In  order to be transported, explosives must be assigned a classification. The  classification, which includes a number that denotes the risk level of the  explosive (from most to least hazardous), dictates associated  transportation requirements, such as by which transportation modes the  explosives can travel and how they are packaged. Unlike some other classes of hazmat that can be self-classified (meaning  the shipper classifies the material), in order to be classified, explosives  must be first examined by one of six PHMSA-approved third party test  labs. 1). PHMSA’s Oversight Is Hindered by the Lack of a Systematic Approach to Guidance for Test Labs, While Stakeholders Have Mixed Views on PHMSA’s Oversight

PHMSA’s oversight of the classification of new explosives includes two  key parts—(1) approving and monitoring the test labs and (2) reviewing  and approving the manufacturers’ applications for classification of a new  explosive and the labs’ test classification recommendations. PHMSA Has Improved Oversight of Test Labs, but Has Not Systematically Determined What Guidance to Provide Test Labs

PHMSA has several activities to approve and oversee test labs, but its  efforts to ensure consistency are limited by PHMSA’s lack of a systematic  approach to developing and issuing guidance for these labs. Likewise, we have previously reported that agencies benefit from  procedures that continually reassess and improve guidance processes  and documents to respond to the concerns of regulated entities. However, PHMSA officials told us they give  test labs flexibility in how to apply these requirements on a case-by-case  basis when testing new explosives to recommend classifications. Four of the six test labs we spoke  to said written guidance from PHMSA could help address “unwritten  rules” such as commonly used modifications to the test manual. 2). According to PHMSA officials, PHMSA’s role in approving classifications,  which is outlined in regulation, is essential to fulfilling its role in regulating  hazmat transportation in the U.S. According to PHMSA officials, its overarching goal in reviewing  applications is to ensure that every new explosive is classified correctly,  and as a result, application review processing times can vary greatly  depending on many factors, such as the quality of the application; the  complexity of the application and the explosive device; and the timeliness  of test-lab response when PHMSA technical reviewers reach out with  questions or requests for additional information. In contrast to some manufacturers’ views, other stakeholders, including  carrier associations and test lab examiners, were supportive of PHMSA’s  oversight role, including the review and approval of test labs’ classification  recommendations. PHMSA’s Oversight Improvement Efforts Align with Goals, but PHMSA Faces Staffing and Data Challenges and Lacks Sufficient Data System Planning

		PHMSA Has Outlined Improvement Efforts That Align with Its Goals

In its February 2016 memo, which cited manufacturers’ concerns with the  approval process, PHMSA outlined improvement efforts that align with  goals in PHMSA’s Office of Hazardous Materials Safety 2013-2016  strategic plan. These goals include increasing outreach, streamlining the  regulatory system, and enhancing risk management. PHMSA Faces Staffing Challenges

Despite these recent reform efforts, PHMSA officials stated that limited  staff resources create challenges for application turnaround. According to  data provided by PHMSA, between 2006 and 2015, on average, PHMSA  officials reviewed 1,700 applications for new explosive classifications  annually. Internal control standards for the federal  government state that management should design the entity’s information  system to achieve objectives and respond to risks. PHMSA officials described several ongoing efforts to improve the  agency’s data systems. Moreover, PHMSA officials stated that  fiscal year 2016 funds have been designated to transition the FYI system  to a PHMSA-wide portal to better capture information in applications and  develop the ability to analyze information across applications. Similarly, while PHMSA  officials stated that test labs’ quality and experience could affect the  length of its review, PHMSA officials have not developed data fields that  could highlight such information in applications and be incorporated into  the new system, potentially improving PHMSA’s ability to analyze the  quality and consistency both across test labs and the reviewers. This  could help the agency target efforts to streamline its process. Conclusion

Although PHMSA has taken steps to strengthen its oversight of the  explosives classification process that align with its strategic goals,  PHMSA’s ability to be responsive to stakeholder concerns and to  overcome challenges may be limited without a more systematic approach  to improvements in two areas: guidance to test labs and information  systems. In contrast, a  carefully developed and implemented data plan could potentially help  PHMSA respond to manufacturers’ concerns about the timeliness of  PHMSA’s review process and mitigate PHMSA’s challenges related to  limited staff resources while also helping it meet its goals related to  outreach, transparency, and developing a risk-based approach. 2. Develop a written plan describing information requirements for  PHMSA’s new data system. Agency Comments

