Coast Guard: Program to Inspect Intermodal Containers Carrying Hazardous
Materials Can Be Improved (Letter Report, 04/27/94, GAO/RCED-94-139).
The U.S. Coast Guard estimates that up to 2.1 million intermodal freight
containers carrying hazardous materials, such as explosives and poison
gas, pass through our nation's seaports each year. The Coast Guard's
draft procedures for inspecting hazardous materials, which have been
implemented in pilot programs at two ports, are scheduled to be
introduced nationwide in April 1994. GAO concludes that the
effectiveness of the nationwide program will be jeopardized unless
several problems are overcome. First, the Coast Guard's approach of
inspecting relatively few containers, using locally developed inspection
procedures, will not achieve the maximum regulatory compliance for the
inspection resources invested. A better approach would be to target
high-risk shipments, such as those of shippers with a history of
noncompliance. Second, Coast Guard inspectors are unsure about how to
interpret some of the thousands of regulations to be enforced. Third, in
most cases, shippers are not notified of violations that are corrected
on the spot. As a result, they may be unaware of the problem and may
repeat the same mistakes. Finally, an agreement under which Coast Guard
inspectors are to train Customs Service inspectors on transportation
regulations and Customs inspectors are to refer possible violations to
the Coast Guard for enforcement has yet to be implemented.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-94-139
TITLE: Coast Guard: Program to Inspect Intermodal Containers
Carrying Hazardous Materials Can Be Improved
DATE: 04/27/94
SUBJECT: Marine transportation operations
Shipping industry
Maritime law
Hazardous substances
Inspection
Freight transportation operations
Safety regulation
Law enforcement
Interagency relations
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Committee on Merchant Marine
and Fisheries, House of Representatives
April 1994
COAST GUARD - PROGRAM TO INSPECT
INTERMODAL CONTAINERS CARRYING
HAZARDOUS MATERIALS CAN BE
IMPROVED
GAO/RCED-94-139
Contractors' Energy Conservation Effort
Abbreviations
=============================================================== ABBREV
GAO - General Accounting Office
MOU - Memorandum of understanding
RSPA - Research and Special Programs Administration
Letter
=============================================================== LETTER
B-256559
April 27, 1994
The Honorable Jack Fields
Ranking Minority Member
Committee on Merchant Marine
and Fisheries
House of Representatives
Dear Mr. Fields:
The U.S. Coast Guard, which oversees marine transportation,
estimates that up to 2.1 million intermodal freight containers
carrying hazardous materials, such as explosives and poison gas, pass
through our nation's seaports each year. During limited inspections
in 1992 and 1993, the Coast Guard found at least one violation of
transportation regulations in over 40 percent of the containers
carrying hazardous materials. The Coast Guard developed draft
procedures for inspecting hazardous materials containers, which have
been implemented in pilot programs in two ports. These procedures
are being implemented nationwide in April 1994.
Since the Coast Guard is responsible for ensuring regulatory
compliance in marine transportation, you asked us to review its
inspection program, including its implementation of the draft
procedures to regulate the transportation of hazardous materials in
intermodal containers. Specifically, we evaluated (1) the Coast
Guard's inspection strategy, (2) the Coast Guard inspectors'
familiarity with the regulations that they must enforce, and (3) how
often inspectors notify shippers of violations. We also examined the
U.S. Customs Service's inspection program, in general, to determine
if that program can be beneficial to the Coast Guard.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The effectiveness of the Coast Guard's new nationwide program will be
limited unless several problems are addressed. First, the Coast
Guard's approach of inspecting relatively few containers, using
locally developed selection procedures, will not achieve the maximum
regulatory compliance for the inspection resources invested. A
better approach would be to target high-risk shipments, such as those
of shippers with a history of noncompliance. Coast Guard
headquarters officials said they would consider the need to target
high-risk containers.
Second, Coast Guard inspectors are uncertain about how to interpret
some of the thousands of regulations to be enforced, and this
uncertainty could cause incorrect enforcement decisions. Coast Guard
headquarters officials believe that some planned actions, such as
assigning full-time container inspectors to field units, will improve
inspections.
