u.s. DEPARTMENT OF TRANSPORTATION REcEIvED 

FEDERAL AVIATION ADMINISTRATION OCT 2 3 2015 

FEDERAL AVIATION 

ADMINISTRATION 

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HEARING DOCKET 

Complainant, 

v. 

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FAA Case No. 2012WP130065 

FDMS No. FAA 2013-1080 

SCHUMAN AVIATION COMPANY, LTD ) 

Respondent. 

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) 

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COMPLAINANT'S APPEAL BRIEF 

Pursuant to 14 C.P.R.§ 13.233(d), Complainant files this brief in support of its appeal of the 

Initial Decision issued by Administrative Law Judge Richard C. Goodwin (ALI) on August 31, 2015, in 

the above-captioned matter. 

I. STATEMENT OF THE CASE 

On February 12, 2014, Complainant filed a Complaint alleging that Respondent, Schuman 

Aviation Company, Ltd. ("Schuman Aviation"), conducted scheduled operations to Kailua-Kona 

International Airport (KOA) in Kona, Hawaii, between the dates of September 8, 2012, and 

September 13,2012,1 when it was not authorized to do so by its operations specifications, in violation of 

14 C.F.R. § 119.5(g). The Complaint also alleged that on or about September 17,2012, two FAA 

Aviation Safety Inspectors (ASis) requested to inspect Schuman Aviation's records concerning the 

above-referenced flights, but Schuman Aviation refused to make any records available at the time of the 

request, in violation of 14 C.F.R. § 135.73. A hearing on these allegations was held before ALI 

Goodwin on December 4, 2014, and the ALJ issued his Initial Decision on August 31, 2015. In this 

decision, the ALJ found that Schuman Aviation had violated 14 C.F.R. §§ 119.5(g) and 135.73 as 

1 The Complaint erroneously stated that these flights were conducted between September 8, 2012, and September 13, 

2008, due to typographical error. The evidence presented at the healing demonstrates that these flights took place during 

the tive-day period between September 8, 2012, and September 13, 2012. 
alleged in the Complaint, but declined to assess the $28,000 civil penalty proposed by the FAA; instead, 

he found that Complainant had failed to present evidence of the appropriateness of the sanction and 

imposed a $10,000 civil penalty. Complainant now appeals the ALI's Initial Decision on the basis of 

this sanction. 

II. STATEMENT OF THE FACTS 

Schuman Aviation is authorized to conduct scheduled air carrier service under 14 C.F .R. 

part 135 between airports listed in paragraph C070 of its operations specifications. (Compl. ~~ 1 & 2, 

Answer~~ I & 2). Between the dates of September 8, 2012, and September 12,2012, Schuman 

Aviation conducted 24 round-trip scheduled flights to Kailua-Kona International Airport (KOA) in 

Kona, Hawaii. (Ex. A-3; see Tr. 22). These flights were conducted on behalf ofMokulele Airlines and 

were operated pursuant to a published flight schedule. (Tr. 24, 26; Ex. A-5). Accordingly, these flights 

constituted scheduled commuter operations under the FARs. (Tr. 27-28, 141-46). Respondent's 

operations specifications did not authorize it to conduct commuter operations into KOA (Compl. ~ 3, 

Answer~ 3; Tr. at 12), because the airport was not listed in paragraph C070 of its operations 

specifications as an authorized airport. (Compl. ~ 4, Answer~ 4; Tr. 14-15). Accordingly, the ALJ found 

that by operating 24 unauthorized scheduled flights to KOA, Respondent violated 14 C.P.R.§ 119.5(g) 

by operating as an air carrier in violation of its operations specifications. (Decision at 12-13). 

The ALI also found that Respondent violated 14 C.P.R. § 135.73 when it denied FAA Aviation 

Safety Inspectors (ASis) the ability to inspect its records. (Decision at 12-13). Testimony at the hearing 

demonstrated that on September 17, 2012, FAA Inspector Joseph Monfort, an ASI at the Honolulu 

Flight Standards District Office (FSDO), and Inspector Kyle Bartler, also an ASI at the Honolulu FSDO 

(Tr. 66), visited the offices of Schuman Aviation to investigate the above-referenced unauthorized 

flights. (Tr. 12). Inspector Monfort requested to see maintenance logs and daily flight logs for the 

relevant time period. (Tr. 15). Mr. Schuman, the President and Director of Operations of Schuman 

Aviation (Tr. 84), initially denied this request. (Tr. 15, 69, 102-104). Approximately two hours later, 

2 
after the ASis left Schuman Aviation's offices and after consulting his attorney, Mr. Schuman contacted 

Inspector Monfort and agreed to make the records available. (Tr. 16-17, 70). The records were 

delivered to the Honolulu FSDO approximately two days later. (Tr. 16-17). The ALJ fouud that these 

facts supported a violation of 14 C.F.R. § 135.73. (Decision at 12-13). 

