NEW APPROACHES NEEDED 

IN MANAGING PHMSA’S SPECIAL PERMITS 

AND APPROVALS PROGRAM 

Pipeline and Hazardous Materials Safety Administration

Report Number: AV-2010-045

Date Issued: March 4, 2010
U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: New Approaches Needed in Managing 

PHMSA’s Special Permits and Approvals Program

Pipeline and Hazardous Materials Safety 

Administration

Report Number AV-2010-045

Date: March 4, 2010

From: Lou E. Dixon

Assistant Inspector General

 for Aviation and Special Program Audits

Reply to 

Attn. of: JA-10

To: Pipeline and Hazardous Materials Safety Administrator

This report presents the results of our review of the Pipeline and Hazardous Materials 

Safety Administration’s (PHMSA) Special Permits and Approvals Program. PHMSA 

is the lead agency responsible for regulating the safe transport of hazardous materials, 

including explosive, poisonous, corrosive, flammable, and radioactive substances.

PHMSA regulates up to 1 million daily movements of hazardous materials. Many 

hazardous materials are transported under the terms and conditions of special permits 

and approvals, which provide relief or exceptions to the Hazardous Materials 

Regulations.1

On September 10, 2009, we testified before the House Committee on Transportation 

and Infrastructure regarding our review of PHMSA’s Special Permits and Approvals 

Program.

 

2

 1 Hazardous Materials Regulations, 49 C.F.R. § 171-180 (2009). 

 Our review disclosed serious deficiencies in how PHMSA processes and 

oversees special permits and approvals. This report summarizes the results of our 

review and transmits our recommendations to strengthen the Special Permits and 

Approvals Program by addressing the issues we presented in our testimony. A copy 

of our hearing statement is attached for your information. Our audit objectives were 

to evaluate the effectiveness of PHMSA’s (1) policies and processes for reviewing 

and authorizing special permits and approvals, (2) coordination with the affected 

2 OIG Testimony Number CC-2009-096, “PHMSA’s Process for Granting Special Permits and Approvals for Transporting 

Hazardous Materials Raises Safety Concerns,” September 10, 2009. OIG reports and testimonies are available on our 

website: www.oig.dot.gov.
2

Operating Administration3

IN SUMMARY

before issuing any of these special authorizations, and 

(3) oversight and enforcement of approved parties’ compliance with the terms and 

conditions of these authorizations. We conducted the audit from July 2008 through 

January 2010 in accordance with government auditing standards prescribed by the 

Comptroller General of the United States. Our objectives, scope, and methodology

are detailed in the exhibit to this report. 

Our review identified safety issues that call into question the effectiveness of 

PHMSA’s process for granting special permits and approvals for transporting 

hazardous materials. Specifically, PHMSA does not (1) adequately review 

applicants’ safety histories, (2) ensure applicants will provide an acceptable level of 

safety, (3) coordinate with the affected Operating Administrations, and (4) conduct 

regular compliance reviews of individuals and companies that have been granted 

special permits and approvals. To alert PHMSA to our safety concerns with transport 

of specialized bulk explosives, we also reported these issues in a July 2009 

management advisory. We note that PHMSA has developed action plans to address 

concerns we have raised about its Special Permits and Approvals Program. We will 

be monitoring the actions taken to ensure that each problem we raised is addressed. 

Our findings are summarized below:

• PHMSA does not look at applicants’ safety history when assessing their fitness for 

a special permit or approval. For all of the 99 permits and 56 approvals we 

examined, PHMSA did not consider the applicants’ incident and compliance 

records when granting, renewing,4 or allowing “party-to”5

• PHMSA has granted special permits and approvals without sufficient data or 

analyses to confirm that applicants’ proposed level of safety is at least equal to 

what is called for in the Hazardous Materials Regulations. PHMSA’s reviews of 

65 percent of the 99 permits and all 56 approvals we examined were either 

incomplete, lacked evidence of an equal level of safety, or simply nonexistent. 

PHMSA also lacks sufficient supporting documentation for renewal and party-to 

permits. We found this 

to be the case even when applicants had multiple incidents and enforcement 

violations for years prior to receiving their permit. Of particular concern is 

PHMSA’s practice of granting special permits to trade associations—effectively 

giving a “blanket authorization” to thousands of member companies without any 

assessment of their safety histories or need for the permit.

 3 The Federal Aviation Administration, Federal Motor Carrier Safety Administration, and Federal Railroad Administration 

are responsible for inspection and enforcement of hazardous materials regulations for their respective industries involved 

in transporting hazardous materials in commerce. 4 A renewal is a request to extend the permit. Renewals can be valid for up to 4 years. 5 A “party-to” is a request to “piggy-back” on a new or existing permit.
3

permits, which are based on evaluations PHMSA may have performed several 

years earlier when assessing the original (new) special permit application.

• PHMSA did not coordinate with the Federal Aviation Administration, Federal 

Railroad Administration, or Federal Motor Carrier Safety Administration on 

90 percent of the new and party-to permits or any of the renewals we reviewed, 

although these agencies may have critical safety data on applicants seeking a 

permit. Further, PHMSA did not coordinate most of the emergency permits we 

reviewed—even though the law specifically requires their coordination. 

• PHMSA’s risk-based oversight program omits a key rating factor that should drive 

compliance reviews—that is, whether a company holds a special permit or 

approval. However, our visits to 27 companies found that more than half did not 

comply with the terms of their permits. Some officials did not know which 

permits applied to their location, and some were unaware that they even had a 

permit to abide by. 

PHMSA’s planned actions address our concerns with the process and procedures used 

to manage the special permit program; the criteria used to assess an equivalent level 

of safety;6

• Developing and publishing written policy to clarify that special permits are issued 

to member companies only, not to the association or organization.

the process for evaluating the fitness of applicants and their safety 

performance; increased compliance audits and oversight of special permit holders; 

enhanced accountability of those operating under the terms of special permits; and the 

need to modernize the information technology system that supports the program. 

PHMSA has already completed several of its action plan items, including:

• Revising policy and procedures to ensure that an “equivalent level of safety” 

determination is met and fully supported with safety documentation evaluations.

• Revising policy and procedures to ensure that applicant fitness determinations are 

well-founded and fully supported.

• Developing formal standard operating policies and procedures for the special 

permits program. 

While these actions and the remaining ones will require sustained management 

attention to fully analyze and resolve concerns with the special permit process, 

PHMSA must also focus attention on its approval process. Our work found that many 

of the weaknesses in the special permit process are also evident in PHMSA’s approval 

process. Specifically, PHMSA did not document applicants’ proposed level of safety 

for all 56 approvals we reviewed and had granted 5 approvals to applicants with prior 

 6 The proposed alternative will achieve a level of safety that is at least equal to what is called for in the regulation from 

which the special permit is sought.
4

safety incidents and regulatory violations—ranging from a company with 6 incidents 

and 1 violation to a company with 178 incidents and 23 violations. In October 2009, 

PHMSA developed and began implementing an action plan to enhance safety 

oversight of the approvals program. However, a number of longer term actions

remain. These include developing a system to notify PHMSA and other relevant 

Operating Administrations of safety concerns and incidents and developing a pilot 

project for installing Electronic Stability Control systems on special use (bulk 

explosives) vehicles to prevent rollovers.

PHMSA should make it a top management priority to execute the action plans to 

improve both its special permit and approval processes. As PHMSA reexamines these

processes, it must consider the age and number of special permits. We believe 

PHMSA would benefit from reviewing special permits that are more than 10 years old 

to determine if any can be included in the Hazardous Material Regulations. Based on 

our review of 39 renewal and 21 “party-to” special permits, we found that 60 percent 

were more than 10 years old and 33 percent were more than 20 years old. Also, the 

sheer number of active special permits—over 5,000—underscores the need to 

reexamine the strategy for adopting special permits into the Hazardous Materials 

Regulations to keep the current regulatory framework in sync with today’s operating 

environment. 

