### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 1 U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

----------------------------x : FAA Docket No. In Re: COLGAN AIR, INC. : CP09EA0017 (Civil : Penalty Action) Respondent. : DMS No. FAA-2009-0581 ----------------------------x

Washington, D.C. Thursday, October 14, 2010 The following pages constitute the proceedings held in the above-captioned matter before the HONORABLE RONNIE A. YODER, appearing telephonically, before Natalia Kornilova of Capital Reporting Company, beginning at approximately 2:03 p.m.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 2 1 A P P E A R A N C E S 2 On behalf of the Petitioner: CHRISTIAN L. LEWERENZ, ESQUIRE 3 Office of the Regional Counsel, EAL-7 1 Aviation Plaza 4 Jamaica, New York 11434 (718) 553-3273 5 On behalf of the Respondent: 6 CHARLES RYAN, ESQUIRE Dombroff Gilmore Jaques & French, PC 7 1676 International Drive - Penthouse McLean, Virginia 22102 8 (703) 336-8728 / (703) 336-8750 9 Also Present: Daniel Morgan, Colgan Air, Inc. 10 * * * * * 11 12 13 14 15 16 17 18 19 20 21 22

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 3 1 P R O C E E D I N G S 2 THE COURT: -- need to discuss before we go 3 on the record? 4 MR. LEWERENZ: Not that I know of, Judge. 5 This is Chris Lewerenz. 6 THE COURT: Okay. 7 MR. RYAN: Not that I'm aware of, Your Honor. 8 No, sir. 9 THE COURT: Okay. And reporter? 10 THE COURT REPORTER: Yes, sir. 11 THE COURT: Have you done these for me 12 before? 13 THE COURT REPORTER: I have a couple weeks 14 ago, that's the one that didn't go through. 15 THE COURT: Okay. But you understand, do you 16 not, that -- if you don't understand anything you need 17 to stop us and get it clarified so the transcript will 18 be correct. 19 THE COURT REPORTER: Okay. Thank you, sir. 20 The only thing is I don't know the names at this point. 21 THE COURT: Oh, you don't have the names? 22 THE COURT REPORTER: No, I do not.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 4 1 THE COURT: Well, you need to get those now 2 then. 3 THE COURT REPORTER: If I may. 4 THE COURT: Did you not get a notice of the 5 prehearing conference? 6 THE COURT REPORTER: I did, it was just a 7 name reference, but no names. 8 THE COURT: Oh, it had a service list on the 9 back. You didn't see the service list? 10 THE COURT REPORTER: I do not have it, sir. 11 THE COURT: You don't have it with you? 12 THE COURT REPORTER: I don't have it at all. 13 I wasn't provided one. 14 THE COURT: Well, I thought you said you got 15 a notice of the prehearing conference. 16 THE COURT REPORTER: I have a worksheet that 17 has the name of the case. That's all I have. 18 THE COURT: Okay, so you didn't get a copy of 19 the notice. 20 Do you have a number there, a fax number 21 where we can send it? 22 THE COURT REPORTER: Yes, sure. It's 202-857-

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 5 1 8577. 2 THE COURT: Okay. Ask Joanne to fax the 3 notice to there. 4 THE COURT REPORTER: Thank you so much. 5 THE COURT: And your name again? 6 THE COURT REPORTER: Natasha, N-a-t-a-s-h-a. 7 THE COURT: Natasha. Thank you. 8 But you can go ahead and get whatever 9 information you need. 10 For the FAA it's Christian L. Lewerenz, L-e11 w- e-r-e-n-z. 12 THE COURT REPORTER: Okay. 13 THE COURT: And for Colgan Air, Mr. Ryan? Is 14 that what -- who's appearing for Colgan Air? 15 MR. RYAN: Yes, sir, that's correct. Charles 16 Ryan. 17 THE COURT: Charles Ryan, okay. You didn't 18 make it on to the service list, that's why I was 19 searching for you. 20 MR. RYAN: Oh, okay. 21 THE COURT: And you have with you Mr. Dan 22 Morgan?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 6 1 MR. RYAN: Right, Dan Morgan. 2 MR. MORGAN: Yes, sir. 3 MR. RYAN: Representing Colgan Air. 4 THE COURT: Is that Dan or Daniel? 5 MR. MORGAN: The formal name is Daniel. 6 THE COURT: Do you need anything else? 7 THE COURT REPORTER: I'm okay. Thank you. 8 THE COURT: Is that enough? 9 THE COURT REPORTER: Yes. I guess three 10 parties -- 11 THE COURT: You have my name? 12 THE COURT REPORTER: Yes, sir. 13 THE COURT: Y-o-d-e-r, Ronnie A., R-o-n-n-i14 e. 15 THE COURT REPORTER: Thank you. 16 THE COURT: Yeah. Okay, we'll get started in 17 just a second. 18 (Pause in proceedings.) 19 THE COURT: Okay, let's go on the record. 20 This is a prehearing conference in Colgan Air, Inc. FAA 21 docket CP09EA0017. 22 And on the phone we have, for the FAA,

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 7 1 Christian Lewerenz. And for respondent, Colgan Air, we 2 have Charles Ryan. And Mr. Ryan you have someone with 3 you. Do you want to introduce him to the record. 4 MR. RYAN: Yes, sir. Also on the line is 5 Daniel Morgan, Vice President for Safety and Compliance 6 with Colgan Air, Inc. 7 THE COURT: Okay. And we have a reporter who 8 will transcribe the proceeding. A copy of the 9 transcript automatically goes to the FAA and to the 10 judge. The FAA pays for the transcript, so they get 11 one. Mr. Ryan, if you need a copy you'll need to raise 12 that with the court reporter. 13 MR. RYAN: Very well, sir. Thank you. 14 THE COURT: Okay. I wanted to see if we 15 could clarify just what is at issue here. I gather we 16 have two regulations involved and two flights. Is that 17 correct, Mr. Lewerenz? 18 MR. LEWERENZ: Yes. 19 THE COURT: And so how many violations are 20 you alleging? 21 MR. LEWERENZ: Well, using the flight 22 attendant who was not trained on two flights is two

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 8 1 violations by way of conduct, although the two 2 regulations alleged the conduct is a very close nexus. 3 THE COURT: Yeah, my question is how many 4 violations are you alleging? 5 MR. LEWERENZ: Two. 6 THE COURT: Not four? 7 MR. LEWERENZ: No. 8 THE COURT: Okay. All right. Well, let's 9 look at the first one, the first regulation. 10 Now that has to do with establishing and 11 implementing a training program. Is that right? 12 MR. LEWERENZ: Establishing, obtaining and 13 providing a training program, yes. 14 THE COURT: Establishing and implementing a 15 training program. Is that right? 16 MR. LEWERENZ: Yes. 17 THE COURT: Now, I notice that the complaint 18 talks about failure to establish and implement. Is 19 that right? 20 MR. LEWERENZ: Yes. 21 THE COURT: And it alleges that they failed 22 to implement. Is that correct?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 9 1 MR. LEWERENZ: Yes. 2 THE COURT: But the quotation of the section 3 in the complaint doesn't refer to implementing, did you 4 notice that? 5 MR. LEWERENZ: Yes. 6 THE COURT: Do you know why that is? 7 MR. LEWERENZ: I cannot recall why we used 8 that word in the allegation. However, what we are 9 saying is that they used her and she had not completed 10 her training and they did not implement the training 11 program meaning they did not -- 12 THE COURT: I know, but you quoted -- 13 MR. LEWERENZ: -- use the training program -- 14 THE COURT: -- a section which doesn't 15 require that they implement it. 16 MR. LEWERENZ: Yes. 17 THE COURT: Well, let me help you, Mr. 18 Lewerenz. The fact is that the regulation, as you 19 quoted it, is from a previous version which was not in 20 force at the time of this violation. 21 MR. LEWERENZ: Okay. 22 THE COURT: And in point of fact 121401(a)1

