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FAA OFFICE OF REGIONAL COUNSEL . - - ^-^ ^ ^. ^ 

1601 LmD AVE., SW . -l i ..-] :-• :• :J\J 

RENTON, WASHTNGTON 98057 

TELEPHOKE: 425.227.1417 

FACSIMILE: 425.227.1007 

UNITEirSTATESTDFTtMERICS 

DEPARTMENT OF TRANSPORTATION 

- - OFFICE OF HEARINGS 

WASHINGTON, D.C. 

In the Matter of: 

Westmark Industries, Inc. 

FAA DOCKET CP06NM0008 

FAA Case No. 2006NM700095 

DM.S No. FAA-2006-26338 

Judge Goodwin 

To; Respondent 

COMPLAINANT'S INITIAL DISCOVERY REQUEST 

In accordance \vitii 14 C-F.R. § 13.220 and the Federal Rules of Civil Procedure, please 

respond to the following Interrogatories, Requests for Production of Documents, and Request for 

Admissions, separately and fUUy under oath by May 25,2011. 

These discovery requests are intended to discover information and/or documents not only 

within your personal knowledge or obtainable by you, but also information in the possession of or 

obtainable by your attorneys, investigators, representatives, employees, agents, or anyone acting on 

your behalf or on tibeir behalf, 

Tbiese discovery requests are continuing in nature and any information which may be 

discovered by you subsequent to the service and filing of your answers must be brought to the 

attention of the agency attorney through supplemental answers when it becomes available to you, at 

a reasonable time prior to the hearing in this matter. If there are any additions, deletions or changes 

in the answers or information provided at any time prior to hearing the Respondent is specifically 

requested to so immediately infoim the agency attorney. If such information is not furnished, the 

agency attorney at the time of the hearing will move to exclude from evidence such infoimation 

requested and not furnished. 

The agMicy attorney further requests that the Respondent produce the documents identified 

and designated herein for inspection and copying at the FAA Office of Regional Counsel, Suite 

570,1601 Lind Avenue, SW, Renton, Wasliington 98057, by May 25,2011. 

PRIVILEGE 

If, in responding to, or failing to respond to these Interrogatories, requests for admission and 

requests for production you invoke or rely upon any privilege of any kind, state specifically the 

nature of the privilege; the basis upon which you invoke, rely upon or claim it, including any 

Complainant'a Initial Discovery Request ScOTTR. MORRIS, FAA ATTORNEV 

Westmark Indui;tri«, Inc, - CP06NM0008/ 2006NM700095 TEL: 425,227.1417; FAX: 425.227,1007 

Page 1 of 5 
04/25/2011 13:27 4252271087 ANM7 PAGE 03/15 

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Statutory or decisional reference; and identifr all documents or other information, including 

contaotg and communications which you believe to be embraced by the privilege invoked. 

DATED this 25th day of April, 2011. 

DTT R. MORJRIS 

FAA Attorney 

Complwnsait's Initial Discovery Request 

AVe-qtmark Industries, Inc, - CP06NMOOOS/ 2006NM7OO095 

Page 2 of 5 

SCOTT R. MoRRTS, FAA ATTORNEY 

TEL; 425.227.1417; FAX: 425.227.1007 
04/25/2011 13:27 4252271007 ANM7 PAGE 04/1& 

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INTERROGATORIES AND REQUESTS FOR PRODUCTION 

Interrogatory No. 1: Identify by name, address, and telephone number all persons whom you know 

to have personal knowledge of the matters alleged in the Complaint. 

Interrogatory No. 2:- Identify by titiief cfe.te, author,- present custodian; and content,- aJl documents-j 

including correspondence, obtained by you or in your possession, relating to the assertions in tiie 

Complaint, your appeal,, your answer, and any affirmative defenses which ypu anticipate raising in 

thismatter. " 

REQUEST FOR PRODUCTTQN NO. 1: Provide a copy of all documents referred to in your 

answer to the preceding Interrogatory. 

Interrogatory No. 3: Identify by name, address and telephone number, all persons whom you intend 

to have testify as a factual or expert witness in your defense at the hearing in these matter, and for 

factual witnesses, provide a detailed summary of each persons anticipated testimony. 

Interrogatory No. 4: Identify by titie, date, author, present custodian, and content, all documents 

which you anticipate offering into evidence at the hearing in this matter, and through which witness 

or witnesses. 

REQUEST FOR PRODUCTION NO. 2: Provide a copy of all documents referred to in your 

answer to the preceding Interrogatory. 

Interrogatory No. 5: With respect to each expert witoess identified in response to Interrogatory 

No. 3, above, specify their specific area of expertise, and provide a synopsis of their credentials, 

background, training and experience, 

Interrogatory No. 6: With respect to each expert you expect to call as a witness, state the subject 

matter on which the expert is expected to testify, and state tiie substance of the fects and opinions to 

which the expert is expected to testify, and a summary of the grounds for each such opinion. 

Interrogatory No. 7: State by name, address, telephone number, date of conversation, and substance 

of conversation, all persons [other than legal counsel or spouse] with whom you have discussed the 

matters alleged in the Complaint 

Interrogatory No. 8: Describe with specificity all of the facts which you anticipate presenting in the 

course of tiae hearing in this matter pertaining to the avoidance or mitigation of tiie sanction sougiit 

by the FAA in this case. 

Interrogatory No. 9: Describe with specificity all of the documents you anticipate presenting in the 

course of the hearing in this matter to substantiate any financial inability to pay ti^e proposed 

sanction sought by tibe FAA in this case. 

REQUEST FOR PRODUCTION NO.. 3: Provide a copy of all Exhibits tiiat you will present 

during the hearing in this matter. 

REQUEST FOR PRODUCTION NO. 4: Provide a copy of the company's filed federal income tax 

returns for the period 2005 - 2010, including all schedules, attachments, and amendments. 

Complftinont's Initial Discovery Request 

Westrowk Industries, Inc. - CP06NMOO08/ 2O06NM.700095 

Pages Of 5 

Soorr R MORRIS, F A A ATTORhfEV 

TEL; 425,227.1417; FAX: 425.227.1D07 
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REQUEST FOR ADMISSIONS 

Under 14 C.F.R, 13,220(b) and Rule 36 of tiie Federal Rules of Civil Procedure, you are requested 

to admit the truth of the following matters. A matter is admitted unless responded to in a 

reasonable time. The Rules of Practice in FAA Civil Penalty Actions, 14 C.F.R. 13.220(d), defines 

a reasonable time to be 30 days. The agency requests that an answer is served upon the agency 

attorney HtBeFadinittihgthe'iriMter, specifically denying flie"maitter, stating wliy the iMttCTcannbt 

be admitted or denied, or objecting to the request, with reasons for the Objection stated within 30 

days ofthe date ofservice upon you," to wit: May 25,2011. Ji you fail to respond to these 

reqnests for admissions in writing bv the date specified, the facts contained therein are 

deemed adnaitted, absent a judge's nUins that your failure to answer was due to 

circnwistances beyond vour control. See 14 C.F.R. § 13.220(1)(1). 

REQUEST FOR ADMISSION NO I: Admit that Westtnark Industries, Inc. is a business entity 

tiiat regular offer, accepts, or transports hazardous material. 

REQUEST FOR ADMISSION NO 2: Admit that Westmark Industries, Inc. is a business entity 

that uses or handles hazardous material in tlie course of its business. 

REQUEST FOR ADMISSION NO 3: Admit that Westmark Industries, Inc has an annual revenue 

m excess of $20,000,000. 

REQUEST FOR ADMISSION NO 4: Admit tiiat Westmark hidustries. Inc. has more than 100 

employees. 

REQUEST FOR ADMISSION NO 5: Admit that Westmark hidustries, hic. has tiie fmancial 

abilify to pay the proposed $16,000 civil penalty. 

Complainant's Initial Discovqiy Request 

Westmark Industries, Inc. - CP06NM,0008/ 2006NM700095 

Page 4 of 5 

SCOTT R MDRRI!!, FAA A.TTO.R?*Ey 

TEL: 425.227.1417; FAX: 425.227,1007 
04/25/2011 13:27 4252271007 ANM7 PAGE 06/16 

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S3 

CERTIFICATE OF SERVICE 

I hereby certify that the foregoing Complainant's Initial Discovery Request has been served via 

facsimile and certified mail - Return Receipt Requested this date, to the following: 

The Honorable Richard C. Goodwin 

Office of hearings, M-20 

1200 New Jersey Avenue, S.E. 

East Building Ground Floor, Rm E12-320 

Washington, D.C. 20590 

TEL: 202.366.2139 

FAX: 202.366.7536 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, D.C. 20591 

Attn; Hearing Docket Clerk, AGC'430 

Wilbur Wri^t Building - Suite 2W1000 

FAX: 202,493.5020 

Michael Offer, Owner 

Westmark Industries, Inc. 