CONCLUSION

Regulating and monitoring the movement of hazardous materials is a critical part of 

ensuring the safety of the Nation’s transportation system, and it is PHMSA’s role to 

properly assess all risks before allowing applicants to participate in commerce under 

special permits and approvals. While PHMSA’s action plans and senior 

management’s attention show promise, it will take time, resources, and sustained 

commitment to address longstanding and emerging issues. As PHMSA addresses 

these areas, it must refocus its approach to proactively identify safety risks, work with 

partner safety agencies to resolve safety and practicality matters, and set targeted 

oversight priorities. 

RECOMMENDATIONS

Based on the results of our review, we are making a series of recommendations to the 

PHMSA Administrator that PHMSA should take now to strengthen its policies, 

procedures, and management oversight to ensure that the Special Permits and 

Approvals Program is operating efficiently. We recommend that PHMSA:
5

1. Finalize and fully implement the action plans to improve the effectiveness of

processing special permits and approvals. 

2. Finalize and fully implement formal standard operating procedures and policies 

for special permit and approval processes (i.e., application, evaluation, 

authorization; agency coordination; and oversight). 

3. Establish priorities for implementing each of the initiatives in the action plans as 

well as a process to measure the effectiveness of each initiative and revise or 

update initiatives as necessary. 

4. Resolve the issue of company fitness and level of safety for existing special 

permits issued to trade associations representing over 5,000 companies by 

requiring these companies to reapply under the new policy guidelines that require 

evaluating a company’s fitness and level of safety. 

5. Develop a precise definition of what constitutes an applicant’s “fitness” to conduct 

the activity authorized by the special permit or approval. This definition should 

include reviewing an applicant’s safety history—incidents and enforcement 

actions—prior to granting a special permit or approval. 

6. Require the Office of Hazardous Materials Technology to conduct and prepare 

complete evaluations that document the level of safety the company or individual 

is proposing is as safe as or safer than requirements from which the company is 

seeking relief.

7. Establish a partner safety interagency working group to develop a uniform process 

for coordinating special permits, including new, renewal, “party-to,” and 

emergency permits as well as new and renewed approvals.

8. Include “holders of special permits and approvals” as a priority factor in 

PHMSA’s risk-based oversight approach in targeting companies for compliance 

reviews.

9. Establish timeframes for resolving and implementing long-standing safety 

concerns and periodically measure performance against the timeframes.

10.Establish a National Task Force to develop standard procedures for facilitating the 

adoption of special permits and approvals into the Hazardous Materials 

Regulations in order to keep the current regulatory framework in sync with 

advanced technologies and business practices.
6

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

We provided PHMSA with our draft report on February 2, 2010, and received its 

formal response on February 25, 2010. PHMSA concurred with our first 

9 recommendations and partially concurred with our 10th recommendation. 

Specifically, PHMSA agreed with the necessity for a regulatory framework that 

accommodates advanced technologies and business practices and spelled out the steps 

it is taking to accomplish this internally through a special team assigned to review all 

currently active special permits and identify those that should be incorporated into the 

Hazardous Materials Regulations. PHMSA’s response is included in its entirety in 

the appendix to this report.

PHMSA’s target completion dates and actions taken or planned for all 

10 recommendations are reasonable, and we consider them addressed and subject to 

follow up under Department of Transportation Order 8000.1C. We appreciate the 

courtesies and cooperation of PHMSA representatives during this audit. If you have 

any questions concerning this report, please contact me at (202) 366-0500 or Scott 

Macey, Program Director, at (415) 744-0434.

Attachment

#

cc: Deputy Secretary

John Hess, PHA-30

Martin Gertel, M-1
7

Exhibit. Objectives, Scope, and Methodology

EXHIBIT. OBJECTIVES, SCOPE, AND METHODOLOGY

Our audit objectives were to assess the effectiveness of (1) PHMSA’s policies and 

processes for reviewing and authorizing Special Permits and Approvals; (2) 

PHMSA’s coordination with the affected Operating Administration before issuing any 

of these special authorizations; and (3) PHMSA, Federal Aviation Administration 

(FAA), Federal Motor Carrier Safety Administration (FMCSA), and Federal Railroad 

Administration (FRA) oversight and enforcement of approved parties’ compliance 

with the terms and conditions of these authorizations. 

We conducted this performance audit from July 2008 to January 2010 in accordance 

with generally accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

believe that evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

Our audit work began in July 2008 at PHMSA, FAA, FMCSA, and FRA headquarters 

offices. For the period January 2004 to August 2008, we statistically sampled 62 new 

special permit applications, 60 special permit “renewals” and “party to” applications,

and 68 approval applications and assessed PHMSA’s policies and processes for 

reviewing, coordinating, and authorizing approvals. See the table below for a 

breakdown of samples. 

Table. Special Permits and Approval Samples

Type of 

Application

Sample 

Size

NonEmergency 

Reviewed

Emergency 

Granted/Reviewed

Denied

Special Permits

 New 62 40 16 6

 Renewal/PTE 39/21 38/21 0 1/0

Permits Total 122 99 16 7

Approvals Total 68 56 0 12

We reviewed the various special permit and approval samples to determine if PHMSA 

adhered to its policies and procedures. Specifically, we examined applications to 

determine whether PHMSA required applicants to adhere to regulatory requirements. 

We also assessed whether PHMSA coordinated with the modal administrations; 

showed evidence of completing evaluation forms; and considered applicants’ fitness
8

Exhibit. Objectives, Scope, and Methodology

to conduct the authorized activity and proposed level of safety to ensure it met or 

exceeded the safety requirements from which the applicant was seeking relief. 

During December 2008 and July 2009, we conducted 27 unannounced site visits to 

high-risk companies that included explosive manufacturers, chemical manufacturing 

plants, cylinder retesters, and other holders of special permits. The site visits were 

conducted to determine if PHMSA was carrying out its roles and responsibilities and 

if the companies were in compliance with the terms and conditions outlined in the 

special permits (i.e., special provisions, safety control measures, certificates of 

registration, security plan, shipping papers, and training requirements). 

In June and July of 2009, we conducted 18 unannounced site visits to members of 

local trade associations in Washington, DC, Maryland, and California to determine if: 

(1) special permits applied to the respective sites and (2) the companies were in 

compliance with the terms and conditions outlined in the special permits.

We met with key PHMSA officials responsible for processing, reviewing, and 

evaluating the Special Permits and Approvals Program. We also reviewed Office of 

Hazardous Materials Safety special permits and approvals databases to review and 

analyze data in support of the review.

We met with industry associations such as International Air Transport Association, 

Air Transport Association, American Trucking Association, Association of American 

Railroads, and Air Line Pilots Association to obtain their views of PHMSA’s Special 

Permit and Approvals Program. 

On July 28, 2009, we issued a management advisory on bulk explosive trucks and 

other issues that arose during our review. On July 30, 2009, we briefed the Acting 

Deputy Administrator for PHMSA and her staff on the status of the review. In 

response, PHMSA briefed the Inspector General and the Deputy Secretary on the plan 

of action developed to address our management advisory.

We also interviewed FAA, FRA, and FMCSA officials regarding their coordination 

with PHMSA when special permits and approvals are issued.
9

Appendix. Agency Comments

APPENDIX. AGENCY COMMENTS

U.S. Department Administrator 1200 New Jersey Avenue, SE.

of Transportation Washington, DC 20590

Pipeline and Hazardous Materials

Safety Administration

February 25, 2010

INFORMATION MEMORANDUM TO THE ASSISTANT INSPECTOR

GENERAL FOR AVIATION AND SPECIAL PROGRAM AUDITS

From: Cynthia L. Quarterman 

x6-4433

Prepared by: Cindy Douglass 

Assistant Administrator/Chief Safety Officer

x6-4461

Subject: Response to Draft Report on PHMSA’s Special Permits 

and Approvals Program

SUMMARY

The Pipeline and Hazardous Materials Safety Administration (PHMSA) has taken 

swift and comprehensive action to ensure that the process for issuing special permits 

and approvals for the transportation of hazardous materials functions effectively to 

protect public safety. PHMSA has fully addressed all specific issues identified in the 

DOT Office of Inspector General (OIG) review of the Office of Hazardous Materials 

Safety (OHMS) Special Permits and Approvals Program. PHMSA conducted a topto-bottom review of its policies, procedures, practices, and staffing, and implemented 

action plans with aggressive timeframes that have already significantly improved 

oversight and accountability. We are dedicated to ensuring that operations authorized 

by special permits and approvals meet the same high safety standard provided by the 

Hazardous Materials Regulations (HMR). 

