MAR ~ 8 aoro 

UNITED STATES OF AMERICA ^^'^^^^^^0 QOCKl 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS - WASHINGTON, D.C. 

In the matter of: 

THRESHOLD AIR CHARTER, INC. 

Respondent 

APPLICATION FOR 

ATTORNEY'S FEES AND 

COSTS UNDER EQUAL 

ACCESS TO JUSTICE ACT —1 

ASSIGNED TO - The Honorable RICHARD C. GOODWIN Jj 

COMES NOW the Respondent THRESHOLD AIR CHARTER, INC., eg 

Respondent in the above entitled matter, for itself alone, and pursuant to 14 CFR §14.01 of 

the Rules Implementing the Equal Access to Justice Act of 1980 submits this application to 

the Administrative Law Judge in support of its application for attorney's fees and expenses. 

STATEMENT OF THE CASE 

On January 27, 2009 the FAA issued a Notice of Proposed Civil Penalty. At that 

time the Respondent did not have counsel and the principals of Respondent held an informal 

conference with FAA counsel. The parties were unable to resolve the matter informally at 

that time and subsequently, on April 16,2009, a Final Notice of Proposed Civil Penalty was 

issued assessing the Respondent the sum of $ 15,675.00 for alleged violations of the Federal 

Aviation Regulations. 

As this application is read, the ALJ should be apprised that no new facts have come 

to the attention of the Agency which would have caused them to change their position. 

Rather, the FAA, decided to dismiss the charges against the Respondent on the same set of 

facts with which it took initial action. In short, the FAA kvas not substantially justified in 

initiating this legal action against the Respondent/Applica|nt., 

FACTS OF THE CASE 

The Respondent Threshold Air Charter, Inc. (hereinafter referred to as "Threshold") 

is a Part 135 Air Carrier with its principal place of business in Chino, California. 

Among the various aircraft that is operated by Respotident is N416CG, a Gulfstream 

GA-1159, a large corporate jet commonly known as a G-II (pAcinounced"G-2"). This aircraft 

Page 1 

APPLICATION FOR ATTORNEY'S FEES uHfDER EAJA 
is manufactured by Gulfstream Aerospace Corporation. 

Threshold's Operations Specifications (hereinafter "Op Specs"), which are required 

to be approved by the FAA before they can be used, require that this aircraft be maintained 

in accordance with the manufacturer's computerized maintenance program. In effect this 

means that the manufacturer, not the certificate holder or the FAA, determines how the 

aircraft should be maintained. A copy of the appropriate section of Threshold Air Charter 

Inc.'s Operations specification is attached hereto as Exhibit "A" and incorporated herein by 

reference. 

The computerized maintenance program required an inspection of a particular portion 

of the aircraft by x-ray technology. The technical terminology for the inspection is 

referenced as "Gil CMP 539535-Fuselage Station 580 NDT (Comscan) Inspection". This 

inspection was due on November 30, 2007. 

When the inspection was due. Threshold flew the aircraft to Los Angeles 

International Airport to Landmark Aviation a Part 145 repair station to have the work 

performed. Unfortunately, when the inspection began, the X-ray machine broke and the 

work could not be completed. 

As a result of the failure of the equipment, Threshold through its Part 145 Repair 

Station (Aviation Maintenance Group) contacted the manufacturer and requested an 

extension to the inspection. If the manufacturer believes that the request will not 

compromise safety, the manufacturer will issue what is known as a Letter of No Technical 

Objection (NTO). As a result of this request, a letter was received from Gulfstream on 

November 16, 2007 stating that: 

"This letter is in response to your request to extend the next due compliance date 

for the Chapter 5 scheduled maintenance check listed below. Our computerized 

Maintenance Program records indicate this inspection Vcheck is due on 11/30/07. You 

have requested to extend compliance of the followmg Maintenance Checks until 

02/28/2008 due to equipment repair and scheduling cortcerns: 

Gil CMP 539535 - Fuselage Station 580 NDT (ComScdn) Inspection. 

Based on Gil fleet history, Gulfstream concludes mat the requested (sic) will have 

no impact on the safety or operational capabilities of your aircraft. There is the possibility 

of incurring additional maintenance costs by delaying the maintenance check listed in this 

request. 

Gulfstream has no technical objection with your re)guestfor the Fuselage Station 

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APPLICATION FOR ATTORNEY'S FEES UMDE R EAJA 
(FS) 580 Bulkhead NDT (ComScan) Inspection, CMP Code 539535. However, final 

authorization of this deviation must be obtained through your local Airworthiness 

Authority." 

A copy of the subject NTO letter is attached hereto as Exhibit "B" and incorporated 

herein by reference. 

Based upon prior NTO letters. Threshold and its Part 145 repair station have always 

interpreted the words "local Airworthiness authority" as referring to the Director of 

Maintenance for Threshold rather than the FAA. Had Gulfstream meant the FAA, they 

would have used that short phrase rather than the longer, non specific description. In fact. 

Threshold has had a number of NTO letters issued to them by the manufacturer and none of 

them have ever had FAA approval even though the FAA has known of the situations. No 

approval was ever obtained by Threshold from the FAA to operate the aircraft during the 

extension period nor were the FAA even notified of the situation. Threshold, as an air carrier 

believed that FAA approval was not necessary. 

As a result of the NTO letter. Threshold kept the aircraft in its charter fleet and 

operated the same during the period of extension in accordance with Part 135 of the Federal 

Aviation Regulations. 

The X-ray equipment was eventually repaired and on February 28,2008, a comscan 

inspection was performed for N416CG and no defects of any type were detected. The 

logbooks were appropriately signed off 

As part of normal oversight and review of records of Threshold, the FAA discovered 

the NTO letter and the operation of the aircraft between November 30, 2007 and February 

28, 2008. 

CONTENTIONS OF THE PARTIES 

The FAA contends that Threshold Air Charter should have sought prior FAA 

approval to operate the aircraft (N416CG) after it receivec^ the NTO from Gulfstream. The 

FAA contends that the failure to obtain this approval constituted an operation in violation 

of its Operations Specifications (FAR §119.5(1) and FAR1§91.403(C). 