6701 SWMcEwanRoad 

Lake Oswego, OR 97035-7815 

TEL: 503.620.0945 

FAX: 503.639.6749 

Dated tliis 25th day of April, 2011. 

MQIFAIR CHIN 

Office of Regional Counsel (ANM-7) 

Federal Aviation Administration 

1601 Lind Ave. SW 

Renton, WA 98057 

425.227.2160 

Complainant's Initial Discovery Request 

•Westmark Industries, Inc. - CP06NM0008/2006NM700095 

Page 5 of 5 

ScoTT R. MoRRts, FAA ATTORNEY 

TEL; 425.227,1417; FAX: 425.227,1007 
04/25/2011 13:27 4252271007 ANM7 PAQE 07/16 

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SCOTT R. MORRIS 

FAA OFFICE OF REGIONAL COUNSEL 

1601 LIND AVE., SW 

RENTON, WASHDJOTON 98057 

TELEPHONE: 425/227-1417 

FACSIMILE: 425/227-1007 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF^EBARINGS -

WASHINGTON, D.C. 

IN THE MATTER OF 

WESTMARK INDUSTRIES, INC. FAA DOCKET NO. CP06NM0008 

DMS No. FAA-2006-26338 

FAA Case No. 2006NM700095 

Judge Richard Goodwin. 

MOTION TO TAKE JUDICIAL NOTICE 

Complainant, through his undersigned counsel, pursuant to Rules of Practice 13.218(a) and FRE 

201, hereby moves ±atthe ALJ take judicial notice ofthe following: 

The Administrator's published sanction guidelines for hazardous material violations contained at 64 

Fed. Reg. 19443 -19450 (April 21,1999). (Attached) 

DATED this 25* d^y of April 2011. 

QTTR. MORRIS 

FAA Attorney 

Motion 10 Take Judicial Notice 

FAA Docket No. CP06NM0008 

Page 1 of 2 

SCOTT R. MORRIS, FAA ATTORNEY 

TEL: 425.227. U17; FAX: 425.227.1007 
I hereby certify that the foregoing Motion to Take Judicial Notice has been served via facsimile 

and Certified Mail - Return Receipt Requested this date, to the following: 

The Honorable Richard C. Goodwin 

-Q£5cg-of bearings, -M-"20i •: 

04/25/2011 13:27 

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4252271007 ANM7 PAGE 08/16 

CERTIFICATE OF SERVICE 

1200 New Jersey Avenue, S.E. 

East Building Ground Floor, Rm El 2-320 

Washington, D.C. 20590 

TEL: 202.366.2139 

FAX; 202.366.7536 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, D.C. 20591 

Attn: Hearing Docket Clerk, AGC-430 

Wilbur Wri^t Building - Suite 2W1000 

FAX: 202.493.5142 

Michael Offer, Owner 

Westmark Industries, Inc. 

6701 SW McEwan Road 

Lake Oswego, OR 97035-7815 

TEL: 503.620.0945 

FAX: 503.639.6749 

Dated this 2Stii day of April, 2011. 

,^^' \ y 

MDIF AIR CHIN 

Office of Regional Counsel (ANM-7) 

Federal Aviation Administration 

1601 Lind Ave. SW 

Renton, WA 98057 

425.227.2160 

Motion to Take Judicial Notice 

FAA Docket No. CP06NM0008 

Page 2 of 2 

SCOTT R, MORRIS, FAA ATTORNEY 

TEL: 425.227.1417; FAX: 425.227.1007 
04/25/2011 13:27 4252271007 ANM7 RASE 09/16 

Federal R^ter/Vol. 64, No. 76/Wednesday, April 21, 1999/Rules and Regulations 19443 

Small BusJness Regulatary Bnforcanen t 

Fairness Act 

The StnaU Business Regulatpiy 

Enforcement Palrness Act of 1996 (Pub, 

L 104-121) provides geno^ y for 

congresslona] review of agency rules, A 

reporting requirement Is triggered in 

"lilstanoes-^^KSeTTOUA-issuiBs'a final'" "-• 

rule as deflned by Section 551 of the 

Administrative Procedures Act. S U.S.C, 

551. The Office of Management and 

Budget has determined that this rule 

does not constitute a major rule for 

purposes of the SmaU Business 

Regulatory Enforcement Fairness Aa of 

1996. 

List of Subjects in 12 CFR Port 701 

Charitable contributions, Credit 

unions. 

By the National Credit Union 

Aclmlnlnrstion Board on April 15,1999. 

Becky Bekra-, 

Secressiy ofthe Board, 

For the reasons Set forth above, NCUA 

amends 12 CFR part 701 as follows: 

PART 701—ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

UNIONS 

1. The authority citation for part 701 

continues ID read as follows: 

AuthewiJr. 12 U.S.C. 1752(5). 1755, l7S6. 

1757. 1759, 17614. 1761b, 1766.1767. 1782, 

178<, 1787. and 1789. Section 70 J .6 is also 

authorised by 31 U.S.C. 3717, Section 701,31 

Is also Huthorlzed by IS U.S.C. 16D1 etseq., 

4Z U.S,C, 1B61 and 42 US.C; 3801-3610. 

Scetton 701,35 id also authortrjjd by 42 

U,S.C. 4311-4312. 

2. Part 701 IS amended by adding 

§ 701.25 to read as follows: 

{701.25 Charitable eoitblbutiona arid 

donatlDna, 

(a) A federal credit union may make 

charitable contributions and/or donate 

funds to recipients not oi:ganl?ed for 

pro ^ that are located In or conduct 

activities in a community In which the 

federal credit union has a place of 

business or to organizations that are tax 

exempt organizations under Section 

501 (c)(3) ofthe Internal Revenue Code 

and operate primarily to promote and 

develop credit unions. 

(b) Tne board of directors must 

approve chailtable contributions and/or 

donations, and the approval must be 

based on a determination by the board 

of dlrectora that the contributions and/ 

or donations are in the best interests of 

the federal credit union and are 

reasonable given the size and financial 

condiUon of the federal credit union. 

The board of directors, if It chooses, 

may establish a budget for charitable 

contributions and/or donations and 

authorize appropriate officials ofthe 

federal credit union to select recipients 

and disburse budgeted funds among 

those recipients. 

[FR Doc 99-993] Filed 4-20-99: 8:45 am) 

aiLUNO eoDE TS3S-VI-P 

DEPARTMENT OF TRANSPORTATION 

Fariaral Aviation Administration 

14 CFR Part 13 

Federal Aviation Adminletration Policy 

on Enforeemant of the Hazardous 

Materials RRgulations: Penalty 

Guidelines 

AOENCY: Federal Aviation 

Administration (FAA), DOT., 

ACTION: General statement of policy. 

SUMMARY: This document states that 

FAA policy on determining the sanction 

amounts in FAA enforcement actions 

addressing violations ofthe Dcpanment 

of TiansponatlDn Hazardous Material 

Regulations (HMR), This policy 

statement provides guidance for agency 

personnel in the exercise of the FAA's 

prosecutorial discretion in enfcircement 

cases concerning transportation dF 

hazardous materials by air. The 

guidance should aid in analysis of the 

facts and circumstances of each case so 

as to arrive at an appropriate sanction in 

light of the statutorily dofinad penalty 

considerations. The analytical 

framework should also promote a 

relative consistency in determining civil 

penalties for violations of the HMR, 

EFFECTIVE DATE: April U. 1999. 

FOa FtJUTHER INFORMATION CONTACT: 

Bill Wilkenlng, OfSce of ClvU Aviation 

Security, Dar^erous Goods and Cergo 

Security Division, telephone; (202) 267-

38B4. facsimile (202) 267-5760, email: 

Bill,Wlll«nlng®faa,gov, mailing 

address: ACO-SOO. 800 Independence 

Avenue. S.W.. Washington, D.C, 20591. 

or AUaj; HL Horowitz, Enforcement 

Division, Office of the Chief Counsel, 

telephone (202) 267-3137. facsimile 

(202)267-5105, email: 

A]]an.fiorowitz^fas.goY, mailing 

address: AGC-300, 800 Independence 

Avenue, S.W., Washington. D.C. 20591. 

SUPPLEUENTAnnr IMFORUATION; 

Background 

Congress determined that the 

unregulated transportation of hazardous 

materials constitutes a threat to public 

sf^ty In all forms of transportation. 

