# HE

# E~\VED EC192013 lNGDOCKET U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS WASHINGTON, DC In the Matter of: I

TGI FREIGHT )FAA Docket No. CP10NM0012 )OMS NO. FAA-2010-1079

________________________________)Judge RICHARD C. GOODWIN

REPLY TO COMPLAINANT'S OPPOSITION TO MOTION FOR FEESAND COSTS There have been two very important concessions by the FAA in this matter. First, the FAA concedes that TGI Freight was the prevailing party in this matter. There is not one word in the FAA's opposition that disputes this fact. Second, the FAA concedes that its Complaint against TGI Freight was not substantiallyjustified. Again, there is not

one word in the FAA's opposition that the Complaint was substantiallyjustified. Thus, the FAA concedes that its Complaint was substantiallyunjustified. The FAA's sole basis for opposing TGI's Motion for Fees and Costs is In re Dominion Concepts, FAA Order No. 2005-4 (2005), Dominion is a case that never left the FAA's offices. Dominion concludedwith the FAAAdministrator. 1 Dominion is an opinionbased solely on the findings of the FAA, the entity that is pursuing tens of thousands of dollars in fines against

1 Dominion Concepts attemptedto appeal but appealed to the Ninth Circuit instead of the U.S. District Court. The Ninth Circuit lacked jurisdiction to hear the appeal, and it was dismissed. See Dominion Concepts, Inc. v. FederalAviation Admin., 197 Fed.Appx. 710 (9th Cir. 2006).TGI Freight. It is not legalprecedent. Rather, it is the agency's interpretation of Congress' intent with respect to 49 USC § 5123 and the Equal Access to Justice Act ("EAJA"). The EAJA is applicable "inevery case of adjudication requiredby statute to be determinedon the record after opportunity for an agencyhearing." 5 U.S.C. § 554(a)

.2 Further, the government must be representedby counsel in the proceedings for the EAJA to be applicable. 5

## u.s.c. § 504(b) (1)(C). The penalty that the FAA sought to impose upon TGI Freight

was invokedpursuant to 49 USC § 5123. The FAA argues, by broad generalizations and a citation to its own self-serving Dominion opinion, that 49 USC § 5123 is not subject to the EAJA.3 49 USC § 5123(b) states: "The Secretarymay find that a person has violated this chapter or a regulationprescribed or order, special permit, or approval issuedunder this chapter only after notice and an opportunity for a hearing."4 The FAA

2 5 U.S.C. § 554 also sets for all of the applicableproceedings for the administrative hearing, of which, for the most part, were followed in this case. 3 Specifically, the FAA discusses the "Hazardous Materials Regulations contained in 49 C.F.R. Subchapter C." Opposition at 2. This is all well and good; however, Congress enacted 49 USC § 5123 under which it allowedthe FAA the abilityto enforce regulations with civil fines. It is the code provision under which the FAA initiatedthese proceedings by asserting its civilpenalty. SeeNotice of Proposed Penalty at 4. 4 Emphasis added. In the Matter of TGI Freight Docket No. CP10NM0012 Page 2also argues that GreenAviationManagement Co., LLC v. F.A.A.5 is not applicable to this matterbecause Green is applicable to Federal Aviation Regulations and not Hazardous Material Regulations. In Green, the FAA sought to penalize Green Aviationpursuant to 49 USC § 46301, which states inpertinent part: "The Secretary of Transportationmay impose a civil penalty for the following violations only after notice and an opportunityfor a hearing." 4 9 USC § 46301(c) (emphasis added)

.6 Both code provisions contain the exact same language regarding notice and opportunity for hearing. Both code provisions make nomention of the EAJA. Clearly, Green is highly instructive. Additionally, it is important to see what courts are doing with EAJA and to ascertain Congress' intent as to what proceedings it is applicable. The Eighth Circuit found that if there "are: 1) adjudications; 2) there is an opportunity for a hearing; and 3) the hearingmust be on the record," then the hearing is coveredunder the EAJA. Lane v. US Dept. of Agriculture, 120 F.3d 106 

### (8th Cir. 1997) In Lane, the Eighth Circuit walkedthrough the steps in ascertaining the EAJA's applicabilityto NationalAppeals Division ("NAD") proceedings.

5 676 F.3d 200, 202 (C.A.D.C. 2012). 6 Formore regarding the GreenAviation proceedings, please see In the Matter of GreenAviationManagement Co., LLC, FAA Order No. 2011-9 (2011) In the Matter of TGI Freight Docket No. CP10NM0012 Page 3For the EAJA to be applicable to NAD proceedings, the Lanes must establish that a NAD hearing is an adjudication under § 554 of the APA "in which the position of the United States is representedby counsel or otherwise." 5 U.S.C. § 504(b)(1)(C)(i). An adjudication is under theAPA if it is governedby § 554 of theAPA. Ardestani v. I.N.S., 502 U.S. 129, 135, 112 S.Ct. 515, 519, 116L.Ed.2d 496, 116 L.Ed.2d 496 (1991). See also, St. Louis Fuel &SupplyCo., Inc. v. F.E.R.C., 890 F.2d 446, 450-51 (D.C.Cir. 1989). The question, then, is whether NAD proceedings are governedby § 554 of theAPA. TheAPA § 554 states that it applies to all adjudications "requiredby statute to be determined on the record after opportunity for an agency hearing." 5 U.S.C. § 554(a). An adjudication is defined as an "agencyprocess for the formulation of an order." 5 U.S.C. § 551(7). The review of agency determinations byNAD clearlymeets the definition of an adjudication. There is a procedure for hearing facts in dispute, afterwhich the hearing officer or Directormust issue a determination. 7 U.S.C. § 6997. The NAD statute also meets the APA § 554 requirement that there be an opportunity for a hearing. Such a hearing is mandatory once requestedby a participant. 7 U.S.C. § 6997(b). See SmedbergMach. &Tool, Inc. v. Donovan, 730 F.2d 1089, 1092 (7th Cir.l984) The only remaining requirement is that NAD proceedings must be on the record. The NAD statute does not expresslyrequire the hearing to be onthe record; nonetheless, Congress' intent is clear. "Although Section 554 specifies that the governing statutemust satisfythe 'on the record' requirement, those three magic words need not appear for a *109 court to determine that formal hearings are required." CityofWest Chicago, Ill. v. U.S. Nuclear Regulatory Comm'n, 701 F.2d 632, 641 (7th Cir. 1983). Lane, 120 F.3d at 108-109. The Eighth Circuit in Lane ultimately found the EAJA was applicable to NAD proceedings. The Ninth Circuit reachedthe same conclusionmore recently in