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 10 1 says establish and implement. 2 MR. LEWERENZ: Okay. 3 THE COURT: That's not what the complaint 4 says. That's what the regulation says. 5 MR. LEWERENZ: Okay. I understand. I wasn't 6 prepared to make that point. I just -- 7 THE COURT: Did you have any problem with 8 that, Mr. Ryan? 9 MR. RYAN: Not -- 10 THE COURT: Do you understand what we're 11 talking about? 12 MR. RYAN: Yeah, no I do, I follow what 13 you're saying, sir. 14 THE COURT: I just wanted to make sure we 15 were clear on what we were working with. 16 Now, the complaint says that there were two 17 flights between Newark and Burlington on May 19. Do 18 you know what the equipment was, Mr. Ryan? 19 MR. RYAN: I believe it would have been a 20 Saab 340. I have to ask Mr. Morgan. 21 MR. MORGAN: No, it was a Q400. Q400. 22 THE COURT: That's a Saab 2400?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 11 1 MR. MORGAN: No, sir, a Bombardier Q400. 2 THE COURT: You want to -- Lombardi? 3 MR. MORGAN: Bombardier is the manufacturer. 4 THE COURT: Bombard -- 5 MR. MORGAN: Bombardier, B-o-m-b-a-r-d-i-e-r. 6 THE COURT: Okay. Q400. 7 MR. MORGAN: Q400 is the model. 8 THE COURT: Do you know how many passengers 9 that has? 10 MR. MORGAN: It holds 74. I don't know how 11 many were in that particular flight or flights, though. 12 THE COURT: Okay. So do you know what the 13 required compliment of flight attendants is for that 14 flight? 15 MR. MORGAN: Yes, sir, it's two. 16 THE COURT: Two. Do you know how many flight 17 attendants there were on the plane on these flights? 18 MR. MORGAN: Two. 19 THE COURT: Including Miss Simms? 20 MR. MORGAN: Yes, sir, that's correct. 21 THE COURT: Okay. Now, the complaint also 22 refers to flight attendants required, as a required

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 12 1 crew member. 2 Mr. Lewerenz, is it your position that Miss 3 Simms was a required crew member? 4 MR. LEWERENZ: Yes, because being used as a 5 flight attendant on a part 121 flight and she had to 6 have been adequately turned to serve as a flight 7 attendant. 8 THE COURT: And you don't allege that she was 9 a required crew member. 10 MR. LEWERENZ: That is not alleged here, no. 11 THE COURT: What? 12 MR. LEWERENZ: That is not alleged that she 13 is a required crew member. 14 THE COURT: Well, if she wasn't a required 15 crew member then she doesn't have to comply with the 16 regulations, does she? 17 MR. LEWERENZ: It's not pled, but that would 18 be part of the proof. 19 THE COURT: Well, the regulation relates to 20 someone who's a required crew member, right? 21 MR. LEWERENZ: Yes. 22 THE COURT: And you didn't allege that she

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 13 1 was a required crew member. 2 MR. LEWERENZ: No, but it is alleged that she 3 was used on those flights by this holder of an air 4 carrier certificate and the flight attendant -- 5 THE COURT: If she were used and were a 6 required crew member, would that be a violation? 7 MR. LEWERENZ: If she were used as a flight 8 attendant, she would -- she's a required crew member 9 who requires training. 10 THE COURT: What if she'd been the third? 11 MR. LEWERENZ: I'm not certain. If she's 12 used as a flight attendant, even if she's the third 13 flight attendant, I just don't know the answer to that 14 right now. 15 THE COURT: Well, let -- 16 MR. LEWERENZ: But if she's used as a flight 17 attendant she is required to have the training. 18 THE COURT: Let me see -- 19 MR. LEWERENZ: And whether -- 20 THE COURT: -- if Mr. Ryan can help us here. 21 Mr. Ryan, I'm having some difficulty dancing 22 through your answer to try to figure out what your

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 14 1 position is. You admit in your answer that she was 2 acting as a flight attendant on this flight. Is that 3 right? 4 MR. RYAN: Yes, sir. 5 THE COURT: So what then is your defense? 6 MR. RYAN: It's two parts, actually. It's 7 not that this person had no training, Your Honor. This 8 person had been through IOE, initial operating 9 experience training, but she had been recommended for 10 additional training. The minimum required numbers of 11 training hours are five, Miss Simms has documented 20 12 hours of training. 13 The reason she got scheduled was a clerical 14 error, admitted by Colgan Air, that she wound up on 15 these two flights. A voluntary disclosure was made in 16 accordance with the FARs. And the comprehensive fix 17 was submitted outside of the suggested ten day time 18 period for the comprehensive fix. And that's the 19 genesis of the violation. 20 The voluntary disclosure reporting program 21 was complied with, from our point of view, and then 22 because the comprehensive fix was submitted a few days

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 15 1 beyond the ten day suggested response period, the 2 penalty has thus been brought forward and a compliant. 3 THE COURT: You didn't allege that as an 4 affirmative defense? 5 MR. RYAN: I'm sorry, sir? 6 THE COURT: You didn't allege that as an 7 affirmative defense. Did you? 8 MR. RYAN: Let me go back and look at my 9 answer. 10 THE COURT: Looking at these pleadings, 11 there's no way in the world I can pick that up. 12 MR. RYAN: I see what you're saying, Your 13 Honor. 14 THE COURT: I mean the purpose of pleadings 15 is to focus the issues. And these pleadings don't 16 focus any issues at all. They allege you used the 17 flight attendant, you said, yeah, we did. And they say 18 she wasn't trained and you say, yeah, she wasn't. Is 19 that right? 20 MR. RYAN: I don't know that we would say 21 she's not trained, Your Honor. 22 THE COURT: Well you said she had three hours

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 16 1 and -- she needed five hours and she needed 20. Is 2 that right? 3 MR. RYAN: No, no, no, sir. No, sir, if I 4 misspoke then I misspoke. I believe you may have it 5 backwards. The minimum -- it's five hours of minimum 6 training required -- 7 THE COURT: Okay. 8 MR. RYAN: -- and Miss Simms had 20. 9 THE COURT: I see. Okay. 10 MR. RYAN: And her supervisor had recommended 11 additional training. 12 THE COURT: All right, we'll let's stick with 13 the five hours minimum required. And that's required 14 in 121434(e)? 15 MR. RYAN: I will -- I don't have the FARs 16 right in front of me, sir. I'm sorry for that. 17 THE COURT: Well, Mr. Lewerenz can help us, 18 I'm sure. Is that where it's required? Do you know 19 where it's required, Mr. Lewerenz? 20 MR. LEWERENZ: I'm sorry, did you say 121343? 21 THE COURT: 434(e). 22 MR. LEWERENZ: Oh, I'm sorry. I just have a

