### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, DC In the Matter of: FROSTAD ATELIER, INC. FAA Order No. 2013-5 FDMS No. FAA-2011-0294 1

Served: September 5, 2013 

### DECISION AND ORDER2 

### I. Introduction Complainant Federal Aviation Administration ("Complainant") has appealed the written initial decision ofAdministrative Law Judge ("ALJ") Richard C. Goodwin

1Materials filed in the FAA Hearing Docket (except for materials in security cases or materials under seal) are also available for viewing at the following Internet address: www.regulations.gov. Inthe instant case, the ALJ sealed most ofthe docket in an order dated August 10,2012. The ALJ explained that the sealed part ofthe docket "contain[ed] non-segregable safety and security related information, the withholding ofwhich from public disclosure [was] consistent with the safety and security responsibilities ofthe FAA." (Initial Decision at 8n.9.) The ALJ wrote that his authority for 'sealing the docket was 14 C.F.R. Part 193 (entitled "Protection ofVoluntarily Submitted Information") as well as 14 C.F.R. § 13.226(a) (authorizing an ALJ to order that any information inithe**reco~d** be withheld from public disclosure). (Initial Decision at 8 n.9.) The ALJ also stated. that withholding the sealed portion ofthe docket was in the public interest. (/d.) Subsequently, in his written initial decision, the ALJ wrote thatthe docket, including the post-hearing briefs, would remain sealed, for the reasons stated in his order sealing the docket. (Initial Decision at 8 n.9.) The ALJ, however, did not seal his written initial decision (a copy of which is attached), because, he wrote, nothing in it required withholding from public disclosure. The instant decision ofthe FAA decisionmaker, the Administrator, is not sealed for the same reason.
2 The Administrator's civil penalty decisions, along with indexes ofthe decisions, the rules ofpractice, and other information, are available on the Internet atthe following address: www.faa.gov/about/office
_orglheadquarters _offices/age/pol_adjudication/ AGC400/ Civil_Penalty. In addition, Thomson Reuters/West Publishing publishes Federal Aviation Decisions. Finally, the decisions are available through LEXIS (TRANS library) and WestLaw (FTRAN-FAA database). For additional information, see the Web site.assessing Respondent Frostad Atelier,3 Inc. ("Respondent") a $5,000 civil penalty for violations ofthe Hazardous Material Regulations ("HMR"), 49 C.F.R. Parts 171-178.4 In its appeal brief, Complainant requests an increase in the civil penalty assessed by the ALJ to $37,500. This decision raises the civil penalty from $5,000 to $20,000. 

### II. Facts Respondent is a small bronze casting foundry. (Exh. C-9;5 Tr. 208-209. 6)

3 "Frostad" is the owner's last name, while "Atelier" is from the French and means "workshop." See www.merriam-webster.com. 4 Specifically, the ALJ found that Respondent violated the following regulations: 49 C.F.R. §§ 171.2(e) (no person may offer a hazmat for transportation in commerce unless it is properly classed, described, packaged, labeled, and in condition for shipment), 172.200(a) (offeror ofhazmat must properly describe the hazmat on the shipping paper), 172.202(a)(l) (shipping papermust include the hazmat's identification number), 172.202(a)(2) (shipping paper must include the hazmat's proper shipping name), 1 72.202(a)(3) (shipping paper must include the hazard class or division number), 172.202(a)(6) (shipping paper must include the total net mass per package), 172.202(a)(7) (shipping paper must include the number and type ofpackages), 172.204(a) (offeror must certify that hazmat is offered according to this subchapter by printing one oftwo certifications) or (c)(!) (providing a certification that can be used inplace ofthe certification required by (a)), 172.204(c)(2) (offeror for transportation by air must provide two copies ofcertification), 172.204(c)(3) (offeror must add to the required certification the statement "I declare that all ofthe applicable air transport requirements have been met"), 172.301(a) (offeror ofnon-bulk packaging must mark the package with the proper shipping name and identification number), 172.600 (no person may offer a hazmat unless emergency response infonnation is immediately available for use at all times the hazmat is present and emergency response information, including the emergency telephone number, is immediately available to representative ofa government agency responding to a hazmat incident or conducting an investigation involving a hazmat), 172.602(b)(3) (required information must be presented either (i) on a shipping paper; (ii) in another type ofdocument that includes both the basic description andtechnical name ofthe hazardous material and the required emergency response information; or (iii) in a written notice to pilot-in-command or a dangerous cargo manifest), 172.604(a)(3) (offeror ofhazmat must provide an emergency response telephone number), and 173.1(b) (shipment ofhazmat that is not prepared according to this subchapter may not be offered for transportation and each hazmat employer must ensure that each hazmat employee is trained according to this subchapter's requirements and persons who offer hazmat for transportation must instructtheir officers, agents, and employees having any responsibility for preparing hazmat for shipment as to applicable regulations in this subchapter). The Appendix contains the text ofthese regulations.
5 Exh. C-9 refers to Complainant's Exhibit 9. Similarly, Exh. R-1, R-2, etc. refer to Respondent's Exhibits.
6 Tr. is used for citations to the transcript ofthe hearing.
2Ms. Ronda ("Ronnie'') Frostad was an owner, operator, and employee ofRespondent. (Jd.) Ms. Frostad testified that Respondent had "probably" six employees in 2010. (Tr. 251.) Respondent is located in McClellan, California, where Ms. Frostad sculpts and produces bronze art sculptures for artists. (!d.) Respondent ships the sculptures bytruck to their destinations, and Ms. Frostad and a small crew travel by air to install the sculptures. (Exh. C-9.) Ms. Frostad testified that they apply chemicals to the sculptures with heat from a propane torchthrough a process called "patinization." (Tr. 212.) Ms. Frostad and her employees wearprotective gear, including gloves and a chemical respirator, when performing this work. (Tr. 259, 261.) Some ofher employees- in particular, welders- wear leather outerwear, goggles, and face masks. (Tr. 262.) Respondent orders chemicals from their manufacturers to use in its business. (Tr. 256-57.) The manufacturers enclose appropriate Material Safety Data Sheets ("MSDS") with each ofRespondent's orders. (Jd.) On May 29,2010, Ms. Frostad was returning from Springfield, Kentucky, where she andher crew oftwo employees had installed a sculpture ofAbrahamLincoln at Springfield, Kentucky's new courthouse. (Jd.; Tr. 9, 11, 209.) Ms. Frostad andher crew
were ticketed passengers on Southwest Airlines ("Southwest") FlightNo. 2409, departing Louisville, Kentucky, for Sacramento, California, with an aircraft change in Chicago. (Tr. 10-11.) At the Louisville International Airport, Transportation Security Administration ("TSA") agents searched a bag checked by Ms. Frostad. They found an undeclared shipment ofhazardous materials: a clear plastic zip-type bag containing a 16.4-ounce



### 3

### cylinder ofpropane and an 8-ounce spray can ofWD-40. (Exh. C-3, C-4, C-9.) The HMRclassify both materials as hazardous. (Tr. 191.) There were no hazardous materials labels, markings, warnings, or other information required under the HMR on the bag. Respondent admitted that its employees had not taken the HMR-required training in the transport ofhazardous materials by air. (Tr. 264.) Signs warning about the transportation ofhazardous materials by air were displayed at the airport. There was a large poster at a line through which all passengers go. This sign warned passengers about the dangers ofpacking hazardous materials, including flammable liquids and aerosols, in their luggage. The sign advised passengers that "Youmust declare your hazardous materials to the airline," and warned that "Violators ofthe [HMR] may be subject to civil penalty ofup to $110,000 for each violation and in appropriate cases, criminal penalty ofup to 10 years imprisonment." (Tr. 43; Exh. C-1 at 2.) Additionally, there were warning signs at each airline ticket counter and in each baggage well. (Tr. 43, 44.) Ms. Frostad testified, however, that she did not see any ofthe hazardous materials signs. (Tr. 263, 264.) The proper shipping name for propane is "Liquidpetroleum gas." (Tr. 165-170; Exh. C-7.) Propane's hazard class is 2.1 (flammable gas), and its identification number is UN 1075. The HMRprohibit shipments ofpropane onpassenger aircraft. (Tr. 169; 49 C.F.R. § 172.101, Table ofHazmat; and Exh. C-7 at 5.) The correct label for propane is "FLAMMABLE GAS." As for the WD-40, its proper shipping name is "Aerosols, flammable," its hazard class is 2.1 (flammable gas), and its identification number is UN 1950. ( 49 C.F.R. § 172.101, Table ofl-Iazmat; Exh. C-6 at 3.) The correct label for the WD-40 is