PHMSA has committed to and is executing the following three action plans:
10

Appendix. Agency Comments

• Action Plan for Special Permits Program;

1

• Action Plan for IT Modernization and Data Collection/Analysis; and

• Action Plan for Approvals Program.

2

The Agency has completed the tasks within each of these plans on schedule and is on 

target to fulfill each action plan. The action plans are “living” documents that will be 

continuously reviewed to improve processes and regulations relating to special 

permits and approvals and ensure they are up-to-date. PHMSA is committing 

significant new budget and staffing resources to this effort and will continue to do so 

as it works with its partners within DOT and the U.S Coast Guard to manage the 

program. Our commitment to ensure the effectiveness of these vital programs 

includes PHMSA’s leadership and management team, the leadership of our partner 

agencies in DOT, as well as the Secretary and the Deputy Secretary.

PHMSA’s actions, in total, systematically address each of the issues identified in the 

OIG report, and offer decisive actions with regard to strengthening the special permits 

and approvals programs. As conveyed in the following responses to OIG’s specific 

recommendations, PHMSA has already completed action pursuant to several of the 

recommendations, with remaining actions well underway. 

PHMSA ACTIONS TO ADDRESS RECOMMENDATIONS

1. Finalize and fully implement the action plans to improve the effectiveness 

of processing special permits and approvals.

PHMSA Response

Concur. On August 6, 2009, PHMSA finalized and began implementation of an 

accelerated and comprehensive action plan to improve its management of the special 

permits program. One main focus of the action plan is to ensure that the program 

functions as intended to provide a level of safety for transportation of hazardous 

materials authorized under special permits that is equivalent to the HMR. The action 

plan takes into account existing personnel, budget and information technology. It 

addresses: (1) the process and procedures used to manage the program; (2) the 

criteria used to assess and document an equivalent level of safety; (3) the process for 

evaluating the fitness of applicants and their safety performance; (4) the need for 

increased compliance audits and oversight of special permit holders; (5) the 

requirement of enhanced accountability of those operating under the terms of special 

permits; and (6) the need to modernize the information technology (IT) system that 

supports the program. All of the initiatives with specific deadlines are complete. For 

 1 Link to Action Plan for Special Permits 2 Link to Action Plan for Approvals Program
11

Appendix. Agency Comments

example, PHMSA has completed the following action items to enhance its oversight 

of the special permits program:

• Published a written policy on special permits issued to members of industry 

trade associations or similar industry organizations to clarify that special 

permits are issued to member companies only, not to the association or 

organization.

• Reviewed and revised the criteria, policy, and procedures used to make the 

statutorily mandated “equivalent level of safety” determination that must be 

met for the issuance of a special permit to ensure that the standard is met and 

supported with appropriate documentation.

• Reviewed and revised the policy and procedures for determining the fitness of 

special permit applicants, including the criteria considered in determining 

“fitness” (such as past safety record, previous incidents and violations, staffing 

and resources, and carrier safety rating if applicable) and the process and 

criteria for initiating on-site fitness reviews to ensure that fitness 

determinations are well-founded and supported with appropriate 

documentation.

• Revised procedures for coordinating the issuance of special permits with FAA, 

FRA, FMCSA, and the USCG, including methods to evaluate the fitness of 

applicants to conduct the activities authorized by the special permit.

• Developed a plan to provide enhanced enforcement of the terms of special 

permits, taking advantage of the resources of all the operating administrations 

with responsibility for enforcing HMR.

• Developed a plan for enhancing the availability of data needed to provide the 

necessary oversight to ensure that holders of special permits are operating 

safely and within the conditions established in the special permits.

• Revised the standard operating procedures governing the entire special permits 

program, including procedures for evaluating applications, determining a level 

of safety equivalent to the regulations, and monitoring activities conducted 

under the special permits. 

PHMSA completed a similar comprehensive review of its policies and processes for 

issuing approvals on November 6, 2009, and finalized an action plan to improve 

management and oversight of the approvals program on December 4, 2009. PHMSA 

has met all the deliverables to date and is on target to meet all planned deliverables in 

the approvals action plan. With the action plans finalized, and comprehensive actions 

underway to complete implementation, we consider the intent of this recommendation 

to be fulfilled.
12

Appendix. Agency Comments

2. Finalize and fully implement formal standard operating procedures and 

policies for special permit and approval processes (i.e., application, 

evaluation, authorization, agency coordination, and oversight).

PHMSA Response

Concur. PHMSA completed and implemented standard operating procedures (SOPs) 

for the special permits program on October 5, 2009. The SOPs incorporate a number 

of program enhancements, including standardized documentation and retention 

requirements for applications, safety assessments, fitness evaluations, internal and 

intermodal coordination records, and all relevant background, data and analysis. 

Further, the SOPs incorporate a rigorous process for determining if a special permit 

will achieve an equivalent level of safety as provided by the HMR and a 

comprehensive review and inspection procedure for making determinations as to the 

fitness of special permit applicants, including specific processes and metrics for 

defining and evaluating fitness. 

Pursuant to its Approvals Action Plan, PHMSA is in the process of developing similar 

SOPs for the approvals program. PHMSA has already finalized and implemented a 

number of enhanced procedures for the approvals program, including procedures for 

safety assessment, fitness evaluations, and internal and intermodal coordination. The 

Agency is on target to complete and fully implement all SOPs for the approvals 

program by March 4, 2010.

3. Establish priorities for implementing each of the initiatives in the action 

plans as well as a process to measure the effectiveness of each initiative 

and revise or update initiatives as necessary.

PHMSA Response

Concur. The initiatives in the action plans are listed according to a combination of 

criteria based on due dates, timeframes for completion, logical order for progression 

and their anticipated safety impact, overall urgency, staffing and budget resources. 

Thus, for each program, the first priority initiative was to complete a broad-based, 

top-to-bottom review covering current operating procedures, staff responsibilities, 

documentation of procedures, criteria for equivalent level safety assessments, fitness 

review criteria and processes, and coordination with DOT operating administrations. 

PHMSA has completed these reviews and identified a means to enhance procedures, 

reduce redundancies, and increase oversight and accountability. 

Data improvement and IT modernization is another high priority, offering the 

potential to use enhanced data analysis to strengthen program oversight. The 
13

Appendix. Agency Comments

information system that supports the special permits program is at the end of its useful 

life and no longer effectively supports the program’s requirements. System 

modernization will enable the agency to process applications and synthesize safety 

and performance information about companies applying for special permits and 

approvals more efficiently. Due to the importance of this initiative, PHMSA 

temporarily assigned a senior staff member to serve as a technical advisor, responsible 

for planning and executing this action plan.

The effectiveness of the actions taken to address each initiative is being monitored by 

a specially designated management team. We consider the initiatives in each plan to 

be “living” documents that may be revised based on lessons learned. The team 

routinely evaluates whether action items are complete or whether additional revisions 

are needed. Senior management reports to the Administrator and to the Deputy 

Secretary upon the completion of each item. With the priorities established for the 

action plans, and a special team established to ensure that actions taken are effective, 

we consider this recommendation to be complete.

4. Resolve the issue of company fitness and level of safety for existing special 

permits issued to trade associations representing over 5,000 companies by 

requiring those companies to reapply under the new policy guidelines that 

require evaluating a company’s fitness and level of safety.