Congress addressed that threat in 1974 

by enacting the Hazardous Mat^lals 

Transportation Act (HMTA). By 1990, 

Congress determined that eCTective 

enforcement ofthe HMTA required 

more severe action, and enacted the 

Hazartlous Materials Transportation 

Unlibrm Safety Act of 1990, Public Law 

No. 101-615.1990 U.S. Code Congress, 

& Admin. News 104 Stat. 4605, The 

prttnaiy effect of this 1990 revision of 

•therMMT-A-was ta-raisc-the ffiaxlmum 

dvil penal^ for violation of any 

regulation enacted under the HMTA to 

$25,000, and, for the first time, to 

require a S250 minimum penalty ( n any 

such violation. The HMTA ^>ns 

recodified in 1994 and is now referred 

CO as the "Federal hazardous material 

tira-nspoTtatlon law," 1994 U.S. Code 

Congress. & Admin. News 108 Stat, 759, 

codified at 49 U.S.C. 5101-5127, In the 

1994 recodification, Congress 

specifically stated that the 

recodification created no substantive 

change to the earlier form of the statute, 

The. Federal Civil Penalties Inflation 

Adjustment Act of 1990. 28 U.S.C. 2461 

(note), as amended by the Debt 

Collection Improvement Act of 1936, 

PUbUc Law 104-134, April 26, 1996, 

provides a mechanism for adjustments 

for monetao' dvil penalties for Inflation 

in Order to maintain the d^errent effect 

of monetary civil penalties and promote 

compliance with the law. Under the 

statute, the new civil petialty 

maximums cannot be applied unless 

they are implemented by regulation. On 

December 20.1996, the FAA published 

a final rule (61 FR 6744), implementing 

Che statute for each civil penalty subject 

ID the FAA's Jurisdiction. On January 

21,1997, the FAA published a 

correcUon to the final rule (62 FR 4134). 

The final rule is codified at 14 CFR Part 

13, Subpart H. Pursuant to 14 CFR 

13.305(d), the maadmum dvU penalty 

that may be assessed for a violation of 

the Federal hazardous material law or a 

hazardous material regulation is now 

$27,500. 

Congress assigned the responsibility 

for tfie enforcement of the Federal 

hazardous material transportation law to 

the Secretaty of Transportation. Within 

the Department of Transportation, the 

Research and Special Programs 

Administration (RSPA) adopts the 

Hazardous Materials Regulations 

(HMR). 49 CFR parts 171 through 178, 

which govern the transportation of 

hazardous materials (Hazmat). Although 

RSPA has some enforcement 

responsibilities, the responslbUl^ for 

enforcing the HMR with respect to civil 

avladon is delegated by the Secretary of 

Transportation to the FAA. 49 CFR 

1.47(k). 

The HMR sat forth regulations For the 

transportation of Haanat, A knowing 

violatton of the statute or of the HMR 

can support the assessment of a dvil 
04/25/2011 13:27 4252271007 ANM7 PAGE 10/16 

19444 Federal Regirter/Vol. 64, No. 76/Wedr>esday, April 21, 19&9/Rule5 and Regulations 

penalty betiveen S250 and S27,500. A 

person acts knowingly ^^en the person 

has actual knowledge of the facts glvtnig 

rise to the violation; or a reasonable 

person actlrig in the circumstances and 

exercising reasonable care would have 

that knowlecfee. 49 U.S.C. 5123(a)(1) (A). 

uJ3tift..cJvH-ponalties_aufl?.oiiis:.ediunder the-. 

statute apply to EACH violation of any 

regulation set forth in the HMR. 

Moreover, under the statute, each 

continuing violation of die HMR can 

constlhite a separate violation for each 

day a violation continues. In section 

5124 of the statute,- Congress prescribed 

criminal penalties for a will^l violation 

of the Federal hazardous material 

transportation law or the HMR; wiJIfiil 

violations lequire evidence of both 

luiowledge ofthe laws and regulations 

ar>d intent to violate them. 

Part 13 of the Federal Aviation 

Regulations—^Investigative and 

Enforcement Procedures (14 CFR Part 

13) governs the procediires appHceble to 

enforcement of the HMR by the FAA, 

Hazmat violations occurring on or after 

August 2,1990, may be dismissed by an 

administrative law judge (AU) if a 

Notice of Proposed Civil Penalty has not 

been Issued within 2 years of the 

violation, unless good cause for delay 

has been shown. 14 CFR 13.208(d). 

Consideration of Statutory Criteria 

bi determining the sanction to be 

assessed, penalty criteria set forth in 49 

U.S.C. 5 J23 must be considered. These 

criteria are the nature, circumstances, 

extent, end gravity of the violation, the 

deg{«e of culpablity ofthe vlalator, any 

history of past violations, the ability to 

pay. any eS^ect on the ability to continue 

to do business, and other matters as 

Justice requires. Some of these 

considerations already are factored to 

some extent Into the categories in the 

Hazardous Material Sanction Guidance 

Matrix. The statutory factois are further 

considered under the weighting analysis 

that is performed to indicate the amount 

of civil penalty within the appropriate 

range, i.e., at the minimum, moderate, 

or maximum portion of the sanction 

range. To cotnply with the underlying 

purposes of the Federal hazardous 

material transportation law and HMR, a 

sancdon should be Imposed that is 

sufHclertdy deterent but not excessive. 

The Hazardous Materials Sanction 

Guidance is designed to piumote better 

consiiltency so that similar penaHtiies are 

imposed in similar cases. The Matrix 

ranges are intended to reflect the nature, 

circumstanoes. extent, and gravity of the 

case as'compared with other types of 

cases. Each case, however, must be 

evaluated on its own iiacts. A sanction 

rnay differ from the Matrix ranges when 

the ^t s and circumstances of a case 

support either a greater or lesser 

penalty. When a special agent believes 

that a penalty should exceed the Matrix 

ranges, Che agent should consult with 

legal counsel befbre further processing 

ofthe Enforcement Investigative Report 

gno . Thlseonsultationis-not-necessaryin the case of a recommended penalty 

that is less than that provided in the 

Matrix. In either situation, the basis for 

the decision to go outside the ranges 

should be explained in detail. 

Violations of Pert 17S ofthe HMR, 

which establish particular requirements 

for air carriers and other aircraft 

operators, we contained in a separate 

matrix. However, such operators often 

offer hazardous materials for air 

transportation, as well as accept and 

transport them. For this reason, such 

operators may be liable for violations 

both as a business entity within the 

Hazardous Materials Sanction GuidarM:e 

Matrix, as weU as specific air carrier 

violations. 

Use ofthe Sanction Guidance 

This guidance provides agency 

personnel with a systematic way to 

evaluate a case and anfve at an 

apfuiopriate peralty, considering all the 

relevant statutory criteria including any 

mitigating and aggravating 

circumstances. Statutory considerations 

have been factored into (he various 

ranges wldiln the Sanction Guidance 

Matrix. DBtermlnatlon of where a 

sanction lies within these ranges Is 

aided by a series of welglitlng questions 

that probe the various aggravating and 

mitigating factors that may exist in a 

case. 

First, the weighting analysis is 

peiformed. AgerKy personnel respond 

to a series of questions to determine the 

aggregate weight of the case The 

aggregate weight of the case helps 

determine the sanction amount of each 

violation group within the established 

ranges ofthe Matrix. 

It is important to note thet 

determlrution of where the sanction lies 

within the Matrix is not the result of a 

mathemadca) computation. Evaluation 

of the case is based on the totality of the 

facts and circurhstances. Generally, If 

the answer to a particular question 

represents a mare significant aspect of a 

case, greater consideration should be 

given to that answer. For example, 

violations involving an extremely 

dangerous substance, even in miTiutB 

quantities, might warrant a penalty, at 

Oie maxlmuni end of the range or even 

B penalty exceeding the Matrix ranges. 

under the Sanction Guidance Matrix, 

agency personnel determine the 

category of violator the person falls 

within (e.g., business entity that 

regularly offets, accepts, or trattsports 

Hazmat; and the offertse category (e.g.. 

undeclared shipment within Hazmat 

quanti^ limitations). The sanction 

ranges under d>e various violator 

categories take Into account the relative 

culpaWitv-of-the vlolatot. Siiiillariy,.-the-— 

offense catiegories address the natuiiT 

circumstances, and gravity of the 

particular oSfense, After determining the 

appropriate categories and intersecting' 

box of the Matrix, agency personnel 

then determine which subcategories of 

offenses (e.g., shipping papers) are 

alleged to have been violated. Based on 

the weighting analysis performed in 

Section I. an appropriate penalty Is 

assigned for each of the applicable 

violation gfoups. The penalty anwunt 

for each relevant violation group is 

added together to reach the 

recommended sanction. 

