UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, DC 

In the Matter of: SCHUMAN AVIATION COMP ANY, LTD. 

FAA Order No. 2016-2 

FDMS No. FAA-2013-10801 

Served: August 24, 2016 

DECISION AND ORDER2 

Complainant Federal Aviation Administration ("Complainant" or "FAA") has appealed 

the civil penalty assessed in the written initial decision ("Initial Decision") of Administrative 

Law Judge (" ALJ") Richard C. Goodwin. 3 The Initial Decision found, based on the undisputed 

record, that Respondent Schuman Aviation Company, Ltd. ("Schuman") violated 14 C.F.R. 

§ l l 9.5(g)4 by operating 24 round-trip scheduled operations under 14 C.F.R. Part 135 to KailuaKana International Airport, Kona, Hawaii ("KOA"). At the time, Respondent's operations 

specifications did not permit it to operate to KOA. In addition, the ALJ concluded, aJso based on 

I Generally, materials filed in the FAA Hearing Docket (except for materials filed in security cases) are 

also available for viewing at http://www.reguiations.gov. 14 C.F.R. § 13.210(e)(l). 

2 The Administrator's civil penalty decisions, along with indexes of the decisions, the rules of practice, 

and other information, are available on the Internet at the following address: 

www jaa. gm,/ about/office_ org!headquartersoffices! age/pol_ adjudication/AOC 4 00/Civil _Penalty!. See 

14 C.F.R. § 13.210(e)(2). In addition, Thomson Reuters/West Publishing publishes Federal Aviation 

Decisions. The decisions also are available through LEXIS (TRANS library) and WestLaw (FTRANFAA database). 

3 The ALJ's Initial Decision is attached. 

4 HNo person may operate as a direct air carrier or ... com1nercial operator without, or in violation of. 

appropriate operations specifications.'' 

c 
the undisputed record, that Schuman violated 14 C.F.R. § 135.735 by initially refusing to permit 

two FAA Aviation Safety Inspectors to inspect Schuman's records concerning the above 

operations.6 The ALJ, however, rejected Complainant's proposed civil penalty of $28,000 and 

instead assessed civil penalties of$5,000 each for the violation of the two regulations, i.e., a total 

civil penalty of $10,000. For the reasons discussed herein, I reverse the Initial Decision in part 

and assess a civil penalty of $27,800.7 

I. Burden of Proof and Standard of Review 

Complainant has the burden to prove the appropriateness of a civil penalty. Wallaesa, 

FAA Order No. 2013-2 at n.30 (May 14, 2013); Seven's Paint & Wallpaper, FAA Order 

No. 2001-6 at 4-5 (May 16, 2001). Complainant may meet this burden by, among other things, 

introducing the Agency's Sanction Guidance8 and the testimony of an FAA Inspector. Northwest 

Airlines, FAA Order No. 1990-37 at 6-9 (November 7, 1990). A respondent must prove any 

affirmative defenses relating to the sanction, such as financial hardship or corrective action. 

Seven's Paint & Wallpaper, supra; Atlas Frontiers, LLC, FAA Order No. 2010-10 at 11 (June 

16, 2010). 

5 "Bach certificate holder and each person employed by the certificate holder shall allow the 

Administrator, at any time or place, to make inspections or tests ... to determine the holder's compliance 

with the Federal Aviation Act of 1958, applicable regulations, and the certificate holder's operating 

certificate, and operations specifications. n 

6 Tr. 15. 

7 Remanding this case to the ALJ is unnecessary. See Esau, FM Order No. 1991-38 at 7 n.7 (September 

4, 1991) (case would not be remanded to determine civil penalty because it was more efficient for the 

Administrator to make the determination). 

8 FM Order No. 2150.3B, entitled "FAA Enforcement and Compliance Program" (October 1, 2007), 

contains the Agency's Sanction Guidance. Id. at 2-4. The particular portions of the order that FM 

personnel use to determine an appropriate sanction are Chapter 7 ("Sanction Guidance Policies"); 

Appendix B ("Table of Sanctions for All Enforcement Programs, Except Hazardous Materials"); and 

Appendix C ("Sanction Guidance-Hazardous Materials Enforcement"). 

2 
In an appeal of an initial decision, the FAA decisionmaker considers whether: (1) each 

finding of fact is supported by a preponderance of reliable, probative, and substantial evidence; 

(2) each conclusion of law is made in accordance with applicable law, precedent, and public 

policy; and (3) the administrative Jaw judge committed any prejudicial errors.9 

II. Discussion 

A. Unauthorized Scheduled Operations 

Schuman holds a certificate authorizing it to conduct scheduled air carrier service under 

14 C.F.R. Part 135.10 Schuman's Operations Specification C070, entitled "Airports Authorized 

for Scheduled Operations," stated that Schuman was authorized to conduct scheduled passenger 

and cargo operations only at the airports listed.11 At all relevant times, Schuman's Operations 

Specification C070-2 did not authorize it to conduct scheduled operations at KOA. 12 

Nevertheless, between September 8, 2012, and September 13, 2012, Schuman operated 

24 round-trip scheduled commuter operations 13 to KOA for Mokulele Airlines, 14 using Cessna 

9 14 C.F.R. § l3.233(b). Schuman argues that these considerations are rendered moot by the Pilot's Bill of 

Rights, Pub. L. 112-153, 126 Stat ll59 (August 3, 2012). In this regard, Schuman cites to a decision of 

the National Transportation Safety Board ("NTSB") in Administrator v. Jones, NTSB Order No. EA5647, 2013 WL 316199 at *4 (January 16, 2013). The Pilot's Bill of Rights, however, applies to NTSB 

certificate cases, rather 1han to FAA civil penalty cases, such as the instant case. Schuman cites no 

authority indicating that the Pilot's Bill of Rights applies in FAA civil penalty cases. Schuman also states 

that when it made an offer to settle this case, Complainant's attorney did not respond. The Administrator 

does not, in an appeal, review an agency attorney's discretionary decision to settle or not settle a matter. 

