RECEIVED 

UNITED STATES OF AMERICA OCT 1 9 2015 

FEDERAL AVIATION ADMINISTRATION HEARING DOCKET 

WASHINGTON, D.C. 

) 

In the matter of ) 

) 

FEDERAL AVIATION ) 

ADMINISTRATION, ) 

) 

v. ) 

) 

NATIONAL POWER CORPORATION ) 

FAA Docket No. CP10GL0212 

FDMS No. FAA-2013-0620 

COMPLAINANT'S APPEAL BRIEF 

Pmsuant to 14 C.P.R.§ 13.233(d), Complainant submits this Appeal Brief which 

perfects Complainant's appeal of the Initial Decision of Administrative Law Judge 

Richard C. Goodwin (the "ALJ") issued on July 24, 2015 in the above captioned matter. 

I. STATEMENT OF THE CASE 

Complainant served National Power Corporation ("Respondent") with a Notice of 

Proposed Civil Penalty on January 3, 2011, in the amount of$66,000, for violations of 

the Department of Transportation Hazardous Materials Regulations ("HMRs"). 

Specifically, Complainant cited violations of 49 C.P.R. §§ 171.2( e), 171.22(b )(1 ), 

171.22(g)(2), 172.604(a)(l), 172.702(a) and 173.185(f). A Final Notice of Proposed Civil 

Penalty was issued on August 1, 2013. Respondent requested a hearing on August 5, 

2013, and Complainant filed the Complaint on August 8, 2013. In the Complaint, 

Complainant requested that the ALJ assess a civil penalty in the amount of $66,000 for 

Respondent's violations of the HMRs. On August 19, 2013, a Notice of Assignment of 

Proceeding was issued naming the ALJ to preside over the hearing. 
Respondent filed a Consolidated Motion by Respondent for More Definite 

Statement, to Strike and Production of Documents on August 21, 2015. In response, 

Complainant filed an Amended Complaint on September 11, 2013. The ALJ issued an 

Order Denying Respondent's Motion on September 12, 2013. On September 23, 2013, 

Respondent filed its Answer. 

On September 29, 2014, a hearing for this matter was held in Chicago, IL. 

Complainant filed its Post-Hearing Brief of Closing Argument on December 11, 2014. 

Respondent filed its Post-Hearing Brief/Closing Argument on January 4, 2015, and 

Complainant then filed the Agency Response to Respondent's Post-Hearing Brief on 

January 15, 2015. The ALJ served his Initial Decision on July 24, 2015, and Respondent 

filed its Notice of Appeal on July 29, 2015. Complainant ftled its Notice of Appeal on 

August 4, 2015. 

II. STATEMENT OF FACTS 

Respondent is a battery manufacturer that regularly ships batteries in the course of 

its business. (Tr. 69: 10-18). On May 17, 2010, the FAA conducted a Hazardous 

Materials ("HAZMAT") inspection of Respondent's facility. (Tr. 18-9: 17 -19). During 

the course of the inspection, an FAA HAZMA T manager, Christopher Zawarus, 

discovered that Respondent had shipped 11 separate packages containing lithium ion 

batteries. Exh. Cl - C11. Lithium ion batteries are classified under the HMRs as 

UN 3480, Class 9, Packing Group II. (Tr. 24: 15-21). 

2 
When reviewing the shippers declarations for dangerous goods1 for the 11 

shipments (Tr. 23: 4-13), Mr. Zawarus discovered violations of the HMRs. Specifically, 

Mr. Zawarus found that the employee who prepared and offered the shipments did not 

receive instruction in the use of international HAZMA T standards for shipping 

HAZMAT,2 the emergency response information provided was not answered 24-hours a 

day,3 no authorization had been obtained from the Pipeline and Hazardous Materials 

Safety Administration ("PHMSA") for shipping the HAZMA T, 4 and the packaging used 

did not meet the applicable packaging requirements.' (Tr. 26-29: 4-20). Accordingly, 

Respondent violated four different offense categories: training, emergency response, 

packaging, and other (failure to receive authorization)6 See FAA Order 2150.3B at C-12, 

Matrix & Definitions (Figure C-1 ). 

Regarding the training violations, Mr. Zawarus found after reviewing the training 

record for the employee who prepared the shipments "that her [HAZMA T] training was 

DOT[ -]specific and did not include a course of study in the international standards for 

which the shipping paper was certified." (Tr. 21: 15-20; 26: 7-12). This training was 

necessary because Respondent utilized packing instruction 965 to prepare the shipment, 

which is an international instruction. (Tr. 72: 9-18; 75: 3-10). Because Respondent 

shipped these 11 shipments using an international standard, the employee preparing and 

1 The shippers declarations of dangerous goods contain infonnation regarding the nature of the shipment 

including the airway bill, the type ofHAZ:MAT, the packing group, and emergency response information. 

(Tr. 24-5: 6-9). 2 This was a violation of 49 C.F.R. §§ 171.22(g)(2) and 172.702(a) (training). 3 This was a violation of 49 C.F.R. § 172.604(a)(l)(emergency response). 4 This was a violation of 49 C.F.R. §§ 173.185(!) and 171.22(h)(1)(other, i.e., failure to receive 

authorization). 