After finding these violations, the ALJ assessed a $10,000 civil penalty (Initial Decision at 16), 

comprised of two $5,000 sanctions- one for each regulation violated by Schuman Aviation. !d. at 15. 

The ALJ declined to assess the $28,000 civil penalty proposed by Complainant (Decision at 13-16), 

stating that the "FAA failed to prove by testimony and/or evidence of how it arrived" at the proposed 

sanction and that that he was "left to speculate how the figures ... were determined." I d. at 13. 

Although Complainant submitted a written closing argument on May 27,2015,2 detailing the evidence 

and explaining why the proposed sanction conformed to sanction guidance (see Com pl.'s Closing 

Argument at 9-11 ), the ALJ held that "the FAA presented no evidence that it considered the nature and 

circumstances of the violation[s]," that the "FAA failed to prove to the ALJ how it used the sanction 

guidance," and finally, that the FAA "failed to show how it used aggravating or mitigating factors to 

adjust the suggested sanction." (Decision at 15). On these grouuds, the ALJ summarily stated that "the 

totality of the facts and circumstances" warranted a $10,000 civil penalty. Id. 

Ill. STATEMENT OF THE ISSUES 

A. Whether the ALJ Erred by Concluding that Complainant Failed to Meet its 

Burden of Demonstrating the Appropriateness of the Proposed Civil Penalty. 

B. Whether the ALJ's Imposition of a $10.000 Civil Penalty for Respondent's 

Violations is Contrary to Precedent and Policy. 

IV. STANDARD OF REVIEW 

Under the Rules of Practice, the Administrator considers on appeal whether the ALJ's fmdings 

of fact are supported by a preponderance of reliable, probative, and substantial evidence. 14 C.F.R. 

2 The parties filed written closing arguments in accordance with the request of ALJ Goodwin and the briefmg schedule 

established by the parties. (See Tr. 156-157). 

3 
§ l3.233(b )(l ). The Administrator also considers whether the ALI's conclusions of law are in 

accordance with applicable law, precedent, and public policy. 14 C.F.R. §13.233(b)(2). Finally, the 

Administrator considers whether the ALJ committed prejudicial errors during the hearing or 

proceedings. 14 C.F.R. § 13.233(b)(3). Complainant bears the burden of proving the appropriateness of 

the civil penalty, but Respondent bears the burden of proof of an affirmative defense. See 14 C.F .R. 

§ 13.224(a); Tn the Matter of Seven's Paint & Wallpaper Co., FAA Order No. 2001-6 (May 15, 2001). 

When an ALJ assesses a civil penalty that is not consistent with agency sanction policy, the 

Administrator on appeal may reverse the ALJ. In the Matter of Ventura Air Servs., Inc., FAA Order No. 

2012-12 (Nov. I, 2012) (citing Folsom's Air Service, FAA Order 2008-11 at 14 (Nov. 6, 2008)). 

V. ARGUMENT 

A. The ALJ Erred by Concluding that Complainant Failed to Meet its Burden of 

Demonstrating the Appropriateness of the Proposed Civil Penalty. 

Complainant bears the burden of establishing by a preponderance of the evidence that the basis 

for its proposed civil penalty is appropriate. See. e.g .. In the Matter of Luxemburg, FAA Order No. 94-

18 at 6 (June 22, 1994); 14 C.F.R. § 13.224(a). Here, the ALJ determined that Complainant did not 

meet this burden on the grounds that Complainant failed to: (I) prove to the ALJ how it used agency 

sanction guidance to arrive at its proposed civil penalty; (2) "prove the existence of aggravating factors 

and failed to show how it used aggravating or mitigating factors to adjust the suggested sanction"; 

(3) present evidence that it considered the nature, circumstances, and gravity of Respondent's violation; 

and (4) present evidence as to "whether Regent's [sic] ability to pay was taken into account." (Decision 

at 15). Contrary to these findings, Complainant presented testimony at the hearing and a detailed 

explanation in its written closing argument that addressed each of these concerns and established that 

the proposed penalty of$28,000 was appropriate for Respondent's violations. For the reasons explained 

below, the ALI's conclusion that Complainant failed to meet its burden is without merit. 

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1. Complainant Explained in its Written Closing Argument and in its 

Written Rebuttal to Respondent's Closing Argument How the Penalty 

Proposed by Complainant Accords with Agency Sanction Guidance. 

A Complainant has met its burden of demonstrating the appropriateness of a proposed civil 

penalty when it has demonstrated through testimony, evidence, and argument that the proposed penalty 

conforms to sanction guidance. Compare Tn the Matter of Northwest Airlines, Inc., FAA Order No. 