Threshold contends, and it raised the issue at the informal conference that: 

(1) Its maintenance program as set forth in the Operations Specifications which 

were approved by the FAA requires that| it follow the manufacturer's 

computerized maintenance program. 

(2) By issuing the Letter of No Technical Objectilpn, the manufacturer modified 

Page 3 

APPLICATION FOR ATTORNEY'S FEES UNbER EAJA 
its computerized maintenance program for that specific aircraft. 

(3) Safety (according to the manufacturer) was not compromised by the delay in 

conducting the inspection and that determination was made by the 

manufacturer. 

(4) There are no Federal Aviation Regulations, Orders, Operation Specification 

limitations. Advisory Circulars or any published documentation requiring 

that FAA approval be obtained after receipt of an NTO letter. As a matter of 

courtesy, it may be done but there is no mandatory requirement. If it is not 

a mandatory requirement, it cannot be a violation. 

Respondent/Applicant contends that under our system of laws, and specific reference 

is made to the Federal Aviation Regulations, if something is not specifically prohibited, then 

it is permitted. 

ULTIMATE RULING OF CASE 

The FAA on January 28, 2010 (erroneously dated 2009) unilaterally withdrew its 

complaint in this matter. There was no settlement of the case and there were no new issues 

or facts brought to the attention of the FAA which caused them to withdraw. 

Thereafter on February 2,2010, the ALJ issued is Order of Dismissal with Prejudice. 

WHY FAA WAS NOT SUBSTANTIALLY JUSTIFIED 

IN PURSUING THIS MATTER 

Applicant is the Prevailing Party in this matter. The FAA was or should have been 

aware prior to its issuance of the Final Notice of Proposed Civil Penalty that there were no 

regulations that covered NTO letters issued by the manufacturer of the aircraft. The FAA 

should have known that the actions of the Respondent/Applicant, while they may not have 

been liked by the local FSDO, did not constitute a violation of the regulations. 

As a general premise, who better than the manufacturer, who has an approved 

computerized maintenance program, has knowledge regarding whether a required inspection 

can be extended? In this situation, the certificate holder idid exactly what its operations 

specifications instructed it to do - it followed the directions of the aircraft manufacturer. As 

a result of the extension by Gulfstream, the inspections were not overdue. Therefore, there 

was no violation of either operations specifications or an appjroved maintenance program as 

alleged by the Agency. 

On March 26, 2007, the Assistant Chief Counsel foJi* Regulation, Office of Chief 

Page 4 

APPLICATION FOR ATTORNEY'S FEES UNtoER EAJA 
Counsel, FAA, issued a written opinion on the question of "When a manufacturer issues 

a No Technical Objection letter to a customer regarding an item which meets the 

definition of minor repair or alteration per the FARs, is it mandatory for that customer 

to take that NTO to their local FSDO for approval before returning the aircraft to 

service?" Keeping in mind that the inspection which is the subject of this litigation is 

maintenance which does not rise to the level of a repair or alternation. However, the basic 

premise is the same; does it need prior FAA approval? What defines this case and is germane 

to the applicant's contention that the FAA was not substantially justified is the response: 

"Procedures for handling No Technical Objection (NTO) letters are not addressed in the 

regulations, [emphasis added] Individual operators should work with their local flight 

Standards District Office (FSDO) on issues involving the acceptability of using NTOs...." 

What is relevant to the instant situation is that FAA approval is discretionary through the use 

of the word "should" rather than the word "musf. This memorandum was issued prior to 

the FAA issuing its Order. 

A copy of that legal opinion is attached hereto as Exhibit "C" and incorporated herein 

by reference. 

This matter was filed without any substantial legal justification to substantiate that 

a violation occurred. 

It was alleged by the FAA that the Respondent/Applicant violated two (2) FAA 

regulations when it operated the aircraft during the extension period.. 

The first alleged violation [FAR §119.5(1)] was an allegation that Threshold Air 

Charter, Inc. failing to operate its aircraft in accordance with its operations specifications.. 

The FAA knew ftill well that the Respondent was following Gulfstream's computerized 

maintenance program. The NTO was part of that program. 

The second alleged violation involves FAR §91.403©. This is a convoluted 

regulation which basically requires that no person shall operate an aircraft unless it complies 

with the inspection intervals set forth in accordance with its operations specifications or an 

inspection program approved under FAR §91.409(e). Section 91.409(e) in turn obligates 

a person operating a turbojet multi-engine airplane to have a particular inspection program 

approved by the Administrator and among those designated programs are "A current 

inspection program recommended by the manufacturer." [FAR §91.409(f)(3)]. 

The FAA knew that the Respondent had a maintenance program approved by the 

FAA whose specific terms and conditions were established by the manufacturer, including 

Page 5 

APPLICATION FOR ATTORNEY'S FEES UNI>ER EAJA 
those for a Gil CMP 539535 - Fuselage Station 580 ND T (ComScan) Inspection. The FAA 

knew that the manufacturer could extend that time for inspections under its maintenance 

program through Letters of No Technical Objection. The FAA had access to the opinions 

of its Chief Counsel who had opined that no regulations covered NTO letters and that there 

was no specific requirement that the same be approved in advance by the local FSDO. The 

FAA could cite no specific regulation. Order, Advisory Circular, Legal Opinion or any 

published document which covered NTO's. 

In effect, in this case, the FAA "made up" this requirement and when faced with the 

option of proving this matter in court, caved in and withdraw its complaint. The 

Respondent/Applicant was forced to defend itself and finally made the determination that it 

would litigate this matter regardless of cost on the basis of "Millions for defense, but not one 

dime for tribute". The FAA should not be allowed to ride roughshod without reason over 

small businesses causing them to spend substantial sums of money to defend themselves. 

While the decision of Threshold Air Charter, Inc. to fight this matter when it had the 

opportunity to settle might have been a poor decision but it a morally correct one. 

