### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, DC In the Matter of: EMPIRE AIRLINES, INC. FAA OrderNo. 2012-10 DocketNo. CP09NM0009 FDMS No. FAA-2009-0586 1



### Served: October II, 2012 

### DECISION AND ORDER' ComplainantFederal Aviation Administration and RespondentEmpire Airlines have filed cross-appeals from the writteninitial decision ofAdministrative Law Judge ("ALI") Richard C. Goodwin.3 

### After a hearing,4 

### the ALI held that Respondent violated: 

### (!) 49 C.F.R. 

### §§ 175.30(a)(2) and 175.30(a)(3), prohibiting any person from accepting a hazardous material for air**transpm~tation** 

### unless the aircraft operator ensures thatthe hazardous material is properly described and certified on a shippingpaper andproperly marked andlabeled, and (2) 49 C.F.R. 

### § 175.3, prohibiting any person from accepting for transportation ortransporting by aircraft a hazardous material thatis not prepared properlyfor shipment. The ALI also held that Respondent did not violate 49 C.F.R.

1

### Generally, materials filed in the FAA Hearing Docket (exceptfor materials filed in security cases) are also available for viewing at http://www.regulations.gov. 

### 14 C.F.R. § 

### 13.210(e)(1).

2

### The Administrator's civil penalty decisions, along with indexes ofthe decisions, the rules ofpractice, and other information, are available on the Internet at the following address: www.faa.gov/ about/ office_ org/headquarters _offices/ age/pol_adjudication/ AGC400/Civil _Penalty/. See 

### 14 C.F.R. § 

### 13.210(e)(2). In 

### addition, Thomson Reuters/West Publishing publishes Federal Aviation Decisions. Finally, the decisions are available through LEXIS (TRANS library) and WestLaw (FTRAN-FAA database). For additional information, see the Web site.

3

### The ALJ's written initial decision is attached.

4

### The hearing took place on October 26 and 27,2010, in Portland, Oregon.

### § 175.33(c)(3), whichrequires an aircraft operatorto have certaininformation, including the location ofany hazardous cargo aboard an aircraft, readily available atthe destination airport for the duration ofthe flight leg. 5 

### The ALJ rejectedthe $20,000 civil penalty sought by Complainant for the alleged violations ofthese four regulations, and instead assessed a $12,000 civil penalty for the violations ofSections 175.30(a)(2), 175.30(a)(3) and 175.3. As will be explained further inthis decision, Respondent's appeal ofthe finding bythe ALJ that it violated Sections 175.3, 175.30(a)(2) and 175.30(a)(3) is denied. Further, Complainant's appeal regarding the ALJ's holding that Respondent did not violate Section 175.33(c) and that the $12,000 civil penalty is inappropriate under agency guidance is granted. A $20,000 civil penalty is assessed. I. 

### Background A. The Relationship between Empire and FedEx Empire is a regional cargo carrier that is certificatedunder 14 C.F.R. Part 119 and operates under 14 C.F.R. Parts 121 and 135. It

### has a contract with FedExto serve as a supplemental orfeeder airline for FedEx d/b/a FedExExpress. (Tr. 46, 133, 168.) Empire has sole operational control ofits aircraft, which are owned byFedExbut are listed onEmpire's operations specifications. 6 

### To track hazardous cargo on its flights, Empire relies onFedEx's electronic

5 These regulations and others relevant to this case are set forth in the Appendix. The alleged violations in this case took place on August 22, 2007. The applicable edition ofthe Code of FederalRegulations, unless otherwise indicated, is the October 1, 2006, edition, becausethe regulations were notrevised again until October 1, 2007.

6 The aircraft display the FedEx logo but are also required by 14 C.F.R. § 119.9(b)to display Empire's name as the operator ofthe aircraft.



### 2

### automated manifesting system, referredto as AutoDG. OnlyFedEx and FedExExpress personnel may enter orupdate information inAutoDG (Tr. 146)because Empire employees do not have access to the FedEx computer mainframe. (Tr. 149, 175.) Empire relies upon FedExto make information about hazardous materials cargo on Empire flights available at destination airports through AutoDG. Ifthere is an emergency

on an Empire flight, a FedExExpress employee at the destination airport canprovide informationregardinghazardous cargoto emergencyresponders by accessing the AutoDG system. (Tr. 146.) 

### B. TheFAA Inspection at Medford, Oregon • 

### On August 22, 2007, two FAA inspectors conducted a random inspection of Respondent's inbound flights at Medford, Oregon. (Tr. 17.) They observedthe arrival and unloading ofFlights 8678-22 and 8677-22. (Tr. 26, 27, 47.) Both flights were aboard Cessna 208 aircraft. The inspectors obtained documents pertainingto these flights from FedExExpress station personnel in Medford. (Tr. 19, 79.) Information about these flights is presented in the chart below. Flight Aircraft Referred to Hazardous

... Number Hazard ··.·· 

# . . . numbers numbers bythe AU material cargo of Class, Packing Group,

.

.. in the· 'boxes and

. . decision as: Identification I .

. ·. .· ·.· 

## ····· Number •.. .·.·

# ..... Flight N778FE "first flight" Potassium 5 Class 8, Corrosive 8678-22 Hydroxide Material, Packing Solution Group II, UN 18147 Flight N940FE "second Nexium HCP 2 Class 3, Flammable 8677-22 flight" Anti-Bacterial Liquid, Packing Hand Group Ill, UN 11708 Sanitizing Gel

7 (Complainant's Exhibit 3 at 4.)

8 (Tr. 56.) 

### 3

### II. Flight 8678-22 A. Facts Respondenttransported five boxes containing potassiumhydroxide solution, a Class 8 Corrosive Material, from Portland, Oregon, to Medford, Oregon, aboard Flight 8678-22. FAAinspectors asked FedEx Express personnel in Medford to generate

an Inbound DGAlertusingthe AutoDG electronic manifest system. The Alert indicated thatthe boxes containing hazardous materials were on the aircraft's main deck (also referred to as "position I"), and that there were no hazardous materials inthe pods. (Complainant's Exhibit 2; Tr. 23-25, 27.) The Alert was consistent withthe AutoDG paperwork thatbothEmpire'spilot and FedEx Express's DG specialist signed, which showed that all ofthe dangerous goods (hazardous materials) were located at "POS !," the main cabin ofthe aircraft. The inspectors, however, sawFedEx Express personnel unload the boxes containing hazardous materials from one ofthepods. (Complainant's Exhibit 4; Tr. 27.) Although Respondent's pilot signed the AutoDO paperwork indicating that the dangerous goods were all inthe main cabin, priorto departure, he asked FedEx Express's DGspecialist to move the boxes to Pod C. (Tr. 163.) The specialist complied, and both the specialist and the pilot signed the Feeder Aircraft Load Control Sheet, with handwritten entries showing that the boxes ofcorrosives were loaded into Pod C. However, the specialist did not make any handwritten corrections to the AutoDG paperwork and did not update the AutoDG systemto reflect the change. (Tr. 163, 178, 179, 192; Complainant's Exhibit II at 2.)

4

### During theflight, Respondent's pilot carried a copy ofthe FeederAircraftLoad Control Sheetinwhichhe certifiedthat he would also carry a copyofthe aircraft manifest. Neitherthe FeederAircraft Load Control sheet nor a corrected AutoDG Alert

were available at the destination airport during the flight. Thus, no one at the destination airport hadthe informationthat the boxes ofcorrosive materials were loadedinto Pod C. Respondent's General Operations Manual ("GOM") provided at the time as follows: Ifthere is AutoDGpaperwork and a last minute DGpackage showsup that is not listed it canbe addedto the Load Control Sheet with a penentry. Ifthe load position ofthe DGpackage changes from what is listed onthe paperwork, the DG Specialist can correct and initial the change with a pen. (Complainant's Exhibit 11 at42.)



### B. The ALJ's Initial Decision Complainant alleged that Respondent violated Section 175.33(c)(3), which providedthat the aircraft operatormusthave certainrequired informationreadily accessible at the intended airport ofarrival. The ALJ, however, wrote that Respondent

was entitled to rely oninformationprovidedby another entity whenreasonable. The ALJ relied on Section 171.2(f), whichprovided inpertinentpart as follows: Each carrier who transports a hazardous material incommerce mayrely oninformationprovided bythe offeror ofthe hazardous material or a prior carrier, unless the carrierknows, ora reasonable person, acting inthe circumstances and exercisingreasonable care, wouldhave knowledge that the information providedbythe offeror orprior carrier is incorrect. The ALJ wrote that itwas reasonable for Respondentto assumethatFedEx Express personnel had updated the AutoDG systemto reflect the location change. (Initial Decision at 4.)

