UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 

WASHINGTON, D.C. 

~----------------------~ 

IN THE MATTER OF: 

COASTAL AIR 

TRANSPORT, INC. 

FDMS NO. 

FAA-2011-1005 

(Civil Penalty Action) 

~----------------------~ 

Thursday, 

December 6, 2012 

The above-entitled matter came on for 

continued oral argument via teleconference, 

pursuant to notice, at 1:30 p.m. 

BEFORE: 

THE HONORABLE J.E. SULLIVAN 

Administrative Law Judge 

RECEIVED 

DEC 1 r& 2012 

HEARING :()QOKET 

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APPEARANCES: 

On Behalf of The Respondent: 

MICHAEL FOSTER 

President 

Coastal Air Transport, Inc. 

P.O. Box 3985 

Christiansted, St. Croix 

Virgin Islands 00822 

(340) 773-6862 

On Behalf of The Complainant: 

RASHAWN RICH GEORGE, ESQ. 

Office of the Regional Counsel 

AS0-7 

Southern Region 

Federal Aviation Administration 

P.O. Box 20636 

Atlanta, Georgia 30320 

(404) 305-5200 

(404) 305-5223 (fax) 

Also Present: 

Cody L. Smith, U.S. Department of 

Transportation 

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C 0 N T E N T S 

ORAL ARGUMENT OF: 

Rashawn Rich George, Esq., 

on behalf of Complainant 

Michael Foster, President 

on behalf of Respondent . 

Rashawn Rich George, Esq., 

on behalf of Complainant - Rebuttal . 

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Page 

40 

88 

114 

EXHIBITS IDENTIFIED RECEIVED 

COMPLAINANT 

1 - 12/11/09 FAA Letter 30 

2 Cert. Mail Receipt 30 

5 10/21/09 Bill of Lading 30 

7 11/2/09 CBP Doc. 30 

8 - 9 Photos of Fiberboard Box 30 

10 Fig. C-1, Matrix/Defin. 30 

11 Table of Offenses 30 

12 - U.S. Air Carrier Violations 30 

14 - Shipper Declaration 

17 - Blank Worksheets 

RESPONDENT 

1 -

2 -

3 -

4 

5 

6 

7 

3/22/12 Respondent Answer 

3/23/12 Motion to Dismiss 

7/9/12 Oppos. to Hearing 

8/2/12 Respondent Answer 

8/7/12 Respondent Answer 

Fiberboard Box Photo 

HAZCOM Labels Photo 

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35. 

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1 P R 0 C E E D I N G S 

2 1:32 p.m. 

3 THE COURT: Okay. We're on the 

4 record in the matter of Coastal Air Transport, 

5 Inc. This is Docket No. FAA-2011-1005. Today 

6 is Thursday, December 6, 2012. And the 

7 parties have convened for continuing argument 

8 on the FAA's Motion for Hearing on Sanction 

9 Only. 

10 I'll note that we last convened on 

11 October 23, 2012. At that time, after some 

12 inquiry of the party and discussion if the 

13 party had their calendars, oral argument was 

14 continued to November 19, 2012 at 1:30 p.m. 

15 and later that same day an order granting a 

16 brief continuance of oral argument and 

17 granting/denying other relief was filed. 

18 After that date, on November 6, 

19 2012, the FAA filed the Agency's supplemental 

20 filing in support of its Motion for Hearing on 

21 Sanction Only. And as part of that 

22 supplemental filing, the FAA included four new 

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1 summary judgment exhibits. 

2 And, Ms. George and Mr. Foster, 

3 just so that you know, those four new exhibits 

4 were identified as Exhibits 1 through 4. 

5 As you know in the original 

6 filing, the FAA had already identified 13 

7 exhibits identified as Exhibits 1 through 13. 

8 So rather than have duplicate 

9 numbering, I'm going to renumber the four new 

10 summary judgment exhibits as 14 through 17, so 

11 that there is no duplication and no confusion. 

12 After November 6' 2012, the 

13 respondent filed the respondent's response on 

14 November 8, 2012. And in this response, the 

15 respondent included two summary judgment 

16 exhibits. 

17 And as you know from our October 

18 23, 2012 discussion, I had identified some of 

19 the respondent's previous material that 

20 appeared testimonial in nature. And I had 

21 already identified them as respondent's 

22 exhibits for the purpose of summary judgment. 

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1 So what I'm going to do with the 

2 respondent's latest two new exhibits is simply 

3 renumber them, so that we again don't have 

4 duplication in our numbering system. And so 

5 those two exhibits filed on November 8, 2012 

6 by the respondent, I'm remarking as Exhibits 

7 6 and 7. Let me just double check. Yes, No. 

8 6 and 7. 

9 And then as you all know, on 

10 November 9' 2012, the FAA filed the 

11 complainant's I'm getting a lot of noise on 

12 the phone. Do I still have Ms. George on the 

13 phone? 

14 MS. GEORGE: Yes, Your Honor. 

15 THE COURT: And Mr. Foster? 

16 MR. FOSTER: Yes, Your Honor. 

17 THE COURT: Okay. I don't know 

18 what is going on, but if there is somebody 

19 moving papers or rustling things around, I'm 

20 getting a lot of static, so if you could move 

21 your papers away from the phone, that would be 

22 helpful. 

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1 Getting back to, you know, just 

2 our summary of what has happened since October 

3 23, 2012, I'll note that on Friday, November 

4 9, 2012, the FAA filed the complainant's 

5 Motion for Continuance of Oral Argument. 

6 On November 14, 2012, this 

7 tribunal issued an order granting the FAA's 

8 Motion for Continuance and granting/denying 

9 other relief. 

10 As part of this order, the 

11 November 19, 2012 motion conference was 

12 continued to today's date and time. 

13 And then since then, I just 

14 received on December 5, 2 012 the complainant's 

15 response to ALJ's order granting Motion for 

16 Continuance. So let's talk about that for 

17 just a minute and get that off the table. 

18 Ms. George, let me chat with you 

19 for a moment about that. Typically the 

20 response one has to an order is to say thank 

21 you for your time and attention. It is not a 

22 dialogue necessarily. So I'm presuming you 

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1 have some type of motion that is contained in 

2 this response, but I'm not quite sure what it 

3 is. 

4 What relief are you asking of the 

5 Court today? 

6 MS. GEORGE: Your Honor, the 

7 Agency is not asking the Court for any relief. 

8 However, in the November 14th order granting 

9 the continuance, it appeared to the Agency 

10 that there were some questions about time line 

11 leading up to the Agency's request for the 

12 continuance. 

13 And, therefore, it was advised to 

14 provide some supplemental documentation of the 

15 motion that was filed on November 9, 2012. 

16 And the filing of yesterday was to do that. 

17 THE COURT: Well, let me ask you 

18 then about that. When you say it was advised, 

19 are you talking about you were advised or your 

20 client --

21 MS. GEORGE: Yes, Your Honor. 

22 THE COURT: All right. Okay. I 

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1 did receive that material. Thank you very 

2 much. It looks to me like what you are doing 

3 is you are simply moving to supplement the 

4 record regarding your absence. Would that be 

5 a fair statement? 

6 MS. GEORGE: That would be very 

7 fair. 

8 THE COURT: Okay. Then I will 

9 simply note that this should be retitled as a 

10 complainant Motion to Supplement the Record 

11 that was outlined in the November 14, 2012 

12 order. 

13 And I don't have any problem with 

14 that. What I would like, however, is to talk 

15 to you a little bit about future problems that 

16 may arise for you if you have future medical 

17 problems . 

18 If you do have future medical 

19 problems, I really would like you to have your 

20 own staff take care of your matters for you, 

21 as opposed to leaving the Court with a lack of 

22 follow-up by you and your office. 

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1 The order that was issued on 

2 November 14, 2012 was pretty specific about 

3 all the different actions that this office had 

4 to take in order to try and take care of the 

5 issue that you left us with. And I'm 

6 certainly appreciative of any type of medical 

7 concerns that you have and the emergent nature 

8 that you had with them. 

9 But presumably, you would be 

10 leaving those kinds of problems for your 

11 colleagues at the FAA to help you out on, as 

12 opposed to leaving it for this Court to 

13 resolve for you. 

14 And so I wanted to get a sense 

15 from you that you understood that the Court 

16 took a lot of action on your behalf. Happy to 

17 do that on a very rare occasion, but it 

18 shouldn't be something that you would be 

19 expecting us to do ever again in the future. 

20 MS. GEORGE: We understand, Your 

21 Honor. The motion that we filed on the 9th 

22 was in line with previous motions that we 

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1 filed over the last 14 years that I have been 

2 here in the office, but I have advised the 

3 office of -- about how we should do that in 

4 the future going forward. 

5 THE COURT: So is it your 

6 assertion when you say that you have done this 

7 for 14 years, that you just file motions and 

8 let the Court take care of it for you? Is 

9 that what 

10 MS. GEORGE: In previous cases 

11 where attorneys have been out of the office on 

12 medical issues, such as these, the type of 

13 motion that I filed has been the model of what 

14 we have done in the past. 

15 But we have -- I have advised the 

16 regional counsel here and the managing 

17 attorney and all the other attorneys here in 

18 the southern region that going forward we need 

19 to do more. 

20 THE COURT: Thank you so much. I 

21 appreciate your assistance to the Court in 

22 that matter. 

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1 Okay. So is there any other thing 

2 that you would like to address in this Motion 

3 to Supplement the Record that you filed? 

4 MS. GEORGE: No, Your Honor. 

5 THE COURT: Okay. Then let me 

6 talk to Mr. Foster next. 

7 Mr. Foster, during this ex parte 

8 contact that my staff had with you that is 

9 outlined in the November 14, 2012 order, you 

10 had indicated that you were planning on 

11 getting a fax machine that would be designated 

12 for incoming faxes, such as the kind that Ms. 

13 George and this office would like to send you. 

14 Have you had a chance to get that 

15 fax machine up and running, so that we have an 

16 alternative to the very slow U.S. Mail route 

17 that we have been using for you? 

18 MR. FOSTER: Your Honor, we did 

19 obtain a fax machine. It wasn't suitable. We 

2 0 had to get another one and it' s -- we are 

21 waiting for it to be installed and hooked up 

22 right now. We had to put another line in the 

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1 office. 

2 THE COURT: When do you anticipate 

3 the fax machine being ready to go? 

4 MR. FOSTER: The next several 

5 days, yes. 

6 THE COURT: When you say the next 

7 several days, today is December 6 , 2 012 . When 

8 do you anticipate that fax machine being ready 

9 to be used? 

10 MR. FOSTER: I would say by the 

11 10th Your Honor. ' 

12 THE COURT: Okay. So what I would 

13 like to have you do is contact my office no 

14 later than December 11, 2012 and to contact 

15 Ms. George's office at the same time and 

16 notify both of us as to what the fax number 

17 is, so that we have it for your fax number of 

18 record. 

19 MR. FOSTER: Yes, Your Honor. 

20 THE COURT: Okay. Thank you so 

21 much. All right. Then let's talk about these 

22 exhibits, because I need to find out if there 

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1 are any particular objections from the 

2 respondent to the FAA exhibits and then if 

3 there are objections by the FAA to the 

4 respondent's exhibits. 

5 Mr. Foster, I'm going to start 

6 with you. And let's talk a little bit about 

7 the 17 total exhibits that the FAA has filed 

8 in support of this motion. And I'm going to 

9 exempt a couple of them out right away, based 

10 on what I have read. 

11 In the materials that are before 

12 the Court for this motion, there are several 

13 requests for admission, which the FAA has 

14 identified and filed, in which you have 

15 admitted to certain facts. And part of those 

16 are duplicative of the exhibits. 

17 So, for example, there was a 

18 Request for Admission No. 14, 15, 16 and 17, 

19 in which you admitted to those requests. The 

20 material referenced in the FAA's Request for 

21 Admission Nos. 14, 15 and 17 are identical to 

22 the FAA Exhibits No. 3, 4 and 9. 

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1 So given the fact that that's 

2 absolutely the same material, those are deemed 

3 admissible on their face. We don't need to 

4 talk about those. 

5 There was also an admission to the 

6 FAA Request for Admissions No. 16, which is 

7 purportedly two pages of photocopies of HAZCOM 

8 labels. Unfortunately, however, the materials 

9 filed with the Office of Hearings is 

10 completely black, so I have a white page with 

11 some blackness on it and no recognizable 

12 things to view. 

13 So whether or not you admitted to 

14 it or not, it's not something I can admit into 

15 evidence, because it's completely unreadable. 

16 So we are not going to talk about that. 

17 Some of the materials that the FAA 

18 filed are legal materials. And so legal 

19 materials are not factual pieces of evidence 

20 and the FAA agreed that on October 23, 2012 

21 that those were simply courtesy copies of 

22 legal reference material. And those 

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1 specifically are Exhibits No. 6, 13, 15 and 

2 16. We don't need to talk about those. 

3 That leaves us with the following 

4 exhibits. And I'm going to outline them for 

5 you and then I'm going to ask you if you have 

6 any objection to their admissibility. 

7 The exhibits that we need to talk 

8 about are Exhibits 1, 2, 5, 7, 8, 10, 11, 12, 

9 14. 

10 MR. FOSTER: Your Honor, what is 

11 the -- I'm not looking at what you are reading 

12 right now. What's the date on that motion? 

13 THE COURT: Before I answer that 

14 question, Mr. Foster, I'm getting a lot of 

15 static again. Is there any-- and I'll start 

16 with you, Mr. Foster, since we are talking 

17 first. Are you moving papers or breathing 

18 really close to the phone, by any chance? 

19 MR. FOSTER: No, Your Honor. 

20 THE COURT: Okay. Ms. 

21 MR. FOSTER: I think it's our 

22 phone system down here is not the best. 

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1 THE COURT: Okay. I'll just check 

2 in with Ms. George then. 

I 

3 Ms. George, by any chance, are you 

4 moving a lot of papers or breathing into the 

5 phone really closely? 

6 MS. GEORGE: No, Your Honor. 

7 THE COURT: Okay. Well, we will 

8 see if the static continues and if so, I'll 

9 let the parties know. 

10 To answer your question, Mr. 

11 Foster, I'm not reading from a document. I'm 

12 telling you what the numbers of the exhibits 

13 are that the FAA has filed as part of this 

14 motion. And I'm going to be asking you to be 

15 looking at each of these exhibits and telling 

16 me if you object to their admissibility or 

17 not. 

18 MR. FOSTER: Okay, Your Honor. 

19 THE COURT: I'm going to give you 

20 those numbers again. The numbers of the 

21 exhibits that I need to get a response from 

22 you on are: Exhibits 1, 2, 5, 7, 8, 10, 11, 

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1 12, 14 and 17. 

2 You have the ability, Mr. Foster, 

3 to object to these exhibits on any number of 

4 grounds. My review of the exhibits is to 

5 determine whether or not they could be deemed 

6 admissible for purposes of review on a summary 

7 judgment motion. 

8 So do you have those exhibits in 

9 front of you? 

10 MR. FOSTER: That's what I was 

11 asking for, Your Honor, what was the date that 

12 they were filed? I have my papers organized 

13 on a date basis. 