PHMSA Response

Concur. On August 17, 2009, PHMSA issued a written policy to clarify that special 

permits are only granted to members of associations, not to associations. Authority to 

perform a transportation activity under the terms of a special permit must be exercised 

by the individual business entity that bears responsibility for compliance under the 

terms of the special permit. (The policy is at Link to Special Permit and Approval 

Policy) 

As an interim measure, on September 4, 2009, PHMSA re-issued all special permits 

granted to members of associations to specifically indicate that it is the members of 

the association who are responsible for compliance with the terms of the special 

permit. 

PHMSA plans to re-issue all safety permits previously granted to members of 

associations through their associations as quickly as resources permit. The Agency 

estimates that at least 20,000-30,000 entities will be affected. After May 1, 2010, (the 

date by which PHMSA will implement a new on-line application process for special 

permits), PHMSA will require all association members granted special permits to 

reapply. PHMSA will evaluate each firm’s safety fitness before it re-issues the 
14

Appendix. Agency Comments

special permits. The timeframe for completing this process will depend on the 

number of entities that elect to reapply and available resources. 

Currently, PHMSA processes about 3,000 special permits applications per year. 

Utilizing additional resources and the on-line application process will enhance the 

Agency’s ability to evaluate special permit applications, but it will likely require at 

least two years to evaluate the fitness of those association members that re-apply for 

special permits. PHMSA will develop a more specific plan as it receives the 

applications.

Concurrently, PHMSA is reviewing the 20 active special permits issued to members 

of associations to identify those that should be incorporated into the HMR. Where 

appropriate, conversion of such special permits to regulations of general applicability 

is a major priority. PHMSA has already initiated two rulemakings to address 

association membership special permits related to cargo tank and rail tank car 

operations. The cargo tank rulemaking applies to a significant number of special 

permit holders. PHMSA expects to issue notices of proposed rulemakings for these 

two projects this spring and final rules as quickly thereafter as possible. Additional 

rulemakings to incorporate the remaining special permits issued to members of 

associations into the HMR will be completed by January of 2012.

5. Develop a precise definition of what constitutes an applicant’s “fitness” to 

conduct the activity authorized by the special permit or approval. This 

definition should include reviewing an applicant’s safety history –

incidents and enforcement actions – prior to granting a special permit or 

approval.

PHMSA Response

Concur. PHMSA is working to more clearly define the process and criteria used to 

determine the fitness of applicants for special permits or approvals. This action will 

be completed by June 1, 2010. The determination of fitness in a complex and variable 

transportation operating environment exemplified by the special permits program 

requires the expert application of specific criteria concerning a company’s safety 

performance together with an overall assessment of the risks inherent in the 

operations under consideration, including such factors as hazardous material type, 

quantity, and form; the transport mode and routes of operation; and the frequency and

location of the operation.

 

Together with its safety partners in FMCSA, FRA, FAA, and the USCG, PHMSA 

completed a comprehensive review of existing fitness determination processes and 

developed a refined process for evaluating fitness, based on identified metrics related 
15

Appendix. Agency Comments

to a company’s safety history. Utilizing safety data from several existing sources, the 

agencies can now use performance-based measures to evaluate an applicant’s past 

safety history and ability to operate under the terms of the special permit as indicated 

in its application. PHMSA is working to further fine-tune this process.

Currently, PHMSA conducts fitness reviews of all entities applying for a special 

permit or approval using historical data records of incidents and violations. Where 

the record appears to be questionable, the company will be required to explain its 

record and the actions it has taken to resolve any safety problems, such as additional 

training or revisions to operating practices, as a condition of receiving the special 

permit or approval. If PHMSA determines that the company is unable to meet safety 

fitness requirements, PHMSA will not issue the special permit or approval and may 

take action to modify or terminate other special permits or approvals held by the 

company. PHMSA will prioritize the monitoring of such a company to assure that it 

meets the safety requirements of the special permit. If PHMSA determines that a 

company’s safety record represents the risk of significant harm, PHMSA will 

terminate a special permit or approval.

6. Require the Office of Hazardous Materials Technology to conduct and 

prepare complete evaluations that document the level of safety the 

company or individual is proposing is as safe or safer than requirements 

from which the company is seeking relief.

PHMSA Response

Concur. PHMSA developed a new safety evaluation form to document pertinent 

information regarding whether a special permit will provide a level of safety that is at 

least equivalent to that provided under the HMR. The safety evaluation considers the 

risks of the materials to be transported, the type of packaging to be utilized, the mode 

of transport to be utilized, the conditions likely to be encountered during 

transportation, and pertinent special handling measures or operational requirements. 

These factors are all documented on the form. Further, on February 2, 2010, PHMSA 

implemented a similar process for consistent and uniform documentation of activities 

authorized under an approval. To ensure that the Agency has complete information, 

PHMSA is amending its procedural regulations to require applicants to provide 

additional data and information concerning the risks of the proposed operations and 

the measures to be utilized to address the risks. The Office of Management and 

Budget (OMB) must approve the new application requirements under the Paperwork 

Reduction Act. OMB approval is expected by December 2010.
16

Appendix. Agency Comments

7. Establish a partner safety interagency working group to develop a 

uniform process for coordinating special permits, including new, renewal, 

“party-to,” and emergency permits as well as new and renewed approvals.

PHMSA Response

Concur. PHMSA established a working group with its partner safety agencies in 

DOT and the U.S. Coast Guard on September 4, 2009. The working group

established specific interagency coordination and concurrence guidelines for special 

permit applications. The guidelines (Link to Guidelines) specify that PHMSA will 

approve or deny applications only after coordination with the operating

administrations and provide for the operating administrations to notify PHMSA of 

any violations of a special permit by the grantee that would call its fitness into 

question. The special permits SOPs, implemented October 5, 2009, incorporate 

detailed procedures for coordinating special permit applications with the operating

administrations. On February 2, 2010, PHMSA finalized and implemented a similar 

process for interagency coordination of approval applications. Therefore, the 

necessary actions envisioned by this recommendation are complete. 

8. Include “holders of special permit and approvals” as a priority factor in 

PHMSA’s risk-based oversight approach in targeting companies for 

compliance reviews.

PHMSA Response

Concur. PHMSA’s Office of Hazardous Materials Enforcement has implemented a 

national business strategy to prioritize its activities. Activities authorized under 

Special Permits and Approvals are targeted as inspection and oversight priorities of 

the Office. This national business strategy is available online at (Link to National 

Business Strategy). In addition, on September 4, 2009, PHMSA in concert with its 

partner operating administrations issued a plan for enhanced enforcement of the terms 

of special permits and approvals, utilizing the resources of all the operating

administrations with enforcement responsibility and available data to identify 

potential safety problems and target resources. The plan includes inspection 

procedures specific to special permit and approval grantees and inspection target 

goals. While the compliance reviews will be conducted on a continuous basis, with 

the priorities established, action on this recommendation is complete.

9. Establish timeframes for resolving and implementing long-standing safety 

concerns and periodically measure performance against timeframes.
17

Appendix. Agency Comments

PHMSA Response

Concur. The OIG identified two long-standing safety issues involving special use 

bulk explosive vehicles and lithium batteries. PHMSA included a plan for addressing 

safety issues associated with special use bulk explosive vehicles as part of the special 

permits action plan it implemented August 6, 2009. Adhering to very aggressive 

timelines for completion, PHMSA completed safety performance and fitness reviews 

of the current special permit holders; performed a risk analysis to ensure the special 

permits address all possible safety issues, including the potential for a highconsequence (catastrophic) accident; and developed additional safety measures to 

address identified risks. PHMSA completed its review of these special permits on 

September 4, 2009, and issued revised special permits incorporating a number of 

enhanced safety requirements on October 5, 2009, resolving this issue.

PHMSA is also taking action to address lithium battery safety. On January 11, 2010, 

PHMSA published an NPRM to address comprehensively the safe transport of lithium 

cells and batteries. The NPRM represents another step in PHMSA’s continuing 

process to ensure the safe transport of lithium batteries and builds on regulations 

published in 2004, 2007, and 2009. The rulemaking will strengthen the current 

regulatory framework by imposing more effective safeguards, including design 

testing, packaging, and hazard communication measures for various types and sizes of 

lithium batteries in specific transportation contexts. Several of the proposals are 

based on recommendations issued by the National Transportation Safety Board. 

