you.
    Mr. Oberstar. Thank you. As I read the PHMSA regulations on 
shelf life, the five year expiration of the approval limits the 
shelf life, which Mr. Weimer says could be longer than that, 
that a product could last much longer than that, but you are 
actually limiting the--or the rule limits the marketability of 
the product. And the industry can apply or the company can 
apply for an extension or for a new approval, but PHMSA would 
then have to review the site again, is that correct? And would 
have to conduct an onsite test of the stability of the product?
    Ms. Quarterman. I don't believe an onsite review is 
necessary. Certainly a complete fitness review would be 
required, and there are several------
    Mr. Oberstar. That would not necessarily require an onsite?
    Ms. Quarterman. There are three stages. The initial stage 
is checking the records that we have, of course, looking at the 
application that is there, looking at incidents and violations. 
And if those things rise to a level that we believe requires 
more information--and we do have specific criteria about it 
jumps over a certain level, we go into a second phase where we 
ask for more thorough information. Once we have seen that, it 
could in fact go into yet a third level, where we go onsite to 
visit.
    Mr. Oberstar. Mr. Weimer, do you have a question about that 
process?
    Mr. Weimer. No. No. We are not--to the best of my 
knowledge, the fitness determination criteria has not been 
published yet. So we are anxiously awaiting the opportunity to 
review it.
    Mr. Oberstar. How does fitness criteria play into extension 
of the expiration date?
    Ms. Quarterman. It is a jumping off point. We have the 
criteria available, and if it is not public, then we can 
certainly do that. I think we are continuing to massage it, but 
there are certain things that we look at in terms of whether it 
is a table 1, class 1 item or if, in the past four years, for 
example, there have been more than one serious incident; and 
there are 15 different items we look at that sort of takes you 
from the initial review into that second level review. And once 
we see what data we get from the second level, it may elevate 
it yet again to the onsite requirement.
    Mr. Oberstar. But the initial stage of review is the 
performance of the company in the period of time that has 
elapsed since the approval was given. If there have been no 
violations, that is a point in their favor.
    Ms. Quarterman. Oh, absolutely. If there have been no 
violations. We actually are looking back at a four year period, 
so------
    Mr. Oberstar. Right.
    Mr. Scovel, do you think this process is fair and sound, or 
does it need further adjustment?
    Mr. Scovel. Mr. Chairman, we think it does need further 
adjustment. However, we are greatly encouraged by the fact 
that, as Administrator Quarterman has pointed out today, they 
are in the process of intensely scrutinizing and dialing that 
down.
    If I could respond to three points by Mr. Weimer, sir.
    Mr. Oberstar. Yes.
    Mr. Scovel. And to paraphrase number one, too much 
attention has been paid by PHMSA in developing plans and 
policies in response to the IG and not enough to acting on 
applications. He is concerned about the adverse effect on 
commerce.
    Again, I am greatly encouraged by Ms. Quarterman's response 
that, for her and her agency, safety is job one. I think it has 
been universally acknowledged by the Committee today, by me in 
my testimony, by Ms. Quarterman that fitness and level of 
safety determinations have been sidestepped, to use a term that 
one of the Committee coined today. To the extent that PHMSA has 
deemed it necessary to respond to points made in our several 
reviews and Management Advisories in order to tighten up on 
fitness and level of safety determinations, we think that is a 
good thing.
    Point number two--again, I am paraphrasing--an automatic 
extension for expiring approvals when the product has a longer 
shelf life than the term of the approval itself. We would urge 
caution upon the part of the agency and the Committee if it 
were to go down that route. To the extent that an expiring 
approval was based on a sidestepped fitness or level of safety 
determination, we would view that essentially as a defective 
approval in the first place, and it should not be subject to an 
automatic extension.