We provided a draft of this product to the Department of Transportation  (DOT) for comment.
Why GAO Did This Study

Explosives accounted for 4 million of the total 2.6 billion tons of hazardous materials transported in the U.S. in 2012. DOT's PHMSA is responsible for regulating the transport of explosives, which includes classifying new explosives prior to transportation. The classification denotes the risk level and requirements, such as which transportation modes can be used to transport the explosive. To be classified, an explosive must be examined by a PHMSA-approved third-party test lab. PHMSA must then approve the test lab's classification recommendation.
The Fixing America's Surface Transportation Act includes a provision for GAO to review DOT's oversight of this process. This report addresses: (1) PHMSA's oversight of the classification of new explosives and related stakeholder views and (2) PHMSA's efforts to improve the oversight process and any associated challenges. GAO collected PHMSA data on applications processed (2006-2015) and explosives incidents (2005-2015) and interviewed officials from PHMSA, all six approved test labs, carrier and explosive manufacturer associations, and five explosives manufacturers selected in part to represent a range of industries.

What GAO Found

The Department of Transportation's (DOT) Pipeline and Hazardous Materials Safety Administration's (PHMSA) oversight of the labs that issue classification recommendations for new explosives is limited by a lack of guidance, and stakeholders have mixed views on PHMSA's oversight. To receive a classification for a new explosive, manufacturers must have an approved test lab examine the explosive and submit an application to PHMSA with the test lab's recommended classification. PHMSA's oversight includes: (1) approving and monitoring the test labs and (2) reviewing applications and classification recommendations. Although PHMSA has several activities to oversee test labs, its efforts to promote test lab consistency—one objective of its oversight—are hindered by the lack of a systematic approach to developing guidance. GAO has reported that agencies benefit from procedures to improve guidance to respond to regulated entities' concerns. PHMSA officials stated that they grant test labs flexibility on how to apply standards and regulations. However, four of the six test labs said guidance could explain “unwritten rules” such as common testing modifications. Without a systematic approach to determining what guidance is needed, PHMSA's ability to achieve consistency is limited.
Stakeholder views on PHMSA's oversight processes, in particular its process for approving classification recommendations, are mixed. PHMSA officials view their role as final approver of classifications as critical. However, some manufacturers stated that PHMSA's review process is time consuming and opaque and questioned whether it adds value. In contrast, other stakeholders such as carrier associations were supportive of PHMSA's oversight role. In 2015, PHMSA began taking steps to improve the transparency of its process by, for example, posting information online on average application processing times.
PHMSA has begun oversight improvement efforts that align with its strategic goals to increase outreach, streamline its classification application review process, and enhance risk management, but it faces staffing and data challenges. For example, PHMSA has eliminated one of two technical reviews for certain explosive classification applications. According to PHMSA officials, such streamlining could help PHMSA better manage its limited staff resources—7 PHMSA officials process an average of 1,700 new explosives annually, along with other duties—a workload that creates challenges for application turnaround. However, PHMSA's data challenges reduce its ability to strategically improve its process, and PHMSA lacks a plan for data system improvements under way. Internal control standards state that management should design the entity's information system to achieve objectives and respond to risks. Currently, PHMSA's data system does not allow the agency to aggregate or analyze most information across applications, limiting PHMSA's ability to analyze its processes or outcomes in order to achieve objectives or respond to risks. PHMSA officials stated that fiscal year 2016 funds have been designated to upgrade its system, but PHMSA does not have a plan documenting what fields or information needs are required for the system in order to reach agency goals. Without a plan to guide the development of the new data system, PHMSA may miss opportunities to use it to better manage staff resources, identify future and evaluate past reforms, and meet agency goals.

What GAO Recommends

To improve oversight of the classification of new explosives, PHMSA should (1) develop and implement a systematic approach for improving PHMSA's guidance for test labs; and (2) develop a written plan describing information requirements for its new data system. DOT concurred with the recommendations.