UNITED STATES DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, D.C.
IN THE MATTER OF TGIFREIGHT FAA DOCKET NO. CP10NM0012 (Civil PenaltyAction) DMS NO. FAA-2010-1079 

# RECE\VED JAN 24 2014 

## HEARING DOCKET FAfi-.Q.OI3-0/20

AGENCY'S RESPONSE TO APPLICANT'S REPLY TO COMPLAINANT'S OPPOSITION TO TGI FREIGHT'S APPLICATION FOR ATTORNEY'S FEES AND EXPENSES
I. PROCEDURAL HISTORY In a written initial decision on the underlying merits that was served bymail on October 29, 2013, the lawjudge found that the Agency had failed to prove that TGI Freight knowingly offered hazardous materials, and he dismissed the complaint. OnNovember 8, 2013,
. the Agencytimely served its Notice ofAppeal. Nevertheless, onNovember 11,2013, TGI Freight served a document entitled, "Motion for Fees and Costs" inwhich it seeks $20,318.00 in fees and $3,983.02 in costs under the Equal Access to Justice Act (EAJA), 5 U.S.C. 

### § 504. Curiously, TGI Freight does not cite 14 C.P.R. part 14, which contains the Agency's regulations implementingthe Equal Access to Justice Act, and no net worth exhibit, which is required by § 14.10, was included. OnNovember 20,2013, the Agency submitted an opposition to the application in which it points outthat proceedings under the Federal hazardous material transportation act are not proceedings under 5 U.S.C. § 554. Thus, in accordance with 14 C.P.R. FAA's Response to Replyto Opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGI Freight DocketNo. CP10NM0012 Page 1 of8

### § 14.02, EAJA does not apply. In re Dominion Concepts, FAA OrderNo. 2005-4 (March 8, 2005). OnDecember 10, 2013, TGI Freight filed its reply in which itpoints out that the Agency did not challenge it assertionthatitwas the prevailing party or address substantialjustification. Itasserts, therefore, that the Agency "concedes that its Complaint was substantially unjustified." While a reference is made to the description ofa net worth exhibitin 

### § 14.11, none was included. OnDecember 12, 2013, the Agency withdrew its notice ofappeal, and by Order served on December 20,2013, the Agency's appeal was dismissed. While TGI Freight first became the prevailing party on December 20, 2013, ithas not sought to supplement or amend its application. 

### II. AGENCY'S RESPONSE The Agency did not address any ofthe other matters inits November 20, 2013, opposition because no determination as to who was the prevailingparty had been made, and in accordance with 14 C.F.R. § l4.20(b) the EAJA proceedings were stayedpending the final disposition ofthe Agency's appeal. Thus it was premature to evendiscuss substantial justification or other issues raised bythe application. These matters are nowripe, and the Agency's response is set forth below. As aninitial matter, there are a number ofrequirements that must be met in order for an entity to be eligible for an award under EAJA. One ofthese is that the entity have a net worth that is less than the maximum specified for itinthe statute. As an eligibility criterion, it is a matter that the application must establish, and ofwhich the Agency's regulations (14 C.F.R. § l4.10(b)) require proofas part ofthe application. Because TGI Freight has failed to submit suchproof, it has failed to establish its eligibility. Forthis reason, alone, the application should be denied.
FAA's Response to Reply to Opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGI Freight DocketNo. CPIONM0012 Page 2 of8Inits December 10,2013, reply, TGI Freighttakes issue withthe Agency's conclusion that EAJA does not apply to proceedings under the Federal hazardous material transportation act. Itacknowledges that 49 U.S.C. § 5123(b) specifically provides that a violation maybe found "only after notice and an opportunity for a hearing" while EAJA is applicable "in adjudications requiredby statute to be determined onthe record after opportunity for an agency hearing." What TGI Freight fails to acknowledge is the lack ofany requirement in § 5123 thatthe adjudication be "onthe record." Because § 5123 does not so require, EAJA is not applicable to
cases under the Federal hazardous materials transportation act. Dominion Concepts, supra. lfEAJA were applicable to cases under§ 5123, the present application should still be denied because the Agency was substantiallyjustified inproceeding as it did in this matter. What it takes for the Agency's positionto be substantiallyjustified is well established. InIn the Matter of Richard W Kuhling, FAA Order No. 2005-13 (August15, 2005) at 4-5, the FAA Decisionmaker states: The Supreme Court has explained thatthe term "substantiallyjustified," as used inthe EAJA, means 'justifiedto a degree that could satisfy a reasonable person," or having a "reasonable basis inbothlaw and fact." Immigration and Naturalization Service v. Jean, 496 U.S. 154, 158 n. 6 (1990), citing Pierce v. Underwood, 487 U.S. 552, 565-566 (1988). Ithas beenheldthat the term '"substantiallyjustified' does not mean 'justifiedto a high degree."' Pierce v. Underwood, 487 U.S. at 565. Instead, the substantialjustification standard "is satisfied ifthere is a 'genuine dispute,' or ifreasonable people could differ as to the appropriateness ofthe contested action."(Id). Failure to prevail in the underlying action does notraise a presumption oflack of substantialjustificationwarranting the payment ofEAJA fees. BayArea Peace Nation Navy v. UnitedStates, 914 F.2d 1224, 1231 n. 4 (9th Cir. 1990); In the Matter of Pacific Sky Supply, FAA Order No. 1995-18 at 11 (August 4, 1995); In the Matter ofWendt, FAA OrderNo. 1993-9 at 3 (March 23, 1993). The government does not need to showthat it had a substantial likelihood of prevailingto prove that its litigation position was substantiallyjustified for the
FAA's Response to Reply to opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGI Freight Docket No. CPIONM0012 Page 3 of8purposes ofEAJA. BayArea PeaceNavy v. UnitedStates, 914 F.2d at 1230; In the Matter ofWendt, FAA Order No. 1993-4. Also in Kuhling, the FAADecisionmaker notes: Congress did not intend that the EAJA should deter Federal agencies from "advancing in good faith the novel but credible extensions and interpretations of the lawthat often underlie vigorous enforcement efforts." In the Matter of Pacific Sky Supply, FAA Order No. 1995-18 at 12 (August 4, 1995), quoting H.R. Rep No. 96-1418, 961 h Cong. 2d Sess. 11, reprintedin 1980 U.S. Code Cong. & Ad. News 4984, 4990. Id. at 6. See also,Application of Sun Quest ExecutiveAir Charter, Inc., FDMS No. FAA-2011- 1294 at 2 (April 30, 2012) (Initial Decision). Here, there was no dispute as to the relevant facts. The product, Unitex Pro-Poxy 400, is