See Offshore Air, FAA Order No. 2001-4 at 10 (May 16, 2001). 

10 Initial Decision at 3. 

n Id. 

12 Complaint II.3; Answer 2. 

13 Tr. 24, 27-28, 143-46. 

14 Tr. 24, 26; Complainant's Exhibit A-5. 

3 
Caravan 208B aircraft. 15 

The FAA Sanctions Guidance provides a range of penalties for operations that are 

contrary to a company's operations specifications. The sanction guidance indicates a minimumrange civil penalty for those unauthorized operations that involve technical noncompliance. 16 

Schuman is a Group III Operator17 and Small Business Concem. 18 To determine the appropriate 

civil penalty, one begins with the middle of the range. If there are aggravating factors, one 

increases that amount, and if there are mitigating factors, one decreases that amount. FAA Order 

No. 2150.3B at 7-9. Complainant followed this approach, decreasing from the midpoints due to 

mitigating factors. For a Group III operator, the minimum range civil penalty is $825 to 

$3,299, 19 and the midpoint is $2,062. 

The record shows that two weeks after the flights, Complainant amended Schuman's 

operations specifications to include KOA as an authorized airport, showing that Schuman's 

operations into the airport likely did not affect safety. Due to this mitigating factor, Complainant 

selected the bottom of the prescribed minimum civil penalty range - $825. Imposing an $825 

civil penalty for each of the 24 unauthorized flights amounted to a sanction of$19,800.20 

B. The Refusal to Permit Records Inspection 

On or about September 17, 2012, two FAA Inspectors from the Honolulu Flight 

15 Complainant's Exhibit A-3; Tr. 62. 

16 FAA Order No. 2150.3B at B-12. 

17 Schuman operates seven aircraft. Complainant's Exhibit A-1. The sanction guidance indicates that an 

operator with seven aircraft is a Group Ill Operator. FAA Order No. 21050.3B at B-3. 

18 It is not disputed that Schuman is a small business and was treated as such by Complainant. 

19 Id. at B-4, B-12. 

20 Complainant's Closing Argument at 10. 

4 
Standards District Office (FSDO) visited the Schuman offices and asked Mr. Schuman, the 

President and owner of Schuman,21 to inspect the company's daily flight logs and maintenance 

logs. 22 Complainant was not required to provide Schuman with prior notice of a records 

request. 23 Mr. Schuman refused to provide the records and the FAA Inspectors left. 24 About 

2 hours later, however, after consulting with his attorney, Mr. Schuman notified the FAA 

Inspectors that he would comply with the request. 25 Subsequently, Schuman delivered the 

records to the Inspectors at the Honolulu FSDO .

26 

The Sanction Guidance prescribes a maximum civil penalty for several types of failure to 

permit FAA inspection. The maximum civil penalty range for a Group Ill operator such as 

Schuman is $7,150 to $11,000,27 and the midpoint is $9,075. Due to the presence of a mitigating 

factor, i.e., about 2 hours after the records request, Schuman agreed to the inspection of its 

records, Complainant selected a civil penalty of $8,000, which is near the bottom of the 

prescribed range. 28 

C. The ALJ's Sanction Analysis 

In imposing a lower civil penalty than had been proposed by Complainant, the ALJ 

21 Tr. 84. 

22 Tr. 15-16, 48. 

23 Tr. 49; Footnote 5, supra. 

24 Tr. 15, 69, 102-04. 

25 Tr. 17, 52, 54, 70. 

26 Tr. 16-17. 

27 FAA Order No. 2150.3B at B-4. 

28 Complainant's Closing Argument at 10; Rebuttal to Respondent's Closing Argument at 3. 

5 
inaccurately stated that Complainant had failed to show how it used the sanction guidance to 

arrive at a figure of $28,000 for the civil penalty.29 ln fact, Complainant explained in its posthearing briefs30 how it used the Agency Sanction Guidance in FAA Order No. 2150.3B31 to 

address the violations. Regarding the violation of its operations specifications (14 C.F.R. 

§ 119.S(g), Complainant's sanction analysis noted that: the proposed civil penalty of $19,800 for 

the violations of 14 C.F.R. § 119.S(g), and $8,000 for the violation of 14 C.F.R. §135.7, equals 

$27,800.32 

The ALJ, however, refused to impose the penalty requested for unauthorized operations, 

stating that Complainant had failed to prove how it arrived at $11,000 for each violation.33 The 

ALJ' s conclusion, however, is based on a false premise. Complainant had not argued for 

imposing an $11,000 civil penalty for each violation. Rather, Complainant correctly stated in the 

Complaint that under 49 U.S. C. § 46301, Schuman was subject to a civil penalty not to exceed 

$11,000 for each of the violations.34 And, as noted above, Complainant imposed the bottom of 

the minimum civil penalty amount for each unauthorized flight. 

29 The ALJ acknowledged that the parties filed post-hearing briefs (Initial Decision at 3), but he 

apparently was unaware of Complainant's explanations in them regarding the sanction. 