5 This was a violation of 49 C.F.R. § 171.2( e) (packaging). 6 Complainant laid the foundation and had admitted into evidence 11 separate shipper's declarations for the 

11 separate shipments. (Tr. 23~52). Allll shipments contained the same HAZMAT and had the same 

violations identified. !d. The shipments were sent to two different address, one being Agilent Technologies 

in Santa Rosa, CA, and the other being Creation Technologies, Inc. in Burnaby, British Columbia. (Tr. 71: 

14-20; 77: 3-11; Exh. C1-Cl1). 

3 
offering the shipments was required to be trained in those international standards. (Tr. 72: 

9-18). 

The emergency response number provided by Respondent with these shipments 

was also in not in accordance with the HMRs. The telephone number supplied by 

Respondent was for a "general office number that was not answered outside the operating 

hours of six a.m. to six p.m." (Tr. 22: 3-10; 26: 15-19). "Hazardous materials offered in 

the [sic] commerce require an emergency response telephone number that's monitored at 

all times while shipments are in commerce." (Tr. 22: 12-15). This is so that "[i]n the 

event that there's an incident involving the package, frrst responders will contact that 

number to get response information." (Tr. 22: 16-20). 

As to the "other" violations, the shipments required- but did not have-- PHMSA 

authorization. The batteries shipped by Respondent were models SM 206 and 520-libat-2. 

(Tr. 121-2: 9-10). The batteries were prototypes and were untested at the time of the 

shipments, thereby requiring authorization fi"om PHMSA. (Tr. 29: 6-20; 123: 10-20; 131: 

4-22; 136-7: 19-2). Respondent admitted that the batteries were untested at the time of 

the shipments. (Tr. 52-3: 16-5; 120-1: 14-8; 124: 14-19). Respondent did not have 

authorization from PHMSA at the time Respondent offered these shipments for 

transportation by air. (Answer at 2; Tr. 126: 6-16). 

Finally, the HMRs require that untested prototype lithium ion batteries be 

packaged according to the packaging requirements of Packing Group I. (Tr. 26-7: 15-7). 

During the investigation, Mr. Zawarus deternrined that the fiberboard boxes used in the 

shipments were tested for Packing Group II. (Tr. 27-9: 8-20). Exhibits C-1 to C-11 show 

that NPC prepared and offered the untested prototype lithium ion batteries under Packing 

4 
Group II. Further, Mr. Thomas Vrablik, Executive Vice President for Respondent, stated 

that the batteries contained in the shipments were prepared in accordance with Packing 

Group II. (Tr. 111: 2-12). 

ALJ's Written Initial Decision 

In his initial decision, the ALJ found that Respondent violated 49 C.F .R. 

§§ 171.2(e), 171.22(b)(l), 171.22(g)(2), 172.203(±/, 172.604(a)(1)8

, and 172.702(a). 

Initial Dec. at 29. The ALJ found that Respondent did not violate 49 C.P.R. 

§ 173.185(±)9 Id. The ALJ assessed Respondent a penalty of$12,000.00, a reduction 

from Complainant's proposed penalty of$66,000.00. Id. at 30. 

On the matter of penalty, the ALJ found that Respondent took "swift and 

comprehensive action during and immediately after the FAA audit," and "there was no 

history of prior violations evidencing a systemic corporate culture guilty of regulatory 

disregard." Id. at 29. The ALJ further found that Respondent "admitted to some of the 

violations," but "[t]he violations were inadvertent and [Respondent] believed, incorrectly, 

they were in full compliance with the regulations." Id. Next, the ALJ found that the 66 

violations "resulted from six (6) acts of omissions." I d. The ALJ also found that 

Respondent "demonstrated a good cooperative attitude dealing with the FAA." I d. 

In addition, the ALJ found that Complainant failed to "prove the existence of 

aggravating factors other than the citation of six ( 6) violations in eleven (11) shipments 

7 Complainant did not cite 49 C.F.R. § 172.203(f) in its Complaint. That regulation is titled "Non-bulk 

packaging for liquid hazardous materials in Packing Group III" and is not applicable in this case. The ALJ, 

therefore, erred in fmding that Respondent violated section 172.203(±), as discussed below. 8 The ALJ incorrectly found tl1at Respondent violated "49 C.F.R. § 172.604(a)(10, (sic)." Initial Dec. at 22. 

The language used in tl1e AU's citation oftl1e regulation ("49 C.F.R. § 172.604(a)(10, (sic)") is the same 

language contained in49 C.F.R. § 172.604(a)(l), which he, presumably, intended to cite. Initial 

Dec. at 6, 22. 9 As discussed below, tl1e ALJ appears to have mistakenly cited a later version of 49 C.F.R. § 173.185(f). 

Complainant cited 49 C.F.R. § 173.185(f) as in effect at the time of the violations in 2010. 

5 
for the same conduct." Id. Further, he found that Complainant "failed to demonstrate how 

it used the sanction guidance to arrive at its proposed penalty," and "how its proposed 

civil penalty was appropriate to the alleged violations." I d. The ALJ also found that 

Complainant "failed to give adequate weight to matters in mitigation of the penalty 

requested." Id. at 30. 