NET WORTH OF RESPONDENT 

Attached hereto as Exhibit "D" is the net worth Exhibit of respondent in accordance 

with 14 CFR §14.11 showing net worth of less than 7 million and not more than 500 

employees at the time the adversary adjudication was initiated. 

ATTORNEY'S FEES INCURRED 

Attached hereto as Exhibit "E" please find the Declaration of Steven L. Graff, 

counsel for the Respondent/applicant. Said declaration includes an itemization of the hours 

spent in connection with this matter, (i.e.: 70.2 hrs) a description of the services provided and 

the rate at which the fee was calculated. The declaration also includes his customary fees, 

the prevailing rate for attorneys in the community, the time spent in representation of this 

client and the complexity of the matter. The prevailing rate for attorney's fees in the 

community is far in excess of what is permitted under EAJA. 

COSTS INCURRED BY RESPONDENT FOR EXPERT WITNESS 

Attached hereto as Exhibit "F", please find the Resume of Charles Hicks, Jr. Esq., 

together with a sworn declaration and a copy of his billing. Mr. Hicks would have been used 

as an expert witness in this matter. He is an attorney as well p a retired FAA inspector (just 

several years ago) whose last job with the FAA was the! Technical Standards Branch 

Manager. His testimony would have been on the issue as the NT O letters and whether or not 

I 

I 

1 

Page 6 1 

APPLICATION FOR ATTORNEY'S FEES UNi)ER EAJA 
there was any requirement on the part of a certificate holder to obtain FAA approval. He 

would have provided opinion testimony as to whether or not the facts in this subject case 

indicated a violation. Further he would have testified on the issue as to whether or not the 

FAA was substantially justified in pursuing this applicant in view of the FAA guidelines set 

forth in Order 2150.3B. 

This case involved extremely complex issues involving maintenance manuals, 

operations specifications and substantial documentation of the Respondent. Mr. Hicks 

expertise as a former FAA Flight Standards employee was invaluable in helping defense 

counsel review all pertinent documentation and assisted in defense counsel preparing witness 

examination and cross-examination for trial. 

Mr. Hicks charged the sum of $300.00 per hour for his work and the total charge for 

Mr. Hicks was $5,550.00. In accordance with the discovery in this matter counsel for the 

Adminisfrator indicated she would not have any expert witnesses although she stated that she 

would have some of her inspectors testify as to "safety issues". Applicant does not know the 

prevailing wage for inspectors (including retirement and medical) so it caimot inform the 

court as to the compensation paid by the FAA for its expert witnesses. 

CONCLUSION 

Based upon the foregoing. Applicant requests the sum of $8,775.00 as attorney' s fees 

and the sum of $5,550.00 as costs for the expense of an expert witness. 

VERIFICATION PER 14 CFR §14.10(e) 

I hereby certify under penalty of perjury in accordance with the laws of the State of 

California that the information contained in this application is true and correct. 

DATED: February 27 , 2010 

STEVEN L. GRAFF, INC, 

A PfofSSSTojial Iraw Cbrodration^ 

STEVEN L. GRAFF 

P.O. Box 892409 

Temecula, CA 92589-2409 

(951) 303-6400 tel 

(951) 303-0723 fax 

Aviationcounsel@aol.com 

Attorney for Respondent 

Page 7 

APPLICATION FOR ATTORNEY'S FEES UNDER EAJA 
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U.S. Department 

ofTransportatlon 

Federal Aviation 

Admfnislralion 

Operation.s Specifications 

D072. Aircraft Maintenance- Continuous Airworthiness 

Maintenance Program (CAMP) Authorization 

HQ Control: 

HQ Revision; 

09/27/05 

01b 

a. The certificate holder is authoTtzccl to conduct operations under 14 CFR Part 135 of the Federal 

Aviation Regulations using tlie aircraft identified in the certificate holder's aircraft listing provided tlie 

following conditions are met. 

b. Each aircraft listed in tlie table below is authorized for use and shall be maintained in accordance with 

the continuous airsvorthiness maintenance program and limitations specified in these operations 

specifications. 

c. Tlie continuous airworthiness maintenance program must be sufficiently comprehensive in scope and 

detail to fulfill its respoiisibility to maintain the aircraft in an airvvortliy condition in accordance witli 

applicable FederalAviation Regulations and standards prescribed and approved by the Administrator. The 

program shall be included in the certificate holder's manual. 

d. Each aircraft and its component parts, accessories, and appliances are maintained in an airwortiiy 

condition in accordance with the time limits for the accomplishment of the overhaul, replacement, periodic 

inspection, and routine checks of the aircraft and its coinponenl parts, accessories, and appliances. Time 

limits or standards for dctennining lime limits shall be contained in these operations specifications or in a 

document approved by the Administrator and referenced in tliese operations specifications. 

e. Items identified as "on condition" shall be maintained in a continuous airworthy condition by periodic 

inspections, checks, service, repair, and/or preventive maintenance. The procedures and standards for 

inspections, checks, service, repair, and/or preventive maintenance, checks or tests, shall be described in the 

certificate holder's manual. 

r. Parts or subassemblies of components dial do not have specific time intervals shall be checked, 

inspected, and/or overhauled at the same time limitations specified for the component or accessoiy to which 

such parts or subassemblies are related or included at the time period indicated for the ATA chapter 

heading. 

Aircraft 

M/M/S 

GA-1159-1159 

CAMP Document 

Name and Number 

Gulfstream Aerospace Corporation 

Computerized Maintenance 

Program/Electronic Data Transfer 

Program 

(As Revised) 

Print Date: 4/8/2008 D072-1 

THRESHOLD AIR CHARTER INC 

Certificate No.: TZDA485K 
U.S. Department 

OfTransportatlon 

Federal Aviation Operations Specifications 

Administration 

1. Issued by the Federal Aviation Administration. 

2. These Operations Specifications are approved by direction of the Administrator. 

Serrano, Gabriel Principal Maintenance Inspector WP21 

3. Date Approval is effective: 10/18/05 Amendment Number: 1 

4. I hereby accept and receive the Operations Specifications in this paragrapli. 

Mehlinger, Eric NMN Chief Pilot, Part 135 Date: 10/18/05 

Print Date: 4/8/2008 D072-2 Certificate No.: TZDA485K. 