5

### C. Appeal and Analysis RegardingViolations On appeal, Complainant argues thatthe ALJ erred in finding that Respondent did not violate Section 175.33(c)(3). Complainant argues that Respondent is responsible for complying with Section 175.33(c)(3), independently ofFedExExpress. Complainant also argues thatthe ALJ misapplied Section 171.2(f) in finding that Respondent didnot violate Section 175.33(c)(3). Section 175.33(c)(3) places the onus onthe aircraft operatorto have the required information readily accessible at the intended airport ofarrival. The regulation states that it is 

### the aircrafi operatorthat 

### must do so. Section 171.2(f) does not apply because it pertains onlyto an air carrier's reliance on 

### information, such as that in the shippingpapers. In this case, Respondent did notrely upon information providedby FedEx, butinstead, relied upon FedEx Express's expected completion ofan 

### action- i.e., updating the AutoDG system. Under the Federal hazardous materials transportation law, only aperson who "knowingly" violates the Hazardous Materials Regulations ("HMR")' is subject to a civil penalty. 49 U.S.C. § 5123(a)(l). This law provides that:

I 

### A person acts knowingly when (A) the personhas actual knowledge ofthe facts giving rise to the violation; or (B) areasonable person acting in the circumstances and exercisingreasonable care would have that knowledge. Although Respondent did nothave actual knowledge thatthe AutoDG systemhad notbeen updated to show that the boxes had been moved to Pod C, a reasonable person acting inthe circumstances and exercising reasonable care would have realized thatthere 'Subchapter C ofTitle 49 ofthe Code ofFederal Regulations, entitled "Hazardous Materials Regulations," includes 49 C.P.R. Parts 171-180 (2006). 

### 6

### was a problem. Respondent's pilot was presented with and signed conflicting documents -the Feeder Aircraft Load Control sheet, which indicatedthat the corrosives were in Pod C (Complainant's Exhibit 3-1), and the Aircraft DG Position Summary and Aircraft DG Manifest (Complainant's Exhibit 3 at 2-5), which indicated thatthe corrosives were on the aircraft's main deck (also referredto as "position 1"- Tr. 23). Respondent's GOM required that ifthe load position ofthe hazardous materials changes, thenthe DG Specialist is to correct and initial the change with a pen, but no such corrections were made on the Aircraft DG Manifest. 10 

### (Complainant's Exhibit II at 42.) Respondent failed to follow the procedures in its own FAA-approved GOM. Eventhough the informationinthe documents conflicted, Respondenttook no action to reconcile the discrepancy regarding the load location. Hence, Respondent failed to exercisereasonable

care. Consequently, the ALJ's**d~termination** 

### that Respondentwas not liable for a violationofSection 175.33(c)(3) arising from the unavailability atthe destination airport ofaccurate information regarding the location offive boxes ofa Class 8 Corrosive material onFlight 8678-22 is reversed.

10 Respondent's Director ofQuality Assurance, Richard Mills, testified at the hearing that he consulted with the Director ofOperations, who was the immediate supervisor ofthe pilots and who interviewed the pilots ofFlight 8678-22 afterthis incident. Mills testified thatthe Director ofOperations and he believed that the DG specialist had made an appropriate "pen and paper change ofthe Auto-DG," which was an acceptable practice underthe GOM atthe time. (Tr. 179.) He testified that "the expectation" was that the AutoDG specialist would enterthe information regardingthe actual location ofthecorrosives in the system. (Tr. 179.) However,

. . the AutoDG printout in the record which the pilot had with him duringthe flight (Complainant's Exhibit 3), was signed bythe pilot and the DG specialist, butdoes not contain any handwritten corrections. 

### 7

### III. Flight 8677-22 A. Facts On August 21, 2007, AstraZeneca offeredtwo fiberboard boxes to FedEx Express ' 

### in Baltimore, Maryland. FedEx Express transported the boxes by airto Memphis, Tennessee, and then to Portland, Oregon. On August 22, 2007, FedEx Express ramp agents removed the boxes from the FedEx Express aircraft and loaded them on board Flight 8677-22. (Complainant'sExhibit

## 7-) Respondent's pilot supervised the loading, which was performedbyFedExExpress personnel. Flight 8677-22 flew to Medford, Oregon, where FAA inspectors observed the unloading ofthe aircraft. The inspectors had a copy ofthe DG Alert generatedby AutoDG for Flight 8677- 22. This Alert indicated that there were no hazardous materials onboard Flight 8677-22. (Tr. 41-42; Complainant's Exhibit 5.) When the boxes shippedby AstraZeneca were unloaded, however, the FAA inspectors noticed thatthe boxes were marked "Consumer Commodity ORM-D" [Other Regulated Material- Domestic]," indicating that the boxes contained a consumer commodity ofhazardous material presenting a limited hazard in transportation. A photograph ofthe conveyorbelt shows thatthe sides ofthe boxes with the ORM-D markings were visible duringunloading. (Complainant's Exhibit 8 at 2.) There were ORM-D markings on two sides ofthe boxes. On one side ofthe boxes, the markings were next to the shipping labels. (Tr. 84.) The FedEx Express manager opened the boxes and found in each box twenty-four 354-ml plastic bottles containingNexium HCP Anti-Bacterial Hand Sanitizing Gel. (Complainant's Exhibit 8, photographs 2- 4; Complainant's Exhibit 9 at I; Tr. 83.) The

11 

### Respondent's General Operations Manual ("GOM") indicates that "ORM-D" is alabel (Complainant's Exhibit II at II), but it is actually amarking. (Tr. 63-64.)

8

### gel has a flash point of74 degrees Fahrenheit, which indicates that itis a flammable liquid. (Tr. 58.) The fiberboard boxes containing the hazardous materials should have been accompanied by shipping papers but were not. (Tr. 50.) In addition, the boxes were not marked properly. ORM-D is not a valid marking for hazardous materials shipped by air. (Tr. 151.) Under Section 172.316(a)(l), the proper marking wouldhave been ORM-DAIR,ifthe shipmenthad beenproperlyprepared for airtransportation in accordance with Section 173.27. (Tr. 55.) These packages did not qualify as ORM-D-AIRbecausethe screw-typebottle caps on each bottle were not secured in accordance with Section 173.27(d). Hence, as packaged, the boxes could not be transported as ORM-DAIRor ORM-D, and shouldhave beenhandled as a Class 3 Flammable Liquid. Respondent's GOM states that FedEx Express ramp personnel will load and unload hazardous materials and will separate hazardous materials from otherfreight "so [Respondent's] crewmember may accomplish the pre-load inspection." (Complainant's Exhibit 11 at 41.) The manual also provides that "[a] crewmember must supervise the loading ofDG." (!d.) 

### Respondent asserted that its pilot did not notice the ORM-D markings on the boxes while he was overseeing the loading process in Portland, even though the markings

were clearly visible in the photograph ofthe unloading ofthese boxes in Medford. (Complainant's Exhibit 8 at 2.) Accordingto Respondent: The ORM imprint on either end ofeachbox was apparentlythe only indication that they might containhazardous materials. When int<;rviewed, our pilot said thathe supervisedthe loading as required but did'not see the ORM imprint. He explained that during the loading process, the long dimension ofthe boxes would run the same direction as the belt loader and the imprint on the box ends would be obscured from 

### 9

### his view. He saidthat ifhe had seen the imprint, he would have pulledthe boxes from the loader and investigated priorto loading them. (Complainant's Exhibit II at 2.) 

### B. The ALJ's Initial Decision Respondent arguedthat it shouldnotbe held liable for the alleged violations of Sections 175.3, 175.30(a)(2), and 175.30(a)(3) because FedEx personnel controlled acceptance and loading. The ALJ

### rejected this argument, finding that Respondent "has a full and independent obligation to comply with the HMRs

. . . [due to] its status as an aircraft operator and as the carrier ofsuch materials." (Initial Decision at 6-7.) The ALJ 

### stated that the HMRrequire aircraft operators to ensure that hazardous materials are authorized for transportationby air and are described and marked properly. He noted that Respondent's GOM:

• sets forth Respondent's responsibility for compliance with the HMR; • directs Respondent's personnel to verifythatthe outside ofpackages are marked properly; • warns thatpackages may not be loaded ifthe shipment does not meet acceptance and packaging requirements; and • states that noncompliant packages mustbe rejected. The ALJ

### heldthat Respondent cannot delegate its responsibilities regarding hazardous

materials. (Initial Decision at 7.) The ALJ 

### found further thatthe FedEx Express personnel who loaded the flight

were Respondent's agents because Respondent's GOM provides that Respondent's crewmember must supervise the loading ofhazardous materials. The ALJ 

### wrote: Thatthe boxes were loaded at

## ari angle which made it difficultto observe the entire outside ofthe boxes, and that the existing documentation failed to alert the pilotto the hazardous materials, made the pilot's duty ofscrutiny trickier, to be sure; butthese circumstances do not absolve Empire ofliability for the resulting violations.