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 17 1 copy of the regulations in front of me. 2 THE COURT: "Flight attendant must, for at 3 least five hours, perform the assigned duties of a 4 flight attendant." That's 434(e) as in Edward. 5 MR. LEWERENZ: That's -- yes, that's what it 6 says. 7 THE COURT: That's the requirement that 8 applies in this case? 9 MR. LEWERENZ: This is operating experience. 10 I know the complaint alleged she did not -- it was not 11 recorded that she had completed initial operating 12 experience training before serving as a crew member. 13 THE COURT: Yeah, I need to let you tell me 14 what that means. If it means something other than -- 15 well, I need you to tell me what it means. You're 16 making the allegation, what are you alleging was 17 required? 18 MR. LEWERENZ: The -- I'm not certain -- I'm 19 not prepared to answer if the initial operating 20 experience is the same as the regulatory requirement 21 for operating experience that you have cited. 22 THE COURT: Well, it's your complaint, Mr.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 18 1 Lewerenz, it's not my complaint. 2 MR. LEWERENZ: Yes. 3 THE COURT: What are you alleging? I mean 4 this is the time to tell me, not later. That's why we 5 had the prehearing conference. 6 MR. LEWERENZ: Well, it's -- 7 THE COURT: If you don't know what your 8 complaint alleges -- 9 MR. LEWERENZ: It's -- 10 THE COURT: -- we're in trouble. 11 MR. LEWERENZ: -- yeah. It's -- there was no 12 record that she completed the initial operating 13 experience training. And that was part of initial 14 disclosure from the carrier to the FAA. And -- 15 THE COURT: You didn't allege that, did you? 16 MR. LEWERENZ: That she had not completed 17 initial operating experience? 18 THE COURT: That there was no record. 19 MR. LEWERENZ: Well, I'm just looking at the 20 evidence. You're asking me how it happened and it -- 21 THE COURT: No, what I'm asking is -- 22 MR. LEWERENZ: I mean I never heard the story

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 19 1 before that, you know, that she had so many hours. It 2 just was told to us on the telephone now. That is news 3 to me. I don't know. 4 THE COURT: What was told to you on the 5 phone? 6 MR. LEWERENZ: That she had had so many hours 7 and that it was supposed to be completed and it was in 8 excess of the hours required, if I understood what Mr. 9 Ryan was saying. I had not heard that before. 10 THE COURT: Yeah, but where did you get the 11 initial information that she had not completed the 12 required hours? 13 MR. LEWERENZ: They called and told the FAA, 14 as part of what it submitted as what it wanted to do 15 under a voluntary disclosure reporting program. And as 16 Mr. Ryan said, it was submitted outside of a ten day 17 window and eventually this turned into an enforcement 18 action. 19 Now what was reported is that flight 20 attendant flew revenue trip prior to completion/sigh21 off of IOE, which is initial operating experience. 22 THE COURT: Who reported that?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 20 1 MR. LEWERENZ: Colgan. 2 THE COURT: Does that have a name on it? 3 MR. LEWERENZ: The person? 4 THE COURT: Yeah. 5 MR. LEWERENZ: Information of the person 6 preparing comprehensive fix, but that's not -- oh, 7 submitted by David Vance, initial notification. David 8 Vance. 9 THE COURT: Do you know him, Mr. Ryan? 10 MR. RYAN: Do I know Mr. Vance? 11 THE COURT: Yeah. 12 MR. RYAN: Yes, sir, I do. 13 Is he still with the company, Dan? 14 MR. MORGAN: No, he was my predecessor in 15 this position. He's no longer with the company for the 16 last two years. 17 THE COURT: Well do you agree with the 18 submission that was just quoted to you? 19 MR. RYAN: I've been listening and reading at 20 the same time, Your Honor, because I was trying to find 21 a reference for you to the hours. 22 THE COURT: Do you not have that submission

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 21 1 to the FAA? 2 MR. RYAN: Oh no, I do. I do. I was looking 3 through the documents because Your Honor asked where 4 the 21 hours or the 20 hours came from. 5 THE COURT: Yeah, I got it. Okay, so you 6 said something to the FAA which said -- you want to 7 read that to me? 8 MR. LEWERENZ: Yes. Description of alleged 9 violation. "Flight attendant flew revenue trip prior 10 to completion/sign-off of IOE." And the -- and -- 11 THE COURT: So -- and you're saying that's 12 wrong? 13 MR. RYAN: What -- no, no I'm not saying 14 that's wrong. 15 THE COURT: Oh. So she flew it prior to 16 completion of IOE? 17 MR. RYAN: Yes. She had not been formally 18 checked off, that is correct. And we acknowledge that, 19 sir. 20 THE COURT: Well, does -- is that what this 21 regulation requires? Does this regulation require that 22 she be formally checked off?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 22 1 MR. RYAN: Are you asking me or Mr. Lewerenz? 2 THE COURT: Yes, sir. You're the one who 3 reported your violation. 4 MR. RYAN: It -- yeah, I believe the company 5 - - yes, the company's of the belief that the IOE 6 training has to be completed. 7 THE COURT: And checked off? 8 MR. RYAN: Yes, sir. 9 THE COURT: Is that in your flight manual or 10 operating manual or something? 11 MR. RYAN: Dan, can you help? 12 MR. MORGAN: It's in the training manual, it 13 wasn't in the training at the time, but it was quoting 14 directly from the 121434. 15 THE COURT: Well, show me something in 434 16 that requires that this not only need to be completed 17 but also checked off. 18 MR. RYAN: 434(a) says the crew member who 19 has not completed the required operating experience, 20 operating cycles and line operating flight time for 21 consolidation of knowledge and skills. 22 THE COURT: Yeah. Okay.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 23 1 MR. RYAN: This flight attendant had, in 2 fact, completed the required operating experience, the 3 five hours. 4 THE COURT: Well, that's what I was asking 5 you. Where does it say in here that she has to -- in 6 addition to competing it, it has to be checked off? 7 So you reported your own violation, you 8 reported it outside the ten day window. Is that right? 9 MR. RYAN: No, sir. The reporting was within 10 the three days. It was within 24 hours. 11 THE COURT: It's a three day window? What 12 was outside the window? 13 MR. RYAN: What was outside the window was 14 the report back afterwards that was a comprehensive fix 15 of how we make sure this doesn't happen again. 16 THE COURT: You reported to the FAA a 17 comprehensive fix? 18 MR. RYAN: We did. 19 THE COURT: Okay. Mr. Lewerenz, this case is 20 totally different from what the complaint says. Are 21 you following me? 22 MR. LEWERENZ: Well, again, the complaint

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 24 1 said that she had not completed the initial operating 2 experience training before serving as a crew member. 3 And that's what the carrier reported and they reported 4 immediate action and then they did report a 5 comprehensive fix later on. 6 THE COURT: Then -- and so what's your 7 complaint? 8 MR. LEWERENZ: The complaint is that they 9 used a flight attendant that had not completed -- 10 THE COURT: The comprehensive fix wasn't -- 11 your complaint is that the comprehensive fix wasn't 12 within the ten day limit? 13 MR. LEWERENZ: No, no. The complaint is that 14 they used a flight attendant, crew member that had not 15 completed the initial operating experience before 16 serving as a crew member. 17 THE COURT: Well, but she had completed it. 18 MR. LEWERENZ: I do not have that information 19 that she did. What was reported to us -- 20 THE COURT: They just -- he's saying that she 21 had done -- 22 MR. LEWERENZ: -- and the evidence I have is

