FAA REB GOUHSL ABL7 002/010

. 03/19/2010 12:26 FAX 847 294 1498



### U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, DC 

## *

••••••**.*••**. •••** *.***.***** Federal 

### Aviation Administtation '" 

# • Complainant 

## '" v. 

### ... Federal Express 

### Corporation 

## * 

# • FAA DocketNo. 

### CP09GL0004 FAA Case No. 

### 2009GL700396 

## * DMSNo. FAA-2009-0097 

### Respondent 4; *'



### ... 

## ••**••••**********••******••••••***** Judge Richard C. Goodwin POST-HEARING REBUTTAL BRIEF OFCLOSING ARGUMENT


### At the conclusion ofthe October 

### 29. 2009

### hearing. the Honorable 

### Judge asked the parties

### to file 

### briefs on the issues. 

### Pursuant to Section 13.230(0) ofthe Rules ofPractice inFAA Civil Penalty Actions (14 C.F.R. § 13.230(c)), Complainant, by 

### and through the 

### undersigned counsel. hereby files this Post-Hearing Rebuttal BdefofClosing 

### Argument inrebuttalto

### the Post Hearing Brieffiled bythe 

### Respondent on March

### 4. 2010. REBUTTAL ARGUMENT 

### The Respondent. Federal Express 

### Corporation (Fed Ex) 

### does not deny that there


### were violations 

### ofthe Federal Hazardous 

### Material Regulations. Fed

### Ex argues that there


### were mitigating circumstances 

### to the 

### violations. Fed Ex argues inits 

### Post Hearing Brief 

### (RPHB) that 

### a mitigating circumstance is thatthe shipments met "'substantially 

### all the regulatory requirements, and the errors committed by the employees ofFed Ex were not intentional, reckless or

### wanton." (p.5 RPHB) The FAArequires and expects that all the 

### regulatory requirements are 

### met and the fact that the shipments metmost ofllie

# - FAA RES COUNSL A6L7 141 OO::l/OlV 03/19/2010 12:26 FAX 847 294 7498
2 

### requirements is not truly a mitigating circumstance.IMeeting all the regulatory requirements is expected to 

### be the nonnjustas having a violation free history is abo expected to the nonn. In the Matter ofABO Caulking Contractors. Inc., 2006 WL 3358561, (November 9,2006). p. 

### 9. In addition, the argument that the errors committed by 

### the Fed Ex employees were not intentional, reckless or wanton is not a mitigating circumstance to areasonable sanction. On the 

### contrary. evidence that 

### the violations were intentional would constitute an aggravating factor, making a higher sanction appropria.te. American AirNetworJ& Inc., FAA Order No. 2006·5 (February 10,2006), p.8.

The Civil Penalty assessed by the FAA isreasonable. The FAA

### is seeking a penalty of$182,500 and this civil penalty is absolutely reasonable under the facts and circumstances ofthis case. The civil penalty assessed has 

### been determined consistent with 

### the FAA policies that were in efflXit at the time of \ : '<'"'' 

### the violations. The statutory factors were considered. including the mitigating and the aggravating factors. The process that the FAA used was explained in Complaint's post hearing briefand was reasonable and 

### consistent with

### the statutory factors present in 

### 49 U.S.C. 5213(a) which include: the nature,**oircumstan~s~** 

### extent, and**~avity** 

### ofthe violation; the degree ofculpability ofthe violator; 

### any history ofpast violations; the ability to pay; any 

### effect on the ability to continue to do business; and, other matters as justice may reqltire. An 

### appropriate civil penalty must reflectthe totality ofthe circumstances sUlTOunding 

### the violations (Tr. 110-11, 117; Folsom!s Air Service, Inc" FAA Order No. 2008-11 (November 6, 2008), p. 12; Eastern Air Center. 

### Inc. , FAA Order No. 2008-3 (1anuary 28. 2008). In

### this 

### case the totality ofthe 

### circumstances was

# .. 03/19/2010 12:28 FAX 847 294 7498 FAA RES COUNSL ABL7 III 004/010
3 taken into consideration and the civil penalty is reasonable considering that the FAA followed the guidelines published. Fed Ex argues that the civil penalty assessed is arbitrary and capricious. (RPHB p.8) This is absolutely not the case. 