14 THE COURT: Okay. Exhibits 1 

15 through 13 were attached to the Agency's brief 

16 in support of an alternative Motion for 

17 Hearing on Sanction Only and according to the 

18 service date, Ms. George served this on July 

19 20, 2012. It was received at the Office of 

20 Hearings on July 23, 2012. 

21 Okay. I just heard a lot of 

22 static again. So, Mr. Foster, were you 

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1 looking through your papers, by any chance? 

2 MR. FOSTER: Yes, I was, Your 

3 Honor, but I was not shuffling. I was just 

4 looking through the folder. 

5 THE COURT: Okay. 

6 MR. FOSTER: I have that in front 

7 of me from July 20, 2012. 

8 THE COURT: Okay. Then --

9 MR. FOSTER: Agency brief 

10 supplement. 

11 THE COURT: I presume that you 

12 have taken a really good look at this and that 

13 you are pretty familiar with Exhibits 1 

14 through 13. Do you want to take a look at 

15 Exhibit 1 and tell me if there is any 

16 objection that you might have to its 

17 admissibility? 

18 MR. FOSTER: I don' t have the 

19 exhibits attached to that particular filing. 

20 Unfortunately, when I sent my files up to the 

21 state, they didn't come back in the same order 

22 that I have now. Let me see if I can find it. 

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1 What does it deal with? I can answer that 

2 directly. 

3 THE COURT: Well, I'm not in a 

4 position to read you every single exhibit, so 

5 I can identify them briefly. 

6 Exhibit 1 is a December 11, 2009 

7 letter to you from the FAA. Does that sound 

8 familiar? 

9 MR. FOSTER: Okay. I don't object 

10 to that. 

11 THE COURT: Okay. How about 

12 Exhibit No. 2? 

13 MR. FOSTER: That's the copy of 

14 the bag that the materials were in? 

15 THE COURT: Exhibit No. 2 is a 

16 copy of certified mail receipt documentation 

17 from the FAA to you. 

18 MR. FOSTER: Okay. I don't object 

19 to that. 

20 THE COURT: Exhibit No. 5 is a 

21 partially illegible document and let's see if 

22 I can-- it's purported to be an October 21, 

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1 2009 Bill of Lading. 

2 MR. FOSTER: I don't believe I saw 

3 a Bill of Lading. 

4 THE COURT: Well, it's not a 

5 question of whether you believe you saw it. 

6 This was attached to the FAA's Motion for a 

7 Summary Judgment, Motion for Hearing on 

8 Sanction Only. 

9 MR. FOSTER: Right. 

10 THE COURT: So --

11 MR. FOSTER: Well, I will object 

12 to that, because I don't believe there was a 

13 Bill of Lading. 

14 THE COURT: Okay. Do you realize 

15 that you actually argued in your own 

16 responsive case that there was a Bill of 

17 Lading? 

18 MR. FOSTER: There was, it was 

19 mentioned in one of the documents that the 

20 Customs officers testified to, but, at the 

21 time, there was not the actual document 

22 attached to that description. 

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1 THE COURT: I'll simply note that 

2 you are objecting to the admissibility of FAA 

3 Exhibit No. 5. Is the basis of your objection 

4 that you don't remember ever seeing it? What 

5 is the basis? 

6 MR. FOSTER: It was not 

7 apparently, it was not attached to the 

8 documents that I was sent. 

9 THE COURT: Okay. 

10 MR. FOSTER: I have quite a few 

11 exhibits here, but the ones I have are not 

12 numbered. 

13 THE COURT: Well, if you look at 

14 the bot tom of the page, the exhibits have been 

15 marked with an exhibit stamp and then they 

16 have been hand lettered with the number of the 

17 exhibits, at least on the ones that I have. 

18 MR. FOSTER: Okay. 

19 THE COURT: So let's go to --

20 MR. FOSTER: All right. 

21 THE COURT: Exhibit No. 7. 

22 Exhibit No. 7 is dated November 2, 2009 and it 

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1 purports to be from the U.S. Customs and 

2 Border Protection employee, Renee Steele, to 

3 FAA Hazmat coordinator, Juan Bulted. It is 

4 one page. 

5 MR. FOSTER: Okay. I did see 

6 that. 

7 THE COURT: Do you have any 

8 objection to its admissibility? 

9 MR. FOSTER: No, Your Honor. 

10 THE COURT: Let's move then to 

11 Exhibit No. 8. Exhibit No. 8 is purporting to 

12 be nine photographs of the exterior, interior 

13 and contents of a fiberboard box. 

14 MR. FOSTER: Okay. I have seen 

15 that. In fact, I had sent copies back with my 

16 response. 

17 THE COURT: Do you have any 

18 objection to the admissibility of Exhibit 8? 

19 MR. FOSTER: No, Your Honor. 

20 THE COURT: Let's talk about 

21 Exhibit No. 10. Exhibit No. 10 is a one page 

22 document that is entitled "Matrix and 

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1 Definitions,'' Figure C-1. Do you have any 

2 objection to its admissibility as documentary 

3 evidence? 

4 MR. FOSTER: No, I don't, Your 

5 Honor. 

6 THE COURT: Okay. What about 

7 Exhibit No. 11? Exhibit No. 11 purports to be 

8 a table of offenses for air carrier and other 

9 aircraft operator violations. Do you have any 

10 objection to its admissibility? 

11 MR. FOSTER: No, I don't, Your 

12 Honor. 

13 THE COURT: What about Exhibit No. 

14 12? This purports to be a partial copy of 

15 some documentation regarding violations 

16 committed by U.S. air carriers or U.S. 

17 commercial operators, classification of air 

18 carrier and operator. 

19 MR. FOSTER: No objection, Your 

20 Honor. I believe that is probably right out 

21 of the regulation book. 

22 THE COURT: Let's look at Exhibit 

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1 No. 14. And Exhibit No. 14 is one of the new 

2 exhibits that the FAA filed that is part of 

3 its supplemental materials. You will need to 

4 give me a minute, so that I can catch up and 

5 pull that material in front of me. 

6 And I'm so sorry folks. Exhibit 

7 14 is a Shipper's Declaration Specimen Design 

8 for Manual Completion. It's one page. Does 

9 that sound familiar to you at all, Mr. Foster? 

10 MR. FOSTER: I'm sorry, the first 

11 part of that cut out, Your Honor. I do 

12 believe I found the exhibits. I'm looking at 

13 --except the last one here is Exhibit 13. I 

14 don't have up to Exhibit 14. 

15 Was that a new filing that was 

16 just sent within the last couple days? 

17 THE COURT: Yes. If you recall in 

18 my opening remarks, I was talking to Ms. 

19 George about her supplemental materials that 

20 I received 

21 MR. FOSTER: Yes, Your Honor. 

22 THE COURT: -- in 2012. And she 

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1 included four new exhibits in those materials. 

2 MR. FOSTER: Okay. 

3 THE COURT: She had marked the 

4 exhibits 1 through 4, but she already had 1 

5 through 4 exhibits marked in an earlier 

6 filing. So I remarked those new exhibits as 

7 Exhibits 14 through 17, so that there was no 

8 duplication and so that they were 

9 chronologically in order with the prior 13 

10 exhibits that were included in her original 

11 material. 

12 So do you have those in front of 

13 you? 

14 MR. FOSTER: No, I don't, Your 

15 Honor. I have not received them yet. 

16 THE COURT: Okay. These were 

17 mailed on November 6, 2012, which was a month 

18 ago. According to even the slowest U.S. Mail 

19 postings, you should have received them by 

20 now. 

21 MR. FOSTER: Okay. Let me check 

22 my documents here, because we did get some 

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1 notice from her, but I didn't notice any 

2 attachments. Okay. I do have them, Your 

3 Honor. I'm sorry. 

4 THE COURT: Okay. 

5 MR. FOSTER: They were -- again, 

6 they are labeled as I see Exhibit 3 is a 

7 Hazmat certificate. Exhibit 4 is a chart of 

8 some sort. And then there is Exhibit 4, it 

9 looks like 42. Am I looking -- and that's 

10 from-- that was dated 11/6. 

11 THE COURT: Well, I'm not quite 

12 sure that you are looking at the same things 

13 that I am. I have before me a document that 

14 is entitled "Agency Supplemental Filing in 

15 Support of its Motion for Hearing on Sanction 

16 Only." 

17 Is that the title of the document 

18 you are looking at? 

19 MR. FOSTER: Yes, it is, Your 

20 Honor. 

21 THE COURT: Okay. Then if you 

22 look past page 15, the very first page after 

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1 that is marked as Exhibit 1. And the title is 

2 11 Shipper's Declaration Specimen Design for 

3 Manual Completion. 11 

4 MR. FOSTER: Exhibit 1? Yes, I 

5 have that, Your Honor. 

6 THE COURT: Do you have any 

7 objection to its admissibility for purposes of 

8 this motion today? 

9 MR. FOSTER: No. My copy is 

10 blank. 

11 THE COURT: So it doesn't say 

12 Shipper's Declaration Specimen Design for 

13 Manual Completion? 

14 MR. FOSTER: Yes, it does, but 

15 there is no-- it's not filled in. It's not 

16 filled out at all. 

17 THE COURT: I'm not saying that it 

18 is. 

19 MR. FOSTER: Okay. 

20 THE COURT: I'm simply saying that 

21 this is Exhibit 14 for this motion today. Do 

22 you have any objection to its --

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1 MR. FOSTER: Okay. 

2 THE COURT: -- admissibility? 

3 MR. FOSTER: Let me 

4 THE COURT: And I'm hearing 

5 MR. FOSTER: Let me change that 

6 then. Okay. I am looking at that. 

7 THE COURT: Since you now are 

8 looking at it, Mr. Foster, do you have any 

9 objection to its admissibility for the purpose 

10 of this motion? 

11 MR. FOSTER: No, Your Honor. 

12 THE COURT: Okay. Then our last 

13 exhibit for you to look at is Exhibit No. 17 

14 in that same package. And Exhibit No. 17, 

15 which is marked as Exhibit 4, pages 1 through 

16 3, basically, are blank worksheets of various 

17 kinds. 

18 MR. FOSTER: Yes, I am looking at 

19 them, Your Honor. 

20 THE COURT: Do you have any 

21 objection for admissibility for today's 

22 motion? 

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1 MR. FOSTER: No, Your Honor. 

2 THE COURT: Okay. Thank you very 

3 much. 

4 (Whereupon, the documents were 

5 marked for identification as 

6 Complainant Exhibits 1, 2, 5, 7, 

7 8, 10, 11, 12, 14, 17 and were 

8 received in evidence.) 

9 THE COURT: I'm going to go next 

10 to you, Ms. George, and we are going to do 

11 pretty much the same thing with you. 

12 And I'm going to go through the 

13 materials that I have pulled out from the 

14 pleadings, which could be deemed testimonial 

15 in nature by the respondent. And we are just 

16 going to look at each one of them to see if 

17 you have any objections for consideration. 

18 As you know --

19 MS. GEORGE: I'm sorry, Your 

20 Honor? 

21 THE COURT: there is a 

22 requirement essentially for this Court to look 

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1 at this type of material as part of the 

2 record. 

3 So the first one is entitled --

4 folks, I'm getting a lot of static again. I'm 

5 getting a lot of static again, so if either of 

6 you have any kind of papers that are near the 

7 phone for whatever reason, I'm hearing a lot 

8 of static when you move them or shuffle them 

9 or touch them. 

10 So if you could be very careful 

11 about that, I would be most appreciative. 

12 So, Ms. George, turning back to 

13 you again. The first of the five documents 

14 that I found in the litigation file that could 

15 be deemed pleadings are as follows: 

16 I'm marking them as I go. No. 1, 

17 Answer to FAA's Motion for Decision Should not 

18 be Granted. 

19 MS. GEORGE: Your Honor, what date 

20 was that? I'm sorry. 

21 THE COURT: I know that it's hard. 

22 I'm still getting a lot of static and so --

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1 MR. FOSTER: Okay. I'm not 

2 hearing it on this side, Your Honor. It's 

3 clear and I'm not moving anything around. 

4 THE COURT: Okay. 

5 MS. GEORGE: I hear the static as 

6 well, Your Honor. 

7 THE COURT: Thank you. Mr. 

8 Foster, thank you for that affirmation. 

9 Hopefully if we all are being as limited in 

10 our movements as possible, we won't get much 

11 static any more. 

12 Ms. George, turning back to you. 

13 This is a document dated and signed March 22, 

14 2012. It's dated and signed by Mr. Foster and 

15 it is entitled "Answer to FAA's Motion for 

16 Decision Should not be Granted. 11 

17 MS. GEORGE: I have it, Your 

18 Honor. 

19 THE COURT: Do you have any 

20 objection to its admissibility as potential 

21 testimonial documentation for purposes of this 

22 motion? 

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1 MS. GEORGE: I do not have any 

2 objection. 

3 THE COURT: Okay. Respondent's 

4 No. 2, dated and signed by Mr. Foster on March 

5 23, 2012. It's entitled ''Motion to Dismiss.'' 

6 MS. GEORGE: I don' t have any 

7 objection to the admissibility, Your Honor. 

8 THE COURT: Okay. Respondent's 

9 No. 3, dated and signed by Mr. Foster on July 

10 9' 2012, one page, and it's entitled 

11 "Opposition to Hearing on Sanction Only." 

12 MS. GEORGE: I do not have any 

13 objections, Your Honor. 

14 THE COURT: Respondent's No. 4, 

15 eight pages, dated and signed by Mr. Foster on 

16 August 2, 2012. It's identified as 

17 Respondent's Answer to Initial Discovery. 

18 MS. GEORGE: Your Honor, I have 

19 two documents entitled "Respondent's Answer to 

20 Initial Discovery.'' I'm sorry. The one on 

21 August 2 I do not have any objection to that. 

22 THE COURT: Okay. The fifth of 

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1 respondent's exhibits would have been dated 

2 and signed by Mr. Foster on August 7, 2012. 

3 It is two pages. And it is entitled 

4 "Respondent's Answer to General Discovery and 

5 Production of Documents." 

6 MS. GEORGE: No objections, Your 

7 Honor. 

8 THE COURT: Okay. Then 

9 Respondent's No. 6 is one of the two exhibits 

10 that were attached to the respondent's 

11 response to FAA Motion for Hearing on Sanction 

12 Only that was received by this office on 

13 November 8, 2012. It is a photograph of the 

14 exterior of a fiberboard box. 

15 Do you have any objection to its 

16 admissibility? 

17 MS. GEORGE: No objection. 

18 THE COURT: Respondent's No. 7 is 

19 a photograph of two HAZCOM labels, which is 

20 one page. And I will simply note for both of 

21 you that it's partially illegible for this 

22 Court. So it will have limited value. 

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1 Ms. George, do you have any 

2 objection to its admissibility, at least on a 

3 limited basis? 

4 MS. GEORGE: I do not have any 

5 objections, Your Honor. 

6 (Whereupon, the documents were 

7 marked for identification as 

8 Respondent Exhibits 1 through 7 

9 and were received in evidence.) 