1990-37 at 6-9 (Nov. 7, 1990) (Complainant met its burden by introducing relevant portion of 

Enforcement Sanction Guidance Table and the corresponding testimony of a Special Agent as to the 

security risk posed by the alleged violations) with In the Matter ofWarbelow's Air Ventures, Inc., FAA 

Order 2000-3 at 19 (Feb. 2, 2000) (Complainant failed to meet its burden when it "failed to explain to 

the law judge, either through witnesses or in its written closing argument, exactly how it used its 

sanction guidance to arrive at a figure"). Although the ALJ states that Complainant failed to prove how 

it used agency sanction guidance to arrive at its proposed civil penalty (Decision at 15), this assertion is 

incorrect. Here, Complainant introduced FAA Order 2150.3b into the hearing record and, through its 

written closing argument,3 demonstrated how the evidence presented at the hearing, in conjunction with 

agency sanction guidance, supported the proposed $28,000 civil penalty. 

Specifically, pages 9 through 11 of this closing argument- aptly entitled "The Sanction Sought 

is Appropriate"- apply agency sanction guidance FAA Order 2150.3B4 to the violations Complainant 

established at the hearing. With regard to Respondent's violation of 14 C.F .R. § 119 .5(g), Complainant 

explained that FAA Order 2150.3B, Figure B-1-c(2), provides that for a Respondent's operation 

contrary to its operations specifications, involving technical non-compliance, a minimum civil penalty is 

warranted. (Compl.'s Closing Argument at 10; see also FAA Order 2150.3B at B-12). For Schuman 

3 In accordance with the ALJ's instructions at the conclusion ofthe hearing and the briefing schedule agreed to by the 

parties (Tr. 156-157), Complainant submitted a written closing argument, which was served on both Respondent and the 

ALJ on May 27, 2015. 

4 At Complainant's request, the ALJ took judicial notice ofF AA Order 2150.3B at the hearing, which was marked for 

identification as Exhibit A-7. (Tr. 31). 

5 
Aviation, a Group III operator, Small Business,5 this corresponds to a minimum civil penalty range of 

$825 to $3,299. (Compl. 's Closing Argument at I 0; see also FAA Order 2150.38 at B-4). Agency 

sanction guidance generally provides that when assessing a civil penalty within a sanction range one 

should begin with an amount in the middle of the range and increase that amount toward the higher end 

of the range for aggravating factors, or towards the lower end of the range to account for mitigating 

factors. See FAA Order 2150.38 at 7-9. Complainant explained that the midpoint of this civil penalty 

range is $2,062. (Compl.'s Closing Argument at 10). Complainant further explained that because the 

FAA ultimately approved Schuman Aviation's amended operations specifications to include KOA as an 

authorized airport after the unauthorized flights took place (Tr. 38)- thereby allowing Respondent to 

conduct scheduled operations into KOA- a minimum penalty at the very bottom ofthis range was used, 

i.e .. $825. (Compl.'s closing argument at 10). Because Respondent operated 24 flights to KOA (see Ex. 

A-3, A-5), a civil penalty of$19,800 ($825 x 24 flights) was warranted for Respondent's 24 violations 

of 14 C.F.R. § 119.5(g). (Compl.'s Closing Argument at 10). Respondent also reiterated this rationale on 

page three of its Rebuttal to Respondent's Closing Argument, served on July 17, 2015. 

Complainant's closing argument also explains why an $8,000 civil penalty is appropriate for 

Respondent's failure to make records available to Inspectors Monfort and Bartler, in violation of 

section 135.73. Specifically, FAA Order 2150.38 recommends a maximum civil penalty for an entity's 

failure to allow an inspection. Complainant cites in its closing argument the following acts set forth in 

the table of sanctions that are analogous to the failure of an air carrier to allow an inspection of 

FAA-required records and corroborative of a recommended maximum civil penalty: (1) Figure B-1-

n(2), the failure to make a flight deck seat available to FAA inspector; (2) Figure B-3-b(18), the failure 

5 Schuman Aviation's Operations Specifications indicate that it operates seven aircraft under part 135. See Ex. A-1. 

Agency sanction guidance classifies such an operation as a Group III operator. See FAA Order 2150.3b at B-3. An air 

transportation entity is considered a small business when it has fewer than 1500 employees. See 13 C.P.R. § 121.201. 

Schuman Aviation's website indicates that it has approximately 22 employees. See Makani Kai Air, Staff, 

https://www.makanikaiair.com/staff.htrnl (last visited October 20, 2015). The Administrator may consider such 

information when determining whether an entity is a large or small business concern, even when it is not in the record. 

See In the Matter of Pinnacle Airlines, Inc., FAA Order No. 2012-2,2012 WL 2588548, at *11 n.l6 (May 22, 2012). 