PHMSA plans to publish a final rule by December 2010. 

With the special use bulk explosive vehicles issue resolved, and a rulemaking in 

process for lithium batteries transport in process, timelines have been established for 

these issues, and this recommendation is considered closed. More broadly, PHMSA’s 

enhanced oversight of the special permits and approvals programs, along with an 

enhanced working relationship with its partner agencies, will enable the agency to 

quickly identify potential safety issues to better ensure that future issues do not 

become long standing issues. In addition, for safety problems identified through 

PHMSA’s enhanced monitoring and enforcement efforts, recommendations from the 

enforcement staff will be referred to a team of specialists to evaluate and act on the 

recommendations within specified timeframes. 

10. Establish a National Task Force to develop standard procedures for 

facilitating the adoption of special permits and approvals into the 

Hazardous Materials Regulations in order to keep the current regulatory 

framework in sync with advanced technologies and business practices.
18

Appendix. Agency Comments

PHMSA Response

Concur in part. PHMSA agrees with the necessity for a regulatory framework that 

accommodates advanced technologies and business practices, but is accomplishing 

this through alternative means. On February 5, 2010, PHMSA finalized a plan to 

establish a systematic process for reviewing outstanding special permits and 

incorporating them, where appropriate, into the HMR. As part of this plan PHMSA 

has designated a special team to review all currently active special permits – about 

1,250 – and identify those that should be incorporated into the HMR. Once the 

review of all currently active special permits is completed, expected by mid 2013, 

PHMSA will routinely review recently granted special permits each year and will 

initiate a rulemaking to propose incorporating them into the HMR as warranted. 

PHMSA’s Office of Hazardous Materials Standards is planning to add a unit that will 

focus on special permit issues and particularly on incorporation of special permits into 

the HMR on a routine basis as appropriate. PHMSA is developing a similar plan for 

incorporating the terms of certain approvals into the HMR. In addition, PHMSA 

plans to publish periodically a Federal Register notice requesting candidates for 

special permits and approvals that should be considered for incorporation into the 

HMR.

* * *

In closing, we want to emphasize that PHMSA has taken aggressive, comprehensive 

and expedited action to address the issues identified by the OIG. Actions have been 

completed or are underway to address each and every issue raised in both the special 

permits program and the approvals program. We have worked closely with the 

Department’s leadership to secure additional staff and budget to continue addressing 

these commitments over the long term and further improve an already strong safety 

record. 

cc: Calvin L. Scovel, Inspector General
Attachment

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Before the Committee on Transportation and Infrastructure

United States House of Representatives

For Release on Delivery

Expected at

10:00 a.m. EDT

Thursday

September 10, 2009

CC-2009-096

PHMSA’s Process for 

Granting Special Permits 

and Approvals for 

Transporting Hazardous 

Materials Raises Safety 

Concerns

Statement of

The Honorable Calvin L. Scovel III

Inspector General

U.S. Department of Transportation
Attachment

Page 2 of 14

Mr. Chairman, Ranking Member Mica, and Members of the Committee:

We appreciate the opportunity to testify today on safety issues within the Pipeline and 

Hazardous Materials Safety Administration’s (PHMSA) Special Permits and 

Approvals Program. As you know, special permits and approvals exempt their 

holders from certain Federal regulations governing the transport of hazardous 

materials. Currently, there are about 5,500 special permit holders1

On July 28, 2009, we issued a management advisory to PHMSA that outlined a 

number of concerns. My testimony today will focus on those concerns as well as new 

ones identified through our ongoing work. Specifically, (1) shortcomings in the 

processes for reviewing and approving special permits and approvals, (2) concerns 

with PHMSA’s oversight of permit holders’ compliance with safety requirements, and 

(3) long-standing safety issues that remain unaddressed by PHMSA. 

and 118,000 

approvals. 

In summary, we found that PHMSA grants special permits and approvals without

exercising its regulatory authority to review applicants’ safety histories and without 

coordinating with partner safety agencies. Despite these weaknesses, PHMSA does 

not target individuals and companies that hold special permits and approvals for 

safety compliance reviews. These issues—along with safety concerns previously 

raised by our office, the Federal Aviation Administration (FAA), and the National 

Transportation Safety Board (NTSB)—call into question the effectiveness of 

PHMSA’s process for granting special permits and approvals. 

We want to recognize Secretary LaHood and Deputy Secretary Porcari for their 

leadership in directing PHMSA to formalize an action plan addressing these and other 

concerns regarding the Special Permits and Approvals Program. 

 1 There are now about 1,250 active special permits. The 5,500 referenced above include these plus all party-to permits. 
Attachment

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BACKGROUND

PHMSA is the lead agency responsible for regulating the safe transport of hazardous 

materials, including explosive, poisonous, corrosive, flammable, and radioactive 

substances.2

Many hazardous materials are transported under the terms and conditions of special 

permits and approvals.

 PHMSA regulates up to 1 million daily movements of hazardous 

materials, totaling up to 20 percent of all freight tonnage shipped each year in the 

United States. The FAA, Federal Motor Carrier Safety Administration (FMCSA), and 

Federal Railroad Administration (FRA) also oversee and enforce regulations for their 

respective industries. 

3

• the company or individual is fit to conduct the activity authorized by the special 

permit or approval and

 Special permits and approvals allow a company or individual 

to transport, package, or ship hazardous materials in a manner that varies from the 

regulations, provided they meet two key criteria for authorization:

• the level of safety the company or individual is proposing is as safe as or safer 

than requirements from which the company is seeking relief. 

Obtaining a special permit or approval allows a company to use technological 

innovations in transporting hazardous materials—improvements that have emerged 

since the regulations were first promulgated. Requests for special permits and 

approvals generally include “new,” “renewals,” and “party-to” applications (a party-to 

application applies only to special permits and is a request to “piggy-back” on a new 

or existing permit). New special permits may be authorized for up to 2 years, at 

which time they may be renewed for a period of up to 4 years.4

PHMSA DOES NOT PROVIDE ADEQUATE REVIEWS OF 

APPLICATIONS FOR SPECIAL PERMITS AND APPROVALS

 Emergency special 

permits must be submitted directly to the affected Operating Administration, which 

evaluates and confirms the emergency, recommends any conditions for inclusion in 

the permit, then forwards its review to PHMSA. The exhibit to this statement 

describes the process requirements for special permit and approval applications.

PHMSA does not review applicants’ incident and enforcement histories—critical 

factors in assessing fitness—before authorizing special permits and approvals for 

individuals, businesses, and trade associations. We also found that PHMSA has 

granted special permits and approvals even though its reviews of requests do not 

 2 Hazardous Materials Regulations, 49 C.F.R. § 171-180 (2009). 3 Special permits authorize a holder to vary from specific provisions of the Hazardous Materials Regulations; identify the 

section(s) from which relief is provided; and include provisions, conditions, and terms that must be followed in order for 

the special permit to be valid. An approval means written consent from PHMSA’s Associate Administrator to perform a 

function that requires prior consent under the Hazardous Materials Regulations. 4 The 4-year renewal period was authorized under SAFETEA-LU, Pub. L. No. 109-59 (2005).
Attachment

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always demonstrate that applicants will provide a level of safety equal to the 

regulations from which they seek relief. In addition, PHMSA does not sufficiently 

coordinate with other agencies that are involved in overseeing the transport of 

hazardous materials before issuing a special permit or approval.