4"FLAMMABLE GAS." According to Complainant's witness, Pershameron Cartrice Dye, Manager ofthe FAA's Atlanta Hazmat Field Office (Tr. 125), WD-40 may be shippedby air under 49 C.P.R.§ 173.306 (entitled "Limited quantities ofcompressed gases") ifthe quantity does not exceed 4 fluid ounces per container, but Respondent offered a container filled with 8 fluid ounces ofWD-40 for shipment by air. (Tr. 162- 163.) Ms. Frostad testified at the hearing, and the ALI found that "she generally was a credible witness." (Initial Decision at 4.) Ms. Frostad testified that she did not pack the propane and WD-40 and did not know that they were inthe bag until after these materials
were discovered by the TSA agents. She further testified that one ofher employees, who
was unfamiliar with flying and afraid offlying, packed the propane and WD-40. (Tr. 213-27, 260; see also Exh. C-9 at 1.) Ms. Frostad testified that she never supervises her employees whenthey are packing the baggage. (Tr. 221.) Ms. Frostad further testified that she never travels with propane. (Tr. 215.) Her company policy was to purchase propane locally to avoid traveling with it. (!d.) As for the WD-40, Ms. Frostad denied ever using it outside ofthe foundry and was baffled as to why it was inher baggage. (Tr. 216, 226.) None ofher employees told her that they
were packing propane or WD-40. (Tr. 226.) 

### III. ALJ's Decision After a hearing, the ALJ found that Complainant had sustained its burden ofproof regarding the violations. The ALJ held that Respondent was responsible for the violations because: (1) the trip was onRespondent's behalf; (2) employers are liable for their employees' actions within the scope ofemployment; and (3) Respondent's

5employee packed the hazardous materials as part ofthe completion ofthejob in Springfield. The ALI wrote that it was not necessary for Complainant to showthat Respondent or its employee actually knewthe contents ofMs. Frostad's luggage or the hazardous nature ofthe propane and WD-40. The ALI pointed out that under the Federal hazardous materials transportation statute,7 any person, including any corporation,8 who "knowingly" violates the statute or a regulation issued under the statute is subject to a civil penalty. 49 U.S.C. 

### § 5123(a)(l); see also 14 C.F.R. 

### § 13.16(c) (to the same etiect). 9 The ALI stated that the evidence proved that Respondent had actual knowledge through
an employee that it was ofiering the luggage containing the propane and WD-40 for air transport, and that such knowledge was sufficient to prove that Respondent had acted "knowingly." The ALI also wrote that the statute does not require knowledge ofthe law. Persons are liable even ifthey do not know that they are breaking the law, the ALJ wrote, citing Riverdale Mills Corp., FAA Order No. 2003-10 at 5 (September 12, 2003) and Smalling, FAA OrderNo. 94-31 at 7 (October 5, 1994).

7 49 U.S.C. §§ 5101-5127. 8 The definition of"person" in the HMR includes corporations and companies. 49 C.F.R. § 171.8.
9 Under the statute: A person acts knowingly when

- (A) the person has actual knowledge ofthe facts giving rise to the violation; or (B) a reasonable person acting in the circumstances and exercising reasonable care would have that knowledge. Jd.; see also 14 C.F.R. § 13.16(c)(l)-(3) (to the same effect). 6The AU held that the various hazardous materials warning signs at the airport provided "ample warning" to passengers about the risks associated with travel with hazardous materials. The AU found it irrelevant that Ms. Frostad testified that she did not see the signs because there was no duty to warn. The AU held that the $37,500 civil penalty sought by Complainant was too high and that $5,000 was appropriate instead. The AU stated that there was only a single underlying act, eventhough Complainant argued that for sanction purposes there were five separate violation groupings (involving required shipping papers, marking, labeling, emergency response information, and training). (Initial Decision at 8.) The AU stated that the proposed civil penalty would do little to advance the agency's policies of compliance and deterrence for this Respondent because Respondent does not need to be educated or lectured about the dangers ofhazardous materials. The AU wrote: On the contrary, it [Respondent] is well aware ofthe risks broadly associated with chemicals. The very nature ofits business warrants and compels such an awareness. Ms. Frostad testified that the companyuses over one hundred different chemicals in casting. Employees performing their duties often must wear protective clothing (Tr. 256-62). Ms. Frostad, Respondent's owner and president, also testified that her business customarilybans the transport ofthese materials for reasons she well understands. It additionally is noteworthy when determining the penalty thatMs. Frostad credibly asserted that she was unaware that the propane and WD-40 had been packed in the company's luggage. The AU also wrote that the proposed civil penalty was much greater thanthose that Complainantproposed intwo other cases that the AU considered "roughly comparable": (1) Kaden, FAA Docket No. CP05NM0024, DMS No. FAA-2005-22081, in which Complainant requested a $3,750 civil penalty (but the ALJ assessed $3,000) for an attempted undeclared shipment oftwo items forbidden on passenger flights- two cylinders ofliquefied petroleum gas (hazard class 2.1, flammable gases) and at least 25 "strike anywhere" matches

7(hazard class 4.2, flammable solids). (2) Macaulay, Docket CP02S00029, DMS No. FAA-2002-12591, inwhich Complainant sought a civil penalty of$3,750 for violations concerning a shipment ofthree !-gallon cans ofconcrete sealer (hazard class 3, packing group III, flammable liquid). The violations involved shipping papers, marking, labeling, emergency response information, and packaging (the hazardous material leaked). The ALI stated that he viewed "with skepticism" the agency's request for a civil penalty 10 times the amount sought in Kaden and Macaulay, especially when the purpose ofthe sanction guidance was to increase the consistency ofsanctions in various cases. The ALI did not accept Respondent's affirmative defense that it could not afford to pay the $37,500 civil penalty sought by Complainant because, he held, Respondent's evidence regarding its financial circumstances was insufficient to prove financial hardship. He noted, in particular, that Respondent's tax returns (for years 2009 and 2010) were not signed by an officer ofthe company. The ALI concluded by assessing a civil penalty of$5,000 for the violations alleged in the complaint. He explained that $5,000 was the minimum recommended by the FAA sanction guidance in hazardous materials cases for a business entity that committed one category ofviolations ofthe HMR. (Initial Decision at 9.) IV. Appeal Respondent has not appealed the finding ofviolations, but Complainant has appealed the sanction amount. On appeal, Complainant asks for an increase inthe civil penalty from $5,000 to $37,500. In 2010, when the violations occurred, the Federal hazardous materials transportation statute provided that the maximum civil penalty was $50,000 per violation for violations not involving death, serious illness, severe injury, or substantial destruction

8ofproperty. 49 U.S.C. 

### § 5123(a)(l) (2010). 10 The minimum civil penalty for the training violation was $450, while the minimum civil penalty for the other violations was $250 per violation. 11 49 U.S.C. 

### § 5123(a)(l), (3). Under the statute, the Administrator12 must consider the following factors in settingthe sanction amount: (I) the nature, circumstances, extent, and gravity ofthe violation; (2) withrespect to the violator, the degree ofculpability, any history of prior violations, the ability to pay, and any effect onthe ability to continue to do business; and (3) other matters thatjustice requires. 49 U.S.C. 

