4th Circuit rules fireworks distributor cannot get review of ‘hazardous’ notices

A fireworks importer and distributor operating in Maryland cannot receive judicial review of a consumer regulatory body’s warning notices regarding a portion of its fireworks that were deemed hazardous substances, the U.S. Court of Appeals for the 4th Circuit ruled.

In a published opinion written by Senior Judge Diana Gribbon Motz and decided last month, the 4th Circuit determined that the U.S. Consumer Product Safety Commission’s notices to Jake’s Fireworks Inc. were not final agency actions, meaning the consumer fireworks company cannot sell a portion of its fireworks that have an estimated retail value of more than $2.6 million.

According to the opinion and Oliver Dunford, counsel for Jake’s Fireworks and a senior attorney at Pacific Legal Foundation, the Kansas-based fireworks company could be subject to civil and criminal penalties if it sells certain fireworks that the commission determined “were dangerously overloaded with explosive material.”

The federal appellate court found the notices issued to Jake’s Fireworks “hardly constitute the culmination of the Commission’s decision-making process” and that the notices are advisory and “do not command any action” because they provide preliminary findings and warnings. The 4th Circuit affirmed the trial court’s dismissal of Jake’s Fireworks’ complaint.

But Jake’s Fireworks argued the notices impose an obligation because some of the notices state that the fireworks must be destroyed within 90 days from the letter’s date unless the Commission’s compliance office approves an extension.

“The position that Jake’s Fireworks advances ‘would quickly muzzle any informal communications between agencies and their regulated communities — communications that are vital to the smooth operation of both government and business,’” the 4th Circuit wrote. “If the [Administrative Procedure Act] made informal advice like these Notices subject to judicial review, it seems ‘likely that many voluntary and helpful comments from agency staff would be withheld altogether.’”

Dunford said his client believes the notices have legal effect.

“We think that the commission effectively gets to issue threats against manufacturers and importers while evading judicial review,” Dunford said in a phone call Wednesday. “Jake’s (Fireworks) can’t even challenge whether the regulation that the Commission is relying on applies to these fireworks.”

A spokesperson for the Maryland U.S. Attorney’s Office, who represented the U.S. Consumer Product Safety Commission, did not immediately respond to a request for comment on Wednesday.

Dunford said he’s unsure if the case would have been decided differently if the U.S. Supreme Court’s landmark overturning of the Chevron doctrine — which was decided just two days after the 4^th Circuit’s ruling — had been issued first. However, Dunford said that while Chevron was not cited in the 4th Circuit’s opinion, the court appeared to weigh the question of deference.

In its ruling overturning Chevron, the high court found that federal agencies do not have the authority to issue rules that implement laws that are unclear and that courts are the proper repository for that authority.

This is not the first time that Jake’s Fireworks has sought judicial review of the warning notices.

The company first sought review in 2019 when the importer and distributor sued the commission in federal court, and most recently requested an informal hearing with the Commission’s compliance office in 2020 to contest the notices. At each step, the court determined the commission had not made a final determination.

Under the Administrative Procedure Act, judicial review is only permitted for “final agency action[s].” To be considered a “final” action, an agency action must be the “consummation of the agency’s decision-making process” and the action must have determined rights, obligations, or be an action “from which legal consequences will flow.”