Under Section III of the Guidance, the 

special agemt then considers other 

relevant factors, including evidence of 

corrective action, A recorrunended 

sanction may be reduced prior to the 

issuance of a Notice of Proposed Civil 

Penalty when there is adequate reliable 

information concerning the corrective 

actions takert by a respondent 

Corrective actions that justif/ reduction 

of the recommended penalty muse 

exceed the mirtimum legal 

requirements. The special agent also 

attempts to provide information 

concerning the alleged violator's si%. 

flnandal condition, and ability to pay a 

recommended sanction. 

When an EIR is forwarded to legal 

counsel for enforcement action, counsel 

with gtve appropriate consideration to 

. the recommended sanction, FAA legal 

counsel will also review the factors, 

analysis, and determinations urxier the 

Hazardous Materials Sanction 

Guidance. Any basis for deviating from 

the tttommend sanction is ordlrarily 

explained to, and discussed with, the 

investigating special agent. 'Final 

determination ofthe sanction amount 

proposed in the Notice of Proposed 

Civil Penalty is ofdirwrlly a product of 

joint decisonmaldng and approval of the 

investigating agent and the legal office. 

Federal Aviation Adnoinlstration 

Hazardous Materials Sanction 

Guidance 

This Sanction Guidance Is divided 

into three sections; 

I, Case Anelysli, 

n, UtUlsaiion of tiie Sanction Guidance 

Matrix (Matrix), and 

HI, Consideration <rf other Statutory Foctors. 

The Sanction Citidanee Matrix )a contained 

in Figure 1 and the Risk CftttgorSes are 

contained in Figure 2. 
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I. Case Analysis (Evaluatian of 

Statutory Aswssment Factors) 

This section contains a series of 

questions designed to assist special 

agents and attorn ^ in evaluating a 

particular case. The question review 

factors involving the naturercircumstances, extent and gravity ofthe 

vjolation, the violator's degree of 

culpability, and the violator's hlstoiy of 

prior violations. Some of these factors 

are already considered to some extent 

within Che various categories of the 

Sanction Guidance Matrix. The 

questions in this section provide 

additlorial consideration of the statutoiy 

factors atxl examine the existence of 

aggravating and mltigatirtg (actors In a 

case. 

The agent/attorrtey answeis each 

question in Section 1 and determines if 

a relative weight of minimum, 

moderate, or maximum should be 

assigned based on the response to the 

question. With the exception of 

Question A,l., not all questions will 

apply to a given fact situation. Question 

A, 1 „ which addresses the nature of the 

hazardous material (s) involved, is the 

only question that always receives a 

"yes" answer to one of its subqucstioris 

and Is considered in every case. The 

aggravating or mitigating foctors 

addressed in the questions only apply to 

the case v*^en the question receives a 

"yes" response. Questions receiving a 

"no" response donot affect the 

weighting ofthe case and are not 

consider&d. For example, if the violation 

resulted in harm to persons or property, 

that may be an agsravating factor in the 

case. However, the feet that the 

violation did not result in Irijury or 

damage, is not a mitigating fector and 

should not result In penalty mitigation. 

In many instances, the answers to most 

or all of the questions will be "no" and 

the only relevant weighting factor in 

this section will be the risk category of 

the material Identified in Question A.l. 

In detertoinJtiig the final aggregate 

weight of the case, the responses to each 

of the questiotts do not have to be 

equally considered. Determination of 

whether the overall case should have a 

minimum, moderate, or maximum 

weight cannot be determined with 

mathematical certainty, GencraUy, if the 

answer to a question demonstrates that 

the factor at Issue represents a more 

slgrdflcam aspect of the case, greater 

consideration is given to that factor. The 

final aggregsite weight is based on the 

totality of 3»e facts and circumstances of 

the case. Once determined, the final 

aggregate weight is then utUjzed to 

arrive at the recommended sanction for 

each applicable violation group on the 

Sanction Guidance Matrb< (Fig. ]). 

A, TTie Nature, Circumstances, Extent, 

end Gravt^ ofthe Violation 

(Factots Corwemlng the Shipment) 

l,_What Matierial(s)_Was Offfered,. 

TiwapartEdrorAccapteiJi'ar Air—~— 

Transportation? 

(Figure Z divides hazardous materials of 

particular classes, divisions; arxl -

packing groups Into three risk 

categories: Category A, Category B, arvd 

Category C. Find the materlaKs) at issue 

in Figure 2 and aruwer the questions 

below.) 

a. Is the materiaUs) offered, 

transported, or accepted in Category A? 

If yes, assign a Maximum weight. 

b.lstheinaterial(s) offered, 

tran^iorted, or accepted in Category B? 

If yes, assign a Moderate weight. 

. c. Is the material (s) offered, 

transported, or accepted in Category C? 

If yes, assign a MtUiirmim wei^t. 

GiddaBce Note: The catBgorles tn Figure 2 

represent the inherenc risk of danger to air 

transportation posed hy the tnaterbl. If thers 

la more th«n one type tif tiazardous material 

Involved in the shipment answer this 

que,stlon uslns the hazardous material in Che 

highest risk cste30iy, 

2. What Quantity of the Material (s) Was 

OfBered, Transported, or Accepted for 

Air Transportation? 

a. Did the package(s) exceed the 

authorized quantity limitations by a 

simifltant amount? 

If yes, consider a Moderate or 

Maximum weight deper>ding on the 

degree to which the limitation was 

exceeded. 

Guidance NOIB: The Mstrlx, discussed in 

Section DI, takes Into account the factual 

sltuatlona where the quantity UmitatJons for 

the material are exceeded, Th)s part of the 

analysis is intended te dstsrtnlne whether 

further Aggravating clnmrnstancf!* exist -

where quantity limltnlona are exceeded by a 

signlllc«nt amount Whether thU lector is 

Mstgned a moderate or maxliTium weight will 

depend on (bo degree by -which the quantity 

Limit&tion was eicceeded, 

Example: The quantity llmitatlan for 

gasoline on a passenger plane is 5 liters per 

package. If a violator offeis 30 [Iteni in a 

.single package on a ptasenger plane, this may 

result in 8 maximum weight for this facbir, 

b. Were there multiple packages in the 

shipment? 

If yes, consider a Moderate or 

Maximum weight, depending on the 

number of packages and total amount of 

has^rdous material being trHraported in 

violation. 

Guidance Note: A package nieans a 

pacicaglng plus its ecuntents, Tiier; may be 

multiple packages in one shipment or 

DverpaciL Multiple packages often represent 

muLUple vlolatiDna. Under the Sanction 

Guidance, this fact is considered an 

aggravating circumstance rather than a direct 

multiplier of the sanction for each violsuon. 

Each caise, however, rnuat be evaluated on its 

particular [acts, A veiy large number of 

packages Riay result in such an egre^ous 

'Ga«(4lai;-'lHrjr«n3At:wetBht.otttie33aaels.sci:=: 

high that a peislty b^ond (he rnaximum 

point in the lange Is warranted. 

An InvestlEBtlon wll) occasionally reveal 

several sYApmetas from the same oifaror over 

a period of several days, all of which involve 

violauons of the HMR. These independent 

BciB of alfertng usually are oorcwUdated into 

one £IR and addressed in one Nate of 

Proposed Civil Penally. However, for 

purposes of deteiTninlng the appropriate 

sanction, each separate shlpnwnt with a. 

separate air waybill or shipping papers, 

separate destination, and/or any other 

evidence eatabUshing it as a separate 

shlpmanc IE ordinarily conslderad as a 

separate incident Ibr purposes of applying 

the sanction guidance arralysls. It is 

suggested that the SGfnrate shipments be 

treated as Individual counts In the EIR and 

the Notice of Proposed Civil Penalty, with 

each count having its own sanction derived 

Snm application of this guidance. Note, there 

nust be suSicient evidence to support each 

count. 

3. Did the Shipment Cause Dainage or 

Harm to Parsons or Property, or Interfere 

With Commeroe? 

If yes, consider a Moderate or 

Maximum weight. 

Guidance Note: The fact that no dainage 

occurred as a result of the stilpment Ss not 

a mitigating factor, However, damage or harm 

may aggravate the nature, circumstances, 

extent, and gravity of the violation, 

Depending on the degree of damage caused 

by The shipment and/or the eadstence of other 

aggravating factors, departure from the ranges 

may be Justified. 

B. Violator's Degree cf Culpability 

(The Matrix, Figure 1, considers the 

relative culpabUity ofthe violator. This 

section of the arialysis further evaluates 

the degree of culpability of the violator.) 

1. Is the Violator the Manufacturer of 

the Hazardous Material? 

Kyes, consider a Maximum weight. 