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of a repair station to permit an FAA inspection; (3) Figure B-3-d(2), the failure of a flight school to 

permit an FAA inspection; and ( 4) Figure B-6-a(3), the failure of airport operator to permit an FAA 

inspection. For Schuman Aviation, a Group Ill operator, Small Business, this corresponds to a civil 

penalty range of$7,150 to $11,000, with a midpoint range of$9,075. (Compl.'s Closing Argument at 

10; see also FAA Order 2150.3B at B-4). Complainant further explains that because Respondent later 

agreed, approximately two hours after the initial request, to permit the inspection of its records, a civil 

penalty at the lower end of this range, i.e., $8,000, is an appropriate sanction. Respondent reiterated this 

rationale on page 3 of its Rebuttal to Respondent's Closing Argument. 

The ALJ's opinion, however, appears to not address the merits of Complainant's written closing 

argument or rebuttal. Although the ALJ states that "post hearing briefs were filed by both parties" 

(Decision at 3), he fails to discuss or even address Complainant's written submissions. His opinion thus 

fails to support his conclusion that Complainant's written closing argument (and rebuttal) is insufficient 

to establish a basis for the proposed civil penalty. Moreover, the ALJ grounds his opinion in the notion 

that the "FAA failed to prove ... how it arrived at the figure of$11,000 figure for each violation." 

(Decision 13). As illustrated above, at no point does Complainant advance the argument that an $11,000 

civil penalty per violation is warranted; rather, the ALJ appears to misconstrue Complainant's citation in 

its Complaint to 49 U.S.C. § 46301, which authorizes the FAA to assess a maximum of an $11,000 civil 

penalty, per violation, against a small businesses, as argument to this effect. But, as illustrated above, in 

accordance with agency sanction guidance, Complainant proposed an $825 penalty for each of 

Respondent's violations of 14 C.P.R. § 119.5(g), and an $8,000 penalty for Respondent's single 

violation of 14 C.P.R.§ 135.73. For these reasons, the ALJ's finding that Complainant "failed to prove 

... how it used the sanction guidance to arrive at its proposal" is wholly unsupported, and is in error. 

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2. Complainant Explained in its Written Closing Argument that it did not Aggravate 

the Sanction, but Rather Applied Mitigating Factors. 

The ALJ erred in concluding that Complainant "failed to prove the existence of aggravating 

factors and failed to show how it used aggravating or mitigating factors to adjust the suggested 

sanction." (Decision at 15). As a threshold matter, Complainant expressly stated in its closing argument 

that it did not aggravate the sanction. (Compl.'s Closing Argument at 11). Although Complainant 

enumerates several factors that could have been used to increase the sanction (i.e., Respondent is an air 

carrier, Respondent's refusal to allow inspection of its records was deliberate), Complainant exercised 

its discretion in not increasing the sanction from the midpoint of the applicable ranges. I d. It is 

axiomatic that Complainant need not prove the existence of aggravating factors it did not use. 

Accordingly, the ALJ's conclusion that Complainant failed to prove the existence of aggravating factors 

is, at best, irrelevant. 

The ALJ's conclusion that Complainant failed to explain how it used mitigating factors to adjust 

the sanction is also in error. Complainant considered mitigating factors that it deemed relevant to the 

violation, see FAA Order 2150.3b at 7-4,6 and detailed its rationale for doing so in its written closing 

argument. Specifically, with respect to Respondent's section 119.5(g) violation, Complainant considered 

as a mitigating factor the fact that Respondent was ultimately granted approval by the FAA to fly into 

KOA, a fact which was testified to by Inspector Mumford at the hearing. (Tr. 38). Complainant states in 

its written closing argument: "As far as aggravating or mitigating factors, since ... Respondent's 

operations to KOA were approved by the FAA once Respondent submitted the proper information, a 

6 FAA Order 2150.3B provides mitigating and aggravating factors in chapter 7, subparagraphs 4.a. through m., that have 

been developed over years of policy making and case adjudication. FAA Order 2150. 3B at Ch. 7, p. 7-4."These factors 

and elements provide a framework for detennining sanctions for violations specifically listed in the table as well as 

those not specifically listed. All the factors and elements, however, may not apply to each violation. Only those factors 

and elements that are relevant to a violation are considered in determining a sanction for the violation." ld. 

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civil penalty at the very bottom of the range was used." (Compl's Closing Argument at 10).7 To account 

for this mitigating factor, Complainant reduced the sanction from the midpoint of the rangespecifically, from $2,062 to $825, per flight into KOA. See id. Complainant also mitigated the penalty 

proposed for Respondent's violation of section 135.73. As expressly stated in Complainant's written 

closing argument, the "fact that Respondent did agree about 2 hours later, after talking to his attorney, to 

produce the records is mitigating." (Compl.'s Closing Argument at 10). The testimony oflnspectors 

Mumford and Bartler established that Mr. Schuman contacted the FAA within a few hours of the initial 

request for records to agree to the inspection. (Tr. 16-17, 70). To account for this mitigating factor, 

Complainant explicitly decreased the sanction from a midrange penalty of$9,075 to the proposed 

$8,000. (Compl.'s Closing Argument at 10). Accordingly, the ALJ's conclusion that Complainant 

"failed to show how it used ... mitigating factors to adjust the sanction" is wholly unsupported. 