3

° Complainant's Closing Argument at 9-10; Complainant's Rebuttal to Respondent's Closing Argument 

at 3. 

31 The ALJ tookjndicial notice of FAA Order No. 2150.3B, which is Complainant's Exhibit 7. Tr. 3, 30-

31. The ALJ said he had checked to ensure that 1his version of the order was correct. Id. 

32 Rounded up, it totals $28,000, which is what Complainant sought. On appeal, however, Complainant 

does not round up and instead seeks $27,800. 

33 Initial Decision at 13. The ALI wrote, "The FAA failed to prove by testimony and/or evidence of how 

it arrived at the figure of $11,000 for each violation. We are left to speculate how the figures of $11,000 

and $28,000 were determined." Id. 

34 Complaint IV. I. 

6 
The ALJ also incorrectly found that Complainant did not show that it considered the 

nature, circumstances, extent, and gravity of the violations. These factors, however, are taken 

into account in the Sanction Guidance itself, which Complainant appropriately used in arriving at 

its sanction recommendation: "[w]hen the FAA formulated [the] sanction ranges for different 

types of violations, the agency considered the nature, extent and gravity of each general type of 

violation .... " Ventura Air Services, FAA Order No. 2012-12 at 27 (November 1, 2012), citing 

Folsom 's Air Service, Inc., FAA Order No. 2008-11 at 12 (November 6, 2008) and Schultz, FAA 

Order No. 1989-5 at 12 (November 13, 1989). Moreover, Schuman has not disputed that 

Complainant used the Sanctions Guidance to arrive at the proposed civil penalty. Thus, by 

appropriately applying the Sanctions Guidance, Complainant necessarily took into account the 

nature, circumstances, extent, and gravity of the violations. 

The ALJ also incorrectly held that Complainant had failed to show how it used 

aggravating or mitigating factors to adjust the sanction. In its post-hearing briefs, however, 

Complainant explained that it took into account two mitigating factors in determining the 

proposed civil penalty. First, Complainant ultimately approved Schuman's operations to KOA, 

indicating that the operations were not unsafe. Due to this mitigating factor, the Complainant 

sought a minimum civil penalty, i.e., $825, rather than a midpoint penalty. Second, Schuman 

agreed after about 2 hours to produce the records. In light of that fact, the Complainant sought a 

sanction of $8000 rather than a midpoint sanction of $9,075. Thus, Complainant appropriately 

considered mitigating factors by selecting a civil penalty near the bottom of the prescribed range. 

The ALJ further found that Complainant had failed to show whether its sanction analysis 

took into account Schuman's ability to pay. It is not, however, Complainant's burden to prove 

Respondent's inability to pay. "Financial hardship and inability to pay are affirmative defenses 

7 
that the respondent has the burden of proving .... " Atlas Frontiers, FAA Order No. 2010-10 at 

11 (June 16, 2010), citing Giuffrida, FAA Order No. 1992-72 at 2 (December 21, 1992). A 

respondent bears the burden of proof because its financial records are within its control. Atlas 

Frontiers, FAA Order No. 2010-10 at 11-12, citing Seven's Paint & Wallpaper, FAA Order No. 

2001-6 at 5 (May 16, 2001). To prove inability to pay, a respondent must introduce supporting 

financial documentation, such as tax records, which Schuman failed to provide. Atlas Frontiers, 

supra at 12; Giuffrida, supra at 5. Self-serving testimony of a company's owner is insufficicnt.35 

Thus, Shuman, not Complainant, failed to appropriately pursue the "inability to pay" component 

of determining the proper civil penalty amount. 

The ALJ stated that he considered the following "corrective actions" justifying 

mitigation in setting a $10,000 civil penalty: (]) Schuman immediately stopped operating when it 

was notified that it was violating its operations specifications; and (2) Schuman permitted 

Complainant to inspect its records 2 hours after it refused perrnission.36 

However, the Sanction Guidance, which could not be clearer, states: 

The FAA considers corrective action a mitigating factor in determining sanction 

provided the corrective action exceeds the minimum regulatory or statutory 

requirements. . . . Corrective action ... that simply brings that person into 

compliance with the statutory or regulatory requirements is not considered in 

mitigation of sanction. To mitigate a sanction based on such corrective action 

would put at an economic disadvantage competitors who have expended the . . 1· 37 resources necessary to mamtam comp rnnce. 

Thus, as set forth above, the two actions cited by the ALJ are not "corrective actions" 

35 Id. Complainant points out that although it did not have the burden of proving Schuman's ability to pay, 

it necessarily considered this by using the Sanction Guidance. Using FAA Order No. 2150.3B, Appendix 

B, Complainant classified Schuman as a Group III Operator and Small Business Concern. 

36 Initial Decision at 13. 

37 FAA Order No. 2150.38, chap!. 7, 1f 4(m) at 7-8 and 7-9 (emphasis added). 

8 
justifying mitigation because they simply brought Schuman into compliance. Schuman's actions 

here were not comprehensive; nor was stopping its unauthorized operations a "positive" action 

warranting a reduction in the civil penalty. Pinnacle Airlines, FAA Order No. 2012-2 at 15 (May 

22, 2012); Mole-Master, FAA Order No. 2010-11 at 11 (June 16, 2010). As discussed above, 

Complainant appropriately considered Schuman's action to be a mitigating factor and lowered 

the proposed civil penalty accordingly to at or near the bottom of the minimum sanctions 

amount. 38 

In addition to the above-slated deficiencies, the ALJ' s assessment does not comport with 

the Sanction Guidance, the Administrative Procedure Act ("APA"),39 and the FAA's Rules of 

Practice.4° It is well established that: "On matters of law and policy . . . ALJ' s are entirely 

subject to the agency." Northwest Airlines, FAA Order No. 1990-37 at 8 (November 7, 1990), 

citing D 'Amico v. Schweiker, 698 F.2d 903, 907 (71

h Cir. 1983); see Scalia, The ALJ - a Reprise, 

47 U Chi. L. Rev. 57, 62 (1980). Moreover, "[i]f the ALJ does not follow agency policy, the 

agency may impose that policy by reversing the ALJ's decision on appeal." Id.; Northwest 

Airlines, supra; War below 's Air Ventures, FAA Order No. 2000-3 at 9 (February 3, 2000). 