Guidance Kotet A manufacturer of a 

hazardous material is expectad to have 

complete knowledge of tiw nature of IIE 

hazardous Rutterlal and thus, a high degree 

of culpability will ordinarily be imputed to 

IL 

2, Did Someone Other Than the Violator 

Prepare the Shipment for 

Transportation? 

If yes. consider a Minimum or 

Moderate weight. 

Guidance Note; Facts supporting an 

affirmative answer to this question may be 

cause to mitigate culpability and/or pursue a 
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19446 Federal RegistBr/Vol, 64, No. 76/Wednesday, April 21. 1999/Rules and Regulations 

separate enforcement action against otlKir 

raaponsible parties who handled ihe 

slilpmem. A shipper that reshlps materUtls 

received froni another parson In the same 

packaging is independentiy respcxislble for 

ensuring the shipment compiles with the 

HMR. Nevertheless, the reshlpper is 

ganeially considered to jiave a leaser degree _ 

uf i-uiprt>tllty for cOJnpniiTue uf the package""" 

as received. However, if the ttshlpper 

unpacks and/or tepaekages the shipment, the 

leshlpper remains as culpable «s the original 

supper and generally is not accorded 

mitigation under this weighting factor, (For 

purposes of chij section, a "reshlpper" refers 

to a peison. other dian the ortglnal offeror, 

wito offers a sh^nnent of hazardous nnierlal 

for transponatlan,) 

3. Did the Violator Reasonably Rely on 

Incorrect Information From Another 

Source? 

If yes. consider a Minimum weight. 

Guidance Note; Detrimental or reasonable 

reliance on another patty may be a mlUgatinB 

factor when considering the violator's d^icc 

of culpAillty. For example, reliance on an 

Inaccurate Material Safely Data Sheet (MSDS) 

may be mitigating, 

4. Does the Violator Have a History of 

Previous HMR Violations? 

If yes, consider a Moderate or 

Maximum weight. 

Guidance Note: To establish a violation 

histoty, a prior violation must be an actual 

finding of violation pucsuamto a legal 

enforcement action. Special agents should 

attempt to determine ti)e corporate structure 

of the violator and whether ottier business 

enttdes or names are or have been used by 

tlia entity In order to obtain a complete 

violation history. The nucnber and age of 

violations ahould be conaldeied. Oitiinarily, 

find IngB of violation more than S years old 

cany less weight, unless a continuing panem 

of violation exists. 

C. Other Factort 

Each case must be evaluated on its 

particular facts. As such, many cases 

may present unique scenarios and 

aggravating or ml tilting foctois that are 

not routinely seen. If an aggravating or 

mitigating circumstance exists that is 

not adecjuately addressed elsewhere in 

the sanction guidance, it may be 

Included and assigned a weight under 

this sectioa The factor should be clearly 

I'dendified end explained in the analysis 

portion ofthe BIR and carefully 

scrutiitized by legal coutuel. 

Guldwice Note: For example, a shipment 

of a single package containing several 

different hazardous materials may present an 

' aggravating factor. The degree of setiousness 

of (his factor wiU increase If the tuardous 

materials are Incompatible with each other 

and, thereforB, create an Increased risk. 

Mitigating faciors may also exist that have 

not been adequately considered. For 

example, a shipment containing *de mtntinis 

quantity of material or an aEnount that would, 

have qiialihed under the small quantity 

exception of § 173,4 m ^ present a mttigatlrig 

iactor if as a result there was a leduced risk 

to fiafety in transportation. 

D. D&ermtni the Final Aggregate 

Weight of the Case 

--All tiiy luspLw'is^is/weigfite 

evaluated to detemdne a fliul aggregate 

weight ofthe case (Minimum. Moderate, 

and Maximum). Questions reoeivli^ a 

"no" response will not be included In 

- this evaluation. To determine the final 

aggregate weight, the agent/attorney 

must exercise his/her discretion in light 

ofthe statutoiy fiictors and knowledge 

of the particular fects of the case. The 

fscts of the particular case wUl dictate 

the relative importance of each of the 

weighting fectors in reaching e final 

aggregate weight The flnal aggregate 

weight should be decided as a result of 

careful analysis, not a mathematical 

averaging. It Is possible that a single 

wel^ting factor may outweigh all 

others. The agent/attorney's analysis 

should always be explained In this 

regard, 

Exampie: A case involving a hazardous 

material in tiie lowest risk category wwy be 

evaluated to.have a maximum weight 

because of tils large quarrtity atiipped or the 

damage resulting from d^e shipment. 

H Utilize the Matrix (Figure 1) 

The sanction ranges under flae ofEeror 

and oiCertf e categories of the Sanction 

Guicfance Matrix reflect the relative 

culpability of the violator and the 

nature, cJrcurnstantes, extent, and 

gravity of the case. Consideration of 

these particular statutory factors under 

the Federal hazardous materia] 

transportation law is built Into the 

Matrix. Further analysis of the statutory 

factors is required to determine the 

appropriate sanction within the ranges 

established under the Matrix. This 

aralysis is performed in Section 1, After 

determining the final aggregate v^ight 

ofthe case under the Section 1 analysis, 

that vveight is applied to the appropriate 

matrix range to Identity the 

recommended sanction amount for each 

of the relevant violation groups and for 

the case as a whole. Although the Notice 

of Proposed Civil Penalty may cite 

numerous violations of a particular part 

or Subpart of the HMR, unless upward 

departure IsJustiHed, a single penalty 

amount for each violation group is 

onjlnatfly used to reach Che fUIl 

sanction, 

A. Instructions 

1. Identify the appropriate category 

for the type of entity and the nature of 

the offense jrjvolved in the case. Refer 

to the Definitions Section that follows 

the Matrix In Figure 1 for guidance. Go 

to the intersecting box and identify the 

applicable sanction range for each 

violation group. 

2. Apply the coiKlusion reached in 

the Section I weighting analysis to 

assign a sanction amount within the 

]m.-jno!decaie;:oij]aaximum_ 

portion of the sanction range for each 

relevant violation group. The 

recommended civil penalty at this stage . 

is the'Sum of the sanctions for each of 

the applicable violation groups, A 

sanction shon^d rK>t be assessed for a 

violation group If there have been no 

violations of that pan or subpart of the 

HMR. The sanction amount for each 

violation group need rtot be Identical 

but onilnarily is within the portion of 

the particular sanction range that 

represents the overall weight of the case. 

3, Departure from the Matrix ranges— 

The Matrix is designed to cover the 

m^ority of cases Involving violations of 

the HMR. The facts and circumstances 

of a particular case, bovvever. may 

Justify either an upvifard or downward 

departure from the Matrbc ranges. This 

. sanction guidance anticipates and 

encourages departure from the Matrix 

ranges when justified. A case involving 

violations in which the nature, 

circumstances, extant; and gravity of the 

incident are particularly severe or 

egregious, may Justify upward departure 

from the Matrix. If the investigating 

agent believes, based upon the fects of 

a case, that a penalty should exceed the 

Matrix ranges, the agent should consult 

with legal counsel before further 

processing ofthe EK. Conversely, the 

investigating agent may believe that 

mitigating factors Justify a downward 

departure from the Matrtx range, 

Consultation with legal counsel is not 

necessary in the case of a recommended 

penalty that is less than that provided 

in the Matrix, In either situation, 

Iiowever, the agent is to provide e 

detailed iss^Ianation of the basis for the 

decision to go outside the ranges, 

4, Violations of Part 17S regulations, 

^^Wch establish particiHar requirements 

for air carriers and othsr obvratt 

operators, are contained in a separate 

matrix. However, such ope^ators often 

ofl^ Hazmat for air transportation as 

well as accept and transport it. As such, 

the operator may be liable for violations 

as a bmlness entity vsrithin the main 

Matrix as well as for the Specific Part 

175 Violations. 

m . Impact of Other Statutoiy Factors 

The Federal haawdous material 

transportation law also requires 

consideration ofa violator's ability to 

pay a civil penalty, the impact of the 

civil penalty on the violator's ability DO 
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continue to do business, and other 

matters chat Justice requires, 

Considaration of these factors may 

result In adjustment ofthe 

recommended clvl] penalty calculated 

in Section n. In situations where the 

agent or attorney is in possession df 

-mttJgating^vfcmatiohrswI^BMftabiHtyto pay the recommended dvil penalty or 

corrective action taken, reduction of the 

recommended penalty maybe 

appropriate. Mitigating InfOmiatiDn 

should be sufUclenOy reliable, 

uncontroverted, and documented in 

order to support reduction of the 

recommended civil penalty prior to 

issuing the Notice of Proposed Civil 

Penalty. 