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 25 1 that she did not complete it. Now whether -- what -- 2 how many hours she had and all that is something I had 3 not heard before and I don't have in my (inaudible) 4 package. 5 MR. RYAN: If I may interject? 6 THE COURT: Yes, Mr. -- yes, sir. Who is 7 this? Mr. Ryan? 8 MR. RYAN: Mr. Ryan. Yes, sir. 9 THE COURT: Yeah. 10 MR. RYAN: If you will look at the 11 investigative package, Exhibit 5 put together by -- 12 THE COURT: I don't have the investigative 13 package. 14 MR. LEWERENZ: Oh, okay. I understand what 15 you're talking about, Chuck. 16 THE COURT: You didn't send it to me, did 17 you? 18 MR. RYAN: Did I send it to you, sir? 19 THE COURT: Did anybody send it to me? 20 MR. RYAN: I can email it within seconds, if 21 you'd like. 22 THE COURT: Well that would be nice. You did

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 26 1 read my prehearing conference order? 2 MR. RYAN: Yes, sir. 3 THE COURT: And it says, "All documents that 4 have been exchanged and have not already been provided 5 to the judge should be furnished by October 7." I take 6 it what you've just described is a package of material 7 that was exchanged between you that has not been 8 provided to the judge. Is that correct? 9 MR. RYAN: It is -- it's the -- I requested - 10

- 11 MR. LEWERENZ: I'm not certain because -- I'm 12 not certain whether Mr. Ryan and I -- we have not done 13 a discovery exchange in this case. So -- 14 THE COURT: I'm not talking about discovery. 15 Does my order say anything about discovery? 16 MR. LEWERENZ: No. It's just I did not see 17 that this was part of any documents I exchanged with 18 Mr. Ryan and therefore -- 19 THE COURT: You may he didn't -- 20 MR. LEWERENZ: -- that's why I didn't 21 provided it to you. 22 THE COURT: -- send it to you folks? It says

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 27 1 "between the parties" it doesn't say between you and 2 Mr. Ryan. 3 MR. LEWERENZ: Yes. (inaudible) -- 4 THE COURT: All right. Make sure we're clear 5 on this for the future, gentlemen. 6 MR. LEWERENZ: Okay. 7 THE COURT: When I say, "all documents 8 exchanged between the parties should be provided to me 9 in advance of the prehearing conference," that's 10 exactly what it means. 11 MR. LEWERENZ: Okay, Judge. Understood. 12 MR. RYAN: Yes, sir. 13 THE COURT: So, we're now sitting here 14 talking about violations that we don't know anything 15 about because we don't know what you folks are arguing 16 about. And what you're really arguing about is the fact 17 that they didn't make a comprehensive proposal for 18 correction within ten days. 19 MR. LEWERENZ: No, that's not the issue. The 20 issue is that she had not completed the initial 21 operating experience. 22 THE COURT: Okay, what didn't she --

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 28 1 MR. LEWERENZ: And I guess it's the -- 2 THE COURT: -- what didn't she complete, Mr. 3 Lewerenz? You tell me. 4 MR. LEWERENZ: Well, the -- I guess it 5 pertains to what Mr. Ryan was talking about, checking 6 her off in their system as -- 7 THE COURT: It's your complaint, Mr. 8 Lewerenz. What didn't she complete? I mean the fact 9 that they self-report doesn't make it a violation. 10 MR. LEWERENZ: Um hmm. 11 THE COURT: Does it? 12 MR. LEWERENZ: Well, the record that we -- 13 well, what we have is that -- 14 THE COURT: Oh, excuse me. 15 MR. LEWERENZ: -- she didn't complete it. 16 THE COURT: Excuse me. 17 MR. LEWERENZ: I'm sorry. 18 THE COURT: The fact that they self-report 19 does not make it a violation, does it? 20 MR. LEWERENZ: Right. No. 21 THE COURT: Is that correct? It does not. 22 Is that right?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 29 1 MR. LEWERENZ: That's right. 2 THE COURT: You have to look at the report 3 and decide whether it's a violation. Right? 4 MR. LEWERENZ: Yes. 5 THE COURT: Okay. So you looked at this 6 report and you said, that's a violation, right? 7 MR. LEWERENZ: The -- 8 THE COURT: Is that right? 9 MR. LEWERENZ: -- inspectors looked at the 10 report. 11 THE COURT: No, is that right? 12 MR. LEWERENZ: That's what happened, yes. 13 THE COURT: Okay. So now tell me what the 14 violation was. 15 MR. LEWERENZ: That she had not completed -- 16 that they had allowed a flight attendant to fly on a 17 revenue trip, prior to completion and sign-off of 18 initial operating experience. 19 THE COURT: You didn't say anything about 20 sign-off. 21 MR. LEWERENZ: Well, I understand from the 22 evidence that the sign-off is the act --

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 30 1 THE COURT: We don't have any evidence -- 2 MR. LEWERENZ: -- of completion of training. 3 THE COURT: -- Mr. Ryan -- Mr. Lewerenz. 4 What we have is a complaint. 5 MR. LEWERENZ: Yes. 6 THE COURT: The complaint says she didn't 7 complete her training. And what I'm asking you is what 8 didn't she complete. Now you're saying she didn't 9 complete it because there was not sign-off. Is that 10 what you're saying? 11 MR. LEWERENZ: There was no sign-off 12 evidencing that she completed her training. 13 THE COURT: Okay. And where is that made a 14 violation? Now it's a complaint about failure to have 15 a sign-off. 16 MR. LEWERENZ: No, the complaint is that she 17 had not completed her initial operating experience and 18 the completion of the initial operating experience 19 training is evidenced by the sign-off. 20 THE COURT: Well that means they're two 21 different things. 22 MR. LEWERENZ: No, I interpret it to mean

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 31 1 that that is the last act -- 2 THE COURT: You interpret what? 3 MR. LEWERENZ: -- documenting the completion. 4 THE COURT: What are you interpreting now, 5 Mr. Lewerenz? 6 MR. LEWERENZ: Well, I'm just saying that 7 it's like she went to class and she took a test or she 8 got a certificate and -- documenting that she had 9 completed it. Now whether she had gone to class, she 10 may never have finished the class, she may never have 11 gotten that certificate (inaudible). 12 THE COURT: Well, this is all very 13 interesting, Mr. Lewerenz, but unfortunately here we 14 have to deal with regulations. What you have to do is 15 tell me what regulation it violated by not having a 16 sign-off. 17 MR. LEWERENZ: Well, the regulation that's 18 violated is that she had not completed her training. 19 THE COURT: Does it say anything -- 20 MR. LEWERENZ: Initial operating experience. 21 THE COURT: -- about a sign-off, Mr. 22 Lewerenz?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 32 1 MR. LEWERENZ: The sign-off is evidence of 2 completion of the training. The violation is not that 3 she -- 4 THE COURT: Oh, then you're talking about not 5 completion. We're back to not completion -- 6 MR. LEWERENZ: Yes. 7 THE COURT: -- not the sign-off. 8 MR. LEWERENZ: Yes. 9 THE COURT: Okay. So what didn't she 10 complete? 11 MR. LEWERENZ: She didn't complete the 12 training. And as -- 13 THE COURT: What didn't she -- 14 MR. LEWERENZ: -- the evidence is the 15 training phase includes, at the conclusion of training 16 some sort of sign-off documenting the training was 17 satisfactorily completed. 18 THE COURT: How are you going to prove that, 19 Mr. Lewerenz? 20 MR. LEWERENZ: Well, as part of the report 21 from the carrier to the FAA and what the inspector 22 found. I believe the inspector spoke with someone from