Thus, the ALJ failed to follow the applicable law and policy on such matter. 

38 Complainant's Closing Argument at 9-10; Complainant's Rebuttal to Respondent's Closing Argument 

at 3. 

39 The AP A required the ALJ to include in his decision "a statement of findings and conclusions, and the 

reasons or basis therefor, on all the material issues of fact, law, or discretion presented .... " 5 U.S.C. 

§ 557(c)(3)(A). 

40 The FAA' s Rules of Practice required the ALJ, in each decision, to "include findings of fact and 

conclusions of law, and the grounds supporting those findings and conclusions, upon all material issues of 

fact, the credibility of wi1nesses, the applicable law, any exercise of the ALI' s discretion, [ and] the 

amount of any civil penalty found appropriate by the ALJ .... " 14 C.F.R. § 13.232. 

9 
Ill. Conclusion 

The ALJ' s reduction of the requested civil penalty was not supported by a preponderance of 

reliable, probative, and substantial evidence; was not in accordance with applicable Jaw, 

precedent, and public policy; and was prejudicial. I therefore reverse the ALJ' s sanction 

determination in part and assess a civil penalty of $27,800. 41 

~'.JRArnR A 

Federal Aviation Administration 

41 This order shall be considered an order assessing civil penalty unless Respondent files a petition for 

review within 60 days of service of this decision with the U.S. Court of Appeals for the District of 

Columbia Circuit or the U.S. court of appeals for the circuit in which the Respondent resides or bas its 

principal place of business. 14 C.F.R. §§ 13.16(d)(4), 13.233(j)(2), 13.235 (2009). See 71 Fed. Reg. 

70460 (December 5, 2006) (regarding petitions for review of final agency decisions in civil penalty 

cases). 

10 
I. Glossary 

AS! 

C.F.R. 

FAA 

FAA# 

FAR 

FSDO 

Grace 

ITh'L 

KOA 

Monfort 

NPCP 

OGG 

OpSpecs 

SERVED: August 31, 2015 

U.S. DEPARTMENT Of TRANSPORTATION 

OF'FICE OF HEARINGS 

WASHINGTON, DC 

' 

IN THE'MATTER OF 

SCHUMAN AVIATION COMPANY, LTD. 

FAA DOCKET NO. [TO BE ASSIGNED] 

(Civil Penalty Action) 

FDMSNO. FAA2013-1080 

RECEIVED 

S!;,f' - 1 2015 

HEARlNG DOCKET 

INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE 

Aviation Safety Inspector 

Code of Federal Regulations 

Federal Aviation Administration 

FAA Exqibit . ,,; ,. , ' . 

Federal Aviation Regulation 

Flight Standards District Office 

Darryl Grace, Director of Operations for Mokulele Airlines 

Honolulu, HI 

Kailua-Kana International Airpo1t, Kona, fll 

Joseph Monfort 

Notice of Proposed Civil Penalty 

Kahului, Maui 

Operations Specifications 

I: ,· .L: C'' . 
S# 

U.S,C. 

II. Introductory Comment 

\-: 

Schuman Exhibit 

United States Code 

Between September 8, 2012, and September 13, 2008, Schuman Aviation Company, Ltd. 

(hereinafter "Schuman") operated out ofKailua-Kana International Airport, Kana, Hawaii 

(hereinafter "KOA''), an airport it was not authorized for scheduled operations by Schuman's 

OpSpccs C070-2. 

On or abo11t September 17, 2012, the FAA requested to inspect Schuman's records 

regarding the above flights. Schuman initially refufed to make any records available, but 

informed the FAA approximately two (2) hours later that Schuman would comply with the 

request. 

lll. Procedural History 

The Federal Aviation Administration (hereinafter "FAA") advised the Respondent, 

Schuman Aviation Company, Ltd. (hereinafter "Schuman"") through a Notice of Proposed Civil 

Penalty and Final Notice of Proposed Civil Penalty that the FAA proposed to assess a civil 

penalty in the amount of $28,000.00. 

On February 5, 201{ SchiJman submitted a written request for a hearing. 

The FAA filed its Complaint on February 12, 2014. 

Schuman answered the FA.A's Coniplaintpt'February 26, 2014. 

TV. Hearing 

A hearing was held on December 4, 2014, in Honolulu, HI. 

The FAA was represented by Don Bobertz, Esq., FAA, Western·Pacific Region, Office 

of Regional Counsel, Lo~ Angeles, CA. 

2 
Schuman was represented by Christopher D. Ferrara, Esq., Honolulu, Bl. 

Post hearing briefs were filed by both parties, 

The matter ls now ready for decision, 

V. Jurisdiction P,.f-11, 

Schuman was at all times mentioned herein, ihe holder of Air Carrier Certificate No, 

MKHA108K, and authorized to conduct scheduled air carrier service under Part 135 of the 

Federal Aviation Regulations (hereinafter "FAR"s) and was subject to those regulations. 

