U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, D.C. Federal Aviation Administration, Complainant, FAADocketNo. 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 inthis matter and in support thereofstates as follows: Respondent herebyincorporates byreference the Initial Decision ofthe Administrative Law Judge as iffully set forth herein for the facts ofthe case, findings oflaw and conclusions ofthe Administrative Law Judge. A. The Administrative Law Judge erred in finding that the totality ofthe evidence and testimony as a whole established aprima 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 ofthe eleven (11) shipments between January 8, 2010 and March 25,2010. 1a. 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 ofat least $250 but not more than $50,000 for each violation. A person acts knowingly when- (A) the personhas actual knowledge ofthe facts giving rise to the violation; or (B) a reasonable person acting inthe 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 

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### 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 elementofthe regulation is scienter. Since the FAA did not establish scienter on the part ofNPC for the alleged violation ofthe regulations cited, any other evidence is moot. Not only did the sole witness for the FAA not establish the scienter element ofthe 

### 2regulation, he negated this element byhis admission above that the alleged violations were not deliberate. In the Matter ofFalcon CrestAviation Supply, Inc. FAA OrderNo. 2007-6 at page 7. The FAA did not meet its burden ofprooffor anyofthe alleged violations. IfNPC did not knowingly violate the regulations, it cannotbe subject to penalty. Logically, how could a penalty deter future behavior, ifthe behavior in question was notintended? Whether or not NPC violated a regulation is notthe sole element ofthe offense. Itmusthave violated the regulation and meant to do so. Assuming arguendo thatNPC violated the regulations regarding the shipments identified in the complaint, the FAA has to prove scienter onNPC's part, and**confessed~that** there was none. On page 28 ofthe ALI's decision he states "The improper shipment oflithium ion batteries can lead to catastrophic consequences. Lack ofknowledge and/or lack ofintent are not defenses." The AU cites no cases for tbis conclusion which contradicts theregulatkm which states that intent is an element.
B. The Administrative LawJudge erred inhis reassessment ofthe penalty.

a. Standards . In determining the amount ofthe penalty, the decisiomnaker must consider "the nature, 

### 3circumstances, extent, and gravity ofthe violation," and, with respect to the violator, "the degree ofculpability, any history ofprior violations, the ability to pay, and any effect on the ability to continue to do business" and "other matters thatjusticerequires" (49 U.S.C. §5123(c)). Federal AviationAdministration v. FrostedAtelier, Inc.,FDMS No. FAA-2011-0294 at page 6 (2013). "[a] civilpenaltymaybe imposed onlyupon proofthat 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 1974 U.S. Code Cong. &Ad. News 7669, 7686; see also TCI Corporation, FAA OrderNo. 92-77 (December 22, 1992), pp. 8-9 n. 13. (emphasis supplied) b. UnderAll ofthe Facts and Findings A Penalty of$12,p00 is Excessive The discussion that follows is somewhat ofan extension ofReBpondent's argume11t thatit lacked the necessary intent to violate the regulations. Respondent still maintains that its lack ofscienter n,ecessitated a decision that it was not guilty ofany violation. Assuming argu'lndo that Respondent did violate one or more regulations, Respondent addresses the.AU's sanction. The ALJ concluded that the FAA's assessment ofa**$~6,000** fine was excesBive and arbitrary. The ALJ concluded that a sanction of$12,000 was appropriate under all ofthe 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 4but not excessive, in order to complywith the underlying purposes ofthe Federal hazardous material transportation law and HMR. ln determining the sanction to be assessed, penalty criteria set forth in 49 U.S.C. § 5123 mustbe considered. These criteria are the nature, circumstances, extent, and gravity ofthe violation; the degree ofculpability ofthe violator; the history ofpast violations (ifany); the abilityto pay; the effect onthe ability to continue to do business; and other matters asjustice requires. FAA Order 2150.3B Appendix C The issue ofdeterrence in Order 2150.3B implies that a violation under the regulations must have beencommittedwithknowledge that it was wrong. One cannotbe deterred from committing a violation unless the violator knew it was violatinga regulation. The FAA admitted that Respondent did not intentionally violate any ofthe regulations alleged. Respondent took immediate and corrective action once itbecame aware ofthe alleged violations. Itfurther believedin good faith the batteries shipped were tested as theyrp.et .the UN standards for testing. The shipping documents were misprinted onlybecause ofclerical error (the labels had the correct phone numbers). The question ofhow anypenalty or sanction can serve as a deterrent in such a case is the real issue. No deterrent could have stopped a clerical error from printingthe wrong number on.the shipping documents especially when the correct number was on the shipping label. IfRespondent reasonablybelievedthat the batteries shipped in the 11 shipments were considered tested under UN 3840 standards no amount ofdeterrent could have stopped a reasonable belief. 5FAA Order 2 150.3B states: "When a single instance ofnoncompliance results inmultiple 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 sanctionrecommended in the table for each regulatory violation ...." Respondent submits that the penalty imposed be reduced to zero orto a nominal amount. Respondent prays that the initial decision ofthe Administrative Law Judgebe modified to fmd that the respondent did not have the requisite intent to be guilty ofviolating 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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