10

### (Initial Decision at 7.) The ALJ held that Complainantprovedthat Respondent had violated Sections 175.3, 175.30(a)(2) and 175.30(a)(3). Regarding the civil penalty, the ALJ assessed $12,000, which was $3,000 for each ofthe four violations he found (shipping paper and marking violations involvingtwo packages). The ALJ regarded lack ofshipping papers and Respondent'sreliance on incorrect information as mitigating factors. C. 

### Appeal and Analysis RegardingViolations 

### Onappeal, Respondent argues that the ALJ erred in finding that it violated Sections 175.3, 175.30(a)(2), and 175.30(a)(3). Respondent argues thatFedExExpress

was its independent contractor, not its agent, because Respondent didnot exercise day-today control over FedEx Express's operations. 12 

### Respondent contends that it should not be held liable for an independent contractor's actions. Further, Respondent argues, there

was no paperwork indicating the presence ofhazardous materials, and the absence of proper shippingpapers constituted an implicitrepresentation byFedExExpress thatthere

was no hazardous material on the flight. Respondent argues that itreasonably relied uponthis implicitrepresentation.

12 Accordingto the Restatement (Third) ofAgency§ 1.01 (2006): Agency is the fiduciary relationship that arises when one person (a "principal") manifests assent to anotherperson (an "agent")thatthe agent shall act onthe principal's behalfand subjectto the principal's control, and the agent manifests assent orotherwise consents so to act. Ifa person has the right to control only "the result ofthe work [by another person], and notthe means by which it is accomplished. an independent contractorrelationship exists." 

### Aero Continente, S.A., FAA OrderNo. 2003-8 at 16 (September 12, 2003), quoting

### In re Coupon ClearingService, Inc., 113 F.3d 1091, 1099 (91 h Cir. 1997). \ 11

### Inresponse, Complainant argues that Respondent maynotdelegate its responsibility under Sections 175.30(a)(2) and (3) to ensure that shipments ofhazardous materials are described properly on a shippingpaper and markedin accordance with the HMR. Complainant argues that "the arrangementbetween [Respondent] and FedEx

. I 

### regarding the loading ofhazardous materials aboard Respondent's aircraft resembled an agencyrelationship" because Respondent could not contract awayits duty to ensure compliance withthe HMR. (Reply Briefat 25-26.) Complainant argues further that the flammable materials were not a hidden shipment. Therefore, Complainanturges, the Administrator should reject Respondent's argument thatit committedno violations regarding this flight. It

### is undisputed that FedEx Express accepted the non-conforming packages on Respondent's behalfand loaded themonboardFlight 8677-22. At common law, a principal generallyis notresponsible for the acts or omissions ofits independent contractors. 

### FederalExpress Corporation, FAA OrderNo. 2002-20 at 6 (August 5, 2002). Butthe common lawis not controllinghere. The regulations at issue do not differentiate between agents and independent contractors. Section 175.3 prohibits the transportation aboard an aircraft ofany hazardous material thatis notpreparedproperlyunder the HMR. There is no questionthat Respondenttransported these boxes andthat these boxes were notproperlypreparedfor shipmentunderthe HMRbecause: (1) the boxes were unaccompaniedby shipping papers; (2) the boxes were not marked properly; and (3) the bottle caps onthebottles in eachboxwere not secured. Sections 175.30(a)(2) and (3) stated:

12

### (a) No person may accept a hazardous material for transportation aboard an aircraft unless the aircraft operator ensures 

### thehazardous material is: (2) Described and certified on a shipping paper ... in accordance with part 172 ofthis subchapter

...; (3) Marked and labeled inaccordance with subparts D and E of part 172

.... (Emphasis added.) The word "ensure" in Section 175.30(a) indicates that the aircraft operator maynot delegate its responsibility to comply with this regulation. Although Section 175.30(a) states that no hazardous materials may be accepted unless the aircraft operator ensures 

### compliance with the HMR, the aircraft operator's responsibility is not absolute. Under the Federalhazardous materials transportation law,

a personis subject to a civil penalty for "knowingly" violating a provision ofthe HMR. As stated above, the statute provides that "[a] person acts knowingly when: (A) the personhas actual knowledge ofthe facts giving rise to the violation; or (B) areasonable person acting in the circumstances and exercisingreasonable care wouldhave that knowledge." 49 U.S.C. § 5123(a)(l). Also as stated above, Section 171.2(f)provided as follows: Each carrierwho transports a hazardous material in commerce may rely on informationprovided by the offeror ofthe hazardous material or aprior carrier, unless the carrierknows or areasonable person, acting inthe circumstances and exercisingreasonable care, would have knowledge that the informationprovided bythe offeror or prior carrier is incorrect. As explained inthe preamble to the amendments to Section 175.30 in 2006, "[t]o ignore readily apparent facts indicating

... [that] a shipment actually contains a hazardous material governed by the HMR despite the fact it may not be properly marked, labeled, placarded, ordescribed on a shipping paper as containing a hazardous material, would

13

### notrepresent reasonable care." 71 Fed. Reg. 14586, 14592 (March22, 2006). Respondent was responsible for the actions ofFedExExpress because the boxeshad hazardous materials markings that shouldhave put Respondent onnotice thatthe shipmentwas notprepared in accordance with the HMR. Respondent argues thatthis case is like 

### FederalExpress Corporation, FAA Order No. 2002-20 (August 5, 2002), in whichthe Administratorheldthat Federal Express was notresponsible for its independent contractor's actions. Inthat case, Federal Express's independent contractor, ScharffInternational Courier and Cargo, S.A., ("Scharff') provided ground courier services in Peru. Scharffpicked up a box ofinfectious bacteria from an individual shipper, putthe box and its shipping papers in a courier bag, and delivered the bagto American Airlines for air transportation to Miami. The package inside the courierbag constituted a hidden shipment during the American Airlines flight. 13 

### Whenthe courierbag was opened inMiami, the package ofinfectiousbacteria

was discovered. The ALJheldthat Federal Express could notdelegate its responsibilities to Scharffbecause air carriers mustperformtheir services withthe highest degree of safetyinthe public interest under49 U.S.C. §§ 44701(d) and 44702(d). Onreview, the Administratorheld that Federal Express hadnot served as an air carrier and, therefore, this statutory dutyplaced on air carriers did not applyto Federal Express. The Administrator also held that Federal Express was not responsible for Scharffsimproper offer or acceptance ofhazardous materials in air transportation because Scharffwas Federal Express's independent contractor. The key difference betweenthe 

### Federal Express case and the case at bar is thatEmpire, as the aircraft operator, transported the

13 The FAA alleged that Federal Express violated Sections 171.2(a), 172.200(a), 172.202(a), 172.204(a), 172.204(c)(l), 172.204(c)(3), 172.406(t), 172.600(c), 172.604(a), 173.I(b), and 175.30(a)(2) (1997) as a result ofScharff's actions. 

### 14

### boxes ofhand gel from Portland to Medford aboard an Empire flight and failed to ensure that the boxes were marked and shipping papers were prepared in accordance with the HMR. In other words, Empire's violations ofSections l75.30(a)(2) and (3) and 175.3

arose from its own actions, not the actions ofits independent contractor, Federal Express. Underthe statute and the regulations, Respondent has a non-delegable duty to bar the transportationby air ofgoods that itknows or should reasonably know do not conform to the HMR. HowRespondent chooses to meet that obligation is up to Respondent, regardless ofwhether the obligationis met by Respondent's employees, its contractor's employees, an agent's employees, or some combinationthereof. For the foregoing reasons, this decision affirms the ALI's findings that Empire violated Sections 175.3, 175.30(a)(2), and l75.30(a)(3) concerning the two boxes ofhand sanitizing gel marked Consumer Commodity ORM-D aboard Flight 8677-22. IV.