Third, in most cases, shippers are not notified of violations that
are corrected on the spot. As a result, they may be unaware of the
problem and may repeat the same mistakes. Coast Guard headquarters
officials plan to require field inspectors to notify shippers of all
violations.
Finally, under an agreement between the Coast Guard and Customs,
Coast Guard inspectors are to train Customs inspectors on
transportation regulations, and Customs inspectors are to refer
possible violations to the Coast Guard for enforcement. However, the
provisions of the agreement have not been implemented. Coast Guard
headquarters officials told us that the agreement will be implemented
under its new program.
BACKGROUND
------------------------------------------------------------ Letter :2
The Hazardous Materials Transportation Act (49 app. U.S.C. sec.
1808) assigns the Secretary of Transportation responsibility for
ensuring the safe transportation of hazardous materials. In turn,
the Secretary has delegated the responsibility for coordinating the
hazardous materials program and for promulgating regulations to the
Research and Special Programs Administration (RSPA).\1 RSPA and the
several modal administrations, such as the Federal Highway
Administration, the Federal Railroad Administration, and the Coast
Guard, are responsible for enforcing the regulations. Shippers,
carriers, and packaging manufacturers who violate the hazardous
materials regulations may be issued a letter of warning or be subject
to civil or criminal penalties. Civil penalties can be imposed for
up to $25,000 per violation, and criminal penalties can result in
fines and imprisonment.
In addition, the Customs Service is responsible under its statutes
and regulations for ensuring that imports and exports of hazardous
materials conform to regulations. However, it has no enforcement
authority to cite a violation under the transportation regulations.
Rather, the Customs Service, by agreement with the Coast Guard, is to
refer cases of possible violations to the Coast Guard for
investigation and, if necessary, enforcement action.
Prior to 1992, the Coast Guard had done little, except during a brief
inspection period in 1985, to open and check containers carrying
hazardous materials for compliance with the transportation
regulations. Beginning in 1992, multiagency strike-force operations
concerning hazardous materials, led by the Coast Guard and the
Federal Highway Administration, were undertaken at four major ports
to determine the degree of compliance with the regulations on
containers. The Coast Guard's inspection strategy essentially relied
on field inspectors to use their judgment to choose which containers
to inspect. Inspecting 640 containers, the strike forces found
violations in 340 containers--a noncompliance rate of 53.1 percent.
As a result of the strike forces' findings in 1992, Coast Guard
headquarters issued draft policies and procedures in January 1993 for
conducting container inspections and began pilot-testing these
instructions in two field offices. For a 3-month test period,
several inspectors who were dedicated to container inspections
checked 223 containers and found 47 violations--a noncompliance rate
of 21.1 percent. When these results are combined with the strike
forces' results, the overall noncompliance rate for the limited
inspections conducted in 1992 and 1993 was 44.8 percent.
Overall, the Coast Guard has about 600 personnel in field offices who
are responsible for carrying out port safety and marine environmental
protection activities. However, although they are responsible for
ensuring compliance with the hazardous materials transportation
regulations, these personnel are primarily committed to investigating
water pollution incidents and inspecting waterfront facilities and
vessels.\2 As a result of its pilot inspection program and a belief
that container inspections needed more emphasis, the Coast Guard
received fiscal year 1994 funding for 76 additional personnel. In
March 1994, the Coast Guard finalized the draft procedures issued in
January 1993 and, in April, initiated a nationwide program using
these procedures to routinely check hazardous materials containers
nationwide.
--------------------
\1 There are thousands of regulated chemicals that can be packaged
and shipped in containers. The purpose of the regulations is to (1)
ensure the safe transportation of hazardous materials through the use
of proper packaging and handling and (2) effectively communicate to
carriers and those responding to emergencies the hazards of the
materials and the appropriate procedures for managing emergencies.