### § 5123(c); 

### see also 14 C.F.R. 

### § 13.16(c) (to the same effect). The agency has issued sanction guidance to implementthe statute. This guidance is found in FAA Order No. 2150.3B, "FAA Compliance and Enforcement Program,"

10 Before the 2005 Amendments to the statute, the maximum civil penalty was $25,000. The 2005 Amendments, Pub.L. 109-59, § 7120(a)(l), which became effective on August 10, 2005, raised the maximum civil penalty to $50,000, except that in cases in which the violation results in death, serious illness, severe injury, or substantial destruction ofproperty, the Secretary ofTransportation could assess a civil penalty of$100,000 per violation. The maximum civil penalty for violations involving hazardous materials was raised again in 2012. The 2012 Amendments, Pub.L. 112-141, § 33010(1)(A), which became effective on October 1, 2012, raised the maximum civil penalty per violation to $75,000, except in cases of violations resulting in death, serious illness, severe injury, or substantial property destruction, when the Secretary could assess a civil penalty as high as $175,000 per violation.
11 Congress has also provided for periodic adjustments for inflation, to maintain the deterrent effect ofcivil penalties and promote compliance with the law. 28 U.S.C. § 2461 (note), as amended by Public Law I04-134 (April 26, 1996). Any applicable adjustments would be found in 14 C.F.R. SubpartH, entitled "Civil Monetary Penalty Inflation Adjustment." No such adjustments are present here.
12 The FAA Administrator has the authority to enforce the statute and the HMRregarding the shipment ofhazardous materials by air. 49 C.F.R. § 1.47U) ("[t]he Federal Aviation Administrator is delegated authority to: ...U)(l)
... carry out the functions vested in the Secretary by 49 U.S.C. § 5123
..., with particular emphasis on the transportation or shipment ofhazardous materials by air").



### 9Appendix C, "Sanction Guidance, Hazardous Materials Enforcement" (October 1, 2007). 13 The sanction guidance "provides agency personnel with a systematic wayto evaluate a case and arrive at an appropriate penalty, considering all the relevant statutory criteria, including mitigating and aggravating circmnstances, ifany." FAA Order No. 2150.3B, Appx. C-2. The sanction guidance is "designed to promote better consistency so that similar penalties are imposed in similar cases." FAA Order No. 2150.3B, Appx. C-2. 14 The sanction guidance requires agency personnel to do the following: (1) weigh the case by answering certain questions to arrive at a weight of minimum, moderate, or maximmn; (2) use the Matrix to find the appropriate sanction amount range; and (3) consider any otherpertinent factors. FAA Order No. 2150.3B, Appx. C,**~~** 2, 8 (emphasis added). To determine the weight ofthe violations- whether minimmn, moderate, or maximum

- the sanction guidance instructs agency personnel to consider a number of factors, including the nature ofthe hazardous material involved. Propane and WD-40 are each in hazard class 2.1 (flammable gas). (Tr. 160-162, 166, 167; Exh. C-6 at 3; Exh. C7 at 5.) Hazard class 2.1 materials fall within Risk Category "A," defined as: materials that when released in the confines ofan aircraft can potentially have a catastrophic effect on the aircraft's ability to continue safe flight, resulting 

### in a crash or emergency landing causing injury or death to

13 The ALJ tookjudicial notice ofthis sanction guidance (Tr. 196), which was marked as Exh. C-1 0 but was not admitted. Presently, FAA Order No. 2150.38, Appx. C, is available on the FAA's Web site at http://www.faa.gov/regu1ations policies/orders notices/. The FAA published this sanction guidance in the Federal Register as "[FAA] Policy on Enforcement ofthe [HMR]: Penalty Guidelines," 64 Fed. Reg. 19443 (April21, 1999).
14 "Appx. C-2" refers to FAA Order No. 2150.3B, Appx. C, p. C-2.

10passengers and flight crew, as well as persons onthe ground. (FAA Order No. 2150.3B, Appx. C, Figure C-2.) Risk Category "A" materials receive a maximum weight. Under the sanction guidance, the quantity ofhazardous material is also considered. Ifthe package exceededthe authorized quantity limitations by a significant amount, then, under the guidance, a moderate or maximum weight, depending on the degree to which the limitation was exceeded, should be considered. The quantity limitation for the WD-40, as a compressed gas" (see 49 C.F.R. 

### § 173.306, "Limited quantities ofcompressed gases"), was 4 fluid ounces, but Respondent offered 8 fluid
ounces for shipment. (Tr. 162-163.) The sanction guidance also recommends assigning a maximum weight ifthe package contained a forbidden material. (FAA OrderNo. 2150.3B, Appx. Cat C-6.) Because propane was forbidden on passenger aircraft, a maximum weight should be considered for the propane-related violations. 

### (Id.) The hazardous materials sanction guidance includes recommended penalty ranges in a matrix for different categories ofoffenses, depending upon the violator's characteristics. The Matrix recommends the lowest sanction ranges for individuals, and higher penalty ranges for business entities. The Matrix recommends penalty ranges that
are evenhigher for business entities that use or handle hazardous materials in their business. The weight ofa particular violation determines whether a penalty at the bottom, middle, or top ofthe appropriate penalty range should be imposed. The offense categories are as follows:

15 Hazard class 2materials are "Compressed Gases." (FAA Order No. 2150.3B, Appx. C17.)
11• Declared Shipment;
• Undeclared16 Shipment within Hazmat Quantity Limitations;
• Undeclared Shipment- Hazmat Forbidden on, or Exceeds Quantity Limits for, Passenger Aircraft;
• Undeclared Shipment Forbidden on, or Exceeds Quantity Limits for, All Aircraft;
• Intentional or Deliberate Violation, or Other Significant Aggravation; and
• Violation Results in Death, Serious Illness, Severe Injury, or Substantial Destruction ofProperty. (FAA Order No. 2150.3B, Figure C-1 ). Each offense category is divided further into subcategories ofviolations involving: (1) shipping papers; (2) labels; (3) markings; (4) packaging; (5) training; (6) emergency response information; (7) release into environment; and (8) other. (Id.) The appropriate offense category inthis case was Undeclared Shipment Hazmat Forbidden on, or Exceeds Quantity Limits for, Passenger Aircraft. This is because the shipment was undeclared, the propane was forbidden on passenger aircraft, and the WD40 exceeded the quantity limits for passenger aircraft. The following is the excerpt from the Matrix (FAA Order No. 2150.3B, Appx. C, p. C-2) for penalties for undeclared shipments ofhazardous materials that are forbidden
on or exceed quantity limits on passenger aircraft:

16 It is well settled that undeclared or hidden shipments pose a special danger. Envirosolve, FAA OrderNo. 2006-2 at 14 (February 2, 2006), citing Toyota Motor Sales, FAA OrderNo. 1994-28 at 12 (September 30, I994). They are thus deserving ofhigher sanctions. 12OFFENSE A. Individual B. Business C. Business D. Business CATEGORIES Entity Entity that entity that uses or regularly handles offers, hazmat inthe accepts, or course of transports business hazmat III. Undeclared Shipment Hazmat For bidden on, or exceeds qty limits for, Passenger Aircraft 1. Shipping 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 Papers 2. Labels 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 3. Markings 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 4. Packaging 

### ------- 5,000-16,200 7,500-22,000 I0,000-32,500 5. Training 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 6. Emerg. 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 Response 7. Release 500-5,500 5,000-16,200 7,500-22,000 10,000-32,500 into Environ. 8. Other 500-5,500 5,000-16,200 7,500-22,000 I0,000-32,500 As the excerpt from the Matrix above shows, whenthe violator is a business entity, the penalty range for each offense subcategory for undeclared shipments of hazardous materials that are forbidden on, or exceed the category limitations for passenger aircraft is $5,000 to $16,200. However, when the business entity uses or handles hazardous materials inthe course ofits business, the recommended sanction range for the same violation subcategories is $7,500 to $22,500. The ALJ found only one violation, and he assessed a civil penalty of$5,000, which was at the very lowend ofthe range for business entities. Complainant argues that the correctrange is $7,500 to $22,500, and that a civil penalty at the very bottom ofthe range -$7,500- is appropriate inthis case for each ofthe five applicable violation

13subcategories (shipping papers, markings, labeling, emergency response information, and training). Complainant does not state how it arrived at a proposed civil penalty of $37,500, butmultiplying the minimum civil penalty of$7,500 by five violations leads to
a total of$37,500. Complainant argues for a minimum civil penalty per violation ($7,500) even though the nature and amount ofthe materials, as discussed above, indicated that the case should be given a maximum weight. The ALJ rejected Complainant's argument that there were five violations because, he said, there was only a single underlying act. According to the ALJ, "Complainant's calculation smack[ed] of'piling on,' a policy the Administrator frowns upon innonegregious circumstances such as these." As support, the ALJ cited Carr, FAA Order No. 1998-2 at 11-12 (March 12, 1998). Carr, however, held that "violation ofgeneral, introductory sections ofthe [HMR] should not necessarily count as separate violations for sanction purposes when violations ofmore specific regulatory requirements are proven." Id. at 12. In the instant case, Complainant has not sought a separate sanction for general provisions inthe instant case. Thus, Carr is inapposite. The Mole-Master case, FAA Order No. 2010-11 at 14 (June 16, 2010), however, is relevant. The respondent inMole-Master, like the ALJ in the instant case, asserted that there was a "piling on" ofviolations by Complainant and that the violation was a single act ofshipping materials. As the Administrator stated inMole-Master: There was no piling on. Althoughthis may have been a single event, it was not a single violation. Under the sanction guidance, Mole-Master violated six different categories ofviolations. ld The instant case also involved a single event, but there were five categories of violations (shipping papers, marking, labeling, emergency response information, and