PHMSA Does Not Consider Applicants’ Safety Histories When 

Determining Fitness for Special Permits and Approvals

Hazardous Materials Regulations provide PHMSA the authority to review an 

applicant’s safety history when assessing the applicant’s fitness for a special permit or 

approval.5

 PHMSA’s reviews, however, solely examine the safety of the requested 

action, process, or package—not the applicant’s prior incidents or enforcement 

violations. According to PHMSA officials, applicants’ incident and compliance 

histories have no bearing on their ability to safely carry hazardous materials—a safety 

issue we highlighted in our July 2009 management advisory. Specifically, we found 

that PHMSA had granted 1 company a special permit to operate bulk explosives 

vehicles,6 despite the fact that over the last 10 years the company had 53 incidents—

12 of which were serious with 9 of those involving vehicle rollovers—and 

22 violations issued by PHMSA’s or FMCSA’s enforcement office.7

In addition, our ongoing review found no instances where PHMSA considered 

applicants’ safety histories. However, our assessment of 99 non-emergency special 

permits found that 26 of those holders (26 percent) had at least 5 incidents or 

violations over the 10-year period preceding PHMSA’s grant of the permit. For 

8 (about 31 percent) of these 26 permits, each applicant had at least 100 incidents, 

some of which were serious. For example, 1 company was granted a special permit in 

September 2004 despite having 321 prior incidents and 5 prior enforcement 

violations. Further, the company’s permit was renewed 2 years later despite having 

an additional 26 incidents and 5 enforcement violations.

We also found that PHMSA granted special permits to 12 trade associations—

effectively a “blanket authorization” for about 5,000 member companies. PHMSA 

granted these permits without verifying member companies’ fitness to carry out the 

terms and conditions of the permit. PHMSA also did not determine whether permits 

were needed or used, whether companies actually existed or provided accurate 

information about themselves, or whether they were even aware that they had a permit 

 5 49 C.F.R. § 107.113f (5) (2009). The regulations state that the Associate Administrator may grant an application upon 

finding that, among other things, the applicant is fit to conduct the activity authorized by the exemption or special permit. 

This assessment may be based on information in the application, prior compliance history of the applicant, and other 

information available to the Associate Administrator. 6 Permit holders are authorized to transport certain explosives, oxidizers, corrosive and combustible liquids, and blasting 

caps on the same truck. 7 An incident generally involves the unintentional release of a hazardous substance or discovery of an undeclared hazardous 

material. PHMSA defines serious incidents as those incidents involving fatalities, serious injuries, closure of a major 

transportation artery, evacuations of 25 or more people, and hazardous materials releases of greater than 119 gallons or 

882 pounds.
Attachment

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to abide by. For example, we visited 18 companies that were members of 7 of the 

12 associations and found that:

• 3 of the 4 companies using an association-granted permit had compliance issues, 

including deficiencies with shipping papers, training requirements, certificates of 

registration, and security plans. In fact, at two facilities, the companies were 

unaware that a special permit applied to the function they were performing and so 

they were not meeting the terms and conditions of that permit. One of the 

companies explained they were recently made aware of the applicable permit after 

the trade association warned them of a possible investigation into permit 

compliance by DOT Office of Inspector General auditors.

• 4 companies did not reside at the address provided by their association (currently, 

the terms of the permit do not require trade associations to notify PHMSA of any 

changes with its member companies); and

• 10 had no reason to use their industry association’s permit because they did not 

perform the activity for which the permit was granted. 

Finally, PHMSA also granted approvals to applicants without examining their safety 

histories. Of the 56 approvals that we reviewed,8

PHMSA Has Granted Special Permits and Approvals Without Support for 

an Equal Level of Safety and Has Overlooked Incomplete Applications

5 were granted to applicants with 

prior safety incidents and violations, ranging from 6 incidents and 1 violation to 

178 incidents and 23 violations. 

PHMSA has granted special permits and approvals without sufficient data and 

analyses to confirm that the applicants’ proposed level of safety is at least equal to 

what is called for in the Hazardous Materials Regulations. We reviewed

99 non-emergency special permits and found that for nearly 65 percent (8 new, 

37 renewals, and 19 party-to status)9 PHMSA’s evaluations10

 8 We sampled a total of 68 approvals, 12 of which were denied, reducing our sample to 56.

were either incomplete, 

lacking evidence to support that the applicant demonstrated an equal level of safety, 

or simply nonexistent. Of particular concern is the lack of supporting documentation 

for renewal and party-to permits, which are based on evaluations PHMSA may have 

performed several years earlier when assessing the original (new) special permit 

application. According to PHMSA officials, some of this information was lost when 

the Office of Hazardous Materials Safety migrated to a new information system and 

decided to transfer the most current special permit but not the historical records. 

9 We sampled 62 new special permits, of which 16 were granted emergency status and 6 were denied, reducing our sample 

to 40 new special permits. We also reviewed a sample of 39 renewals, 1 of which was denied, reducing our sample to 

38 renewals. Our sample also included 21 party-to permits. 10 PHMSA’s evaluations are generally performed by chemists, general and mechanical engineers, physicists, and physical 

science experts in PHMSA’s Hazardous Materials Technology Office.
Attachment

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Despite this lack of original information, PHMSA opted to renew permits or grant 

party-to status without conducting a new evaluation. Further, there was still 

information missing for the eight new permits—information needed to support an 

equal level of safety.

Evidence of an equal level of safety to support emergency special permits and 

approvals was similarly lacking:

• PHMSA’s evaluations for 8 of the 16 (50 percent) emergency special permit 

applications we reviewed were either incomplete, not reviewed by PHMSA’s 

technical staff, lacked a conclusion that an equal level of safety was demonstrated, 

or were not performed.

• Each of the 56 approval applications we reviewed lacked evaluation 

documentation by PHMSA to indicate how an equal level of safety was reached. 

In addition, PHMSA is not holding applicants accountable for providing required 

information, as it has granted new permits and renewals to applicants who did not: 

• provide relevant shipping and incident experience, 

• demonstrate that a special permit achieves a level of safety at least equal to that 

required by regulation, and 

• certify—for renewals—that the original application remains accurate and 

complete. 

Within the 99 non-emergency permits we reviewed, we sampled 40 applications for 

new permits and 38 applications for renewals. The table below shows that for most of 

these, required information was either not provided by applicants or not validated by 

PHMSA. 

Table. Insufficient Information on Special Permit Applications

Permit Type Shipping/Incident 

Experience 

Missing

Shipping/Incident 

Experience Not 

Validated by 

PHMSA

Equal Level of 

Safety Not 

Supported

Accuracy and 

Completion of 

Original 

Application 

Not Supported

New 18 19 5 N/A

Renewal 1 37 N/A 7

 Total Problems 

Found 19 56 5 7

Note: We did not examine what applicants provided for the 21 party-to permits since they generally provide 

limited information, given that they receive their permit based on PHMSA’s evaluation of the original permit 

holder’s application.

We also looked at applications for emergency permits, which require applicants to 

provide specific support to justify emergency processing. However, 3 of the 
Attachment

Page 7 of 14

16 applicants (or about 19 percent) we reviewed who were granted emergency permits 

did not provide such support. 

PHMSA Grants Special Permits and Approvals With Little or No Input 

from Partner Safety Agencies

While PHMSA is not required to coordinate with Operating Administrations before 

authorizing a non-emergency special permit or approval, the exchange of information 

among safety stakeholders, especially those with oversight and enforcement 

responsibilities, is fundamental to safety. According to officials we spoke with, 

coordination between PHMSA and FAA, FRA, and FMCSA mainly consists of 

informal e-mails and phone conversations. 

Based on our review of 99 non-emergency special permits, we found no evidence that 

PHMSA coordinated with the affected Operating Administration in granting 36 of 

40 (90 percent) new permits, all 38 renewals, and 19 of 21 (about 90 percent) party-to 

permits we sampled. Coordination with partner safety agencies prior to granting 

renewal and party-to permits is especially critical so they can ensure these applicants 

are still fit to conduct the authorized activity and that their proposed level of safety 

meets or exceeds the safety level required by the Hazardous Materials Regulations. 

Authorizing special permits that have not been fully vetted could ultimately lead to 

unsafe transportation of hazardous materials. Twelve of the 36 new permits that were 

not coordinated allowed transport by air (passenger and/or cargo), a particularly 

vulnerable transportation method if an incident were to occur. 