### theFAA assessed a civil penalty in accordance withthe published guidelines. The agency issued enforcement guidelines inFAAOrder No. 2150.3A for its employees to follow in determining appropriate sanctions. The guidelines advise the public ofthe sanction policy that the Administrator intends to follow through thc adjudication ofindividual cases. Folsom's Air Service. Inc. at p. 13. The Sanction Guidance Tab1e contained inAppendix 4 ofOrder No. 2150JA and as amended by CompliancefEnforcement BulletinNo. 92-1, sets out penalty recommendations within three ranges ofamounts
- designated minimum. moderate, and maximum to bestreflect the nature and circumstances ofeach violation. Mitigating andlor aggravating factors are part ofthe calculus. The FAA followed the published guidelines and didtake into account mitigating factors such as cOlTective action. By way ofargument, ifthe FAA intended to be arbitrary and capricious withits assessment ofthe civil penalty, the civil penalty would have been much higher as the maximum amount allowable.by law is $350)000. However, the amount was detennined using the totality of circumstances and the sanction guidance table and not only is it reasonable, but was not detennined arbitrarily or in a capricious manner. Fed Ex argues thatthere is a "staggering" difference in the civil penalty amounts demanded inthis case 'Yhen compared with the civil penalties demanded inthe cases that
were cited in their violation history. (RPHB p. 5) Civil Penalties by their very nature are going to increase with each violation. It stands to reason that with each subsequent violationthe sanction will be increased in an03/19/2010 12:26 FAX 841 294 1498 FAA REB CDUNSL AGL1 19JVV..J/V,,,,, 

### 4
effort to deter 

### future violations. The civil penalty shouldprovide sufficient incentive to deterthe respondent and similarly-situated entities from future violations. 

### Id at P, 

### 20. The point ofthe penalizing a company by demanding a civil penalty is to create a**".--.~.-.** , . deterrent 

### to viofanngtheFedenrl Regulations in the future, that coupled withthe fact that
a violation history is an aggravating factor itis completely reasonable that the civil penalty assessed inthis caseis higher than the civil penalties assessed 

### inthe past. FedEx 

### argues that they are a very large company handling more regulated shipmentsper day than 

### any other

### carrier inthe world. (RPHB p.S) The 

### large size ofFed Ex should absOlutely betaken into consideration when determiningthe amount of sanction. InToyotaMotor 

### Sale§. USA. 

### Inc., FAA Order No. 

### 94-28 (September 30, 

### 1994)
.. the Administrator

### relied upon the size 

### ofthe company to

### increase a civil penalty 

### sought by

### the FAA. The 

### Administrator stated. "When the violator is a 

### large company 

### rather than 

### a small company. the

### penalty may needto be correspondingly larger

### to achieve the same deterrent effect. tt The civil penalty cannotbe considered a cost of 

### doing business for Fed Ex. With a net worth and 

### sales figures inthebillions and 

### being a major world wide corporation, 8 civil penalty811Y 

### lower than 

### $182,500 would notbe 

### a reasonable deterrent. 

### The sanction assessed by the 

### FAA is reasonable especially whenthe actual hazardous 

### material that was shipped in air commerce is

### taken in to consideration. This
case involved 

### numerousflammable liquids and flammable solids. Underthecurrent policy this material is classified 8$ a "Category

### N' material carrying a '"maximum" 

### final aggregate weight 

### The hazardous 

### material that was accepted and transported was notin theproperpackagingwhich could lead to the packaging being 

### compromised. This is further aggravation and 

### shows the gravity ofthe 

### violation.

. . \ .

### 5 pat FAA REB COUNSL ABL1 03/19/2010 12:28 FAX 847 294 7438

In addition to the**h~ardous** material the sanction is reasonable when Fed Ex's degree ofculpability is considered. As explained inthe FAA'5 Post Hearing Brief, Fed Ex is one ofthe world's largest shippers. Fed Ex accepts andplaces into air commerce ten ofthousands ofhazardous material shipments each day. They have extensive training programs and systems put into place to accept and transport hazardous material. Due 

### to their knowledge and expertise inthe area ofacceptance and transportation ofhazardous materials their degree 

### ofculpability 

### is high. In addition, the sheer volume ofhazardous materials placed into air commerce byFed Ex expands their culpability. It 

### stands to
reason that due care 

### is necessary 

### and expected with each shipment 

### and that the more hazardous material placed into air commercethe more likely a hazardous material accident will occur. Violation history is also a factor indetermining the culpability ofthe violator. Fed 

### Ex has 

### an extensive violation history. 

### Tr. 93. During the hearing, McDaniel 

### testified that when looking at 

### only acceptance violations, Fed Ex had fifteen (15) from the years 2004-2007. The outcome,ofthe violations were that, seven (7) were civil penalty actions and eight (8) were administrative actions. Tr. 