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 33 1 Colgan about the report to confirm what had happened. 2 THE COURT: Okay. Well, it's very clear to 3 me that nobody knows what this case is about. 4 MR. RYAN: Your Honor? 5 THE COURT: Yes. 6 MR. RYAN: If you would like I'm prepared to 7 email you this file. It's about -- 8 THE COURT: I asked you to. 9 MR. RYAN: All right. I just want to make 10 sure before I send it and -- 11 THE COURT: Yeah. 12 MR. RYAN: -- Mr. Lewerenz. 13 The other thing -- 14 THE COURT: You have my email address? 15 MR. RYAN: I do, sir. 16 THE COURT: Okay. 17 MR. RYAN: I do. And you'll see, Your Honor, 18 when you look through it, the reason given for 19 rescinding the case, being the voluntary disclosure 20 case, is a matter of dispute over the timing of the 21 comprehensive fix being submitted. 22 It wasn't that the self disclosure was

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 34 1 rescinded because of the, you know, the heinous nature 2 of the violation, it was rescinded because of a 3 dispute, I'll say, over the timing of when the 4 comprehensive fix has to be submitted under the 5 regulation. 6 That being said, there's -- if a carrier 7 makes a voluntary disclosure and then turns around and 8 takes a $25,000 penalty for its honesty, it sort of 9 defeats the purpose of the voluntary disclosure 10 program. But that's a matter of -- 11 THE COURT: Well you talk about rescission. 12 Who rescinded the voluntary compliance notice? 13 MR. RYAN: It was rescinded by Kathleen -- 14 Miss Kathleen Ritchey, R-i-t-c-h-e-y. 15 THE COURT: She's an FAA employee? 16 MR. RYAN: I presume so, Your Honor. I'm 17 looking at an FAA (inaudible). 18 THE COURT: Well, is it FAA that rescinds it 19 or is to Colgan that rescinds it? 20 MR. MORGAN: It's the FAA, Your Honor. 21 Kathleen Ritchey is one of the inspectors in the Dulles 22 office.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 35 1 THE COURT: Okay. So what we're coming down 2 to is a dispute over the timing of the submission of 3 the comprehensive correction and we have a complaint 4 that relates to the failure to complete training, 5 citing no regulation for the constituent parts of that 6 alleged violation. Is that where I am, Mr. Lewerenz? 7 MR. LEWERENZ: I'm sorry, I do not 8 understand. The FAA has alleged that this flight 9 attendant was used when she had not completed her 10 training, initial operating experience. That is what 11 was reported to the FAA. The FAA has some (inaudible) 12

-- 13 THE COURT: Well let me tell you what -- 14 MR. LEWERENZ: -- the carrier about a 15 comprehensive fix -- 16 THE COURT: Yeah, but -- 17 MR. LEWERENZ: -- but it did not accept it, 18 so the -- 19 THE COURT: -- you're going to have to do a 20 better job than that or you aren't going to get to 21 first base on this complaint. Do you understand what 22 I'm saying?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 36 1 MR. LEWERENZ: Well, maybe what I don't 2 understand is what is it that's not clear about this, 3 she did not complete -- 4 THE COURT: Is the basis for the alleged 5 violation -- 6 MR. LEWERENZ: Yes, that she did not complete 7 her training. 8 THE COURT: -- where is that in the 9 regulation? 10 MR. LEWERENZ: It's -- well the -- 11 THE COURT: We don't just have violations 12 drifting down from the ceiling somewhere, violations 13 have to be founded in a specific regulation. 14 MR. LEWERENZ: Yes (inaudible) -- 15 THE COURT: If you don't know the regulation 16 you're proceeding under there's no way you can proceed. 17 MR. LEWERENZ: Pardon me, Judge. I took a 18 moment to turn to the part of the complaint that has 19 the regulation so that I don't misspeak. 20 THE COURT: Okay. Good. 21 MR. LEWERENZ: And I have that in front of me 22 now.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 37 1 THE COURT: Good. 2 MR. LEWERENZ: And that section is 121434(a) 3 stating that, "No certificate holder may use a person, 4 nor may any person serve as the required crew member of 5 an airplane unless the person has satisfactorily 6 completed, on that type of airplane and that crew 7 member position, the operating experience," and so 8 forth. 9 THE COURT: I'm familiar with that. Where 10 does it say that they had to complete something they 11 didn't complete? 12 MR. LEWERENZ: She had not -- the regulation 13 said that they could not use her unless she had 14 satisfactorily completed the operating experience. 15 THE COURT: And what operating experience did 16 she not complete? 17 MR. LEWERENZ: It is a course of training 18 that I understand -- 19 THE COURT: Regulation. Regulation. What 20 regulation says -- 21 MR. LEWERENZ: 121434(a) -- 22 THE COURT: Yeah?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 38 1 MR. LEWERENZ: -- talks about operating 2 experience training. 3 THE COURT: Right. What operating experience 4 did she not complete? 5 MR. LEWERENZ: She did not complete that 6 phase of the training that's, like I said before, the 7 evidence in front of me is that she did not -- 8 THE COURT: I'm talking about the -- 9 MR. LEWERENZ: -- was not signed-off as 10 having completed. 11 THE COURT: Mr. Lewerenz, I'm asking you 12 about a regulation. You don't know a regulation that 13 says she didn't do what she had to. I suggest that you 14 better find such a regulation or this complaint may get 15 dismissed before we even get further. 16 MR. LEWERENZ: Well, I don't understand, 17 Judge, where I'm -- 18 THE COURT: If you don't -- 19 MR. LEWERENZ: -- falling short in explaining 20 to you. 21 THE COURT: -- understand, you better go back 22 and read the prehearing conference transcript when you

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 39 1 get it, because a complaint has to be founded in a 2 regulation that specifies the nature of the violation 3 or it can't proceed. 4 MR. LEWERENZ: The allegation is that she had 5 not completed initial operating experience training -- 6 THE COURT: Okay. I hope you heard what I 7 said -- 8 MR. LEWERENZ: -- before serving as crew 9 member -- 10 THE COURT: -- Mr. Lewerenz. I've heard what 11 you've said. 12 Let's move on to the second part of this. 13 Now, Colgan Air says it's a small business. Are you 14 agreed with that? 15 MR. LEWERENZ: I am not agreed with that. 16 THE COURT: Oh, okay. So what are the 17 criteria that we apply in determining whether Colgan 18 Air is a small business and why do you conclude that it 19 is not? 20 MR. LEWERENZ: Although at the time of the 21 violation, I'm not sure if it's still true today, they 22 had had a number of employees, I think less than 1,500

