### BEFORE THE UNITED STATES DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS 

### ----------------------------x In the Matter of FEDERAL AVIATION ADMINISTRATION, Case No. FAA-2013-0620 Complainant, vs. NATIONAL POWER CORPORATION, Respondent. 

### ----------------------------x Dirksen Federal Building 219 S. Dearborn Street Hearing Room 2230 Chicago, Illinois 60604 Monday, September 29, 2014 The above-captioned matter convened, pursuant to notice at 9:08 a.m. BEFORE: The Honorable RICHARD C. GOODWIN, Administrative Law Judge 1



# RECEIVED

(202) 234-4433 

# ORIGINAL OCT 222014 

### HEARING DOCKET

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### APPEARANCES: For the Complainant KATE BARBER, ESQ. FAA Great Lakes Region 2300 East Devon Des Plaines, Illinois 60018 For the Respondent MARTIN A. BLUMENTHAL, ESQ. One Northfield Plaza, Suite 300 Chicago, Illinois 60093

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### TABLE OF CONTENTS OPENING STATEMENT On Behalf of Complainant On Behalf of Respondent 9 12 

### WITNESS DIRECT CROSS REDIRECT RECROSS Chris Zawarus Thomas Vrablik Chris Zawarus (Recalled)

Complainant's: C-1 C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 

### Respondent's: P-D P-E Employer's: E-1 

### E-2 17 70 100 119 135 138



### EXHIBITS: IDENTIFIED

NEAL R. GROSS 92 96 126



### IN EVIDENCE 23/26 23/31 23/34 23/36 23/38 23/40 23/42 23/44 23/47 23/49 23/51 54/55

104 106

130 130 3

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### 1 P R 0 C E E D I N G S 2 (9:08a.m.) 3 ADMIN. LAW JUDGE GOODWIN: This the 4 case of National Power Corporation, FAA, No. 5 2013-0620. Counsel will identifyyourself for 6 the record, please. 7 MS. BARBER: Your Honor, my name 8 is Kate Barber. I'm an attorney with the 9 Federal Aviation Administration. 10 MR. BLUMENTHAL: My name is Martin 

### 11 A. Blumenthal. I'm the attorney for National 12 Power. 13 ADMIN. LAW JUDGE GOODWIN:

**~1r.** 14 Blumenthal, I have to ask you. Do you have 15 any relatives in Annapolis, Maryland? 16 MR. BLUMENTHAL: Not that I know 17 of, Your Honor. 18 ADMIN. LAW ,JUDGE GOODWIN: Well 19 there are a couple of very distinguished 20 lawyers in Annapolis who I've known for 30, 40 21 years. 22 MR. BLUMENTHAL: I think I've

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### 1 heard of a couple. 2 ADMIN. LAW JUDGE GOODWIN: Yes, 3 Harry Blumenthal is one of them and a couple 4 other ones. 5 

### MR. BLUMENTHAL: Yes, they're not 6 related to me. 7 

### ADMIN. LAW JUDGE GOODWIN: Well, I 8 have the sameproblemwith Goodwin, obviously. 9 

### MR. BLUMENTHAL: Yeah. 10 

### ADMIN. LAW JUDGE GOODWIN: 11 Ultimately we're related, but 12 MR. BLUMENTHAL: I believe I've 13 

### gotten mail or something for, I 

### don't 14 remember, it was a few years ago, for someone 15 out east. 16 

### ADMIN. LAW JUDGE GOODWIN: I can 17 top that, I got a phone call one day in my 18 office, is this Richard Goodwin? Yes, who's 19 calling? Well, this is NBC News, we'd like 20 your thoughts on some political issue. And I 21 said, I think you've got the wrong Richard 22 Goodwin. I think you want the one who worked

NEAL R. GROSS (202) 234-4433 COURTREPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 WINW.nealrgross.com6 1 for Nixon, he's a couple years older than me. 2 Oh I'm sorry. And then, of course, my wheels 3 started turning, can you imagine what would 4 have happened if I popped off and said 5 something on it. I'm not going there. 6 I have to apologize for not 7 getting an amended hearing notice out. I 8 didn't realize until Saturday when the court 9 reporter called me that I had forgotten to 10 amend the court, the hearingnotice. I'm glad 11 you all took enough initiative to check the 12 CSOs. I made sure that the CSOs knew this 13 morning that Mr. Collins had put us in, in 14 this courtroom. 15 Normally I take a break about 16 10:30, break for lunch about noon. Take 17 anotherbreak about 4:30, we'd finish it, 4:30 18 every afternoon. The primary reason is the 19 CSOs in most jurisdictions go on overtime at 20 five. So, because I'm a guest in the 21 courthouse, I'd like to make sure that I 22 accommodate the courthouse.

NEALR. GROSS (202) 234-4433 COURT REPORTERSAND TRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 "WWW.nealrgross.com7 1 What I'm going to ask the court 2 reporter to do, during your

**presentatio~** if 3 the court reporter raises his hand, that means 4 there's something he'd like to spell at a 5 convenient point. Do that, that way at 6 midnight tonight, he's not trying to figure 7 out what it is that we said. 8 Please review your exhibits to 9 make sure we don't have any personal 10 identifying information in the file. And 11 that's for both parties. Business addresses, 12 business phone numbers is fine, but I, in 13 today's environment, you know, I don't think 14 we want any social security numbers, home 15 phone numbers, home e-mail addresses. And if 16 there is, I always bring a large black magic 17 marker and, and we can redact it. If 18 necessary, to protect business interest, we 19 can seal the record and we' 11 address that as 20 we go along. 21 I've got a hearing disability, so 22 if I ask you to repeat something, don't take

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### 1 it personally. I, quite literally may not be 2 able to hear you. I'm going to suggest to the 3 court reporter, I only need a digital copy. 4 I'd like a copy in PDF and, was it AS, ACSII, 5 

### is that what it's called? In other words, 6 text. 7 

### Okay. And on the Exhibits, I 8 don't care how you mark them as long as you 9 don't use the same identical thing. It gets 10 confusing when you use the same numbers. 11 Other than that, are there anything 12 preliminary? 13 

### MS. BARBER: No, Your Honor. 14 

### ADMIN. LAW JUDGE GOODWIN: Okay. 15 And if for some reason you need to take a 16 break, if, I did trial work for 20 some years 17 and every once in a while you get a frog in 18 

### your throat and you're gasping. Just raise 19 

### your hand and we'll take a time out. Ms. 

### 2

### o Barber, did you want to make an opening 21 statement? 22 MS. BARBER: Yes, Your Honor.

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### ADMIN. LAW JUDGE GOODWIN: And I 2 have to apologize for the format of, 3 especially to you Mr. Blumenthal, I didn't 4 literallyput the thing here and I was in this 5 courtroom in the beginning of the month and I 6 spent two days trying to figure out how to 7 raise the chair and I didn't figure it out, 8 so. We'll just have to move around and last 9 time I was in a courtroom, the lamp was 10 actually bolted to the desk. Go ahead. 11 

### MS. BARBER: May I please the 12 Court? 13 

### ADMIN. LAW JUDGE GOODWIN: Yes. 14 

### OPENING STATEMENT BY COMPLAINANT 15 

### MS. BARBER: We're here in the 16 

### matter of National Power Corporation. The 17 Federal Aviation Administration hereby asks 18 the Court to levy a civil penalty in the 19 amount of $66,000 for violation of the 20 

### hazardous materials regulations. The 21 violations were discovered on May 17, 2010 22 when the special agent, Mr. Zawarus, who

NEAL

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### 10

1 

### you're going to hear from today, conducted a 2 

### hazardous materials inspection at the 3 residence, in the business place of National 4 Power Corporation. 5 

### During that inspection, it was 6 discoveredthat several shipmentshad gone out 7 and they did not comply with the hazardous 8 

### materials regulations. There were 11 9 

### shipments of dangerous goods. They were 10 untested prototype lithium ion batteries and 11 they were transported by air. And they were 12 

### certified under the IKO, 

### technical 13 

### instructions for the transportation of 14 dangerous goods. 15 We're going to present to you 11 16 shippingpapers of these lithiumionbatteries 17 and describe to you how each one of the 18 shippingpapers and each one of the shipments 19 violatedthe hazardous materials regulations. 20 We will explain that each one of the batteries 21 

### required a special permission from the 22 

### Pipeline Hazardous Materials Safety

NEAL R. GROSS (202) 234-4433 COURT REPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com11 1 Administration. However, National Power did 2 not have this special permission that was 3 required to ship the batteries. 4 Additionally, the shipments 5 weren't properly packaged in UN4G fiberboard 6 boxes. They were tested in the packing Group 7 II standard. However, they should have been 8 packaged in the UN4G packing group one 9 standard. We're also going to explain to you 10 why this matters and how this effects safety 11 in air commerce. 12 Additionally, National Power 13 Corporation failed to correctly put the 14 emergencyresponse informationon the shipping 15 papers. The emergency response telephone 16 number is a number that needs to be available 17 and used at all times during the day, 24 18 hours, seven days a week. We will explain to 19 you why this regulation is in place and why 20 the fact that the number on each one of the 21 shipping papers was in not in compliance and 22 that it only was answered or available to be

NEAL R. GROSS (202) 234-4433 COURT REPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com12 1 answered during the business hours, as it was 2 National Power Corporation's business line. 3 Additionally, National Power 4 Corporation violated the hazardous materials 5 regulation when they had their employee 6 perform the hazardous materials shipping 7 functions when that employee had not received 8 the required hazardous materials training. 

### 9 Information the 

### FAA will prove that National 10 Power Corporation violated the hazardous 11 materials regulations and we would ask that 12 you, Your Honor, fine them a civil penalty ln 13 the amount of $66,000. Thank you. 14 ADMIN. LAW JUDGE GOODWIN: Mr. 15 Blumenthal, did you want to be heard or do you 16 want to reserve? 17 OPENING STATEMENT BY RESPONDENT 18 MR. BLUMENTHAL: Good morning, 19 Your Honor. Good morning counsel. Your 20 Honor, you've heard the allegations that the 21 

### FAA has said they were going to prove. 22 However, National Power, in fact, did not

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1 violate any of the regulations. The batteries 2 that were shipped that were the subject of the 3 complaint were, in fact, tested. They met the 4 requirements even though they were slightly 5 different and the way that they were 6 configured. They did not differ materially 7 accordirg to what, the way the regs are 8 written. 9 As a matter of fact, one of the 10 batteries, there was zero difference. The 11 only differencebetween the batterypacks were 12 the way the individual cells were arranged to 13 fit the equipment they were supposed to be in. 14 Further, Your Honor, regarding the allegation 15 of the improper phone number, there was an 16 improper phone number on the label. However, 17 the National Power had contracted with a 18 company called Chemtrec, the, long before 19 these labels were discoveredto have the wrong 20 number. It was a typographical error. 21 National Power was not trying to evade the 22 requirement of having the emergency number on

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1 there. Certainly, there was no incentive for 2 them to do so. It was no question of trying 3 to save money not having a 24 hour number. 4 They did, in fact, have it. 5 As far as, and further, as far as 6 the shipping of the batteries go, the proto, 7 actually these were prototypes that were 8 supposed to be sent in a particularpackaging 9 arrangement. National Power sent these 10 battery packs ln a higher class than was 11 necessary to be on the safe side. Apparently 12 this turns out to be a violation. 13 But, however, we will show that 14 the regulations involved are ambiguous. And 15 a reasonable person could come up with either 16 interpretation. And we'll show that erring on 17 the side of caution should not be something 18 that a company should be punished for. And as 19 a matter of a fact, they paid for the extra 20 charges involved for shipping it in a more 21 safe manner than may have been required 22 according to a different interpretation of

NEAL R. GROSS (202) 234-4433 COURT REPORTERSAND TRANSCRIBERS 1323 RHODE ISlANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com15 1 the, of the regs. 2 The other problem we will address, 3 Your Honor, is the question of the $66,000 4 fine. We haven't been able to find out how 5 that was derived. Yes, there are tables 6 similar to the federal sentencingguidelines, 

### 7 but the exact way of that the 

### FAA contends 8 that this fine is reasonable. We haven't been 9 able to find out. And so, therefore, we' 11 be 10 presenting no evidence regarding the 11 reasonableness of the fine. 12 ADMIN. LAW JUDGE GOODWIN: 13 All right, thank you. Mr. Blumenthal, if we 14 get into an area during the discourse where 15 there is, you mentioned the batteries are 16 prototype. My concern is, everything we do 17 here is on the record unless I seal it. Sol 18 Ms. Barber and Mr. Blumenthal, if we get int.o 19 an area where we start talking about some 20 proprietarythings, let's have the discussion 21 whether we want to go off the record and that, 22 we'll just take it when we get there. Okay?