FAA has also expressed dissatisfaction that PHMSA does not provide sufficient and 

consistent documentation upon which FAA can base its evaluation of the special 

permit or approval terms and conditions. For example, in 2008, PHMSA coordinated 

an emergency special permit application to transport by cargo aircraft several 

hazardous materials contained in spacecraft parts and components. The items 

included lithium batteries in a package that exceeded size parameters and a poisonous 

gas contained in pipes, which is normally prohibited by the Hazardous Materials 

Regulations for shipment by air. According to FAA, the request did not provide any 

additional safety measures for the pilots, and PHMSA did not include an explanation 

of how an equal level of safety would be met. 

This example also illustrates the importance of coordination for emergency special 

permits, which is required by regulations.11

 11 49 C.F.R. § 107.117(d) (2009).

 Unlike non-emergency special permits, 

emergency special permits must be submitted directly to the affected Operating 

Administration, which evaluates and confirms the emergency, recommends any 

conditions for inclusion in the permit, then forwards its review to PHMSA. However, 

in 13 of the 16 emergency applications we reviewed, the applications went directly to 

PHMSA and were not coordinated with the affected Operating Administration. 
Attachment

Page 8 of 14

PHMSA also failed to publish 11 emergency permits in the Federal Register within 

90 days of issuance as required by law for public safety and stakeholder notification. 

The lack of coordination between PHMSA and FMCSA is also disconcerting, given 

that special permits for use of “bulk explosive” vehicles continue to be approved 

despite their number of serious incidents and violations—a key issue highlighted in 

our July management advisory to PHMSA. For the period October 2005 to July 2008, 

bulk explosives vehicles have experienced 14 serious incidents, 11 of which involved 

vehicle rollovers. 

We also reviewed 56 approvals and found that none were coordinated with the 

affected Operating Administration. According to PHMSA, most approvals (e.g., 

explosive classifications, fireworks classifications, and retesters of cylinders) are 

mode-neutral and do not require coordination. We agree that not every approval 

needs to be coordinated, but certain approvals should be, especially those that provide 

exceptions from regulatory requirements or prohibitions, such as authorizations to 

transport lithium batteries in quantities greater than 77 pounds (anything under this 

weight does not require PHMSA approval). Our work underscores the importance of 

PHMSA and the affected Operating Administration jointly developing and 

implementing a Memorandum of Agreement on the type of approval requests that will 

be coordinated. This would provide each agency with an opportunity to share their 

knowledge about the party seeking an alternative method of compliance to the 

requirements in the Hazardous Materials Regulations. 

PHMSA DOES NOT CONDUCT REGULAR COMPLIANCE REVIEWS 

OF INDIVIDUALS AND COMPANIES THAT HAVE BEEN GRANTED 

SPECIAL PERMITS AND APPROVALS

PHMSA’s risk-based oversight approach considers three priority factors when 

selecting individuals and companies that transport hazardous materials for safety 

compliance reviews: accident investigations, third-party complaint investigations, and 

fitness inspections.12

Our visits to 27 companies indicate otherwise. Sixteen of these companies 

(59 percent) held 91 special permits. We found that all 16 were not complying with 

various terms and conditions of 56 (62 percent) of the permits, such as training, 

shipping, and signage requirements. For example, one company failed to post a 

 Conducting compliance reviews of special permit and approval 

holders is not considered a priority, even though PHMSA states it holds companies 

with special permits and approvals to a higher standard of compliance than nonpermit holders. PHMSA contends that this does not need to be incorporated in its 

risk-based oversight criteria because special permit holders have demonstrated better 

compliance over the last 10 years than non-permit holders. 

 12 Fitness inspections are usually referred from PHMSA’s Office of Special Permits and Approvals to its Office of 

Hazardous Materials Enforcement (OHME).
Attachment

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required sign on a vehicle that read “Warning, trailer may contain chemical vapor. 

Do not enter until vapors have dissipated.” Officials from five companies were 

unaware of which special permits applied to their location, and two facility officials 

seemed confused as to what a special permit was and made several calls to their 

corporate office or manager to obtain clarification on their permit use.

We are particularly concerned about these weaknesses with regard to the many 

companies whose operations depend on special permits and approvals and those 

companies operating multiple permits, approvals, or both. For example, we identified

16 companies that each had 20 or more special permits, 7 companies that each had 30 

or more special permits, and 1 company that had 65 special permits.13

LONG-STANDING SAFETY CONCERNS HAVE LARGELY GONE 

UNADDRESSED BY PHMSA

 Omission of 

the priority factor, “holder of special permit and approval” from PHMSA’s risk-based 

oversight criteria means it cannot increase oversight for those companies that may not 

be providing an equal or higher level of safety as specified by the terms of the permit 

and the Hazardous Materials Regulations.

Safety concerns associated with bulk explosive trucks were raised to PHMSA more 

than 2 years ago but have only recently received attention. Although PHMSA formed 

an advisory group primarily comprised of industry representatives, the group did not 

produce actionable solutions to these vulnerabilities. Our recent management 

advisory to PHMSA brought this issue to the attention of the highest levels of the 

Department. In response to our advisory, PHMSA developed an action plan 

addressing our concerns related to specialized bulk explosive truck operations, as well 

as other issues found with the special permits program in general. We intend to 

monitor PHMSA’s progress on this issue as this is not the first time identified safety 

concerns have gone largely unaddressed. 

Safety Concerns Associated With Certain Bulk Explosives Special 

Permits Have Only Recently Received Attention 

In June 2007, PHMSA’s Chief of the Office of Hazardous Materials Enforcement 

(OHME), Central Region, sent a letter to the Director of the Special Permits and 

Approvals Office citing specific problems and risks associated with vehicles traveling 

under two special permits. The letter described the results of a PHMSA investigation 

of a rollover incident where the vehicle’s tanks had ruptured and the different 

hazardous materials had mixed, creating the potential for a catastrophic event. As a 

precaution, the local fire department evacuated all areas within a 1.5-mile radius of 

the incident—1 mile beyond the emergency response handbook requirement.

The two special permits in question—11579 and 12677—allow permit holders to 

transport certain explosives, oxidizers, corrosive and combustible liquids, and blasting 

 13 We excluded the Department of Defense as a holder of special permits in our analysis.
Attachment

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caps all on the same truck. While this practice is prohibited by the Hazardous 

Materials Regulations, permit holders are exempted from these requirements if they 

can show that their method of transport meets or exceeds the level of safety specified 

in the regulations and that they are fit to conduct the activity authorized by the permit.

OHME made a series of recommendations, one of which requires all operators of 

vehicles with multi-hazard special permit authorizations to receive additional safety 

training that specifically addresses vehicle susceptibility to rollovers.

In May 2008, nearly a year after receiving OHME’s letter, PHMSA formed an 

advisory group, comprised of DOT and industry representatives, which met and 

discussed several issues. These included vehicle rollover prevention, training for 

drivers of these vehicles, improved battery protection or relocation, and ways to 

minimize circumstances that would cause a fire in a rollover spill. We first raised our 

concerns about the number of incidents and violations associated with these special 

permits in January 2009. At that time, PHMSA officials told us that the advisory 

group was looking into this matter. In March 2009, the group met again, and the 

Institute of Makers of Explosives representatives presented recommendations for the 

increased safety of the vehicles operated under the special permits. At both meetings, 

OHME’s recommendations were not pursued and no clear course of action was 

determined except that another meeting in the near future would be beneficial.

Long-Standing Safety Concerns Regarding Special Permits To Ship 

Lithium Batteries Have Not Been Addressed

In 1999, a pallet of lithium batteries caught fire while being handled between flights 

at Los Angeles International Airport. Following this incident, FAA raised safety 

concerns involving life-threatening accidents with the air transport of bulk shipments 

of lithium batteries. Further, the NTSB’s investigation of this incident revealed that 

these batteries presented an unacceptable safety risk to aircraft and passengers. The 

NTSB made a series of recommendations, including that packages containing lithium 

batteries be identified and shipped as hazardous materials when shipped on aircraft.