14training). Each violation required proofofa fact that the other did not, the test for multiplicity established by the U.S. Supreme Court. Ball v. UnitedStates, 470 U.S. 856, 861 (1985). Also, as Complainant points out, each ofthe five categories ofviolations (shipping papers, marking, labeling, emergency response information, and training) involve separate and distinct means ofcommunication and are essential components of the regulatory scheme that has been developed to ensure safety in the transportation of hazardous materials. (Appeal Briefat 16-17.) Thus, the ALJ erred in finding only one violation for sanctionpurposes. Under the statute, other factors affecting the sanction amount include the violator's ability to pay, any effect on the violator's ability to continue to do business, and any other matters thatjustice requires. 49 U.S.C. § 5123(c). "Determination ofthe appropriate penalty does not involve a simple mathematical formula
... but instead requires the exercise ofdiscretion andjudgment." Dominion Concepts, Inc., FAA Order No. 2005-4 at 5 n.l5 (March 8, 2005). Respondent has asserted an inability to pay and an inability to continue in business. Because Respondent's financial information was within its own control, Respondent bore the burden ofproving any inability to pay or to continue inbusiness. Giuffrida, FAA OrderNo. 1992-72 (December 21, 1992). The ALJrejected Respondent's affirmative defense offinancial harm on the ground that Respondent had failed to show that the civil penalty would cause it grievous harm. According to the ALJ, Respondent did not show a nexus between the proposed civil penalty and a negative result. Also, the tax returns offered by Respondent were not signed by a company officer. The ALJ ruled that Respondent failed to prove that it was

15

### unable to pay any penalty. Respondent introduced its Federal tax returns for 2009 and 2010. (Exh. R-1 and R-2; Tr. 240.) Ms. Frostad testified that the 2009 and 2010 tax returns were true and correct copies ofthe returns that Respondent filed with the Federal government. (Tr. 230,232, 241-242.) She testified that she knows that the 2010 return was filed byemail and she received a copy ofit. (Tr. 232.) She has an accountant, and presumably the accountant filed the tax returns. She testified that to the best ofher knowledge, the information inthe 2009 and 2010 returns was correct. (Tr. 232, 242.) The ALJ held that she was a generally credible witness. (Initial Decision at 4.) Under the circumstances, the ALJ did not err in admitting the tax returns. Further, because the 2009 and 2010 tax returns are consistent with Ms. Frostad's testimony, they are entitled to some weight regarding the company's financial circumstances. Ms. Frostad testified that Respondent did not make any money in 2009 or 2010, and that she has taken no salary since Respondent was incorporated in 1999. (Tr. 215, 241, 244, 251.) Infact, she testified that Respondent has never

### had a profitable year. (Tr. 251.) She also testified that ifRespondent were ordered to pay Complainant's sought-after penalty of$37,500, the company would not be able to continue to operate. (Tr. 262.) The ALJ correctly found that the evidence is insufficient to prove that a $37,500 civil penalty would force Respondent to go out ofbusiness. Respondent has operated at a loss since its inception and it has not yet gone out ofbusiness. For this reason, it is unclear that a $37,500 civil penalty would force it out ofbusiness. Ms. Frostad's conclusory, self-serving statement that the company would not be able to operate ifit

16were orderedto pay a $37,500 civil penalty is insufficient proof. However, the tax returns, combined with Ms. Frostad's testimony, provide evidence that Respondent does not have the financial means to pay a civil penalty as high
as $37,500. The tax returns showed that Respondent's costs ofdoing business exceeded its gross receipts in both 2009 and 2010. Additionally, the returns indicate that the company has no significant assets upon which it can draw to pay the $37,500 civil penalty appropriate under the Matrix and sought by Complainant. The $37,500 civil penalty sought by Complainant was appropriate at the outset, but in light ofthe evidence described above regarding Respondent's financial situation, a somewhat lower civil penalty is warranted. A civil penalty of$20,000 will accomplish these purposes. 17 Finally, the question is whether "any other matters thatjustice requires" compel further adjustment ofthe penalty. This category includes factors such as corrective action, including hazardous materials training for employees, ifsuch an action is sufficiently swift and comprehensive. 

### Atlas Frontiers, LLC, FAA Order No. 2010-10 at 13 (June 16, 2010). Respondent did not assert that it provided relevant training or that it took any other corrective action as affirmative defenses. The ALI stated that he would not assess Complainant's proposed sanction of $37,500 because Complainant proposed a far lower sanction- only $3,750- in two cases that the ALI thought were "roughly comparable." 

### Kaden, FAA DocketNo. CP05NM0024, DMS No. FAA-2005-22081, and 

### Macaulay, FAA Docket No.

17 The evidence that Respondent introduced demonstrated that Respondent's financial circumstances are challenging. However, Respondent did not provide evidence regarding the amount ofa penalty that it can pay. The penalty assessed in this decision reflects both Respondent's limited means and the seriousness ofthe violations, and should not be deemed as a factual conclusion regarding Respondent's available financial resources. 17CP02S00029, DMS No. FAA-2002-12591. Inthe first ofthe cases cited by the ALJ, Kaden, FAA Docket No. CP05NM0024, DMS No. FAA-2005-22081, Complainant requested a $3,750 civil penalty butthe ALJ assessed $3,000 for an undeclared shipment oftwo cylinders ofliquefied petroleum gas (hazard class 2.1, flammable gases) and at least 25 "strike anywhere" matches (hazard class 4.2, flammable solids). Both items are forbidden on passenger flights. In the second case, Macaulay, FAA Docket CP02S00029, DMS No. FAA-2002- 12591, Complainant sought a civil penalty of$3,750 relating to an undeclared shipment ofthree !-gallon cans ofconcrete sealer (hazard class 3, packing group III, flammable liquid). Respondent defaulted and the ALJ assessed a civil penalty of$3,750 as sought in the complaint. Kaden andMacaulay are distinguishable from the instant case in at least several importantrespects. The respondents in those cases were individuals rather than businesses. The civil penalties for individuals are lower. Also, the cited cases are significantly older thanthe instant case. The alleged violations occurred inFebruary 2000 inMacaulay and in April 2005 in Kaden. The maximum civil penalties in those cases, perviolation, was $25,000, as opposed to the $50,000 maximum civil penalty in the instant case. 18

18 The amounts sought by Complainant in the other two cases and the sanctions actually imposed by the ALJ in those cases are not precedent binding upon the Administrator in subsequent cases. In contrast, decisions ofthe FAA Administrator are precedent in other civil penalty cases. The Rules ofPractice provide that: A final decision and order ofthe Administrator after appeal is precedent in any other civil penalty action. Any issue, finding, or conclusion, order, ruling, or initial decision ofan [ ALJ] that has not been appealed to the FAA decisionmaker is not precedent in any other civil penalty action.

18Moreover, it is unnecessary to compare the cases. As previously held, "[a]bsent extraordinary circumstances,
... past sanctions will not be grounds for reducing sanctions that fall within the parameters set by the sanction guidance." 

### TexasArmyNational Guard, FAA Order No. 2012-3 at 6 (May 22, 2012), quoting 

### Tate andPartners, FAA Order No. 2010-7 at 15 (June 15, 201 0). The rationale for this is that "comparing sanctions [whether proposed or actual] across cases is notjust diflicult, but it is unworkable" because "there are simply too many variables in each case." 

### Tate, FAA Order No. 2010-7 at 6 (June 15, 2010). Ifan ALJ assesses a civil penalty that is not consistent with the guidance, the Administrator has both the authority and the duty to impose the agency's sanction guidance on appeal. 