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1 

### MR. BLUMENTHAL: Yes, Your Honor. 2 ADMIN. LAW JUDGE GOODWIN: And 3 we'll address the issue. But, I've had cases 4 

### in the past where issues have come up that, or 5 

### business decisions and, you know, we seal the 6 

### record just to make sure that the information 7 

### wasn't released earlier than people wanted it 8 

### to be. 9 

### MR. BLUMENTHAL: Okay. Thank you, 10 

### Your Honor. 11 

### ADMIN. LAW JUDGE GOODWIN: Thank 12 

### you. Ms. Barber, do you want to call your 13 

### first witness? 14 

### MS. BARBER: The FAA calls l'l.lr. 15 

### Christopher Zawarus. 16 

### ADMIN. LAW JUDGE GOODWIN: Stand 17 

### and raise your right hand. State and spell 18 

### your first and last name, please? 19 

### THE WITNESS: My name is 20 ChristopherZawarus. First name is C-h-r-i-s21 

### t-o-p-h-e-r, last name is Zawarus, 

### z like 22 zebra, a-w-a-r-u-s.

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1 

### ADMIN. LAW JUDGE GOODWIN: Ms. 2 Barber. 3 Whereupon, 4 

### CHRISTOPHER ZAWARUS 5 

### was called as a witness and, after being first 6 

### duly sworn, was examined and testified, as 7 

### follows: 8 

### DIRECT EXAMINATION 9 

### BY MS. BARBER: 10 Q 

### Mr. Zawarus, where are you 11 

### currently employed? 12 A 

### I work for the Federal Aviation 13 

### Administration. 14 Q 

### And what is your position there? 15 A 

### I'm 

### a manger of hazardous 16 materials. 17 Q 

### What type of schoolingdid you get 18 to become the manager of hazardous materials? 19 A 

### When I began in the hazardous 20 

### materials section, I went to hazardous 21 

### materials basic in Oklahoma City. 22 Q 

### How long was the program?

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1 A Three and a-half weeks. 2 Q And how long have you been with 3 the FAA? 4 A Since 2001. 5 ADMIN. LAW JUDGE GOODWIN: Mr. 6 Blumenthal, I was just about to suggest to 7 you, if you want to move around, feel free to s do so. 9 MR. BLUMENTHAL: Thank you, Judge. 10 ADMIN. LAW JUDGE GOODWIN: I 11 didn 1t set the courtroomup. It 1s better than 12 the one I tried, earlier when we had 13 Respondent 1stable behind the Agency 1s table, 14 that was really exciting. Go ahead, sorry, 15 Ms. Barber. 16 BY MS. BARBER: 17 Q No problem. When did you have an 18 occasion to investigate the National Power 19 Corporation? 20 A Conducted an inspection of the 21 facility on May 17, 2010. 22 Q Was this the first time you had

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### 1 ever been there? 2 A 

### No. 3 Q 

### When was the first time you were 4 

### at National Power? 5 A 

### A few weeks earlier in mid to late 6 

### April. 7 Q 

### And what happened then? 8 A I 

### came in unannounced for 9 hazardous materials inspection and the owner 10 of the facility asked to reschedule. 11 Q 

### And then what happened? 12 A 

### Following our scheduling of the 13 inspectiona couple days prior, I was notified 14 that they were canceling that scheduled 15 inspection. 16 Q 

### And you did eventuallyconduct the 17 inspection, correct? 18 A 

### Yes. 19 Q 

### And that was May 17, 2010? 20 A 

### Yes. 21 Q 

### What did you discover during this 22 inspection?

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### 20

1 A 

### During the course of the 2 inspection, a review of training records 3 

### revealed that the individual who was 4 certifying documentation

-- 5 

### MR. BLUMENTHAL: I '11 object, Your 6 Honor, as the question is too broad and 7 there's no foundation laid for the question. 8 

### ADMIN. LAW JUDGE GOODWIN: 9 Rephrase the question, Ms Barber. 10 

### BY MS. BARBER: 11 Q 

### Can you repeat what the question 12 

### was? Please describe for the Court the 13 

### procedure you took during the inspection. 14 A 

### Met with the owner of the company, 15 

### Mr. Alpipirt, his legal counsel and another 16 

### individual from the company. Sat down, went 17 

### through their shipping process, reviewed 18 

### documentation. Reviewed the packaging they 19 were using, the shipment of the lithium 20 batteries that they were offering into 21 

### transportation. 22 Q 

### What documents, specifically, did

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1 

### you review? 2 A 

### The retention file, all of the 3 Federal, I think they were using Federal 4 

### Express. The shippers declaration for 5 

### dangerous goods they used to declare their 6 

### shipments and in commerce. 7 Q 

### What's the purpose of this 8 

### inspection? 9 A 

### To determine compliance with the 10 

### hazardous materials regulation. 11 Q 

### Did you find any noncompliance 12 

### during your inspection? 13 A 

### Yes. 14 Q 

### And what did you find? 15 A 

### Review of training records for the 16 employee who was certifying the shipper's 17 

### declarationsfor dangerousgoods revealedthat 18 she had not competed a course of study in 19 

### international standards for which she was 20 

### certifying the documents. 21 Q 

### And by the documents, do you mean 22 

### the shipping papers?

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### 22

1 A 

### Yes. 2 Q 

### What else did you discover? 3 A 

### Upon questioning Mr. Alpipirt, 4 indicated that the telephone number that was 5 

### being used on the shipping papers was the 6 

### general office number for the facility. Upon 7 

### further questioning, it was revealedthat that 8 

### number was only answered during operating 9 

### hours, which was six a.m. until six p.m. as it 10 

### was told to me. 11 Q 

### How is that a violation? 12 A 

### Hazardousmaterials offered in the 13 

### commerce require an emergency response 14 telephonenumber that'smonitoredat all times 15 while shipments are in commerce. 16 Q 

### Why does it have to be 24 hours? 17 A 

### In the event that there's an 18 

### incident involving the package, first 19 responders will contact that number to get 20 response information. 21 Q 

### I'm showing you, may I approach, 22 Your Honor?

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### 23

1 

### ADMIN. LAW JUDGE GOODWIN: Yes, 

### 2 thank you. 3 

### BY MS. BARBER: 4 Q 

### I'm showing you what I previously 5 

### marked Exhibit C-1 through C-11. Do these 6 

### exhibits, one through 11 look familiar to you? 7 

### (Complainant's Exhibits C-1 8 

### through C-11 were marked for identification.) 9 A 

### Yes. 10 Q 

### And what are they'? 11 A 

### Shippers declarations for 12 

### dangerous goods that were reviewed during the 13 

### inspection. 14 Q 

### I'd like to start with C-1. 15 A 

### Okay. 16 

### ADMIN. LAW JUDGE GOODWIN: Before 17 

### you do that, just so you, everybody 18 understands, what the Court does, I write ID 19 

### above the exhibit number. If and when it's 20 admitted, I 'll line through ID and put the 21 

### date. That's, so I make sure it's in 22 properly, so when you see the, and again,

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### 1 exhibits all go on the internet, so just make 2 sure that there's no informationon here that 3 

### you don't want on the internet. I'm sorry, 4 Ms. Barber. 5 BY MS. BARBER: 6 Q 

### What is the airway bill number of 7 Exhibit C-1? 8 A 

### 798285410873. 9 Q 

### On C-1, what is the date of the 10 shipment? 11 A 

### It was certified on January 8, 12 2010. 13 Q 

### And what was contained in this 14 shipment? 15 A 

### The shipment was declared to 16 

### contain lithium ion batteries. UN number 17 3480, Class 9 hazardous materials and packing 18 Group II. 19 Q 

### What was the package group? 20 A 

### The shipment contained a packing 21 two material. 22 Q 

### Who signed the declaration of

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1 

### shipment? 2 A 

### Maria Munoz, office manager. 3 Q 

### And what is the telephone number 4 that is on that, on C-1? 5 A 

### 1-800-813-9468. 6 Q 

### What did you later determine who 7 

### that number belonged to? 8 A 

### That's the general office number 9 

### for National Power Corporation. 10 Q 

### At this time, Your Honor, does 11 

### this, does C-1 fairly and accurately depict 12 

### the shippingpaper that you looked at and made 13 

### a copy of on May 17, 2010? 14 A 

### Yes. 15 

### MS. BARBER: Your Honor, I would 16 

### ask to introduce this into evidence. 17 

### ADMIN. LAW JUDGE GOODWIN: Mr. 18 Blumenthal? 19 

### MR. BLUMENTHAL: No objection. 20 

### ADMIN. LAW JUDGE GOODWIN: 21 

### Complainant's1 for identificationis received 22 into evidence as Complainant's 1.

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1 (Complainant's Exhibit C-1 was 2 received into evidence.) 3 BY MS. BARBER: 4 Q Please go through C-1 and explain 5 to Judge Goodwinwhere the hazardousmaterials 6 regulations violations appear. 7 A In the certification box, Maria 8 Munoz, office manager, review of her training 9 record revealed that her hazardous materials 10 training was DOT specific and did not include 11 a course of study in international standards 12 for which the shippingpaper was certified. Go 13 on? 14 Q Yes, please. 15 A The emergency response telephone 16 number provided as indicatedby Mr. Alpipirt, 17 was a general office number that was not 18 answered outside the operating hours of six 19 a.m. to six p.m. And through review of the 20 packaginginformationthat was providedduring 21 the course of the inspection, it was revealed 22 that the lithium ion batteries were not UN

NEAL R. GROSS (202) 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISlANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com27 1 tested. Therefore, they required authorization 2 by the Pipeline Hazardous Materials Safety 3 Administration, and would then be required to 4 be offered in a packing group one packaging. 5 Q According to Exhibit C-1, what 6 packaging group was this shipment offered in? 7 A Packing Group II. 8 Q Did you learn how the batteries 9 were packaged when sent? 10 A Yes. During the course of the 11 inspection, packagingmaterials were provided 12 for review. We were provideda fiberboardbox 13 and that was rated to the packing Group II 14 standard. It was a combinationpackaging that 15 contained a metal inner can and a foam insert 16 to hold the batteries in place. And I was 17 also told that battery shipments were offered 18 exempt -- 19 MR. BLUMENTHAL: Objection, 20 hearsay. 21 ADMIN. LAW JUDGE GOODWIN: 22 Sustained.

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### 28

1 

### BY MS. BARBER: 2 Q 

### Who told you about the battery 3 packages? 4 A 

### Mr. Alpipirt. 5 Q 

### And who is Mr. Alpipirt? 6 A 

### Owner of National Power 7 

### Corporation. 8 

### MS. BARBER: Your Honor, I would 9 

### ask that it's not hearsay what Mr. Alpipirt 10 

### told Mr. Zawarus during the course of the 11 

### investigation as it is an admission by party 12 

### opponent in regards to the packaging and how 13 

### they package the shipments. 14 

### ADMIN. LAW JUDGE GOODWIN: Mr. 15 Blumenthal? 16 

### MR. BLUMENTHAL: No objection to 17 the rephrasing. 18 

### ADMIN. LAW JUDGE GOODWIN: Okay. 19 I'll allow the testimony and this is an 20 administrative hearing and the FAA rules do 21 

### allowhearsaybeing, obviouslythe hearsaycan 22 be admitted, it goes to the weight that the

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1 

### Court's going to put on it, on the evidence. 2 So, I'll allow it during the hearing. 3 

### MS. BARBER: Okay. Thank you, 4 Your Honor. 5 

### BY MS. BARBER: 6 Q 

### What did Mr. Alpipirt tell you in 7 

### regards to how he packaged the shipment in C8 1? 9 A 

### I was told that shipments of 10 

### lithium ion batteries that were offered fully 11 

### regulated were done so because they were 12 

### untested prototype lithium batteries being 13 

### sent to customers for potential purchase. 14 Q 

### And what, was the way they were 15 

### packaged compliant with the hazardous 16 

### materials and regulations? 17 A 

### No. Untestedbatteries require an 18 

### authorizatim from Pipeline Hazardous 19 

### Materials Safety Administration and have 20 

### higher packaging requirements. 21 Q 

### Now, I'd like to draw your 22 attention to Exhibit C-2. Do you recognize

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1 

### Exhibit C-2? 2 A 

### Yes. 3 Q 

### And what is it? 4 A 

### It's a shipper's declaration for 5 dangerous goods. 6 Q 

### Okay. What date was the 7 

### declaration for dangerous goods sent? 8 A 

### It was certified on January 8, 9 

### 2010. 10 Q 

### And what is the airway bill 11 

### number? 12 A 

### Airway bill is 793164350459. 13 Q 

### And who signed the certification? 14 A 

### Maria Munoz, office manager. 15 Q 

### Do you recognize this document as 16 

### the airway bill that you investigated and 17 

### inspectedon May 17, 2010? And does it fairly 18 

### and accurately depict that airway bill? 19 A 

### Yes. 20 MS. 

### BARBER: We request that 21 Exhibit C-1 be entered into evidence, Your 22 Honor.

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1 

### MR. BLUMENTHAL: No objection. 2 

### ADMIN. LAW JUDGE GOODWIN: C-2 for 3 identificationhas beenreceivedinto evidence 4 

### as Complainant's 2. 5 

### (Complainant's Exhibit C-2 was 6 

### received into evidence.) 7 

### MS. BARBER: I would also ask for 8 

### the sale of expediency, there are 11 

### of them, 9 

### if I could move them all into evidence, or 10 

### would you like me to lay foundation for each 11 

### one individually? 12 ADMIN. LAW JUDGE GOODWIN: In 13 fairness to Respondent, I think we ought to 14 just take them one at a time. 15 

### MS. BARBER: Okay. 16 

### ADMIN. LAW JUDGE GOODWIN: It 

### 17 makes the record easier. 18 

### MS. BARBER: Very well. 19 

### ADMIN. LAW JUDGE GOODWIN: Thank 20 you for asking. 21 BY MS. BARBER: 22 Q 

### On Exhibit C-2, please describe

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1 each area where the hazardous materials 2 violations were regulated? 3 A In the signatorybox, the document 4 was certified by Maria Munoz. Her, Ms. Munoz 5 training failed to include training in the 6 internationalstandards for whichthe document 7 was certified. The emergency response 8 telephone number provided, as previously 9 indicated is a number for the general office 10 at National Power Corporation, which I was 11 toldwas only answeredduring operationhours, 12 six a.m. to six p.m. 13 As previously indicated, I was 14 told by Mr. Alpipirt that fully regulated 15 hazardous material shipments of lithium 16 batteries were untested prototype lithium 17 batteries. Therefore, upon my request, 18 National Power Corporation was unable to 19 provide an authorization from Pipeline 20 Hazardous Materials SafetyAdministrationfor 21 shipment of those battery types and the 22 packaging provided was not compliant with the

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### 1 higher standard required for untested lithium 2 

### batteries. 3 Q 

### I'd like to now ask you about 4 

### Exhibit C-3. What date was, well, what is 5 

### Exhibit C-3? 6 A 

### Shipper's declaration for 7 

### dangerous goods. 8 Q 

### And what is the airway bill 9 

### number? 10 A 

### Airway bill is 793164350426. 11 Q 

### And what day was it sent? 12 A 

### It was certified on January 8, 13 

### 2010. 14 Q 

### Who certified it? 15 A 

### Maria Munoz, office manager. 16 Q 

### And what were they sending? 17 A 

### Lithium ion batteries, UN 

### number 18 

### 3480, Class 9 hazardous materials, packing 19 

### Group II. 20 Q 

### Does Exhibit C-3 fairly and 21 accuratelydepict the airway bill number that 22 you copied and inspected on May 17, 2010?