VI. Burden of Proof 

The FAA was the petitioning party with the initial burden of proof (14 C.F.R. § 13.224). 

VII. Allegations 

A. FAA's recitation qJfacts 

1. Schuman was the holder of Air Carrier Certificate No. MICHAJ 08K, authorized to 

conduct scheduled air carrier service under part 135 of the FARs. 

2. Schuman's Operations Spccifications(liereitlafter "OpSpecs") C070, "Airports 

Authorized fot Scheduled Operations" stated that Schuman was "auihorized to conduct 

scheduled passenger and cargo operations between the regular, refueling, and provisional 

airports" only a\ the airports listed on C070·2. 

3. At all relevant times, Kailua-Kana International Airport, Kona, Hawaii (hereinafter 

"KOA''), was no\ an airport authorized for scheduled operations by Schuman's OpSpecs 

C070-2. 

4. Between September 8, 20 l 2, and September 13, 2008, Schuman operated ch11 aircrafts 

N687MA and N865MA, both Cessrnt 208B aircraft on approximately twenty-four (24) 

round trip flights to KOA. 

,. 

3 
5. On or about September 17, 2012, the FAA requested to inspect Schuman's records 

regarding the above flights. 

6. Schuman initially refused to make any records available, but informed the FAA 

approximately two (2) hours later that Schuman would comply with the request. 

7. On or about September 21, 2012, Shuman provided the requested records to. the FAA. 

The FAA alleged by reason of the foregoing facts and circumstances, Schuman violated 

the following Sections of the F ARs (Title 14, Code of Federal Regulations (hereinafter "CFR"): 

14 C. F.R. J19. 5 (g), which states that "[n Jo person may operate as a direct rur carrier or as 

a commercial operator without, or in violation of, an appropriate certificate and 

appropriak operations specifications." 

14 C. F.R. 135, 73, which slates: .. "Each,q~rt(fi..c11te holder and each person employed by the 

certificate holder shall allow the Administrator, at any time or place, to make inspections 

or tests (including en route inspections) to detem 1 ine the holder's compliance with the 

Federal Aviation Act of 1958, applicable regulations, and the certificate holder's 

operating certificate, and operations specifications." 

The FAA alleged, pnrsuanl to Title 49 U.S. C. Section 46301, Respondent was subject to a 

civil penalty not to exceed $11,000.00 for each of the violations alleged. 

The FAA alleged, under the facts and ciTcumstances of this case, a civil penalty of 

$28,000.00 was approp1iate. 

B. SchlllI)an's recitation of facts 

Schuman Answered: 

FIRST DEFENSE 

1. The Administrator's Complaint failetl,tti'.stlfa cause of action upon which relief could 

be granted. 

SECOND DEFENSE 

2. Respondent admitted the allegations in paragraphs I; Il, 1, 2, 3, 4 and 7 of the 

FAA's Complaint. 

4 
3. Respondent averred it was without knowledge of the actual date in the allegation 

contained in paragraph ll, 5 of the F AA's Complaint, and therefore denied the same. 

4. Respondent denied the allegation contained in paragraph ll, 6 of the FAA's Complaint. 

5. Respondent denied the applicability of,'pa,~}aph III, a and band paragraph IV, I .and 2 ; .,, r 

of the FAA's Complaint. 

THIRD DEFENSE 

6. Schuman intended to rely on any and all Affirmative Defenses that were available, the 

applicability of which might be determined and/or disclosed by investigation and/or 

discovery. 

VIII. Issues 

Did Schuman violate 14 C.F.R. Jl9.5(g), and 14 C.F.R. 135. 73 of the FARs. 

If Schuman violated the above provisions of the C.F.Rs. was a fine of$28,000.00 

appropriate under the circurustanccs. 

IX. Summary of Testimony and Evidiiice 

All admitted testimonial and documentary evidence was reviewed and considered. Only 

brief highlights are summarized herein. 

Joseph Monfort' 

Joseph Monfort (hereinafter "Monfort") was employed by the FAA at the Honolulu 

(hereinafter "HNI}') Flight Standards District Office (hereinafter "FSDO") as an Aviation Safety 

Inspector (hereinafter "ASI") at the tin1e of the alleged violations. He had been employed 

approximately five { 5) years. He had primary oversight of general aviation in the islands. 

I Tr. p. 9, 1. 11 top. 32, I. 20 

5 
He was the principal operations inspector for Schnman and routinely conducted 

surveillance of all Part 135 operations. 

He was notified in September 2012 there were comnmter operations conducted by 

Schuman at Kana airport. He reviewed the files for Schuman, verified that he did not have the 

operation specifications, "Charlie 070" (hereinafter''C070") to conductcommuter operations in 

to Kona, so he and Bartler2 went over to Schuman's office to find out what was going on. 

At the interv,ew, when Monfort inquired about the operations, Schuman denied doing 

co=uter operations. Schnman said he was doing "on-demand charter", and he could do as 

many as he wanted, as often as he wanted. Monfdrtreviewed C070, which was issued to 

Schuman as of the date of September 17, 2012 (FAA# !). Monfort pointed out that under 

operation specification C070, page two, there was a list of airport cities where Schnman was 

autborized to conduct commuter operations and Kona was not listed on that page. 

