U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 

WASHINGTON, D.C. 

Federal Aviation Administration, 

Complainant, 

FAA Docket No. CP10GL0212 

v. 

DMS No. FAA-2013-0620 

National Power Corporation, 

RECEIVED 

SEP - 8 2015 

HEARING DOCKET 

The Honorable Richard C. Goodwin 

Respondent. 

RESPONDENT'S APPEAL FROM INITIAL DECISION 

Respondent, National Power Corporation (NPC), pursuant to 14 C.F.R. §13.233, hereby appeals 

the Initial Decision in this matter and in support thereof states as follows: 

Respondent hereby incorporates by reference the Initial Decision of the Administrative Law 

Judge as if fully set forth herein for the facts of the case, findings of law and conclusions of the 

Administrative Law Judge. 

A. The Administrative Law Judge erred in finding that the totality of the evidence and testimony 

as a whole established a prima facie case that NPC violated 49 C.F.R. § 171.2(e), 49 C.F.R. § 

171.22(b)(l), 49 C.F.R. § 171.22(g)(2),49 C.P.R. §172,203(±), 49 CE.R. §l72.604(a)(10), and 

49 CF.R. § 172.02(a), inclusive, for each of the eleven (11) shipments between January 8, 2010 

and March 25,2010. 

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a. The relevant statute states "49 U.S.C. §5123 (a) Penalty.-{!) A person that knowingly 

violates this chapter or a regulation, order, special permit, or approval issued under this chapter is 

liable to the United States Government for a civil penalty of at least $250 but not more than 

$50,000 for each violation. A person acts knowingly when-

(A) the person has actual knowledge of the facts giving rise to the violation; or 

(B) a reasonable person acting in the circumstances and exercising reasonable care would have 

that knowledge." (Emphasis supplied) 

During his testimony, Mr. Zawarus, admitted that National Power did not have the requjsite 

intent to violate the regulations he testified about. 

Trial Transcript P. 84 

21 Q In the course of your 

22 investigation, did you make a determination as 

Page 85 

1 to whether the alleged violations were 

2 deliberate? 

3 A No. It wasn't. 

A necessary and crucial elementof the regulation is scienter. Since the FAA did not establish 

scienter on the part ofNPC for the alleged violation of the regulations cited, any other evidence 

is moot. Not only did the sole witness for the FAA not establish the scienter element of the 

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regulation, he negated this element by his admission above that the alleged violations were not 

deliberate. In the Matter of Falcon Crest Aviation Supply, Inc. FAA Order No. 2007-6 at page 7. 

The FAA did not meet its burden of proof for any of the alleged violations. 

IfNPC did not knowingly violate the regulations, it cannot be subject to penalty. Logically, how 

could a penalty deter future behavior, if the behavior in question was not intended? Whether or 

not NPC violated a regulation is not the sole element of the offense. It must have violated the 

regulation and meant to do so. 

Assuming arguendo that NPC violated the regulations regarding the shipments identified in the 

complaint, the FAA has to prove scienter on NPC's part, and confessed~that there was none. 

On page 28 of the ALI's decision he states "The improper shipment oflithium ion batteries can 

lead to catastrophic consequences. Lack of knowledge and/or lack of intent are not defenses." 

The AU cites no cases for tbis conclusion which contradicts the regulatkm which states that 

intent is an element. 

B. The Administrative Law Judge erred in his reassessment of the penalty. 

a. Standards . 

In determining the amount of the penalty, the decisiomnaker must consider "the nature, 

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circumstances, extent, and gravity of the violation," and, with respect to the violator, "the degree 

of culpability, any history of prior violations, the ability to pay, and any effect on the ability to 

continue to do business" and "other matters that justice requires" (49 U.S.C. §5123(c)). Federal 

Aviation Administration v. Frosted Atelier, Inc.,FDMS No. F AA-2011-0294 at page 6 (2013). 

"[a] civil penalty may be imposed only upon proof that the defendant knowingly committed the 

act which constitutes the violation (it is not necessary to show that he knew the act constituted a 

violation) .... " S. Conf. Rep. No. 1347, 93rd Cong., 2nd Sess., reprinted in 197 4 U.S. Code 

Cong. &Ad. News 7669, 7686; see also TCI Corporation, FAA Order No. 92-77 (December 22, 

1992), pp. 8-9 n. 13. (emphasis supplied) 

b. Under All of the Facts and Findings A Penalty of $12,p00 is Excessive 

The discussion that follows is somewhat of an extension of ReBpondent' s argume11t that it lacked 

the necessary intent to violate the regulations. Respondent still maintains that its lack of scienter 

n,ecessitated a decision that it was not guilty of any violation. Assuming argu'lndo that 

Respondent did violate one or more regulations, Respondent addresses the.AU's sanction. The 

ALJ concluded that the FAA's assessment of a $~6,000 fine was excesBive and arbitrary. The 

ALJ concluded that a sanction of $12,000 was appropriate under all of the facts and findings of 

the case. Respondent respectfully submits that even $12,000 is excessive. 

As a general matter, a sanction should be imposed that is sufficiently deterrent 

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but not excessive, in order to comply with the underlying purposes of the Federal 

hazardous material transportation law and HMR. ln determining the sanction to 

be assessed, penalty criteria set forth in 49 U.S.C. § 5123 must be considered. 

These criteria are the nature, circumstances, extent, and gravity of the violation; 

the degree of culpability of the violator; the history of past violations (if any); the 

ability to pay; the effect on the ability to continue to do business; and other 

matters as justice requires. FAA Order 2150.3B Appendix C 

The issue of deterrence in Order 2150.3B implies that a violation under the regulations must have 

been committed with knowledge that it was wrong. One cannot be deterred from committing a 

violation unless the violator knew it was violating a regulation. The FAA admitted that 

Respondent did not intentionally violate any of the regulations alleged. Respondent took 

immediate and corrective action once it became aware of the alleged violations. It further 

believed in good faith the batteries shipped were tested as they rp.et .the UN standards for testing. 

The shipping documents were misprinted only because of clerical error (the labels had the correct 

phone numbers). 

The question of how any penalty or sanction can serve as a deterrent in such a case is the real 

issue. No deterrent could have stopped a clerical error from printing the wrong number on.the 

shipping documents especially when the correct number was on the shipping label. If Respondent 

reasonably believed that the batteries shipped in the 11 shipments were considered tested under 

UN 3840 standards no amount of deterrent could have stopped a reasonable belief. 

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FAA Order 2 150.3B states: 

"When a single instance of noncompliance results in multiple violations of 

general and specific regulations involving the same or similar conduct, the 

FAA ordinarily does not compound the sanction to reflect the amount of 

sanction recommended in the table for each regulatory violation .... " 

Respondent submits that the penalty imposed be reduced to zero or to a nominal amount. 

Respondent prays that the initial decision of the Administrative Law Judge be modified to fmd 

that the respondent did not have the requisite intent to be guilty of violating FAA regulations and 

that the penalty imposed be eliminated. 

Respectfully submitted: 

National Power Corporation by 

Martin A. Blumenthal, its Attorney 

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CERTIFICATE OF SERVICE 

I hereby certify that the foregoing Appeal From Initial Decision was sent via First-Class Mail 

to: 

Attn: Hearing Docket Clerk, AGC-430 

Federal Aviation Administration 

800 Independence Avenue, S.W. Wilbur Wright Building, Suite 2WIOOO 

Washington, D.C. 20591 

Federal Aviation Administration 

2300 E. Devon Ave., AGL-7 

Des Plaines, IL 60018 

Attn.: Kate Barber, Esq. 

Date: 2 September 2015 

Signed: 

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