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1 A 

### Yes. 2 MS. BARBER: Your Honor, at this 3 time, the FAA asks to enter into evidence 4 

### Exhibit C-3. 5 

### MR. BLUMENTHAL: No objection. 6 

### ADMIN. LAW JUDGE GOODWIN: Exhibit 7 

### C-3 for identification is received into 8 

### evidence as Exhibit C-3. 9 

### (Complainant's Exhibit C-3 was 10 

### received into evidence.) 11 

### BY MS. BARBER: 12 Q 

### Mr. Zawarus, please describe for 13 

### the Court each way that Exhibit C-3 is in 14 

### violation of the hazardous materials 15 regulations. 16 A 

### The document was certified by 17 

### Maria Munoz, office manager. Her hazardous 18 materials training, upon review, was found to 19 not include training in the international 20 standards for which she certified document. 21 

### The emergency response telephone number 22 provided on the shipper's declaration was an

NEAL R. GROSS (202) 234-4433 COURT REPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com35 1 office number that was not operationaloutside 2 the hours of six, or not answered outside the 3 hours of six a.m. to six p.m. 4 It was found that the, or it was 5 determinedthat the lithiumion batteriesthat 6 were offered in the shipment were untested 7 prototype lithium batteries for which no 8 authorization from PHMSA was available. And 9 the packaging used to prepare those shipments 10 was not of the standard required for untested 11 batteries. 12 Q Okay. Now, I'd like to draw your 13 attention to Exhibit C-4. What is the airway 14 bill number of Exhibit C-4? 15 A Airway bill is 793174932310. 16 Q And what date is on Exhibit C-4? 17 A Shipment was certified on January 18 12, 2010. 19 Q Who certified the document? 20 A Maria Munoz, office manager. 21 Q Does Exhibit C-4 fairly and 22 accurately depict the airway bill that you

NEAL

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### 1 inspected and copied on May 17, 2010? 2 A 

### Yes. 3 

### MS. BARBER: At this time, Your 4 Honor, the FAA seeks to enter into evidence 5 Exhibit C-4. 6 

### MR. BLUMENTHAL: No objection. 7 

### ADMIN. LAW JUDGE GOODWIN: Exhibit: 8 C-4 for identification is received into 9 evidence as Exhibit C-4. 10 

### (Complainant's Exhibit C-4 was 11 received into evidence.) 12 BY MS. BARBER: 13 Q 

### Mr. Zawarus, please describe in 14 each way that Exhibit C-4 is in violation of 15 the hazardous materials regulations. 16 A 

### Maria Munoz, office manage:r- who 17 

### certified the document, review of her 18 training, revealed that she did not have 19 instruction in the use of international 20 

### standards for which the document was 21 certified. The emergency response telephone 22 number listedon the shipper'sdeclarationwas

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### 1 the general office number for National Power 2 Corporation, which is not answeredoutside the 3 hours of six a.m. to six p.m. 4 The lithium ion batteries offered 5 as part of this shipment, the company could 6 

### not provideUN test reports for, and there was 7 no authorization from the Pipeline Hazardous 8 Materials Safety Administration for shipment 9 of untestedbatteriesissuedto National Power 10 

### Corporation. And the packaging used to 11 prepare the shipment was not the appropriate 12 level for an untested lithium ion battery. 13 Q 

### Okay. I'd like to draw your 14 attentionto Exhibit C-5. Please describe the 15 airway bill number of Exhibit C-5? 16 A 

### Airway bill is 798307715600. 17 Q 

### And what date was this airway bill 18 certified? 19 A 

### Shipment was certified on January 20 15,2010. 21 Q 

### Who certified the shipment? 22 A 

### Maria Munoz, office manager.

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1 Q 

### Does airway bill, Exhibit C-5 2 

### fairly and accurately depict the airway bill 3 that you inspectedand copied on May 17, 2010? 4 A 

### Yes. 5 

### MS. BARBER: At this time, Your 6 

### Honor, I would ask that Exhibit C-5 be entered 7 

### into evidence. 8 

### MR. BLUMENTHAL: No objection. 9 

### ADMIN. LAW JUDGE GOODWIN: Exhibit 10 

### Complainant's5 for identificationis received 11 

### into evidence as Complainant's 5. 12 

### (Complainant's Exhibit C-5 was 13 

### received into evidence.) 14 

### BY MS. BARBER: 15 Q 

### Mr. Zawarus, please describe in 16 

### each way that Exhibit C-5 is in violation of 17 

### the hazardous materials regulations. 18 A 

### Maria Munoz, office manager 19 

### certified the document. During review of 20 

### training records, it was revealed that she 21 

### didn't have training in use of the 22 

### internationalstandardsfor whichthe document

NEAL R. GROSS (202) 234-4433 COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 wNw.nea!rgross.com39 1 was certified. The emergency response 2 telephone number 1isted on the shipping paper 3 was a number, a general number for National 4 Power Corporation, which was not answered 5 outside the hours of six a.m. to six p.m. The 6 lithium ion batteries contained ln the 7 shipment, as indicated by National Power 8 Corporation were untested prototype lithium 9 batteries and the packaging used to prepare 10 those, that the shipment was a packing Group 11 II standard, specification, fiberboard box. 12 Untested lithium batteries require a higher 13 standard for UN specification. 14 Q Now, I'd like to draw your 15 attention to Exhibit C-6. What is the airway 16 bill number of Exhibit C-6? 17 A Airway bill number is 18 798378979723. 19 Q And what date was this certified? 20 A Shipment was certifiedon February 21 10, 2010. 22 Q Who certified this?

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1 A 

### Maria Munoz, office manager. 2 Q 

### Does this airway bill, Exhibit C3 6, fairly and accurately depict the airway 4 

### bill that you inspected and copied on May 17, 5 

### 2010? 6 A 

### Yes. 7 

### MS. BARBER: At this time, Your 8 

### Honor, we wish to enter into evidence Exhibit 9 

### C-6. 10 MR. BLUMENTHAL: No objection. 11 

### ADMIN. LAW JUDGE GOODWIN: 12 Complainant's6 for identificationis received 13 into evidence as Complainant 6. 14 

### (Complainant's Exhibit C-6 was 15 received into evidence.) 16 BY MS. BARBER: 17 Q 

### Mr. Zawarus, please describe each 18 way that Exhibit C-6 is in violation of the 19 hazardous materials regulations. 20 A 

### Maria Munoz, office manager, who 21 certified the document, during review of 22 trainingrecords, it was revealedthat she did

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### 1 not have training in the use of international 2 standards for which the document was 3 

### certified. 4 

### The emergency response telephone 5 

### number listed on the shipping paper was 6 

### determined to be that of the general office 7 

### number of National Power Corporation. A 8 

### number that was not, or is not answered 9 

### outside business hours of six a.m. to six p.m. 10 

### The lithium ion batteries 11 

### contained in the shipment were determined to 12 

### be untested prototype lithium ion batteries. 13 

### The company couldnot provide an authorization 14 

### from Pipeline Hazardous Materials Safety 15 

### Administration for shipment of those 16 

### batteries. 17 

### And the packing group, or the 18 

### packagingused to prepare those shipments did 19 

### not meet the higher packaging level required 20 

### for untested lithium batteries. 21 Q 

### Now, I'd 

### like to draw your 22 attention to Exhibit C-7. What is the airway

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1 

### bill number of Exhibit C-7? 2 A 

### Airway bill number is 3 793316713356. 4 Q 

### And what date was this certified? 5 A 

### Shipment was certifiedon March 2, 6 

### 2010. 7 Q 

### And who certified it? 8 A 

### Maria Munoz, office manager. 9 Q 

### Does Exhibit C-7 fairly and 10 

### accurately depict the airway bill that you 11 

### inspected and copied on May 17, 2010? 12 A 

### Yes. 13 

### MS. BARBER: At this time, Your 14 

### Honor, we seek to introduce intoevidence, or 15 

### enter into evidence Exhibit C-7. 16 

### MR. BLUMENTHAL: No objection. 17 

### ADMIN. LAW JUDGE GOODWIN: 18 Complainant 7 for identification is received 19 into evidence as Complainant 7. 20 

### (Complainant's Exhibit C-7 was 21 

### received into evidence.) 22 BY MS. BARBER:

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1 Q Mr. Zawarus, please describe each 2 way that Exhibit C-7 was in violation of the 3 hazardous materials regulations. 4 A Maria Munoz, office manager, who 5 certifiedthe document, review of her training 6 records revealed she did not have training in 7 the use of international standards for which 8 the document was certified. The emergency 9 response telephone number listed on the 10 shipping paper was the general office number 11 of National Power Corporation. A number which 12 is not answered outside business hours of six 13 a.m. to six p.m. 14 The lithium ion batteries 15 contained in this shipment were untested 16 prototype lithium batteries and no 17 authorization was available from Pipeline 18 Hazardous Materials SafetyAdministrationfor 19 shipment of those batteries. The packingused 20 to prepare the shipments did not meet the 21 higher, heightened packing requirements for 22 untested prototype lithium batteries.

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1 Q 

### Now, I'd like to draw your 2 attention to Exhibit C-8. What is the airway 3 bill number of Exhibit C-8? 4 A 

### Airway bill is 798461814731. 5 Q 

### And what day was this airway bill 6 

### certified? 7 A 

### Shipment was certified on March 8 

### 10, 2010. 9 Q 

### And who certified? 10 A 

### Maria Munoz, office manager. 11 Q 

### Does Exhibit C-8 fairly and 12 

### accuratelydepict the airway bill number that 13 

### you copied and inspected on May 17, 2010? 14 A 

### Yes. 15 

### MS. BARBER: We ask to enter into 16 evidence Exhibit C-8. 17 

### MR. BLUMENTHAL: No objection. 18 

### ADMIN. LAW JUDGE GOODWIN: 19 Complainant's8 for identificationis received 20 into evidence as Complainant's 8. 21 

### (Complainant's Exhibit C-8 was 22 received into evidence.)

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1 BY MS. BARBER: 2 Q Please describe each way that 3 Exhibit C-8 is in violation of the hazardous 4 materials regulations. 5 A Maria Munoz, the office manager 6 who certified the shipment, through review of 7 her training records, it was revealedthat she 8 had no training in the use of international 9 standards for which the document was 10 certified. The emergency response telephone 11 number provided on the shipping paper was the 12 general office number for National Power 13 Corporation. A number that was not answered 14 outside of normal business hours, six a.m. to 15 six p.m. 16 The lithium ion batteries 17 contained in the shipment were untested 18 prototype lithium batteries for which no 19 authorization was available from Pipeline 20 Hazardous Materials Safety Administration. 21 And the packagingused to prepare the shipment 22 was not the heightenedpackage, it didn't meet

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### 46 1 the heightened packaging requirements for 2 untested lithium batteries. 3 Q 

### Now, I'd like to draw your 4 attention to Exhibit C-9. What is the airway 5 

### bill number of Exhibit C-9? 6 A 

### Airway bill number is 7 

### 798461814720. 8 Q 

### And what day was this shipment 9 

### certified? 10 A 

### Shipment was certified on March 11 

### 10, 2010. 12 Q 

### And who certified it? 13 A 

### Maria Munoz, office manager. 14 Q 

### Does Exhibit C-9 fairly and 15 

### accurately depict the airway bill that you 16 copied and inspected on May 17, 2010? 17 A 

### Yes. 18 

### MS. BARBER: The FAA 

### asks to enter 19 into evidence C-9. 20 MR. BLUMENTHAL: No objection. 21 

### ADMIN. LAW JUDGE GOODWIN: 22 Complainant's9 for identificationis received

NEAL

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### 1 into evidence as Complainant's 9. 2 (Complainant's Exhibit 

## c-9 was 3 received into evidence.) 4 BY MS. BARBER: 5 Q 

### Please describe each way that 6 Exhibit 9 is in violation of the hazardous 7 materials regulations. 8 A 

### Maria Munoz, office manager, who 9 certifiedthis shipment, throughreviewof her 10 training records, it was revealed she didn't 11 have international standards training for 12 which the document was certified. 13 The emergency response telephone 14 number listed on the shipping paper was that 15 of the general office number for National 16 

### Power Corporation. A number that was not 17 answered outside hours of six a.m. to 18 six p.m. 19 

### The lithium ion batteries 20 contained in the shipment were untested 21 prototype lithium batteries for which no 22 authorizationwas available from the Pipeline

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### 1 Hazardous Materials Safety Administration. 2 And the packagingused to prepare the shipment 3 

### did not meet the heightened packaging 4 

### requirements for untested lithium batteries. 5 Q 

### Now, I'm going to ask you about 6 

### Exhibit C-10. What is the airway bill number 7 

### of Exhibit C-10? 8 A 

### 793388207231 is the airway bill 9 

### number. 10 Q 

### And what date was this certified? 11 A 

### Shipment was certified on March 12 

### 25, 2010. 13 Q 

### And who certified the shipment? 14 A 

### Maria Munoz, office manager. 15 Q 

### Does the airway bill listed on 16 

### Exhibit C-10 fairly and accuratelydepict the 17 

### airway bill that you inspected and copied on 18 

### May 17, 2010? 19 A 

### Yes. 20 

### MS. BARBER: The Complainant asks 21 

### to enter into evidence C-10. 22 MR. BLUMENTHAL: No objection.

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### ADMIN. LAW JUDGE GOODWIN: 2 Complainant 10 for identificationis received 3 into evidence as Complainant's 10. 4 (Complainant's Exhibit C-10 was 5 received into evidence.) 

### 6 BY MS. BARBER: 7 Q Mr. Zawarus, please describe each 8 way that Exhibit C-10 is in violation of the 9 hazardous materials regulations. 10 A Maria Munoz, the office manager, 11 who certified the shipping paper, through 12 review of her training records was revealedto 13 have not completed instruction in the use of 14 international standards, which is how the 15 shipment was certified. The emergency 16 response telephone number listed on the 17 shipping paper was the general office number· 18 of National Power Corporation. A number that 19 was not answered outside hours of six a.m. to 20 six p.m. 21 The lithium ion batteries 22 contained in the shipment were untested

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### 50

1 

### prototype lithium batteries for which no 2 authorizationwas available from the Pipeline 3 Hazardous Materials Safety Administration. 4 And the packagingused to prepare the shipment 5 

### did not meet the heightened packing 6 

### requirements for untested lithium batteries. 7 Q 

### I'd like to draw your attention, 8 

### finally to Exhibit C-11. What is the airway 9 

### bill number on Exhibit C-11? 10 A 

### Airway bill number is 11 

### 793388207334. 12 Q 

### And what date was this airway bill 13 

### certified? 14 A 

### Shipment was certified on March 15 25, 2010. 16 Q 

### And who certified the shipment? 17 A 

### Maria Munoz, office manager. 18 Q 

### Does Exhibit C-11 fairly and 19 accurately depict the airway bill that you 20 copied and inspected on May 17, 2010? 21 A 

### Yes. 22 MS. BARBER: The Complainant asks

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### 51 1 to enter into evidence Exhibit C-11. 2 

### MR. BLUMENTHAL: No objection. 3 

### ADMIN. LAW JUDGE GOODWIN: 4 

### Complainant's 11 for identification is 5 received into evidence as Complainant's 11. 6 

### (Complainant's Exhibit C-11 was 7 received into evidence.) 8 BY MS. BARBER: 9 Q 

### Please describe for the Court each 10 way that Exhibit C-11 is in violation of the 11 hazardous materials regulations. 12 A 

### Maria Munoz, office manager, who 13 certified the shipment through review of her 14 training records did not have instruction in 15 the use of international standards for which 16 

### the shipment was certified. The emergency 17 response telephone number listed on the 18 shipping paper was the general office number 19 

### for National Power Corporation. A number 20 which was not answeredoutside of the hours of 21 six a.m. to six p.m. 22 

### The lithium ion batteries

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### 52 1 contained in the shipment were untested 2 