Akin to the ALJ' s finding that Complainant failed to use agency sanction guidance in support of 

its proposed civil penalty, the ALJ similarly erred finding that Complainant did not raise in its closing 

argument factors relating to mitigation. His opinion does not provide any elaboration as to why he found 

insufficient Complainant's explanation of the mitigating factors it used to reach the proposed sanction. 

Accordingly, the ALJ erred in his determination that Complainant failed to articulate mitigating factors 

for its proposed sanction. To the extent that the ALJ used this rationale to decrease the proposed 

sanction, this also was in error. 

3. Complainant Proposed Sanction Takes into Consideration the Nature, 

Circumstances, and Gravitv of the Violations. 

In his sanction analysis, the ALJ erred in finding that Complainant "presented no evidence that it 

considered the nature and circumstances of the violations" or "the extent in gravity [sic] related to the 

violations." (Decision at 15). Complainant's use of FAA Order 2150.3b's sanction guidance tables to 

formulate a recommended civil penalty (see Com pl.'s Closing Argument at 9-11) inherently includes an 

7 On page three of its Rebuttal to Respondent's Closing Argument, Complainant reiterated this basis as grounds for the 

reduction ofthe proposed sanction from the midrange recommended by sanction guidance. 

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assessment and consideration of these factors. As the Administrator has previously explained, "[w]hen 

the FAA formulated these sanction ranges for different types of violations, the agency considered the 

nature, extent and gravity of each general type of violation as well as the individual's prior violation 

history." In the Matter of Ventura Air Servs., Inc., FAA Order No. 2012-12 2012 WL 6673077, at * 17 

(Nov. 1, 2012) (addressing previous iteration in FAA Order 2150.3A) (citing In the Matter of Schultz, 

FAA Order No. 89-05,1989 WL 550061, at *4 (Nov. 9, 1989)). The sanction table's recommended civil 

penalty ranges, which are designated minimum, moderate, or maximum, best reflect the nature, 

circumstances, and gravity of each corresponding violation. See, e.g., In the Matter of Husted & Husted 

Air Charter, Inc., FAA Order No. 2010-9, 2010 WL 7940358, at *17 (June 16, 2010) ("The Sanction 

Guidance Table ... sets out penalty recommendations within three ranges of amounts - designated 

minimum, moderate, and maximum- to best reflect the nature and circumstances of each violation."). 

By way of illustration, for Respondent's violations of 14 C.F.R. § 119.5(g) Complainant 

determined that Figure B-l-c(2) in the Sanction Guidance Table, "Operation contrary to ops specstechnical noncompliance," appropriately reflected the nature and circumstances and of this case. (See 

Compl.'s Closing Argument at 10). When selecting an appropriate sanction to address Respondent's 

operations specifications violations, Complainant had a choice between two levels of gravity: "technical 

noncompliance" or "likely potential or actual adverse effect on safe operation." See FAA Order 

2150.3B, Figure B-1-(c)). A minimum penalty is recommended for the former, while a moderate to 

maximum penalty is recommended for the latter. !d. Complainant's selection of"technical 

noncompliance" reflects a judgment of the minimal safety risk involved. As Complainant explained in 

its closing argument, the fact that Respondent was ultimately granted approval to fly into KOA through 

an amendment to its operations specifications approximately two weeks after the flights at issue (Tr. 3 8-

39), evidences that Respondent's operation into this airport likely did not have an adverse effect on safe 

operation. (See Compl.'s Closing Argument at 10; Tr. at 37-39). To obtain authority to operate into 

KOA, Respondent had to submit a written request for an amendment to its OpSpecs, which detailed 

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information showing it could operate safely into KOA (for example, a list of altitudes Respondent 

planned to operate at where a single-engine aircraft could, in the event of engine failure, where an 

aircraft could safely touch down on land). (See Tr. 60). However, as explained by ASI Monfort at the 

hearing, the requirements necessary for operation into KOA are similar to those for airports for which 

Respondent already had received approval from the FAA to operate into. (See Tr. 38-39, discussing 

requirements for KOA and Kaluapapa). Thus, the flights Respondent conducted into KOA prior to the 

formal amendment of its OpSpecs likely did not present a significant safety risk. Complainant's 

selection of the "technical non-compliance" figure in the Sanction Guidance Table reflects this degree of 

safety hazard. See FAA Order 2150.3B, Ch.7, '1!4.h(e ). Thus, contrary to the ALI's assertion, the 

minimum-range penalty proposed by Complainant ($825 for each flight) appropriately reflects the 

nature, circumstances, and gravity of Respondent's operational violations. 