A. Ability ToPay/Co/jttnue in Business 

Historically, the FAA has considered 

these factors after ti^ issuance of die 

Notice of Proposed CivU Penalty due to 

the absence of reliable flriancial 

information on which to base a 

reduction prior to the issuance ofa 

Notice, This Sanction Guidance 

recommends that the special agent rm'ke 

efforts to obtain reliable information 

reganaing the violator's size ai>d' 

financial condition for review prior to 

the issuance of a Notice, This 

information vvlll be transmitted to the 

legal office for consideration. It is 

recognized that It may not always be 

possible for the special agent and/or 

attorney to obtain reliable financial 

information on a particular respondent, 

that financial circumstances change and 

that information may be provided after 

tiie issuance of the Notice that may 

warrant further consideration of a 

respondent's ability to pay. 

1. The investigating agent will attempt 

to indude financial Information as an 

exhibit in the EIR. It is anticipated tfiat 

this information, if avaOrfkle, will be 

obtained from reliable financial daU 

bases, Financial documentation should 

Ixidude. but need not be llmltod to.- undw the SmaU Business Regulatnty 

liifoiTO-aBSfi^oRGerrfngtli^vl^asf:*^^ 

corporate structure, business address. 

ofHcers, number of employees, and 

gross revenues. 

Z. The investigating agent provides a 

Statement or comment with respect to 

consldet^on of a respondent's 

financial claims after issuance ofthe 

Notice. 

4. If legal counsel determines that a 

respondent qualifies as a small business 

entity, counsel trBy consider that status 

the financial information obtained but 

ordinarily does not evaluate the 

financial condition of a respondent with 

respect to Its ability to pay a proposed 

dvil penalty. The investigating agent's 

statement should encompass areas such 

as the number of employees, gross 

revenues, and nature of business of the 

violator. 

3. PA A legal counsel reviews the 

financial information provided in the 

EIR and evaluates Its suillclency at)d 

relevance to the recommended dvil 

penalty. Legal counsel may determine if 

more current information exists 

concerning the financial condition of a 

respondent and If that Information 

substantially differs frtim the 

information available at the dme of 

preparation of the HR. If there is a basis 

for determining that the reconwnended 

sanction is inappropriate based upon 

the financial information provided in 

the EIR, the recommended sanction is 

adjusted prior to issuance ofthe Notice 

of Proposed Civil Penalty, This is a 

preliminary consideration ofa 

company's abibty to pay. As such, ps«-

Notlce adjustment of a recommended 

CivU penalty does not preclude further 

MATRIX AND DEFINmONS 

IFHjure 1] 

witii respect to the appropriateness of 

the reconunended dvil penalty. A 

respondent's status as a small business 

entity may be considered in conjunction 

vriih analysis of the statutOty factoid. 

B. Carrectfve Action 

The most common "other matter" that 

the FAA takes into consideration is 

corrective action. Corrective action that 

results in mitigation is remedial action 

that exceeds the minimum legal 

requirements. The primary factors in 

detennining the appropriate amount of 

penalty reduction are the extent and 

tirning of the corective action. In other 

words.'mitigation is determined on the 

basis of how much corrective action was 

taken and how quickly tiie action was 

taken. Systemic change Intended to 

prevent future violations should be 

given greater consideration. Similarly, 

corrective action that commences upon 

the violator's first notice of the violation 

ordinarily is given greater credit than 

cwrecUvB action Oat commences only 

after the Notice of Proposed Civil 

Penalty has been Issued. 

Mitigation of a reoommentied civil 

p«5nalty based upon corrective action . 

Should be referenced in the Notice of 

Proposed CivU Penalty so that the 

respondent is on notice that credit 

already has been given for said action. 

OKense categories 

I, Declared Shipmoni: 

1. Shipping Papers -

2. Labels 

3. MarWngs , _ -

4. Pacteghg ..,.-. „.... 

5. Training - .,,.... 

6. Emeig. Response — , 

7. Release Into Environ ,. 

8. Other ^...._ , -

II. Undeclared Shipment WHNn Haanai QuarWy Lknltallons: 

1. SNppIng papers _ .... 

2. Labels ,„. -... n... —.,..•..•.„.„.-..,.•.' 

3. Mart<lrigs _ -.„ ..,.,._...,... , 

PW*aglrtg _ ,. -., 

Training 

Emerg. Responsa .— 

Releaes into Envlion 

Other „.,. 

A, Individual 

250-500 

250-500 

250-SOO 

250-500 

250-500 

250-5DD 

250-500 

250-1,000 

250-1,000 

260-1,000 

250-1,000 

250-1,000 

25O-1.O00 

250-1.000 

3. BuslrMse entity 

250-1,ODD 

250-1,000 

2SO-1.0OO 

250-1.000 

250-1,000 

250-1.000 

250-1,000 

250-1,000 

1,500-7,500 

1,500-7,500 

1,500-7,500 

1,500-7,500 

1300-7,500 

1,500-7,500 

1.500-7,500 

1,500-7 ,SOD 

C, Business entity 

ihat uses or handles Hazmat in 

the course of busirtess 

500-2,000 

SOD-2,000 

500-2,000 

£00-2,000 

SOD-Z,ODQ 

500-2.000 

500-2,000 

S00-2,QDO 

2,500-1 D.DOD 

2.500-10,000 

2,300-10,000 

2300-10,000 

2,500-10,000 

2,500-10.000 

2,500-10.000 

2,300-10.000 

D. Bualneae entity 

thai regularly ofiefs, Bocaplfi, Of 

transports Hazmat 

1,000-5,000 

1.000-5,000 

1.000-5.000 

1,000-5,000 

1,000-5.000 

1.000-5.000 

1.DO0-6.0D0 

1.000-5,000 

5,000-12,000 

6,000-12.000 

6.000-12,000 

5,000-12.000 

5,000-12,000 

5.000-12.000 

5,000-12.000 

5,000-12.000 
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1944S Fedternl Rcgistfcr/Vol. 64. No, 76 /"Wfednesday, April 21, 1999"/Rules and Regulations 

MATRIX AND DEFiNmoNS—Contitiued 

{Figure 1] 

Offense categories 

III. Undeclated Shipment Hazmat Forbidden on, or exceeds 

qty limits for. Passenger Abcieft; 

1. Shlppirifl Papers „,...„ , ^... 

2. Labels - _ .„ 

3. Marldnse , „.. » 

4. Packaging _ 1,..., 

5. Training - , -

6. Emarg, Response ., _.., 

7. Release into Environ „., 

8. Other ,. 

IV. Undeclared Snipmsnt Foibldden on, or exceeds qly limits 

tor, AR Aircraft 

1. Shipping Papers , 

2. Labels 

3. MarKngs » - , « 

4. Paciaging -...; •....,„.„.. 

5. Training -.-

6. Emetg, Response _-

7. Release Into Emriron ..„ -....„ _ 

8. Oltwr „ „.,..„ _ _ „ 

V. IntentlQnal or Deliberate Vlolallon -....._ 

A. IndhMual 

500-5,000. 

500-5.000 

500-5,000 

500-5,000 

500-5.000 

500-5,000 

500-5,000 

500-27,500 

500-27,500 

500-27,500 

500-27,500 

501^27,500 

500-27,500 

500-27,500 

Consult Legal 

B, Buxlness entity 

5,000-15,000 

5,000-15,000 

5,000-15,000 

5,000-15,000 

5.O0O-15.OQ0 

3,000-15.000 

5,000-15,000 

5,000-15,000 

7,500-27,500 

7,500-27,500 

7,500-27,600 

7,600^27,500 

7,500-27.600 

7.500-27,500 

7.500-27,500 

7.500-27,500 

Consult Legel 

C. Bun'nms entity 

that uaes ot handles Hamo i in 

the course of busl-

• neas 

7.500^0,000 

7.500-20,000 

7.EOO-2D.O00 

7.500-20,000 

7.500-20,000 

7.500-20,000 

7,500-20,000 

7.500-20,000 

10,000-27,500 

10,000-27,500 

10,000-27,500 

10,000-27.500 

10,000-27,500 

10,000-27,500 

10,000^27,500 

10,000^7,500 

Oons'uM Legal 

D. Business entity 

(hat regularly offers, acc^ls. or 

San»pons_Ha»iw.l_ 

10.000-27,500 

lQJ)00-27.5oa 

10,000-27,500 

10.000-27,500 

10.000-27,500 

10,000-27,500 

10,000-27,500 

10.000-27,500 

15,000-27,500 

15.000-27,500 

15.000-27,500 

15,000-27.500 

15,000-27,500 

15,000-27,500 

15,000-27.500 

15,000-27,500 

Consult legal 

Air carrier and other aircffifi operator violations 

Failure to comply wtSi Paris 171.172, or 173 requirements of the HMR as an oReror of Hasmat 

Improper acceptance of Hazmat Ibr «jr transportallan (I.e., quantity, labeling, meiUng, padaglng, and 

ahlppina papers) See <»9 CFR 175,30(a) (1H4) - : 

Fallui« lo Insped Hazmat shlpmont properly, See 49 CFR 175.30 (b), (c), <d), (e) 

Improper storsge/s^euring of Hazmat aboani aircrafl ,.._ 

Failure to provide Haemal bolnlng, nte'intam records of training, or meet m'mimuin i^uiremants fix 

Haanat training , , ,. .' _.,,. 