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 40 1 employees, and I'm looking at the 21503(b) on page B-2, 2 when I had looked up -- 3 THE COURT: 2150 -- you're talking about the 4 FAA penalty guidelines? 5 MR. LEWERENZ: Yes. 6 THE COURT: 53(a). Okay, at the time of the 7 violation they had less than what, a thousand you said? 8 MR. LEWERENZ: Less -- I believe they had 9 less than 1,500 employees. 10 THE COURT: Less than -- okay. 11 MR. LEWERENZ: However, looking at the SBA 12 website and other information that they publish, there 13 is information about when a company is affiliated with 14 another company and we had information that they were 15 affiliated with a parent corporation called Pinnacle. 16 And that parent corporation also owns another company 17 that has its own air carrier certificate, also called 18 Pinnacle. And because of these affiliations I was 19 unable to resolve that they are a small business, but 20 that they are perhaps a large business because then 21 when taking the affiliations into account they have 22 significantly over 1,500 employees.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 41 1 THE COURT: Yeah. Mr. Ryan? 2 MR. RYAN: Yes, sir. 3 THE COURT: Do you have such an affiliation 4 at the time of this alleged violation? 5 MR. RYAN: No, sir. 6 THE COURT: When did that come about? 7 MR. RYAN: Our position -- 8 THE COURT: No, excuse me. 9 MR. RYAN: -- at the time of the alleged 10 violation -- 11 THE COURT: When did that come about? Did it 12 come about? Do you have such an affiliation now? 13 MR. RYAN: Our position is that we do not. 14 Pinnacle -- Colgan Air is a wholly owned subsidiary of 15 a holding company known Pinnacle Airlines Corporation. 16 Pinnacle Airlines Corporation also owns another 17 separately certificated carrier, Pinnacle Airlines, 18 Inc. There are no shared directors, there is no shared 19 funding, there's no shared operations. It -- they were 20 two separate airlines owned by a common holding 21 company. 22 And our position is, whether you look at

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 42 1 21503(b) or whether you look at the SBA guidelines, 2 that they are not affiliated as defined by SBA and thus 3 Colgan Air is entitled to be considered a small 4 business enterprise, because there is no power to 5 control whether it's exercised or not. They're two 6 separate certificate holders with a common holding 7 company, none of the three share common directorate. 8 THE COURT: Well how is affiliated defined in 9 21503(b) Mr. -- 10 MR. LEWERENZ: It is not. 11 THE COURT: -- Lewerenz? 12 MR. LEWERENZ: It is not. 13 THE COURT: Oh, it's not? 14 MR. LEWERENZ: No. 15 THE COURT: How do you decide then whether 16 someone is affiliated or not? 17 MR. LEWERENZ: Again, I looked -- I don't 18 have all that information in front of me right now, but 19 I recall looking at the SBA.gov website and the 20 regulations cited in 2150(b). 21 THE COURT: And? 22 MR. LEWERENZ: For further guidance on small

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 43 1 business and -- 2 THE COURT: And what did you conclude, with 3 respect to affiliated? 4 MR. LEWERENZ: That it appeared that at the 5 time of the violation that Pinnacle -- an entity called 6 Pinnacle, I don't have the exact title in front of me, 7 wholly owns Colgan and that they also wholly own 8 another certificate holder, also called Pinnacle. And 9 that even today they share officers, they share one or 10 more management personnel and so forth. So these seem 11 to me, to me to be indicia that they -- since they are 12 so closely affiliated and between companies there are - 13 - and it's business the same business, that it's really 14 part of one large business concern. 15 THE COURT: I see. And your complaint speaks 16 in the alternative as to the level of penalty, 17 depending on whether the respondent is a small business 18 or not. Is that right? 19 MR. LEWERENZ: That's correct, sir. 20 THE COURT: But this penalty was calculated 21 on the business of not being a small business? 22 MR. LEWERENZ: That is correct.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 44 1 THE COURT: I see. And so -- okay. Well 2 that might make a substantial difference in the penalty 3 level in this and whatever other cases are pending, I 4 gather. Is that right, Mr. Ryan? 5 MR. RYAN: That would be our position, sir, 6 yes. 7 THE COURT: Yeah. Okay. I think what I'm 8 going to need from your gentlemen is a prehearing 9 brief. And it's going to address two subjects. It's 10 going to address the alleged violation and the 11 regulatory basis for the allegation. Because that's 12 not in the complaint and it hasn't been in anything 13 that has been said here in this prehearing conference. 14 And Mr. Ryan, Colgan is not without fault in 15 this regard since you self-reported. 16 MR. RYAN: Yeah, I -- yeah. 17 THE COURT: You said there was a violation. 18 MR. RYAN: The company made a good faith, 19 voluntary disclosure. 20 THE COURT: I understand that, but you've got 21 to tell me what the violation was and you haven't been 22 able to do that today. Or, can you do it now?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 45 1 MR. RYAN: I'd have to consult with my client 2 a little further before -- 3 THE COURT: Yeah. 4 MR. RYAN: -- I didn't want to go out on a 5 limb like that without consultation. But I can do that 6 in our brief, certainly. 7 THE COURT: Yeah, okay. Well, what you've 8 got to do is put together a brief that tells me what 9 the regulation is that resulted in your making a self10 report of a violation. If you hadn't made that report 11 we wouldn't be sitting here today, I gather. Is that 12 right? 13 MR. RYAN: I would tend to agree. 14 THE COURT: Yeah. And so you reported, yep, 15 we violated something, we aren't sure what. And we 16 don't want to be punished for it because we're taking 17 corrective action. And then you reported that within 18 three days of your malfeasance and then you didn't 19 correct it within ten days, didn't propose a overall 20 correction and that's the period required by the FAA 21 regulation. Is that right? 22 MR. RYAN: I would say suggested by it, but

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 46 1 yes. Because the regulations say -- 2 THE COURT: What regulation are you referring 3 to? 4 MR. RYAN: Under the voluntary disclosure 5 reporting program requires -- or suggests, I'm sorry, 6 Advisory Circular 00-58(a) states, "The written report 7 of the comprehensive fix should be provided by the 8 regulated entity within ten working days after the 9 initial notification." 10 THE COURT: And when did you provide it? 11 MR. RYAN: It was provided five days after 12 the ten day period. It was provided -- the 13 comprehensive fix, if you went with the ten days as 14 being a deadline, would have been June 5th and the 15 comprehensive fix was submitted on June 8th -- I'm 16 sorry, on June 10th, so five days. 17 THE COURT: Yeah. Mr. Lewerenz? 18 MR. LEWERENZ: Yes. 19 THE COURT: If he had provided (tape skips) 20 instead of the 10th, would we be here today? 21 MR. LEWERENZ: I don't know the answer. I 22 would have to consult with the flight standards

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 47 1 inspectors and the certificate holding district office. 2 THE COURT: Well, you mean that the operation 3 of the self-reporting program is not automatic? 4 MR. LEWERENZ: I think another criteria is 5 whether the comprehensive fix was satisfactory and I 6 just do not have the information to speculate that had 7 it only been timely received we would not be here 8 today. 9 THE COURT: Yeah. 10 MR. LEWERENZ: I'm not equipped to answer 11 that. 12 THE COURT: Right. Are you equipped to 13 answer whether the comprehensive fix was satisfactory? 14 MR. LEWERENZ: No, I'm not. 15 THE COURT: Okay. Well, you'll do that in 16 your brief. Okay? And so -- 17 MR. LEWERENZ: I mean I just want to be fair, 18 I don't want to suggest that this is an ongoing problem 19 or that there are other cases, because there are not -- 20 THE COURT: I understand that. 21 MR. LEWERENZ: -- to my knowledge. Yeah. 22 THE COURT: Yeah. And that's what I want, I