### Sancti~n On appeal, Complainant argues that the $12,000 civil penalty assessedbythe ALI is too low and that the appropriate amount is $20,000, as it sought in the complaint. Respondent argues in responsethat theALJ's decisionto assess a $12,000 civil penaltyis supportedby substantial evidence and is consistentwith applicable law, precedent and policy. Complainantbears the burden ofproving, by a preponderance ofthe evidence, the appropriateness ofthe amount ofthe civil penalty it seeks. Phillips BuildingSupply, FAA Order No. 2000-20 at4 (August ll, 2000), citing 14 C.F.R. § l3.224(a) (stating that "[e]xceptin the case ofan affirmative defense, the burden ofproofis on the agency"). In determining the amount ofa civil penalty, the Federal hazardous materials transportation

15

### law requires consideration of: (1) the nature, circumstances, extent, and gravity ofthe violation; (2) with respectto the violator, the degree ofculpability, anyhistory of priorviolations, the ability to pay, and any effect on the ability to continue to do business; and (3) other matters thatjusticerequires. 49 U.S.C. § 5123(c). These considerations are factored into the FAA'spenalty guidelines for hazardous materials cases, which are located in Compliance and Enforcement Program, FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 2 (Policy on Enforcement ofHazardous Materials Regulations: Penalty Guidelines) (Aprill4, 1999). 14 

### The purpose ofthe penalty guidelines is to "provide agency personnel with a systematic wayto evaluate a case and arrive at an appropriate penalty, considering all the relevant statutory criteriaincluding any mitigating and aggravating circumstances." (FAA Order No. 2150.3A, Change 26, Appendix 6 at 3, Complainant's Exhibit 12 at 2, 64 Fed. Reg. at 19444.) Thepenalty guidelines "provide guidance to agencypersonnel in the exercise of the FAA'sprosecutorial discretion in enforcement cases concerning transportation of hazardous material by air." (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 3, Complainant's Exhibit 12 at 2, 64 Fed. Reg. at 19444.) Although the ALJs are not agency personnel, "ifan ALJ assesses a civilpenaltythat is not consistentwith agency sanction policy, the Administrator on appeal may reverse the ALJ." Folsom'sAir Service, Inc., 

### FAA OrderNo. 2008-11 at 14 (November 6, 2008); NorthwestAirlines,

14 The FAA published these guidelines in the 

### Federal Register as "Federal Aviation Administration Policy on Enforcement ofthe Hazardous Materials Regulations: Penalty Guidelines." (Complainant's Exhibit 12 at I; 64 Fed. Reg. 19443 (April21, 1999).) The FAA has since canceled FAA Order No. 2150.3A, replacing it with FAA Order No. 2150.3B, but FAA OrderNo. 2150.3A applies in this case because it was in effect at the time ofthe violations. 

### 16

### Inc., FAA OrderNo. 1990-37 at 8-9 (November 7, 1990); FAA OrderNo. 2150.3B, Appendix C,**~~** 

### 2, 8. The penalty guidance requires: (I) 

### weighingthe case byanswering a list of questions to arrive at a weight ofMinimum, Moderate, or Maximum; (2) using the Matrix to find the appropriate sanction amount range; and (3) considering any other statutory factors, such as corrective action or financial hardship. !d.**at~** 

### 8. It is importantto note thatthe penalty guidelines state that "determinationof where the sanction lies withinthe Matrix is not the result ofa mathematical computation," but instead "[e]valuation ofthe case is based on the totality ofthe facts and circumstances." (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 3; Complainant's Exhibit 12 at 2; 64 Fed. Reg. at 19.444.) See also StebbinsAviation, Inc., FAA OrderNo. 2006-3 at 5 (February 7, 2006) (stating that "it is inappropriate to take a mathematical, formulaic approach ofsimply multiplying the number ofviolations by a set dollar amount"). Regarding Flight 8678-22, Respondenttransported five boxes containing potassiumhydroxide solution, a Class 8 CorrosiveMaterial in Packing Group II. (Complainant's Exhibit 3 at 4.) The penalty guidelines state that Class 8 Corrosive Materials in Packing Group II fall within Risk Category B, which suggests a Moderate weight. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 6, 18 Figure 2 "Risk Categories"; Complainant's Exhibit 12 at 7-8, Figure 2 "RiskCategories"; 64 Fed. Reg. at 19445, 19449-19450, Figure 2 "Risk Categories.") Category B materials are: materials that may not pose an immediate threatto the safety ofa flight, but can cause death orinjury to persons due to unintended releases in aircraft cabin areas, andpotential damage to aircraft structures over a longer period oftime due to undiscovered releases on aircraft structural 17

### components. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 18; Complainant'sExhibit 12 at 7, Figure 2 "Risk Categories"; 64 Fed. Reg. at 19449, Figure 2 "Risk Categories".) The penalty guidelines also state that where there are multiple packages in a shipment- andhere there were five- a Moderate or Maximum weight shouldbe considered. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 6-7; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at I9445.) The guidelines state that ifsomeone otherthan Respondentprepared the shipment for transportation, whichwas the case here, consider a Minimumto Moderate weight. (FAA OrderNo. 2I

### 50.3A, Change 26, Appendix 6 at 8; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at I

### 9445.) 15 

### The guidelines also allow for consideration ofaggravating and mitigating circumstancesthat are not routinely seen, recognizing that some cases presentunique scenarios. (FAA OrderNo. 2I

### 50.3A, Appendix 6 at 9.)

. \ 

### The assignment ofa Minimum final aggregate weight is appropriate for the Flight 8678-22 violation due to FedEx Express's role. Although Respondent is responsible for the violation ofSection 175.33(c)(3), Respondent's degree ofresponsibility was reduced by FedEx Express's failure to follow the usual procedures and to enterinformation about the change in location ofthe boxes ofpotassiumhydroxide into the AutoDG system.

15The guidelines also ask whetherthe packages exceededthe authorized quantity limitation by a significant amount, whetherthe shipment caused damage to persons or property or interfered with commerce, whether the violator was the manufacturer ofthe hazardous materials, and whether the violatorhas ahistory ofprevious HMRviolations. (FAA Order No. 2150.3A, Change 26, Appendix 6 at 6-8; Complainant's Exhibit 12 at 3-4; 64 Fed. Reg. at 19445-19446.) In this case, all ofthese questions are answered in the negative. The guidelines indicate that questions receiving a negative response do not affect the weighting ofthecase- that is, these matters are not mitigating. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 5; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at 19445.) 

### 18

### This factor outweighsthe other factors previously discussedthat would indicate a Moderate or even a Maximum final aggregate weight in this case. The Matrix recommends a range of$5,000 to $15,000 civil penalty for "Other Part 175 violations" committedby a Group II air carrier like Respondent. 16 

### Giventhat the final aggregate weight ofthe violation ofSection 175.33 is Minimum, a civil penalty of$6,000 would be appropriate. As for Flight 8677-22, the boxes marked ORM-D did not meet all the requirements in Section 173.27 to be designated as Consumer Commodity ORM-D-AIR. (Tr. 55.) The boxes did not meetthe requirement in Section 173.27(d) thatthe screwtype bottle caps inside be secured to prevent the closure from loosening due to vibration

or substantial change intemperature. Because the contents ofthe boxes could notbe reclassified as Consumer Commodity ORM-D, they were Class 3 Flammable Liquids and

were in Packing Group III. 

### (Tr. 56.) Class 3 Flammable Liquids in Packing Group III 

### fall within Risk Category B (Moderate weight). (Tr. 71; FAA OrderNo. 2150.3A, Change 26, Appendix 

### 6 at 18 "Risk Categories"; Complainant's Exhibit 12 at 7-8, Figure 2 "Risk Categories"; 64 Fed. Reg. at 19445, 19449-19450, Figure 2 "Risk Categories.") The penalty guidelines also state that where there are multiple packages in a shipment- here there were two- a Moderate or Maximum weight shouldbe considered. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 6-7; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at 19445.) Ifsomeone other thanthe respondent preparedthe shipmentfor transportation, which was the case here, a Minimum to Moderate weight shouldbe

16 Group II aircraft operators consist of"air carriers and otheraircraft operators that hold Part 121 certificates or have 50 or more pilots or operate 25 or more aircraft, with annual operating revenue ofless than $100,000,000." (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 15; Complainant's Exhibit 12 at 6; 64 Fed. Reg. at 19448.) 