III. STANDARD OF REVIEW 

On appeal, the FAA Decisionmaker considers whether each fmding of fact is 

supported by a preponderance of reliable, probative, and substantial evidence, and 

whether each conclusion oflaw is made in accordance with applicable law, precedent, 

and public policy. 14 C.F.R. § 13.233(b)(l)-(2). Complainant bears the burden of proving 

the appropriateness of the civil penalty, but Respondent bears the burden of proving 

affirmative defenses. 14 C.F.R. § 13.224(a); In re Seven's Paint & Wallpaper, Co., FAA 

Order No. 2001-6, 2001 WL 629388 (May 15, 2011). When an ALJ assesses a civil 

penalty that is not consistent with agency sanction policy, the Administrator may reverse 

the ALJ. In re Ventura Air Servs., Inc., FAA Order No. 2012-12, 2012 WL 6673077 

(Nov. 1, 2012). 

IV. STATEMENT OF THE ISSUES 

1. Whether the ALJ's determination that Respondent did not violate 49 C.F.R. 

§ 173.185(t) is supported by a preponderance of the reliable, probative, and 

substantial evidence, and is consistent with applicable law, precedent, and 

public policy. 

2. Whether the ALJ's sanction assessment is supported by a preponderance of 

the reliable, probative, and substantial evidence, and is consistent with 

applicable law, precedent, and public policy. 

6 
V. ARGUMENT 

1. The ALJ's fmding that Respondent did not violate 49 C.F.R. § 173.185(t) is 

not supported by a preponderance of the reliable, probative, and substantial 

evidence, and is not consistent with applicable law, precedent, and public 

policy. 

The ALJ found that Respondent did not violate 49 C.F.R. § 173.185(±), stating 

that Complainant did not make a prima facie case that Respondent violated this 

regulation with respect to any of the 11 shipments. Initial Dec. at 23. In 2007, PHMSA 

issued a final rule "in order to reduce the risks of battery-related fires in transportation." 

72 FR 44930 (Aug. 9, 2007). The fmal rule revised 49 C.F.R. § 173.185 to require that 

shippers conform to certain requirements prior to shipping lithium cells and batteries. 

Section (f) of the regulation provides that"[ a]lithium cell or battery that does not comply 

with the provisions of this subchapter may be transported only under conditions approved 

by the Associate Administrator." 49 C.F.R. § 173.185(t) (2010). 

In his findings regarding this violation, the ALJ states that Complainant did not 

make a prima facie case that Respondent violated this regulation because "[!]here was no 

evidence and/or testimony that any of the eleven (II) National shipments ... involved 

lithium ion cells or lithium batteries, that had been damaged or identified by the 

manufacturer as being defective for safetv reasons; or that National otherwise violation 

[sic] any portion of 49 C.F.R. § 173.185(±)." Initial Dec. at 23 (emphasis added). The 

ALJ, however, relied on the wrong regulation in making this fmding. The language cited 

used by the ALJ is from a version of section 173.185(±) promulgated in 2014. 

Complainant properly cited the version of section 173.185(±) in effect in 2010, the 

7 
timeframe of these violations. 10 In 2014, section 173.185(!) was recodified at 49 C.F.R. 

§ 173 .185(g), and the new regulatory language cited by the ALJ promulgated at 49 

C.F.R. § 173.185(!). See 79 FR 46306 (Aug. 6, 2014). 

The ALJ found that Respondent violated 49 C.F.R. §§ 171.2(e), 171.22(b)(l), 

171.22(g)(2), 172.203(!), 172.604(a)(l), and 172.702(a). Initia!Dec. at 29. Section 

173.185(!) requires that if a lithium ion cell or lithium battery does not comply with the 

HMRs 11 , then it can only be transported in accordance with conditions set by the 

Associate Administrator for Hazardous Materials Safety, PHMSA. Respondent did not 

have a special permission letter from PHMSA or any other documentation of conditions 

for shipment from the Associate Administrator. (Answer at 2; Tr. 126: 10-12). Because 

the shipments did not conform to the HMRs, as evidenced by the ALJ' s findings that 

Respondentviolated49 C.F.R. §§ 171.2(e), 171.22(b)(l), 171.22(g)(2), 172.604(a)(l), 

and 172.702(a) (as well as the evidence and testimony that supports these findings), and 

Respondent did not have a special pennission letter from the PHMSA Associate 

Administrator, Respondent violated 49 C.F .R. § 173 .185(!). Therefore, the ALJ s finding 

that Respondent did not violate 49 C.F .R. § 173 .185(!) is not supported by a 

preponderance of the reliable, probative and substantial evidence, and is not consistent 

with applicable law. 

10 See Appendix A for copies of 49 C.F.R. § 173.185(1) as in effect in 2010 and in 2014. Paragraph (f) from 

the 2010 regulation has been moved to paragraph (g) in the 2014 regulation. 11 Subchapter C contains the HMRs, 49 C.F.R. §§ 171-177. 

8 
2. The ALJ's sanction assessment is not supported by a preponderance of the 

reliable, probative, and substantial evidence, and is not consistent with 

applicable law, precedent, and public policy. 