10 MS. GEORGE: If I may, the first 

11 copy that the FAA has is a black and white 

12 copy. It might be more legible if we send 

13 that as a PDF rather than as a photocopy, if 

14 you would like. 

15 THE COURT: When you say the first 

16 copy, what are you talking about? 

17 MS. GEORGE: The copy of the 

18 HAZCOM labels that both the Agency and the 

19 respondent have provided to the Court. It's 

20 from an enforcement investigative report 

21 compiled by Mr. Juan Bulted, the Agency 

22 Special Agent for Hazardous Materials. 

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1 It lS a black and white 

2 photograph. And in the photocopying of that, 

3 it appears that it has become illegible for 

4 your purposes. I would be able to provide a 

5 PDF copy, a scanned copy of it to be able to 

6 read the information there. 

7 THE COURT: Okay. So you are 

8 referring-- you are saying that Respondent's 

9 Exhibit No. 7 --

10 MS. GEORGE: Yes. 

11 THE COURT: -- actually, well, if 

12 you can give me a minute to finish the 

13 question, is potentially part of the FAA's 

14 Request for Admission No. 16, which purported 

15 had two pages of HAZCOM label photographs, 

16 which I couldn't see? 

17 MS. GEORGE: Yes. Those 

18 photographs that are Respondent's Exhibit R7 

19 are the same exhibits as the complainant's. 

20 THE COURT: Well, I want to ask 

21 you about that because your Request for 

22 Admissions No. 16 had two pages of photocopies 

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1 whereas the Respondent's Exhibit No. 7 only 

2 had one photograph. 

3 MS. GEORGE: He had provided one 

4 page of that document. 

5 THE COURT: Okay. Mr. Foster, let 

6 me turn back to you then because there has 

7 been an offer of alternate filing by the FAA 

8 for the photographs that were contained in 

9 Request for Admissions No. 16, which you 

10 admitted to. 

11 Do you have any objection to Ms. 

12 George sending an emailed copy to one of the 

13 Office of Hearing staff, so that potentially 

14 this Court can see a legible, readable copy of 

15 that material? 

16 MR. FOSTER: No objections, Your 

17 Honor. In fact, that's the problem. I have 

18 made a copy of her copy, which is a copy of a 

19 photograph, so that's why I -- mine is also 

20 very difficult to read. 

21 THE COURT: Okay. Then I will ask 

22 you, Ms. George, to send a copy of that 

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1 material to Mr. Smith at his email address. 

2 And I'm going to give that to you now, but 

3 I'll just caution both of you that we don't 

4 normally accept email filings. And so this is 

5 just for today and for this purpose. 

6 MS. GEORGE: I understand, Your 

7 Honor. 

8 THE COURT: Yes. Are you ready, 

9 Ms. George? 

10 MS. GEORGE: I am. 

11 THE COURT: Okay. It's the first 

12 name is cody, c, as in cat, 0, as in orange, 

13 D, as in David, Y, as in yellow, . smith, S, as 

14 in Sam, M, as ln Mary, I' as in igloo, T, as 

15 in Tom, H, as in happy, @d, as in dog, 0, as 

16 in orange, T, as in Tom, .gov. Do you need me 

17 to repeat that? 

18 MS. GEORGE: No, Your Honor, 

19 cody.smith®dot.gov. 

20 THE COURT: Correct. Thank you so 

21 much. 

22 Ms. George, when do you think you 

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1 could send that to Mr. Smith? 

2 MS. GEORGE: At the conclusion of 

3 today' s proceedings, I will send him the email 

4 copy. 

5 THE COURT: Okay. Thank you very 

6 much. Okay. So it looks like we have covered 

7 all of the exhibits. 

8 So then let me do this. Ms. 

9 George, and I give this opportunity to 

10 everybody who appears, you can either take 

11 five minutes and just highlight for me which 

12 exhibits you think go to prove which 

13 violations. You know, give me your argument 

14 and then I can ask you questions after that 

15 or, if you prefer, I can ask you questions 

16 first. It just depends on what your comfort 

17 level is. 

18 You may end up answering a lot of 

19 my questions with your narrative, but one 

20 never knows. So what would you prefer? 

21 MS. GEORGE: I would prefer for 

22 you to reserve your questions to the end. 

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1 THE COURT: Okay. Then counsel, 

2 you are welcome to take your five minutes and 

3 highlight for us what the gravamen of your 

4 motion is. 

5 MS. GEORGE: Okay. Your Honor, 

6 thank you for the opportunity to speak to you 

7 today regarding the Agency's outstanding 

8 Motion for Hearing on Sanction Only. 

9 In looking at the case that is 

10 currently before you, on September 8, 2011, 

11 the complainant filed its complaint in this 

12 matter against the respondent, Coastal Air 

13 Transport. 

14 In the complaint, respondent was 

15 alleged to have transported hazardous 

16 materials on board an aircraft operated by 

17 Coastal Air. The shipment consisted of diesel 

18 fuel, which is a hazardous material under the 

19 Department of Transportation's Hazardous 

20 Material Table, which can be found at 49 CFR 

21 172.101. 

22 At the time of the transportation 

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1 of the hazardous material, the respondent was 

2 and is currently classified as a will-not3 carry dangerous goods air carrier under 14 CFR 

4 Part 135. 

5 On March 23, 2012, the respondent 

6 in response to the complainant's Motion for a 

7 Decision on the Pleadings, which was filed on 

8 February 21, 2012, responded in part to the 

9 allegations in the complaint. And on August 

10 7, 2 012, respondent answered the complainant's 

11 General Discovery and Production of Document 

12 request filed on June 15, 2012. 

13 THE COURT: Ms. George? 

14 MS. GEORGE: The respondent 

15 replied to the Agency. 

16 THE COURT: Ms. George, I'm going 

17 to ask you to slow down a little bit, because 

18 I --

19 MS. GEORGE: I apologize. 

20 THE COURT: am listening to 

21 everything you say and I'm having a hard time 

22 keeping up with you. So can you slow down 

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1 just a bit? 

2 MS. GEORGE: I will. 

3 THE COURT: Okay. Thank you. Go 

4 ahead. 

5 MS. GEORGE: On August 7, 2012, 

6 the respondent answered the complainant's 

7 General Discovery and Production of Documents 

8 filed on June 15, 2012. And in the 

9 respondent's reply to the Agency's Request for 

10 Admissions, the respondent admitted, first, 

11 that it transported on October 21, 2009 two 

12 750 milliliter bottles containing fuel oil on 

13 board a Flight 413, which were labeled fuel 

14 oil, U.N. No. 1993. 

15 The respondent also admitted that 

16 Exhibit 1 to the discovery, which was a letter 

17 dated January 14, 2010, was a true and 

18 accurate copy of a letter forwarded from the 

19 respondent to the Federal Aviation 

20 Administration. 

21 THE COURT: And I'm sorry, is that 

22 letter contained in your exhibits? 

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1 MS. GEORGE: Yes. 

2 THE COURT: Which number is it? 

3 MS. GEORGE: That letter, if we 

4 are going by the exhibit history, the brief 

5 number is Exhibit No. 3. 

6 THE COURT: Okay. Thank you. Go 

7 ahead. 

8 MS. GEORGE: The respondent also 

9 admitted that the Material Safety Datasheet 

10 that was attached as Exhibit 2 to the 

11 discovery for fuel oil was a true and accurate 

12 copy of the Material Safety Datasheet for the 

13 material carried on board of Flight 413 on 

14 October 21, 2009. 

15 The Material Safety Datasheet 

16 bears the 

17 THE COURT: And, Ms. George, I'm 

18 going to interrupt you again. What I'm 

19 interested in knowing is what exhibit number 

20 it is for the purpose of the exhibits that you 

21 filed. 

22 MS. GEORGE: It's Exhibit No. 4. 

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1 THE COURT: Okay. Okay. Thank 

2 you. Go ahead. 

3 MS. GEORGE: Additionally, the 

4 respondent admitted that copies of exhibits of 

5 true and accurate copies of the hazardous 

6 communications level -- excuse me labels that 

7 were attached to the containers of diesel fuel 

8 that were carried aboard Flight 413 on October 

9 21, 2009 were also true and accurate copies. 

10 As we have previously discussed 

11 that it would be Respondent's Exhibit R7 and 

12 in the complainant's filing those HAZCOM 

13 labels, and I apologize I'm looking through 

14 our materials at the same time --

15 THE COURT: I think the FAA's 

16 Request for Admission 

17 MS. GEORGE: They are on 

18 Exhibits 3 and 4 of the Request for 

19 Admissions. 

20 Finally, Exhibit 5 of the Request 

21 for Admissions was a the respondent 

22 admitted was a true and accurate copy of the 

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1 Federal Aviation Administration's National 

2 Operator and Training Manual for nonacceptance 

3 and non-transport of dangerous goods in the 

4 air signed by the respondent in December of 

5 1999. 

6 THE COURT: And, Ms. George, that 

7 appears to be FAA Exhibit No. 9. Is that 

8 correct? 

9 MS. GEORGE: Yes, Your Honor. 

10 THE COURT: And just so that we 

11 are clear, it's not the entire Operations and 

12 Training Manual. It appears to be just the 

13 cover sheet to it with some signatures and 

14 assertions. 

15 MS. GEORGE: That is correct. 

16 THE COURT: Okay. Go ahead, 

17 please. 

18 MS. GEORGE: Through the 

19 respondent's various admissions and filings, 

20 the respondent has admitted that it 

21 transported dangerous goods on board a flight 

22 on October 21, 2009 when it was not authorized 

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1 to do so. 

2 The respondent has authenticated 

3 the photographs of the shipment at issue, 

4 which demonstrate that the package was not 

5 properly prepared for shipment in air in 

6 accordance with the Hazardous Materials 

7 Regulations. 

8 By reason of the foregoing, the 

9 complainant has alleged that respondent is in 

10 violation of separate regulatory violations of 

11 the HMR as specifically enumerated in its 

12 complaint dated September 8, 2011. 

13 Please note that although the FAA 

14 has included citations to 49 CFR § 171.2(a) 

15 and (b) , the general regulation provides an 

16 overview of the specific parts of the HMR 

17 violated and was not treated as a separate 

18 violation for penalty purposes. 

19 This action has been supported. 

20 This treatment has been supported by the FAA's 

21 decision maker and has been previously 

22 recognized. 

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1 THE COURT: And I don't --

2 MS. GEORGE: In the Matter of 

3 Carr, FAA Order FA --

4 THE COURT: I'm going to interrupt 

5 you. You have lost me. So you are telling me 

6 that you have referred to certain statutory 

7 authority, but it doesn't matter? 

8 MS. GEORGE: What we are saying is 

9 that it is included in our complaint, but it's 

10 not separate for penalty calculations. 

11 THE COURT: All right. Well, let 

12 me go to your complaint then. And what page 

13 of your complaint are you -- you're talking 

14 about paragraph Roman Numeral --

15 MS. GEORGE: It's§ 3, paragraphs 

16 1 and 2. 

17 THE COURT: Okay. So you are not 

18 claiming that there are specific violations 

19 for those two allegations? 

20 MS. GEORGE: Regulations. 

21 THE COURT: Okay. 

22 MS. GEORGE: Those are general 

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1 sections of the HMR and are included in 

2 hazardous materials complaints to give a 

3 general overview of the violation. 

4 THE COURT: Okay. 

5 MS. GEORGE: They are not treated 

6 for separate penalty calculations under the 

7 Agency's Sanction Guidance Policy and Matrix. 

8 THE COURT: So are you saying to 

9 me that these are not separate violations that 

10 you are trying to prove today? 

11 MS. GEORGE: That we're not 

12 they are violations of the HMR, but they do 

13 not lead to a separate penalty calculation for 

14 this_ 

15 THE COURT: Okay. So if I found, 

16 for example, that the respondent had violated 

17 -- Violation No_ 1 on page 3 of the complaint, 

18 which is identified as 49 CFR § 171.2(a), it 

19 would not, in and of itself, have a minimum 

20 $250 fine attached to it? 

21 MS. GEORGE: That is correct. 

22 THE COURT: And the same would be 

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1 true for Violation No. 2 on page 3 of the 

2 FAA's complaint which alleges a violation of 

3 49 CFR § 171.2{b)? 

4 MS. GEORGE: That is correct, Your 

5 Honor. 

6 THE COURT: Okay. Thank you. Go 

7 ahead. 

8 MS. GEORGE: The FAA's decision 

9 maker held in the Matter of Carr, which is FAA 

10 Order 98-2, that a violation of general 

11 introductory sections of the HMR do not 

12 necessarily count .as separate violations for 

13 sanction purposes. 

14 And so you are correct that those 

15 two sections would not automatically lead to 

16 an assessment of a civil penalty. 

17 THE COURT: Okay. Thank you. 

18 MS. GEORGE: The complainant 

19 alleges that the respondent, Coastal Air, is 

20 liable for a civil penalty for violation of 

21 the remaining 14 regulations of the HMR cited 

22 in its complaint. 

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1 The legislative history --

2 THE COURT: Just so that we are 

3 clear, those would be Violations No. 2 through 

4 16? 

5 MS. GEORGE: 3 through 

6 THE COURT: I'm sorry. 

7 MS. GEORGE: 16. 

8 THE COURT: 3 through 16. Thank 

9 you. Go ahead. 

10 MS. GEORGE: Yes. The legislative 

11 history of § 5123, which is the Federal 

12 Hazardous Materials statute, indicates there 

13 was a legislative intent to impose a penalty 

14 for each discrete violation of the Hazardous 

15 Materials Regulations. 

16 Therefore, multiple violations may 

17 be charged. 

18 THE COURT: I'm sorry, I'm going 

19 to interrupt. I'm interrupting you again. 

20 Excuse me. 

21 MS. GEORGE: Yes. 

22 THE COURT: Could you cite me to 

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1 that again? What citation did you give me? 

2 MS. GEORGE: That was § 5123 of 

3 the Federal Hazardous Materials statute and 

4 that's 49 usc 5123. 

5 THE COURT: Okay. Thank you. Go 

6 ahead. 

7 MS. GEORGE: Therefore, multiple 

8 violations may be charged, even if the 

9 violations arise out of a single transaction. 

10 This view was supported in FAA v. Landy, 

11 that's L-A-N-D-Y, Case Citation 705 F.2d 624 

12 (2d Cir. 1983). 

13 The statute itself, its 

14 legislative history and the underlying purpose 

15 indicates that Congress specifically intended 

16 to subject a person to a civil penalty for 

17 each violation of an applicable regulation. 

18 As a result, so long as each 

19 violation requires proof of a fact that the 

20 other does not, it passes Constitutional 

21 muster. 

22 The Supreme Court supported this 

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1 view in two separate cases: Whalen v. US, W2 H-A-L-E-N, and that can be found at 445 US 684 

3 (1980) and also in Missouri v. Hunter, which 

4 is 4 59 us 3 59 ( 19 8 3 ) -

5 In Whalen and in Hunter, the U.S. 

6 Supreme Court held that cumulative punishment 

7 is authorized when there is a clear indication 

8 of legislative intent to authorize multiple 

9 punishment. 