During tbe interview, when Monfort and Bartlet mentioned tbat Schuman could not 

condnct commuter operations into Kona, Schuman disagreed, so Monfort and Bartler asked to 

see his maintenance logs, daily flight logs. At that point in time, Mr. Schuman said, no, I don't 

think so. Monfort testified he and Bartler said: 

... are you sure tbat's what yoll want to do? He says: Yeah, I don't think so, and he backed 

away from his desk. At that point in time, we got up and we walked out of the office. It 

was a very sho11 meeting ... . ,·. •;' ' .-~ 

Monfort testified Schuman was under the impression he could do on-demand operations 

or charter operations from Mokulele Airlines and he believed that he col.lld do that as often as he 

liked. 

Monfort testified, two hours later, Schuman called me, after contacting his lawyer, and he 

said the records would be made available to us. Schuman delivered the records to the FSDO 

2 Kyle Bartler, see I.D below. 

6 
sometime Inter, 

Monfort reviewed FAA# 2 and 3. FAA# 2 was his statement, which was given limited 

weight because it was cumulative to the live testimony at the hearing . 

• FAA# 3 was the daily flight logs or run sheets for the Cessna Caravan. The document 

showed the actual commuter flights that were conducted for Mokulole by Schuman with this 

aircraft. There were two (2) flights that day on the page one of eight, and it had the time periods, 

the actual aircraft hours, when they took off, when they landed, how much time was accumulated 

between each flight. These notations recurred on multiple pages. On page three of eight, it 

showed Kahului, Maui (hereinafter "OGG") , KOA, KOA, OGG. OGG. The records indicated 

operations between Kona and Maui. There were two different aircraft used 687 Mike Alpha and 

65 Mike Alpha. 

Once the FAA identified that the actual flights to Kona were done from Mokulele, the 

FAA requested records from Mokulele Airlines,3 to give the FAA their published schedule and 

which flights Schuman flew those published schedules for. The FAA received a document 

Darryl Grace4 (hereinafter "Grace") showing the actual commuter scheduled airline operations. 

FAA# 5 showed the flights were scheduled operations, which was the basis for a commuter 

airline. 1n other words, a ticket was sold for a certain time, from a certain airport to a certain 

place, just like you would go to an airline. When this operation was conducted on these days, it 

was a scheduled commuter operation. The fllghts that went between Kona and OGG were preplanned flights by Mokulele, which were conducted by Schuman Aviation. On page four of six, 

were the actual logs by the flight-locating system for Mokulele, and with the estimated time of 

departures and their estimated tin,e of arrivals, and their actual times, inputted by an individual, 

:., FAA# 4, Ltr. to Darryl Grace 1 Director of Operations f~r Mokuleltl 

'FAA# 5. 

7 
when they landed and when they took off. The first two pages were the flights conducted by 

Schuman for Mokulek, and the pilot's name that conducted those flights from Schi1man. 

Cross5 

Monfort had not been involved in management in prior employment. He was a line pilot. 

Schuman told Monfort he had amended the OpSpecs about four months prior to the 

inspection allowing Schuman to operate into Lahalna and Lanai, Schuman told Monfort he had 

been in the commuter business for over a year, a year and a half at the time, and he had 

previously amended the OpSpecs. Schuman principally operated from Mokulele into Lanai 

and Lahaina. Kalaupapa was a very small airport that was difficult to fly in, but the same 

requirements for the commuter operation exh,1ed at Kona as they did at Kalaupapa. The 

weather at Lanai was pretty much island weather, the same as everywhere. Kona was a 

single, very Jong runway airport. Monfort testified Schuman ultimately applied for and 

received OpSpecs allowing him to operate out ofKona. 

Schuman had asked to do on-demand operations for Mokulele in the past, and 

Monfort informed him that he had to have same operation specifications at Mokulele to 

support Mokulele commuter operations. Had Schuman asked me for the Kona route, 

Monfort would huve gone through the ca,tegori0c1lJ exclusion, requested an amendment to 

his operation specifications, and would have gone through the proper procedure to 

authorize him to conduct Kana operations, just like we did Lahaina and Lanai City. Had 

Monfort.known that he was requesting to go to Kana, he would have started the process 

to issue him and go tluough the requirements to issue C070 into Kana. 

5 Tr, p. 34, l, 5tDp. 60,]. 7. 

8 
On the date in question, when Monfort requested records, and he was denied 

access. Schuman immediately pulled the aircraft out ofKona and brought it back to 

Honolulu. 

There was no requirement for the FAA to notify the operator prior to an 

. inspection. The FAA nonnally employed two inspectors when it Conducted an 

investigation. In accordance with the 135 rules and regulations, an inspector can inspect 

at any time and any place, and all the records that arc available should be made available 

tous. 

Monfort did not !mow Schuman was conducting Kona operations, Early in the 

morning of the 17th, Monfort was told there was a possibility that Schuman was 

conducting commuter operations out ofKona. Monfort talked to his front-line manager, 

and then he and Bartlcr proceeded over to Schuman's office. Schuman kept a copy of 

logs file in his maintenance records downstairs in his office. Plus he had an All Pro 

System that identified where the aircraft go and come from. 

When Mr. Schuman called Monfort two, two and a half hours later, there was no 

question that he was going to deliver the records. After his initial denial, he said he 

wanted to talk to his lawyer before he gave us the records. Had he told us the records 

were not there, this would be a non-issue. It's the initial -- that he denied it, that we were 

shocked. 

Rcdirect6 

'Tr. p. 60, I. lOto p. 6l, I. 7. 

