Fourth Circuit rules fireworks distributor’s case a dud

RICHMOND, Va. (CN) — The Fourth Circuit on Wednesday ruled against a fireworks distributor that asked the appellate court to act against a warning letter sent to the company regarding the safety of one of its bestselling models.

Noncompliance notices from the U.S. Consumer Product Safety Commission don't constitute a final order subject to review, the court found, quashing the appeal brought by the Kansas-based Jake's Fireworks.

The company claims the notices have forced $2.6 million dollars worth of fireworks into limbo by leaving it without administrative options while opening up the distributor to criminal and civil penalties.  

In an opinion penned by Senior U.S. Circuit Judge Diana Jane Gribbon Motz, the panel said it views noncompliance notices as advisory, rather than orders that demand action. 

"The notices at issue here simply do not represent the commission's last word on this matter," the Bill Clinton appointee wrote. "They merely provide preliminary findings and warnings by agency staff, like countless other letters and guides that federal agencies issue throughout the year."

The notices after the commission's Office of Compliance and Field Operations sampled Jake's Fireworks products from 2014 to 2018 and found that about one-third of the samples indicated that the fireworks were dangerously overloaded with explosive material, rendering them banned hazardous substances under the agency's regulations. 

The compliance office suggested that Jake's destroy the fireworks.

Because the compliance office doesn't have enforcement authority, the distributor says, it has only one choice for administrative review: continue selling the hazardous products until the commission moves to enforce the noticed violations through a formal administrative or judicial action.  

The three-judge panel concluded that the compliance office is a subordinate of the U.S. Consumer Product Safety Commission and has no authority to issue binding decisions on behalf of the commission. Only the commission itself may vote to authorize an administrative complaint seeking to compel an entity to take corrective action.

"The commission's regulatory scheme provides its compliance office with a role that is subordinate, investigatory and advisory to the commission," Motz wrote. "Notices of noncompliance therefore represent the conclusions and advice of agency staff, not of the commission itself."

Under the Administrative Procedures Act, an agency action must satisfy two prongs to be deemed final: First, it has to mark the consummation of an agency's decisionmaking process. Second, it must set either determine rights or obligations, or set out legal consequences.

"A notice of noncompliance does not trigger any of the administrative, civil or criminal proceedings that the commission could pursue," Motz wrote. "The power to make a final determination as to whether a violation has occurred and whether to pursue enforcement rests with the commission itself."

In question are Jake's Fireworks' bestselling Excalibur model, a reloadable aerial shell. They are designed to be launched 40 to 50 feet into the air, where a burst-charge component ignites to produce visual effects.

The fireworks distributor is among the largest in the country, with distribution centers in seven states. 

The Office of Compliance and Field Operations claimed, among other things, that the fireworks violated the Audible Effects Regulation put into place in 1970 to ban consumer use of handheld explosive pest control devices. Jake's Fireworks believes the regulation was never meant to apply to the small reloadable aerial shells it imports and sells.

But ruling in Jake's favor, the panel determined, would be a lose-lose, where regulated companies would enter unlawful territory without the warning afforded through noncompliance orders.

"Given that Jake's Fireworks's position would turn the agency's decisionmaking hierarchy upside down, we find the agency's interpretation far more persuasive," wrote Motz, who was joined on the panel by the Chief U.S. Circuit Judge Albert Diaz, an Obama appointee, and the Reagan-appointed U.S. Circuit Judge J. Harvie Wilkinson III.

Attorneys representing the office declined to comment, while attorneys representing the distributor failed to respond.

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