\2 Coast Guard inspectors initially learn about hazardous materials
regulations and how to inspect containers in a 3-day segment of
training during the Marine Safety Petty Officer's Course in Yorktown,
Virginia.
NATIONWIDE INSPECTION PROGRAM
NEEDS BETTER PLANNING,
EXECUTION, AND FOLLOW-UP
------------------------------------------------------------ Letter :3
While the Coast Guard is initiating its nationwide program, it must
address several problems in order to effectively regulate an
expanding chemical transportation industry with its available
inspection resources. First, the Coast Guard inspectors are not
focusing on the highest-risk containers. Second, these inspectors
are uncertain about how to interpret some of the thousands of
regulations. Finally, the Coast Guard is not notifying shippers
found to be in violation that there is a need to correct their
procedures for shipping hazardous materials.
PROCEDURES DO NOT TARGET
HIGH-RISK SHIPMENTS
---------------------------------------------------------- Letter :3.1
According to estimates by the Coast Guard, its inspectors will check
from 10,500 to 21,000 containers each year. Field inspectors will
use selection strategies that are developed locally in choosing which
containers to inspect. The Coast Guard does not require that, under
these strategies, inspectors identify and inspect the highest-risk
shipments.\3 We believe that when only a relatively few items can be
checked, a better approach would be to require targeting high-risk
containers for most inspections. The Coast Guard could use
statistical sampling procedures to randomly select a proportion of
the 10,500 to 21,000 containers it plans to inspect. Information
could then be developed from these inspections to determine the
characteristics common to those containers often found to be in
violation. For example, first-time shippers may have a higher rate
of violation than other categories of shippers. Characteristic such
as this one could then be used to select additional containers for
inspection, with the knowledge that they have a high risk of
violating the regulations. By using this approach, the Coast Guard
could maximize the effectiveness of its inspection effort.
To effectively target high-risk shipments for inspection, the Coast
Guard must know the shippers and systematically analyze the results
of its inspections in order to identify the characteristics of
high-risk shipments. It could, for example, (1) develop an inventory
of importers with such relevant information as the owner's name and
address, products imported, and history of past violations; (2)
centrally analyze the results of shipments found to be in violation
to identify common characteristics, such as the importer, product,
and country of origin; and (3) incorporate the characteristics that
signal high risk into a selection system that triggers inspections of
future shipments with these characteristics.
The Customs Service, which is responsible for enforcing numerous laws
and regulations, such as collecting tariffs on imported goods, also
has to deal with an overwhelming number of containers needing
inspection and has implemented a targeting system. Customs is
continuing to develop a system that uses statistical sampling to
randomly select for inspection less than 1 percent of the cargo
shipments entering the country. Using the results of these random
inspections, Customs is refining criteria (common characteristics of
the cargos found to be in violation) and using these criteria to
target for examination another 7 percent of the shipments having
these characteristics. Customs estimates that in its tariff program,
the voluntary compliance rate is 96 percent.
Because the Coast Guard does not plan to use selection criteria based
on its experience as does Customs, its inspectors may not check the
highest-risk shipments and shippers. Customs inspectors in Seattle,
Washington, which was the only Customs office we visited with a
program to check hazardous materials, told us that companies from
certain Pacific Rim countries had a history of noncompliance with
laws and regulations on safety and environmental protection. Coast
Guard inspectors in Seattle were unaware of this information and did
not consider it in selecting containers for inspection. However, if
it used a systematic approach to target high-risk shipments for
inspection, the Coast Guard could consider future shipments from
these countries for inspection, even if the importers use a different
port of entry.
We discussed the need for random and targeted container inspections
with Coast Guard headquarters officials. These officials agreed that
targeting would increase the effectiveness of the container
inspection program. However, they said it would take some time to
develop and test a targeting strategy before implementation. They
also indicated that they will develop an evaluation plan to measure
the effectiveness of the new container inspection program. The plan
will include data requirements and consider the need to target
high-risk containers.