The ALJfound that Respondent violated 49 C.F.R. §§ 171.2(e), 171.22(b)(1), 

171.22(g)(2), 172.203(£), 172.604(a)(1), and172.702(a). 12 Initial Dec. at 20-23. He 

determined, however, that the violations warranted a reduction of the civil penalty from 

the $66,000 requested by Complainant to $12,000. The ALJ erred in reducing the 

sanction and in assessing a $12,000 civil penalty because his basis for reducing the 

amount of the civil penalty was arbitrary and inconsistent with applicable law, precedent, 

and FAA sanction guidance. 

A. The ALJ erred in basing his sanction determination on a finding that 

a single act resulted in Respondent's violations of the HMRs. A 

sanction is appropriately based on the undisputed evidence that 

Respondent violated the HMRs for 11 distinct shipments. 

The FAA Decisionmaker may reverse the ALJ' s sanction determination on appeal 

when it is inconsistent with agency policy. In re Northwest Airlines, Inc., at *4 (citing 

Assoc. of Admin. Law Judges v. Heckler, 594 F.Supp. 1132, 1141 (D.D.C. 1984)); see 

Iran Air v. Kugelman, 996 F.2d 1253, 1262 (D.C. Cir. 1993) (holding that the agency 

Decisionmaker "remains the final administrative arbiter on questions oflaw and policy"). 

Here, the ALJ found that Respondent had violated the HMRs alleged for 11 

separate shipments. Initial Dec. at 20-23. Specifically, the ALJ found that Respondent 

violated 49 C.F.R. §§ 171.2( e), 171.22(b )(1), 171.22(g)(2), 172.604(a)(l), 172. 702(a), as 

well as 49 C.F.R. § 172.203(£).13 !d. The ALJ found that these violations of the HMRs 

were applicable to each of the 11 shipments. I d. at 29. However, the ALJ found that these 

12 As stated above, 49 C.F.R. § 172.203(±) was not cited in the Complaint and is not applicable to this case. 

Future discussions in this btiefwill no longer reference this regulation. 13 As discussed above, the ALJ erred in finding that Respondent violated 49 C.F.R. § 172.203(!). 

9 
11 separate shipments, each of which resulted in violations of the six HMRs cited in the 

previous sentence for a total of 66 separate violations, were the result of"six (6) acts or 

omissions." Id. The ALJ reasons that "there were six (6) single instances of 

noncompliance with the CFRs proven which resulted in multiple violations of general 

and specific regulations involving the same or similar conduct." Id. at 28. The ALJ then 

concluded, after "taking the totality of the facts and circumstances into account," that "a 

fine of$2,000 for each of the six (6) violations is appropriate." I d. at 28-9. The ALJ did 

acknowledge that "[t]he violations were serious and could have had serious 

consequences," but that "a total fme of $12,000 is more commensurate with the totality of 

circumstances, including the nature, extent and gravity of the violation, degree of 

culpability, history of prior violations, financial situation, and other matters as justice 

may require, including aggravating and mitigating factors." Id. at 30. 

A plain reading of 49 U.S.C. § 5123 shows that it is appropriate to assess separate 

civil penalties for separate violations. Specifically, the statute states "[a] person that 

knowingly violates this chapter or a regulation, order, special permit, or approval issued 

under this chapter is liable to the United States Government for a civil penalty of at least 

$250 but not more than $50,000 for each violation." 49 U.S.C. § 5123(a) (2010) 

(emphasis added). FAA Order 2150.3B provides guidance in this area by stating: 

... for purposes of determining the appropriate sanction, each separate 

shipment with separate air waybill or shipping papers, separate 

destination, and/or other evidence establishing it as a separate shipment, is 

ordinarily considered as a separate incident for purposes of applying the 

sanction guidance analysis. 

10 
FAA Order 2150.3B at C-6-7. The violations cited by the FAA were from 11 separate 

shipments with different aiLway bills over a two- and a half-month period and to two 

separate locations. 

Here, Complainant charged six separate regulatory violations applicable to the 11 

different shipments. The ALJ found five of these violations applicable to 11 different 

shipments, and also found a violation of 49 C.F.R. § 172.203(f), which was not cited in 

the Complainant and is not applicable. Initial Dec. at 29. As discussed above, with the 

inclusion of a violation of 49 C.F.R. § 173.185(f) and the eliLnination of the violation of 

49 C.F.R. § 172.203(f), there were six separate violations for each of 11 shipments. 

Therefore, there were 66 separate violations of the HMRs rather than six single instances 

of noncompliance as the ALJ found. 

In addition, case law supports treating each shipment separately for the purpose of 

sanction determination. In a case before the Administrator involving two separate 

shipments of HAZMA T on two separate flights, the Decisionmaker applied FAA 

guidance to the violations applicable to each shipment separately. See In re Empire 

Airlines, FAA Order No. 2012-10,2012 WL 5378722 *12 (Oct. 11, 2012). The 

Decisionmaker calculated the sanction applicable to each shipment and then totaled the 

sanction for both shipments to arrive at the appropriate penalty. Id. So, too, in this case 

the total sanction should be based on each of the 11 shipments. (As discussed below, 

Complainant appropriately used agency sanction guidance to calculate the ultimate 

sanction based on each of the 11 shipments multiplied by the applicable "offense 

categories.") 