### 19

### considered under the guidelines. (FAA Order No. 2150.3A, Change 26, Appendix 6 at 8; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at l9445f Other factors affectthe weighting ofthe case. First, Respondentrelied onthe DG Alert generated by AutoDG for Flight 8677-22, which indicatedthat there were no hazardous materials onboard. Further, there were no shipping papers advising ofthe presence ofhazardous materials. And finally, the penalty guidelines state that areshipper ofhazardous materials (like Respondent) "is

## gene~ally considered tohave a lesser degree ofculpability [thanthe original shipper] for compliance ofthe package received." (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 8.) While these factors do not relieve Respondent ofliability altogether, particularlybecause there were ORM-D markings on the boxes that should have alerted Respondent to the hazardous nature oftheboxes' content, these factors are properly considered in determining the sanction amount. In light ofthese factors, the final aggregate weight for the two Flight 8677-22 violations (absence ofshipping papers and failure to mark properly) is Minimum. The next step is to use the Matrix, which sets forth specific penalty ranges. The range under the guidelines for violations ofSections 175.30(a)(2) and (3) is $5,000 to $27,500 per violation for Class 3 Flammable Liquids. (Tr. 74; 'FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 15; Complainant's Exhibit 12 at 6, Figure I; 64 Fed. Reg. at 19448.) A a

17 As discussed above, the guidelines also ask whether the packages exceededthe authorized quantity limitation by a significant amount, whether the shipment caused damage to persons or property or interfered with commerce, whetherthe violator wasthe manufacturer of the hazardous materials, and whether the violator has ahistory ofprevious HMR violations. (FAA Order No. 2150.3A, Change 26, Appendix 6 at 6-8; Complainant's Exhibit 12 at 3-4; 64 Fed. Reg. at 19445-19446.) All ofthese questions are answered in the negative regarding Flight 8677-22, As stated above, the guidelines indicatethat questions receiving a negative response do not affectthe weighting ofthe case. (FAA OrderNo. 2150.3A, Change 26, Appendix 6 at 5; Complainant's Exhibit 12 at 3; 64 Fed. Reg. at 19445.) Respondent has not argued that the mitigatingfactors ofcorrective action or financial hardship apply. 

### 20

### civil penalty of$7,500 for each ofthetwo violations (absence ofshipping papers and failure to mark properly) would be appropriate. To summarize, for Flight 8678-22, a civil penalty of$6,000 is appropriate. For Flight 8677-22, a civil penalty of$7,500 for each ofthe two violations is appropriate. Thetotal is $21,000. However, the civil penalty cannot be higher than the $20,000 sought inthe complaint. 

### Mole-Master Services Corp., FAA OrderNo. 2010-11 at 12 (June 16, 2010) (citing 14 C.F.R. 

### § 13.16(j), which provides that "the FAA decisionmaker

... shall not assess a civil penalty in an amount greater than that sought in the complaint"). Therefore, a civil penalty of$20,000 is assessed. Based onthe

18 This order shall be considered an order assessing civil penalty unless Respondentfiles a petition for review within 60 days ofservice ofthis decision with the U.S. CourtofAppeals for the District ofColumbia Circuit or the U.S. court ofappeals for the circuit in which Respondent resides or has its principal place ofbusiness. 14 C.P.R.§§ 13.16(d)(4), 13.233(j)(2), 13.235 (20 12). See 71 Fed. Reg. 70460 (December 5, 2006) (regardingpetitions for review offinal agency decisions in civil penalty cases). 

### 21

### APPENDIX 

### Section 171.2(f) 19 

### provided: No person may transport a hazardous material in commerce unless the hazardous material is transported in accordance with applicable requirements ofthis subchapter, or an exemption or special permit, approval, orregistration issued under this subchapter or subchapterA of this chapter. Each carrierwho transports a hazardous material in commerce may rely on information providedby the offeror ofthe hazardous material or a prior carrier, unless the carrier knows or, a reasonable person, acting inthe circumstances and exercising reasonable care, would have knowledge that the informationprovidedbythe offeror or prior carrier is incorrect. Section 172.316(a)(l)provided: The designation for ORM-D must be: (I) ORM-D-AIRfor an ORM-D that is prepared for air shipment and packaged in accordance with the provisions of§ 173.27 ofthis subchapter. Section 173.27(d) provided: Stoppers, corks or other such friction-type closures mustbeheld securely, tightly and effectively in place bypositivemeans. Each screw-type closure on any packaging must be secured to prev6nt closure from loosening due to vibration or substantial change intemperature. Section 173.144 provided: "ORM-D material" means a material such as a consumer commodity, which although otherwise subject to the regulations ofthis subchapter, presents a limited hazard during transportation due to its form, quantity, and packaging. 

### Itmustbe a material for which exceptions are providedin the§ 172.101 table. Each ORM-D material and category ofORM-D material is listed in the § 172.101 table. Section 175.l(b)(l)provided: This part applies to the offering, acceptance, and transportation of hazardous materials in commerce by aircraft to, from, or withinthe United States, and to any aircraft ofUnited States registry anywhere in air commerce. This subchapter applies to any person who performs, attempts to perform, or is required to perform any function subjectto this

19 All citations are to the October I, 2006, edition ofTitle 49 ofthe Code ofFederal Regulations. The regulations at issue were not revised again until October I, 2007. 

### 22

### subchapter, including-- (1) Air carriers, indirect air carriers, andfreight forwarders and theirflight and non-flight employees, agents, subsidiary and contractpersonnel (including cargo, passenger and baggage acceptance, handling, loading and unloading personnel);

.... Section 175.3 provided: A hazardous material that is notprepared for shipmentin accordance with this subchapter maynotbe

... accepted for transportation or transported aboard an aircraft. Section 175.30(a)(2)provided: No personmay accept a hazardous material for transportation aboard an aircraftunless the aircraft operator ensures the hazardous material is

... (2) [ d]escribed and certified on a shipping paper ... in accordance with part 172 ofthis subchapter

.... Section 175.30(a)(3) provided: No person may accept a hazardous material for transportation aboard an aircraft unless the aircraft operator ensures the hazardous material is

... (3) [m]arked and labeled in accordance with subparts D and E ofpart 172[.] Section 175.33(c)(3) provided: (c) The aircraft operator must

- (3) Havethe informationrequired to be retained underthis paragraph readily accessible atthe airport ofdeparture andthe intended airport of arrival for the duration ofthe flight leg.

23

# ~~fCEJVED**·S~R\T~DJ\1ARQH28,2011** . · r.IAR 2

# 9

# litH 

# HEARING DOCKET' UNITED STATES DEPARTMENT OFTRANSPORTATION OFFICE OFHEARINGS

WASffiNGTON,D. C. ) 

### FEDERALAVIATIONADMINISTRATION,) ) 

### Complainant, ) FAADOCKETNo. CP09NM0009 )



### · v. ) (Civil PenaltyAction) ) 

### EMPIREAIRLINES,INC., ) ) 

### Respondent. ) DMS No. FAA-2009-0586

INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD C. GOODWIN 

### Found: 1) Respondentviolated 49 C.F.R. §§175.3, §175.30(a)(2), and 175.30(a)(3) as charged; 2) Complainantfailed to prove a violation of§175.33(c)(3); 3) The chargeofviolating49 C.F.R. §175.33(c)(3) is dismissed; and 4) Respondentis hereby assessed a civil penalty of$12,000. 

### I. Background Respondent. Empire Airlines, Inc., ("Respondent" or "Empire"), of Hayden, ID, is an air carrier authorized to carry cargo under Parts 121 and 135. Complainant, Federal Aviation Administration, ("Complainant,' "FAA," or "the agency'') has charged the carrierwith several violations ofthe Department's Hazardous Materials Regulations ("HMRs"), 49 CFR §§171-178. The allegations pertain to two flights. One charge involves the first flight. In the first flight the FAA avers that the location of hazardous materials on board had not been properly documented (see Exh. C-1 0; Tr. 166-68). The remaining charges apply to the second flight. In the second flight, the FAA alleges that agents of Empire accepted and shipped two boxes ofa certain sanitizing gel, a hazardous material ("hazmat"). The boxes allegedly 1) contained improper markings and 2) lacked mandatory shipping papers.2

In the Complaint, as amended at the hearing (Tr. 6-7), the agency charged Empire with violating 49 C.F.R. §§175.33(c)(3), 175.3, 175.30(a)(2), and 175.30(a)(3). It is the §175.33(c)(3) allegation that pertains to the first flight. Empire failed in its obligation to retain a copy of a shipping paper describing the hazmats on board and specifying their location, the charge asserts. The shipping paper must be "readily accessible" at both the airport of departure and the intended airport of arrival. The remaining allegations relate to the second flight. Section 175.3 prohibits a hazardous materialthat has not been properly prepared for shipmentto be offered, accepted, or transported in air transportation. Section 175.30(a)(2) does not allow a hazardous material to be accepted for air transportation unless the aircraft operator ensures that it is described on a shipping paper in accordance with HMR requirements. Finally, §175.30(a)(3) prohibits the acceptance of hazmats in air transportation unless the aircraft operator ensures that such materials have been marked and labeled as required. Pursuant to 49 U.S.C. §5123(a)(1), the agency asks for a total civil penalty of $20,000. Respondent denied the charges, and asserts that no civilpenaltY is justified (Exh. C-11; Resp. Br., pp.12-13; Tr.12). A hearing was held on October 26, 2010, in Portland, OR. I determined that a written decision was reasonable and appropriate underthe circumstances. The parties have each filed opening briefs, and Complainant, which has the burden of proof, has also filed a rebuttal brief. 1 Ifind and conclude that Complainant failed to prove the alleged §175.33(c)(3) violation (the charge relating to the first flight). I also find and conclude that Complainant proved the remaining allegations. I hold that the facts and circumstances of this case warrant anassessment against Respondent of$12,000. 