10 Now, the plain language of § 5123 

11 of the Federal Hazardous Materials statute 

12 contemplates a civil penalty for each 

13 violation of the HMR and leaves no doubt that 

14 Congress intended for each violation of a 

15 regulation contained in the HMR to constitute 

16 an independent basis for a penalty. 

17 As a result of the legislative 

18 intent of the HMR, the Federal Aviation 

19 Administration instituted its Hazardous 

20 Materials Sanction policy in 1999 to better 

21 promote consistency and penalties imposed in 

22 similar cases. 

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1 I have a discussion of this in 

2 the complainant's brief dated July 2 0, 2 012 at 

3 page 7 and paragraph no. 5. 

4 To that end, the complainant has 

5 established a sanction guided matrix for 

6 violations of persons who currently 

7 incorrectly offered, accepted or transported 

8 hazardous materials. Copies of this matrix is 

9 also attached to the July 20, 2012 brief at 

10 Exhibits 10, 11 and 12. 

11 The, 14 regulatory violations of 

12 which the respondent is alleged to have 

13 violated and which may lead to civil penalty 

14 assessment are grouped in accordance with the 

15 sanction guidance matrix into five categories 

16 of offense. 

17 Those categories are: Improper 

18 acceptance of hazardous materials; failure to 

19 inspect hazardous shipment properly; failure 

20 to provide hazardous materials training; 

21 maintain records of training or meet minimum 

22 requirements of training and they are to 

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1 notify the FAA of incidents or discrepancies 

2 in hazardous material shipments; and failure 

3 to provide notice to the pilot in command. 

4 A discussion of the five 

5 categories of offense are included in the 

6 Agency's brief filed on July 20, 2012 at page 

7 8 and also in its supplemental filing of 

8 November 5, 2012 at pages 10 through 11. 

9 Additionally, in the November 5, 

10 2012 brief at page 11, the Agency has divided 

11 the 14 regulations of what a civil penalty can 

12 be assessed into the five categories of 

13 offense and that is included on page 11 of 

14 that brief. 

15 Now, a civil penalty is proposed 

16 in this matter in accordance with the 

17 complainant's Hazardous Material Policy 

18 Matrix. Based upon the facts of this case, a 

19 maximum civil penalty for a Group 4 air 

20 carrier is required. 

21 A definition of a Group 4 air 

22 carrier is also included in the July 20, 2012 

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1 brief at Exhibit No. 12. 

2 A review of the matrix reveals 

3 that for a failure to inspect maximum civil 

4 penalty for a Group 4 carrier is $16,200. It 

5 is $16,200, the civil penalty, for improper 

6 acceptance, $16,200 for failure to train, 

7 $5,500 for failure to notify the FAA and 

8 $5,500 for failure to notify the pilot in 

9 command. That can be found at Exhibit 11 of 

10 the July 20, 2012 brief. 

11 In total the Agency is seeking a 

12 civil penalty of $59,600 for the violations 

13 that have been discussed in this matter. 

14 In accordance with the Hazardous 

15 Material Sanction Guidelines, the complainant 

16 also considered whether the respondent should 

17 receive mitigation of the civil penalty. 

18 Based upon the Hazardous Material statute's 

19 requirement to consider the violator's ability 

20 to pay a civil penalty, the impact of the 

21 civil penalty on the violator's ability to 

22 continue in business and, as the statute 

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1 describes, other matters that justice 

2 requires_ 

3 Now, this consideration has been 

4 determined to be an affirmative defense by the 

5 respondent. Consideration may result in the 

6 adjustment of a civil penalty if the 

7 respondent provides mitigating information 

8 that is sufficiently reliable, uncontroverted 

9 and documented to support the reduction. 

10 The Agency will also consider 

11 corrective actions taken by the respondent to 

12 support mitigation of the civil penalty. 

13 Under the sanction policy, 

14 corrective action is action that is remedial, 

15 that exceeds the minimum legal requirement. 

16 The primary factors in determining whether or 

17 not a civil penalty reduction should occur is 

18 the extent and the timing of the corrective 

19 action. 

20 Examples of corrective action that 

21 result in civil penalty reduction include 

22 systematic changes intended to prevent future 

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1 violations and corrective action that 

2 commences upon first notification is given 

3 greater credit. 

4 At all times, it is the 

5 respondent's burden of proof to provide 

6 evidence of mitigation for consideration. 

7 Now, in the FAA's discovery dated 

8 June 15, 2012, the complainant asked for a 

9 copy of the respondent's training program, 

10 referenced in its January 14, 2010 letter. 

11 The respondent replied in its August 7, 2012 

12 response that it did not pursue a training 

13 program. 

14 In the respondent's request for 

15 production -- excuse me. In the FAA -- in the 

16 complainant's Request for Production No. 3 and 

17 Interrogatory No. 4, the complainant also 

18 requested evidence of corrective or remedial 

19 actions taken as a result of this matter. 

20 The respondent replied in its 

21 August 7, 2012 response that all station 

22 personnel and flight crews were advised of the 

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1 Hazmat requirement. However, respondent did 

2 not provide any copies of any such 

3 notification nor did it explain what this 

4 notification consisted of. 

5 The FAA decision maker provided in 

6 the case in the Matter of PCI Corporation, FAA 

7 Order No. 92-77, it's a December 22, 1992 

8 case, and in the Matter of Toyota Motor Sales 

9 US, FAA Order No. 94-28, a September 30, 1994 

10 case, that the type of corrective action that 

11 warrants a significant reduction in civil 

12 penalty is action to ensure that hazardous 

13 materials are handled in compliance with the 

14 HMR in the future. 

15 In this case, the respondent has 

16 failed to take any corrective action to ensure 

17 that a violation such as this does not occur 

18 in the future. 

19 Additionally, the respondent has 

20 failed to meet its burden to show that the 

21 civil penalty would not impact its ability to 

22 continue in business or that it does not have 

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1 the ability to pay the civil penalty. 

2 In conclusion, based upon the 

3 evidence, the complainant has presented in its 

4 filings on February 21, 2012, July 20, 2012, 

5 July 26, 2012 and November 6, 2012, there 

6 remain no genuine issues of material facts 

7 other than a dispute of the sanction. 

8 However, the complainant's various 

9 filings and submissions also make clear that 

10 the civil penalty currently sought in this 

11 matter is consistent with the complainant's 

12 sanction guidance policy and should also be 

13 upheld. 

14 Thank you. 

15 THE COURT: Now, let's talk a 

16 little bit about some of the things that you 

17 have mentioned. And I appreciate your lengthy 

18 and detailed argument regarding the penalty 

19 and all of the legal authority that you have 

20 cited, that's always very helpful. 

21 But before we even get to the 

22 penalty, we have to have a discussion about 

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1 what you have proved and how you have proved 

2 it in terms of the violations alleged. 

3 And so let's kind of backtrack to 

4 that discussion. So I'm looking at your 

5 complaint, this page 4, and I'm going to start 

6 with No. 3, Violation No. 3. 

7 And it's about§ 175.3. This is--

8 and I shouldn't abbreviate, excuse me, 49 CFR 

9 § 175.3, in which you allege that Coastal Air 

10 accepted for transportation or transit aboard 

11 an aircraft a shipment of hazardous material, 

12 not prepared for shipment in accordance with 

13 this subchapter. 

14 And you are absolutely correct 

15 that there are a variety of facts that are 

16 undisputed by the parties. And it appears to 

17 me that it is undisputed by either the FAA or 

18 the respondent that on October 21, 2009, 

19 Coastal Air Transport, the respondent, did 

20 conduct and complete Flight DQ413 from St. 

21 Eustatius, NA, to the Alexander Hamilton 

22 Airport, St. Croix, Virgin Islands. 

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1 On October 21, 2009, the pilot in 

2 command of that flight was Captain Michael 

3 Foster. Mr. Foster is also the lay 

4 representative of the respondent appearing 

5 here today. 

6 Mr. Foster has acknowledged in 

7 pleadings and in other materials before the 

8 Court today that he knowingly accepted for 

9 transportation by air and transported above 

10 the aboard the aircraft a one-piece 

11 shipment in a fiberboard box. 

12 The fiberboard box shipment held 

13 two plastic bags labeled HAZMATPAC and I'll 

14 spell that. H-A-Z-M-A-T-P-A-C. Two plastic 

15 bags each contained one bottle containing, 

16 approximately, 750 milliliters of diesel fuel 

17 labeled fuel oil UN No. 1993. 

18 It's undisputed that the aggregate 

19 volume of the total fiberboard box shipment 

20 was less than 1.5 liters. It's undisputed 

21 that the diesel fuel is a flammable 

22 combustible liquid. It's also undisputed this 

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1 one-piece box shipment accepted and 

2 transported by Captain Foster on a Coastal Air 

3 flight was not further identified beyond what 

4 we just talked about as hazardous material. 

5 It did not contain a material 

6 safety datasheet. It did not contain packing 

7 slips. And it did not have hazardous markings 

8 or warnings labeled on the box pursuant to 

9 Hazardous Material Regulations under 14 CFR 

10 171.2(a) and (b) and 14 CFR 175.2(o) and so 

11 forth. 

12 It is undisputed that this box 

13 transported by Captain Foster was identified 

14 as diesel fuel with a Hazard Class of 3 and a 

15 Packing Group of 3. The respondent's argument 

16 is that this was an acceptable form of 

17 shipping pursuant to 49 CFR 172.101. 

18 It is also undisputed that the 

19 fiberboard box as labeled was shipped in the 

2 0 cargo compartment of the aircraft and remained 

21 in the cargo compartment during the entire 

22 flight. 

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1 So let's talk about the 

2 respondent's assertion. Respondent asserts 

3 that he is exempted from the regulations that 

4 the FAA claims that he should have followed 

5 because he looked at the table contained in 49 

6 CFR § 172.101 and he complied with it. 

7 Can you tell me why the respondent 

8 is wrong? 

9 MS. GEORGE: The respondent is 

10 wrong for several reasons. The first one, and 

11 the most important one, is that the respondent 

12 has a will-not-carry dangerous goods or 

13 hazardous materials air carrier was not 

14 authorized to carry this package at all. 

15 The second reason that the 

16 respondent is incorrect is that the package--

17 THE COURT: I'm going to interrupt 

18 you. Let me just walk with you about that. 

19 So it's the FAA's position that the respondent 

20 cannot under any circumstances carry any 

21 hazardous material unless the respondent 

22 agrees and signs up with the FAA to be a 

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1 hazardous material carrier and to comply fully 

2 with the FAA requirement. Is that the FAA's 

3 position? 

4 MS. GEORGE: That is correct. The 

5 only exception would be found in 49 CFR 175.10 

6 and those are exceptions for passengers, crew 

7 members and air operators for the carriage of 

8 hazardous materials that are enumerated there 

9 that are personal in their personal checked 

10 baggage. 

11 Diesel fuel is not a hazardous 

12 material that would fall under any of the 

13 exceptions of 49 CFR 175.10. As a result, the 

14 respondent, as an air carrier, was required to 

15 transport the package that he did in 

16 accordance with the HMR. 

17 The HMR requires hazardous 

18 materials to be properly classed, labeled, 

19 identified, have shipping papers that 

20 accompany it, have notification to the pilot 

21 in command, have emergency response 

22 information contained on it and also in the 

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1 documents that are provided to the pilot in 

2 command. 

3 The shipment that occurred on 

4 October 21, 2009 did not contain any of the 

5 required documentation labeled in markings 

6 that are associated with hazardous material 

7 shipments. 

8 As a result, there was a violation 

9 of 175.3 in that there was improper acceptance 

10 of the hazardous materials in this case. 

11 THE COURT: Okay. . So let's talk a 

12 little bit about the regulations. Mr. Foster 

13 had, and I'm going to give him a chance to 

14 talk about this, too, but since you are on the 

15 phone and you are the plaintiff, I want to ask 

16 you some questions about it, too. 

17 Mr. Foster has said that this is a 

18 minimal amount of diesel fuel that it could be 

19 packaged and carried in the cargo hold 

20 pursuant to the regulations that he saw. And 

21 you are saying, essentially, that it is 

22 absolutely not correct, even for a minimal 

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1 amount. There has to be some packaging and 

2 labeling pursuant to the Hazardous Materials 

3 Act. 

4 MS. GEORGE: That is correct, Your 

5 Honor. 

6 THE COURT: Okay. So let's go to 

7 Violation No. 4. In a summary judgment 

8 motion, you can't just make allegations. You 

9 have to point to specific proof. So you 

10 touched on this, but I want to just check in 

11 with you again. 

12 Violation No. 4 basically says 

13 that Mr. Foster failed to comply with 49 CFR 

14 175.20 (a) . And this you allege has to do with 

15 failure to ensure that Hazmat employees 

16 receive training. And what factual proof do 

17 you have of this violation? Which exhibit are 

18 you referring me to for this? 

19 MS. GEORGE: One second, Your 

20 Honor. In the FAA's first notification to Mr. 

21 Foster that there was -- that the shipment 

22 that he transported on October 21, 2009, 

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1 Special Agent Juan Bulted forwarded a Letter 

2 of Investigation dated December 11, 2009 to 

3 Coastal Air Transport, Michael Foster. 

4 In that excuse me, that is 

5 marked as Exhibit No. 1 on the July 20, 2012 

6 filing by the Agency. 

7 In that letter, specifically on 

8 page 2 of it at No. 4, the Agency's Special 

9 Agent requested a copy of the hazardous 

10 training materials curriculum and training 

11 records for each individual involved in the 

12 transportation of the shipment on October 21, 

13 2009. 

14 In response to Mr. Bulted's 

15 letter, at Exhibit No. 3, July 20ili brief, Mr. 

16 Foster responded and did not provide any 

17 copies of training records or materials 

18 curriculum used by his company. 

19 He indicates 

20 THE COURT: I mean, looking at 

21 Exhibit No. 3, you are saying because he 

22 didn't reference that in his January 14, 2010 

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1 letter, you have proven that he doesn't have 

2 it? 

3 MS. GEORGE: We are saying that we 

4 asked him for the documentation. He says that 

5 he did not -- excuse me. He says copies are 

6 included. They were not. We also requested 

7 copies --

8 THE COURT: Well, before you go 

9 into they were not, where do you have in your 

10 proof a statement that you never received 

11 them? 

12 MS. GEORGE: That will be in the 

13 testimony of the Special Agent. 

14 THE COURT: And where is the 

15 testimony attached to my motion? 

16 MS. GEORGE: It's not attached to 

17 your motion, Your Honor. 

18 THE COURT: Okay. Then let' s go 

19 to Violation No. 5. Violation No. 5 asserts 

20 that respondent violated 49 CFR § 175.20(b), 

21 as in boy. And in this one, there is another 

22 one that this is somewhat similar where there 

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1 is an assertion that the respondent did not 

2 train each of its Hazmat employees. 

3 So are you referring again to 

4 Exhibit 1 and Exhibit 3 as your proof of this 

5 or are there more exhibits that I should be 

6 looking at? 