11 
In view of the foregoing, there is no basis to fmd that the 66 violations stem from 

six single acts or omissions or to base a sanction on that finding. Complainant 

respectfully submits that the ALJ' s decision to disregard the 11 separate shipments 

resulting in 66 separate violations for purposes of sanction is contrary to precedent and is 

inconsistent with the FAA's validly adopted sanction guidance. Accordingly, the ALJ 

erred in assessing a lower civil penalty on this basis. 

B. Complainant's determination of the amount of the proposed civil 

penalty was appropriate and the ALJ's bases for mitigating sanction 

are in error. 

Under the Rules of Practice in FAA Civil Penalty Actions, 14 C.F.R. § 13.224(a), 

Complainant must prove both the regulatory violations and the appropriateness of the 

proposed civil penalty by a preponderance of the evidence. In the Matter of Phillips 

Building Supply, Inc., FAA Order No. 2000-20,2000 WL 33125266 at *4 (Aug. 11, 

2000). In determining the approp1iate amount of the civil penalty to be assessed, the 

Complainant's representatives must consult the penalty guidelines, which incorporate the 

considerations set fmih in 49 U.S.C. § 5123(c). FAA Order 2150.3B, Appendix C 

at 4-11. These considerations include the nature and circumstances of the violation, the 

culpability of the violator, whether the violator has a history of prior violations, the 

violator's ability to pay, and other matters that justice requires. 49 U.S.C. § 5123(c); 

Phillips, at *5. The FAA's penalty guidelines for violations of the HMRs, which factor 

these considerations into the sanction guidance matrix, 14 present a series of 

questions/considerations to assist agency personnel in determining the sanction amount 

14 FAA Order 2150.3B provides guidance on case analysis including questions to review when determining 

an appropriate sanction. Regarding these questions, the guidance states that "[t]he questions review factors 

involving the nature, circumstances, extent and gravity of the violation, the violator's degree of culpability, 

and the violator's history of prior violations. Some of these factors are already considered to some extent 

within the various categmies of the Sanction Guidance Matrix." Order 2150.3B at C-5 (emphasis added). 

12 
within the appropriate range based on the various aggravating and mitigating factors that 

may exist in the case. FAA Order 2150.3B, Appendix Cat 5-11. 

The statute governing the transportation of hazardous materials, 49 U.S.C. 

§ 5101, et seq. provides that "[a] person that knowingly violates this chapter or a 

regulation, order, special permit, or approval issued under this chapter is liable to the 

United States Government for a civil penalty of at least $250 ($450 for violations related 

to training) but not more than $50,000for each violation." 49 U.S.C. § 5123(a)(l) and 

(a)(3) (2010) (emphasis added) 15 Complainant has developed penalty guidelines, 

approved by the Administrator, to guide prosecutmial discretion and to "promote a 

relative consistency in determining civil penalties for violations of the ... HMR." FAA 

Order 2150.3A, Appendix 6 at 1 (Apr. 14, 1999). These penalty guidelines were adopted 

and incorporated into FAA Order 2150.3A, as published in the Federal Register. 64 Fed. 

Reg. 19443-19450 (Apr. 21, 1999); see In re Northwest Airlines, Inc., FAA Order No. 

90-37, 1990 WL 656278 at *3 (Nov. 7, 1990) (stating that FAA Order 2150.3A "was 

prepared to provide compliance and enforcement program and procedural guidance" and 

that "concerning matters of agency law and policy, administrative law judges are subject 

to the agency"). These penalty guidelines subsequently were amended and incorporated 

into FAA Order 2150.3B, as published in the Federal Register, and represent the policy 

of the FAA. 72 Fed. Reg. 55853 (Oct. 1, 2007). The HAZMAT sanction guidance 

contained FAA Order 2150.3B, Appendix C, "is designed to promote better consistency 

so that similar penalties are imposed in similar cases." FAA Order 2150.3B, Appendix C 

at2. 

15 If the violation is related to training, the minimum penalty is $450. 49 U.S.C. § 5123(a)(3). If the 

violation "results in death, serious illness, or severe injury to any person or substantial destruction of 

property," the maximum penalty is $100,000. 49 U.S.C. § 5123(a)(2). 

13 
Under the penalty guidelines contained in FAA Order 2150.3B, Appendix C, the 

section titled Matrix & Definitions (Figure C-1) sets forth the penalty ranges for 

violations of the HMRs. FAA Order 2150.3B, Appendix Cat 12. This section provides 

for different violation ranges based on the type of entity and the type of shipment (i.e., 

declared or undeclared within or exceeding limitations). !d. Respondent is a battery 

manufacturer that regularly ships HAZMA T in the course of its business and the 

shipments were declared. (Tr. 69: 10-18; Exh. Cl - Cll). Therefore, applying Figure C-1 

would result in a civil penalty for each violation in the range of $1,000-$5,500. FAA 

Order 2150.3B, Figure C-1 (cross-referencing "Business Entity that regularly offers, 

accepts, or transports hazmat" with "I. Declared Shipment"). Violations are categorized 

within groups for each offense category such as violations involving shipping papers, 

labels, markings, packaging, training, emergency response, release into environment, and 

other. I d. Here, the violations fall into four offense categories: packaging, 16 emergency 

response/ 7 training,18 and other. 19 (Tr. 68: 10-15; 94-5: 12-1). Therefore, for Respondent, 

the appropriate sanction range for each of the four offense categories is $1,000 to $5,500 

for each shipment. FAA Order 2150.3B, Figure C-1. 