    My third point, sir, Mr. Weimer's concern about criteria 
used to determine fitness. I will return to a point that we 
discussed on the record at the September hearing, and that had 
to do with the proper place of enforcement actions as a 
criterion for determining fitness. And I pointed out then, in a 
history lesson, that RSPA, PHMSA's predecessor, had argued in 
the face of industry opposition that enforcement actions may 
be--I am quoting--``may be indicative of an applicant's ability 
or willingness to comply with applicable regulations.'' Because 
the Associate Administrator is considering whether to authorize 
compliance with specific alternatives to the HMR, the 
likelihood of an applicant's compliance with those alternatives 
is relevant to public safety.
    We think it is relevant not only to the fitness 
determination, but also as a criterion for determining whether 
compliance reviews should be conducted, so again we urge 
caution in sidestepping or shortcutting any of those factors, 
sir.
    Mr. Oberstar. I also raised the issue of point of 
production in China. What are your thoughts about site 
inspection in China and how much effort should go into that, 
and at what stage in this process should that occur given the 
seasonality, the unique seasonality of fireworks? They have to 
get their product on the market and sold and delivered in time 
for one set of maybe two or three days.
    Mr. Scovel. Yes, sir. It is a troubling point. If PHMSA is 
to do its job comprehensively, it would seem logical to 
conclude that it needed to follow the supply chain all the way 
back. Otherwise, at some point the agency is going to have to 
rely on a certification from an importer or a shipper that the 
product that came out of the factory overseas is indeed safe 
and matches up to whatever criteria or factors the agency 
itself has set. Resources always being a problem, I know PHMSA 
would have to calibrate very carefully its effort in that area.
    However, I will note that in Mr. Weimer's testimony to the 
Committee, he said that the Consumer Product Safety Commission 
has had inspectors on the ground in China with regard to 
fireworks specifically, and if it seems important and feasible 
for that Commission to do it, perhaps the agencies can seek 
proper authorization and appropriations in order to carry out 
what we would think is an important aspect of their duties too.
    Mr. Oberstar. Shouldn't they coordinate their efforts? Ms. 
Quarterman, couldn't you and the CPSC get together, have a 
joint inspection of production sites, and not do it separately; 
time-consuming, more cost?
    Ms. Quarterman. I believe this came up earlier, and I 
committed then to talk with that agency and find out exactly 
what they are doing and see how we can work together.
    Mr. Oberstar. Mr. Weimer, do you have some observations or 
responses to the comments preceding?
    Mr. Weimer. One comment, Mr. Chairman, on the fitness 
determination.
    Mr. Oberstar. Yes.
    Mr. Weimer. All we are looking for is the criteria. From my 
point of view, if there is an unfit importer or exporter out 
there, we are going to be the first ones to vote to deny them 
any approvals. We want this industry safe. This is not my job, 
Mr. Chairman; this is what I do, this is what I live. So my 
mission is to make sure that the products we sell and the way 
we handle them are done in a safe manner. So I am not 
questioning a fitness determination. We would just like to 
understand the criteria.
    Mr. Oberstar. You cited earlier in your testimony the 
association's underwriter laboratories type of facility for 
fireworks. Has that facility set forth a set of criteria for 
the conduct of safety reviews of the products?
    Mr. Weimer. Yes, Mr. Chairman. The American Fireworks 
Standards Laboratory has its own standards committee and, in 
actuality, the AFSL standards, in three or four different 
instances, are a little more extreme, little more demanding 
than the CPSC standards. So when we do the testing in China, it 
is done to the AFSL standards, as opposed to the CPSC 
standards, which are a little more rigid.
    Mr. Oberstar. So that laboratory, then, has established 
criteria that you are asking PHMSA, in effect, to set forth, 
right?
    Mr. Weimer. No. The criteria that has been established 
started with the Consumer Product Safety Commission criteria 
and then it expanded a little beyond that. The AFSL has 
contracted with an international testing agency, SGS, 
internationally recognized. Fireworks is one of the smallest 
consumer goods they test; they test food and different things 
like that. They employ agents on the ground in China. The U.S. 