### II. Discussion andFindings A. The First Flight 1. The Evidence FAA special agent Donald Stiger, who Ifound credible, testified that on August 22, 2007, he and his supervisor, special agentThomas Kenny, had undertaken a routine ramp inspection of Empire at the Medford, OR. airport. They were observing off-loading operations when a Cessna 208 flight that had originated in Portland, OR. became their focus. The flight was part of Empire's feeder service for Federal Express ("FedEx''). Empire operates on behalf of FedEx in more rural areas whose traffic does notjustify

1 Complainant'sBriefwillbenotedas "Compl. Br.,'; Respondent's as "Resp. Bt.'1 ; and Complainant's Rebuttal Briefas "Compl. Rebut."3

a FedEx trunk aircraft. The aircraftwas adorned with FedEx colors and logo, but it was operated by Empire and used an Empire crew (Tr. 46,67-69, 134, 168-69, 186; Exhs. C-11 and C-15). The agents determined that the records provided them failed to state the correct location of dangerous goods' on the flight. These records, known as an Inbound Dangerous Goods Alert and an Auto DG Manifest, stated that all the flight's hazmats had been loaded onto the main deck (Exh. C-2; Tr. 23-25). However, the inspectors observed the dangerous goods -five packages of Class 8 hazardous materials labeled as corrosives- being unloaded from Pod C. Pod C is the aft center pod belowthe main deck (Exhs. C-1 and C-4, p. 4). The agents learned that the hazmats originally had been loaded onto the main deck, as the papers given them had stated. But the pilot had decided priorto takeofffrom Portland to move them to Pod C. (Pilots have the authority to make such changes (Tr. 30, 162, 191-92)). Empire uses a computer system known as Auto DG to enter hazmat data. Auto DG is a product of Federal Express (Tr. 80-81). Only FedEx employees have access to the system, and only FedEx personnel trained in the system can update it. Conversely, a discrepancy could not be corrected by a non-FedEx employee (Tr. 146-49, 175; Exh. C-11, p. 41). A FedEx dangerous-goods specialist in Portland made a paper entry reflecting the change. The new location was noted on a document known as a Feeder Aircraft Load Control Sheet ("Load Control Sheet"). The pilot signed offon the change and was given a copy ofthe Load Control Sheet. But no computer entry reflecting the change was put into the Auto DG system. As a result the updated data was not sent downline. That is why the records the agents obtained at the airport of arrival, Medford, reflected the hazmats' old location (Exhs. C-1, C-2, C-3, C-4, p. 4 and C-11; Tr. 17-40,81, 162-63, 179-80, 190-92). 

### 2. Arguments of

### the Parties Empire argues that, underthe circumstances described, it is not responsible for the violation. The failure ofthe downline station to show the hazmats' changed location simply is not its fault, it states. The responsibility laywith Federal Express and only with Federal Express. Empire pilots- and the pilot operating this flight was employed by Empire-- must ensure that their paperwork reflects accurately the nature, amount, and location of hazmats on board their ship. Pilots take charge ofthis process. But Empire's responsibilities, Respondent contends, do not extend to ensuring that any

2 Theterm "dangerous goods," as usedintheInternational CivilAviation Organization(ICAO) Technical Instructions, is interchangeable withtheterm "hazardousmaterial" as defined in49 C.F.R. §171.8. See also Empire's General Operations Mannal, Exh. C-11,p. 8, 1[0 ("ThetermsDangerous Goods and Hazardous Materials are synonymous and may beusedinterchangeably.))).4 changes made are reflected in a computer system owned, controlled, and managed by another entity (Tr. 52, 80, 169-74; Exh. C-11, p. 2). Respondent argues that it was FedEx' sole responsibility to enter the change, and that Empire was justified in its expectation that FedEx personnel would so perform (Resp. Br., p. 10). Since only FedEx personnel had the authority and training to enter the new data, Empire cannot under these circumstances be held liable for non-performance, the carrier contends. To ascribe responsibility to Empire, Respondent argues, would amount to imposing a duty on its pilotto "follow the DG specialist back to the office to ensure the manual entries were transcribed" (Exh. C-11, p. 2). Respondent contends that its obligations cannot fairly be stretched that far.' Complainant countered that Empire should be held liable. Respondent has an independent duty to abide by the HMRs, it stated. The fact that Empire relied on another carrier's tracking system was "a business decision" which did not relieve the carrier of its discrete responsibility for the ready availability ofan accurate document, the FAA contends (Compl. Br., pp. 5-6 and n. 26). 3. Decision Iwill dismiss this charge. I agree with Respondent that, in these circumstances, it may not be held legally responsible for the fact that a change in the hazmats' location failed to be reflected in the downline record. The operative regulation, §175.33(c)(3), obligates the aircraft operator to ensure that data showing the location of hazmats on board is "readily accessible" at the operator's destination. Butthe operator, Respondent, cannot be held liable for every failure of performance. Empire, as Complainant stresses, is responsible as the operatorfor compliance with the HMRs. The carrier's own General Operations Manual ("GOM" or 'Manual") as well as the HMRs compels it (Exh. C-11, p. 8; see Compl. Br., pp. 6, 9). Indeed, this responsibility is so critical- stemming an air carrier's duty to exercise the highest possible degree of care- that it may not be delegated. See, e.g., Alaska Airlines, Inc., FAA Order No. 2004-8, 2004 WL 3198210 (October 4, 1984), p. 6. Yetthe regulations also ensure \hat Empire may rely on information provided by another entitywhen it is reasonable to do so. 49 C.F.R. §171.2(f). This is such a situation. Empire obtained a paper copy reflecting the locational change. I hold that it was reasonable to assume thatthe necessary computer entry also would be made in due course bythe FedEx official responsible. Itwas a purely ministerial step, taken routinely. The risk of non-compliance was small, and the inconvenience to Empire comparatively great. The HMRs in these circumstances do not charge the operator with a duty to investiga\e and the concomitant knowledge ofwhat an investigation would have revealed.

3 Respondent also statedthat inthe future it would ask FedExfor a copy ofthe carrier'sAuto DG entry reflecting hazmatplacement. Tr. 180.5 The fact, moreover, that Empire has since implemented a method ofensuring that this situation is not repeated should not suggest that thil carrier was duty-bound to employ the method in the first place. Hindsight is 20-20. Respondentwas not obligated to take steps to forestall this possibility. For all these reasons, I decline to find a violation of §175.33(c)(3). Iwill dismiss this charge' B. The Second Flight 1. The Evidence The FAA agents also claimed violations pertaining to a second PortlandMedford flight Empire had operated on August 22, 2007. The agents determined that Empire had tendered and shipped two fiberboard boxes marked on both sides "CONSUMER COMMODITY ORM-D." (Caps in original). A FedEx official at the Medford airport opened the boxes

.. Each contained onecase (24 bottles) of 354- milliliter plastic bottles of Nexium Hand Sanitizing Gel ("Gel"), a hazardous material (Exhs. C-1 and C-8; Tr. 49-54). Because ofthe presence of hazmats, the agents concluded that the markings were improper. Nor were the packages accompanied by hazardous materials shipping papers. The Gel had begun itsjourney in Balflmore the day before, on August 21, 2007. It had traveled to Memphis on Federal Express and then was put on a flight to Portland, OR before the FAA agents observed the packages at the final air destination, Medford, OR, the following day. The packages were to be delivered to a customer ofAstrazeneca Pharmaceuticals LP ("AstraZeneca"), the original shipper, in Jacksonville, OR (Exhs. C-1, C-7). The Gel product is described generically as an antibacterial hand gel. It is classified as a hazardous material on account of its alcohol content. The product's Material Safety Data Sheet ("MSDS") indicates that it contains as much as 62% ethyl alcohol byvolume. The Gel's flashpoint is 74' Fahrenheit (23' Celsius). Agent Stiger testified that this item is properly classed as a Class 3 flammable liquid. It is formally categorized in the Hazardous Materials Table ("Table") as a Flammable Material in Packing Group 