When determining the sanction to assess in this case, Complainant followed the 

requirements contained in 49 U.S.C. § 5123(c) as articulated in FAA Order 2150.3B. 

Specifically, Mr. Zawarus considered the nature, circumstances, extent, and gravity of the 

violation, violator's degree of culpability, any histo1y of prior violations, the ability to 

pay, and any effect on the ability to continue to do business, and other matters as justice 

16 49 C.F.R. § 171.2(e) (packaging). 17 49 C.F.R. § 172.604(a)(l)(emergencyresponse). 18 49 C.F.R. §§ 171.22(g)(2) and 172.702(a) (training). 19 49 C.F.R. §§ 173.185(!) (approval) and 171.22(b )(I) (other). 

14 
requires. (Tr. 67-70: 6-5; 83-7: 12-7; FAA Order 2150.3B, Appendix Cat 2). Many of 

these considerations have been factored into the various categories of the Sanction 

Guidance Matrix. Order 2150.3B, at C-5. For example, the nature of the materials and 

gravity of the violations is considered by applying the Risk Categories in Figure C-2. 

Order 2150.3B, Appendix Cat 6. Mr. Zawarus testified that lithium batteries are assigned 

a mininaum weight. (Tr. 63-4: 13-3; Order 2150.3B, Figure C-2 (Lithium ion batteries are 

a Class 9 HAZMAT and considered a Category "C" materials20; therefore, a minimum 

weight is applied to the sanction)). He added that because the batteries here were 

untested, they were of a higher risk. (Tr. 63-4: 13-3). 

The violator's degree of culpability is also considered in the Sanction Guidance 

Matrix. Order 2!50.3B, Appendix Cat 7. In addition to the fact that Respondent is an 

entity that regularly offers, accepts, or transpmis batteries, Respondent manufactures 

batteries, a fact warranting a higher degree of culpability finding. See Order 2150.3B, 

Appendix C at 7 ("A manufacturer of a hazardous material is expected to have complete 

lmowledge of the nature of the hazardous material it manufactures or uses; thus, a high 

degree of culpability will ordinarily be imputed to it.") 

Aside from the sanction analysis built into the Sanction Guidance Matrix, 

Mr. Zawarus also considered whether Respondent was unable to pay or unable to 

continue to do business; however, no evidence was produced that would support 

mitigation based on this factor. (Tr. 68-9: 16-5). It is the Respondent's burden to establish 

inability to pay. In re Val/amor Tabula, FAA Order No. 2010-6, 2010 WL 7940355, at *7 

(June 15, 2010). To establish inability to pay, Respondent "must substantiate his or her 

2

° Category "C" (Minimum Weight) HAZMAT "are materials that present the least amount of 1isk to the 

transportation system." Order 2150.3B, Figure C-2. 

15 
claims at the hearing with the types of records that a reasonable person would accept as 

reliable and probative on the issues of incomes and expenses." I d. At hearing, 

Respondent did not provide any evidence regarding inability to pay. Initial Dec. at 29. 

Therefore, the ALI's finding that Respondent presented no evidence of inability to pay is 

correct; Complainant was correct to not mitigate the penalty on this basis. 

Mr. Zawarus also reviewed Respondent's violation history. (Tr. 93: 4-22). 

Mr. Zawarus testified that Respondent did not have a violation history but that a 

violation-free history is not mitigating in terms of sanction. I d. This is because regulated 

entities are expected to have a violation fi·ee history. Id; See also, In re Toyota Motor 

Sales, USA, Inc., FAA Order No. 94-28, 1994 WL 899666 *4 (Sep. 30, 1994) (finding 

that "a violation-free history is expected to be the norm, and will not be considered as 

mitigating an otherwise reasonable civil penalty"). Additionally, FAA Order 2150.3B 

clearly assesses violation history as only an aggravating factor. FAA Order 2150 .3B 

provides guidance that if a violator has a history of previous violations, then moderate or 

maximum weight should be applied to the sanction. FAA Order 2150.3B, Appendix Cat 

8. The Order does not call for mitigating a sanction based on lack of a violation history. 

I d. Therefore, the ALI's fmding that "[t]here was no history of prior violations 

evidencing a systemic corporate culture guilty of regulatory disregard," for the purpose of 

mitigating the sanction is in error. The lack of a violation history should not be taken into 

account for the purposes of mitigation because all regulated entities are expected to 

comply with the regulations and have a violation free history. 

Mr. Zawarus also analyzed the fmal factor, i.e., other matters that justice requires, 

in making its sanction determination. Specifically, Mr. Zawarus reviewed the corrective 

16 
actions put into place by Respondent. (Tr. 56-9: 19-2). Regarding corrective actions, 

FAA Order 2150.3B states the FAA may take into account corrective actions in order to 

reduce sanction but "[ c ]orrective actions that justifY reduction of the recommended 

penalty must exceed the minimum legal requirements." FAA Order 2150.3B, Appendix C 

at4-5, See also,In reAtlas Frontiers, LLC, FAA Order No. 2010-10,2010 WL 7940346 

*7 (June 16, 2010) (quoting FAA Order 2150.3A for the proposition that in order for 

corrective action to be mitigating, it must exceed the minimum legal requirements). 