### prototype lithium batteries for which no 3 

### authorizationwas available from the Pipeline 4 

### Hazardous Materials Safety Administration. 5 

### The packaging used to prepare the shipments 6 

### did not meet the heightened packing 7 

### requirements for untested lithium batteries. 8 Q 

### What did you do after you finished 9 

### your inspectionand then discoveredthat there 10 

### were these 11 

### MR. BLUMENTHAL: Objection, 12 leading. 13 

### ADMIN. LAW JUDGE GOODWIN: Yes, 14 rephrase the question. 15 BY MS. BARBER: 16 Q 

### Tell me how you finished your 17 inspection? 18 A 

### During the inspection, I 

### had 19 questioned and was told that the batteries 20 that were offered under these shipments were 21 untestedprototypes that were being offeredto 22 prospectivecustomers for review. I asked for

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### 1 authorization, a DOT special permit or 2 competent authority from Pipeline Hazardous 3 Materials Safety Administration that would 4 allow shipment of these batteries in air 5 

### commerce. I was told none was available. 6 

### Upon return to the office, I 7 reviewedthe documentationthat was collected, 8 the training records that were collected and 9 I, the office issued a letter of investigation 10 to National Power Corporationrelative to the 11 violations that were determined during the 12 inspection. 13 Q 

### Did National Power Corporation 14 respond to your letter of investigation? 15 A 

### Yes. 16 Q 

### And what did they say? 17 A 

### In their letter of response, they 18 admitted to the emergency response telephone 19 number not being an appropriate number. 20 

### MR. 

### BLUMENTHAL: Objection, 21 there's no letter of response ln evidence. 22 ADMIN. LAW JUDGE GOODWIN: Yes,

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### 1 establish your foundation. 2 

### MS. BARBER: May I approach, Your 3 Honor? 4 

### ADMIN. LAW JUDGE GOODWIN: Sure. 5 

### BY MS. BARBER: 6 Q 

### I'm showing you what's previously 7 beenmarked as Exhibit C-12. Do you recognize 8 Exhibit C-12? 9 

### (Complainant's Exhibit C-12 was 10 marked for identification.) 11 A 

### Yes. 12 Q 

### And what is it? 13 A 

### C-12 is an e-mail containing 14 National Power Corporation's response to the 15 FAA's letter of investigation. 16 Q 

### And does this e-mail and attached 17 letter fairly and accurately depict the 18 correspondencethat you got from l'llr. Alpipirt? 19 A 

### Yes. 20 

### MS. BARBER: At this time, Your 21 Honor, the Complainant asks to enter into 22 evidence Exhibit C-12.

NEAL

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### 55

1 

### MR. BLUMENTHAL: What was the date 2 of that e-mail? 3 

### ADMIN. LAW JUDGE GOODWIN: It's 4 

### Exhibit 12, Mr. Blumenthal. It's the second 5 page. I've marked C-12 as having three pages. 6 

### This would be page two of three. It's got the 7 

### National Power Corporation letterhead in the 8 

### upper left-hand corner. 9 

### MR. BLUMENTHAL: Okay. No 10 

### objection. 11 

### ADMIN. LAW JUDGE GOODWIN: It's 12 

### the one I'm looking at, so 13 

### MR. BLUMENTHAL: Okay. I have it. 14 

### ADMIN. LAW JUDGE GOODWIN: If 15 

### we're all wrong, we're all wrong together. 16 

### MR. BLUMENTHAL: Okay. No 17 objection. 18 

### ADMIN. LAW JUDGE GOODWIN: All 

### 19 right. Complainant's 12 for identificationis 20 received into evidence as Complainant's 12. 21 

### (Complainant's Exhibit C-12 was 22 received into evidence.)

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### 1 BY MS. BARBER: 2 Q 

### What did C-12 tell you? 3 A 

### The letter response indicatedthat 4 the 24 hour telephone number that was in 5 question, that was providedby National Power 6 Corporationon the shippingpapers, they, they 7 agreedwith the findings and agreedto correct 8 them immediately and indicated that they had 9 

### done so. National Power stated that they 10 would provide the 24 hour number of Chemtrec 11 as their emergency response telephone number 12 in the future. 13 

### ADMIN. LAW JUDGE GOODWIN: Would 14 you spell Chemtrec, please? 15 

### THE WITNESS: Sure. Chemtrec is 16 spelled C-h-e-m-t-r-e-c. 17 

### ADMIN. LAW JUDGE GOODWIN: Thank 18 you. 19 

### THE WITNESS: In their letter of 20 response, National PowerCorporation indicated 21 that they offered the shipments under 22 reasonable and good faith basis, believing

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### 1 that they were in conformance with the 2 applicable regulations. But without special, 3 without knowledge the special approval by 4 

### PHMSA was needed. The letter response 5 indicated that, following the receipt of the 6 

### FAA's letter of investigation, 7 

### National Power immediately 8 

### instructed its employees to discontinue air 9 

### freight shipments of untested prototype 10 batteries pending a receipt of special 11 approval from PHMSA. And that employees were 12 provided functions, specific training and 13 

### compliance with 49CFR. National Power 14 Corporation provided business information, 15 they provided copies of hazardous materials 16 

### training records along with a course outline 17 

### for that training. And an explanation 18 

### specific corrective actions implemented to 19 prove event similar. Albeit, unattended 20 violations of the regulations. 21 Lastly, National Power indicated 22 that they would dedicate a page on their

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### 1 website to the hazardousmaterialsregulations 2 to alert their customers in general 3 marketplaceof the regulations and methods for 4 proper and compliant shipment. 5 BY MS. BARBER: 6 Q 

### What was the date of that letter, 7 again? Sorry. 8 A 

### The date of the response was June 9 10, 2010. 10 Q 

### Did you verify that the corrective 11 actions were taken as statedby National Power 12 Corporation? 13 A 

### I followed-up with National Power 14 Corporation relative to the training that was 15 provided because it still did not appear to 16 have instruction in international standards. 17 Q 

### Was corrective action eventually 18 taken by National Power? 19 A 

### Yes. Yes. 20 Q And did you take these corrective 21 actions into consideration when determining 22 the amount of sanction?

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### 1 A 

### Corrective action is taken into 2 account, yes. 3 Q 

### Did National Power happen t.o put 4 anything on their website as per the letter 5 stated? 6 A 

### I was unable to verify that. 7 Q 

### In regards to the sanction, how, 8 without going into the specifics of how each 9 individual sanction is determined, what are 10 the general factors that you consider when 11 looking at the appropriateamount of sanction? 12 A 

### Risk of the hazardous materials, 13 the nature of the shipment, undeclared, you 14 know, versus declared. And I'm not sure what 15 16 Q 

### Specifically, in this case, you 17 just responded that you do take into consider 18 

### the risk of the material. In regards to 19 untested prototype lithium batteries, what 20 type of risk is there in shipping those? 21 

### MR. BLUMENTHAL: Objection as to, 22 if he's an expert in these areas. There's

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1 

### been no foundation laid that he would know. 2 Or that he was trained or educated in these 3 areas that would show how they're dangerous. 4 

### MS. BARBER: Would you like me to 5 

### respond? 6 

### ADMIN. LAW JUDGE GOODWIN: Let's 7 

### establish some foundation. 8 

### MS. BARBER: Okay. 9 

### ADMIN. LAW JUDGE GOODWIN: So, 10 

### I'll sustain the objection at this time. 11 

### BY MS. BARBER: 12 Q 

### In your position as the manager of 13 

### the hazardous materials division for the FAA, 14 

### what type of training and knowledge have you 15 

### received in regards, specifically to lithium 16 

### ion batteries? 17 A 

### We receive hazardous materials 18 

### training, we receive it recurrently and we 19 

### receive instruction in lithium battery 20 shipment. 21 Q 

### When was the most recent recurrent 22 that you've taken?

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### 61

1 A 

### Six weeks ago. 2 Q 

### And how often do you take that? 3 A 

### Recurrentlyevery, I mean, we take 4 

### training annually. Recurrently every three 5 years. 6 Q 

### And what do these classes entail? 7 A 

### Instruction in the hazardous 8 materials regulations. 9 Q 

### And do they speak specifically to 10 lithiumbatteries and the risk determinations 11 of those batteries? 12 A 

### This most recent training did have 13 instruction in hazardous, or lithium battery 14 shipping, yes. 15 Q 

### Is it part of your position at the 16 FAA to determine the amount of sanction 17 appropriateper each hazardous materials that 18 lS 

### shipped in each specific case? 19 A 

### Yes, we make recommendations. 20 Q 

### Okay. And your trained on that 21 currently, correct? 22 A Correct.

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### s of this conversation is that more of a 9 participant witness type of situation. The 10 fact that he was actually the one that 11 evaluatedand made the sanction. So, it would 12 be his mental determination of how that came 13 about, which they were inquiring about to 14 begin with. 15 ADMIN. LAW JUDGE GOODWIN: Mr. 16 Blumenthal? 17 MR. BLUMENTHAL: Your Honor, I 18 would, I would object to the Government 19 introducingAgent Zawarus as, or tendering

### him 20 as an expert. But I, because he did not 21 describe the training, there's no specific 22 degree or who provided the training. I'll

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### 1 accept that as his testimony, but as far as 2 tendering him as an expert witness, I would 3 

### object to that. 4 

### ADMIN. LAW JUDGE GOODWIN: I'm 5 

### going to sustain it as to him being accepted 6 

### as an expert. I don't think there's 7 

### sufficient commendation. I think that Agency 8 

### has established sufficient foundation to all 9 

### the testimony on the subject, but not 10 

### testimony as an expert. 11 

### MS. BARBER: Okay. 12 

### BY MS. BARBER: 13 Q 

### So, ln 

### your position, as a 

### 14 hazardousmaterialsmanagerand the personwho 15 investigatedthis case, how did you take into 16 

### consideration that they were lithium 17 batteries? 18 A 

### Lithium battery is a Class 9 19 hazardous materials. We assign it a minimum 20 

### risk level, according to the hazardous 21 

### materials. Class 9 is a miscellaneous 22 hazardous material with a minimum risk. That

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1 

### told in their training that untested 2 prototypeshave a higher risk, then that's the 3 instruction that he uses in determining the 4 

### sanctions. Whetherthe underliningscience is 5 

### inaccurate, I think it's beyond the scope of 6 

### what I can address. But it certainly goes to 7 

### weight as to what I'm going to consider in 8 

### determiningwhether or not the sanction asked 9 

### for in this case was appropriate. 10 

### You know, and if your position is 11 

### that the underlining testing doesn't support 12 

### what the Agencyhas done in classifyingthese, 13 

### then that's something I think is well within 14 

### the range of what the Court can do in 15 

### determining whether the sanction is 16 

### appropriate. At this point, well, anyway. 17 

### MR. BLUMENTHAL: Okay. I 

### 18 understand, Your Honor. 19 

### ADMIN. LAW JUDGE GOODWIN: It's 20 still Monday morning. 21 

### BY MS. BARBER: 22 Q 

### Ultimately, what was the civil

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### 1 penaltythat was sought againstNational Power 2 Corporation? 3 A 

### The recommendation that we're 4 

### talking about right now? 5 Q 

### Yes. 6 A 

### $66,000. 7 Q 

### And, excuse me -- 8 

### ADMIN. LAW JUDGE GOODWIN: Do you 9 want to take a break and get a drink of water? 10 

### MS. BARBER: Sure, that would be 11 great. 12 

### ADMIN. LAW JUDGE GOODWIN: Okay. 13 Why don't we do this, it's

-- 14 

### MS. BARBER: People have been 15 talking for a while. 16 

### ADMIN. LAW JUDGE GOODWIN: It's 17 about 10:15. Let's take a ten minute break. 18 I'm going to instruct the witness, you're not 19 to discuss your testimony with anybody during 20 this brief recess of ten minutes. 21 (Off the record.) 22 ADMIN. LAW JUDGE GOODWIN: I

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1 

### remind the witness you're still under oath. 2 THE WITNESS: Yes. 3 

### ADMIN. LAW JUDGE GOODWIN: Ms. 4 Barber? 5 

### BY MS. BARBER: 6 Q 

### Mr. Zawarus, how does the F.AA 7 

### and/or yourself determine the sanction in a 8 

### hazardous materials violation's case? 9 A 

### We follow our enforcement order, 10 

### 2150.3, currently B, 

### FAA compliance and 11 

### enforcement. 12 Q 

### And is that document a public 13 

### document? 14 A 

### Yes. 15 Q 

### And what does that guidance tell 16 

### you? 17 A 

### It provides the factors that are 18 

### taken into account to determine 19 recommendations for sanction. 20 Q 

### And in this case the sanctioned 21 

### amount was $66,000. Is that the maximum 22 amount that couldhave been allegedor seeked,

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### 1 sought from National Power Corporation? 2 A 

### No. It is not. 3 Q 

### And what would, if you know, what 4 would be the maximum? 5 A 

### Under current compliance and 6 enforcementguidelines, a penaltyof hazardous 7 materials regulations can be assessed up to 8 $32,500 per violation. 9 Q 

### And so, in this case, where there 10 four violations or six? 11 A 

### Four violations per shipment, I 12 believe. 13 Q 

### So, essentially, it could have 14 been much higher? 15 A 

### Correct. 16 Q 

### What considerations did you 17 evaluate when determining the amount of the 18 civil penalty assessed against the company? 19 A 

### Nature and circumstances of the 20 shipment, the extent in gravityrelatedto the 21 shipment. The, any mitigating or aggravating 22 circumstances there, the company's ability to

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1 

### pay is taken into account. 2 Q 

### Was an inability to pay ever 3 brought up to you in or anyone in the FAA to 4 

### your knowledge ln regards to this case? 5 A 

### No. 6 Q 

### And is $66,000, 

### is that an 7 

### appropriate civil penalty for this type of 8 

### case? 9 A 

### Yes. 10 Q 

### Do you take into considerationthe 11 

### nature of a business when lookingat sanction? 12 A 

### It is factored in, yes. 13 Q 

### And what is the nature of National 14 

### Power Corporation's business? 15 A 

### They're a battery manufacturer. 16 Q 

### And do they regularly ship 17 batteries in their course of business? 18 A 

### Yes. 19 Q 

### What does that tell the FAA when 20 looking at a sanction, why would you look at 21 

### the nature of the business entity doing the 22 shipping?

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### 1 A 

### Generally, a companywho is in the 2 businessof manufacturinga hazardousmaterial 3 has a, is expected to have a higher degree of 4 