During our 2003 through 2004 review of FAA’s Hazardous Materials Safety Program, 

two serious incidents involving the shipment of lithium batteries occurred. In one of 

these incidents, which occurred in August 2004, a shipment of lithium batteries 

caught fire on a ramp of a major all-cargo carrier at Memphis International Airport. 

According to the shipping documents, the battery package was shipped under a 

PHMSA approval; however the materials were not packaged according to the terms of 

the approval, and the approval was never coordinated with FAA. Our November 

2004 report ultimately concluded that discussions between FAA and PHMSA (known 

as the Research and Special Programs Administration at the time) on the safe 
Attachment

Page 11 of 14

transport of lithium batteries and other issues on rules governing air shipments of 

hazardous materials had been ongoing for 5 years without any effective resolution.14

We reported that serious efforts to resolve these issues were only undertaken after the 

August 2004 incident; high-level Departmental attention; and issuance of FAA’s 

technical report, which concluded that lithium batteries pose a unique threat in the 

cargo compartment of an aircraft because lithium fires cannot be extinguished by 

FAA’s certified fire suppressant system. We made a number of recommendations to 

address these unique safety requirements. The Assistant Secretary for Transportation 

Policy concurred, stating that the Department “anticipate[s] having a process 

formalized by February 2005” to resolve such disputes between Operating 

Administrations. However, the Department has yet to implement such a policy.

 

In December 2004, the Department issued an interim final rule on the safe handling 

and shipping of lithium batteries by air. This rule was finalized in August 2007 and 

subsequently amended in January 2009. Both amendments mandated additional 

safety requirements to address FAA’s concerns and the NTSB’s safety 

recommendations. However, not all of FAA’s and NTSB’s concerns have been 

resolved. Currently, PHMSA, in consultation with FAA, is proposing changes to the 

January 2009 rule to include that all lithium batteries be designed to withstand normal 

transportation conditions and packaged to both reduce potential damage that could 

lead to a catastrophic incident and minimize the consequences of an incident. At the 

core of the current debate is the Air Line Pilots Association’s perspective that 

shipment of lithium batteries by air should be strictly prohibited until new regulations 

are in place to ensure the safe transport of hazardous materials. The Department must 

be vigilant in resolving this issue, as incidents involving shipments of lithium 

batteries continue to occur, with eight incidents in 2008—two of which were lifethreatening—and six so far in 2009. The most recent of these include a burnt lithium 

battery package discovered on an aircraft at Honolulu International Airport on 

June 18, 2009, and another package that caught fire on a flight to St. Paul 

International Airport on August 14, 2009.

OIG Management Advisory Presses PHMSA To Immediately Address 

Safety Concerns 

On July 28, 2009, we issued a management advisory to PHMSA outlining concerns 

with weaknesses we have identified thus far with the special permit process. In short, 

our work shows that immediate attention is needed to prevent unsafe packaging and 

transport of explosives and explosive components traveling under Department of 

Transportation Special Permit Numbers 8554, 11579, and 12677.

 14 OIG Report Number SC-2005-015, “New Approaches Needed in Managing FAA’s Hazardous Materials Program,” 

November 19, 2004. OIG reports are available on our website: www.oig.dot.gov.
Attachment

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PHMSA’s August 6, 2009, response to our advisory outlines its plans to address these 

identified issues: 

• Special permits issued to trade associations – permits to be issued to member 

companies only, not to the associations.

• Safety documentation evaluations – revise policy and procedures to ensure that an 

“equivalent level of safety” determination is met and fully supported.

• Applicant fitness – revise policy and procedures to ensure that fitness 

determinations are well-founded and fully supported.

• Formally develop standard operating policies and procedures for the special 

permits program. 

PHMSA’s planned actions addressed some, but not all, of OHME’s June 2007 

recommendations. One such action is to develop a pilot project for installing 

electronic stability control systems on bulk explosive vehicles to prevent rollovers. 

However, PHMSA still needs to address OHME’s remaining safety concerns. We 

will continue to monitor PHMSA’s progress as it begins establishing implementation 

priorities in these areas and means to measure effectiveness.

CONCLUSION 

Regulating and monitoring the movement of hazardous materials is a critical part of 

ensuring the safety of the Nation’s transportation system, and it is PHMSA’s role to 

properly assess all risks before allowing applicants to participate in commerce under 

special permits and approvals. However, a number of longstanding and new issues 

call into question the effectiveness of PHMSA’s Special Permits and Approvals 

Program. The sheer number of active special permits and approvals alone—many 

dating back 10 years or more—underscores the need to reexamine the strategy for 

adopting special permits and approvals into the Hazardous Materials Regulations to 

keep the current regulatory framework in sync with today’s operating environment. 

As PHMSA addresses these areas, it must re-focus its approach to proactively identify 

safety risks, work with partner safety agencies to resolve safety and practicality 

matters, and set targeted oversight priorities. 

This concludes my statement, Mr. Chairman. I would be happy to answer any 

questions that you or other Members of the Committee may have.
Attachment

Page 13 of 14

Exhibit. Process Requirements for Special Permit and Approval 

Applications

EXHIBIT. PROCESS REQUIREMENTS FOR SPECIAL PERMIT AND 

APPROVAL APPLICATIONS

Table A. Process Requirements for Special Permit Applicants and PHMSA

What Applicants Must Provide How PHMSA Processes the Request

New Permits

• identification/agent information

• citation of regulation relieved from

• proposed mode of transport

• all supporting documents (e.g., test results and 

drawings) 

• demonstration of equal level of safety

• all relevant shipping and incident experience

• enter application into HMIS\a

• submit to Technical Office if needed\b

• 30-day period: determine conformity to 

 requirements and accept or reject 

• evaluate equivalent level of safety

• assess fitness of applicant to conduct the activity

 authorized

• publish notice in Fed. Register

• 15-day period: out for comments

• draft permit with justification

Renewal Permits

• identification/agent information

• permit number for renewal

• certification that original application remains

 accurate and complete

• all relevant shipping and incident experience

• 15-day period: determine completeness/conformity

• verify timely receipt and enter into HMIS

• draft authorization letter for signature

Party-To Permits

• identification/agent information

• permit number seeking to join

• demonstration of equal level of safety

• 30-day period: determine completeness/conformity

• evaluate equivalent level of safety

• assess fitness of applicant to conduct the activity

 authorized

• verify “party-to” status not previously

 granted

• draft authorization letter for signature

Emergency Permits

• facts showing necessity to prevent injury, 

support national security, or prevent economic 

loss

• the application to the DOT modal official for the 

initial mode of transportation to be utilized. 

• determine necessity to prevent injury, support

 national security, or prevent economic loss

• publish in Fed. Register within 90 days

\a Hazardous Materials Information System (HMIS)

\b If non-technical, the application is assigned to a non-technical Special Permit Specialist.
Attachment

Page 14 of 14

Exhibit. Process Requirements for Special Permit and Approval 

Applications

Table B. Process Requirements for Approval Applicants and PHMSA

What Applicants Must Provide How PHMSA Processes the Request

New Approvals

• identification/agent information

• section of regulation under which 

 application is made 

• description of the activity for which the approval 

is required

• proposed mode of transit

• all supporting documents (e.g., any additional 

information specified in the section containing 

the approval, test results, drawings, and any 

required reports) 

Examples include classifications of explosives 

and fireworks, cylinder retesters, and 

manufacturers of cylinders

For an approval that provides exceptions to 

the regulations, additional information is 

required:

• demonstration of equal level of safety

• identification of any increased risk to safety or 

property

• enter application into NetFYI Information

 Management System

• submit to Technical Office if needed

• evaluate equivalent level of safety

• assess fitness of applicant to conduct the activity

 authorized

• draft authorization letter

Renewal Approvals

• identification/agent information

• for approvals with expiration dates: renewals

 must be filed in same manner as original

 application

• approval number for renewal

• determine completeness

• draft authorization letter for signature