--------------------
\3 In this report, we use the term "high-risk" to describe containers
that carry very dangerous materials, such as poison gas, and
containers that have a high potential, based on past inspection
results, for regulatory noncompliance.
INSPECTORS ARE UNCERTAIN
ABOUT HOW TO INTERPRET SOME
REGULATIONS
---------------------------------------------------------- Letter :3.2
Coast Guard inspectors are faced with enforcing regulations covering
thousands of chemicals with diverse characteristics, and the
inspectors have been uncertain about whether some conditions are
violations. The result of this uncertainty is that inspectors may
make incorrect enforcement decisions.
We observed inspections at six field offices, including those using
the draft policies and procedures. At five of the six field offices
we visited,\4 inspectors frequently discussed various conditions at
length while consulting the regulations, often without resolving
whether or not these conditions were a violation of the regulations.
Inspectors told us that the regulations were complex and that they
were uncertain about how to interpret some of them. Some uncertainty
revolved around complex technical issues, such as how to interpret
the lengthy and technically detailed tables in the transportation
regulations; other uncertainty revolved around more straightforward
issues. While accompanying Coast Guard inspectors in one port, for
example, we saw a container with placarding printed in French.\5 The
Coast Guard inspectors said they were uncertain whether such
placarding was acceptable. A Coast Guard headquarters official
researched the situation and concluded that non-English words on
placarding were not prohibited. He stated, however, that this
example demonstrated the complexity of interpreting the regulations.
We discussed our observations on how inspections were being conducted
with Coast Guard headquarters officials, who said they were also
concerned. These officials stated that inspectors, after being
trained, return to their field units and, as part of their
multimission duties, primarily have to perform other types of
inspections, such as vessel inspections, and do not perform many
container inspections. And, over time, inspectors' knowledge of
container regulations fades. In the field offices we visited, we
found this to be true. Newly trained inspectors were expected to
become proficient in other areas, such as pollution investigations,
through on-the-job training before becoming involved with
lower-priority container inspections, which were relatively few in
number.
Coast Guard headquarters officials discussed several planned actions
that they believe would improve inspections. For example, the Coast
Guard plans to assign 51 of the 76 additional personnel funded in
fiscal year 1994 to 27 field offices to inspect only containers. In
addition, the Coast Guard plans to form a national strike force of 10
people to provide field offices with additional training and assist
them with container inspections.
--------------------
\4 At the remaining field office, Coast Guard inspectors curtailed
inspections and initiated a spill response when material was observed
leaking from a container labeled as hazardous.
\5 Placarding is marking required on the outside of a hazardous
materials container to communicate the hazards posed by the
materials.
SHIPPERS ARE NOT NOTIFIED OF
VIOLATIONS
---------------------------------------------------------- Letter :3.3
Although Coast Guard inspectors require that violations be corrected
on the spot by facility or other personnel, in most cases shippers
are not notified of violations discovered by the Coast Guard
container inspectors working at waterfront facilities. The Coast
Guard does not require notification of the shipper, but instead
leaves the decision to recommend a warning or penalty to the
discretion of local officials. At all six field offices we visited,
inspectors did not notify shippers of violations in most cases.
Consequently, shippers may not be aware of the need to correct
similar problems in future shipments or of the existence of an
enforcement program. For example, we found that for the 387
violations detected by the strike forces and during pilot tests, the
Coast Guard followed up on only 81, or 20.9 percent, with
recommendations for letters of warning or penalties.
Inspectors at four field offices we visited told us that processing a
violation--resulting in a letter of warning or a civil
penalty--entailed too much paperwork, detracting from available time
to do additional field inspections. These inspectors also said that
the Coast Guard would like to develop a cooperative relationship with
industry rather than an adversarial one. In addition, inspectors
require an on-the-spot correction, which they consider as fulfilling
their responsibility. However, on container inspections, Coast Guard
inspectors do not deal directly with shippers' representatives, who
control compliance with important regulations on, for instance,
classification and container packing. Rather, the inspectors deal
with facility representatives, who receive sealed containers that
were packed by the shippers. As a result, shippers are not aware of
corrections needed in future shipments unless they are notified of
violations on current shipments.