### responsibility relative to that shipment, or 5 

### to those materials that they ship. 6 

### MS. BARBER: At this time, Your 7 

### Honor, the Complainant has no further 8 questions, but I reserve the right to 9 redirect. 10 

### ADMIN. LAW JUDGE GOODWIN: Sure. 11 Mr. Blumenthal? 12 

### MR. BLUMENTHAL: Thank you, Judge. 13 

### CROSS EXAMINATION 14 

### BY MR. BLUMENTHAL: 15 Q 

### Okay. Mr. Zawarus, I 'd 1

### ike to go 16 

### back to Exhibit, your Exhibit C-4. Do you 17 have that in front of you? 18 A 

### Yes. 19 Q 

### Okay. And who's the consignee in 20 that exhibit? 21 A 

### Agilent Technologies. 22 Q 

### Yes, and can you read us the

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### 1 address on there? 2 A 

### 1400 Fountain Grove Parkway, Doc 3 

### 4LS, Santa Rosa, California 95403. 4 Q 

### Okay. And in the box called 5 

### transport details, do you see where it says, 6 

### airport of destination? 7 A 

### Yes. 8 Q 

### Okay. And what is the airport of 9 

### destination? 10 A 

### Santa Rosa, California. 11 Q 

### Okay. And if you can please take 12 

### a look at your Exhibit C-5. 13 A 

### Okay. 14 Q 

### Okay. And the consignee is also 15 

### Agilent Technologies? 16 A 

### Correct. 17 Q 

### And it's also in Santa Rosa? 18 A 

### Yes. 19 Q 

### Okay and the airport at 20 destination is also Santa Rosa, California? 21 A 

### Yes. 22 Q 

### Okay. Would it be fair to say

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1 

### that SantaRosa, Californiais domesticrather 2 

### than international? 3 A 

### Correct. 4 Q 

### So, there would be no violation of 5 

### any international standards concerning these 6 two labels? 7 A 

### No, that would be incorrect. 8 Q 

### Why is that? 9 A 

### A hazardous materials shipper who 10 

### utilizes the international standards in 11 

### offering hazardous materials for 12 transportation is required to be trained in 13 those international standards. If you refer 14 to the packing instructioncolumn of this, of 15 both of those shipping documents, the packing 16 

### instruction 965 was provided. 965 packing 17 instruction is specific to the IKO IATA 18 regulation. 19 Q 

### And that would mean that even if 20 it was going a domestic shipment, it would 21 still have to follow international standards? 22 A 

### Correct.

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1 Q 

### Even though it wasn't being 2 shipped internationally? 3 A 

### Yes. 4 Q 

### Okay. Now, those standards would 5 only have to be used if it was an untested 6 prototype, is that correct? Is that what your 7 testimony was? 8 A 

### Could you clarify? 9 Q 

### When would these, when would the 10 international standards come into play, even 11 for a domestic shipment? 12 A 

### Any shipment that was prepared 13 using the international standards. 14 Q 

### Are the international standards 15 stricter, the same or less strict than 16 domestic? 17 A 

### They are, the international 18 requirement, there are differenCEs between 19 them. But for the most part they are similar. 20 Q 

### Okay. So there's really no 21 differencebetween domestic and international 22 requirements for these types of shipments?

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1 A 

### No, I did not say that. There are 2 differences between them. 3 Q 

### Okay. Are they stricter, the same 4 

### or less? 5 

### MS. BARBER: Objection, Your 6 

### Honor. 7 

### ADMIN. LAW JUDGE GOODWIN: 

### s Overruled. You can answer the question. 9 

### THE WITNESS: With your, I guess I 10 

### need you to clarify your question in general 11 

### or with regard to these shipments? 12 

### BY MR. BLUMENTHAL: 13 Q 

### Well, in general. 14 A 

### I, there, there are differences 15 

### between the regulations. In some instance 16 

### they are more restrictive, but for the most 17 

### part they are the same as the domestic. 18 Q 

### So, for the sake of argument, even 19 

### if these batteries were shipped by a person 20 

### who didn't have the specific training in 21 

### international shipments, or didn't use 22 precisely the type of packaging required for

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### 1 international shipments, there's really no 2 difference, isn't that correct? 3 A In this instance, they were used, 4 

### they were prepared using the packing 5 instructionin the IKO technical instructions. 6 There are no packing instructions in the 7 domestic 49CFR. There, let me rephrase that. s There arepacking, packagingrequirements,but 9 

### the packing instructions as indicated in the 10 IKO do not exist in 49CFR. 11 Q 

### Okay. In packing instruction in 12 965, 

### is that stricter, the same or less 13 restrictive than the way you've testified it 14 should have gone out? 15 A 

### It should be the same. 16 Q 

### Okay. You've also testified that 17 the number on the, Exhibits C-1 through C-11, 18 at the bottom, the emergencytelephonenumber, 19 was that of National Power, is that how you 20 testified? 21 A 

### Correct, that's what I was told. 22 Q 

### Okay. Now, did you also look at

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### 1 the shipping labels for these particular, the 2 shipmentsthat pertainedto those Exhibits C-1 3 through C-11? 4 A 

### The, I'm sorry, can you say that 5 again? 6 Q 

### Did you actually look at the 7 shipping labels that were on the boxes? 8 A 

### I was provided examples of the 9 hazard, or the lithium battery shipping 10 handling label, yes. 11 Q 

### Okay. And was there a phone 12 number on those labels? 13 A 

### Yes, there was. 14 Q 

### Okay and what phone number was 15 that? 16 A 

### That was Chemtrec. 17 

### ADMIN. LAW JUDGE GOODWIN: Could 18 you spell that, please? 19 

### THE WITNESS: C-h 20 

### ADMIN. LAW JUDGE GOODWIN: You 21 already did. C-h-e-rn 22 THE WITNESS: E-m-t-r-e-e.

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1 

### ADMIN. LAW JUDGE GOODWIN: Okay. 2 

### BY MR. BLUMENTHAL: 3 Q 

### Now, except for Exhibits C-4 and 4 C-5, which went to California, were the 5 consignees and the airport of destinationthe 6 same on the rest of those exhibits? 7 A 

### Yes, they were. 8 Q 

### Okay. That was Creation 9 Technologies in Burnaby, British Columbia, 10 Canada? 11 A 

### Correct. 12 Q 

### And all the ship, all these 13 shipments to Creation Technologies were the 14 same, they were consistent in the manner in 15 which they were handled? 16 A 

### How do you mean? 17 Q 

### Was the same batteries being 18 

### shipped? The same class? The same packing 19 group? The same quantityand type of packing, 20 and the same packing instruction? 21 A 

### They have different quantities. 22 Q 

### Okay, the quantit.ies, the only

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### 1 difference was the quantity? 2 A I 

### was not provided specific 3 information relative to the battery, nor was 4 

### a I 

### provided UN test reports upon request, so 5 I 

### couldn't say. 6 Q 

### But as far as the shipping 7 documents go, the airway bills that are 8 Exhibits C-1 throughC-11, except for the ones 9 that went to California, they're consistent in 10 

### how they read for the type of shipment it was, 11 for the lithium ion batteries? 12 A 

### With the exception of quantity, 13 yes. 14 Q 

### They're all UN3480? 15 A 

### Yes. 16 Q 

### Okay. And they were all signed by 17 Maria Munoz? 18 A 

### Yes. 19 Q 

### Now, you also testified that the, 20 that the batteries that were in these 21 shipments in C-1 through C-11 were untested, 22 correct?

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### That's the information that was 2 providedto me at the time of inspection, yes. 3 Q 

### So, how did you know the batteries 4 

### were untested? 5 A 

### At the, when the company provided 6 

### me examples of the packaging used to prepare 7 

### shipments, they also provided me lithium 8 battery handling labels and indicated that 9 

### theyuse both to ship their lithiumbatteries. 10 I asked why they were shipping by two 11 

### different methods, one accepted using the 12 

### lithium handling label and one fully 13 

### regulated. And I was told that the fully 14 regulated shipments were untested batteries 15 

### being sent to customers, potential customers. 16 Q 

### And who told you this? 17 

### A Mr. Alpipirt. 18 Q 

### Did Mr. Alpipirt later told you 19 

### that these batteries were untested but there 20 were similar batteries that were tested? 21 A 

### I was, I believe in the response 22 that I was told that the cells for the

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1 

### batteries were tested. 2 Q 

### Isn't it true that in the 3 regulation, the regulations state that if a 4 

### battery pack does not differ more than 20 5 percent in weight, that is, it doesn't require 6 any more testing? 7 A 

### I believe there are additional 8 

### testing requirements, or exceptions, but that 9 is one of them, correct. 10 Q 

### Okay. And in fact, this, the 11 

### batteries that were shipped were just a 12 different configurationof batteries that had 13 already, battery packs that had already been 14 tested and passed? 15 A 

### To my knowledge, I was told that 16 the batteries were untested and in the 17 response I was provided no information that 18 indicated that they were tested. 19 Q 

### And under paragraph three of your 20 Exhibit C-12, where it says that the remainder 21 of these shipments are less than 100 watt hour 22 

### battery packs, classified as small and

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### 1 designedto meet the requirementsof each test 2 in UN 

### Manual of Tests and Criteria using only 3 

### lithium ion cells a type proven to meet the 4 

### requirements of the UN 

### Manual of Tests and 5 

### Criteria were offered for shipment under a 6 

### reasonable and good faith basis, believing 7 

### they were in conformance with all applicable 8 

### regulations. Do you see that? 9 A I 

### do. 10 Q 

### Okay. But with, and I '11 

### continue 11 

### for the sake of completeness. But without the 12 

### knowledge of that special approval buy PHMSA, 13 

### it's P-H-M-S-A for the record, was needed? 14 A 

### Sir, I, 

### if that's what it says. 15 Q 

### Okay. Now would special approval 16 

### had been needed had these battery packs been 17 

### tested? 18 A 

### No. 19 Q 

### Okay. So, if these battery packs 20 were, in fact, not materially different from 21 

### batterypacks that had alreadybeen tested, no 22 PHMSA letter would have been needed?

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### 1 A 

### If they had met the requirements 2 in the UN Manual of Tests and Criteria, 3 

### correct. 4 Q 

### But you didn't do any further 5 

### investigation regarding the testing of the 6 

### battery pack that was -- 7 A I 

### was provided no further 8 information to indicate that those batteries 9 had met any requirements. 10 Q 

### Okay. You also testifiedthat you 11 were unable to verify if a notice was put on 12 the website as paragraph six says in C-12? 13 A 

### Correct. 14 Q 

### Why were you unable? Did you try? 15 A 

### I did look periodically, and I 16 never saw anything. 17 Q 

### Okay. And when did you look? 18 

### A I don't recall. 19 Q 

### So, ln fact, you don't know if 

### it 20 

### was, if 

### it was corrected? 21 A I don't, no. 22 Q 

### Now, your testimony regarding the

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### 1 amount of penalty in this case, the $66,000. 2 That came from you? 3 A 

### Yes, it was my recommendation. 4 Q 

### Okay. FAA counsel had nothing to 5 

### do with determining that amount? 6 A 

### Well, initially, when the case 7 

### went up, it included other shipping 8 documentationbut, so it was a higherpenalty. 9 Q 

### Okay. But the recommendation 10 comes from you, not the FAA counsel? 11 A 

### Correct. 12 Q 

### Okay. You also said that there's 13 a enforcement order 2150.3? 14 

### A Yes. 15 Q 

### And that's a public document? 16 

### A Yes. 17 Q 

### And there are factors in there for 18 

### you to consider? 19 A 

### Correct. 20 Q 

### Okay. What are the, what are 21 

### those factors is, there are factors in 22 mitigation?

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1 A Yes. 2 Q Okay. Such as corrective action? 3 A Correct. 4 Q What other factors in mitigation 5 are there? 6 A Factors, what do you mean by 7 mitigation? 8 Q That mitigation, in other words, 9 making the, that wouldmake the penalty lower. 10 A If a company had gone above, above 11 the requirement of the regulation to ensure 12 future safety. Takingimmediateand corrective 13 action upon notification. Those types of 14 things. 15 Q Okay. And are one those factors 16 of mitigation, the intent of the company? 17 A Not necessarily, no. And a person 18 actingwith knowledge relative to the material 19 that their shipping, there's an exceptionthat: 20 they'll prepare it and offer it properly. 21 Q In the course of your 22 investigation, did youmake a determinationas

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1 to whether the alleged violations were 2 deliberate? 3 A No. It wasn't. 4 Q Okay. Did you, when you were 5 coming up with the amount of the penalty, are 6 there, and according to enforcement order 7 2150.3, are there factors in aggregationtha·t 8 you consider? 9 A Yes. 10 Q Okay. And what would be those 11 factors in aggregation? 12 A Release of the hazardous material, 13 shut down of transport artery, injury, death, 14 things like that. 15 Q Were any of those factors here? 16 A No, no. 17 Q 

### So, there were no factors ln 18 aggregation? 19 A No. 20 Q Does enforcement oJ::·der 2150.3 give 21 you specific monetary amounts? 22 A Provides ranges.

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1 Q 

### And what is the range per single 2 violation? 3 A 

### I believe the minimum is 250 

### and 4 

### the maximum is $32,500, 

### statutorily. 5 Q 

### So, you have a lot of digression, 6 

### isn't that true? 7 A 

### Correct. 8 Q 

### Did you make a determination on a 9 

### per violation amount and multiply that by the 10 

### number of alleged violations or was there 11 

### another method you used? 12 

### MS. BARBER: Objection, Your 13 

### Honor, his specific method of his 14 

### determinationis protectedby attorney client 15 

### privilege and privilege of FAA. 16 

### ADMIN. LAW JUDGE GOODWIN: I think 17 

### counsel has a right to enquire in how he got 18 

### to a specific number. There are areas, 19 

### certainly, that it's, that I don't think this 20 is it, so I'll overrule the objection. 21 

### BY MR. BLUMENTHAL: 22 Q 

### Okay. Should I repeat the

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1 

### question? 2 A 

### Please. 3 Q 

### Okay. Are there, regarding 4 enforcement order 2150.3, are there specific 5 

### monetary amounts per violation? 6 A I 

### factor, I 

### take into account each 7 

### of the violations, yes. 8 Q 

### Okay. Now, when you came up with 9 a $66,000 number, was there a number you came 10 

### up with per violation and multiple it by the 11 

### number of alleged violations, or was there 12 

### some other method? 13 A 

### Each transaction is provided a 14 

### sanction recommendation. 15 Q 

### Okay. Now, what was your 16 

### recommendation per sanction? 17 A I 

### don't recall. 18 Q 

### Okay. So you're telling us that 19 

### we really can't get to the essence of the 20 

### reasonableness of that sanction? 21 22

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### ADMIN. LAW JUDGE GOODWIN: Well, 4 his testimony was that his original 5 recommendation was a higher number than 6 ultimately showed up in the complaint. 