### Ill. Its UN identification number is UN 1170 (Exh. C-9; Tr. 54-59, 71 ). 2. Arguments ofthe Parties Agent Stigertestified that an "ORM-D'**m~rking** on a box means that the material inside is hazardous (Tr. 53). ("ORM-D" is an authorized marking standing

4 Thepilot, as seen, hadthe correctinformation on board. But itwas not**'~readily** accessible" asthe regulationrequires -particularlyin a situation inwhich itwould be needed most, anactual emergency. Pilots inemergency situations are trained to leave the aircraft as quickly as possible. Therisk ofleaving documentsbehind inthat event clearlywould be too great to suggest thatthe paperrecord inthepilot's possession satisfiedregulatory requirements. See Tr. 33-35.6 for "other regulated material." 49 C.F.R. §173.144). As so marked, such goods are permitted to move by ground or rail. But the ORM-D marking is not authorized for air transportation (Tr. 50, 151; Exh. C-9; 

### seeTable following §172.101). Such goods as a general matter are properly marked ORM-[)-Air. Another deficiency agent Stiger noted is that a hazardous material package labeled ORM-D that is offered or intended for transportation by air must be accompanied by a shipping paper (49 C.F.R. §§172.200(a) and (b)). But there were no such papers. The flight's Inbound Dangerous Goods Alert and the aircraft DG manifest had indicated that no hazmats were on board (Exhs. C-5, C-6; Tr. 41-44, 50). Finally, the bottles, which had screwtype caps, were not securely held with a positive. means of control as §173.27 ofthe HMRs requires. This is significa(lt because.these goods then could not have been reclassified as ORM-D Air. In such circumstances they revert to the base classification- in this case, a Class 3 flammable ethanol.' Complainant concluded that the shipment had not been described and marked as required by the cited HMRs. Empire countered that no violations could be ascribed to it. The acceptance and loading processes, it pointed out, are controlled and overseen by Federal Express. FedEx personnel also do the actual loading. FedEx properly bears responsibility for the violations, it asserts. Empire does not. Respondent "simply flies the plane carrying the FedEx Express shipments from one point to another" (Exh. C-11, p. 41; Tr. 60-61, 176, 188; Resp. Br., pp. 4-6). Empire concedes that (in conformance with Manual requirements) its pilot had supervised the loading process. But the pilot had not seen the ORM imprint because the dimensional manner in which the boxes were placed on the belt loader prevented him from seeing the area to which the imprints were affixed (Exh. C-11, p. 2; Tr. 52, 181, 189-90; see Exh. C-8, pp. 1, 2; Resp. Br

.., p. 7). And he had no reason to suspect hazmats, Respondent contends, because there was no paperwork for these boxes (Tr. 53, 182; Resp. Br., pp. 7, 8, and 9, andp. 8 n. 2). No visual cues alerting the pilot to such a situation were present. The captain's duties, Empire says, do not extend to examining every package placed on board (Tr. 180-82). During loading he orshe is concerned primarily with weight-and-balance limitations (Tr. 182). Moreover, the package handler at that point would not have been "doing any type of inspection for acceptance" (Tr. 158). 3. Decision I find the violations. Respondent's arguments cannot be sustained. I agree with Complainantthat Empire has a full and independent obligation to comply with the HMRs. This duty is a necessary element of its status as an aircraft operator and as the carrier of such

5 Tr. 54-56, 86; Ex h. C-8. 49 C.F.R §l73.27(d) states that "Stoppers, corks orothersuchfriction·type closures mustbe held securely,tightlyand effectively in place bypositivemeans. Each screw-typeclosure on anypackagingmustbesecured topreventclosure from loOsening due to vibration or substantialchange intemperature.''

. 1

### 7 materials. 49 C.F.R. §171.1. The obligation, moreover also is required by the carrier's GOM (Exh. C-11, pps. 6-44; Tr. 62, 98). Empire simply is responsible for identifying HMRs aboard aircraft it operates (Tr. 99-100). More specifically, the HMRs require aircraft operators to ensurethat hazmats are authorized for transportation by air and are properly described and marked. 49 C.F.R. §175.30. The GOM directs Empire personnel to verify that the outside of packages tendered to it are properly marked. II cautions that packages may not be loaded "unless the shipment has met acceptance and packaging requirements."6 Non-compliant hazmats must be rejected. These responsibilities are fully Empire's; they are not delegable or transferable. · · The GOM does note that FedEx personnel perform the loading. But the Manual underscores that is the responsibility of Empire crewmembers to oversee the process: "A crewmember mustsupervise the loading of DG," the Manual states (Exh. C-11, p. 41,**~A.2;** Tr. 65-66,100, 188). Empire's pilots perform this supervision (Tr. 100). In these circumstances, the actual loaders, no matter by whom employed, act as Empire's agents. Empire is responsible for the result. That the boxes were loaded at an angle which made it difficult to observe the entire outside ofthe boxes, and that the existing documentation failed to alert the pilotto the hazmats, made the pilot's duty of scrutiny trickier, to be sure; but these circumstances do not absolve Empire of liability for the resulting violations. For the reasons stated, Ifind and conclude that Empire violated HMRs §§175.3, 175.30(a)(2), and 175.30(a)(3). 

### ill. Penalty We now turn to the issue of civil penalty. 

### A. Factors Determination ofan appropriate civil penalty involves a number offactors. The decisionmaker mustweigh "the nature, circumstances, extent, and gravity ofthe violation[s]," and, with respect to the violator, "the degree ofculpability, any history of priorviolations, [and] the ability to pay" as well as "other matters thatjustice requires" (49 U.S.C. §5123(c); see Tr. 62). The principal elements in this analysis are the nature ofthe respondent's conduct and thetotality ofthe circumstances. Envirosolve, LLC, FAA Order No. 2006-2 (February 7, 2006), p. 13. The Administrator has provided policy guidance for agency employees to followwhen recommending an appropriate civil penalty in hazardous-materials cases. It has published penalty guidelines. The guidelines, contained in FAA Order 2150.3A, assess all relevant statutory criteria, including mitigating and aggravating

6 Exh. C-11, pp. 11, 12, 13; Tr. 62-65, 99. While "ORM-D" properly is considered amarking and not a label, the GOMcategorizeditas alabel. Exh. C-11, p. 11; Tr. 63-64.8 circumstances. The guidelines f[Jrther aid Complainant's penalty determination through a Sanction Guidance Matrix. The Matrix sets out specific penally ranges for each input, cross-referencing such factors as the nature ofthe respondent (for example, whether it is a business which "regularly" offers hazmats) and the relative risk of harm posed by the goods offered. Complainant's sanction determination nonetheless does not reflect merely a fixed mathematical computation. The sanction guidance table is intended to indicate the Administrator's "general views" about the civil penalty ranges appropriate for different types ofviolations. Folsom's Air Service, Inc., FAA Order No. 2008-11 (November 6, 2008), 2008 WL 4948488, p. 13. Nor are the guidelines binding. Each situation, being dependent on so many variables, is unique. "Evaluation ofthe case," the FAA has emphasized, "is based on the totality ofthe facts and circumstances."' An administrative lawjudge ("ALJ") is not required to follow the Policy. The Policy is intended for the guidance of agency personnel, and ALJs are not agency personnel. Folsom's, supra, p. 14. ALJs make decisions independently, and the ALJ determines (subject to agency review) whether a civil penalty is to be assessed, and ifso, in what amount The Guidelines nonetheless must be respected as an expression of agency sanction policy. They represent an effort to produce consistent results in similar cases. The Administrator has asserted the power to impose the agency's sanction policy on appeal ifan ALJ assesses a civil penaltythat is not consistent with the Guidelines. Warbelow's Air Ventures, Inc., FAA Order No. 2000-3 (February 3, 2000), p. 20; NorthwestAirlines, FAA Order No. 1990-37 (November 7, 1990), pp. 8-10. Additional factors inform the determination ofan appropriate civil penalty. Air carriers are held to a high duty ofcare. Indeed, they are obligated to perform their services with "the highest possible standard ofcare." See, e.g., Folsom's, supra, p. 16. This degree of care devolves from carriers' responsibility to assure, to the maximum extent possible, the safety and well-being oftheir passengers, crew, and others involved in transportation by air. Hazardous materials require particular attention. They are dangerous by their very nature. The risk ofharm must be kept to an absolute minimum in view ofthe possible grave consequences oferror. Carriers ofdangerous goods such as Empire are expected to conform to the highest standards ofcare and, concomitantly, must answer in appropriate measure iftheyfall sh9rt. On account ofhazmats' inherent capacity for peril, the HMRs provide a web ofprotection to minimize the risk for persons who could be adversely affected by such materials. Flammable materials, to cite one type of problem, could cause a fire

7 FAAPolicy on Enforcement offueHazardous MaterialsRegulations: Penalty Guidelines, 64 Fed.Reg. 19443, 19444, 1999 WL 226610 (F.R) (Apri121, 1999) ("the Policy" or"the Guidelines"), alsopublished onAprill4, 1999, as Change 26, Appendix 6, to FAA Order2150.3A. FAA Order 2150.3Amaybe found atwww.airweb.faa.gov andwas submittedinpertinentpart inthisproceeding as Exhibit C-12.