THRESHOLD AIR CHARTER INC 

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November 16, 2007 -

R&MENG07-159 

Mr. Andy McMaster 

Aviation Maintenance Group 

8352 Kimball Ave. BLDG F350 #3 

Chino, CA. 91708 

Phone:(909)606-1666 

Fax: (909) 606-2507 

Subject: Request for Extension of Chapter 5 Scheduled Maintenance Check. 

Gulfstream Gil, Serial Number 180 Registration Number N416CG 

This letter is in response to your request to extend the next due compliance date for the Chaptei 5 

scheduled maintenance chexl; listed below. Our Computerized Maintenance Program records 

indicate this inspection / check is due on 11/30/2007. You have requested to extend compliance 

of the following Maintenance Checks until 02/28/2008 due to equipment repair and Aircraft 

scheduling concerns: 

Gil CIvlP 539535 - Fuselage Station 580 NDT (ComScan) inspection 

Based on Gil fleet history, Gulfstream concludes that the requested will have no impact on the 

safety or operational capabilities of your au-ciTaft. There is the possibility of incurring additiona! 

maintenance costs by delaying the maintenance check listed in tlus request. 

Gulfstream has no technical objection widi youi request for the Fuselage Station (FS) 580 

Bulkhead NDT (ComScan) Inspection, CMP code 539535. However, final authorizadon of thit 

deviation must be obtained through your local Airworthiness Authority 

I tnisi this informadon will help in the operation of your GU aircraft and if we can be of fxirther 

assistance, please do not hesitate to contact us. 

JoyM. Silas Sr. 

Mintainability Engineering 
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March 26,2007 

CERTIFIED MAIL - RETURN RECEIPT REQUESTED 

Dassault Falcon Jet Corporation 

John K. Loh 

Director, Technical support 

Teterboro Airport 

Box 2000 

South Hackensack, NJ 07606 

800 Independence Ave., S.w. 

Washington, D.C. 20591 

Re: Request for Interpretation of the Part 135 Regulations Pertaining to Whether General 

Maintenance Manuals Used in Part 135 Operations are Approved by the Federal Aviation 

Administration (FAA), and Whether Minor Repairs and Alterations Must be 

FAA-Approved 

Dear Mr. Loh: 

This is in response to your letter dated October 22,2006, in which you asked for a Federal 

Aviation Administration (FAA) legal interpretation of "the Part 135 regulation which pertains to 

a 135 Operators General Maintenance Manual (part 135.21)." Your request appears to be based 

on the premise that some operators have indicated to Dassault Falcon Jet Corporation (Dassault 

Falcon) their belief that their General Maintenance Manuals (GMM) are approved by the FAA. 

Accordingly, they believe that all repairs and alterations to their aircraft, whether major or minor, 

must be approved by the FAA. On page two of your letter, you ask four specific questions on 

these matters. We will answer them in order. 

1. Please advise if in fact the approval of a Part 135 GMM constitutes the express FAA 

approval of all documents referenced within that document. 

FAA Answer. In order to provide context, you stated in the background section of your letter 

that an operator advised you of a statement in its manual that it "will use the OEM's 

maintenance manual in the maintenance of the aircraft." You stated further that the operator's 

perception is that, "since the GMM is approved by the FAA, then the data contained within 

that GMM then becomes approved data." The regiUation you refer to, section 135.21 of the 

Federal Aviation Regulations, 14 C.F.R. § 135.21, states, in pertinent part: 

Each certificate holder, other than one who uses only one pilot in the 

certificate holder's operations, shall prepare and keep current a manual 

setting forth the certificate holder's procedures and policies acceptable to 

the Administrator. This manual must be used by the certificate holder's 

flight, ground, and maintenance personnel in conducting its operations. 

Printed from Summit Aviation's Digital Aviation Reference Library, 2/26/2010 

Page 1 
By its terms, the regulation requires only that the manual be "acceptable" to the FAA. If we 

understand your question correctly, it seems to be based on inquiries you have received that 

set forth an erroneous premise that the operators' GMMs are approved by the FAA. As a 

regulatory matter, such approval is not required. Moreover, the performance rules of the 

FAA's maintenance regulations, specifically 14 C.F.R. § 43.13(c), provide, in pertinent part, 

that: 

Unless otherwise notified by the Administrator, the methods, techniques, 

and practices contained in the maintenance manual or the maintenance part 

of the manual of the holder of an air carrier operating certificate or an 

operating certificate under Part 121 or 135 .... constitute acceptable means 

of compliance with this section. 

Nevertheless, operators' GMMs may contain documents that require formal approval by the 

FAA. By way of example, portions of the Structural Repair Manual (SRM), Weight and 

Balance Manual, and the Airworthiness Limitations section of the Instructions for Continued 

Airworthiness (ICA) [see H2504 "Airworthiness Limitations section" of Appendix H to 14 

C.F.R. part 25] have data that is FAA-approved. Details of GMMs may vary among 

operators, depending on each particular operator's specific needs and requirements. 

Generally, each certificate holder works with its local Certificate Management Office (CMO) 

in developing an acceptable manual, including which portions are FAA-approved. Questions 

concerning a given operator's GMM should be addressed to that operator's local CMO. 

2. Please advise if there is any condition in which the FAA considers the Dassault Airplane 

Maintenance Manual as approved data. 

FAA Answer. As noted above, only the Airworthiness Limitations section of the Instructions 

for Continued Airworthiness (ICA) prepared by a manufacturer is required to be 

FAA-approved. The essence of your letter is in the context of Part 135 operators' 

maintenance manuals, and, with respect to an operator's using its GMM in maintaining its 

aircraft, our answer above applies. 