### Warbelow's, FAA Order No. 2000-30 at 20 (February 3, 2000). "[C]oncerning matters ofagency law and policy, administrative lawjudges are subject to the agency." 

### AmericanAirlines, FAA OrderNo. 2002-16 at 7 (May 20, 2002), quoting 

### NorthwestAirlines, FAA Order No. 1990-37 at 8 (November 7, 1990). The ALJ stated that the sanction amount suggested by Complainant would do little to advance the agency's policies ofcompliance and deterrence in this case, in part because Respondent is well aware, due to the nature ofits business, ofthe risks associated with chemicals. However, Respondent failed to demonstrate awareness ofthe risks associated with offering hazardous materials for air transportation when it shipped the propane and WD-40. Respondent admitted that it had not trained its employees inthe shipment ofhazardous materials. The fact that the company was well aware ofthe risks associated with these hazardous materials makes the violation more egregious and warrants a more serious civil penalty. 14 C.F.R. § 13 .233(j)(3). 19

### Conclusion Complainant's appeal is granted inpart. The civil penalty assessed by the ALI, in the amount of$5,000, is too low. A civil penalty inthe amount requested by Complainant- $37,500- was perfectly appropriate at the outset because it was inthe correct range and was notundermined by any case law. However, a $37,500 civil penalty is higher than necessary, inlight ofthe evidence described above regarding Respondent's financial situation, and as a result, this decision assesses a civil penalty 

### inthe amount of $20,000. This amount appropriately reflects the sanction guidance, the statutory factors, andthe totality ofthe circumstances. This amount will promote compliance and deter future violations by Respondent and others. 19

Federal Aviation Administration

19 This order shall be considered an order assessing civil penalty unless Respondent files a petition for review within 60 days ofservice ofthis decision with the U.S. Court ofAppeals for the District ofColumbia Circuit or the U.S. court ofappeals for the circuit in which Respondent resides or has its principal place ofbusiness. 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 offinal agency decisions in civil penalty cases).

20APPENDIX Section 171.2(e)20 provides: (e) No person may offer or accept a hazardous material for transportation in commerce unless the hazardous material is properly classed, described, packaged, marked, labeled, and 

### in condition for shipment as required or authorized by applicable requirements ofthis subchapter
.... Section 172.200(a) provides: (a) Description of hazardous materials required
. ... [E]ach person who ofiers a hazardous material for transportation shall describe the hazardous material onthe shipping paper in the manner required by this subpart. Sections 172.202(a)(l)-(3), (6)-(7) provide: (a) The shipping description ofa hazardous material onthe shipping paper must include: (1) The identification number prescribed for the material
...; (2) The proper shipping name prescribed for the material
...; (3) The hazard class or division number prescribed for the material
...; and (6)
... the total netmass perpackage
...; (7) The number and type ofpackages
.... Section 172.204(a) provides: (a) General.
... [E]ach person who offers a hazardous material for transportation shall certify that the material is offered for transportation in accordance with this subchapter byprinting
... onthe shipping paper ... the certification contained in paragraph (a)(l) ofthis section or the certification
... in paragraph (a)(2) ofthis section. (1) "This is to certify that the above-named materials are properly classified, described, packaged, marked and labeled, and are inproper condition for transportation according to the applicable regulations ofthe Department of Transportation."
.... (2) "I hereby declare that the contents ofthis consignment are fully and accurately described above by the proper shipping name, and are classified, packaged, marked and labelled/placarded, and are in all respects inproper condition for transport according to applicable international and national governmental regulations."

20 All citations are to the Januaty I, 2009, edition ofTitle 49 ofthe Code ofFederal Regulations (CFR), which was in effect at the time, as the violations occurred in May 2010 and the regulations were not revised again until October I, 20I0.Section 172.204(c)(l) provided: (c) Transportation by air--(1) General. Certification containing the following language may be used inplace ofthe certification required byparagraph (a) ofthis section: I hereby certifY thatthe contents ofthis consignment are fully and accurately described above byproper shipping name and are classified, packaged, marked and labeled, and in proper condition for carriage by air according to applicable national governmental regulations. Section 172.204( c)(2) provided: (c)
... (2) Certificate in duplicate. Eachperson who offers a hazardous material to an aircraft operator for transportation by air shall provide two copies ofthe certification required in this section
..... Section 172.204(c)(3) provided: (c)Additional certification requirements
. ... (3) [E]achperson who offers a hazardous material for transportation by air must add to the certificationrequired inthis section the following statement: "I declare that all ofthe applicable air transport requirements have beenmet." Section 172.30l(a) provided: (a) [E]ach person who offers a hazardous material for transportation in a non-bulkpackaging must markthe package with the proper shipping name and identification number (preceded by "UN" or "NA," as appropriate) for the material as shown in the 

### § 172.101 Table
.... Section 172.600 provided: (c) General requirements. No person to whomthis subpart applies may offer for transportation, accept for transportation, transfer, store or otherwise handle during transportation a hazardous material unless: (1) Emergency response information conforming to this subpart is immediately available for use at all times the hazardous material is present; and (2) Emergencyresponse information, including the emergencyresponse telephone number, required by this subpart is immediately available to any person who, as a representative ofa Federal, State or local government agency, responds to an incident involving a hazardous material, or is conducting an investigation which involves a hazardous material. Section 172.602(b)(3) provided:

2(b) Form of information. The information required for a hazardous material by paragraph (a) ofthis sectionmustbe: (3) Presented- (i) On a shipping paper; (ii) In a document, other than a shipping paper, that includes boththe basic description and technical name ofthe hazardous material as required by§§ 172.202 and 172.203(k), the ICAO Technical Instructions, the IMDG Code, orthe TDG Regulations, as appropriate, and the emergencyresponse informationrequired by this subpart (e.g., a material safety data sheet); or (iii) Related to the information on a shipping paper, a written notificationto pilotin-command, or a dangerous cargo manifest, in a separate document (e.g., an emergency response guidance document), in a manner that cross-references the description ofthe hazardous material onthe shipping paper withthe emergency response information contained in the document. Aboard aircraft, the ICAO "Emergency Response Guidance for Aircraft Incidents Involving Dangerous Goods" and, aboard vessels, the IMO "Emergency Procedures for Ships Carrying Dangerous Goods," or equivalent documents, may be used to satisfy the requirements ofthis section for a separate document. Section 172.604(a)(3) provided: (a) A person who offers a hazardous material for transportation must provide an emergency response telephone number, including the area code or international access code, for use inthe event ofan emergency involving the hazardous material. The telephone number mustbe- (3) Entered on a shipping paper, as follows: (i) Immediatelyfollowing the description ofthe hazardous material required by subpart C ofthis part; or (ii) Entered once on the shipping paper in a clearly visible location. This provision may be used only ifthe telephone number applies to each hazardous material entered on the shippingpaper, and ifit is indicatedthat the telephone number is for emergency response information (for example: "EMERGENCY CONTACT: 

## * * *). Section 173.l(b)provided: (b) A shipment ofhazardous materials that is notprepared in accordance withthis subchaptermay not be offered for transportation by air, highway, rail, or water. Itis the responsibility ofeach hazmat employer subject to the requirements ofthis subchapter to ensure that each hazmat employee is trained in accordance withthe requirements prescribed inthis subchapter. Itis the duty ofeach person who offers hazardous materials for transportation to instruct each ofhis officers, agents, and employees having any responsibility for preparinghazardous materials for shipment as to applicable regulations inthis subchapter.

3

### '



## SERVED: JANUARY 14, 2013

'

. I
. . 

