An investigation from the Sacramento Bee revealed how California law “loopholes” allowed for the company which owned the fireworks facility in Esparto — which exploded on July 1 leaving seven dead — to receive state licenses for handling businesses dealing in explosives.

Devastating Pyrotechnics, a company involved in fireworks, did not possess the necessary local permits and had brought in large quantities of raw chemical materials commonly associated with explosive production, according to shipping and import documentation.

Fireworks industry specialists found this activity unusual, considering the company’s official role as a wholesaler and provider of public displays. Despite a felony conviction that disqualified him from obtaining federal licenses from the Bureau of Alcohol, Tobacco, Firearms and Explosives, Kenneth Chee — the company’s registered owner and CEO — was still able to secure state explosives licenses due to what appears to be a gap in California’s explosives regulations.

According to Cal Fire laws and regulations, most felony convictions make a person ineligible for a federal explosives license. However, at the state level, only felonies specifically related to explosives, fireworks, or arson prevent someone from obtaining an explosives license issued by the state fire marshal.

In an email to The Bee on Saturday, State Fire Marshal Daniel Berlant stated that while investigators had finished gathering evidence at the scene, the investigation itself remains active. A day prior, however, the department acknowledged the discrepancies between the federal and state requirements for licensure.

“California’s explosives permitting requirements do not have the same restrictions on people with criminal records as federal permits do,” the agency said Friday.

The company operated on a rural property in Yolo County, just outside the more densely populated area of Esparto, without the proper local permits. The land was designated for agricultural use, even though the fireworks operation appears to have grown significantly in recent years, according to satellite imagery obtained by The Bee.

The San Francisco Chronicle reported Thursday authorities may have been looking into Kenneth Chee before the explosions at the Esparto site connected to his company.

The investigation centered on allegations that Chee had illegally stored fireworks in Southern California and mislabeled powerful fireworks to make them appear as though they met the state’s legal classification, according to an unnamed source from the Chronicle’s reports. It is not clear which agency or agencies were involved in the probe. Chee’s attorney told the Chronicle the source’s claims were “inaccurate in many important respects.”

The Chronicle found Chee was denied federal licensing, citing a 1998 unrelated felony conviction. However, business documents and public records show Chee operated Devastating Pyrotechnics with other officials within the company holding the required licenses.

The federal explosives license the company had, which was reportedly held by Gary Chan Jr. of San Francisco, only allowed for imports of “display fireworks,” higher-grade explosives used in public shows. It did not authorize the company to manufacture fireworks.

Additional records uncovered by The Bee show the company behind the Esparto warehouse imported common chemicals for fireworks manufacturing, including 120 drums of aluminum powder and 3,000 pallets of potassium perchlorate in 2020. Charley Weeth, a fireworks industry consultant, told reporters at The Bee it was uncommon for chemicals such as these to be shipped in large quantities by wholesalers or public display companies such as Devastating Pyrotechnics.

When combined, the two chemicals form “flash powder,” a substance frequently used in salutes and other professional-grade fireworks. Producing this mixture legally requires a specialized manufacturing license from the ATF, as well as a certified facility for handling the process.

When asked about the imports, an attorney for Chee stated, “Sorry but your facts are wrong. I have no further comment.”

Despite being ineligible for a federal explosives license, Chee obtained three state-issued licenses for Devastating Pyrotechnics through Cal Fire’s Office of the State Fire Marshal. These licenses authorized the company to import, export, wholesale and use display fireworks. While state licenses allow the transportation of both consumer and display fireworks into California, they rely on local authorities to oversee proper storage.

Another company linked to the Esparto site, BlackStar Fireworks — associated with Craig Cutright, a volunteer with the Esparto Fire Department — also held a state public display license. Import records show over the past two years, BlackStar brought in 16 shipping containers: five containing display fireworks and 11 with consumer-grade fireworks. Additionally, one container of consumer fireworks was delivered in the month leading up to the explosion.

Fireworks storage is not permitted under Yolo County’s agricultural zoning regulations, and the county had not issued any special permits to allow such use on the property, according to reporting from The Bee. Yolo County spokesperson Laura Galindo told reporters any business storing over 500 pounds of hazardous materials, including fireworks, is required to submit a Hazardous Materials Business Plan to the county’s hazardous materials unit.

However, no such plan was submitted for the Esparto site associated with Devastating Pyrotechnics and BlackStar Fireworks.

“The County has not issued any use permits authorizing the storage of commercial-grade fireworks on an agriculturally-zoned property in Yolo County,” she said. “The only zone in which such a use could potentially be permitted is in the Heavy Industrial Zone, and there are no such zoned parcels in the vicinity of the incident site.”

Additional digging revealed since 2019, Devastating Pyrotechnics has brought over 240 shipping containers of fireworks into the United States, based on import records from U.S. Customs compiled by Import Info, a private firm that tracks import data. In the month prior to the explosion, the company imported five containers — four of them containing display-grade fireworks. Overall, approximately 60% of Devastating’s imports have consisted of consumer fireworks.

It’s unknown how many fireworks and explosives were held at the time of the explosion, but experts have shared based on the size of the operations and the actual explosion itself, it’s possible the warehouse was in violation of federal storage and processing requirements.

The investigation into the Oakdale fire is still ongoing at the time of writing.