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 48 1 just want to be fair. And in order to be fair I have 2 to know what you folks are referring to as the 3 application regulations, and I don't. I mean I have 4 the regulations here in front of me and I don't have 5 anything in them that says what you're saying, that 6 you've shown to me. It may be there, but you have -- 7 if it's there you haven't shown me. So you've got to 8 show me, both of you have to show me what this case is 9 about. 10 Mr. Ryan, you started it so you're going to 11 have to tell me what violation you're referring to. And 12 I'd rather not have self-serving submissions saying, 13 well we really didn't have anything in mind. You 14 understand what I'm saying? 15 MR. RYAN: Yes, sir. 16 THE COURT: I mean you submitted this, you 17 must have had something in mind. I want to know why 18 this was submitted and what violation you think you 19 committed. Then I want to know what you did with 20 respect to reporting and what you did with respect to 21 comprehensive reporting. 22 Did you ever get a sign-off from the FAA that

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 49 1 the comprehensive reporting was -- comprehensive fix 2 was okay? 3 MR. RYAN: No, sir, to -- not that I've seen. 4 The only thing we have in that regard was the 5 rescission of the case by Ms. Ritchey and -- 6 THE COURT: Yeah. Okay, but do you -- when 7 you submit a comprehensive fix do you normally get a 8 sign-off as being acceptable? 9 MR. MORGAN: If I may, Your Honor, it's Dan 10 Morgan. Yes, sir, we normally do -- we always do. 11 We'll get a response back as to whether that fix was 12 acceptable. In this case, since it rescinded, it was 13 never even considered. 14 THE COURT: It was rescinded because it 15 wasn't submitted within the five days? 16 MR. RYAN: Correct. 17 MR. MORGAN: That's correct, sir. So they 18 never did evaluate our response. 19 THE COURT: Submitted within ten days. 20 MR. MORGAN: Correct. 21 THE COURT: Yeah. So, is that comprehensive 22 fix still in place?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 50 1 MR. MORGAN: Yes, sir, it is. Actually other 2 changes have been made since that period of time in our 3 recordkeeping and some system changes but -- 4 THE COURT: You mean that FAA doesn't care 5 whether you make a comprehensive fix, it only cares 6 whether you self-report within a ten day time period? 7 MR. MORGAN: That would appear to be 8 reasonable suggestion. 9 THE COURT: Well that was a question, that's 10 not a suggestion. 11 MR. MORGAN: That would be a reasonable 12 question. 13 THE COURT: Well anyway, you understand what 14 you need to do on this subject, Mr. Ryan. You've got 15 to explain to me why you reported a violation and what 16 regulation -- and maybe -- it may be that there's a 17 regulation says you have to comply with your manuals. 18 It may be that your manual says that they have to get a 19 sign-off on the completion of their training and that 20 may be the violation. But there's nothing before me 21 that shows that. 22 MR. RYAN: Right. I will dive into it --

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 51 1 THE COURT: And trust me, if we go to a 2 hearing someone is going to explain this in very clear 3 detail or we're all going to be very unhappy. You 4 understand? 5 MR. RYAN: Yes, sir. 6 THE COURT: Yeah. Okay. And so you're going 7 to explain that. And then you're going to explain this 8 relationship that you have with another company. 9 MR. RYAN: Yes, sir. 10 THE COURT: And I should hasten to add that 11 Mr. Morgan has said a few things here today and I want 12 to make sure that he understands and you understand 13 that we haven't required him to say anything. And that 14 when he says things, he in essence, is making 15 statements for the record on behalf of the company. 16 You, of course, are you just making 17 arguments, although I don't know what your official 18 connection is with Colgan, I'm assuming for the time 19 being, that you're just an attorney. 20 MR. RYAN: I am just an attorney. 21 THE COURT: Okay. And that you're acting for 22 Colgan in that capacity. But Mr. Morgan needs to know

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 52 1 that when he speaks up it's like he's testifying, 2 because a false statement to a federal officer in the 3 performance of his duties is a no-no, which we 4 sometimes call felonies. And so he needs to make sure 5 that when he says things that he says what he knows to 6 be true. 7 Okay, I just throw that out there so that 8 you'll understand the playing field on which we are 9 engaged. 10 Okay. So you're going to spell out the 11 relationship of these companies and then you're going 12 to tell me, under the SBA regulations and under 13 21253(a) why you are a small business. 14 MR. RYAN: Sure. 15 THE COURT: Okay? And Mr. Lewerenz is going 16 to do the same with respect to each of those insofar as 17 he knows. I assume that he should know as much about 18 the first one as you do. 19 As to the second one, he may not know as much 20 about your corporate structure as you do. So he may 21 have some limitations on how much he can say there. 22 In my very early years with the Civil

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 53 1 Aeronautics Board I had a case involving the question 2 of U.S. citizenship of an air carrier. And we wound up 3 tracking back -- Cathay Pacific was the name of the 4 case, and the question was whether it was U.S. 5 controlled or foreign controlled. And we 6 wound up with about 150 different interlocking 7 corporations. And we wound up concluding that it was 8 controlled and consequently was not a U.S. citizen, 9 that is my recollection. We're going back 30, 35 years 10 here now. 11 So I'm not unfamiliar with the interlacing of 12 corporate structures. So what you will need to do is 13 look at 21503(a) and the SBA and sort out what the 14 relevant criteria are and then explain how your 15 structure fits in those criteria. Okay? 16 MR. RYAN: Yes, sir. 17 THE COURT: Now of course if you settle this 18 then we don't need to do any of this, although it 19 strikes me that the likelihood is we're going to wind 20 up doing the second part of this in one of these cases 21 unless you settle them all. So, you know, you can keep 22 that in mind.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 54 1 Now, Mr. Lewerenz, what you need to do is the 2 second half of that and the first half, to the extent 3 that you know it. I don't know what's been exchanged 4 between you folks with respect to information. 5 I see here I got an email and it has the 6 investigative file. And -- well it doesn't seem to be 7 horribly long. What do you got about ten pages in 8 that, Mr. Ryan? 9 MR. RYAN: No, sir, I believe it's like 24, 10 25 all together, total. 11 THE COURT: Yeah, the pages aren't numbered. 12 MR. RYAN: No. 13 THE COURT: Yeah, it's hard just scanning 14 down here. But we'll take a look at this before we get 15 your briefs. And you folks should take a look at it 16 and whatever else you need to look at. 17 Now, Mr. Ryan are you alleging ability to pay 18 as a problem here? 19 MR. RYAN: No, sir. 20 THE COURT: Okay. All right. That's off the 21 boards then. 22 But if you're alleging small business and it

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 55 1 - - the question of affiliation comes up under 21503(a) 2 or the SBA, then you're going to have to disclose 3 whatever is necessary in order to make that 4 determination. 5 MR. RYAN: Okay. 6 THE COURT: And you may find that I think 7 things are necessary which you don't think are 8 necessary. But if that's going to be an issue here we 9 will explore it. Okay? 10 MR. RYAN: Okay. 11 THE COURT: Okay. Now, I need a date for you 12 gentlemen to submit briefs. 13 First of all, I give you an opportunity to 14 try to get this settled and presumably the -- getting 15 it settled would fall before the brief date is due. So 16 I don't guess we need two dates, okay? 17 So you tell me how much time you need to do 18 the briefs that we've been talking about. I would 19 normally give people a couple of weeks, but this -- I 20 would listen to suggestions beyond that if you want to 21 make them. 22 Let me ask, Mr. Lewerenz?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 56 1 MR. LEWERENZ: Yes, sir. 2 THE COURT: Do you think you need additional 3 information on the structure of Colgan and its related 4 companies? Or do you think you know enough already to 5 deal with that issue? If it's going to be -- if 6 they're going to be contending small business, I would 7 guess that the burden of going forward is going to be 8 on Colgan with respect to that. 9 Would you agree with that, Mr. Ryan? 10 MR. RYAN: On the small business issue? 11 THE COURT: Yeah, in terms of the factual 12 presentation. I would guess that the burden of going 13 forward with the evidence is going to be on you folks. 14 You're the ones who knows what the relationships are. 15 MR. RYAN: Right, right. Yeah, -- 16 THE COURT: I mean the ultimate burden of 17 persuasion is going to be on the FAA, but if you're 18 going to contend small business you're going to have to 19 prove small business. 20 MR. RYAN: Absolutely, sir. 21 THE COURT: Okay? 22 MR. RYAN: Yes, sir.