### U.S. DEPARTMENT OFTRANSPORTATION OFFICE OF HEAR.INGS



### WASHINGTON, DC

FEDERAL AVIATION ADMINISTRATION: ) ) ) ) Complainant; 

### v. FAA Docket No. [To Be Assigned) (Civrl Penalty Action) FROST AD ATELIER, INC. ) ) ) ) ) Respondent. ) FDMS No. FAA-2011-0294 )

INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD C. GOODWIN :!, ,'i :

. ' 

### Found: 1. Respondent violated §§171.2(e), 172.200(a), 172.202(a)(1), 172.202(a)(2), 172.202(a)(3), 172.202(a)(6), 172.202(a)(7), 172.204(a) or (c)(1), 172.204(c)(2), 172.204(c)(3), 172.30l(a), 172.600 and 172.602(b)(3), 172.604(a)(3), and 173.i(b)as charged; and 2. Respondent is assessed a civil penalty of$S,000.
I. Background 

### This matter originated with the'discovery byauthorities ofcertain restricted substances inthe luggage ofa passengerpreparingtoboard an aircraft. On 

### May 29, 2010, 

### Ronda (Ronnie)·Frostad, a ticketedpassenger on Southwest Airlines, preparedto depart Louisville, KY for Sacramento, 

### CA.' She was travelling

1 Tr. 211. The Complaint stated the date as May 7, 2010. Complainant later served an erratumto the.Complaint correcting the date ofthe iricidentto

### May 29, 2010. See Tr: 

### :ho:'( ' '

### 2 

## ' \ ' J·. 

### onbehalfofa company she owns andruns,. Respondent Frostad Atelier,Inc., ofMcClellan and. Sacramento, CA. (''Respondent" or ''the company"). Respondent is a bronze casting foundry (Tr. 208-09; Exh. C-9, p. 1). Ms. Frostad and the two Respondentemployees travelling withher were returning after completing ajob thatthe company hadbeen contracted to perform (Tr. 209- 12). Agents ofthe Transportation Security Administration ("TSA"/ searched a bag ch.ecked by Ms. Frostad and found two substances inside warranting further examination:·a 16.4-ounce can ofpropane and an 8-ounce cont!Uner ofan aerosol lubricantpopularly known as WD-40 (Exhs. C-2 and C-4). They determined thatboth substance.s were classified as hazardous materials ("hazmats'') undertheDepartment's Hazardous Materials Regulations ("HMRs"); 49 C.P.R. §§171-180, The HMRs are designed to facilitate.properhandling ofinherently dangerous goods and to alert first responders in the event ofan incident. As such, hazardous waterials offered for transportationby air mustcomply with detailed marking, labeling, packing, and informational requirements spelled out therein. Certaintraining obligations must be observed aswell. 49 C.P.R. §172. Ms. Prostad'stenderhad been undeclared:thatis, the luggage in question had contained nowarning or notice ofthe hazardous nature;ofits contents. MtdtownNeonSign Corporation, 

### P AA OrderNo. 96-26 (August 13, 1996), p, 2.
'' I I,, :, I '



### . Based on the foregoing, the Complaint ()fthe**F~dera!Aviation** 

### Administration

.("Complainant," "P AA," or ''the agency") citedRespondent for thefollowing fourteenHMR violations: §171.2(e), in offering hazardous materials for transportation improperly classed, described, packaged, marked,**andlabel~d;** 

### §§**172.~00(a),** 

### 172.202(a)(l), 172.202(a)(2), 172.202(a)(3),172.202(a)(6),and 172.202(a)(7), in offering hazardous materialsfor transportation without propetlydescribing the material on shipping papers, including the failll!e to set out the materials' identification number, shipping name, hazard class ordivision, the total net mass per package, and the number and type ofpackages; §172.204(a) or (c)(!), in offering

## a hazardous.material without certifying that the materialwas offered inaccordance with applicable HMRs; §172.204(c)(2), in 

### offering a hazardousmaterial andfailing to**provid~<** 

### two copies ofthe certification; §I

### 72.204(c )(3), in offering ahazardous material and failing to add prescribed language to the certification; §172.30l(a), in offering hazardous materials in a non·bulk package not marked with the proper shipping names and identificationnumbers; §§172.600and 172.602(b)(3), in offering hazardous materials withoutproviding emergency response information inthe manner required; §172.604(a)(3), inoffering a.hazardousmaterial without providing a 24-hour emergencyresponse teleph9ne number; and §173.1(b), in offering hazardous materials without instructing its ageniSand employeesin preparing such goods for shipment. Complaifilmt asked for a civil penalty**\md~r**

## 49U .S.C. §5123(a) .of$37,500.

. . ' 

### Respondent deniedthe charges. 

# tt raised several substantive defenses to liability.and to mitigate or avoid the civil penalty sought. It

### also assertedthat the imposition ofa civil penalty would constitute. a financial hardship for the company. ' ' J

2 Awitness asserted thatthe "S" in "TSA" stands for "Safety." This is incorrect,**S~e** Tr. 28,3



### · I held ahearing inSanFrancisco, CA., on July 10, .2012
..The parties have filed briefs
. and the matter is now ready for decision.3 .· · · · 

### Complainant beai:s the burden of proving its case. 14 C.P.R. 

### §13.224. 

### Italso bears

### th~ burden ofproving thatthe penalty it seeksis appropriate. 

### See, e.g., American AirNetwork, FAA OrderNo. 2006-5 (February 10, 2006), 2006 WL 265369, p. 9 n. 19. Financialhardship may constitute grounds for a reduction ofan assessmentwhich is otherwise fitting. 

### Conquest Helicopters, FAA OrderNo. 1994-29 (June 22, 1994), p. 3. Theplea ofinability to pay, however, is an affirmative defense. On 

### thatissue it is Respondentwhich assumes the burden of proof. 14 C.F.R. §i3.224(c). As theAdministratorhas explall1ed, thisassignment oftheburden is ''reasonable and necessary'' because theRespondent

### has corttrpl ofitsfinancial information. 

### Salvatore Giuffrida, FAA OrderNo. 1992-72 (Decemb'er21, 1992), p. 2. Claims ofsuch a nature must be substantiatedto be credited. 

### See,.e.g., MichaelJohn Costello, FAAOrderNo. 93c!O (March 24, 1993), 1993 WL 833110, p. 4. 

### II. Discussion and Findings and Conclusions I find and conclude that Complainant

### has sustained its burden ofproofonits allegations. Respondent is found inviolationofeach ofthe fourteen charges preferred against it. Iwill assess a civilpenalty against Respondent of$5,000.

. ' 

### The facts which make up the charges are straightforward and maybe.briefly summarized: On May 29,2010, the evidence showed, Ms. Frostad and two employees ofthe company were preparing to board Southwest Airlines atthe Louisville International AirportinLouisville, KY. (''the Airport").4 

### They had been workingin):he Louisville area onajobfor Respondentand were returning home. Luggage Ms. Frostad had

### checked at .Southwest's ticket counter was. flagged by agents ofthe TSA. Inside the luggage the agents observed a Ziploc-type plastic see.-throughbag. Inside the bagtheyfound an 8-ounce spray can ofWD-40 and a 16.4-ounce cylinder 

### Ofpropane (Tr. 9-11,30-31,58-61,65,69-70,76, 108;Exhs. C-2 andC•3, and C-9, p. 1). • · Both substances are listed by the**Depai:tm~t's** 

### tJMRs as hazardous materials (Tr; ·19l; 

### See §172.101 HazardousMaterials Table;see 

### also Exh,.iC-7 andTr, 164-70,175, 179 (propane); Exh. C-6 and Tr. 157-61 (WD-40)). As 

### noted, when such items are offered for shipment certall1 marking and labeling conventions mustbe observed. The HMRs require that propane be described as "Petroleum gases, liquefied, Hazard Class 2.1 (flammable gases)." The substance is assigned the United Nations ("UN") 

### identificationnumber kllown as UN 1075. This material is, as the parties stipulated, notpermitted inpassenger airtransportation (Tr. 137, 152-53). The second hazmat found in Ms. Frostad's luggage, Wb-40, isproperlydescribed for shipping purposes as "Aerosol, flammable, Hazard Class 2.1." Its assignedidentification numberis UN 1950. The correct label for boththe. propane and the WD-40 is ''FLAMMABLE GAS," (emphasis and caps in original). Respondentrecognized that WD-40 also is con$idered a

3 Complainant'sBriefwill be referredto as "Compl. Br."; Respondent's as "Resp. Br."; aitd Cllmplainant'sRebuttal Briefas "Compl Rebut. Br."
. 4The three-letteridentifying code for the Airport is .SDF. Tr. 82; see, e.g., Exh.C"2, p. 5.