Failure to notify FAA properly of inddent/dlscrepancles in Hasnat shipmont , „ 

FeUure lo ptovide nc<lceto Ihe pllpt-ln-oofninand _ , , 

Other Part 175 vlotellons „ „ 

'' Use main Matrix. 

E Qreup I & II air 

caTTlars and Other 

aircraft operators 

5.000-27.500 

10.000-27.500 

10,000-27,500 

10,000-27,500 

5,000-15,000 

5.000-15.000 

5.00D-15.000 

F, Group III & IV 

air canrlers and 

other aircraft operators 

2.500-15,000 

5,000-15.000 

5.000-15,000 

6,000-15,000 

1,000-6,000 

1.000-5,000 

1.000-5,000 

0efl.raUgn9 

(a) Air Carrier and Other Aircraft 

Operator Croups (I. U, m. iVJ—Air 

carriers and other aircraft operators are 

divided into two categories for purposes 

of determining an appropriate sancriorL 

These categories track the air carrier 

groups established in FAA Order No. 

2150,3A, Appendix 1, Compliance/ 

Enforcement Biilletin 92-1, but also 

Includes any operator of an aircra^ that 

is operated "In comrneroe" as defined in 

the Fedei^ hazardous materials law, 

including Part 129 For^gn Air Carriers, 

Part 125 Operatois, and Part 91 

Operators. Group I is comprised of air 

carriers and other aircraft operators with 

annual operating revenue ol' 

SI60,1x0,060 or more. Group II is 

comprised of air carriexs and other 

aircraft operators that hold Fart IZl' 

certificates or have 50'or more pilots or 

operate 25 or more aircraft, with annua] 

operating revenue of less than 

$100,000,000. Group III is comprised of 

air carriers and other aircraft operators 

that do not meet the criteria for Croup 

n wltii (1) 6 to 49 pilots, or (2) 6 to 24 

aircraft. Croup IV is comprised of ai] 

other air carriers or aircraft operators 

not meeting the criteria for Groups 1,1, 

orH. 

ftO Business Entity—Thb violator is a 

business, corporation, partnership, 5ubS Corporation, sole proprietor, 

association, or any type of commercial 

entity. An individual who offers a 

hazmat shipment in air trattsportation in 

the course of his/her self-owned 

business falls Into this category. 

Includes all entities defined under the 

HMR's definition of "person." (49 CFR 

171.8) with the exception of an 

Individual as defined herein, 

(c) Business Entity that Regularly 

Off^, Accepts, or Transports 

Hazardous Materials in the Course of Its 

Business.—A manufacturer dr 

distributor of Haonat fejls Into this 

category. A freight forwarder would also 

fall into this categoty. The aspect of . 

"regularly" offering covers a business 

entity that offers Hazmat vrich some 

anticipated frequency or purports to do 

so, e.g., a catalogue company that ofiets 

hazardous material to its customers 

would fall into this categoiy.evcn 

though its aaual sale or transportation 

of the Hazmat js infrequent or limited. 

{d) Business Enaty that Uses, HsndJes 

Hazmat in the Course of Its Business— 

This category encompasses the business 

that utilizes Hazmat in Its business but 

does 730^ offer it for transportation on a 

regular basis, as described above. For 

example, a rnanufacturer of a honHazmat product that uses Hazmat In the 

manufacturit^ process could fall into 

this category. It must be established chat 
04/25/2011 13:27 4252271007 ANM7 PAGE 15/16 

Federal Repster/Vol. 64, No. 76/Wednesday, April 21, 1999/Rules and Regulations 19449 

tiie company ordinarily does t»ot offer 

the Hazmat It utilizes far transportation, 

aiuj the shipment in this instance 

represents an isolated Incident This 

type of business is held to a higher 

standard than the business entity that 

has_nO regular involvement^with_ 

receives the subject hazardous material 

in transporiaUon and uses it in its 

business: thus, it is clearly on notice of 

the hasMirdDirt nature ofthe material and 

the regulatory requirements to which 

the Hazmat is subject. 

(e) Declaivd Shipment—A declared 

shipment, for purposes of this matrix 

only, is one that complies vrith one or 

rnore of the communicative 

requirements of the HMR, Le.. it has 

markings, labels, and/or partiallycorrect shipping papers. A package that 

has shipping papers that declare the 

contents as ho&irdous material but is 

othervrise'not mai);ed or labeled falls 

into this category. Similarly, a properly 

marked and labeled pacJcage that lacks 

shipping papers also Mis into this 

category. A case fialls into tills category 

where there Is clear indication thst the 

offeror made some attempt to give 

notice of the hazardous nature of the 

shipment 

(f) Forbidden or Exceeds Quanaty 

Umits for Passeager.Alrcraft—A 

shipment falls into this category if the 

quantity of Hazmat per paduige exceeds 

the quantity limitations/orpasseng^rcarrying alrcrait or if the particular 

hazardous matralal is forbidden in air 

transportation on passenger aircraft. 

(g) Forbidden on or Exceeds Quantity 

—amfts^foTTW-j'aricnfff^^^Ashlpm^ 

fall Into this category If the quantity of 

hazardous material per pacl»ge exceeds 

the aUowable arnount for both passenger 

and cargo aircraft or the Hazmat is 

absolutely forbidden In air 

transportation. 

(h) Hazmst—A "hazardous material," 

as defined in 49 CFR 171,8, includes 

and is interchangeable wicji the term 

"dangerous goods, " as used In the 

International Civil Aviation 

Organization (ICAO) Technical 

Instructions, 

(1) Individual—An Individual who 

offers a shipment of hazardous material 

in his/her personal capacity wltfiout any 

business purpose or as pari of a 

commercial enterprise on the part of the 

' IndfVlduaL 

(1) Intentional or Deliberate 

Violation—A ahlprrwnt falls into this 

category when there is evidence that, the 

offeror, acceptor, air carrier, or aircrafl 

operator had knowledge of the 

requirements of the HMR and willfully 

circumvented or attempted to 

RISK CATEGORIES . 

[Figure 2) 

circumvent those requirements. For 

example, an offeror who places a 

properly marked and labeled" Hasmat 

shipment along with properly 

completed shipping papers, into an 

overpack nwrked as "printed material," 

has committed an intentional or 

<iMlKerate->^Tatlon;."lft-aila4ype of CBB6^ 

Che Investigating'agerkt shall consult 

with FAA legal counsel and follow 

agency guidance for potential criminal 

violations of the HMR, 

(k) Undeclared Si^pznenr—This is a 

shipment that has no indication of its 

hazardous tnaterlal contents and/or no 

indication chat the offeror 

communicated the hazardous nature of 

the shipment's contents to persons who 

accept or trartsporL 

(I) Withto Hazmat Quantity 

Limitations—The amount of hazardous 

material is within the quantity 

limitations per package as established in 

the § 172,101 Table (49 CFR 172-101) for 

the type of aircraft on which the 

shipment traveled. For example, if the 

shipment was offered for transportation 

on a passenger aircraft, the quantity of 

hazardous material was within the 

established limit for transportauon by 

passenger aircraft. If the shipment was 

offered for transportation on a cargo 

aircraft, the quantity limitations for 

cargo aircraft apply. 

CBteaory "A" (Maximum Weight) 

Category "A" mateilais are materials that when released hi the confines of an alnaefl can potentially have a catastrophic eifect on an eirCTBfi's abnhy to continue safe iRohL resuHing in a oash or enwrgency landing causing injury or death to paasengets and nightcrew, as wen as 

persons on Iha ground. 

Class 1 „„ . Explosives: Division 1.1, (JS, 1.3: 

Class 2 „ CDiiqMBBsed QBBSB All 2.1, 2.2 vrilh Subsidlaiy Risk 5.1' and All 2.3 PIH Zones A-0 . 

Class 3 Flan>.mabla Liquids P(3 I, II, and (PIH), 

Class 4 „ Division 4-1 Flemntable Solids PG t, & (Maiches), 

Division 4.2 Sponianeoualy CombuaHble Materials F>G I (Pyrophorie). 

Division 4.3 Dangerous When Wot PG I, . . 