7 MS. GEORGE: Exhibit 1 and Exhibit 

8 3 . In addition to the respondent's reply to 

9 the Agency's discovery in which we again, 

10 specifically requested copies of training 

11 materials and that was not provided. 

12 THE COURT: Okay. And when you 

13 say the Agency's request to Mr. Foster or to 

14 the respondent for discovery, we are in the 

15 motion, it's the factual documentation about 

16 that. As I have the exhibits before me, I 

17 have the pleadings before me. I need to know 

18 where you are pointing me to for the factual 

19 evidence that supports that. 

20 MS. GEORGE: Just one second, Your 

21 Honor. It's in respondent's August 7, 2012 

22 reply to the Agency's General Discovery and 

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1 Production of Documents. 

2 THE COURT: Okay. And let me go 

3 to that just very briefly. 

4 MS. GEORGE: The question that we 

5 asked --

6 THE COURT: I see the answer to 

7 General Discovery. And where are you 

8 referring me to on that two page document? 

9 MS. GEORGE: I want to refer to --

10 he doesn't list the question. I'm going back 

11 to my initial filing. 

12 THE COURT: All right_ I see on 

13 page 1 of that document statement production. 

14 And under production it says No_ 3, "All 

15 station personnel and flight crews advised as 

16 to Hazmat requirements." 

17 MS. GEORGE: That was in response 

18 to the Agency's Request for Evidence of 

19 Corrective or Remedial Action. However, in 

20 No. 6 of the Request for Production, we asked 

21 for a copy of Hazardous Materials Training 

22 Program, as described in the response letter 

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1 of January 14, 2010. 

2 And in his response, he replied 

3 "We have been advised not to pursue this 

4 program. Our refinery operation has closed 

5 down in St. Croix, so there is no longer a 

6 requirement to transport samples in the 

7 future." 

8 THE COURT: Okay. And when I look 

9 at these kinds of documentation, I am supposed 

10 to look at the evidence in a light most 

11 favorable to the responding party, not in a 

12 light most favorable to you. 

13 So it would appear to me that I 

14 could look at this and see it in a different 

15 light than you are arguing right now. 

16 Let me ask you this. In terms of 

17 Violation No. 6, this is a violation alleged 

18 of 49 CFR § 175.25, you are asserting that the 

19 respondent failed to display notices of the 

20 requirements applicable to the carriage of 

21 hazardous materials aboard the aircraft as 

22 well as failed to display notices of the 

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1 penalties for failure to comply. 

2 What factual documentation do you 

3 have to support this particular violation? 

4 When I looked at your materials, it did not 

5 appear that you were citing me to any exhibit 

6 or material that is relevant for my 

7 consideration today. Where is the factual 

8 documentation about the lack of notices for 

9 the aircraft? 

10 MS. GEORGE: Your Honor, the 

11 documentation or excuse me, the violation, as 

12 alleged, was based upon the fact that the 

13 respondent is a will-not-carry air carrier. 

14 And as a will-not-carry air carrier, does not 

15 display notifications regarding hazardous 

16 materials in his area. 

17 THE COURT: Okay. But that's an 

18 argument and I have to be -- I have to hold 

19 you to a factual evidentiary standard. So is 

20 there anything in the materials that you have 

21 provided that, basically, says that the 

22 respondent has violated this section on this 

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1 basis? This is how we are going to prove it 

2 as opposed to saying, Judge, you can make a 

3 reasonable assumption that it didn't occur. 

4 MS. GEORGE: No, Your Honor. 

5 THE COURT: Okay. Let's go to 

6 Violation No. 7. And this is an allegation of 

7 respondent violating 49 CFR § 175.2 --

8 OPERATOR: This conference is 

9 scheduled to be disconnected automatically in 

10 10 minutes. To extend the time, please, dial 

11 366-4000 to speak with a DOT operator. 10. 

12 THE COURT: I'm going to see -- I 

13 just got a message saying that our conference 

14 is about to end, unless we extend it. And so 

15 I'm going to ask Mr. Smith to leave the office 

16 and call the conference line and see if he can 

17 extend it for us. 

18 I think it is the 3600, Mr. Smith. 

19 I'm going to give this to you to see if you 

20 can help us out. If it is not extended, then 

21 I will try and call you back using our 

22 internal conference line if we get cut off. 

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1 So folks, Mr. Smith has left the 

2 office. And I'll note that he has gone. 

3 Let's go back to Violation No. 7. 

4 This particular violation alleges that the 

5 respondent failed to display notices at each 

6 of its facilities where cargo is accepted, the 

7 two persons offering such cargo, of the 

8 requirements applicable to the carriage of 

9 hazardous materials as well as the penalty. 

10 What factual evidence does the FAA 

11 proffer to tell me what facilities they are 

12 talking about respondent has control over and 

13 what was or was not posted at those 

14 facilities? Can you show me or guide to me 

15 the exhibits or other materials that would 

16 give me the factual proof to find you have 

17 made a prima facie case? 

18 MS. GEORGE: The Agency's response 

19 is the same as for 175.25, Your Honor. 

20 THE COURT: And that would be 

21 what? 

22 MS. GEORGE: That we do not have 

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1 any documentation within what we have provided 

2 to you. However, by omission and the 

3 respondent's admissions in his responses to 

4 our discovery and his other filings, the 

5 violation is supported. 

6 THE COURT: Can you even identify 

7 for me, based on the material you say is 

8 helpful, what facilities you are talking 

9 about? 

10 MS. GEORGE: We do not have any 

11 facilities identified in our file, Your Honor. 

12 THE COURT: Okay. Let's talk 

13 about Violation No. 8. This is alleged to be 

14 a violation of 49 CFR § 175.30(a) (2). And in 

15 this one you assert that Coastal Air accepted 

16 hazardous material aboard an aircraft where it 

17 was not properly shipped and certified. 

18 And I presume that you are 

19 asserting that you have made the case by 

20 factual proof on this particular violation? 

21 MS. GEORGE: Yes, Your Honor. 

22 Again, we have requested copies of all 

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1 documentation for the shipment. Mr. Foster in 

2 his reply in January of 2010 provided 

3 documents to the Special Agent who was 

4 assigned to investigate this matter. And he 

5 did not provide any shipping documents, excuse 

6 me, hazardous material shipping papers as 

7 described in our Exhibit No. 14 to the 

8 supplemental filings. 

9 That was not prepared nor kept for 

10 this shipment. And as a result, there is a 

11 violation of 175.30 (a) (2) 

12 THE COURT: And are you saying 

13 that the FAA Exhibit, essentially, No. 17, 

14 which has those three boilerplate forms, are 

15 mandatory forms for carriers who are 

16 transporting hazardous goods? 

17 MS. GEORGE: No, Your Honor. I am 

18 pointing to what was originally our Exhibit 1 

19 of the supplemental filing and renumbered as 

20 Exhibit 14. 

21 THE COURT: Okay. 

22 MS. GEORGE: It is the shipper's 

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1 declaration example. 

2 THE COURT: And is this something 

3 that is a mandatory document that FAA --

4 MS. GEORGE: Yes, Your Honor. 

5 THE COURT: Okay. And just so you 

6 know, folks, Mr. Smith has reentered the 

7 hearing room and has notified me by a silent 

8 nod that we have extended our conference time, 

9 so we should be good to go. 

10 Let me talk then about Violation 

11 No. 10. This is an assertion of violating 49 

12 CFR § 175.30(b). Essentially that there was 

13 this hazardous material carried on board, but 

14 the operator of the aircraft failed to 

15 immediately inspect the package before placing 

16 it aboard the aircraft. 

17 There is an assertion by Mr. 

18 Foster that he saw the package, believed that 

19 it was properly packaged and carried it onto 

20 the aircraft himself as in his role as pilot 

21 in command. 

22 So how is it, in your opinion, 

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1 that you have definitively proven this 

2 particular violation? 

3 MS. GEORGE: It is the Agency's 

4 argument, Your Honor, that because the package 

5 was improperly prepared, that it was, 

6 therefore, not properly inspected by an air 

7 carrier. 

8 Air carriers who are authorized to 

9 carry hazardous materials when they are 

10 presented with a package as the one that was 

11 prepared in this matter, that did not include 

12 shipping papers, did not include the proper 

13 shipping name attached to the package, did not 

14 include orientation markings, did not include 

15 hazardous material labels on the outer most of 

16 the package. 

17 During an inspection of a package 

18 presented in that manner would have rejected 

19 transportation of the package. 

20 THE COURT: So 

21 MS. GEORGE: Because the 

22 respondent, Coastal Air Transport, in fact did 

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1 transport the package, it is our allegation 

2 that they failed to properly inspect it, based 

3 upon the obvious defects that were apparent 

4 for a hazardous material shipment. 

5 THE COURT: So, Ms. George, it's 

6 not just that he didn't inspect it, he didn't 

7 properly inspect it pursuant to the Hazmat 

8 Regulations? 

9 MS. GEORGE: That is correct, Your 

10 Honor. 

11 THE COURT: Okay. So any factual 

12 dispute that Mr. Foster may raise would more 

13 likely in the FAA's opinion go to the weight 

14 given to the civil penalty, given the nature 

15 and circumstances, as opposed to the 

16 credibility or proof of the violation itself? 

17 MS. GEORGE: That would be 

18 correct, Your Honor. 

19 THE COURT: Okay. Let's talk 

20 about Violation No. 11. It appears to be 

21 asserted that whether the respondent 

22 violated 49 CFR § 175.30(e) (2) And, in 

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1 essence, you are saying that the respondent 

2 accepted hazardous material, failed to take 

3 reasonable steps to establish that it was 

4 properly packaged? 

5 MS. GEORGE: That is correct. 

6 THE COURT: It sounds like that 

7 you are relying upon proof that we have 

8 already talked about and that the respondent's 

9 defense to this is more a defense to the 

10 penalty as opposed to the violation? 

11 MS. GEORGE: That is correct, Your 

12 Honor. 

13 THE COURT: Okay. Let's turn to 

14 Violation No. 12, which alleges a violation of 

15 49 CFR § 175.30(e) (3). And again, we have an 

16 allegation that the inside packages did not 

17 comply with the specifications on the outside 

18 of the overpack. And again, as I understand 

19 your argument, the fact that this shipment was 

20 not packed according to the Hazmat Regulation 

21 is the overriding concern that the FAA has and 

22 that the respondent's actions and intent 

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1 really goes more to the penalty as opposed to 

2 the violation itself? 

3 MS. GEORGE: Your Honor, it is our 

4 position that a reasonable air carrier and the 

5 position that Mr. Foster or Coastal Air was 

6 placed in would have taken more steps to 

7 determine whether or not the package was 

8 correctly presented for air transportation. 

9 THE COURT: Okay. Let's go to 

10 Violation No. 13. This alleges a violation of 

11 49 CFR § 175.33(a). And in this, you are 

12 saying that the respondent failed to provide 

13 the pilot in command at least, and I quote, 

14 ''The following information set forth in this 

15 paragraph in writing as early as possible 

16 prior to the departure." 

17 And then there is no information 

18 other than that. What are you talking about? 

19 MS. GEORGE: Your Honor, I do 

20 apologize. Part of that regulation was not 

21 included in the regulation. If you give me 

22 two seconds, I would be able to provide that 

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1 to you. 

2 THE COURT: Well, I have the 

3 material here in front of me, but I'm 

4 concerned because part of the complaint is 

5 supposed to give the respondent adequate 

6 notice of the charges and how to respond to 

7 them. 

8 And in looking in this particular 

9 charge, I'm not even sure what you are 

10 charging or what the proof is that you are 

11 offering to prove the material. So I'm 

12 looking at 49 CFR § 175.33(a). And then it 

13 talks about hazardous material shipping 

14 papers, accurate and legible written 

15 information about that shipment and so forth. 

16 So what proof do you have in your 

17 materials that shows that the respondent 

18 violated this particular section? 

19 MS. GEORGE: The proof that we 

20 have, Your Honor, again, is the absence of a 

21 provided -- of a document, a notice of 

22 notice to the pilot in command. It is vowed 

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1 the renumbered No. 17 Exhibits, which were 

2 examples of written notifications to pilots in 

3 command of different air carriers that are 

4 required to be provided under the HMR, we have 

5 included with our supplemental filing there--

6 THE COURT: Okay. 

7 MS. GEORGE: for this 

8 particular shipment, Coastal Air Transport and 

9 the documents that we requested did not 

10 provide us any information or a copy of a 

11 document that would have been provided to the 

12 pilot in command or kept in the records of 

13 Coastal Air to provide the proper shipping 

14 name, classification or division, UN number, 

15 the number of packages, the quantity, the 

16 packing group of the material, where it was 

17 loaded on the cargo hold of the aircraft. 

18 That information was not provided to the 

19 Agency. And it is a requirement for notices 

20 to the pilots in command. 

21 THE_ COURT: Okay. Let's go to 

22 Violation No. 14, which alleges a violation of 

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1 49 CFR § 175.33(b), as in boy. And I have 

2 that in front of me as well in which it states 

3 that "The written notification to the pilot in 

4 command should be readily available, which 

5 includes emergency response information, as 

6 required by subpart G of Part 172 of this 

7 subchapter. " 

8 Mr. Foster in some of his 

9 materials gives this and says that he did, in 

10 fact, have the emergency information available 

11 that he needed. In looking at his response, 

12 what is it that you believe makes not only 

13 your prima facie case, but takes away, in your 

14 opinion, any reasonable doubt about the 

15 genuineness of the fact? 

16 You know, I'm looking at this and 

17 I say I have a respondent who says that he did 

18 have that emergency information. What's 

19 missing, in your opinion? 

20 MS. GEORGE: Your Honor, what we 

21 would require for hazardous material shipments 

22 is on the initial shipping document, the 

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1 shipper's declaration, there should also to be 

2 included a telephone number, contact 

3 information, who needed to be contacted if 

4 there was spillage, if there was a problem 

5 with the hazardous material shipment that was 

6 transported. 

7 We don't have a shipper's 

8 declaration for this particular package. 

9 Therefore, we do not have emergency response 

10 information as required by the HMR that was 

11 provided to -- in writing the pilot in command 

12 for this shipment. 

13 THE COURT: Okay. Let's go to 

14 Violation No. 15. This alleges a violation of 

15 49 CFR § 175.35(a) And as I look at my CFRs, 

16 I don't see that such a regulation even 

17 exists. Can you tell me where you think it 

18 might be? 

19 MS. GEORGE: Your Honor, I would 

20 have to go to the addition of the regulations 

21 that were in effect at the time the Notice of 

22 Proposed Civil Penalty was issued. There have 

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1 been revisions to the regulations since such 

2 time. And it is possible that the citation 

3 there refers to an earlier regulation that was 

4 included. 

5 THE COURT: It may also be, and 

6 I'm just simply noting this, that it didn't 

7 exist even in 2009. But I will give you time 

8 to see if you can find it, because at least 

9 our office researchers did not find it past 

10 the year 2006. 