3. Please advise if an operator's operation luider Part 135 in any way changes the 

requirements to establish the needs for return to service of Minor versus Major repairs. In 

essence, is there any mandate to have approved data for a repair or alteration that per the FAR's 

meets the definition of minor? 

that: 

FAA Answer. Section 135.437(b), 14 C.F.R. § 135.437(b), provides, in pertinent part, 

A certificate holder may approve any airframe, aircraft engine, propeller, 

rotor, or appliance for return to service after maintenance, preventive 

maintenance, or alterations that are performed .... However, in the case of 

a major repair or alteration, the work must have been done in accordance 

Printed from Summit Aviation's Digital Aviation Reference Library, 2/26/2010 

Page 2 
with technical data approved by the Administrator. 

Therefore, if a proper determination has been made that the repair or alteration at issue is 

minor, FAA-approved technical data is not required. 

4. One final interpretation - when a manufacturer issues a No Technical Objection letter to a 

customer regarding an item which meets the definition of minor repair or alteration per the 

FAR's, is it mandatory for that customer to take that NTO to their local FSDO for approval 

before returning the aircraft to service? 

FAA Answer. Procedures for handling No Technical Objection (NTO) letters are not 

addressed in the regulations. Individual operators should work with their local Flight 

Standards District Office (FSDO) or CMO on issues involving the acceptability of using 

NTOs. As noted above, however, if the repair or alteration at issue meets the regulatory 

definition of a minor repair or a minor alteration, FAA-approved technical data is not 

required for the repair or alteration. 

We hope the above answer responds to your needs. 

Sincerely, 

Rebecca MacPherson 

Assistant Chief Counsel for Regulations 

Office of the Chief Counsel 

Printed from Summit Aviation's Digital Aviation Reference Library, 2/26/2010 

Page 3 
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From: 02/26/2010 03-. 51 «704 P.001/002 

•«a'.:'V- "ii: jVf .^utiig .-jjjfciwf ;y.i i THRESHOLD! 

I s. AIR CHARTER, ING, 'i^ 

2/26/10 

To: Whom it may concern. 

My name is Maik DiLullo, I am the Chief Executive Officer of Threshold Air Charter, 

Inc. Attached please find a balance sheet covering fiscal year 2008 for Threshold Air 

Charter Inc., this is being provided as proof that the Corporation does not have assets/net 

worth of over $7,000,000.00, also there are no affiliate companies financially joined with 

Threshold Air Charter. 

Additionally, Threshold Air Charter Inc., has never employed over 500 employees at any 

time and specifically not during the time in question. 

Respectfully, 

MarkDiLtBIoTCEO 

= = = 8352 Kimball Ave. • BIdg. F350 #3 • Chino. CA 91708 ' 

Phone: (909) 606-6319 • Fax: (909) 606-1173 • Air Carrier Cert. # TZDA485K 
From: 02/26/2010 09:52 ff704 P. 002/002 

9:51 AM Threshold Air Charter, Inc. 

02/26/10 Balance Sheet 

Accrual Basis As of December 31,2008 

Dec 31, 08 

ASSETS 

Current Assets 

Checking/Savings 

1000 •Qenerel Account 68,429.35 

1020 • Payroll Account 60.00 

1030 • Petty Cash -3,000.00 

Total Checking/Savings 65,489.35 

Accounts Receivable 

1200 • Accounis Receivable \ 15,506.56 

Total Accounts Receivable 15,506.56 

Other Current Assets 

.1499 • Undeposited Funds -219,112.SS 

1615 • Intercompany Transfer 1,195,827.44 

1616.1 • Intsr-co Tfr - AMG -427,394.58 

1515.2 • Inter. Co MFG 1,000.00 

1515.3 • Inter, Co, TTI -299,781.61 

Total Other Current Assets 250,538.69 

Total Current Assets 331,534.60 

TOTAU ASSETS 331,634.60 

LIASILITIES a EQUITY 

Liabilities 

Current LlabllltieB 

Accounis Payable 

2000 • Accounts Payable 211,269.32 

Total Accounts Payable 211,269.32 

Other Current Liabilities 

2011 • Loan Payable • Lions Pride 2,900 00 

2012 - Loan Payable - Lisa Dilullo -11.179.60 

2400 • Intercompany Tran5fers(6-16-08) 

401 • AMG General -26.200.00 

402 • AMG Payroll -151,000.00 

404 • Threshold Technologies Inc. -217,400.00 

406'TTI-FBO -93,200,00 

406 • Threshold Textron -3,000.00 

407-Threshold iUfg -39,200.00 

408 • Threshold AMEX __ 4^00.00 

Total 2400 • Intercompany Tran8fers(6-16-08) -525,600.00 

Total other Current Uablllties -533,779.60 

Total Current Liabilities -322,510.28 

Total Liabilities -322,510.28 

Equity 

3500 • Retained Earnings -90,049.83 

Net Income 744,094.71 

Total Equity 654,044,88 

TOTAL LIABILITIES & EQUITY 331,534.60 

Page 1 

UNITED STATES OF AMERICA 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS - WASHINGTON, D.C. 

) FAA DOCKET: No. CP09WP0006 

In the matter of: ) DMS No. FAA-2009-0095 

) 

THRESHOLD AIR CHARTER, INC. ) DECLARATION OF 

) STEVEN L. GRAFF, ESQ. 

Respondent ) IN SUPPORT OF EAJA 

) APPLICATION 

) 

ASSIGNED TO - The Honorable RICHARD C. GOODWIN 

I, STEVEN L. GRAFF, ESQ., declare as folIoM^s: 

1. If called as a witness in the above entitled matter, I could competently testify under 

oath as follows. 

2. I am an attorney at law duly licensed to practice law and I have my offices at 43399 

Calle De Velardo, Temecula, CA 92592 and use P.O. Box 892409, Temecula, CA 92589-

2409 as my mailing address. 