For comparison purposes, we asked RSPA officials about letters of
warning and penalties because RSPA is the coordinating agency for the
Department of Transportation's enforcement of hazardous materials
regulations. RSPA, according to these officials, requires that
written notification be provided to all responsible parties and that
action be taken on violations detected by its inspectors. RSPA
officials viewed the administrative effort needed to process a letter
of warning or civil penalty as a necessary ingredient of an effective
enforcement program.
We discussed this problem with Coast Guard headquarters officials,
who agreed that a need exists to inform shippers of problems and to
revise the agency's procedures to require official action on all
identified violations. To accomplish this, officials said, a
hazardous materials discrepancy report has been developed as part of
the Coast Guard's new program. This report will be used to provide
notification to all shippers and other involved parties of
discrepancies discovered during container inspections.
CUSTOMS INSPECTORS ALSO HAVE
OVERSIGHT RESPONSIBILITY
------------------------------------------------------------ Letter :4
In 1989, the Coast Guard and the Customs Service, whose inspectors
routinely encounter hazardous materials when inspecting cargo in
containers, signed a memorandum of understanding (MOU). The MOU
states that the Coast Guard will train Customs inspectors on
hazardous materials transportation regulations and that Customs
inspectors will notify the Coast Guard of potential violations.\6
Coast Guard inspectors would then investigate the potential violation
and take appropriate action. This arrangement would extend federal
oversight of containers carrying hazardous materials because Customs
has 1,600 inspectors in our nation's seaports.
At the six locations we visited, however, the Coast Guard had not
trained Customs inspectors on transportation regulations and Customs
inspectors were not identifying and referring possible violations to
the Coast Guard. Most of the Customs inspectors we interviewed were
unfamiliar with the transportation regulations and the agreement.
Coast Guard field officials in all six field offices we visited said
that training was not provided to Customs inspectors because the
officials were not aware of the MOU and therefore had not implemented
it. Also, Coast Guard field officials explained that prior to 1992,
the Coast Guard had done little to inspect containers carrying
hazardous materials.
Coast Guard headquarters officials agreed that the provisions of the
MOU had not been implemented in the field. They also told us that
working with Customs, in accordance with the MOU, is important and
will be emphasized in the new nationwide container inspection
program.
--------------------
\6 A reciprocal arrangement provides for Customs to train Coast Guard
inspectors, who are to report possible Customs violations, such as
contraband, to Customs.
CONCLUSIONS
------------------------------------------------------------ Letter :5
The Coast Guard's program to routinely inspect containers carrying
hazardous materials will be of limited effectiveness unless several
problems are addressed.
First, because of staffing limitations, Coast Guard inspectors can
only check a small percentage of these containers. In addition, they
will select containers on the basis of locally developed inspection
strategies, which are not required to target high-risk cargo. A
better approach is to require that available inspection resources be
used to target high-risk cargo. In this way, the Coast Guard can
focus most inspections on the highest-risk cargos. The Coast Guard
agreed that targeting is a better approach and agreed to begin
addressing these issues.
Second, the regulations are complex and cover thousands of different
chemicals. Coast Guard inspectors are uncertain about how to
interpret some of these regulations and therefore may make erroneous
enforcement decisions. According to the Coast Guard, inspectors
receive adequate classroom training, but their knowledge fades over
time because they are primarily responsible for conducting other
types of inspections, such as vessel inspections. To help resolve
this problem, the Coast Guard is (1) increasing its inspection work
force, (2) assigning a few dedicated container inspectors to 27 field
offices, and (3) forming a national strike force to provide training
and expertise in container inspections.
Last, the Coast Guard does not generally notify shippers of
violations because inspectors feel that the required paperwork is too
time-consuming and because violations are corrected on the spot by
waterfront personnel. However, on-the-spot corrections by personnel
at waterfront facilities will not preclude future noncompliance
because shippers, who control compliance with important hazardous
materials regulations, are not being told about the problems with
their procedures. Coast Guard headquarters officials said that
follow-up would be required for all identified problems.