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 57 1 THE COURT: So, Mr. Lewerenz, if you -- in 2 the course of preparing your brief conclude that you 3 need additional information, it would be good if you 4 could try to get clarification from Mr. Ryan before 5 your brief is due so you won't be tilting at windmills, 6 so to speak. You understand? 7 MR. LEWERENZ: Yes. 8 THE COURT: Okay. And if I can assist, in 9 terms of adjusting the due dates because of that need 10 to exchange information, you folks let me know. Okay? 11 MR. RYAN: Okay. 12 THE COURT: So I need to know when you think 13 you can get the briefs on those two subjects, in my 14 hands. 15 MR. RYAN: Well, we're at the 14th here, from 16 my perspective, Your Honor, I don't see any reason I -- 17 we could not have that to you by November 5th at the 18 very latest. 19 THE COURT: November 5. 20 MR. RYAN: That's -- 21 THE COURT: What day is -- what sort of a day 22 is that?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 58 1 MR. RYAN: That's a Friday. 2 THE COURT: Friday. And Mr. Lewerenz, does 3 that sound acceptable to you? 4 MR. LEWERENZ: Well, except that I'm not sure 5 that we could accomplish the exchange of the 6 information about the corporations within that time 7 frame, as you suggested, and still get the issue 8 resolved. Unless -- 9 THE COURT: Well, what date -- 10 MR. LEWERENZ: -- we file briefs based on 11 what we have and then file -- 12 THE COURT: Well, what -- 13 MR. LEWERENZ: -- reply briefs, I guess if 14 you will, based upon their submission. 15 THE COURT: Yeah, what date would you 16 suggest, Mr. Lewerenz? 17 MR. LEWERENZ: I was going to ask for at 18 least 30 days out from today. 19 THE COURT: That would be November 14, right? 20 MR. LEWERENZ: Yes. 21 THE COURT: And 14 is going to be a Sunday. 22 MR. LEWERENZ: November 14th is Sunday, so

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 59 1 15th is Monday, due the 19th, Friday. 2 THE COURT: I'm sorry? 3 MR. LEWERENZ: You said November 14th, that's 4 a Sunday. 5 THE COURT: Yes, understand. So which date 6 did you wind up with? 7 MR. LEWERENZ: November 19th? 8 THE COURT: Well, I don't want to fix the 9 19th and then have you come in on the 19th and say you 10 need to get more information from Mr. Ryan. 11 MR. LEWERENZ: No, I -- 12 THE COURT: Do you understand what I'm 13 saying? 14 MR. LEWERENZ: Right. 15 THE COURT: So -- 16 MR. LEWERENZ: I think we could exchange -- 17 THE COURT: -- I think we probably better 18 have a date by which you're going to tell Mr. Ryan and 19 me what additional information you need, if you need 20 additional information. 21 MR. LEWERENZ: Okay. 22 THE COURT: Okay? So you tell me what date

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 60 1 that's going to be. 2 MR. LEWERENZ: All right. I think certainly 3 two weeks from today. 4 THE COURT: Two weeks from today. That'll be 5 the -- 6 MR. LEWERENZ: 28th? 7 THE COURT: 28th. Okay. So, by the 28th Mr. 8 Lewerenz will tell Mr. Ryan what, if any, additional 9 information he needs with respect to the relationship 10 of the companies. 11 And then by the -- November 19 he will file 12 his brief, and as will you, Mr. Ryan. 13 MR. RYAN: Yes, sir, November 19th. 14 THE COURT: Does that sound good? 15 MR. RYAN: That's very fair. 16 THE COURT: Okay. Well, that's -- that will 17 be very helpful and then we will know what this case is 18 about. Nobody has a clue as to what it's about now. 19 And I don't try cases that way. When I try cases we 20 know what it is we're trying before we go to the 21 hearing, we don't try to figure it out once we get 22 there. Okay?

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 61 1 All right. So those are the due dates and 2 you folks will get back to me, presumably before -- 3 well, we could say before the 28th, if this case is 4 going to settle. But, you know, if you get out to 5 November 19 and you tell me it's going to settle, 6 that's okay too. But I'd like to have some kind of 7 status report on your settlement efforts, by the 28th. 8 Okay? 9 MR. LEWERENZ: Okay. 10 MR. RYAN: Yes, sir. 11 THE COURT: That means you folks talk between 12 now and then and somebody gets back to me and say, at 13 this point it's not settling. All right? 14 MR. LEWERENZ: Okay. 15 THE COURT: And then if this case settles and 16 we get to the next one down the line, and we have the 17 same questions you'll have this in the transcript, so 18 you'll know what we're going to have deal with. All 19 right? 20 MR. LEWERENZ: Yes. 21 MR. RYAN: Yes, sir. 22 THE COURT: All right. Anything further,

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 62 1 gentlemen? 2 MR. RYAN: Not us, Your Honor. 3 MR. MORGAN: Your Honor, Dan Morgan, if I 4 may. I'd just like to acknowledge I am aware of your 5 advice about your statement as an officer. Thank you. 6 THE COURT: Yeah, good. Okay. 7 Well thank you all. That's -- it's been 8 helpful to me, I now have some idea of what this case 9 is about, whereas before, based on the pleadings no one 10 could tell. 11 And if there's nothing further that concludes 12 the prehearing conference. Thank you very much. 13 MR. RYAN: Thank you, Your Honor. 14 MR. LEWERENZ: Thank you, Judge. 15 THE COURT: All right. Bye-bye. 16 (Whereupon, at 3:01 p.m., the 17 prehearing conference was adjourned.) 18 * * * * * 19 20 21 22

### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

(866) 448 - DEPO www.CapitalReportingCompany.com © 2010 63 1 CERTIFICATE OF NOTARY PUBLIC 2 I, NATASHA KORNILOVA, the officer before whom 3 the foregoing hearing was taken, do hereby certify 4 that the testimony that appears in the foregoing pages 5 was recorded by me and thereafter reduced to 6 typewriting under my direction; that said deposition is 7 a true record of the proceedings; that I am neither 8 counsel for, related to, nor employed by and of the 9 parties to the action in which this testimony was 10 taken; and further, that I am not a relative or 11 employee of any counsel or attorney employed by the 12 parties hereto, nor financially or otherwise interested 13 in the outcome of this action. 14 15 16 ____________________________ NATASHA KORNILOVA 17 Notary Public in and for the District of Columbia 18 19 20 My commission expires: April 14, 2012 21 22

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### Capital Reporting Company In Re: Colgan Air, Inc. 10-14-2010

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