### 7 BY MR. BLUMENTHAL: 8 Q How did you, when you had 9 originallywanted to assess a higher penalty, 10 was that on a per violation and multipliedby 11 the number of alleged violations or was it 12 just a number you came up with? 13 A My initial sanctionrecommendation 14 was based on additional instances. 15 Q But you did not, so, would it be 16 fair to say that the $66,000 number is totally 17 arbitrary? 18 A 

### No. 19 Q What basis did you use to come up 20 with the $66,000? 21 A The compliance and enforcement's 22 guidance that we have in our compliance and

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### enforcement order. 2 Q 

### Did that give you a specific 3 

### amount per v i 

### o l 

### a t i 

### o n ? 4 5 A 

### No, it does not. 6 Q 

### So, it was arbitrary as to the 7 number you came up with, isn't that correct? 8 A 

### I have latitude, yes. 9 Q 

### Latitude meaning it's arbitrary? 10 A 

### If you want to call it arbitrary, 11 

### yes. 12 Q 

### What would you call it? Latitude? 13 A 

### Sure. 14 Q 

### Isn't that just another word for 15 

### arbitrary? 16 

### MS. BARBER: Objection, Your 17 Honor. 18 

### ADMIN. LAW JUDGE GOODWIN: Yes. 19 

### Sustained. The Court gets the point. 20 

### BY MR. BLUMENTHAL: 21 Q 

### By the way, Mr. Zawarus, what's 22 the purpose of the sanction or the penalty?

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1 

### What purpose does it serve? 2 A 

### To promote future compliance. 3 Q 

### Anything else? 4 A 

### No, sir. 5 Q 

### Would it serve as a deterrent? 6 A 

### Sure. 7 Q 

### So, you just told us that you had 8 no reason to believe that there was any 9 

### deliberateviolationof the regulations here, 10 

### so how would $66,000 

### ensure future compliance 11 

### or deter National Power from violating the 12 

### regulations in the future? 13 

### MS. BARBER: Objection, Your 14 

### Honor, speculation. It's calling for him to 15 

### speculate on how it may or may not 16 17 

### ADMIN. LAW JUDGE GOODWIN: I'll 18 

### allow limited inquiry to the extent that it's 19 

### relevant to the case. 20 

### MR. BLUMENTHAL: So, it's 21 

### overruled? 22 

### ADMIN. LAW JUDGE GOODWIN: I'll

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### 1 overrule it but allow limited inquiry. 2 BY MR. BLUMENTHAL: 3 Q 

### You can answer me. 4 A 

### Based on our compliance and 5 enforcement guidelines, the nature of the 6 

### shipment, the civil penalty was appropriate. 7 Q 

### Okay. Let's say you're, let's say 8 

### for the sake of argument, $30,000. 

### Would that 9 

### be enough to ensure compliance in this case? 10 

### MS. BARBER: Objection, Your 11 Honor, calls for speculation. 12 

### ADMIN. LAW JUDGE GOODWIN: 13 Overruled. 14 

### THE WITNESS: In this case, the 15 following the compliance and enforcement 16 order, sanction came out to $66,000. 17 

### BY MR. BLUMENTHAL: 18 Q 

### Okay. So you don't know if 19 $30,000 

### would have worked? Even $1500 

### would 20 have served to ensure future compliance? 21 A 

### I make a recommendation based on 22 the facts and circumstances of the case, ln

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1 accordancewith our complianceand enforcement 2 program. 3 MR. BLUMENTHAL: May I have just a 4 second, Your Honor? 5 ADMIN. LAW JUDGE GOODWIN: I'm 6 sorry, sure. 7 MR. BLUMENTHAL: No further 

### s questions, Your Honor. 9 ADMIN. LAW JUDGE GOODWIN: 10 Redirect? 11 REDIRECT EXAMINATION 12 BY MS. BARBER: 13 Q When you look at a hazardous 14 materials case, does whether or not a company 15 or person sends anything deliberatelycome in 16 or matter to the hazardous materials 17 regulations? 18 A If it's determined that somebody 19 deliberately sent something relative to 20 violationof hazardous materials regulations, 21 that would be considereda criminal action in 22 most cases, and that's outside of the scope of

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1 

### our compliance and enforcement program. 2 Q 

### What is the anticipation of the 3 FAA with the hazardous materials regulations 4 

### in regards to a violation history? 5 A 

### Can you clarify that? 6 Q 

### Yes. Does it matter to a, in 7 

### regards to the sanction, whether or not a 8 

### person or company has a violation free 9 

### history? 10 A 

### We do review violation history 11 

### with regard to companies that are fined in 12 

### violations, yes. 13 Q 

### Is it a, considered a corrective 14 

### action or mitigating factor if they have a 15 

### violation f 

### r e e h i 

### s t 

### o r y ? 16 17 A 

### No. 18 Q 

### So, what then is the anticipation 19 for the FAA in regards to all companies that 20 

### deal in hazardous materials? 21 A 

### That they have no violation 22 history.

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1 Q Mr. Blumenthal asked you on cross 2 examination in regards ·to how you came about 3 the $66,000. And you had mentioned before 4 that it was more. Why did it, why was it so 5 much more but it ended up only being $66,000? 6 A Due to the age of some of the 7 shipments. They had reached their stale 8 point. 9 Q And how many more were there? 10 A I don't know, specifically, but it 11 was in excess of 20 I believe. 12 Q And so, when you determined the 13 sanction, do you go through each specific CFR 14 orhazardousmaterials regulationspecifically 15 that's violated, or do you do it in 16 categories? 17 A In categories. 1.8 Q What type of process do you go 19 through? 20 A I take into account, you know, 21 whether it's a shipping paper violation, a 22 marking, a labeling, training, emergency

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1 

### response information. Things like that. 2 Q 

### And is your sanction analysis 3 reviewed by people? 4 A 

### Yes. 5 Q 

### Who is it reviewed by? 6 A 

### My immediate supervisor. 7 Q 

### And after your supervisor reviews 8 l t ' 

### then what happens? 9 10 A 

### It's reviewed by the region. 11 Q 

### Okay and then after the region 12 

### reviews your sanction analysis, then who 13 

### reviews it? 14 A 

### Legal counsel. 15 Q 

### So, after several layers of review 16 

### and analysis, that is when the sanction is 17 

### finally put into place? 18 A 

### Correct. 19 

### MS. BARBER: Okay. No further 20 questions, Your Honor. 21 

### ADMIN. LAW JUDGE GOODWIN: Any 22 questions based on the redirect?

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1 

### MR. BLUMENTHAL: Yes, Your Honor. 2 

### RECROSS EXAMINATION 3 

### BY MR. BLUMENTHAL: 4 Q 

### When you submit your 5 recommendation to your immediate supervisor, 6 

### did he ask you to explain how you came up with 7 

### that number? 8 A 

### No. 9 Q 

### So, he just looked at the number 10 

### and said, it's okay? 11 A 

### My case laid out the facts of the 12 

### investigation. 13 Q 

### But he didn't ask you specifically 14 

### how you came up with $66,000? 15 A 

### No. 16 Q 

### Did any of the higher ups ask you 17 

### how you came up with that number? 18 A 

### No. 19 Q 

### Okay. Legal counsel didn't ask 20 you for that number, or how you came up with 21 

### that number? 22 A 

### The facts of the case in concert

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1 

### ADMIN. LAW JUDGE GOODWIN: Ms. 2 Barber, anything further? 3 

### MS. BARBER: No, Your Honor. We 4 have nothing further at this time. 5 

### ADMIN. LAW JUDGE GOODWIN: Mr. 6 

### Blumenthal, you can take your case now or we 7 

### can take a break for lunch and we can come 8 

### back and put your case on then. Your call. 9 

### Let's go off the record for a second. 10 

### (Off the record.) 11 

### ADMIN. LAW JUDGE GOODWIN: Ms. 12 

### Barber, while I'm thinking about, if you and 13 

### I have anymore cases, I 'm not going to be ------...J.4 

### scheduling anything until January. So, if 15 

### you've got some dates, January, February that 16 

### you, you know, talk to opposing counsel, get 17 

### them to me and I'll put you on the docket. 18 

### MS. BARBER: Okay. 19 

### ADMIN. LAW JUDGE GOODWIN: Mr. 20 Blumenthal? 21 

### MR. BLUMENTHAL: Are we back on 22 the record now?

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### 99

1 

### ADMIN. LAW JUDGE GOODWIN: Sure, 2 yes. Thanks though. We always have to check. 3 

### MR. BLUMENTHAL: Okay. Your 4 

### Honor, I call Thomas Vrablik 5 

### ADMIN. LAW JUDGE GOODWIN: Okay. 6 

### Sir, you want to approach? Stand, stand here. 7 

### Raise your right hand. Please be seated. 8 

### State your full name for the record and spell 9 your first and last name. 10 

### THE WITNESS: Full name is Thomas 11 

### M. Vrablik. T-h-o-m-a-s, last name, V-r-a-b12 

### 1-i-k. 13 

### ADMIN. LAW JUDGE GOODWIN: Okay. 14 

### There's an extra set of exhibits up here, Mr. 15 Blumenthal if you need them. 16 

### MR. BLUMENTHAL: Oh, okay. Thank 17 you. 18 Whereupon, 19 THOMAS VRABLIK 20 was called as a witness and, after being first 21 duly sworn, was examined and testified, as 22 follows:

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### 100

1 

### DIRECT EXAMINATION 2 

### BY MR. BLUMENTHAL: 3 Q 

### Mr. Vrablik, what is your position 4 with National Power? 5 A 

### I'm executive vice president. 6 Q 

### Okay. And how long have you been 7 associated with National Power? 8 A 

### Approximately 25 years. 9 Q 

### And what is your function at 10 National Power as vice president? 11 A 

### My primary function is in the role 12 of sales. 13 Q 

### Okay. And are you familiar with 14 theproductsthatNational Powermanufactures? 15 A 

### Very. 16 Q 

### Okay. And are you involved in 17 their design? 18 A 

### Yes. 19 Q 

### Okay and your work, does National 20 Power employ engineers to design the various 21 batteries that you manufacture? 22 A 

### Yes, we do.

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### 101 1 Q 

### Okay. Now, you don't, you design 2 battery packs, correct? 3 A 

### Yes. 4 Q 

### Okay and in what type of equipment 5 

### are these battery packs used? 6 A 

### All types of equipment. There's 7 medical equipment, military equipment, land 8 surveying, we would just fall under an 9 

### industrial type scenario. Geophysical 10 equipment, that, highendexpensiveequipment. 11 Q 

### Okay. Now, what goes into the 12 manufacture of a battery pack? 13 A 

### The electronic components, basic 14 building blocks are rechargeable lithium ion 15 cells, which are procured from our suppliers. 16 And along with some active and passive safety 17 components and it all gets wrapped up with 18 some type of way to get power in and out of it 19 from its environment. 20 Q 

### It's, so it's the cells that 21 actuallysupplythe electricityin the battery 22 packs?

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### 102

1 A 

### The cells store electricity, yes. 2 Q 

### Okay. But you don't manufacture 3 the cells, yourself? 4 A No. 5 Q 

### Okay. Who does the manufacturing 6 

### of these, of the cells? 7 A 

### Large corporations such as 8 Panasonic, Sanyo Energy Corporation, Samsung 9 Electronics, LG, those types of companies. 10 Q 

### Okay. And you buy these cells and 11 then you put them together? 12 A 

### Yes, we do. 13 Q 

### Okay. You also stated that there 14 was safety circuitry in the battery packs, 15 correct? 16 A 

### Yes, there is. 17 Q 

### Okay and what is that consist of? 18 A 

### Basically a, an IC that controls 19 fets or gates for electricityto move through. 20 And the IC would be, if it's, well, if it's a 21 passive component, it would rely on such 22 things as over voltage or under voltage or

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### 103 1 over current to close the gates so electricity 2 would stop flowing. 3 Q 

### Okay. And where did you get these 4 circuits? 5 A 

### The components, again, are 6 manufactured, normally by large Japanese 7 

### conglomerates, such as Mitsumi. The safety 8 circuits, we have sub assembled for us in 9 various locations from Canada to Asia. 10 Q 

### Okay. Then all these components 11 are shipped to you, okay, and you put these 12 together depending on what they're designed 13 for? 14 A 

### Correct. 15 Q 

### As an example, for example, if we 16 take the Government's Exhibit C-4, these 17 lithiumion batteries, couldyou describe what 18 these lithium ion batteries look like? 19 A 

### C-4? I don't have that exhibit. 20 

### ADMIN. LAW JUDGE GOODWIN: Should 21 be right, there's a copy right there. 22 MR. BLUMENTHAL: May I?

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### 104

1 

### ADMIN. LAW JUDGE GOODWIN: Yes, 2 take them. Ms. Barber, that's the set that 3 you put up there? 4 

### MS. BARBER: I believe so, yes. 5 

### THE WITNESS: Shipments to Agilent 6 

### Technologies, that wouldbe ourNational Power 7 

### model SM206. 8 

### MR. BLUMENTHAL: Okay. And for 9 

### demonstrative purposes, Your Honor, I'd like 10 to introduce Exhibit D, which is the SM206. 11 

### I've already showed it to counsel. May I 12 approach the witness? 13 

### (Petitimer's Exhibit P-D was 14 marked for identification.) 15 

### ADMIN. LAW JUDGE GOODWIN: Yes. 16 

### BY MR. BLUMENTHAL: 17 Q 

### Is this the SM206? 18 A 

### Yes, it is. 19 Q 

### Okay. And what's inside the 20 SM206? 21 A 

### The basic building blocks of the 22 lithium ion cells. There's six cells that are

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### 105 1 18 millimeters in diameter and 65 millimeters 2 long. Therefore, they're called 18-650 in the 3 jargon on the industry. So, they're six 18- 4 650 were chargeable lithium ion cells in here. 5 All coupledtogetherwith a safety circuit and 6 in this particular case, a fuel gauge. 7 Q 

### Okay. And if you were to describe 8 the capacity or the power of this, of the 9 SM206, how would you describe it? Would you 10 use the term in terms of voltage or wattage? 11 A 

### Watt hours would be complete 12 because includes the volts and the amp hours. 13 So it would be 11.1 volts times 4.6 amp hours. 14 Q 

### Okay. Now, this is, so, this is 15 what you sent to, this is the lithium ion 16 battery you sent to Agilent Technologies, 17 correct? 18 A 

### Yes, it is. 19 Q 

### Okay. Now, was this particular 20 battery pack, the SM206 ever tested? 21 A 

### Yes. 22 Q 

### Okay. And what kind of tests did

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### 106 1 it undergo? 2 A 

### It went through UL's safety 3 

### testing, UL2054 to be exact. And, but 4 

### eventually the UN38.3 batteries, battery of 5 

### tests. 6 Q 

### Okay. Now, is that, are there 7 

### other battery packs that you ship that are 8 

### similar to this one? 9 A 

### I, absolutely. 10 Q 

### Okay. And would that be, if I, 11 Your Honor, if I 

### may introduce for 12 demonstrativepurposes, I'mjust going to show 13 you Exhibit E, would this be one of those 14 battery of packs? 15 

### (Petitioner's Exhibit P-E was 16 marked for identification.) 17 A 

### Yes, it is. 18 Q 

### Okay. Would you describe that? 19 A 

### Sure, it's our model SM201-6. 20 Again, assembled with six 18-650 lithium ion 21 rechargeable cells for a total watt hours of, 22 47 watt hours, it says on the label for me to