11 MS. GEORGE: I' 11 take a look, 

12 Your Honor. 

13 THE COURT: Okay. I would note 

14 for you that there appears to be a similar 

15 problem with Violation No. 16, which alleges 

16' a violation of 49 CFR § 175.85 (a) . And again, 

17 in looking at my current copy of the 

18 regulation, no such regulation exists. And it 

19 does not appear, at least to my humble 

20 research abilities, that it existed in 2009 as 

21 well. 

22 But if you could provide any 

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1 information about that and I'll ask you to do 

2 it no later than tomorrow by 5:00, that would 

3 be helpful. 

4 MS. GEORGE: Will do, Your Honor. 

5 THE COURT: Okay. Thank you. And 

6 when I say tomorrow by 5:00, I always like to 

7 give due dates in terms of calendar dates, 

8 December 7, 2012 by 5:00p.m. 

9 Ms. George, is there anything else 

10 that you would like to talk about based on the 

11 Court's inquiry before I turn to the 

12 respondent? And I will also give you a chance 

13 at the very conclusion to do a final 

14 summation. 

15 MS. GEORGE: I have nothing 

16 further, at this time. 

17 THE COURT: Okay. Thank you very 

18 much. 

19 Mr. Foster, let's talk a little 

20 bit about these violations. As I understand 

21 your primary argument, you are asserting, 

22 essentially, that the FAA is wrong. That, in 

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1 fact, the shipped box that you hand-carried 

2 onto the plane on October 21, 2009 was 

3 properly packaged, labeled and shipped 

4 pursuant to 49 CFR § 172.101. Is that not the 

5 gravamen of your argument? 

6 MR. FOSTER: Well, Your Honor, I 

7 did bring out that the box and packaged 

8 material were all DOT-approved packages. And 

9 Ms. George has confirmed that with her 

10 exhibits. 

11 My basic contention is that we 

12 would not have knowingly carried what was 

13 considered hazardous material and we did not 

14 consider these hazardous at the time. And 

15 with the HMR 175.10, they do give you a list 

16 of many exemptions that may be carried aboard 

17 the aircraft without complying with the normal 

18 Hazmat procedures. 

19 And again, we had --

20 THE COURT: I'm sorry, I'm going 

21 to interrupt you, sir. Tell me again which 

22 statute you are referring to for exemption. 

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1 Put it in 

2 MR. FOSTER: Well, they don't --

3 HM -- 49 HMR 175.10. 

4 THE COURT: Okay. 

5 MR. FOSTER: And that's § 4 (i) (I). 

6 THE COURT: And this is the 

7 section where you talked a little bit about 

8 using the alcohol as an analogy? 

9 MR. FOSTER: Yes, Your Honor. It 

10 says exemptions for passengers, crew members 

11 and air operators. And it allows you to carry 

12 up to 1.3 gallons of flammable material 

13 without complying with the sections of the 

14 Hazardous Material Code. 

15 THE COURT: And when you say that, 

16 you are talking about 49 CFR § 175.10 and are 

17 you referring to subsection (2)? Those are 

18 aerosols, {2) talks about aerosols. And we 

19 are not talking about aerosols. We are 

20 talking about diesel fuel. 

21 MR. FOSTER: Okay. Your Honor, 

22 excuse me. 

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1 THE COURT: Can you give me a 

2 little better section to look at and talk with 

3 about with you? 

4 MR. FOSTER: Well, § 2 talks to 

5 lighter fluid, lighter fuel, which is 

6 basically diesel fuel. But I'm looking at § 

7 4(i)(I). 

8 THE COURT: Okay. 

9 MR. FOSTER: Which talks about 

10 carrying alcoholic beverages on board up to 

11 1.3 gallons, which would normally be a six12 pack of alcohol up to, I believe it is, 121 

13 proof, which is flammable material. 

14 THE COURT: Well, most people that 

15 I know who drink alcohol would not go and use 

16 diesel fuel as a substitute for their 

17 entertainment. 

18 MR. FOSTER: Yes, Your Honor. 

19 THE COURT: So tell me how you 

20 think I can get from a drink of beer to diesel 

21 fuel under this particular section. 

22 MR. FOSTER: Okay. Your Honor, 

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1 the guidelines I will -- I was going by, at 

2 the time -- and we have been operating for 40 

3 years now. Our FAA inspectors here in San 

4 Juan gave me the same guidelines and they will 

5 testify to that, that they had advised me not 

6 to develop a Hazmat material course, because 

7 we do not regularly carry. We do not carry 

8 Hazmat materials. 

9 Their guidelines again were you 

10 can carry small quantities properly packaged 

11 aboard the aircraft or in carry-on baggage or 

12 in the cargo compartment and that's the 

13 guidelines that we were going by, at the time. 

14 We would not have carried it if we 

15 had considered it hazardous. And these were 

16 pint bottles of low volatility diesel fuel 

17 versus, you know, 1. 3 gallons of flammable 

18 material. 

19 THE COURT: Okay. Well, I 

20 understand that you had an intent not to 

21 violate the regulations. I think that comes 

22 through loud and clear in the materials that 

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1 you filed. 

2 The problem I have is that the FAA 

3 is saying to me look, we have filed all these 

4 different documents. We think we have proof 

5 for some, if not all, of the violations that 

6 we have alleged. And the respondent, Coastal 

7 Air, has not challenged these documents in any 

8 meaningful way with factual evidence of its 

9 own. 

10 So one of the obligations that you 

11 have in representing the company is to say to 

12 me okay, so I have looked at, and I'm just 

13 going to give you an example, and reviewed the 

14 exhibit marked Exhibit No. 4 in the FAA's 

15 materials, which is the Material Safety 

16 Datasheet that identifies low sulfur diesel 

17 fuel as the shipping liquid. 

18 And it is wrong because that's not 

19 what we shipped or it's not accurate because 

20 it wasn't 1.5 liters of liquid. It was only 

21 2 ounces of liquid. I want to know from you 

22 if you have some factual evidence that you 

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1 think disputes some of the material that I 

2 just reviewed with the FAA regarding the 

3 violations it is alleging, because you have an 

4 obligation as a non-moving party to point out 

5 either factual evidence that is in the record 

6 that disputes the allegation or the lack of 

7 factual allegation or proof regarding about a 

8 violation. 

9 So I wanted to know just generally 

10 if you have an argument to make about the 

11 FAA's assertion that regardless of your 

12 intent, you actually carried onto that 

13 aircraft hazardous material and it wasn't 

14 properly shipped according to the Hazmat 

15 Regulations. 

16 MR. FOSTER: Well, Your Honor, 

17 that's what the whole argument hinges on. We 

18 are going-- they are allowed 1.3 gallons and 

19 that's considered small quantities. The FAA 

20 has --

21 THE COURT: Well, let me -- before 

22 you jump into something else, when you say 

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1 they are allowed 1.3 gallons, are you 

2 referring me back to RCW -- I'm sorry, not 

3 RCW, 49 CFR § 175.104(i) again? 

4 MR. FOSTER: Yes, I am, Your 

5 Honor. I'm trying to define small quantities 

6 properly packaged, which are the guidelines 

7 that we had been given. And we have been 

8 doing this for 20, 30 years. And nobody has 

9 objected to it in the past. 

10 We have brought the samples in on 

11 a fairly regular basis. We are not doing it 

12 any more and that's the instructions we have 

13 given our staff at the different locations 

14 that we will not accept anything that is 

15 questionable in any way. 

16 But the FAA has already confirmed 

17 that yes, these were small quantities. And 

18 that's our argument that they were small 

19 quantities, properly packaged and they -- we 

20 did not consider them hazardous at the time. 

21 If we had, we would not have carried them 

22 aboard the aircraft. 

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1 THE COURT: Okay. Well, I know 

2 that there are some small quantities or 

3 accepted quantities under the Hazardous 

4 Materials Regulations that allow you to carry 

5 very small limited amounts of certain types of 

6 hazardous material. 

7 But according to the FAA, even if 

8 you were carrying very small limited packaging 

9 materials, you still have to identify yourself 

10 as a hazardous materials carrier. And one of 

11 their arguments is that since 1999, you have 

12 identified yourself as an operator that does 

13 not carry any kind of hazardous material. 

14 And as such then, you are in 

15 violation of even a small amount. What 

16 response do you have to that? 

17 MR. FOSTER: That ' s in 17 5 . 10 . 

18 Again, the same chapter part (a) that 

19 subchapter does not apply to the following 

20 hazardous materials when carried by aircraft 

21 passengers or crew members provided the 

22 requirements of 171.15 and 16 are met. 

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1 So that's what we are going by and 

2 again, the guidelines that were given to us 

3 30 years ago when we started this operation. 

4 THE COURT: Okay. So if I 

5 understand it, you are asserting that because 

6 you were the pilot, you were a crew member and 

7 had the ability to carry small amounts of 

8 hazardous material under 49 CFR § 175.10? 

9 MR. FOSTER: That's correct, Your 

10 Honor. It names both crew members and air 

11 operators. 

12 THE COURT: And under this 

13 particular statute that I have before me, it 

14 basically says that there are a variety of 

15 different things that one could carry as a 

16 crew member, but it doesn't talk about diesel 

17 fuel. It does talk about alcoholic beverages 

18 and I would agree with that. It does talk 

19 about some lighter fuel. But it also says 

20 that lighter fuel and I'm looking at 

21 subsection (a) (2). 

22 And it says "One packet of safety 

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1 matches or a lighter intended for use by an 

2 individual when carried on one's person or in 

3 carry-on baggage only. Lighter fuel, lighter 

4 refills and lighters containing unabsorbed 

5 liquid fuel (other than liquid gas) are not 

6 permitted on one's person or in carry-on or 

7 checked baggage. " 

8 So lighter fuel, which you 

9 indicated in your argument a little earlier is 

10 a type of, you know, flammable liquid, and 

11 clearly is not allowed under this section. 

12 You are making an argument to me, 

13 I think, that I should make a leap of faith 

14 and say that because alcohol is allowed, 

15 diesel fuel should be presumed in small 

16 quantities to be no more dangerous than 

17 alcohol. 

18 Is that kind of where you want me 

19 to go? 

20 MR. FOSTER: That's a correct 

21 assumption, Your Honor. 

22 THE COURT: Okay. Do you realize 

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1 that I do not have the power to rewrite the 

2 Hazmat Regulations? That I have to comply 

3 with them. 

4 MR. FOSTER: Yes, Your Honor. 

5 THE COURT: Okay. It appeared to 

6 me in my independent review of the regulations 

7 that there are some small limited exceptions 

8 to Class 3 ' Package 3 diesel fuel 

9 transportation packaging requirements, but 

10 that, of course, you still have to be clear or 

11 certified, essentially, to accept dangerous 

12 goods as a carrier. 

13 So I'm not sure I need to go into 

14 that particular material at length. 

15 Mr. Foster, let me ask you this. 

16 Is there anything else that you would like to 

17 add to your argument about the violation 

18 itself? 

19 MR. FOSTER: Your Honor, I think 

2 0 in my -- I brought several i terns out in my 

21 response to the FAA motion --

22 THE COURT: Yes. 

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1 MR. FOSTER: -- from November 5th. 

2 THE COURT: Yes. And let me get 

3 your latest materials in front of me, so that 

4 I can follow along with you. Okay. I have 

5 that in front of me, sir. Go ahead. 

6 MR. FOSTER: Okay. In § 4 

7 regardless of the complainant's argument, 

8 there remain facts that cannot be admitted in 

9 there otherwise because of the impossibility 

10 of contradiction to complainant's own 

11 evidence. 

12 THE COURT: And what would those 

13 be? 

14 MR. FOSTER: And then we --

15 THE COURT: What would those be? 

16 MR. FOSTER: Well, the one 

17 statement she made regarding a non18 specification fiberboard box where in her 

19 exhibit, which we had labeled R1, clearly 

20 showed DOT markings on the box indicating it 

21 was a specification box, which is normally 

22 used for samples like this. 

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1 THE COURT: Is it your assertion 

2 that by using this box with the DOT marking, 

3 that that in and of itself trumps all of the 

4 other regulations that the FAA asserts that 

5 you violated? 

6 MR. FOSTER: Well, the violation 

7 was that the shipment was not properly 

8 packaged. We are contending that it was 

9 properly packaged. And again, the guidelines 

10 we were given, small quantities properly 

11 packaged and they did use the DOT certified 

12 boxes and packaging material to put these 

13 items in. 

14 So that in itself would indicate -

15 

16 THE COURT: Well, let me ask you 

17. about that. You say that the FAA gave you 

18 specific guidelines for small packages. Where 

19 is that in your material? 

20 MR. FOSTER: It would be a witness 

21 statement, Your Honor. We have the FAA 

22 inspectors that we dealt with on our original 

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1 certification were the ones that gave me those 

2 guidelines. And additionally, we had other 

3 inspectors that gave us the same guidelines. 

4 Small quantities properly packaged. 

5 THE COURT: Well, today would have 

6 been the day to have their testimony in 

7 writing and submitted as part of your defense. 

8 MR. FOSTER: Yes, Your Honor. 

9 THE COURT: Okay. Let me ask you 

10 this. You say that in your November 8' 2012 

11 respondent's response to FAA Motion for 

12 Hearing on Sanction Only, paragraph 5 in 

13 encamped. The statement from CBP Officer 

14 Steele contradicts this in that the cargo was 

15 presented to Customs inside the airport 

16 inspection area. 

17 How, in your opinion, does that 

18 challenge the factual evidence that has been 

19 discussed so far that the FAA has presented in 

20 this motion? 

21 MR. FOSTER: The FAA's information 

22 is incorrect, Your Honor. They state that the 

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1 box was discovered on board the flight, which 

2 was not the case. It was brought into Customs 

3 and it was presented for normal inspection as 

4 we have done in the past. 

5 And that statement by Officer 

6 Steele confirms that and that's in the 

7 exhibits that were given to me by the FAA. 

8 THE COURT: Okay. Well, the 

9 concern I have is that I'm looking at the 

10 violations that the FAA is alleging against 

11 you. And you have heard me go through them 

12 one-by-one with Ms. George a little earlier in 

13 this proceeding. 

14 And there doesn' t appear, in my 

15 opinion, to be an allegation that you are 

16 looking at a violation or a penalty because of 

17 where the shipment was found. 

18 You know, the FAA in this 

19 particular motion did not dispute your 

20 assertion that you hand-carried it to the 

21 Customs official. So I'm a little unsure as 

22 to what you want me to do with that particular 

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1 piece of information in this particular 

2 motion. 

3 MR. FOSTER: Well, I did not hear 

4 that mentioned in your current list of 

5 charges, but it was in a prior list of 

6 charges. 

7 THE COURT: Okay. 

8 MR. FOSTER: That they stated that 

9 the box was discovered on board the aircraft, 

10 which is false. It was not discovered on 

11 board the aircraft. 

12 THE COURT: Okay. All right. 

13 Then let's talk about a couple other things. 

14 And I'm still looking at your materials here. 

15 You had indicated on page 2 of 

16 your most recent response, paragraph 8, that 

17 you are asking the Court to dismiss this case 

18 in its entirety and then you are asking for 

19 punitive damages in the amount of $59,600. 

