HE 

E~\VED 

EC 1 9 2013 

lNG DOCKET 

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 FEES AND 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 substantially justified. Again, there is not 

one word in the FAA's opposition that the Complaint was 

substantially justified. Thus, the FAA concedes that its 

Complaint was substantially unjustified. 

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 concluded with the FAA Administrator. 1 Dominion is an 

opinion based solely on the findings of the FAA, the entity 

that is pursuing tens of thousands of dollars in fines against 

1 Dominion Concepts attempted to 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. Federal Aviation 

Admin., 197 Fed.Appx. 710 (9th Cir. 2006). 
TGI Freight. It is not legal precedent. 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 "in every case of adjudication 

required by statute to be determined on the record after 

opportunity for an agency hearing." 5 U.S.C. § 554(a) . 2 

Further, the government must be represented by 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 invoked pursuant 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 Secretary may find that a 

person has violated this chapter or a regulation prescribed or 

order, special permit, or approval issued under 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 applicable proceedings 

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 allowed the FAA the ability to 

enforce regulations with civil fines. It is the code provision 

under which the FAA initiated these proceedings by asserting 

its civil penalty. See Notice of Proposed Penalty at 4. 

4 Emphasis added. 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 2 
also argues that Green Aviation Management Co., LLC v. F.A.A. 5 

is not applicable to this matter because Green is applicable to 

Federal Aviation Regulations and not Hazardous Material 

Regulations. In Green, the FAA sought to penalize Green 

Aviation pursuant to 49 USC § 46301, which states in pertinent 

part: "The Secretary of Transportation may impose a civil 

penalty for the following violations only after notice and an 

opportunity for a hearing." 4 9 USC § 4 6301 (c) (emphasis 

added) . 6 Both code provisions contain the exact same language 

regarding notice and opportunity for hearing. Both code 

provisions make no mention 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 hearing must be on the record," then the 

hearing is covered under the EAJA. Lane v. US Dept. of 

Agriculture, 120 F.3d 106 (8th Cir. 1997) In Lane, the Eighth 

Circuit walked through the steps in ascertaining the EAJA's 

applicability to National Appeals Division ("NAD") proceedings. 

5 676 F. 3d 200, 202 (C.A.D.C. 2012). 

6 For more regarding the Green Aviation proceedings, please see 

In the Matter of Green Aviation Management Co., LLC, FAA Order 

No. 2011-9 (2011) 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 3 
For 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 represented by 

counsel or otherwise." 5 U.S.C. § 504 (b) (1) (C) (i). An 

adjudication is under the APA if it is governed by § 

554 of the APA. Ardestani v. I.N.S., 502 U.S. 129, 

135, 112 S.Ct. 515, 519, 116 L.Ed.2d 496, 116 L.Ed.2d 

496 (1991). See also, St. Louis Fuel & Supply Co., 

Inc. v. F.E.R.C., 890 F.2d 446, 450-51 (D.C.Cir. 

1989). The question, then, is whether NAD proceedings 

are governed by § 554 of the APA. 

The APA § 554 states that it applies to all 

adjudications "required by 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 "agency process for the formulation of 

an order." 5 U.S.C. § 551(7). The review of agency 

determinations by NAD clearly meets the definition of 

an adjudication. There is a procedure for hearing 

facts in dispute, after which the hearing officer or 

Director must 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 requested by a participant. 

7 U.S.C. § 6997(b). See Smedberg Mach. & 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 expressly require the hearing to be on the 

record; nonetheless, Congress' intent is clear. 

"Although Section 554 specifies that the governing 

statute must satisfy the 'on the record' requirement, 

those three magic words need not appear for a *109 

court to determine that formal hearings are 

required." City of West 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 reached the same conclusion more recently in 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 4 
Aageson Grain and Cattle v. U.S. Department of Agriculture, 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, 

and the Federal Rules of Evidence were loosely followed. 

The FAA does provide for formal hearings. 7 The FAA did not 

indicate in the adoption of 14 CFR § 13.221 et seq. whether it 

was of the opinion that its formal hearings were statutorily 

mandated. A review of the history of the same and orders 

issued by the FAA do not shed further light on this. 

Additionally, 49 U.S.C. § 5127 states(b) that when an 

aggrieved party files an appeal regarding a decision under this 

chapter, ~The Secretary shall file with the court a record of 

any proceeding in which the final action was issued." Thus, 

Congress had the expectation that a formal record would be 

created and available for use in the appellate process. 

Further, 28 USC§ 2112(a) requires that the record be 

certified. 

Finally, TGI Freight had little choice in pursuing this 

matter. TGI Freight is not a large company but a business 

that, in large part, deals with the shipment of hazardous 

7 See 14 CFR § 13.221 et seq., in particular, 14 CFR § 13.230 

requiring all hearings to be recorded and transcribed. 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 5 
materials in the highly unique U.S. market. 8 Alaska has a 

relatively tiny road system given the size of the state. 

Alaska has an even smaller railway system. Large portions of 

the state may only be accessed by air transportation. This 

causes issues unique to Alaska in the transportation of 

hazardous materials, whereas in other regions of the country 

there are multiple options to ship to most areas - whether by 

air, water, ground, or rail transportation. 

The FAA's position, at least in its Alaska office, is that 

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

one error in shipping. If there are multiple errors, whether 

inadvertent or not, the fines will grow exponentially with each 

error. TGI Freight is a small company and cannot afford even 

little mistakes with the FAA. When it came to light that the 

manufacturer was at fault and had not properly marked or 

labeled its product, it was imperative that TGI's slate be 

wiped clean because of the FAA's policies. If the civil 

penalty stood, through no fault of TGI Freight, then if TGI 

Freight had one more mistake in the future, the penalty could 

put it out of business. 

Further, it is imperative that shippers not be held to the 

higher standards that the FAA seeks with which to hold them. 

8 The uniqueness of the Alaska market is only rivaled by Hawaii. 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 6 
The regulations are clear on what needs to be done. TGI 

Freight demonstrated that it followed its internal procedures 

that were correct. It was imperative for TGI Freight, and all 

hazardous material shippers in Alaska, to take a stand 

regarding this heightened duty the FAA was attempting to impose 

upon it. 

There can be no dispute that TGI Freight was the 

prevailing party. Pursuant to 5 USC § 504, TGI Freight is 

entitled to recover its fees and costs 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 necessary pursuant to 14 CFR 14.11, 

TGI Freight will certainly provide one. The size and net worth 

of TGI Freight will very likely be undisputed. Such 

submission, if required, would be submitted pursuant to section 

(c) of the regulation. 

In the Matter of TGI Freight 

Docket No. CP10NM0012 

Page 7 
CERTIFICATE 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 Aviation Administration 

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 Aviation Administration 

222 West 7th Avenue #14 

Anchorage, AK 99513-7587 

Cheryl M. Jones, Sr. Attorney 

Office of Regional Counsel 

Alaska Region 

Federal Aviation Administration 

222 West 7th Avenue #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 Jersey Avenue, 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