Furthermore, an MOU between the Coast Guard and Customs, whereby
Customs would refer possible violations of transportation regulations
to the Coast Guard, has not been implemented. Nationwide
implementation of this agreement could aid the Coast Guard in its
responsibility to enforce hazardous materials regulations because
Customs has over 1,600 inspectors in seaports, who can supplement
Coast Guard inspectors in checking for compliance. Coast Guard
headquarters officials said steps will be taken to emphasize the MOU
in their new program.
RECOMMENDATIONS TO THE
SECRETARY OF TRANSPORTATION
------------------------------------------------------------ Letter :6
We recommend that the Secretary of Transportation direct the
Commandant of the Coast Guard to
develop a strategy to target the agency's inspections by (1)
selecting and inspecting a random sample of containers, (2)
analyzing the results of these inspections to identify the
characteristics of high-risk shipments, and (3) using those
characteristics to select high-risk containers for inspection;
monitor the performance of its container inspectors to ensure that
inspections are adequate; and
require field officials to notify all shippers of violations
identified by inspectors.
We also recommend that the Secretary direct the Commandant of the
Coast Guard, as part of the new inspection program, to work with the
Customs Service to train its inspectors so they can assist the Coast
Guard in its enforcement of hazardous materials container
regulations.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
We discussed the factual content of our report with the Chief of the
Coast Guard Office of Marine Safety, Security and Environmental
Protection and with headquarters officials of the U.S. Customs
Service Office of Inspection and Control. These officials generally
agreed with our findings and conclusions, and their specific comments
have been incorporated throughout the report. However, as requested,
we did not obtain written agency comments on a draft of this report.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8
To evaluate whether the Coast Guard can improve inspections in order
to better enforce hazardous materials container regulations, we
interviewed headquarters and field officials of the Coast Guard,
Customs, and other Department of Transportation agencies. Field
audit work was done in Houston, Texas; Los Angeles, California; New
York, New York; Philadelphia, Pennsylvania; San Francisco,
California; and Seattle, Washington. These six ports provided a
cross section in terms of geographic location, volume of container
shipments, and the experience level of the relevant Coast Guard field
office in inspecting containers. To evaluate the Coast Guard's
inspection program, we examined (1) laws and regulations; (2)
policies and procedures; (3) statistics on hazardous materials
transportation, inspections, violations, and incidents; (4) staffing
levels and responsibilities of inspectors; and (5) inspection and
incident reports. While working at each field location, we
accompanied Coast Guard and Customs inspection personnel to see
inspection procedures firsthand.\7 We performed our review from April
1993 through April 1994 in accordance with generally accepted
government auditing standards.
--------------------
\7 We did not accompany Customs inspection personnel in Houston and
Seattle because of time constraints.
---------------------------------------------------------- Letter :8.1
As arranged with your office, we will send copies of this report to
the Secretaries of Transportation and the Treasury, the Commandant of
the Coast Guard, the Administrator of RSPA, the Commissioner of
Customs, and other interested parties. We will also make copies
available to others on request.
This work was performed under the direction of Kenneth M. Mead,
Director, Transportation Issues, who can be reached at (202) 512-2834
if you or your staff have any questions. Major contributors to this
report are listed in appendix I.
Sincerely yours,
Keith O. Fultz
Assistant Comptroller General
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I
RESOURCES, COMMUNITY, AND
ECONOMIC DEVELOPMENT DIVISION,
WASHINGTON, D.C.
--------------------------------------------------------- Appendix I:1
Allen Li, Associate Director
Emi Nakamura, Assistant Director
Steven R. Gazda, Assignment Manager
PHILADELPHIA REGIONAL OFFICE
--------------------------------------------------------- Appendix I:2
Joseph A. Kredatus, Regional Management Representative
William S. Justice, Evaluator-in-Charge
James J. Ungvarsky, Staff Evaluator