3. I have been a practicing lawyer for approximately 42 years and am a former attorney 

with the Federal Aviation Administration. I specialize in representing aviation oriented 

clients, including air carriers, air/taxi commercial operators, fixed based operators, flight 

schools, maintenance facilities, mechanics, pilots, corporate flight departments and aircraft 

leasing firms. My representation includes, but is not limited to, all initial certification work, 

adverse actions, governmental regulatory issues, airport, transactional and litigation matters. 

In addition to providing general aviation business transactional and litigation 

assistance, I have a subspecialty in administrative law matters and represents clients before 

federal and state administrative agencies in matters involving government certification and 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
regulatory defense. I have appeared before and have argued cases before the Federal Aviation 

Administration, National Transportation Safety Board, Merit System Protection Board, 

Department of Transportation, United States Customs, State Department, United States 

District Court and United States Court of Appeals for 4th, 9th, 11th and D.C. Circuits. 

4. I was the former General Counsel for the National Organization of Air Carriers, have 

sat as Judge Pro-Tem in Superior Court in L. A. & Riverside Counties and am a past instructor 

in Aviation Law at Long Beach City College. 

5. I charge $350.00 per hour for my services which is the prevailing rate for my expertise 

in Southern California but I understand that I am limited to $125.00 per hour in this EAJA 

application. 

6. This case was extremely complex due to issues involving manufacturer' s maintenance 

program and letters of no technical objection. There was a voluminous amount of paperwork 

that was required to be reviewed. 

7. I was retained by Threshold Aviation to represent them afer the complaint was filed 

and was initially asked to prepare the Answer to the Complaint and the initial discovery to the 

Administrator. I became counsel of record officially on August 6, 2009 by notification to 

both the ALJ and FAA. 

8. The following is my documentation of fees and expenses based upon an hourly 

compilation only: 

DATE SERVICES RENDERED TIME 

05/29/90 Initial meeting with Mark Dilullo, President, Threshold 

Air Charter, Inc.; Receipt/Review FAA complaint; 

Prepare Answer on behalf of client in Pro-per; 

initial review of FAA documents 

and review of aircraft documents. 2.6 hrs. 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
DATE SERVICES RENDERED TIME 

06/11/09 

07/14/09 

Receipt/review Assignment of judge; prepare discovery 

to FAA (Set No. 1) with letter to client. 1.5 hrs 

Receipt/Review FAA's responses to discovery; 

Telecon with client re: need for additional discovery. .7 hr 

08/05/09 Meeting with Mr. Dilullo at Riverside County Courthouse; 

Review fiirther documents and discussion as to 

strategy and tactics in defense of action. Provided 

Procedural Order of June 9. 2.1 hrs 

08/06/09 

08/14/09 

Prepare letter to ALJ Goodwin requesting extension and 

notification as retention of counsel for Respondent; 

Reviewed expert files for local expert witness (requirement 

that witness be former FAA). 1.1 hrs 

Prepare Requests for Admissions; Prepare Interrogatories; 

File review; telecon with client. 4.6 hrs 

08/18/09 Receipt/review e-mails fi:om Marcus Giordano (DOM) 

Re: additional documentation not initially provided; telecon 

with DOM regarding need for further documents and 

need for testimony at time of trial. 1.3 lirs 

08/24/09 Receipt/review Amended Procedural Order; FAX to 

ALJ re: scheduling of trial. .5 hrs 

08/25/09 Receipt/review letter fi:om client forwarding letter from 

FAA regarding effect of NTO letter; telecon with DOM 

regarding letter received; Receipt/review discovery request 

from FAA; prepare fax to counsel re: extension of discovery 

and improper calculation of time; prepare fax to client 

with cc of FAA discovery and instructions regarding; 

how to respond. Prepare tentative questions ford Inspector 

FAA Serrano at after discussion with DOM. 3. Ihrs 

08/31/09 Telecon with FAA counsel; fax to FAA counsel re: all 

cut off dates for discovery and motions; Receipt/ Review 

E-mail from Mr. Dilullo regarding information not initially 

provided; telecon with Mr. Dilullo re: responses to FAA 

discovery. 1.8 hrs 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
DATE SERVICES RENDERED TIME 

10/19/09 Receipt/review FAA responses to discovery (all objections): 

Prepare fax to FAA counsel re: "meet and confer" and that 

FAA responses were improper; Prepare responses to 

FAA requests for admissions; Numerous telecons 

Mr. Dilullo as to avenues available to compel discovery. 

Determination that motions would not be 

cost effective as issues can be proven independently. 

Advised client to provide full disclosure of all documents 

regardless of FAA's objections and failure to respond 

since ALJ could issue preclusionary order at time of trial 

if not given in discovery. 3.4 hrs 

10/20/09 Telecon with DOM; receipt/review e-mail from DOM 

regarding FAA request for documents; advised DOM not 

to provide "informal discovery" to FAA; Received call 

from Mr. Dilullo very upset at actions of FAA: 

Prepared FAX to FAA counsel complaining about actions 

of inspector and that the same should "cease and desist". 2.1 hrs 

10/27/09 Receipt/Review FAX fi-om FAA regarding Respondent's 

discovery responses ("meet and confer" letter); telecon 

with client regarding further responses. .9 hrs 

11/09/09 Prepare additional examination questions for FAA 

Inspectors; Receipt/Review Notice of Trial; Telecon 

with client re: meeting to prepare for trial. 1.2 hrs 

11/16/09 Review file and prepare additional examination 

questions for FAA Inspectors, research issue of 

use of word "should" in all FAA documents; 

Discovered that FAA Order 1270.1 defines 

"Should" as desirable or preferred but not mandatory; 

Used in FAA opinion letter given to client. 2.4 hrs 

11/18/09 Meeting at client's Chino office with Mr. Dilullo, 

Mr. Giordiano; Mr. McMasters, Mr. Nichols and other 

staff in preparation for trial; interview witnesses and 

review documentation that may not have been provided; 

Made presentation as to how trial proceeds and general 

information all witnesses need at time of trial. 4.3 hrs 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
DATE SERVICES RENDERED TIME 