A similar analysis applies to Respondent's violation of 14 C.P.R.§ 135.73. Complainant 

selected several figures in the Sanction Guidance Table that reflect the failure of a regulated entity to 

permit an inspection of its facilities, equipment, personnel, records, or certificates. (See Complainant's 

Closing Argument at 10 (citing Fig. B-3-b(18) (Repair Stations), Fig. B-3-d(2) (Part 141 Flight 

Schools), and Fig. B-6-a(3) (Airport Operators))). Sanction guidance recommends a maximum-range 

penalty for each of these regulated entities' failure to allow an inspection, embodying an agency 

judgment of the seriousness of a regulated entity's refusal to allow the inspection of its records. 8 Here, 

Respondent's failure to permit AS Is Monfort and Bartler to inspect its daily flight logs upon request is 

akin to that of a repair station's "failure to permit FAA to inspect" (Fig. B-3-b(l8)), or an airport 

operator's "Failure to permit FAA inspector to conduct inspection," each of which warrant a maximumrange penalty under sanction guidance. Accordingly, Complainant's utilization of these figures to 

8 As explained by AS! Mumfort, Respondent's failure to allow inspection of records is conduct serious enough to 

possibly warrant the suspension of its operating certificate. (Tr. 16). See Administrator v. Werth, NTSB EA-4776, 1999 

WL 300777, at *I (Respondent's violation of the "unequivocal regulatory requirement that he allow an inspection 'at 

any time or place"' warrants suspension of a certificate); Fig. B-3-b(lS) (which provides for a maxirnrnn penalty or 

"Indefinite Suspension until Compliance" for a repair station's failure to permit an FAA inspection). 

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propose a maximum civil penalty for Respondent's 14 C.F.R. § 135.73 reflects the policy of the agency 

that the gravity of such a violation warrants a heightened civil penalty. Accordingly, as illustrated above, 

Complainant's use ofthe Sanction Guidance Table to arrive at its proposed penalty reflects a 

consideration the nature, circumstances, and gravity of each violation. 

4. That Complainant Did Not Present Evidence of Respondent's Ability to Pay is Not a 

Valid Ground for Decreasing the Proposed Sanction. 

The ALJ also declined to assess Complainant's proposed civil penalty because he found that 

Complainant "presented no evidence ... whether [Respondent's] ability to pay was taken into account." 

(Decision at 15). The ALJ is correct in stating that among the various factors to consider in determining 

an appropriate civil penalty is a respondent's ability to pay the civil penalty and the effect of a penalty 

on a respondent's ability to stay in business. See In the Matter of Folsom's Air Service, Inc., FAA Order 

No. 2008-11 at 11 (November 6, 2008). However, financial hardship is an affirmative defense that a 

respondent has the burden of proving. In the Matter of Rushmore Helicopters, Inc., FAA Order 2012-8 

at 13-14 (Oct. 11, 2012) (citing In the Matter of Atlas Frontiers, LLC, FAA Order No. 2010-10 (June 

16, 201 0)). Thus, it is not Complainant's burden to produce evidence showing Respondent's ability to 

pay. Id, See also In the Matter of Phillips Building Supply, FAA Order No. 2000-20 at 8 (Aug. 11, 

2000) (respondent has burden of proving "any affirmative defense such as a harmful effect on its ability 

to continue to do business"). The ALI's suggestion to the contrary- that Complainant was required to 

present evidence as to Respondent's ability to pay in order to demonstrate the appropriateness of a 

sanction- improperly shifts this burden and is against the weight of established precedent. 

Even if the ALJ had properly construed this burden, Respondent failed to meet it. The 

affirmative defense of financial hardship requires a showing by the Respondent of reliable, supporting 

documentation, such as tax records and other company financial data. See In the Matter of Atlas 

Frontiers, LLC, FAA Order No. 2010-10 at 12 (June 16, 2010) (when "only evidence in the record" was 

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"self-serving testimony" and company failed to "provide any supporting documentation such as tax 

records," Respondent failed to bear its burden of proving financial hardship and inability to pay). 

Here, as in Atlas Frontiers, Respondent did not introduce any evidence as to its inability to pay the 

proposed civil penalty. Respondent only offered testimony at the hearing that "the financial impact 

would be high" (Tr. 111), and that his net revenue was "almost nothing." (Tr. 128). Respondent did not 

introduce tax returns or any other financial documents at the hearing to corroborate these statements. 

(Tr. 128). In fact, Respondent did not even argue that it had any inability to pay the civil penalty in its 

written closing argument. Accordingly, Complainant was not obligated to prove or consider this factor 

when reaching its proposed sanction.9 The ALJ seems to suggest that because "Schuman presented 

testimony that the penalty requested would severe [sic] impact its operations," this should be considered 

a mitigating consideration. (Decision at 13). This testimony, however, absent more, is insufficient. 

To the extent that the ALJ decreased the proposed sanction due to Complainant's purported failure to 

consider this factor, this conclusion is contrary to precedent, and is in error. 