AFSL personnel go to China three or four times a year, conduct 
seminars and the training of the inspectors, and then the 
inspectors are turned loose and go to the different factories 
and test to the AFSL standards, which, as I said, in three or 
four different instances go further than the CPSC standards.
    Mr. Oberstar. So this laboratory has a great deal of 
technical expertise. Let me invite you to ask them to submit to 
the Committee their version of what factors and criteria for 
the conduct of safety fitness reviews, and we will look at and 
then we will invite PHMSA and the Inspector General to come and 
visit with us about their reaction to it.
    Mr. Weimer. We are happy to do that, Mr. Chairman.
    Mr. Oberstar. I have taken that approach to other work of 
the Committee in the safety arena; it has often proven to be 
very useful. In most cases it has; in some cases there are 
obstinate people who don't want to comply, and then they comply 
in a different way. So let's approach it from that standpoint.
    I will say that the fireworks industry is a great deal 
safer, for the home fireworks industry a great deal safer than 
when I was growing up. Many of the classmates of mine who had 
damaged fingers, numb hands, an injured eye, and other 
accidents resulting from fireworks that didn't react properly 
or weren't used properly, but caused a great deal of personal 
injury. I think the industry is much safer than it was.
    My experience over 25 years of pursuing safety in a wide 
range of the areas under jurisdiction of this Committee is that 
there has to be a culture of safety in the corporate boardroom 
and there has to be also a culture of safety in the oversight 
agency that represents the public interest.
    The corporate interest is served by a product that does not 
fail and does not cause injury, and Toyota learned that to 
their great dismay. We have seen that in the aviation sector. 
They have learned to do a lot better job in maintenance and 
production of after-market parts. So we are pursing the same 
objectives here.
    Mr. Shuster said, at the outset of his remarks, this is a 
safe industry and inquired why we are making things difficult 
for it. Well, I don't think this is--he didn't put it quite 
that way, but that is what he meant. It is not making things 
difficult. I know that every industry is safe until there is an 
accident. The next fatality is just waiting around the corner, 
and it may be for a human failure; it may be like those pilots 
for Northwest Airlines, who are doing something they should 
never have been doing in the cockpit, and they overflew their 
destination, and they paid the price for it.
    But there are other times when material fails, equipment 
fails, process fails. And if we set in place the proper 
procedures and standards and have oversight from various 
viewpoints, we can make safety a reality. You want that to be 
able to sell products; the agency wants that to be able to 
protect the public.
    Committee staff, do you have any questions you would like 
to ask?
    Ms. Quarterman. Mr. Chairman, may I ask one final thing? 
And that is, looking back at your statement on the record at 
the end of the last hearing, about the fact that there are many 
good employees with good intentions within PHMSA working hard. 
I just want to say here that that is in fact the case. We have 
been working hard to develop a very, very strong safety culture 
and say to employees if there is a safety question, you should 
come directly to the top, if necessary, and you don't have to 
go outside of the agency; we have put together a safety review 
board.
    But I think that, by and large, the employees within PHMSA 
are dedicated and committed to their mission, and I want to 
make sure that they understand that I know that going forward, 
and that we have been asking them to work very hard, and we are 
going to ask them to continue to work very hard. I just wanted 
to say that for the record.
    Mr. Oberstar. That is very encouraging to hear. I 
appreciate that very much and I know that from the Office of 
the Secretary on through this Department there is a whole new 
culture of safety. Secretary LaHood has, as he put it, been on 
a tear for safety, and he has communicated that to every agency 
within the Department, and you certainly got that message. And 
Mr. Scovel is there to make sure that you and all your sister 
agencies hear and keep that message, and the industry is 
getting it as well.
    We look forward to receiving that information that I 
requested from your AFS laboratory; further information from 
you, Ms. Quarterman; and, Inspector General Scovel, thank you 
for your continued review.
    Committee stands adjourned.
    [Whereupon, at 2:02 p.m., the Committee was adjourned.]

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