Further, it is the burden of the Respondent to prove corrective action as an affirmative 

defense. In re Seven's Paint & Wallpaper Co., FAA Order No. 2001-6, 2001 WL 629388 

*3 (May 15, 2001). ~n this case, there is no evidence that the corrective actions put into 

effect by respondent did any more than meet the legal requirements for transporting 

untested prototype batte1ies and training employees who ship HAZMAT. (Tr 56-8: 19-4; 

83-4: 17-20). Respondent updated the emergency response number, "instructed its 

employees to discontinue air freight shipments of untested prototype batteries pending a 

receipt of special approval from PHMSA", and its "employees were provided functions 

(sic) specific training." (Tr. 56: 3-9; 57: 7-13; 114-5: 13-8). Having a correct emergency 

response number that is answered 24-hours a day, as required by the regulations, 

receiving special approval from PHMSA, as required by the regulations, and providing 

function specific training to employees who ship HAZMAT, as required by the 

regulations, are not sufficient to mitigate the sanction because these corrective actions did 

nothing more than help Respondent meet its regulatory obligations. Therefore, the ALJ 

was in error in mitigating the sanction based on Respondent's corrective actions. In 

17 
contrast, Complainant's analysis of this statutory factor is supported by the evidence and 

guidance. 

The ALJ' s findings that Respondent admitted to some of the violations and was 

cooperative are not relevant to the sanction analysis. These frndings do not relate to any 

of the factors discussed in 49 U.S.C. § 5123(c) as articulated in FAA Order 2150.3B. 

Therefore, the ALJ' s reliance on these findings as mitigation is in error. In any event, the 

ALJ' s finding that Respondent's cooperative attitude is mitigating is wanting because 

Respondent's attitude did nothing more than ensure that it met basic regulatory 

requirements. 

The ALJ' s finding that Respondent's belief they were in full compliance and 

therefore the violations were inadvertent is somehow mitigating, is also in error. Intent to 

violate the regulation is not an element of any of the violations cited by Complainant. 

"[S]hippers are liable and subject to civil penalties as long as they !mow the facts giving 

rise to the violations." In re Scott Novak, FAA Order No. 2014-1, 2014 WL 493035 *8 

(Jan. 2, 2014). Although Respondent may have thought it was in compliance, it is 

responsible for the violations because it knew of the facts giving rise to the violations, 

namely that it was shipping lithium ion batteries by air transportation. Further, FAA 

Order 2150.3B factors in whether or not a respondent acted mistakenly or intentionally. 

Among the Offense Categories contained in Appendix C is a category for "Deliberate 

Violation, or other significant aggravation." FAA Order 2150.3B, Appendix C, 

Figure C-1. By using the "Declared Shipment" category (as discussed below) and not the 

"Deliberate Violation, or other significant aggravation," Complainant factored in the 

18 
inadve1ient nature of the violations; therefore, the ALJ was iri error iri fmdirig this as a 

mitigatirig factor to be applied to the sanction. 

Regardirig the ALJ' s finding that the FAA failed to prove the existence of 

aggravating factors other than the citation of six ( 6) violations iri eleven (11) shipments 

for the same conduct, this is clearly in error as demonstrated through the discussion 

above. Complainant provided evidence that it evaluated and assessed for sanction 

purposes aggravatirig factors such as the extent of the violations, the gravity of the 

violations, the culpability of Respondent. 

The ALJ' s statement that the "FAA failed to produce any testimony and/or 

evidence of how it calculated the proposed penalty of$66,000" is finally without basis. 

The record shows that Complainant, through testimony and argument, established that it 

considered the nature and circumstances of the violation, the culpability of the violator, 

whether the violator has a history of prior violations, the violator's ability to pay, and 

other matters that justice requires iri accordance with 49 U.S.C. § 5123(c) and FAA Order 

2150.3B, Appendix C. In addition, the sanction analysis perfonned is not one of siri1ple 

"mathematical computation." Order 2150.3B, Appendix Cat 4. "Evaluation of the case is 

based on the totality of the facts and circumstances." I d. 

As discussed above, the violations cited and their associated violation categories 

(packagirig, emergency response, trairiirig, and other) call for a penalty iri the range of 

$1,000 to $5,500. FAA Order 2150.3B at C-12. Consideririg there were four separate 

violation categories of the HMRs for each of 11 separate shipments, a total penalty 

between $44,000 (11 x (4 offense categories x $1,000)) and $242,000 (11 x (4 offense 

categories x $5,500)) would be within the sanction range. In this case, Complairiant 

19 
provided evidence of aggravating factors such as the extent of violations, the gravity of 

violations, and the culpability of Respondent. There was no evidence mitigating the 

violations, i.e., either that Respondent was unable to pay or would be unable to continue 

in business, or that Respondent's corrective actions exceeded regulatory requirements. 

Taking into consideration the totality of circumstances, for each offense category, a 

penalty of $1,500 is appropriate. Accordingly, starting in the middle of the penalty range 

and applying the appropriate weighting for the factors discussed above, a total penalty of 

$66,000, or $1,500 per offense categmy, is appropriate and in accordance with the 

Administrator's sanction guidance (11 x (4 x $1,500)). 