11/20/09 

11/20/09 

11/23/09 

11/25/09 

11/30/09 

12/03/09 

12/07/09 

12/14/09 

Prepare partial responses for discovery. 2.4 hrs 

Telecon with potential expert witness Charles 

Hicks regarding (1) whether violation existed at 

all; (2) whether legal action was even justified; 

(3) does issue even fall within FAA's matrix in 

Order2150.3B? 1.1 hrs 

Complete discovery responses; telecon with 

Mr. Dilullo and Mr. Giordano re: responses and 

documents provided; send copy of documents to 

expert witness Hicks. 2.4 hrs 

Telecon with expert witness Hicks regarding facts of 

case and legal issues; telecon with Mr. Giordano 

regarding setting up meeting in Chino. 1.7 hrs 

Meeting with expert witness Hicks & Mr. Giordano 

at client's facility for fiill review of all documents in 

preparation for trial. 3.1 hrs 

Send final document package to FAA counsel; 

Telecon with expert witness Hicks re: resume; review 

FAA rules and Judge's pre-trial order re: service. 1.5 hrs 

Receipt/Review expert witness resume; Discussion with 

Mr. Dilullo regarding use of Mr. Hicks and payment for 

same. .5 hrs 

Telecon with Mr. Nichols regarding need for expert 

witness as to (1) legal issues; (2) FAA interpretations; and 

and foundation for FAA Orders. .3 hrs 

12/31/09 Telecon with Mr. Giordano regarding FAA request for 

additional information; instructed client to tell FAA 

to submit request through legal office. .4 hrs 

01/08/10 Telecons with Lisa Toscano (FAA Counsel) re: settlement 

and issues in case; review opinion letter of Chief Counsel's 

Office provided by counsel re: NTO letters; Informed FAA 

that no regulations prohibited conduct set forth in CP Order; 

discussions Re: civil compromise. 1.1 hrs 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
DATE SERVICES RENDERED TIME 

01/11/10 Review documentation provided by Andy McMasters 

in preparation for trial regarding his request of 

Gulfstream for NTO letter; discussion with witness 

as to statements of Gulfstream regarding any need to 

obtain FAA approval. .9 hrs 

01/15/10 

01/21/10 

Receipt/review of documents from FAA regarding 

civil compromise of $10,000.00.; telecon with cHent. .7 hrs 

Telecon with client and telecon with FAA regarding 

civil compromise of $5,000.00. FAA refiisal. 1.2 hrs 

01/22/10 Telecon with Mr. Dilullo re: strategy and response 

to FAA. 1.0 hrs 

01/25/10 Prep e-mail to FAA counsel informing her that 

Respondent will not settle and to prepare 

for trial. .1 hrs 

01/25/10 

01/28/10 

Initial consideration of contents and notes for 

opening statement; areas of examination and rough 

notes for examination of expert witness Hicks; 

Further preparation of cross-examination questions. 3.8 hrs 

Telecon with Mr. Nichols re: NTO Letters; 

Receipt/Review e-mail from Mr. Giordano regarding 

prior NTO letters; further preparation for trial 

including direct examination questions for Threshold's 

defense witnesses. 2.6 hrs 

01/28/10 Receipt/Review FAA's Withdrawal of Complaint; 

Telecon to Mr. Dilullo that FAA folded. .3 hrs 

02/02/10 Receipt/Review Order of Dismissal with Prejudice; 

Telecon with Mr. Dilullo re: application for EAJA fees; 

Advised client that FAA was not substantially justified 

in that they were aware of legal opinion issued prior to 

their CP Order. .4 hrs 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
DATE 

02/10/10 

02/26/10 

02/27/10 

SERVICES RENDERED 

Preparation of letter to client advising as to requirements 

for filing an EAJA application; copy of regulation sent 

to client. Advised client that reimbursement is only at 

the rate of $125.00 per hour. 

Initial Preparation of EAJA AppUcation; telecon to Mr. 

Dilullo requesting financial statement. Telecon with 

expert witness Hicks regarding a copy of his billing. 

Review file, documents and FAA regulations 

in preparation of submitting EAJA Application. 

Prepare Final Draft of EAJA application, including 

exhibits and declaration of counsel in support of 

application. 

TIME 

.7 hrs 

6.2 hrs 

4.2 hrs 

Tota 70.2 hrs l hours for legal representation of Applicant's Counsel 

Based upon the foregoing hours, at the statutory rate of $125.00 per hour, the claim 

for attorney's fees is $8,775.00. If the approved rate has increased, the application is increased 

by the same percentage as the increase of fees. 

I declare under penalty of perjury in accordance with the laws of the state of California 

that the foregoing is true and correct and that this declaration is executed this 27"' day of 

Fehmary 2010 at TemecularCoiifomia. 

STEVEN L. GRAFF 

Declarant 

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DECLARATION OF STEVEN L. GRAFF IN SUPPORT OF EAJA APPLICATION 
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DECLARATION OF CHARLES HICKS, JR., ESQ. 

I, CHARLES HICKS, JR., ESQ., declare as follows: 

Attached as exhibit one, is a breakdown of the time I spent preparing for the scheduled 

trial between the Federal Aviation Administration and Threshold Aviation. 

I declare under penalty of perjury under the laws of the state of California that the 

foregoing is true and correct. 

Date: 2/27/2010 

Charles Hicks, Jr., Esq. 

Page 1 of 2 
9 

10 

11 

12 

13 

14 

15 

16 

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18 

19 

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Date 

Total 

Billable Hours 

11/20/2009 1.1 hours 

11/25/2009 1.4 hours 

11/27/2009 2.0 hours 

11/29/2009 1.0 hour 

11/30/2009 3.0 hours 

11/30/2009 1.0 hour 

Billable Hours 

Of 

Charles Hicks, Jr., Esq. 

@$300 per hour. 

$330 

$420 

$600 

$300 

$900 

$300 

Activity 

Telecom with Steve Graff, Threshold 

Aviation's primary counsel. 