20 MR. FOSTER: That's correct, Your 

21 Honor. 

22 THE COURT: Let's talk about the 

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1 Motion to Dismiss first. 

2 The Motion to Dismiss is a very 

3 rare request in these kinds of cases and the 

4 standard for a dismissal is pretty high. 

5 Other than your assertion that there has been 

6 some inappropriate behavior by the FAA in 

7 pursuing these violations, do you have any 

8 legal authority that you want to cite to me in 

9 this motion that you are making for a 

10 dismissal? 

11 Any legal authority at all? 

12 MR. FOSTER: Well, Your Honor, the 

13 FAA has impeached itself in making these 

14 inaccurate charges, which are very serious 

15 charges. I look at this as a statement under 

16 oath when they provide this documentation and 

17 they are making charges which are completely 

18 false. And I don't feel there is a reason for 

19 it. 

20 THE COURT: Okay. I'm going to --

21 MR. FOSTER: And I 

22 THE COURT: Okay. Go ahead, sir. 

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1 Yes? 

2 MR. FOSTER: Well, I would also 

3 believe that their fine calculations have 

4 taken what is a very minor incident up to the 

5 maximum fine that they can possibly impose. 

6 And again, we question the motives on this. 

7 THE COURT: When you say you 

8 question the motives. Are you asserting that 

9 there is some type of personal vendetta 

10 against your company by the FAA? 

11 MR. FOSTER: Well, the FAA by and 

12 through their attorney -- this, again, was a 

13 very minor incident and we have gone from a 

14 relatively small fine of $250 up to $59,600, 

15 which is, in our case, a huge fine. 

16 In the event that there was no 

17 this caused no danger to crew or passengers or 

18 people on the ground. This was a very small 

19 incident, if that. 

20 THE COURT: Would you agree or 

21 disagree that it could have been different? 

22 There could have been a fire on the plane and 

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1 that everyone on the plane could have died 

2 because of it? 

3 MR. FOSTER: Your Honor, we carry 

4 346 gallons of highly volatile aviation gas in 

5 the wing of the aircraft. A pint bottle which 

6 would be compatible to a pint bottle of 121 

7 or a liter bottle of 121 rum, there would be 

8 no reason for that, other than a crash 

9 situation, to even be exposed to expose 

10 anybody to a hazardous material. 

11 THE COURT: Is it your assertion 

12 that a bottle of rum has the same flammability 

13 as a bottle of diesel fuel? 

14 MR. FOSTER: It's a higher 

15 volatility than diesel fuel. 

16 THE COURT: So it sounds to me 

17 like you disagree in part with some of the 

18 regulations that the FAA has promulgated as 

19 safety requirements. 

20 MR. FOSTER: I'm in favor of the 

21 regulations limiting hazardous material, 

22 that's a safety issue. I'm saying, in this 

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1 case, these were very small quantities, which 

2 they label, and it has always been the case 

3 you can still carry small quantities properly 

4 packaged aboard the aircraft. 

5 And we are claiming that this 

6 shipment fell into that category. 

7 THE COURT: Okay. And other than 

8 the citation to 49 CFR 175.10, you do not have 

9 any other legal authority to offer me in 

10 support of that argument or do you? 

11 MR. FOSTER: Well, we have 

12 witnesses, I don't have a statement from him 

13 yet, that works for another oil company that 

14 used to work for Hess and he is now working 

15 for the rum factory in St. Croix. And he has 

16 indicated that there is a higher volatility to 

17 the 121 rum than there is a small sample 

18 bottle of diesel fuel. 

19 THE COURT: Okay. Well, that may 

20 very well be. Let's assume that that's true. 

21 The problem is that I still don't have a 

22 regulation that you can offer me that exempts 

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1 the diesel fuel from the Hazardous Materials 

2 Regulations. 

3 I can't make the same analogy that 

4 you do because the regulations don't allow me 

5 to. 

6 MR. FOSTER: I would be strictly 

7 on -- again, on the guidelines that we were 

8 given by our FAA inspectors early on and it 

9 was just a flat simple statement, small 

10 quantities properly packaged are exempt from 

11 the Hazmat Regulations. 

12 THE COURT: Do you have those 

13 recommendations in writing that you could fax 

14 to our office by tomorrow at 5:00p.m.? 

15 MR. FOSTER: I doubt I could get 

16 them by tomorrow, Your Honor_ The one 

17 several of the agents that dealt with this 30 

18 and 35 years ago are no longer working with 

19 the Agency_ 

20 THE COURT: Okay. 

21 MR. FOSTER: So I would have to 

22 track them down. 

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1 THE COURT: So is this more 

2 anecdotal as to what your memory is of what 

3 someone told you a long time ago as opposed to 

4 some written instructions they gave you and 

5 that you kept? 

6 MR. FOSTER: It was as I 

7 remember it, Your Honor, verbal instructions. 

8 THE COURT: Okay. Okay. Let me 

9 ask you this. There has been some talk by Ms. 

10 George about the penalty phase. As you may 

11 recall on October 23, 2012, we talked about 

12 the penalty phase just briefly. And, at that 

13 time, I found that this motion was strictly on 

14 the violations only, because of the notice 

15 that had been given by the FAA in terms of 

16 this entitled motion. 

17 So my question to you is are you 

18 aware that if this case is not settled for 

19 whatever reason by the time of the trial date, 

20 that you have an obligation to the trial or 

21 the hearing with information that addresses 

22 all of the nine factors that the FAA has 

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1 already identified, that would give you the 

2 opportunity to challenge the $59,600 fine that 

3 they are alleging should be assessed against 

4 you? 

5 MR. FOSTER: Yes, Your Honor. 

6 THE COURT: Okay. There is a due 

7 date of December 5, 2012 for you to file 

8 respondent's witness and exhibit list. Have 

9 you sent that off to Ms. George yet on behalf 

10 of your company? 

11 MR. FOSTER: Yes, we have, Your 

12 Honor. 

13 THE COURT: Okay. Those exhibits 

14 should also include any and all financial 

15 information that you think would be applicable 

16 to the assessment of a fine, if one is 

17 imposed. And it should also address any and 

18 all of the nine criteria that you could talk 

19 about, if you want to, regarding mitigating 

20 circumstances, the nature and circumstances of 

21 the offense and so forth that I have to look 

22 at in reviewing the proposed fine. 

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1 So if you did not know that now, I 

2 want you to know it as of today, so that if 

3 you need to supplement your witness and 

4 exhibit list, you can. And I would like you 

5 to file, if you need to, any supplemental 

6 exhibits and witness lists no later than 

7 December 14, 2012. 

8 You don't have to file a 

9 supplemental, but I'm just concerned that you 

10 make sure that you take good care of yourself 

11 in this proceeding. Does that make sense to 

12 you? 

13 MR. FOSTER: Yes, yes, it does, 

14 Your Honor. 

15 THE COURT: Okay. Then let's just 

16 talk about your request for punitive damages 

17 in the amount of $59,600. 

18 May I make a leap of faith in this 

19 one matter and assume that you are asking for 

20 the same amount against the FAA that they have 

21 asked against you? 

22 MR. FOSTER: That's correct, Your 

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1 Honor. 

2 THE COURT: Okay. In these 

3 particular proceedings, we do not assess 

4 punitive damages _ This is not a Court of 

5 Equity. It is not an Article 3 Bench. And we 

6 do not have the ability to grant punitive 

7 damage relief_ So I would not be able to even 

8 entertain this type of motion from you. I 

9 just wanted to let you know right off the bat_ 

10 Does that make sense? Did my 

11 explanation make sense to you? 

12 MR. FOSTER: Yes, it does, Your 

13 Honor. 

14 THE COURT: Okay. Is there 

15 anything else that you would like to add to 

16 your particular argument this afternoon before 

17 I turn back to the moving party? 

18 MR. FOSTER: Okay. Just a couple 

19 of items, Your Honor that the FAA had 

20 mentioned about our failure to take corrective 

21 action and that, of course, is not true. 

22 We have advised all our employees 

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1 not to accept any questionable material in the 

2 future, until we get a settlement on this. 

3 This is what we consider a gray area as to 

4 what is actually a small quantity and what is 

5 actually hazardous in small quantities. We 

6 are getting different definitions from 

7 different sources. 

8 The second matter is we have 

9 always had Hazmat posters displayed at our 

10 counter sites on our different locations that 

11 we go to. It is an FAA-approved poster that 

12 we have. We do have it pasted to the counter, 

13 so it is clearly visible to anybody that 

14 travels. 

15 THE COURT: Okay. Well, thank you 

16 very much for that information. I certainly 

17 will take it as part of your argument. 

18 Is there anything else that you 

19 would like to add before I turn back to Ms. 

20 George? 

21 MR. FOSTER: No, Your Honor. 

22 THE COURT: Okay. Thank you. Ms. 

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1 George, I know we have gone way past our 90 

2 minute deadline, but as the moving party, you 

3 have a right of final reply. You are welcome 

4 to take five minutes or less to make any final 

5 argument, if you so choose. 

6 Do you have anything else you 

7 would like to add? 

8 MS. GEORGE: Just a couple of 

9 points of clarification, Your Honor. 

10 The first one is under§ 5123(a) 

11 of the Hazardous Material statute. The 

12 statute defines acting knowingly. And under 

13 the statute it indicates that a person acts 

14 normally when the person has actual knowledge 

15 of the facts giving rise to a violation where 

16 a reasonable person acting in the 

17 circumstances or exercising reasonable care 

18 would have that knowledge. 

19 Mr. Foster has indicated that the 

20 company did not know that what they were 

21 carrying was hazardous materials. However, 

22 under the definition that is contained within 

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1 the statute, the knowledge requirement 

2 pertains to the respondent's knowledge of what 

3 it did or failed to do and not whether or not 

4 the respondent was aware of whether a material 

5 is classified as a hazardous material or 

6 whether his actions would result in a 

7 violation of the Hazardous Materials 

8 Regulation. 

9 Therefore, in essence, the Federal 

10 Hazardous Materials statute requires a person 

11 to make a reasonable inquiry under the 

12 circumstances known to it at the time and 

13 exercising reasonable care to gain knowledge 

14 of what the material is that it has 

15 transported and accepted. 

16 The next thing that we wanted to 

17 mention --

18 THE COURT: Well, before you go on 

19 to your next thing, which violation are you 

20 alleging this is material to? 

21 MS. GEORGE: I'm responding to the 

22 respondent's argument today that the company 

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1 did not act knowingly when it transported the 

2 diesel fuel on board the flight on October 21, 

3 2009. 

4 THE COURT: Which violation do you 

5 think this is applicable to, just so that I 

6 know? 

7 MS. GEORGE: Actually, all of the 

8 violations, Your Honor, because there is a 

9 requirement that there was a knowing violation 

10 of HMR as the overarching requirement for 

11 these types of cases. 

12 THE COURT: Okay. Thank you. Go 

13 ahead. 

14 MS. GEORGE: The second point that 

15 we would like to make is that Mr. Foster, as 

16 the company's representative, has also 

17 indicated that there was a $250 civil penalty 

18 that the company could have been assessed. We 

19 just want to make note in going forward that 

20 under the Agency's Hazardous Materials Penalty 

21 Guidelines and the matrix that we have 

22 included with our filing on July, excuse me, 

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1 I think it is, 20, 2012 at Exhibit 10, 11 and 

2 12, those portions are from the Agency's 

3 Sanction Guidelines. 

4 A $250 civil penalty is the amount 

5 of a civil penalty that could be assessed for 

6 an individual who then properly accepted --

7 excuse me, improperly offered a hazardous 

8 material for transportation in the air 

9 transportation system. 

10 However, for air carriers, 

11 specifically Group 4 air carriers of which 

12 Coastal Air Transport is, under the matrix, 

13 the minimum civil penalty that can be assessed 

14 is contained on Exhibit 11 of our July filing. 

15 For a proper acceptance, the minimum civil 

16 penalty that can be assessed under the matrix 

17 is $2,500 with a maximum civil penalty of the 

18 $16,200 that we are seeking. 

19 For failure to inspect a Hazmat 

20 shipment properly, the minimum civil penalty 

21 is $5,000 to the maximum of $16,200, that we 

22 are seeking. 

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1 For failure to provide Hazmat 

2 training, the minimum civil penalty is $5,000 

3 and the maximum is $16,200 under the matrix. 

4 THE COURT: And, Ms. George, I 

5 don't need to have you read the rest of 

6 Exhibit 11 to me. But let me just make sure 

7 I understand. This is an internal guideline 

8 for the FAA employees, is it not? 

9 MS. GEORGE: It is a published 

10 sanction policy. It was published in a 

11 Federal Register on April 21, 1999, which 

12 indicates how the Agency would be applying the 

13 Hazardous Material statute for air 

14 transportation of hazardous materials. 

15 THE COURT: But the statute itself 

16 does not require this to be imposed? 

17 MS. GEORGE: The statute does not 

18 require it to be imposed. However, the Agency 

19 through the decision maker has requested 

20 difference to the policy. 

21 THE COURT: Thank you. Well, we 

22 will have an interesting discussion about 

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1 that, I'm sure, in January. 

2 Anything else that you would like 

3 to add? 

4 MS. GEORGE: The final thing that 

5 we would like to add is on the topic of 

6 corrective action. 

7 Mr. Foster, the respondent, has 

8 indicated that the company has made a decision 

9 that it will no longer carry any hazardous 

10 materials until a conclusion of this 

11 particular matter. 

12 I think it is important for us to 

13 mention that under case law, specifically in 

14 the Matter of TCI, which is, I'm looking for 

15 a citation for you, it is TCI Corporation, FAA 

16 Order 92-77, December 22, 1992. The decision 

17 maker in that case indicated that a decision 

18 not to handle hazardous materials in the 

19 future does not represent the type of positive 

20 corrective action that would warrant 

21 consideration in determining a penalty. 

22 The decision maker specifically 

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1 indicated that this type of a change of policy 

2 is one that could be changed at any time. And 

3 as a result is not the type of corrective 

4 action that we would use for mitigation of a 

5 civil penalty. 

6 And that's all that I have. 

7 THE COURT: Thank you very much. 

8 Ms. George, Mr. Foster, thank you 

9 very much for the time that you have spent 

10 today. It has been very, very helpful for 

11 this Court to hear both of your arguments. 

12 I'll thank the court reporter, 

13 too, for staying beyond the 90 minute proposed 

14 time period. 

15 Just to remind you all, Ms. 

16 George, you have until tomorrow, December 7, 

17 2012 at 5:00p.m., to fax Mr. Smith a PDF 

18 version of essentially the photographs 

19 contained in the FAA's Request for Admission 

20 No. 16, which, in essence, also includes 

21 respondent's one page photocopy of the same 

22 Hazmat labels in respondent's Exhibit No. 1. 

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1 In addition, Mr. Foster, you have 

2 until December 7, 2012 at 5:00 p.m. to 

3 provide, if you have it, a copy of the written 

4 regulation that you say you were complying 

5 with that the FAA provided to you. 

6 You indicated in some of your 

7 arguments that you think that it was simply 

8 oral only and so the Court also gave you the 

9 alternative of providing a testimonial 

10 statement from the FAA inspector that you 

11 think might be able to assert that with any 

12 specificity. 