### 93. The final aggregate weight ofthe 

### case was 

### detennined tobe maximum. After assigning 

### an aggregate weight ofm(1Ximum to the case. the next step is to refer to the penalty matrix. The highest maximum amount allowed by law is $50,000 for each ofilie**~,** 

### '.
, ". , ,., ,'.".

. seven (7) shipments. The FAA would have beenjustified in choosing the maximum of

the range for sevenviolations in the acceptance group, which would produce the amount of$350,000. The FAA considered the corrective actiontaken and the severity ofthe violations along with the aggravating factors and assigned a penalty of$32,500 per marking violation (5X) and $10,000 perpackaging violation (2x) , which yielded a6 .. 03/19/2010 12:2S FAX 847 294 1498 FAA REa COUHSL AaL7

penalty of$182,500. This penalty is very reasonable considering that it is much lower than the maximumcivil penalty allowable by law and was carefully considered using the FAA guidelines and 

### statutory guidance. Does the Administrative Law Judge have the authority, under the statutes and regulations. to reduce the civil penalty? The Administrative Law Judge (ALl) does have the authority to determine the amount ofthe civil penalty. However, deference should be given to the FAA's assessment ofthe civil penalty. The United States Court ofAppeal for the District of Columbia Circuit states, "an administrative agency is entitled 10 substantial deference in assessing the civil penalty appropriate for a violation ofits regulations. The agency's choice ofa sanction is notto be overturned unless itis unwarranted inlaw orwithout justification infact," 

### NL Industries. 

### Inc, v, Dept. 

### ofTransportation. 901 

### F,2d 

### 141, 144 (D.C. Cir. 1990). The civil penalty assessed in this case is most certainly w8.ITanted in law andjustified in fact. Fed Ex admits that the violations occurred and unless the court
can conclude afflIlllatively that the FAA has acted in an arbitrary or capricious manner concerning the civil penalty amount, 

### the Court should give deference 

### to the reasonable amount ofcivil penalty assessed in this case. As noted ab()ve, the FAA in no way acted arbitrarily or capriciously when determining the amount ofsanction to be assessed aga.inst Fed Ex. CONCLUSION The transportation ofhazardous materials is inherently dangerous. A hazardous material is defined in the HMRs as "a substlUlce ormaterial that the Secretary of Transportation has determined is capable ofposing an unreasonable risk to health, safety, and property when transported incommerce", and has been so designated. 49 C.F.R.

### 7 FAA REG COUNSL AGL7
.. 03/18/2010 12:27 FAX 847 294 743B

§ 

### 171.8. Therefore, acceptors and tra.nsporters ofinherently dangerous materials such as hazardous materials have a very high duty ofcare. This case involves flammable liquids that were packaged in fiberboard boxes that had not been tested to ensure that the boxes could maintain their integrity during the transportation ofthe hazardous materiaL The UN-specification boxes are incredibly important because they are manufactured and tested to withstand many types ofdamage that routinely occurs in

### the transportation system. These safe guards are not in

### place when 

### a non-descript fiberboard boxis used as packaging. Many types ofthings can and do happen to damage packaging which will 

### lead to the exposW'e ofthe hazardous material. In

### addition, the missing overpack marking is significant because the marking tells all the people handling the shipment thatthe packages inside the overpack are correctly packaged. marked, and·labeled in

### accordance with the FHMR. Whenthis marking is missing those handling the Shipment do not have this verification. The amount ofsanction that the FAA proposes to assess againstFed Ex is extremely reasonable and not arbitrary or capricious. The FAA

### requests that the AU 

### give the deference to the carefully reasoned sanction amount. The amount ofpenalty was not taken lightly by

### the FAA 

### and neither were the proposed violations. Due to the nature ofFed Ex's business both 

### in that they ship more hazardous material than arguably anyone inthe world and have such an expansive net. worth the civil penalty is more than reasonable. These factors taken into consideration along with the violation history. the nature ofthe violations and FAA published guidance the sanction amount of$182,500 is not only reasonable but necessary to deter future violations. WHEREFORE, Complainant requests the Adminis$tive Law Judge to..ll:?sess the civil penalty at the requested amount of$182,500.

# -03/19/2010 12:27 FAX 847 294 7498 FAA REB COUNSL ABL7**~UU::J/VIV** 8 Respectfully submitted this 191iJ dayofMarch. 2010.

Kate 

### Barber Attorney Office ofthe Regional CounselIjtJOlO/OlV FAA REa COUNSL A6L7 203119/2010 12:27 FAX 847 294 7498 9 

### CERTlFICA TE OF SERVICE Jhereby certifY thatthe foregoing Post-Hearing BriefofClosing Argument has been 

### mailed by Federal Express to the following:
The Honorable Richard C. Goodwin Administrative Law Judge Office ofHearings, M-50 Room 5411 U.S. Department 

### ofTransportation 400 Seventh Street, SW Washington, DC 20590 FAX: (202) 366-7536 And by CERTIFffiD MAIL to= Attorney J. Mark Hansen Federal Express Lead Counsel 3620 Hacks Cross Road Building 

### B, 3td Floor Memphis, TN 38125 FAJ(:901-434-8283 TEL: 901-434-8583 Hearing Docket FAA. AGC-400 600 Indep.endence Ave., SW Room 2014 Washington, DC 20590 FAX: (202) 493-5020 TEL: (202) 385-8229



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