B. The ALJ's Imposition of a $10.000 Civil Penalty is Unsupported by his Opinion and 

is Contrary to Agency Sanction Guidance and Established Precedent. 

At the conclusion of his initial decision, the ALJ assessed a $10,000 civil penalty, comprised of 

a $5,000 civil penalty for Respondent's violation of section 119.5(g) and a $5,000 civil penalty for 

Respondent's violation of section 135.73. (Decision at 15-16). However, the ALJ's opinion provides no 

rationale or explanation as to how he determined these penalty amounts were appropriate for 

Respondent's violations. Rather, his opinion states simply that he took "the totality of the facts and 

circumstances into account." Id. at 15. This explanation is insufficient. The Rules of Practice governing 

FAA civil penalty actions provide that in each decision, the ALJ "shall include findings of fact and 

9 Complainant also inherently considered Respondent's size and ability to pay a civil penalty when it utilized the 

sanction guidance in FAA Order 2l50.3b, Appendix B, to categorize Respondent as a category III operator and small 

business concern. Under agency sanction guidance, the minimum, moderate, and maximum penalty ranges vary 

depending on the size of the operator; higher civil penalty ranges correspond to larger operators, and vice versa. 

13 
conclusions of law, and the grounds supporting those findings and conclusions," for among other things, 

"the amount of any civil penalty found appropriate by the administrative law judge." 14 C.F.R. § 13.232 

(emphasis added). The Administrative Procedure Act similarly requires that all decisions "shall" include 

a statement of all "findings and conclusions, and the reasons or basis therefore, on all the material issues 

of fact, law, or discretion presented in the record." 5 U.S.C. § 557(c)(3)(A). Courts have held that this 

provision imposes duties and obligations on ALJ s to engage in demonstrably reasoned decisionmaking. 

See, e.g., Peabody Coal Co. v. Hale, 771 F.2d 246, 247 (7th Cir. 1985) (finding that "the ALJ did not 

adequately explain his findings and conclusions in reaching a decision and remand this case to him for 

further consideration"). An ALJ must "clearly set forth the rationale for his findings of fact and 

conclusions of law" because adherence to this obligation is "critical to the appellate review process." 

Dir .. Office of Workers' Comp. Programs v. Congleton, 743 F.2d 428,429 (6th Cir. 1984). 

Here, the ALJ's decision is devoid of any such explanation. As illustrated by the previous 

discussion, an $8,000 and $19,800 civil penalty for Respondent's violations of 14 C.F.R. § 135.73 and 

119.5(g), respectively, is appropriate under agency sanction guidance. 10 The $5,000 civil penalty 

imposed by the ALJ for each violation does not comport with this guidance, and the ALJ offers no 

explanation as to why the circumstances here merit such a significant departure from these ranges. 

Although the ALJ noted that Schuman "subsequently allowed the FAA to inspect its records" and that 

"Schuman immediately ceased operations when informed it was in violation of the F ARs," the ALJ 

failed to relate these facts to his determination of an appropriate civil penalty. (See Decision at 13). 

10 As to Respondent's 14 C.F.R. § 135.73 violation, agency sanction guidance recommends a maximum range penalty, 

embodying an agency judgment of the seriousness of a regulated entity's refusal to allow the inspection of its records. 

See. e.g., FAA Order 2150.2b, Appendix B, Figure B-3-d(2). For Schuman Aviation, a Group III operator, small 

business concern, this "maximum" penalty corresponds to a civil penalty range of$7,150 to $11,000. (Campi. 's Closing 

Argument at 10; see also FAA Order 2150.3B at B-4). The same rationale applies to Respondent's 24 violations of 14 

C.F.R. § 119.5(g). Sanction guidance recommends a minimum civil penalty range of$825 to $3,299, for each technical 

violation of an operator's operations specifications. See FAA Order 2150.3b, Figure B-l-c(2) & page B-4. Here, 

Respondent violated this provision on 24 separate instances, each time it operated into KOA. Even using the lowest 

civil penalty amount recommended by the sanction guidance- $825- the $19,800 civil penalty that Complainant 

proposed is an appropriate penalty for Respondent's 24 flights into KOA. 