In the Matter ofTGI Freight Docket No. CP10NM0012 Page 4Aageson Grain and Cattle v. U.S. Department ofAgriculture, 500 F.3d 1038 (9th Cir. 2007). There is no doubt that there was a formal hearing in this matter, one that was recorded. Further, witnesses were sworn, andthe Federal Rules of Evidence were loosely followed. The FAA does provide for formal hearings.7 The FAA didnot indicate in the adoption of 14 CFR § 13.221 et seq. whether it

was of the opinion that its formal hearings were statutorily mandated. Areview of the history of the same and orders issuedby the FAA do not shed further light on this. Additionally, 49 U.S.C. § 5127 states(b) that when an aggrievedparty files an appeal regarding a decision under this chapter,**~The** Secretary shall file with the court a record of anyproceeding in which the final actionwas issued." Thus, Congress had the expectationthat a formal recordwould be created and available for use in the appellate process. Further, 28 USC§ 2112(a) requires that the recordbe certified. Finally, TGI Freight had little choice inpursuing this matter. TGI Freight is not a large companybut a business that, in largepart, deals with the shipment of hazardous

7 See 14 CFR § 13.221 et seq., inparticular, 14 CFR § 13.230 requiring all hearings to be recorded andtranscribed. In the Matter of TGI Freight Docket No. CP10NM0012 Page 5materials in the highlyunique U.S. market. 8 Alaska has a relatively tiny road systemgiventhe size of the state. Alaska has an even smaller railway system. Large portions of the statemay onlybe accessedby air transportation. This

causes issues unique toAlaska in the transportation of hazardous materials, whereas in other regions of the country there aremultiple options to ship tomost areas - whether by air, water, ground, or rail transportation. The FAA's position, at least in itsAlaska office, is that

a shipper gets one bite at the apple. The shipper is allowed

one error in shipping. Ifthere aremultiple errors, whether inadvertent or not, the fines will grow exponentiallywith each

error. TGI Freight is a small company and cannot afford even littlemistakes with the FAA. When it came to light that the manufacturer was at fault andhadnot properlymarked or labeled its product, itwas imperative that TGI's slatebe wiped cleanbecause of the FAA's policies. Ifthe civil penalty stood, through no fault of TGI Freight, then if TGI Freight had onemoremistake in the future, the penalty could put it out ofbusiness. Further, it is imperative that shippers not be heldto the higher standards that the FAA seeks withwhich to hold them.

8 The uniqueness of theAlaskamarket is only rivaledby Hawaii. In the Matter of TGI Freight Docket No. CP10NM0012 Page 6The regulations are clear onwhat needs to be done. TGI Freight demonstrated that it followed its internalprocedures that were correct. Itwas imperative for TGI Freight, and all hazardous material shippers inAlaska, to take a stand regarding this heightenedduty the FAA was attempting to impose upon it. There canbe no dispute that TGI Freight was the prevailingparty. Pursuant to 5 USC § 504, TGI Freight is entitledto recover its fees andcosts in this matter.9 TGI Freight respectfully requests that the Court grant this request. DATED this 

### lOth day of December 

### 2013.

LAW OFFICE OF HOZUBIN 

### &MOBERLY Attorneys for_TGI Freight By:

9 If a net worth exhibit is necessarypursuant to 

### 14 CFR 

### 14.11, TGI Freight will certainlyprovide one. The size andnet worth of TGI Freight will very likelybe undisputed. Such submission, if required, wouldbe submittedpursuant to section (c) of the regulation. In theMatter of TGI Freight Docket No. CP10NM0012 Page 7CERTIFICATE OF SERVICE I hereby certify that on the lOth day of December 2013, a true and correct copy of the foregoing was MAILED to the following: Original Plus 1 Copy Federal AviationAdministration 800 Independence Avenue, S.W. Washington, DC 20591 Attn: Hearing Docket Clerk, AGC-430 Wilbur Wright Building-Suite 2W1000 One Copy Howard L. Martin, Jr. Regional Counsel, Office of Regional Counsel, AAL-7 Alaskan Region Federal AviationAdministration 222 West 7thAvenue #14 Anchorage, AK 99513-7587 Cheryl M. Jones, Sr. Attorney Office of Regional Counsel Alaska Region Federal AviationAdministration 222 West 7thAvenue #14 Anchorage, AK 99513-7587 The Honorable Richard C. Goodwin, Administrative Law Judge U.S. Department of Transportation Office of Hearings, M-20 1200 New JerseyAvenue, S.E. East Building, Ground Floor, Room E12-320 Washington, DC 20590

LAW OFF MOBERLY

In the Matter of TGI Freight Docket No. CP10NM0012 Page 8