13 In addition, Mr. Foster, you have 

14 until December 14, 2012 to file any and all 

15 supplemental exhibits and/or witness lists to 

16 ensure that you have fully covered your 

17 defenses on the penalty phase, which still 

18 remains for hearing in January in the hearing 

19 dates that we have scheduled in St. Croix, 

20 Virgin Islands. 

21 I will then issue a decision on 

22 the FAA's Motion for Hearing on Sanction Only. 

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1 I'm going to try and get it out no later than 

2 December 14, 2012. And I'm hoping to have it 

3 out even earlier than that, but I want to wait 

4 until the end of tomorrow business day at 5: 00 

5 p.m. to get any and all supplemental materials 

6 that we just talked about. 

7 With that, on behalf of the FAA, 

8 Ms. George, is there anything else that you 

9 would like to add or correct to the record, at 

10 this time? 

11 MS. GEORGE: No, Your Honor. 

12 THE COURT: Mr. Foster, on behalf 

13 of Coastal Air, anything you would like to add 

14 or correct to the record, at this time? 

15 MR. FOSTER: Your Honor, it was 

16 December 7th you said for the statements? 

17 THE COURT: You have until 

18 tomorrow, December 7, 2012 by 5:00p.m. to 

19 file one of the two things that we talked 

20 about. 

21 No. 1' either ' the written 

22 instructions that you say you might have 

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1 received from the FAA inspectors years go that 

2 qualify the regulations and gave you 

3 information that allowed you to believe that 

4 you had a right to transport small quantities 

5 of diesel fuel, as you have talked about or in 

6 the alternative, to submit the statement from 

7 the FAA inspector that you thought would 

8 corroborate that as well with the specific 

9 regulation cited. 

10 If you don't file it, that's fine. 

11 I'm going to go ahead and issue the decision 

12 after December 7, 2012. 

13 But because you said that you had 

14 that evidence, you just didn't have it at 

15 hand, I'm going to give you a chance to file 

16 it. And of course, if you send it to me, you 

17 send a copy at the same time to Ms. George. 

18 And you need to fax it to us, 

19 because we are not going to get it by U.S. 

20 Mail by tomorrow. It has to be in my hands by 

21 tomorrow at 5:00 p.m. 

22 In terms of 

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1 MR. FOSTER: Your Honor, that's 

2 not going to be sufficient time for me to get 

3 statements from FAA inspectors. 

4 THE COURT: If you don't, then you 

5 are out of time. 

6 MR. FOSTER: Okay. 

7 THE COURT: You either have -- you 

8 can take the time to find if you have 

9 somebody available to you and you can get a 

10 statement tomorrow morning and fax it to us by 

11 tomorrow afternoon, that's great. But this 

12 particular motion was the time for you to 

13 provide factual evidence, either by 

14 testimonial statement or by factual document. 

15 And we have talked about that 

16 before. So the time is pretty much up for you 

17 to do that. But because I'm giving the FAA an 

18 opportunity to file a better copy of the 

19 photographs of the Hazmat label, I'm also 

20 giving you the same amount of time to provide 

21 a supplement to your factual documentation. 

22 If you can't make it within the 24 

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1 hours I have given you, then that's okay. You 

2 just won't make it. 

3 So in terms of the December 14, 

4 2012 deadline, that was the deadline for you 

5 to file any and all supplemental witness lists 

6 and/or exhibit lists for the purposes of the 

7 hearing that we have scheduled in January 

8 2013. 

9 If you have already filed your 

10 witness list and exhibit list and you are 

11 comfortable that it covers all of the areas 

12 that you want to cover, both for potential 

13 violation defense and defense against the 

14 alleged penalty of $59,600, then you, 

15 obviously, don't need to do anything by 

16 December 14, 2012. You are done. 

17 But if, in this particular 

18 conversation and motion, something rang a bell 

19 for you and you think oh, I better add this 

20 in, I'm giving you a chance to do that. 

21 Does that make sense? 

22 MR. FOSTER: On the December 14th 

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1 deadline, yes, it does, Your Honor. 

2 I'll be working. I'll be flying 

3 all day tomorrow, so I will not be available 

4 to do any interviews with any of the FAA 

5 people 

6 THE COURT: Okay. 

7 MR. FOSTER: -- if I could get a 

8 hold of them, so that's not going to work. 

9 THE COURT: Okay. Well, I'm sorry 

10 it doesn't work out. And I'll look forward to 

11 getting material from you, perhaps, on 

12 December 14, 2012. 

13 And I'm certainly looking forward 

14 to seeing both of you in January 2013. 

15 With that, on behalf of the FAA 

16 and on behalf of the respondent, I'm going to 

17 thank both of you, Ms. George and Mr. Foster, 

18 for your presence today and all of your 

19 assistance. 

20 It appears our business is 

21 complete. We can go off the record and I wish 

22 you all a good day. 

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1 MS. GEORGE: Thank you. 

2 THE COURT: Thank you. Bye-bye. 

3 MR. FOSTER: Thank you, Your 

4 Honor. 

5 THE COURT: You're welcome. Bye6 bye. 

7 (Whereupon, the Oral Argument was 

8 concluded at 3:56p.m.) 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

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___ A __ 

abbreviate 60:8 

abilities 86:20 

ability 18:2 55:19 

55:21 58:21 59:1 

96:7 112:6 

able 36:4,5 81:22 

112:7 121:11 

aboard 44:8 60:10 

61:10 71:21 75:16 

77:16 88:16 91:11 

94:22 107:4 

above-entitled I: 13 

absence 9:4 82:20 

absolutely 15:2 

.60:14 65:22 

accept 38:4 94:14 

98:11 113:1 

acceptable 62:16 

acceptance 53:18 

55:6 65:9 117:15 

accepted 53:7 

60:10 61:8 62:1 

74:6 75:15 80:2 

95:3 115:15 117:6 

accompany 64:20 

accurate 42:18 

43:11 44:5,9,22 

82:14 92:19 

acknowledged 61:6 

act66:3 116:1 

acting 114:12,16 

action 1:7 10:16 

46:19 56:14,14,19 

56:20 57: I 58: I 0 

58:12,16 70:19 

112:21 119:6,20 

120:4 

actions 10:3 56:11 

57:19 80:22 115:6 

acts 114:13 

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take 9:20 10:4,4 

11:8 19:14 39:10 

40:2 58:16 80:2 

86:11111:10 

112:20113:17 

114:4 124:8 

taken 19:12 56:11 

57:19 81:6 105:4 

takes 84:13 

talk 7:16 9:14 12:6 

13:21 14:6 15:4 

15:16 16:2,7 

23:20 59:15 63:1 

65:11,14 75:12 

77:10 79:19 87:10 

87:19 90:2 96:16 

96:17,18 103:13 

103:22 109:9 

110:18111:16 

talked 62:4 80:8 

89:7 109:11 122:6 

122:19 123:5 

124:15 

talking8:1916:16 

25:18 35:16 47:13 

74:12 75:8 81:18 

89:16,19,20 

talks 82:13 89:18 

90:4,9 

TCI 119:14,15 

teleconference 1:14 

telephone 85:2 

telll9:15 63:7 

74:11 85:17 88:21 

90:19 

telling 17:12,15 

47:5 

terms60:2 71:16 

87:7 109:15 

123:22 125:3 

testified 21 :20 

testifY 91 :5 

testimonial5:20 

30:14 32:21121:9 

124:14 

testimony 68:13,15 

101:6 

thank 7:20 9:1 

11:20 13:20 30:2 

32:7,8 38:20 39:5 

40:6 42:3 43:6 

44:1 49:6,17 50:8 

51:5 59:14 87:5 

87:17113:15,22 

116:12 118:21 

120:7,8,12 126:17 

127:1,2,3 

thing 12: I 30:11 

115:16,19 119:4 

things 6:19 15:12 

27:12 59:16 96:15 

103:13 122:19 

think 16:21 38:22 

39:12 44:15 73:18 

85:17 90:20 91:21 

92:4 93:1 97:13 

98:19 110:15 

116:5 117:1 

119:12 121:7,11 

125:19 

thought 123:7 

three 76:14 

Thursday 1:10 4:6 

time4:11 7:12,21 

8:10 13:15 21:21 

40:22 41:2144:14 

73:10 77:8 85:21 

86:2,7 87:16 

88:14 91:2,13 

94:20 109:3,13,19 

115:12 120:2,9,14 

122:10,14 123:17 

124:2,5,8,12,16 

124:20 

times 57:4 

timing 56:18 

title27:1728:1 

today 4:5 8:5 13:7 

28:8,21 38:5 40:7 

48:10 61:5,8 72:7 

101:5111:2 

115:22120:10 

126:18 

today's 7:12 29:21 

39:3 

told 109:3 

Tom 38:15,16 

tomorrow 87:2,6 

108:14,16 120:16 

122:4,18 123:20 

123:21 124:10,11 

126:3 

topic 119:5 

total14:7 55:11 

61:19 

touch 31:9 

touched 66:10 

Toyota 58:8 

track 10 8:22 

train 55:6 69:2 

training 45:2,12 

53:20,21,22 57:9 

57:12 66:16 67:10 

67:10,17 69:10 

70:21 118:2 

transaction 51 :9 

transit 60:10 

transport 1:6 2:4 

4:4 40:13 60:19 

64:15 67:3 71:6 

78:22 79:1 83:8 

117:12123:4 

transportation 1: 1 

2:22 40:22 60:10 

61:9 67:12 78:19 

81:8 98:9 117:8,9 

118:14 

Transportation's 

40:19 

transported 40:15 

42:11 45:21 53:7 

61:9 62:2,13 

66:22 85:6 115:15 

116:1 

transporting 76:16 

travels 113:14 

treated 46:17 48:5 

treatment 46:20 

trial109:19,20 

tribunal7:7 

true42:17 43:11 

44:5,9,22 49:1 

107:20 112:21 

trumps I 00:3 

try 10:4 73:21 

122:1 

trying48:10 94:5 

turn 37:6 80:13 

87:11 112:17 

113:19 

turning 31:12 

32:12 

two 5:15 6:2,5 15:7 

33:19 34:3,9,19 

36:15,22 42:11 

47:19 49:15 52:1 

61:13,14 70:8 

74:7 81:22 122:19 

type8:110:611:12 

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105:9 112:8 

119:19 120:1,3 

types95:5 116:11 

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Neal R. Gross & Co., Inc. 

202-234-4433 

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72:22 79:22 82:18 

100:5 

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49:20 50:14 51:17 

51:19 52:13,14 

58:17 60:6 65:8 

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85:14,14 86:15,16 

93:8 95:15 98:17 

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114:15 115:7,19 

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24:9,15 39:13 

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53:11 55:12 57:1 

60:2 87:20 92:5 

93:3 102:10 104:7 

109:14 116:8 

violator's 55:19,21 

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volatile 106:4 

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106:15 107:16 

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112:9 115:16 123: I 54:10,13 55:9 

warnings 62:8 yellow 38:13 67:2 79:20 117: I 

warrant 119:20 yesterday 8: 16 117:14 118:6 

warrants 58:11 p 

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wasn't 12:19 92:20 123:1416:818:1 $ 93:13 --- 24:14 30:7 53:10 

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114: I 117:18,21118:3 12/11109 3:10 

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114:3 127:5 $5,000 117:21 135:6,716:118:15 

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work 107:14 126:8 19:15 20:6 26:4,4 121:14 122:2 

126:10 28:1,4 29:15 30:6 125:3,16 126:12 

working I 07:14 31:16 35:8 42:16 14th 8:8 125:22 

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- Neal R. Gross & Co., Inc. 

202-234-4433 

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175.30(e)(2) 79:22 

175.30(e)(3) 80:15 

175.33(a) 81:11 

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175.35(a) 85:15 

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1983 51:12 52:4 

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1993 42:14 61:17 

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2012 1:12 4:6,11,14 

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69:21 87:8 101:10 

109:11110:7 

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122:2,18 123:12 

125:4,16 126:12 

2013 125:8 126:14 

206362:12 

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70:14 98:8,8 

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3:56 127:8 

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3:13,13,13, 13,14 

3:14,14,14,15,15 

58:9 94:8 96:3 

I 08:17 

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305-5200 2:14 

305-5223 2:15 

340 2:6 

346106:4 

35 3:17,17,17,17,18 

3:18,18,18,19,19 

3:20,20,22,22 

108:18 

359 52:4 

3600 73:18 

366-4000 73:11 

39852:5 

4 

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55:4 57:17 60:5 

66:7,12 67:8 

92:1499:6117:11 

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403:4 91:2 

4042:14,15 

41342:13 43:13 

44:8 

4227:9 

445 52:2 

459 52:4 

49 40:20 46:14 

48:18 49:3 51:4 

60:8 62:17 63:5 

64:5,13 66:13 

68:20 71:18 73:7 

75:14 77:11 79:22 

80:15 81:11 82:12 

84: I 85:15 86:16 

88:4 89:3,16 94:3 

96:8 107:8 

5 

5 3:11,19 7:14 16:8 

17:22 20:20 22:3 

30:6 44:20 53:3 

54:8,9 68:19,19 

101:12 110:7 

5th 99:1 

5:00 87:2,6,8 

108:14 120:17 

121:2 122:4,18 

123:21 

5123 50:11 51:2,4 

52:10 

5123(a) 114:10 

6 

61:12 3:20 4:6,18 

5:12 6:7,8 13:7 

16:1 26:17 34:9 

59:5 70:20 71:17 

624 51: II 

684 52:2 

7 --- ---~--

7 3:12,22 6:7,8 16:8 

17:22 22:21,22 

30:6 34:2,18 35:8 

36:9 37:1 41:10 

42:5 53:3 57: II 

57:21 69:21 73:6 

74:3 87:8 120:16 

121:2 122:18 

123:12 

7th 122:16 

7/9/12 3:18 

705 51:11 

75042:12 61:16 

773-6862 2:6 

8 

8 3:12 5:14 6:5 16:8 

17:22 23:11,11,18 

30:7 34:13 40: I 0 

46:12 54:7 75:13 

101:10 103:16 

8/2/12 3:18 

8/7/12 3:19 

883:5 

9 

9 3:12 6:10 7:4 8:15 

14:22 33:10 45:7 

9th 10:21 

90114:1 120:13 

92-77 58:7 119:16 

94-28 58:9 

98-2 49:10 

Neal R. Gross & Co., Inc. 

202-234-4433 

Page 143 
144 

C E R T I F I C A T E 

This is to certify that the foregoing transcript 

In the matter of: Coastal Air Transport, Inc. 

Before: US DOT/FAA 

Date: 12-06-12 

Place: teleconference 

was duly recorded and accurately transcribed under 

my direction; further, that said transcript is a 

true and accurate record of the proceedings. 

(202) 234-4433 

Court Reporter 

NEAL R. GROSS 

COURT REPORTERS AND TRANSCRIBERS 

1323 RHODE ISLAND AVE .. N.W. 

WASHINGTON, D.C. 20005-3701 WNW.nealrgross.com