9 
To get an amendment to Op Specs, an operator normally provided the FAA a letter 

saying where he wanted to go - start from and go to - and provided a list of altitudes that 

he'd be at where the single engine aircraft could make easy glide, or in the event of 

engine failure, could land on land. It was a seven page, eight page document. That 

document was signed by the operator and then finalized and issued by the FAA. 

Recross7 

Because Schuman did not have faci,lities;;to operate, or handle passengers out of 

Kana, except for the ones that Mokulele would provide, Monfort just needed to see the 

agreement. Eight (8) days later it was issued to him through the proper requests. 

Kyle Bartler8 

Kyle Barller (hereinafter "Bartl er") corroborated the testimony of Monfort. 

Evidence 

The following FAA exhibits were admitted: FAA# 1, FAA# 2, FAA# 3, FAA# 4, FAA# 

5, FAA# 6, FAA# 8, FAA# 9 

We took judicial notice of FAA# 7, FAA Order 2150.3B, consistent with past practices of 

this court. 

B. Schuman's Cas.~ 

Gustav R. Schuman9 

Schuman testified he owned Schuman. In the summer of 2012 Mokulele contacted 

Schuman about supporting Mokulele to with their conunuter schednled operations from Oa~u to 

Molokai, Molokai to Maui that may include Lanai and Kapalua. Schuman believed at that time, 

7 Tr. p. 61, l. 13 top. 65, I. 22. 8 Tr. p. 65, l. l I top. 74, I. 1. 9 Tr. p. 83, l. 9 top. 132, I. 6. 

10 
that he could comply with Mr. Grace's requests because they were an authorized Part 135 on· 

demand carrier. Schuman attempted to contact the'J'IAA but was unsuccessful. Schuman 

believed the flights were legal. 

When the FAA informed Schuman he was not authorized to perform the missions, they 

immediately ceased the operations. 

Schuman admitted denying the FAA access to his records. Schuman admitted that two 

hours later he called the FAA and offered to produce the records. 

C. Credibiliiy determirrnJig@ 

All witnesses were found to be credible. 

X. Analysis of Evidence and Testimony 

fAA's case 

A. 14 C.F.R. J19.5(g) provides: 

No person may operate as a direct air carrier or as a commercial operator without, or in 

violation of'. an appropriate certificate and appropriate operations specifications. No 

person may operate as a direct air carrier or as a commercial operator in violation of any 

deviation or exemption authority, if issued to that person or that person's representative. 

B. J4C.VR.135.73provides: 

Each certificate holder and each person employed by the certificate holder shall allow the 

Administrator, at any time or place, to make inspections or tests (including en route 

inspections) to determine the holder's compliance with the Federal Aviation Act of 1958, 

applicable regulations, and the certificate holder's operating certificate, and operations 

specifications. 

XI. Law 

A. The FAA has the burden of proof, except for affirmative defenses 14 C.F.R. 

§§ 13. 224((1) and (c). The standard is a'preponderai~ce ofreliable, probative, and substantial 

evidence 14 C.F.R. § 13.223. 

11 
B, 49 U.S C. § § 463 0 J (a) and ( d) (Transportation) provides for the imposition of civil 

penalties in FAA cases. 

A person is liable to the United States Govemmcnt for a civil penalty of not more than 

$25,000 for violating .. , (B) a regulation prescribed or order issued lmder any provision to 

which clause (A) of this paragraph applies." The authority for issuing Parts 119 and 121 

of 14 C.F.R. includes 49 U.S.C. Chapters 401, 441, and 447 - all of which are covered 

by clause (A). 49 US.C. § 46301(a)(l)(A), 14 C.F.R. Parts 119 and 121 (Preamble). 

C. 14 C.F.R 119.S(g) provides: 

No person may operate as a direct air carrier or as a commercial operator without, or in 

violation of, an appropriate cerL!ficate,'l,pg,\lppropriate operations specifications. No 

person may operate as a direct air carrier or as a commercial operator in violation of any 

deviation or exemption authority, if issued to that person or that person's representative. 

D. 14 C.F.R. 135.73 provides: 

Each certificate holder and each person employed by the certificate holder shall allow the 

Administrator, at any time or place, to make inspections or te;ts (including en route 

inspections) to determine the holder's compliance with the Federal Aviation Act of 1958, 

applicable regulations, and the certificate holder's operating ce1tificate, and operations 

specifications. 

XII. Findings of Fact 

We find that the evidentiary facts, by a preponderance of the evidence standard, do 

support a findings that the following violations occurred: 

A. 14 C.F.R. l 19.5(g) provides: 

No person may operate as a dir€ct ai;)\lirr1lgr as a commercial operator without, or in 

violation of, an appropriate certificate and appropriate operations specifications. No 

person may operate as a direct air carrier or as a commercial operator in violation of any 

deviation or exemption authority, if issued to that person or that person's representative. 

B. 14 C.F.R. J35.73provides: 

Each certificate holder and each person employed by the certificate holder shall allow the 

Administrator, at any (ime or place, to make inspections or tests (including en route 

inspections) to determine the holder's compliance with the Federal Aviation Act of-1958, 

applicable regulations, and the cerlilicate holder's operating certificate, and operations 

specifications. 

12 
XIII. Conclusions 

We find that the evidentiary facts, by a preponderance of the evidence standard, support a 

':\ I ,., ·ff~r-!(}j',"7".f 

finding that Schuman violated 14 C.F.R. JJ 9: 5(g1'in that Schuman operated as a direct air cairier 

or as a commercial operator in violation of a deviation or exemption authority, 

We find that the evidentiary facts, by a preponderance of the evidence standard,. support a 

finding that Schuman violated 14 C. F.R. 135, 73 in that Schuman <lenied the Administrator to 

make inspections or te&is (including en route inspections) to detennine the holder's compliance 

with the Federal Aviation Act of 1958, applicable regulations, and the certificate holder's 

operating certificate, and operations specifications, 

XJV. Penalty and Mitigation Considerations 

Schuman subsequently allowed the FAA to inspect its records. 

