'Not an Isolated Case'
Traffic World
October 13, 2003, Monday
By Angela Greiling Keane
In a case the U.S. Justice Department used to trumpet a new crackdown on hazardous materials shipping, CNF Inc. agreed to pay $6.5 million in penalties after pleading guilty Sept. 30 to 12 counts of improperly documenting hazardous materials shipments at Emery Worldwide Airlines in 1998 and 1999.
"This is not an isolated case," Department of Transportation Inspector General Kenneth M. Mead said. "This is not an aberrant situation. Emery is a serious case but it's not the only one."
With anti-terror initiatives high on the agenda in Washington, the case drew attention at high levels of the government. Attorney General John Ashcroft joined top transportation officials at an event linking the Emery settlement to efforts they would extend across the transport modes.
"It is not difficult to postulate a terrorist attacking by hazmat," said Ashcroft alongside Transportation Secretary Norman Mineta, Federal Aviation Administrator Marion Blakey and Mead. "This initiative has already borne fruit."
The officials wouldn't discuss details of their initiative, however, nor how it was related to the investigation of documentation for shipments in the late 1990s.
"I thought it was unfortunate that the attorney general would link this case that occurred in 1998 to events today," said Jim Allen, a spokesman for CNF.
Allen said the mistakes were the fault of CNF, not shippers, and that the company fully cooperated with the investigation and is adding new training and safeguards on hazmat handling. "In this case, the blame lies with us," said Allen.
Even without the terror concerns, regulation of hazardous materials shipping is a huge undertaking. U.S. shippers send 1.56 billion tons of hazmat-class material each year on various modes of transportation. The federal government closely regulates such shipments with strict rules on documentation and handling.
Many such shipments are barred from passenger aircraft and some cargo airlines refuse to carry hazardous materials. The FAA conducted some 2,000 hazmat handling investigations in 2002, resulting in $6 million in civil penalties. The agency employs 125 hazmat inspectors, who conducted 9,000 inspections of carriers and shippers last year.
The DOT inspector general's office has more than 60 ongoing hazmat criminal investigations and has gotten at least 20 convictions in each of the last three years.
Hazardous materials take in obvious shipments such as chemicals and fertilizers to less obvious goods including materials packed in dry ice and consumer products such as nail polish removers and aerosol sprays - the kind of goods Emery was accused of misidentifying.
In the Emery case, said Allen, "these are normal industrial goods. It's not radioactive plutonium."
Under the plea agreement, entered in U.S. District Court in Dayton, Ohio, CNF will pay a $6 million criminal fine and a separate $500,000 civil fine. The company also agreed to five years' probation and to implement a hazardous materials handling compliance program for its employees at the company's expense. Although the penalties were the maximum for each count, the fines could have been higher if the government had prosecuted more counts of improperly handling hazardous cargo.
The former Emery Worldwide operates under the Menlo Worldwide Forwarding business that was reorganized into the Menlo Logistics business. The heavyweight air shipping operation uses contracted lift since Emery voluntarily grounded its airline in 2001 during an investigation into the crash of an Emery DC-8 freighter outside Sacramento, Calif., in 2000 that killed three crewmembers. The National Transportation Safety Board recently concluded Emery was at fault in that crash.The former Emery Worldwide operates under the Menlo Worldwide Forwarding business that was reorganized into the Menlo Logistics business. The heavyweight air shipping operation uses contracted lift since Emery voluntarily grounded its airline in 2001 during an investigation into the crash of an Emery DC-8 freighter outside Sacramento, Calif., in 2000 that killed three crewmembers.
Emery employees triggered the separate hazmat investigation, complaining that pilots were not properly notified about the presence and location of hazardous materials on their aircraft. Investigators said Emery had not properly labeled some shipments and that the company had no way of tracking hazardous shipments diverted to different flights.
-- Traffic World associate editor John D. Schulz contributed to this report.
Copyright 2003 Journal of Commerce, Inc.