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### 107

1 

### do the math, so. Again, assembled with a 2 safety circuit, a common safety circuit to 3 manage the pack and a fuel gauge all wrapped 4 

### in UL2054VO plastic. 5 Q 

### Okay. So, in terms of watt hours, 6 

### it's the same as SM201? 7 A 

### Well, according to the UN38.3, 

### it 8 

### doesn't differ by more than 20 percent in the 9 

### reg. But 20 percent or greater change in the 10 anode, cathodeor electro light in mass, which 11 equates to actually, watt capacity. No it 12 

### doesn't, it's similar in construction. 13 Q 

### Okay. And the reason they would 14 

### be in different shapes is because it's going 15 

### into different equipment? 16 

### MS. BARBER: Objection, Your 17 Honor, leading. 18 

### ADMIN. LAW JUDGE GOODWIN: Yes, 19 rephrase the question. 20 BY MR. BLUMENTHAL: 21 Q 

### And why are they different, in 22 different packaging?

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### 108

1 A 

### They would be assembled in 2 different shapes according to the product 3 requirements that it needs to fit inside of. 4 Q 

### Okay. So, for example, when you 5 

### sent this battery pack to Agilent 6 

### Technologies, was that so they, was that so 7 

### they could see if it was suitable for their 8 

### equipment? 9 

### MS. BARBER: Objection, Your 10 Honor, leading. 11 

### ADMIN. LAW JUDGE GOODWIN: 12 Overruled. 13 BY MR. BLUMENTHAL: 14 Q 

### You can answer the question. 15 A 

### It was for the purpose of their 16 approval to proceed. 17 Q 

### Okay. Did they give you the 18 specifications for the battery they wanted? 19 A 

### They gave us the basic electrical 20 

### specifications. We decided to pursue this 21 model as one of our standard offerings. 22 Therefore bears our trade name of SM Ener·gy,

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### 109 1 which is where the prefix comes from SM201, 2 SM206. 3 Q 

### Okay. Do you know what kind of 4 equipment that was going to go into, by the 5 way? 6 A 

### The Agilent? 7 Q 

### Yes. 8 A 

### It goes into a test of measurement 9 machine. Agilent specializes in measuring 10 waves of cable bands, things like that. So, 11 it's test of measurement of some other 12 electrical device. 13 Q 

### Okay. Was the SM201 tested? 14 A 

### It was also tested to UL 

### at the 15 time 60950-1. And also to UN.38.3 

### Manual of 16 Test and Criteria. 17 Q 

### So, did that, did it differ by 18 more than 20 percent, either in the anode, 19 cathode or electro light amassed from the 20 SM206? 21 A 

### No. 

### 22 Q 

### Okay. And you're familiar with

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1 the regulations for shipping lithium ion 2 batteries? 3 A I'm familiar with them. 4 Q Okay. So, was it your 5 understandingthat the two batteries were the 6 same per the regs as far as shipping 7 requirements? 8 A Yes. 9 Q Okay. How were the, so this was, 10 now, let me back up a second, Agilent wanted 11 the battery for testingpurposes, is that what 12 you stated? 13 A No, to actually run a piece of 14 equipmentthat theymanufacturedthatperforms 15 test functions. 16 Q Okay. Oh, it was to power a 17 machine that

-- 18 A Power a test device for it. 19 Q So, would you say that this was a 20 prototype of something that they may, in the 21 future, order? 22 A For them it was a prototype. For

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### 111

1 

### us, it's a finished product. 2 Q 

### Okay. So, what shipping standard 3 

### would you use to send a tested battery? A 4 

### tested lithium ion battery? 5 A 

### It would fall under class two, I'm 6 

### sorry, Group I I containerof the regulations. 7 Q 

### Okay. 8 A 

### Packing instruction 965. 9 Q 

### Okay. And in fact, is that how 10 

### you shipped it? How National Power shipped 11 it? 12 A 

### Yes. 13 Q 

### Okay. Regarding the exhibits, the 14 Government's Exhibits C-1 through C-11, the 15 phone number, the emergency telephone number 16 was 1-800-813-9468. 

### Do you recall that? 17 A 

### Do I recall? 18 Q 

### Do you recall that testimony? 19 A 

### I do recall that testimony, yes. 20 Q 

### Okay. Is that the same number 21 that would appear on the labels on the boxes 22 that were shipped?

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1 A No. 2 Q Okay. What number appeared on the 3 labels, on the boxes that were shipped on 4 these airway bills? 5 A The Chemtrec 24 hour hotline. 6 Q Okay. Why was there a difference 7 between the Chemtrec number on the labels and 8 the number that appeared on the airway bill? 9 A Because the labels were pre10 printedwith the correct information. And the 11 typographical error listed on this, these 12 documents was propagated over time. It was 13 never corrected. 14 Q Okay. So no one ever noticed that 15 it was National Power 1s number, not Chemtrec 1s 16 number? 17 A No, no. 18 Q Had you known that it was the 19 wrong number, what would you have done? 20 A I would have not been happy. I 21 would have corrected it. 22 Q Do you ever review the regulations

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### 1 and the shipping instructions from FedEx 2 regarding how batteries should be shipped? 3 A 

### Counselor, that's kind of a tricky 4 

### question. I'll tell you why. Because the 5 

### common carrier's, FedEx and UPS have been 6 

### known to give us incorrect information. 7 Q 

### But as far as you're concerned, 8 

### National Power employees are instructed as to 9 

### how to properly ship batteries? 10 A 

### Yes. 11 Q 

### Okay and they've received training 12 

### and how to ship batteries? 13 

### A Absolutely. 14 Q 

### Especially lithium ion batteries? 15 

### A Especially lithium ion batteries. 16 Q 

### Okay. And who typically provides 17 

### that training? 18 A 

### A third party. 19 Q 

### And these third parties, do these 20 

### thirdparties have credentialsto provide that 21 

### type of instruction? 22 A 

### Yes.

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1 Q 

### So, for example, Maria Munoz's 2 name appears on these typical, these airway 3 

### bills that the Government has introduced, to 4 

### the best of your knowledge, had she received 5 

### proper training? 6 A 

### If she's involved in the shipment, 7 

### she received proper training, yes. 8 Q 

### Okay, now after the FAA came in 9 

### and audited National Power, pointed out the 10 things that Mr. Zawarus testified to today, 11 

### what did National Power do after these alleged 12 deficiencies were pointed out? 13 A 

### We implemented corrective action, 14 corrective action plans for them. 15 Q 

### Okay. Could you give an example 16 of one of those? 17 A 

### Employees that were involved in 18 shipments, offeringshipmentsfor carrierthat 19 were trained in DOT hazmat then received 20 additional trainingin IATA hazmat with regard 21 to packaging instruction 965 

### and with regard 22 to offering hazmat for shipment.

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1 Q 

### Okay. 2 A 

### We also applied for the special 3 approval letter through the, I can't think of 4 

### the legal name here, it's special approval 5 

### through, I forgot the name. 6 Q 

### Yes, and you received the special 7 

### approval? 8 A 

### Yes. 9 Q 

### How long did it take you to get 10 

### that special approval? 11 A 

### About seven months. Competent, 12 

### the competent authority. 13 Q 

### So, at all times, you and other 14 

### National Power employeesmade all shipments in 15 

### good faith believing that all the regulations 16 

### were followed? 17 

### MS. BARBER: Objection, Your 18 Honor, leading. 19 

### ADMIN. LAW JUDGE GOODWIN: 20 Overruled. You can answer the question. 21 

### THE WITNESS: The employees 22 involved in the shipments have received the

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1 proper training, yes. 2 BY MR. BLUMENTHAL: 3 Q Okay. And at all times, they 4 believed they were shipping the batteries 5 according to the proper regulations? 6 A Absolutely. 7 MR. BLUMENTHAL: Nothing further 8 at this time, Your Honor. 9 ADMIN. LAW JUDGE GOODWIN: Now as 10 to the exhibits, the two exhibits were marked 11 for identification. Was it your intention to 12 introduce them into evidence or just mark them 13 for identification? 14 MR. BLUMENTHAL: Just mark them 15 for identification. 16 ADMIN. LAW JUDGE GOODWIN: What 17 I I d 18 like the two of you to talk about, Ms. Barber, 19 is because they've been identified, they 20 should be apart of the administrative record. 21 But I don't want the batteries. So if we can 22 figure out a way to Xerox them or something

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### 117

1 

### like that with the identifying information. 2 

### And what I would do if it were my 3 

### case, I'd take a ruler, put it on the Xerox 4 

### machine, set the battery next to it so we've 5 

### got some concept of scale and the identifying 6 

### information. And that way, it's part of the 7 

### administrative record, but it's not in 8 

### evidence. So you two work that out. 9 

### MR. BLUMENTHAL: I think

-- 10 

### ADMIN. LAW JUDGE GOODWIN: Why 11 don't you work it out, send it to me by e-· 12 mail. 13 

### MR. BLUMENTHAL: Okay. 14 

### ADMIN. LAW JUDGE GOODWIN: All 15 right. 16 I mean, is that satisfactory to you, Ms. 17 Barber? 18 

### MS. BARBER: Yes, Your Honor. 19 

### ADMIN. LAW JUDGE GOODWIN: All 20 right. I had a case where we, a hazmat case 21 that involved a filling station gas nozzle. 22 Well, the problem is that nozzle floated

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### 1 around my office and the Appellant for three 2 or four years. 3 

### And it was, it was proprietary 4 because of the way, I didn't know enough about 5 

### it to understand it, but I took the word of 6 

### the Respondent that it was proprietaryand we 7 

### wanted to make sure it got returned. I don't 8 

### want to run into that problem here. 9 

### MR. BLUMENTHAL: Okay. We' 11 

### take 10 

### care of it. 11 ADMIN. LAW JUDGE GOODWIN: Ms. 12 Barber? 13 

### MS. BARBER: If you can just give 14 me one moment, Your Honor? 15 

### THE WITNESS: Your Honor, may I 16 leave these here? 17 

### ADMIN. LAW JUDGE GOODWIN: Yes, 18 she's going to ask you some questions. 19 

### THE WITNESS: All right. 20 

### ADMIN. LAW JUDGE GOODWIN: 21 Probably, maybe. Ms. Barber, if you want to 22 take a minute?

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### 120 1 on the shipping papers? 2 A 

### The same battery? 3 Q 

### The same type of battery. 4 A 

### Oh, the same, yes. 5 Q 

### Okay. And that is the SM201-6? 6 Or the SM206? 7 

### A 206. 8 Q 

### Is the ones that were shipped? 9 

### A Yes. On what exhibits? 10 Q 

### C-1 through C-11. 11 

### A No, that is not the same battery 12 that was shipped on all the shipments. But 13 each shipment contained the same battery. 14 Q 

### Okay. Each of these shipments 15 contain the same battery? Is that correct? 16 A 

### There was no mixed models in any 17 

### of the shipments, correct. 18 Q 

### Okay. How do you know which model 19 

### was sent? 20 A The consignee. It's what the 21 consignee ordered. 22 Q 

### Okay. And there in which, which

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### 121 1 one of the batteries was the one that was 2 shipped in all of these that we're talking 3 

### about up there? 4 A 

### The SM206. 5 Q 

### Okay. And that was the untested 6 

### model, correct? 7 A 

### That's how it was shipped, 8 

### correct. 9 

### ADMIN. LAW JUDGE GOODWIN: Now, 10 

### the SM206 was shipped with the respect to 11 which exhibit numbers? One, two 12 THE WITNESS: Agilent. 13 

### ADMIN. LAW JUDGE GOODWIN: Well 14 

### I'm assuming that four and five is one type of 15 

### battery and the other ones were the second 16 

### type of batteries? 17 

### THE WITNESS: Correct. Yes, Your 18 

### Honor. 19 

### ADMIN. LAW JUDGE GOODWIN: So, 20 Exhibit 4 and 5 is which battery? 21 THE WITNESS: Four and five is the 22 SM206.

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1 

### ADMIN. LAW JUDGE GOODWIN: And 2 

### what was the other one? The nomenclature of 3 the battery that was shipped? 4 

### THE WITNESS: The balance of the 5 

### shipments? 6 

### ADMIN. LAW JUDGE GOODWIN: Yes. 7 

### THE WITNESS: That would be, we 8 

### haven't talked about that model, it's a 520- 9 

### libat-2, I 10 

### believe. 11 

### MS. BARBER: Okay. 12 

### ADMIN. LAW JUDGE GOODWIN: How do 13 

### you spell libat? 14 

### THE WITNESS: L-i-b-a-t. 15 

### ADMIN. LAW JUDGE GOODWIN: And 16 

### then, 520-libat, and what's the rest of it? 17 

### THE WITNESS: Dash two, I believe, 18 

### Your Honor. 19 

### ADMIN. LAW JUDGE GOODWIN: Okay. 20 

### I'm just trying to make sure the Court didn't 21 

### get them confused. Last thing either one of 22 

### you want to do is confuse the Court. I'm

NEAL

### R. GROSS (202) 234-4433 COURT REPORTERSAND TRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com123 1 confused enough. 2 BY MS. BARBER: 3 Q So, it's fair to say that in every 4 single one of these shipments, C-1 all the way 5 through 11 that we put into evidence here 6 today, none of the batteries that were shipped 7 are, were tested? 8 A Yes. 9 Q Okay. 10 ADMIN. LAW JUDGE GOODWIN: 

### All 11 right, the Court's confused. I thought you 12 said earlierthat the batteries themselveshad 13 been tested but when you put them into the 14 package that you got there, that had not been 15 tested? 16 THE WITNESS: At the time of these 17 shipments? 18 ADMIN. LAW JUDGE GOODWIN: Yes. 19 THE WITNESS: They were not tested 20 to UN38.3. 21 ADMIN. LAW JUDGE GOODWIN: In 22 other words, the two things that you, the

NEAL

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### 124 1 SM206 and the 520-libat-2, which essentially, 2 you buy lithium batteries and you put them 3 into a package? 4 

### THE WITNESS: Yes. 5 

### ADMIN. LAW JUDGE GOODWIN: And the 6 package has the two names as described, had 7 the batteries themselves been tested by that 8 manufacturer or -- 9 

### THE WITNESS: Oh the components 10 themselves, Your Honor? 11 ADMIN. LAW JUDGE GOODWIN: Yes. 12 THE WITNESS: Yes. Those were 13 tested. 14 

### ADMIN. LAW JUDGE GOODWIN: Okay. 15 But when you put them into your package, 16 ESM206 or the 520-libat, that had not been 17 tested? 18 