Class 9 ,> Division S.1 Oxidtzing Liquids and Sdlda PG i, 11, e.g., "Chemical Oxygen Qeneratois", 

Dlvtakm 6.2 Organic Peroxides PG II (Type A B, C, or D), 

Class $ DMskm 6,1 Poisonous Liqukfs PG I (PIH). 

Class 7 Caroo Aircrall Only Quantifies on Passenger Aircraft, 

Class,8 Corrosive Material Liquid PG I and (PIH). 

Forbidden Materials (See 49 CFR ir3.2 i & fCAO Tecnmcal Instnjctlons). 

Forblddsn Hazmat listed In Dangerpm Goods Table 49 CFR 172.101. 

Category "H " (Moderate Waight) 

The matertale lisled in Category "B" are matorialB Ihel may not pose en imnwdlato threat to the safety oT e flight, but can eausa death or Injury to persons due lo unlnlended releasee tn aircraft cabin areas, end potendai damage to aircraft structures over a longer period of lime dua 

lo undiscovered release* on sifcrait structural compbnentB. 

Class 1 

Class 3 

Class 4 

Class & 

Class? 

Division 1.4,1.5,1.0, All Compatibility Groups. 

PG III Flammable Liquids. 

DMslon 4,1 mammable SoKda PS II, III. 

Division 4.2 Spontaraously Combustible Matsriais PG III. 

Division 4,3 Dangaroue When Wei PG II, III. 

Dhrtston 5,1 Oxidizing UquUs or Soltds PG III. 

Dhrlslen 6,2 Organic Peroxides (Type E, F, Q). 

Division 6.1 Poisonous Liquids PG I, II (NON-PIH), 

Division 6.2 infisetiftue Substances, 
04/25/2011 13:27 4252271007 ANM7 PAQE 15/16 

19450 Pedeiral Register/Vol, 64, No, 76/Wednesday, April 21, 1999/Rules and Regulations 

RISK OTEQORIES—Continued 

IFigureaj 

Class 7 

Class 8 

RadloacBve Materials, yellow tabet III, yellow bbal II, and white label I. 

Liquids PO II. Ill SoRds PG I, II, lit. 

Cataffory "C" (Mnlmuni Weight) 

T7M mafBna» nsiaa m (^aregary 

Class 2 

ClasG 6 — 

Claaa .7.. 

Class S , „ 

"C" srmstsnsisinsrptsBsta ThB-iaast jmount of nsmtr t 

2.2 Nonflammable Gas, 

DIvlsfan 6,1 packing Group III, 

All other FtAM (LSA, LID QTY, InsbumentB and Arfidea), 

MiaceilanBous Dangerous Goods (ORM^ and Conaumer Commodity). 

Note: This guidance Is not intended, to replace the exparianced Judgment to a special agent who Is convinced, based on the cvidenoe and 

facts of 8 oase, that the failure of an air carrier, shipper, freight ibiwarder, or passenger to follow established regulailons has pMcd a risk lo 

aviagon aafely. 

Issued In Washington, PC on April 14, 

1999, 

lane F. Carvcy, 

Ad/THJtlstr»tw, 

(FR Do c 9S-99B3 PUed 4-20-99 ; B;45 am] 

SIU-IMQ cone 4t1>-1s-M 

SECURITIES AMD EXCHANGE 

COlMMISSION 

17 I:F R Parts 2D2,240, 242 and 249 

[Release Uo. 34-41297; File No. S7-12-«8) 

RIN 3235^AH41 

Regulation of Altentatlve Trading 

Systems; Technical Amendment 

AGENCY: Securities and Exchange 

CojimiissJoo, 

ACTION; Final rule; technical amendmEnt 

and revised compliance date. 

SUMMARY: The Securities and Exchange 

Commission is modiiying the 

compliance dates for Rule 301(b)(3) and 

making a technical change to Rule 

202.3, These and other rules and rule 

amendments relate to the regulation of 

alternative trading systems and 

exchanges and were published on 

December 22.1998 (63 FR 70844). The 

effective date for the other rules and 

amendments published in 63 FR 70844 

remains April 21,1999, except for the 

effective date for §§Z42.30I(b)(5)(i)(D) . 

and (E3 antl §§ 242.301 (b)(6)(i)p) and 

(E), which remains April 1,20(30, 

OAT^s: Effective Date: April 21, J 9&9 for 

amendment to § 202.3. 

Compliance Date: Alternative trading 

systems must comply with 

§242.301 (b)(3) \vith respect to the 50 

securities listed in Schedule A by 

August Z3,1999; with respect to the 

securities listed on Schedules A and B 

by September 23. 1999: with respect to 

the securities listed on Schedules A, B 

and C by April 25, 2000; and with 

respect to all Securities by June 20, 

2000. 

FOR njRTHER INFORMATION COHTACT: 

Elizabeth King, Senior Special (kiunsel, 

at (202) 942-0140, Constance Klggins, 

Special Counsel, at (202) 942-0059, and 

Kevin Ehrlich, Attorney, at (202) 942-

0778, Division of Market Regulation. 

Securities and Exchange Camml£$ian, 

450 Fifth Street, N,W„ Weshlngtoa D.C. 

20549-1001, 

SUPPLEMEHTARY INFORMATION: 

' I, Background 

On Decembers, 199S, the Securities 

and Exchange Commission 

("Commission") adopted new rules end 

rule amendments to allow aJtematlVB 

trading systems to choose,whether to 

register as ruitlonal securities exchanges, 

or to register a$ broker-dealers and 

comply with additional rei^lrements 

under Regulation ATS, depending on 

their activities and trading volume,) The 

elective date for most of these new 

rules and rtile amendments is April 21, 

1999. The Commission stated in the 

adopting release that, prior to April 21, 

1999, it would publish a list of those 

sectultles with respect to which 

altarnative trading systerru must comply 

with Rule 301 (b) (3) on April 21, 1999 

and those securities virjch respect to 

which eJtematlve trading systems must 

comply with Rule 301 (b) (3) on August 

3D. 1939, Rule 301(b)(3) requires an 

alternative trading system to provide to 

a national securttie; e'^change or 

. nadonal securities association, for 

inclusion in the public quotation 

system, the prices and sizes of Its best 

priced buy and sell orders, that arc 

displayed to n^ore than one person, in 

each covered security in which the 

alternative trading system represents 

5% or more of the total trading volume^' 

I Svcuriaec Exchnnge Actt^dimM No. 40760 

(Dec. B, laSS), 63 PRraS«4 JPtu, tZ. 199^. 

> 17 CFR 242.301 (b)(3). Ferpurpgtef or 

KaguUktloni ATS, a "eov«red jeeurhy" Includei all 

eurhante-llstod, Nvcdiq NM BKuriUcs. end Nasdaq 

Smin Cap ttcurltlds, other thaa dgbt and 

«ODvertlMe aecurlUN. Sm Rule 11 Acl-l M(S), IT 

JL Delay of the CompUance Dates for 

Rule 301(b)(3) 

One major alternative trading system 

has irxlicated that it will be unable to 

comply with the rettuiretnents of Rule 

301^) (3) by the original compliance 

dates without putting the operation of 

its system at serious risk of failure. The 

operatlona] failure of a raEjor alternative 

trading ^stcm could inteifere with the 

markets as a whole. Accordingly, the 

Commission believes it necessary to 

adjust the compliance dates for Rule 

301(b)(3) as follows: 

August 23,1999; Cojnpllance with 

Rule 301 (b)(3) with respect to the SO 

Nasdaq securities listed on Schedule A, 

attached in the appendix, 

September 28,1999; Compliance with 

Rule 301 (b)(3) for the 50% of Nasdaq 

securities listed on Schedules A and 6, 

attached in the appendix, 

ApfU 25, 2000: ComplJafjce with Rule 

301 (b)(3) fbr the 75% of Nasdaq 

securities listed on Schedules A, B, and 

C, attached In the appendix. 

June 20, 2000: Compliance with Rule 

301 (b)(3) for all Nasdaq securities. 

Schedules A. B, arxl C were created 

l7y ranking all covered securities traded 

on Nasdaq by their January 1999 

volume, and including an equal number 

of setnjrities from each decile. Some 

securities that were not traded an 

Nasdaq in January 1999 may commence 

trading on Nasdaq subsequently. 

Alternative trading systems may wait 

until June 20, 2000 to comply with Rule 

301 (b) (3) with respect to these 

securities. 

All Other compliance dates for the 

rules and rule amendments adopted last 

December remain the same. The 

Commission encourages those 

alternative trBdlng systems chat are able 

to comply with Rule 301 (b)(3) on April 

21, 1999 to do so. 

CFR24D,tlAc1-'l(a)(6):Rule30[l(d', ITCFR 

£42.300(1).