By Order2150.3B, effective October 1, 2007, fue agency issuednew sanction guidelines supersedingthe old. Since tbe actions involved in this matter occurredpriorto theeffective date, Order2150.3Aremains applicable. See 72Fe<lReg. 55853 (October 1, 2007).9 ifthey come in contact with a heat source. Such circumstances could threaten the integrity ofthe flight itself. B, 

### Complainant'sPosition Complainant has asked for a levy of $20,000 on all charges. It bears the burden of proving the appropriateness ofthis amount by a preponderance ofthe evidence. Phillips Building Supply, FAA Order No. 2000-20 (August 11, 2000), p. 8. The penalty guidelines place the type offlammable liquid involved in this case in packing group Ill in the medium-risk category ofthe matrix, known as Category "B." Category B materials are materials that "may not pose an immediate threat to the safety of a flight, but can cause death or injury to persons due to unintended releases in aircraft cabin areas, and potential damage to aircraft structures over a longer period oftime,

... " They are given moderate weight for assessment purposes (64 Fed.Reg.19443, 19449 (April21, 1999); Exh. C-12, p. 7; Tr. 71,86- 87). Respondent's marking and notification violations created a serious risk of danger, the agency says. The rules' prohibition ofair carriage represents a determination that the product, as shipped, was too dangerous for airtravel. There were two violations, or one per shipment, stemming from the lack of shipping papers, and two violations for improper markings (Tr. 71-72). The agency also determined for assessment purposes that Empire was a "Group 2" carrier, as measured by the number of its pilots and the number of aircraft it operates (Tr. 73-74; Exh. C-12, p. 8). · Finally, Complainant accounted for a mitigating factor: an entity other than the violator prepared the shipment. Respondent relied on incorrect infonmation from another source. This factor suggests a minimum weight (Tr. 72-73). Respondent's violation hilltory also was considered. It had none, but that circumstance is not considered mitigating (Tr. 73, 107). A violation-free history is expected to be the norm. Toyota MotorSales, USA, Inc., FAA Order No. 94-28 (September 30, 1994). Forthe second flight- the only flight in which violations are found-- the guidelines suggest a sanction in the range of $5,000 to $27,500 for each ofthe four found violations (Tr. 74). So the sanction range is $20,000 to $110,000. Yet even if each shipment on the second flight is considered as one violation, for a total oftwo, the sanction range becomes $10,000 to $55,000 (Tr. 76). In taking all factors in consideration, including corrective action undertaken by Respondent. the agency concludes that its proposed assessment of$20,000 (which, ofcourse, includes the allegation which was not proven) appropriately reflects all the salient circumstances, is "eminently reasonable," and even is low (Tr. 75-77; Compl. Br, 

### p. 16). '10 

### C. Resnondent'sPosition Empire noted that neither ofthe boxes leaked. The packaging remained intact. Neither box caused any damage or harm (Tr. 82-83). Additionally, the carrier had no priorviolation history. As stated, Empire also emphasized the difficulties in spotting the faulty markings (1.0., p. 6). It asserts that it fails to understand why it received a proposed civil penalty under all the circumstances (Resp. Br., p. 14). · 

### D. Decision I have decided to assess a total civil·penalty of$12,000. I find and conclude that this amount appropriately reflects the totality ofthe circumstances surrounding the offending shipments. Any package containing hazardous materialswhich fails to completely conform to the HMRs introduces an unacceptable, and possibly perilous, element into the stream of air commerce. Flammable items, by their very nature, could ignite. The violations presented a significant threat to the safety ofairtransportation. These facts and circumstances warrant a commensurate fine. I give no weight to Respondent's argument that no leak or other potentially troublesome result flowed from its failure to properly mark the packages. These are fortuitous circumstances which do not justify mitigation. Indeed, harm resulting from any of the shipments would have constituted an aggravating factor (Exh. C-10, p. 3 (64 Fed.Reg. 19443, 19445 (April21, 1999)). Al;iditionally, the fact that Federal Express was involved in inspecting and transporting the offending packages, and may also have been atfault, simply is not relevant to the determination in the instant matter. Empire as the operator was independently and fully responsible for permitting these packages to enterthe stream of airtransportation. The lack of shipping papers, however, must be considered a mitigating factor. Lacking a warning that hazmats were on board, it is natural- though not excusable- to relax one's guard and fail to look for problems wittl the same vigilance one might perform otherwise. The fact itselfthat Empire relied on incorrect information also mitigates to an extent. Finally, civil penalties levied in other cases may be a relevant consideration. Yet as the Administrator has said, "it is often difficult to compare sanctions across cases because there are so many variables involved in each case." AlikaAviation, Inc., FAA Order No. 1999-14 (December 22, 1999}, p. 12, n. 20 quoted in Folsom's AirService, Inc., FAA Order No. 2008-11 (November 6, 2008), p. 21. Additionally, base penalty amounts have been raised periodically over the years, and have been adjusted upward from time to time to account for inflation. The maximum civil penalty for a single violation of49 U.S.C. §5123(a), the penalty statute underwhich Complainant broughtthis case, was raised from $25,000 to $30,000 in 2002, and then to $50,000 for violations occurring afterAugust 10, 2005. See 14 C.F.R. §13.305 (showing changes in minimum and maximum penalty amounts). 

### It is useful11

to note, nonetheless, the decision in the noted cases, which, like the present matter, involved two nonconforming units. The Respondent in Toyota MotorSales, USA, Inc., was fined $50,000 for an undeclared shipment of two "wet" automobile batteries. FAA Order No. 94-28 (September 30, 1994). The respondent in Midtown Neon Sign Corporation, FAA Order No. 1996-26 (August 13, 1996) was fined $25,000 for an undeclared (and leaking) shipment oftwo 1-gallon cans of paint. I have considered all other arguments advanced by both parties. Those not discussed are rejected as without merit. In weighing the all the facts and circumstances, I find and conclude that a civil penalty assessment of$12,000 is warranted. This amount appropriately reflects the nature and extent ofthe risk to air transportation safety created by Empire, while giving appropriate weight to other salient factors. The risk of harm that Respondent brought to air transportation was significant. It allowed into the stream of air commerce flammable liquids considered so perilous that they were prohibited from traveling by air. On the other hand, mitigating circumstances, as discussed above, also were present. I believe a civil penalty of $3,000 for each ofthe four found violations (two per package), or $12,000 in total, is appropriate. The civil penalty levied will, I find, achieve the statutory purpose of promoting compliance with the HMRs. It also will achieve deterrence for Respondent and entities in a similar position. In sum, it appropriately accounts for the factors the statute and agency policy directs in fixing the assessment. Respondent Empire Airlines, Inc. is hereby assessed a civil penalty of $12,000 for violations ofthe HMRs 49 C.F.R. §§175.3, 175.30(a)(2) and 175.30(a)(3) as stated in this Initial Decision. The Complaint is in all other respects dismissed.'



### Attachment- Service List chard C. Goodwin 

### Ac)ministrative LawJudge

' This decisionmay be appealedto theAdministrator ofthe FAA. The notice ofappeal must conformto sections 13.210, 13.211(e) and 13.233 ofthe Rules ofPractice, whichrequirethat anotice ofappeal 1)be filed notlaterthan 10 days (plus an additional five days ifmailed) from the service date ofthis decision, and 2) beperfected with awrittenbriefor memorandu'i' not laterthan 50 days (plus anadditional five, if mailed) from the service date ofthis decision. The notice ofappeaiandbrieformemorandum musteither be a) mailedto the Federal AviationAdministration, 800 Independence Avenue, S.W., Washington, DC 20591, Attn: HearingDocket Clerk, AGC-430, Wilbur WrightBuilding-Suite2Wl000, orb) delivered personally orviaexpedited courier serviceto the FederalAviation Administration, 600 lodependence Avenue, S.W., Wilbur Wright Building-Suite2WIOOO, Washington, D.C. 20591, Attn: HearingDocket Clerk, AGC-430. A copy ofthenotice ofappeai and briefor memorandum also mustbe sentto agency counsel. Service upon thepresidingjudge is optional.