Telecom with Steve Graff, Threshold 

Aviation's primary counsel. 

Review of FAA Order, and 

Handbooks in preparation for 

meeting with Threshold Aviation. 

Additional Review of FAA Order, 

and Handbooks in preparation for 

meeting with Threshold Aviation. 

Meeting with Threshold Aviation 

and Steve Graff 

Travel time to and from meeting 

with Threshold Aviation. 

4.0 hours 

2.5 hours 

2.5 hours 

18.5 hours 

$1,200 

$750 

$750 

$5,550 

Reviewed company manuals and 

procedures. 

Review of documents in preparation 

for trial. 

Continued review of documents in 

preparation for trial. 

Page 2 of 2 
Charles Hicks, Jr., Esq. 

5122 Katella Ave., Suite 307 

Los Alamitos, CA 90720 

Phone:(562)682-6686/Fax:(866)368-8583 

attorneychuck(^verizon.net 

PROFILE: Forty-two years experience in civilian, commercial, military, governmental 

and general aviation; including air carrier and operator regulatory oversight in 

the areas of operations and ain/vorthiness; attorney working in the areas of 

aviation regulatory compliance and defense. 

Retired from the Federal Aviation Administration with over Thirty years of 

service in the following capacities: 

Ainways Facilities Technician 

Flight Procedures Technician 

Aviation Safety Inspector 

Technical Training Program Manager 

Flight Procedures Branch Manager 

Regional Aviation Safety Program Manager 

Technical Standards Branch Manager 

Los Angeles Flight Standards District Office Manager 

Retired Army Aviator 

UH-1 

OH-58 

C-12 

Attorney at Law: eligible to practice before the California and 

Federal Courts 

EXPERTISE: Regulatory compliance: dealing with; Certification, ongoing regulatory 

ISO 9000:2008 and ASO 9001 compliance of air carriers and operator and 

Maintenance Repair Organization. 

Flight procedures development. 

Airport and Airspace Analysis. 

Obstruction Evaluation. 

Legal: Administrative law, and civil litigation, expert testimony, legal research, 

deposition and documentation analysis, flight crew standard of care, witness 

interviews, legal aspects and ramifications of aircrew performance, pilot 

actions, air traffic control procedures, crew resource management, pilot 

training, Federal Aviation Administration (F/\A) enforcement investigation 

procedures, and F/\A certificate management and oversight. 

EXPERIENCE: Electronic Technician with the United States Air Force and FAA. 

Flight Inspection Technician with the FAA performing airborne electronic 

analysis of ground based navigation signals. 
Flight Instructor in general Aviation Aircraft. 

Principal Aviation Safety Inspector, Operations: General Aviation and Air 

Carriers. 

Technical Training Program Manager: provided management oversight of the 

FAA's regulatory, except airports, and security training programs. 

Fight Procedures Branch Manager: managed all aspects of flight procedure 

development in the Western Pacific Region of the FAA, evaluated and 

approved the uses of international flight procedures by US flag carriers in the 

Western Pacific, and evaluated proposed changes to National Airspace 

System and the construction of structures for their impact on aviation safety. 

Regional Safety Program Manager: Managed the AA Western Pacific 

Region's Aviation Safety Program. 

Technical Standards Branch Manager: provided technical guidance and 

assistance to Flight Standards District Offices (FSDO)in the areas of 

certification, surveillance and certificate management of air carriers, air 

operators and maintenance repair organizations in the Western Pacific 

Region. Directed the evaluation of enforcement cases written by FSDOs to 

determine if there was sufficient evidence to support a proposed 

enforcement action and whether the recommended sanction was 

appropriate. 

United States Army Aviator in helicopter and fixed-wing. 

Attorney at Law: working in the area of Aviation Law, administrative and civil. 

Aircraft owner (Cessna -120, 150, 170, and 177). 

RELEVANT EDUCATION: 

Edison State University - BS in Applied Science and Technology (Aviation). 

Pacific Coast University, School of Law: Jurist Doctor Degree. 

Gladhill Associates International: ISO 9000: 2008 and AS-9100B Lead 

Auditor Training Course. 

PROFESSIONAL QUALIFICATIONS: 

Airline Transport Pilot 

Type Certificates: DC-9 

Single and multi-engine land, instrument airplane and helicopter 

Flight Instructor: airplane, helicopter, and instrument 

Over 4, 00 hours flight time. 

PROFESSIONAL AFFILIATIONS: 

Lawyer Pilot Association 

NTSB Bar Association 

California Bar Association 

Aircraft Owners and Pilots Association (AOPA) 

AOPA Legal Panel 
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CERTIFICATE OF SERVICE 

I hereby certify that I have this day, placed in the United States mail, postage prepaid,, the 

original and copy of the APPLICATION FOR ATTORNEY'S FEES UNDER EAJA 

TOGETHER WITH EXHIBITS A THROUGH F addressed to: 

The Honorable RICHARD C. GOODWIN 

Office of Hearings, M-20 

U.S. Dept. OfTransportatlon 

1200 New Jersey Avenue, S.E. 

East Building Ground Floor, Room El2-320 

Washington, D.C. 20590 

A duplicate original and a copy was also this day, placed in the United States mail, postage 

prepaid, addressed to: 

FEDERAL AVIATION ADMINISTRATION 

600 Independence Ave, S.W. 

Wilber Wright Bldg, Suite 2W1000 

Washington, D.C. 20591 

Att: Hearing Docket Clerk, AGC 

A copy of the above document was also this day, placed in the United States mail, postage 

prepaid, addressed to: 

LISA J. TOSCANO, ESQ 

Office of the Regional Counsel, AWP-7 

FEDERAL AVIATION ADMINISTRATION 

P.O. Box 92007 

Los Angeles, CA 90009-2007 

I declare under penalty of perjury under the laws of the state of California that the foregoing 

is true and correct and that this document is executed on February 27, 2010 at Temecula, 

California. 

STEVEN L. G 

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APPLICATION FOR ATTORNEY'S FEES UNDER EAJA