## ·• !

### 4 hazardous materil:ll (Tr. 152). See also 

### table following §172.101 ofthe HMks; §172AOO; §172.417.

### s .

. The luggage had beenundeclared. No labeling, marking, 

### warnings orother information required underthe HMRs were present (Tr. 170; seidrlitialDecision{"I.D."), p. 2). Nor had the. company's employees undergone the HMR-requiredtraining in the transport byair ofhazmatsa fact Respondent conceded (Tr. 264). · . RondaFrostad testified for Respondent Frostad Atelier, In:

### c. She generally Wl:IS 

### acredible witness. Ms. Frostad acknowledgedthat Respondent had offered the luggage in question for transport (Exh. C-9, p. 1). 

### But in defen,se to 

### the charges she insisted that she wasnot aware that the offending materials were init. She 'did not paekthem, she said. She assert!ldthat she never travels with propane. It

### was used onthe Louis:villejob,.yes; but company policy istopurchase propane locally and to avoid travelling with it. Thepresence ofWD-40is a biggermystery, Ms. Frostad insisted; while it is used at the foundry in California, Ms. Frostad denied using it on this job. One ofthe employees travelling withherpacked the hazmats, Sheadded (Tr. 213-27, 260). These circumstances do not avail Respondent; they do notabsolveitfrom legal. responsibility stemming from the tender oftheluggage. The trip manifestly was carried out on behalfofRespondent. Respondent, ofcourse, had beenhired in orderto. perform and had performed the work for which the travel hadbeen undertaJ<_en. The airline ticketswere purchased referencing the company address(Exh. C-2, p. 2). All matters involving the trip, including the tender; are properly the company'sresponsibility. Inany event employers are vicariously liable for the acti0n,s 

### oftheiremployeesaptin9.withinthe scope oftheiremployment (see, e.g., Warbelow'sAir Ventures,

### I~:~c., FAA OrabrJ:(Td, 2000-3 (February3, 2000), p. 5, reconsid den., 

### FAA OrderNo. 2000-14,**~une** 

### 8, 2000;pet den. 

### 19 Fed.Appx, ()06(unpublished opn., September 20, 2001)). Theoffending materials were packed as part ofthe winding up of thejob that hadjust been completed. The conduct underlying the charges, then, was within.the · scope... Ms. Frostad acknowledged also 

### thatthe tools ofthe trade (which, the evidence showed, included both items under review) are the property ofRespondent (Tr. 221-24). The circumstances described above show, Lponclude; that Respondent is obligated to 

### answer for the conduct ofits employee a:p.dto acceptresponsibility for the consequences ofthe presence ofthe offending materialsinMs. 

### Frostad's luS!,lage. ' It is not necessary to Complainant's proofto showthatRespondent or one ofits agentsor employees actuallyknew whatwas inside Ms. Frostad's luggage. Nor is it necessaryfor the agency to demonstrate that Respondentor one ofthese individuals was aware that either or.both ofthe offending items in fact were regulated orprohibited ltazardousmaterials. The governing statute contains no suchrequirements. Itsubjects any persop. 

### to a'

### civil penaltywho hM .· "knowingly committed an 

### act which is aviolation
..." "Knowingly'' mea:p.s only that aperson . (the definition ofwhich includes abusiness) has actual knowledge ofthefactsgivip.g rise to the violation (49 U;S.C. §5123(a)(l)). In: 

### this matter, itmeans thatRespondent -through anagent

5Complainant's witness P. Cartrice Dye, a security specialistwhqlf<:view¥'1the agency's investigative file, stated that WD-40 is pennittedto be shipped by air inaquantity II(!**great~r**than four fluid ounces, citing 49 C.FJl §173.306. Tr. 162. The particular item at issue, however, was storedin an aerosol can ofeight fluid ounces. Ms. Dye reiteratedthat the HMRs prohibit the movenient ofpropane 

### ill airtransportation in any quantity. Tr. 169.

### 5



### or employee, ofcourse -- knew that itwas offering the luggage in question forairtransport. This, ofcourse, was proven. The statute also makes clear thatknowledge ofthe law is unnecessary to a finding ofviolation; persons are liable even ifthey do not know they are breaking thelaw. 

### Riverdale Mills Corporation, FAA OrderNo. 2003-10 (September 12, 2003), p. 5; 

### Scott H 

### Smalling, FAA OrderNo. 94-31 (October

### 5, 1994), p. 7. Congress intended to prevent individuals from relying on ignorance hfthe law as an excuse in civil hazardous materials cases.6 · . 

### Ms. Frostad also asserted that she failed to see any signs atthe Airport warning passengers ofsuch things as categories ofrestrictedorprohibited hazardousmaterials, hazmats' associated risks and dangers, and the possible adverse consequences ofattempting air transport ofsuch substances (Tr. 263-64). ·The evidence showed thatthe SouthwestAirlines .area where passengers tendertheir checked baggage features alarge poster board containing pictures and· descriptions ofitems which may notbe 

### packed or brought aboard aircraft. The c::arrier also had posted notifications at the counter on either side ofthe baggage wells where passengers place their bags for tagging and weighing. The signs advise that violators are subjectto fines ofup to $110,000 (Tr. 42-47; Exh. C-1, p.2). The various signs provided ample warningtowould-be passengers ofthe risks associated with travelling with hazmats. But Ms. Frostad's failure to spot any ofthem isin any event irrelevant to .the charges. No duty to warn existed. The finding ofviolations is grounded simply on proofthat Respondent offeredthe luggage containing the restricted or prohibited materials for carriage inpassenger air transportation undeclared. The luggage failed to conform to pertinent 

### HMRs.
. ' Pursuant to the foregoing discussion, it is concluded that Complainant proved its case. Respondent is found in violation ofthe HMRs as chargedinthe Complaint: §§17l.2(e), 172.200(a), l72.202(a)(l), 172.202(a)(2), 172.202(a)(3),172.202(a)(6), 172.202(a)(7), 172.204(a) or (c)(!), 172.204(c)(2), 172.204(c)(3);172.600, 172.602(b)(3), 172.604(a)(3), and §173.l(b) (Tr. 191). lll. Penalty 

### I will assess against Respondent a civil penalty of$5,000. A. Standards 

### In determining the amount ofthe penalty; 1\l.e decisionmaker must consider "the nature; circumstances, extent, and gravity ofthe violation," and, withrespeCtto the violator, "the degree

6 Scott H. Smalling, p. 7. The legislative history ofthe Hazardous Material Transportation A¢t.confirms that Congress intended to impose civil penalties on persons who knew aboutthe act constituting the violation but didnot know aboutthe law. The conference substitute explains that "acivilpenalty may be imposed onlyupon proofthat the defendant knowingly committed the act which .constitutes the violation (it is notnecessary to show that he knew
. the act constitutedaviolation)
. .. (emphasis supplied)!' S. Conf. Rep. No. !347, 93"' Cong., 2nd Sess,, reprinte41n 1974 U.S. CodeCong. & Ad. News 7669, 7686; see also TCJ Corporation; FAA OrderNo. 92-77 (December 22, · 1992), pp. 8-9 n. 13. · · · ·

### .6 

### ofculpability, any history ofpriorviolations, theability to pay, and any effectontheabilityto continue to do 

### business" and "othermattersthatji:tstice requires'' (49U.S.C. §5123(c)}. The Adrrlinisti'ator has provided policy guidance·for agency employees to follow wh¢n
. recommending anappropriatecivil penalty inhazardous-materials cases. The guidance isfol.Uld
·in the agency's Penalty Guidelines ("the Guidelines"). The Guidelines have been publishedas

FAA Order2150.3B, Appendix C. They weremarked (butnot admitted) in this proceeding as Exhibit C-10, ofwhich I tookjudicial notice (Tr. 196). (I will refer to itas "Exh.C"lO"even though it was not admitted). The Guidelines assess all relevant statutory**criteri~** 

### including mitigating andaggravating circumstances. They additionally aidComplainant's penalty determination through a Sanction Guidi!D;Ce Mlltrix ("the Matrix"). The Matrix sets out specific penalty ranges.for each·input, cross-referencing suchpertinentfactors as the respondent's size;

. the quantity ofthe. violative materialoffeted, the extentofthe respondent's \lsnal dealings with ··

hazmats, the relative risk ofharm posed by the substancesinvolved, and any**adver~e** 

### . consequences associated withthe hazmats' transp<>rt. · · The Guidelines are intendedto indicate the Administrator's "general views" aboutthe civil penalty ranges appropriate for different types ofviolations. 