Schuman immediately ceased opcrations,,wh,;1~,informed it was in violation of the F ARs, 

';1 r '\'r-L:-' . ' 

We found the violations alleged. 

Schuman was not initially cooperative and responsive to FAA concerns. 

Once notified of the discrepancies/violations, Schuman took swift, comprehensive 

corrective action. 

Schuman presented testimony that the penalty requested would severe impact its 

operations. 

The FAA failed to prove by testimony and/or evidence of how it arrived at the figure of 

$11,000 for each violation. We are lefi to speculate how the figures of $11,000 and $28,000 

were determined. 

While a penalty calculated in aciordiri'ce y.;iffi the FAA's policy guidance should stand, 

absent a showing of the Schuman's inability to pay, the evidence and testimony did not support 

13 
the penalty requested. While the FAA was rntitled to substantial deference in establishing an 

appropriate civil penalty, we cannot ignore our role to evaluate the testimony and evidence. 

A_ Sanctions guidance 

FAA Order 2150.3B Appendix C sets forth the penalty policy of the FAA. 10 As a general 

matter, a sanction should be imposed that ls a sufficient deterrent but not excessive, in order to 

comply with the underlying purposes of the Federal hazardous material transportation law and 

L ;, ~~-~- t,111'.'..' 

HMR. The FAA considers a variety of factors wheri determining an appropriate civil penalty, 

including: (1) the nature and circumstances of the violation; (2) the extent and gravity of the 

violation; (3) the person's degree of culpability; ( 4) the person's history of prior violations, if 

any; (5) the person's ability to pay the civil penalty; (6) the effect on the person's ability to stay 

in business; lllld (7) other matters as justice may require. 11 

Any dete,mination of penalty should weigh whether the violation was inadvertent or 

deliberate, the private or public character of the violation, and the attitude of the violator. 

The agency should also consider the respondent's size, particularly in determining the 

offender's ability to absorb the sanction. An appropriate civil penalty must reflect the totality 

of the circumstances surrounding the vi.olati©I)§, Et1stern Air Center, Inc., FAA Order No. 

'.<, ,· ,,_,;r,a -'(1'."''· 

2008-3 (January 28, 2008)_ · Finally, the civil penalty should provide sufficient incentive lo 

deter the respondent and similarly-situated entities from future violations. Folsom's Air 

Service, Inc., Id, p. 20. 

The FAA has the burden of justifying the amount of civil penalty sought. 12 The FAA' s 

'° Folsom', Air Service, Inc., FAA Order No. 2008-11, 2008 WL 4948488 (November 6, 2008). 11 Id. See also Eastern Air Center, Inc., FAA Order No. 2008-3, 2008 WL 345386 (2008). 12 In The Matc~r oj.: PhyfitsJones Luxrnnburg, 1994 WL 899676 {1.994)1 citing In the Matter o/Northwesi Airlines, 

FAA Order No, 90-37 at 7 (Novotnber 7, 1990). 

14 
proposed sanction is no more than a proposal or a r.9c.ommendation to the ALJ. 13 The FAA must ,'/ : "·:l· ,·· \·::,J 

' 

prove to the ALJ how it used the sanction guidance to anive at its proposal.14 The FAA must 

also prove the existence of aggravating factors and must show how it used aggravating or 

mitigating factors to adjust the suggested sanction. Evid~nce of swift comprehensive corrective 

. action must be considered as a mitigating factor. Significant weight has been given to 

respondent's efforts to ensure that a violation will not reoccur. 15 

B. Analysis 

Schuman violated two (2) provisions of tho FARs as set forth above. 

The FAA presented no evidence that it considered the nature and circumstances of the 

violations; the extent in gravity related to the violatioru, any mitigating or aggravating 

circumstances, or whether Regent's ability to ll.~ni;las taken into account. 

The FAA failed to prove to the ALJ how it used the sanction guidance to arrive at its 

proposal. 

The FAA failed to prove the existence of aggravating factors and failed to show how it 

used uggravating or mitigatlng factors to adjust the suggested sanction. 

Taking the totality of the facts and circumstances into account, we conclude a fine ~f 

$5,000 for each of the two (2) violations is appropriate, for a total fine of$10,000. 

WHEREFORE, evidence and testimony having been heard and considered it be and is 

hereby ORDERED as follows: 

a. We find the FAA proved Schuman violated 14 C.F.R. l l9.5(g) and 14 C.F.R. 

135. 73; and 

---------------· 

13 In the Matter of Eastern Air Center, Inc., FAA Order No. 2008-3, 2008 WL 345386 (2008). 

14 In the Matter ofWarbelow's Air Ventures, Inc., FAA Order 2000-3, 2000 WL 298578 (2000). 15 In the Matter of American A tr Network, lnc., FAA Order No. 2006-5, 2006 WL 465369 (2006). See also ln the 

Matter of Airtran Airways, Inc., Docket No, FAA-2010-0193, Initial Decision (June 231 2010). 

15 
b. Schmnan be and is hereby assessed fines of $5,000 for each of the two (2) 

violations for a total fine of $10,000. 

Richard C. Goodwin 

U.S. Administrative Law Judge 

Attachment - Service List 

16