Fnrther, the AU improperly disregarded the Agency's validly adopted sanction 

guidance contained in FAA Order 2150.3B, Appendix C. In 1999, the FAA established 

guidance for the determination of sanction in cases involving violations of the HMRs. 

See 64 FR 19443 (Apr. 21, 1999). These guidelines were updated and incorporated in 

FAA Order 2150.3B. 72 FR 55853 (Oct. I, 2007). The guidelines incorporated the 

statutory factors contained in49 U.S.C. § 5123 into the categories established in the 

guidelines as well as the weighting analysis that is performed in accordance with the 

guidelines21 64 FR 19443, 19444. 

"The Hazardous Materials Sanction Guidance is designed to promote better 

consistency so that similar penalties are imposed in similar cases." Id. Sanctions may 

deviate from the recommended ranges when the facts and circumstances of a particular 

case warrant such a deviation but the basis for the deviation "should be explained in 

21 49 C.F.R. § 5123(c)- "Penalty Considerations.- In determining the amount of a civil penalty under this 

section, the Secretary shall consider- (1) the nature, circumstances, extent, and gravity of the violation; (2) 

with respect to the violator, the degree of culpability, any history of prior violations, the ability to pay, and 

any effect on the ability to continue to do business; and (3) other matters that justice requires." 

20 
detail." Id. As discussed above, Complainant recommended a sanction that is fully in 

compliance with the sanction guidance contained in FAA Order 2150.3B, Appendix C. 

The ALJ in reducing the sanction to $12,000 disregarded the sanction guidance in its 

entirety. To disregard FAA Order 20150.3B is to go against the public policy of 

providing consistency in sanctions levied in enforcement cases. In this case, the bases for 

the ALI's departure from FAA Order 20150.3B, Appendix C, are erroneous and therefore 

against public policy. 

For the forgoing reasons, Complainant submits that a $66,000 civil penalty, which 

is consistent with statutory sanction considerations and validly adopted FAA sanction 

guidance, is not excessive and is warranted under the facts and circumstances of the case. 

VI. CONCLUSION 

For all of the foregoing reasons, Complainant respectfully requests the FAA 

Decisiomaker to overturn the ALI's finding of no violation of 49 C.F.R. § 173.185(f) and 

his sanction assessment, and assess a civil penalty of $66,000. 

Dated: October 19,2015 

Respectfully submitted, 

Peter Lynch 

Assistant Chief Counsel 

for Enforcement 

By:CJ!2 

Charles Raley, Attorney 

Enforcement Division, AGC-300 

Office of the Chief Counsel 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

Washington, DC 20591 

Phone: (202) 267-3357 

Facsimile: (202) 267-5106 

21 
Certificate of Service 

I hereby certify that on this date I have served by personal delivery, one original 

and one copy of Complainant's Appeal Brief In the Matter of National Power 

Corporation, FDMS No. FAA-2013-0620, to: 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

Washington, D.C. 20591 

Attn: FAA Decisionmaker, AGC-430 

Wilbur Wright Building- Suite 2Wl 000 

In addition, I hereby cmiify that on this date I have sent one copy of the foregoing 

document by certified mail to: 

Mruiin A. Blumentbal, Esq. 

I Northfield Plaza, Suite 300 

Northfield, IL 60093 

Dated: October 19, 2015 
APPENDIX A 

49 C.F.R. § 173.185ill (2010) 

Lithium cells and batteries. 

(f) A lithium cell or battery that does not comply with the provisions of this subchapter 

may be transpmted only under conditions approved by the Associate Administrator. 

49 C.F.R. § 173.185ill (2014) 

Lithium cells and batteries. 

As used in this section, lithium cell(s) or battery(ieo) includes both lithium metal and 

lithium ion chemistries.Equipment means the device or apparatus for which the lithium 

cells or batteries will provide electrical power for its operation. 

(f) Damaged, defective, or recalled cells or batteries. Lithium cells or batteries, that 

have been damaged or identified by the manufacturer as being defective for safety 

reasons, that have the potential of producing a dangerous evolution of heat, fire, or short 

circuit (e.g. those being returned to the manufacturer for safety reasons) may be 

transported by highway, rail or vessel only, and must be packaged as follows: 

(1) Each cell or battery must be placed in individual, non-metallic inner packaging 

that completely encloses the cell or battery; 

(2) The inner packaging must be sun·ounded by cushioning material that is noncombustible, non-conductive, and absorbent; and 

(3) Each inner packaging must be individually placed in one of the following 

packagings meeting the applicable requirements of part 178, subparts L, M, P and Q of 

this subchapter at the Packing Group I level: 

(i) Metal (4A, 4B, 4N), wooden (4Cl, 4C2, 4D, 4F), or solid plastic (4H2) box; 

(ii) Metal (1A2, 1B2, 1N2), plywood (ID), or plastic (1H2) dnnn; or 

(iii) Except for transportation by aircraft, for a single large battery or for a single 

battery contained in equipment, the following rigid large packagings are authorized: 

(A) Metal (SOA, SOB, SON); 

(B) Rigid plastic (SOH); 

(C) Plywood (SOD); and 

23 
( 4) The outer package must be marked with an indication that the package contains a 

"Damaged/defective lithium ion battery" and/or "Damaged/defective lithium metal 

battery" as appropriate. 

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