### THE WITNESS: That battery 19 assembly had not been tested to UN38.3. 20 

### ADMIN. LAW JUDGE GOODWIN: Okay. 21 THE WITNESS: At the time of these 22 shipments.

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### 125

1 

### ADMIN. LAW JUDGE GOODWIN: All 

### 2 right. Not trying to confuse you either, tvls. 3 Barber. 4 

### MS. BARBER: Oh, that's okay. 5 

### BY MS. BARBER: 6 Q 

### So, just for more clarification, I 7 apologi3e, the, in order to make what we are 8 looking at today, a battery, it's composed of 9 cells, is that correct? 10 A Yes, that's correct. 11 Q 

### The cells by themselves are not an 12 actual battery? 13 

### A That is correct. 14 Q 

### So, what you're manufacturing at 15 National Power Corporation is an actual 16 

### battery? 17 

### A Yes. 18 Q 

### And it's composed of the cells 19 whichyou get from the manufacturers in Japan, 20 as you spoke of earlier. But that by itself 21 is not considered a battery, it's, correct? 22 A 

### The component cells are not

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### 126 1 considered a battery. 2 Q 

### Okay. So, but after it leaves 3 your, National Power, it is considered a 4 battery? 5 A 

### Yes, it is. 6 Q 

### Okay. Do you currently have the 7 special approval that you applied for and 8 received after the shipments? 9 A 

### Yes, we do. 10 Q 

### But you did not have the special 11 approval at the time of the shipments? 12 A 

### We did not. 13 

### MS. BARBER: No further questions, 14 Your Honor. 15 

### ADMIN. LAW JUDGE GOODWIN: 16 Redirect? 17 REDIRECT EXAMINATION 18 BY MR. BLUMENTHAL: 19 Q 

### Okay. When you just stated that 20 the battery that was actually shipped was not 21 tested, did you believe it needed testing? 22 A 

### Our shipping department believed

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### 127 1 it needed testing. 2 Q 

### The, your model SM201 did receive 3 

### testing? 4 A 

### Received UN39.310 testing and 5 

### passed, yes. 6 Q 

### Okay. And the SM206 was not 7 

### different from the SM201? 8 A 

### According to UN3 8.

### 3, it was not 9 

### different. 10 Q 

### Okay. So, therefore, it did not 11 need testing? 12 A 

### Therefore, we could, we could say 13 

### that, we could take that position. 14 Q 

### Okay. According to the 15 regulations? 16 A 

### Yes. 17 Q 

### Okay. But subsequently, you had 18 it tested anyhow? 19 A 

### Yes, we have all our models 20 tested. 21 Q 

### Okay. Okay, the letter that you, 22 I mean the battery that you shipped on the

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### 128 1 other shipments to the, to Canada, what types 2 of batteries were those? 3 A 

### Again, lithium ion batteries. 4 Q 

### Okay. Did they differ from the 5 SM201 and SM206 in appearance? 6 A 

### Yes. 7 Q 

### Okay. 8 

### MR. BLUMENTHAL: Your Honor, may I 9 approach? 10 

### ADMIN. LAW JUDGE GOODWIN: Sure. 11 

### MS. BARBER: Your Honor, I object 12 to beyond the scope of my redirect. He's 13 entering into 14 

### ADMIN. LAW JUDGE GOODWIN: Well, 15 

### technically it is. Here's the Court's 16 problem, I'm trying to wrap myself around it. 17 I think it's, the Court has some latitude in 18 developing the record in order so that the 19 record's clear. 20 And I'm going to tell you now, I'm 21 going to ask both of you to brief this case. 22 Because I think it's important issue and it's

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### 129 1 important nuances. And ask that the two of 2 you have the opportunity to develop. 3 

### And a part of that is the Court's 4 

### ability to understand what's going on. And 5 

### for a couple of reasons, not just this case. 6 

### But as you know, Ms. Barber, this is not the 7 

### first lithium ion battery case the FAA has 8 

### had, and it's an issue that, I don't know, but 9 

### I suspect it's an issue important to the FAJl, 10 

### and PHMSA and some others as well as to the 11 Respondent. 12 So, I'm going to note the 13 

### objection, overrule it, and allow some 14 latitude and also allow you, Ms. Barber allow 15 you the latitude to cross it, without waiving 16 your objection. 17 

### MR. BLUMENTHAL: Okay. Thank you, 18 Your Honor. 19 BY MR. BLUMENTHAL: 20 Q 

### Okay. I'm going to show you what 21 I've marked as Exhibits E-1 and E-2. Could you 22 describe Exhibit

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### 130 1 E-1? 2 (Employer's Exhibits E-1 and E-2 3 

### were marked for identification.) 4 

### Sure, it's an assembly with two 5 Sanyo 103450, that's tenmillimetersthick, 34 6 millimeterswide, 50 millimetershigh. Two of 7 

### those cells assembled into a battery with 8 

### safety circuitry and a way to, and a way for 9 

### the power to see the outside world. 10 Q 

### Okay. And I'm also going to show 11 you Exhibit E-2. Could you describe that? 12 Yes, it's an assembly with two of 13 the Sanyo 103450 lithium ion rechargeable 14 cells. Again, assembled into a battery pack 15 with a safety circuit and a way for the 16 outside world to tap into it. 17 Q 

### Okay. And are those the batteries 18 

### that were shipped to the Canadian customer? 19 

### A One of these was. 20 Q 

### Okay. Which one was that? 21 A This one. 22 Q 

### Okay and that's marked as?

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### Exhibit E-1. 2 Q 

### Now, how did you, how did you ship 3 that battery? 4 A 

### National Power offered these 5 

### shipments as Class 9 

### hazmat ln Group II 6 

### packaging. 7 Q 

### Okay, are, is that battery tested? 8 A 

### Today? 9 Q 

### No, no. At the time, was it 10 

### tested? 11 A 

### At the time, it was not tested at 12 the time. 13 Q 

### But you had it subsequently test? 14 

### A Yes. 15 Q 

### And it passed that test? 16 

### A Yes. 17 Q 

### So, as an untested, would you 18 

### classifythat as a prototype, as well? So, it 19 

### was an untested prototype? 20 A I 

### think that's what the 21 regulations would classify it as, since it's 22 not tested. I don't know if there's another

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### 132 1 way to, another area you could put that. 2 Q 

### Okay. So, you shipped that 3 

### batteryaccordingto the regulationsusing the 4 

### untested prototype standard? 5 A 

### That's the way our shipping 6 

### department offered it for shipment, yes. 7 

### MR. BLUMENTHAL: Okay, okay. 8 

### Nothing further, Your Honor. 9 

### ADMIN. LAW JUDGE GOODWIN: Ms. 10 

### Barber, would you like to inquire? 11 MS. BARBER: You know, if I could 12 have a moment, please? 13 ADMIN. LAW JUDGE GOODWIN: Sure. 14 

### MS. BARBER: No further questions. 15 

### ADMIN. LAW JUDGE GOODWIN: Mr. 16 Blumenthal, anything further of this witness? 17 

### MR. BLUMENTHAL: No, Your Honor. 18 We rest. 19 

### ADMIN. LAW JUDGE GOODWIN: Okay. 20 Sir, you can step down, leave the exhibits 21 there. So, you said the Respondent rests? 22 

### MR. BLUMENTHAL: Yes, Your Honor.

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### 133

1 

### ADMIN. LAW JUDGE GOODWIN: 2 Rebuttal? 3 

### THE WITNESS: Your Honor 4 

### ADMIN. LAW JUDGE GOODWIN: If you 5 want, you can step down. Do you want to take 6 

### a minute and decide what you want to do? 7 

### MS. BARBER: I would like to take 8 

### a minute, please. 9 

### ADMIN. LAW JUDGE GOODWIN: All 10 right. I've got ten minutes after one. We're 11 going to take a break until 20 minutes after. 12 But before we go off the record to counsel, 13 the Court's got the same issue with all the 14 

### batteries we discussed. You two figure out 15 how they've been identified. 16 

### They're not in evidence. You two 17 figure out between you how you want to get a 18 copy or into the record so I have something to 19 refer to, but the Court doesn't need the 20 originals. Just figure it out as a part of 21 your process. Okay. So, we're going to go 22 off the record for ten minutes.

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### 134

1 

### (Off the record.) 2 ADMIN. LAW JUDGE GOODWIN: Ms. 3 Barber? 4 

### MS. BARBER: Yes, Your Honor. I 5 

### do have a rebuttal. 6 

### ADMIN. LAW JUDGE GOODWIN: Oh, 7 

### okay. I forgot where we were, that's why I 8 

### asked you. 9 

### MS. BARBER: Okay. 10 

### ADMIN. LAW JUDGE GOODWIN: Go 11 ahead. 12 MS. BARBER: The Complainant calls 13 mister, recalls Mr. Zawarus. 14 ADMIN. LAW JUDGE GOODWIN: All 

### 15 right, sir, stand and approach. I remind you 16 that you are still under oath. 17 

### THE WITNESS: Yes, sir. 18 

### ADMIN. LAW JUDGE GOODWIN: 19 Counsel. 20 Whereupon, 21 CHRISTOPHER ZAWARUS 22 is recalled as a witness herein, having been

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### 135 1 previously duly swom, resumed the stand and 2 testified as follows: 3 

### DIRECT EXAMINATION 4 

### BY MS. BARBER: 5 Q 

### Mr. Zawarus, did you hear on the 6 

### Respondent's, during the Respondent's case, 7 

### that the emergency response number was on the 8 

### shippinglabel. Do you recall that testimony? 9 A 

### Yes. 10 Q 

### However, it was not on the 11 shipping paper, is that correct? 12 ADMIN. LAW JUDGE GOODWIN: Well, 13 ask the question, it's really, you're trying 14 to cross examine your own witness. 15 MS. BARBER: Okay. 16 

### ADMIN. LAW JUDGE GOODWIN: 17 Rephrase the question 18 BY MS. BARBER: 19 Q 

### What is the difference between 20 having an emergencyphone number on a shipping 21 paper and a shipping label? 22 A 

### The hazardous materials

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1 regulations require the emergency response 2 telephone number to be on the shipping paper. 3 That's so that it is available to the pilot in 4 command during flight and also to emergency 5 responders in the event of an incident. 6 Q Why would they not be able to use 7 the shipping label? 8 A Because that would be affixed to 9 the package and aboard the aircraft where it 10 is not accessible. 11 Q I would like to draw your 12 attention to the batteries that they used 13 today, National. Power used today for 14 demonstrative purposes. What did those 15 batteries that they talked about today, what 16 impact did that have on the case, the 17 batteries that were shipped on the shipping 18 labels, or the, on the exhibits C through 11? 19 A The, during the inspection when I 20 requested what, or I asked whether the 21 batteries contained in the shipments were 22 tested. And after being told that they were

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1 prototype, I was told that they were not 2 tested. 3 Subsequently, based on that 4 information and not having test that relative 5 to the batteries, our office sent out a letter 6 of investigation notifying National Power 7 Corporationof our allegedviolations, we were 8 not provided any test data in response to our 9 letter of investigation. There was no 10 information available to determine that they 11 were tested 12 batteries. 13 Q Were you ever provided any test 14 information about any type of battery? 15 A Yes, in the letter of response, we 16 were providedtest data for, that was relevant 17 to two shipments. And as a result, we did not 18 pursue those shipments. 19 Q And could, would it matter if 20 someone, or would it matter if National Power 21 shippeda untestedbatterythat was similar to 22 a tested battery?

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1 A According to the UN Manual of Test 2 and Criteria, as long as it's within the 3 allowances for watt hours and voltage, they, 4 they can do that. But it would also have to 5 be a type that would not materiallychange the 6 test results. 7 Again, we were provided no 8 information in response to our letter of 9 investigationthat would allow us to make that 10 determination. 11 Q So, as we sit here today, it 12 stands that all the batteries that were 13 shipped by National Power, as exhibited in C 14 through 11 were untested batteries? 15 A The 

### FAA has received no 16 information indicating that they were tested 17 batteries. 18 MS. BARBER: No further questions. 19 ADMIN. LAW JUDGE GOODWIN: Mr. 20 Blumenthal? 21 CROSS EXAMINATION 22 BY MR. BLUMENTHAL:

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### 139

1 Q 

### If subsequent correspondence with 2 counsel and the FAA provided test results and 3 

### explanations, would you have been provided 4 

### those? 5 A 

### I did receive a e-mail which 6 provided the test report, but not knowing the 7 configuration of the batteries, we couldn't 8 make a determination whether it was the test 9 report applicable to those shipments. 10 Q 

### Okay. So, did you ask for further 11 clarification? 12 A 

### Yes, I did. 13 Q 

### Okay. And to whom did you ask? 14 A 

### I relayed that information to Ms. 15 Barber. 16 Q 

### So, you've received nothing else 17 from the FAA regardingfollow-updocumentation 18 on test results provided to you? 19 A 

### No. 20 Q 

### Okay. So if they received it and 21 didn't tell you about it, there would be no 22 other way for you to find out, isn't that

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### 141 1 find out in the near, short or middle term 2 that it's available, but she will. What 3 I'm going to ask the two of you to do, Ms. 4 Barber, when you get the transcript, if you .5 will call Mr. Blumenthal, one of, the two of 6 you work out a briefing schedule. 7 

### Now, just for your benefit, you 8 can do all the briefing you want to, but I'm 9 not going to get a chance to get to it until 10 

### first part of next year. I don't know what 11 your leave status is Ms. Barber, but the 12 problemyou run into in the government, is you 13 get user leave and all sorts of other things. 14 So, if your briefing schedule runs 15 into next year, don't worry about it. If you, 16 if you'll just, once you agree, 17 Ms. Barber, if you'll send me an 18 order, I'll sign it. And then if either one 19 of you runs into a problem, talk with each 20 other and if you need to extend it, just let 21 me know. I try to be flexible on, it makes, 22 there's some lssues that are worth while

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1 

### MS. BARBER: No, Chris Zurales. 2 

### ADMIN. LAW JUDGE GOODWIN: Okay, 3 

### all right. Thank you and we'll go off the 4 

### record. Thank you very much. 5 

### (Whereupon, at 1:33 p.m., the 6 hearing in the above-entitled matter was 7 concluded.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

NEAL R. GROSS (202) 234-4433 COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.comPage 144 A active 101:16 134:10,14,18 42:1044:2,4,5,12 51:20 $150091:19 actual125:12,15 135:12,16 138:19 46:4,6,1548:6,8 anticipation93:2 $30,00091:8,19 additional80:7 140:5,9,15 142:21 48:15,17 50:8,10 93:18 $32,50068:8 86:4 88:14 114:20 143:2 50:12,1978:7 anybody66:19 $66,0009:19 12:13 Additionally11:4 Administration1:6 112:4,8 114:2 97:17

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Neal R Gross and Co. Inc. Washington DC Page 159

www.nealrgross.com160 C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of: Federal Aviation Administration v. National Power Corporation Before: us DOT

Date: 09-29-2014

Place: Chicago, Illinois

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

(202)234-4433 Court Reporter

NEAL R. GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com