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 Docket No. CP09GL0004 

FAA Case No. 2009GL700396 

* DMSNo. FAA-2009-0097 

Respondent 4; 

*' 

... 

••**••••**********••******••••••***** 

Judge Richard C. Goodwin 

POST-HEARING REBUTTAL BRIEF OF CLOSING 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 

in FAA Civil Penalty Actions (14 C.F.R. § 13.230(c)), Complainant, by and through the 

undersigned counsel. hereby files this Post-Hearing Rebuttal Bdefof Closing Argument 

in rebuttal to the Post Hearing Brief filed by the 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 in its Post Hearing Brief 

(RPHB) that a mitigating circumstance is that the 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 FAA requires and expects that all the 

regulatory requirements are met and the fact that the shipments met most ofllie 
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requirements is not truly a mitigating circumstance.IMeeting all the regulatory 

requirements is expected to be the nonn just as 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 a reasonable sanction. On the contrary. evidence that the violations were 

intentional would constitute an aggravating factor, making a higher sanction appropria.te. 

American Air NetworJ& Inc., FAA Order No. 2006·5 (February 10,2006), p.8. 

The Civil Penalty assessed by the FAA is reasonable. 

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 brief and 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 reflect the 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 
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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. the FAA assessed a civil penalty in accordance 

with the published guidelines. The agency issued enforcement guidelines in FAA Order 

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 of individual cases. Folsom's Air Service. Inc. at p. 13. 

The Sanction Guidance Tab1e contained in Appendix 4 ofOrder No. 2150JA and as 

amended by CompliancefEnforcement Bulletin No. 92-1, sets out penalty 

recommendations within three ranges of amounts - designated minimum. moderate, and 

maximum to best reflect the nature and circumstances of each violation. Mitigating 

andlor aggravating factors are part ofthe calculus. The FAA followed the published 

guidelines and did take into account mitigating factors such as cOlTective action. By way 

of argument, ifthe FAA intended to be arbitrary and capricious with its 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 that there is a "staggering" difference in the civil penalty amounts 

demanded in this case 'Yhen compared with the civil penalties demanded in the 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 violation the sanction will be increased in an 
03/19/2010 12:26 FAX 841 294 1498 FAA REB CDUNSL AGL1 19JVV..J/V,,,,, 

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effort to deter future violations. The civil penalty should provide sufficient incentive to 

deter the 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 with the fact that 

a violation history is an aggravating factor it is completely reasonable that the civil 

penalty assessed in this case is higher than the civil penalties assessed in the past. 

Fed Ex argues that they are a very large company handling more regulated 

shipments per day than any other carrier in the world. (RPHB p.S) The large size of Fed 

Ex should absOlutely be taken into consideration when determining the amount of 

sanction. In Toyota Motor 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 need to be correspondingly larger to 

achieve the same deterrent effect.tt The civil penalty cannot be considered a cost of 

doing business for Fed Ex. With a net worth and sales figures inthe billions and being a 

major world wide corporation, 8 civil penalty811Y lower than $182,500 would not be a 

reasonable deterrent. 

The sanction assessed by the FAA is reasonable especially when the 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 not in 

the proper packaging which could lead to the packaging being compromised. This is 

further aggravation and shows the gravity ofthe violation. . . \ . 
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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 of culpability is considered. As explained in the FAA'5 Post Hearing Brief, Fed 

Ex is one ofthe world's largest shippers. Fed Ex accepts and places into air commerce 

ten ofthousands of hazardous 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 in the area of acceptance and transportation ofhazardous 

materials their degree of culpability is high. In addition, the sheer volume ofhazardous 

materials placed into air commerce by Fed 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 commerce the more likely a hazardous material 

accident will occur. 

Violation history is also a factor in determining 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 to be 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 been justified in choosing the maximum of 

the range for seven violations in the acceptance group, which would produce the amount 

of$350,000. The FAA considered the corrective action taken and the severity ofthe 

violations along with the aggravating factors and assigned a penalty of$32,500 per 

marking violation (5X) and $10,000 per packaging violation (2x) , which yielded a 
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penalty of $182,500. This penalty is very reasonable considering that it is much lower 

than the maximum civil 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 of the 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 of a sanction is not to be overturned unless it is unwarranted in law or without 

justification in fact," 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 and justified 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 or material that the Secretary of 

Transportation has determined is capable ofposing an unreasonable risk to health, safety, 

and property when transported in commerce", and has been so designated. 49 C.F.R. 
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FAA REG COUNSL AGL7 .. 03/18/2010 12:27 FAX 847 294 743B 

§171.8. Therefore, acceptors and tra.nsporters of inherently dangerous materials such as 

hazardous materials have a very high duty of care. 

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 of the 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 box is used as packaging. Many types of things 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 that the 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 against Fed 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 

in the 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 of the 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. 
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Respectfully submitted this 191iJ dayofMarch. 2010. 

Kate Barber 

Attorney 

Office ofthe Regional Counsel 
FAA REa COUNSL A6L7 IjtJOlO/OlV 203119/2010 12:27 FAX 847 294 7498 

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CERTlFICATE OF SERVICE 

J hereby certifY that the foregoing Post-Hearing Brief ofClosing Argument has been mailed 

by Federal Express to the following: 

The Honorable Richard C. Goodwin 

Administrative Law Judge 

Office of Hearings, 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 

o 

Dated