### Folsom**~s**

### AirService,Inc., FAA OrderNo
.. 2008-11 (November 6, 

### 2008), 2008 WL4948488,p. 13. They are not binding. Each situation, beingdependent on so many variables, is unique. "Evaluation ofthe case/' the FAA has emphasized, "is based on the totality ofthe facts and circumstances."7 · · · 

### An .administrative lawjudge ("ALJ") is notrequiredto follow the g1lidelines
..The
.. guidelines are intended for agency personnel, andALJs are not agency personnel. 

### Folsom'$,
. supra, 

# p. 14, ALJs make decisions i11dependently, and the ALJ determines (subjectto agency review) whether a civil penalty

### is to be 

### assessed, and 

### ifso, in what amount: The Guidelines nonetheless must berespected as an expressionofagency sanction policy. Theyrepresentan · effort 

### to produce consistent results in similar cases; The Administratorbas asserted the power to impose the agency's sanctionpolicyon appeal if

## aqAI}assesses a civilpenalty that is not . · · consistentwith theGuidelines. 

### Warbelow 's; sU]Jra, 

# p. 2'0; 

### NorthwestAirlines, FAA OrderNo. 1990-37 (November 7,1990), pp. 8-10. · ' ·· B. Complainant's Position 

### Complainant seeks a civil penalty totaling $37,500. It calculated the sum as follows: first, byslotting the HMRs violated into five categories (shipping papers, labels, markings, training, and emergency response) and then by describing Respondent per 

### the Guideline category "Business Entity that uses orhandles hazmat in the course ofbusimiss" (Exh. C-10, p. 14; Compl. Br., pp. 9-10). TheMatrix suggestsa range of$7,500 tq 

### $22,0.00 per vioh1tion category for this 

### type ofbusiness entity found to have offered anundeclared shipment: ofahazmat exceeding quantity limits orforbidden on passengeraircraft (Exh. C"l2, Fig. C-1, intersectionof

7FAA Policy on Enforcement ofthe HazardousMateriillsRegulations:

### PenaltyGuid~lines, 64Fed.Reg.l9443, 19444, 1999 WL226610 (F.R.)(April2l, 1999); alsopublishedon Aprill4, 1999, as Change26,Appendix6,to FAA Order2150.3A. Order2150.3B,.effectiveOctober l,2007, updated ll!ld superseded the original guidelines. See 72 Fed.Reg. 55853. FAA Otder 2150.3B may also be found atwww.airweb.faa:gov and rgLfaa;gov.SeeTr. 194.

### 8 penalty necessarily is grounded on five;Violationgtoupings, andthen calculating the proposed · assessment on that basis, fails to account for this fundamental fact. Complainant is not sufficiently appreciative ofthe Administrator's warning thatderiving an assessment simplyby multiplying the number ofviolations bythe penalty recommended per sanction "· even a ·· categoryminimum

-- could result ina fine .disproportionately severe. 

### Warbelow'sAir Ventures, Inc., FAA OrderNo.2000-3 (February 3, 2000), pp. 20-21,

### pet.for reconsidden., OrderNo.**2000~**

### 14 (June 8, 2000). Complainant's calculation smacks of"piling on,"

# a policy the Administrator frownsupon in non-egregious circumstances such as these. PaiJlA. Carr, 

### FAA OrderNo. 98-2 (March 12, 1998), pp. 11-12.

·The fine suggested also would do littleto vindicate theagency's policies ofcdmplillllce and deterrence for this Respondent. Frostad Atelier, Jnc. is an.entity which does not.rteed to be educated or lectured about the dangers**ofh~~Zardous** 

### sUbstances. Onthe contrary, itiswell aware ofthe risks broadly associated with chemicals, The·.very nature ofits business warrants and · compels suchan awareness. Ms. Frostad testifiedthat the companyuses over dne hundred different chemicals in 

### casting. Employees performingtheir duties oftenmust wear protective clothing (Tr. 256-62). Ms. Frostad,Respondent's owner and president, alsotestifiedthather business customarily bans 

### the transport ofthese materials forrea8o11s she well understands,. }t additionally is noteworthy when determining penaltythatMs; Frostad credibly aSsertedthatshe was unaware that the propane and WD7

### 40 had been packed in

### the company's luggage. Against this background, a fine ofthe magnitude suggested clearly would do little to impress upon this company the agency's policies ofCompliance ·or deterrence. Finally, it

### bears mention thatthe civil penalty suggested is much greaterthanthe agency has soughtinroughly comparable.matters.. In

### one casethe agency asked

### for an assessment of $3,750 for the attempted undeclared shipment on apassenger-carryingflight of"strikeanywhere" matches and twocylinders ofcompressedgas. These are substances. which are banned from passenger air transportation under alfcircumstances. 8 

### In

### another instance, the FAA sought a civilpenalty in the same amount.forthefailure to

### jltoperlymark, label, and package a shipment ofthree one•gallon 

### cans ofconcrete 

### sealer(Berthan Macaillay, Docket CP02S00029 (DMS 12591)). Kaden 

### and Macaulay 

### are not unlike the instant case. It

### is true, ofcourse, thatthe agencyhas virtually unfettered discretionin suggestingcivil
. penaltytotals. Moreover, because each casepresents a:'unique set.ofcircumstances, comparisons with other proceedings can be elusive. Butthe request ofthe agency-·whose**Guidelin~s** 

### are designed to produce consistent results**insirnil~ c~es**  

### (see I.D., p. 6) -to seek a civil penalty 

### ten times the 

### amount sought in the referenced matters must, Withoutadditionaljustification, be viewedwith considerable skepticism. Ihave considered all otherarguments advanced by both parties and reject them as without merit.9

8 ToddKaden, FAA Docket No. CP05NM0024, Initia!Decision ofAdministrativeLawJudge Richard C. Goodwin, served June 22, 2006. The Respondent was found to have violatedthe HMRs as charged andwas assessed a civil fenalty of$3,000. · . . ' .·. ·

Two more matters require attention. The first concerns.the fact thatthe docketinthis case has been sealed. See Order Sealing Docket.served August I0, 2012. The docket, now incll!dingthebriefS, will remain seal¢forthe·9
Weighing all the circumstances discussed above,Iconclude.thata civil penaltyof$5,000 iswarranted. The amount equalsthe minimum suggestedbythe Guidelines for a business entity committing one category ofhazmatviolation. Suchanassessmentbestreflects the totality ofthe circumstances in the contextofthe statutory factors. The fine alsowill fittingly promotethe agency's policies ofcompliance and deterrencefor simnarly-situated entities. Itis substantial butnotunduly punitive. In the**circurnstan~;eS** it is appiapnate. RespondentFrostadAtelier, Inc. is hereby asses8eda civilpenalty of$5,000 for violations ofthe following HMRs: §§171.2(e), 172.200(a), 172.20Z(a)(l), 172.202(a)(2), 172.202( a)(3),172.202(a)(6),172.202(a)(7), 172.204(a) or (c)(l), 172.204( c)(2), 172.204( c)(3), 172.30l(a), 172.600 and 172.602(b)(3),J72.604(a)(3), and §173.1(b). 10 · ·

Attachments

- Service List I< •

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reasons stated in the Order, butthisInitial Decision, l hold, does not touch on any subject appropriate for withholding from public disclosure an<!, therefore, is not subject to that Order. The.I.D. may be freely disseminated. The secondmatter concerns Complainant'sMotion to Strike ("Motion") Respondent's PostHearing Brief, dated DecemPer 17, 2012, on the grounds thatthe briefwas one business day late. The Motion, failingto deinonstrate any ftrejudice to Complainant, is denied.. · . . . · 0 Any appeal from the Initial Decision to the Administratormustbe inaccordaitce with section 13.233· oftbeRules ofPractice, which requires l)that anotice ofappeal be filed no later than 10 days (plus an additi0 nal5 for mailing) from the date ofthis order and 2) that the appeal be perfected with a written brieformemorandljltl not laterthan 50 days (plus 5for mailing) from the date ofthis order. Each is to.be sentto the Appellate DocketClerk, Room 924-A, Federal Aviation Administration, 800Independence Ave)lue, WashJ)lgton, DC 20591, and to.agency counsel. Service upon the presidingjudge is optional.