14 
Because the ALJ failed to explain the rationale for his decisionmaking, it is unclear what weight, 

if any, he gave to these considerations when he imposed a decreased sanction. However, to the extent 

that he decreased the sanction on these grounds, this was in error. A civil penalty may only be reduced 

on the basis of corrective action where there is "sufficient, specific evidence of swift or comprehensive 

corrective action." In the Matter of Mauna Kea Helicopters, FAA Order No. 1997-16 at 10-11 n.15 

(May 23, 1997). The fact that "Schuman immediately ceased operations when informed it was in 

violation" is not a corrective action. Simply complying with a pre-existing regulatory requirement~ 

here, to not operate in violation of OpSpecs- does not warrant reduction. Cf. In the Matter of: Delta Air 

Lines, Inc., FAA Order No. 1992-5, 1992 WL 753173, at *3 (Jan. 7, 1992) (finding that Respondents 

posting a "reminder to the staff of their pre-existing responsibilities, standing alone, does not 

necessarily constitute the type of significant corrective action that warrants a reduction of an 

otherwise appropriate civil penalty"). This analysis holds for the section 135.73 violation as well: 

Schuman's allowing ofF AA to inspect its records is precisely the conduct that was required under the 

FARs in the first place. Schuman's subsequent compliance with the FARs, which should have occurred 

in the first instance, is unsufficient corrective action. Moreover, the limited time period between 

Respondent's refusal of the inspection and agreement to allow inspection was already considered by 

Complainant as a mitigating factor when determining the sanction, see supra sections A.1 & A.2, and, 

therefore, is not an adequate basis for the ALJ's further reduction of the civil penalty. 

The ALJ' s civil penalty finding does not comport with the Sanction Guidance Table, which 

represents the policy of the agency. See, e.g., In the Matter ofNorthwest Airlines, FAA Order No. 90-37 

at 7 (Nov. 7, 1990). The Administrator may reverse on appeal an ALJ's decision regarding the issue of 

an appropriate sanction when the ALJ' s decision differs from the policy expressed in FAA Order 

2150.3B. See In the Matter of Northwest Airlines, FAA Order No. 90-37 at 7 (Nov. 7, 1990); In the 

Matter of[ Air Carrier], FAA Order No. 1996-19 at 8 (June 4, 1996) (stating that "if the law judge does 

15 
not follow agency policy, the agency may impose that policy by reversing the law judge's decision on 

appeal) (citing Association of Administrative Law Judges v. Heckler, 594 F. Supp. 1132, 1141 (D.D.C. 

1984)). Indeed, the Administrator has "both the authority and duty to impose the agency's policy on 

appeal." In the Matter ofWarbelow's Air Ventures, Inc., FAA Order 2000-3,2000 WL 298578, at *9 

(Feb. 2, 2000). The Administrator need not remand the case, however, in order to impose an appropriate 

civil penalty. See. e.g., In the Matter of Mole-Master Servs. Com., FAA Order No. 2010-11, 2010 WL 

7940347, at *5 (June 16, 2010). Instead, the Administrator may impose an appropriate sanction without 

remand when it would be more efficient to do so. See In the Matter ofEsau, FAA Order No. 1991-38 at 

7 n. 7 (Sept. 4, 1991) (stating that while it would not be inappropriate to remand the case to the ALJ, it 

was more efficient for the Administrator to determine the sanction). Such is the case here. As illustrated 

in Section A above, Complainant derived its proposed civil penalty using FAA Order 2150.3B and its 

Sanction Guidance Tables; as such, it reflects the policy of the agency and appropriately accounts for 

the nature, circumstances, gravity, and mitigating factors relating to Respondent's violations. Therefore, 

the Administrator should reverse the ALJ and impose Complainant's $27,80011 civil penalty on appeal. 

11 Complainant requested a $28,000 civil penalty before the ALJ. Sanction guidance recommends a $27,800 civil 

penalty for these violations, which Complainant rounded to reach the proposed amount. 

16 
VI. CONCLUSION 

The ALJ erred by concluding that Complainant failed to meet its burden of demonstrating the 

appropriateness of the proposed $27,800 civil penalty. Complainant derived its proposed $27,800 civil 

penalty using FAA Order 2150.3b and its incorporated Sanction Guidance Tables, and, as such, the 

penalty reflects the policy of the agency and appropriately accounts for the nature, circumstances, 

gravity, and mitigating factors relating to Respondent's violations. In contrast, the ALJ's sanction 

determination does not accord with the policy of the agency and should be reversed. 

By: 

Dated: October 23, 2015 

17 

Respectfully submitted, 

Peter J. Lynch 

Assistant Chief Counsel for Enforcement 

Federal Aviation Administration 

Office of the Chief Counsel 

800 Independence Ave., S.W. 

Washington, D.C. 20591 

Telephone: (202) 267-5964 

Facsimile: (202) 267-5106 
CERTIFICATE OF SERVICE 

I hereby certify that on this date I have sent the foregoing Complainant's Appeal Brief by 

facsimile and by U.S. certified mail, return receipt requested, postage prepaid, to: 

Christopher D. Ferrara, Esq. 

3555 Harding Avenue, Suite 2F 

Honolulu, HI 96816 

In addition, I certify that I have on this date personally delivered the original and one copy of the 

foregoing document to: 

Attn: Hearing Docket Clerk, AGC-430 

Wilbur Wright Building- Suite 2Wl 000 

Federal Aviation Administration 

600 Independence Avenue SW 

Washington, DC 20591 

Dated: October 23, 2015 

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