a hazardous material, and TGI Freight had actual knowledge itwas offering Pro-Poxy, yet it did not comply with any ofthe requirements for the shipment ofhazardous materials. There is no indication TGI Freightknew atthe time ofthe shipment that Pro-Poxy is a hazardous material, butthis information was readily available onthe Materials Data Safety Sheet prepared by its manufacturer. Further, TGI Freight holds itselfout as having particular expertise in the transportation ofhazardous materials. The Agency's primary positionregarding the law was thatunder§ 5123(a)(l)(A), knowledge that it was shipping the Pro-Poxy was sufficient to establish that TGI Freight acted knowingly. This position is based squarely onIn the Matter of Riverdale Mills Corporation, FAA OrderNo. 2003-10 (September 10, 2003). InRiverside Mills Corporation, the FAA Decisionmaker specifically states that whether something is a hazardous material is a question of law rather than a question offact. Thus, because the knowledge requirement of§ 5123(a) extends to knowledge ofthefacts giving rise to the violation, proving a violation does not

FAA's Response to Reply to Opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGIFreight DocketNo. CPIONM0012 Page 4 of8require proofthat the person offering a shipment was aware that items inthe shipment were hazardous. Riverdale Mills Corporation, supra; In the Matter of Smalling, FAA OrderNo. 94- 31 (September 30, 1994). 1 Because subsections (A) and (B) of§ 5123(a) are separatedbythe disjunctive or ratherthanthe conjunctive and, it was implicitly the Agency's position that the reasonable care determination in subsection (B) is notrelevant inthe analysis ofsubsection (A). The issue now is not whether the Agency was correct in its analysis. Rather, it is whether it was reasonable under the circumstances for the Agency to have relied on this position. Neither the lawjudge'srejection ofit nor the Agency's decision to withdraw its appeal answers that question. In this regard, TGI Freight has not identified any precedent, binding or otherwise, that
even arguably calls the Agency's analysis ofsubsection (A) into question or otherwise even attempted to explainhowit could possibly have been unreasonable for the Agency to rely on the FAA Decisionmaker's decisions inRiverside Mills Corporation and Smalling under the facts and circumstances here. The primary focus ofthe inquiry under EAJAis whether the case as a whole was substantiallyjustified. Hence, it isn't appropriate to parse each and every position taken during the proceeding and separately determine whether it was substantiallyjustified. Hence, that the Agency was substantiallyjustified in its position with respect to§ 5123(a)(l)(A) is enough to establish that its positionwith respect to the overall case was substantiallyjustified. Nevertheless, the Agency was substantiallyjustified in its alternative position based on § 5123(a)(l)(B). The essence ofthis alternative positionis that because TGI Freight holds itself out as having expertise, the trigger terms that were present, and precisely because the shipment 1That the Agency didnot have to prove knowledge ofthe hazardous nature ofa substance was recentlyreaffirmed inIn the Matter of ScottNovak, FAA Order No. 2014-1 (January 2, 2014) at 13. FAA's Response to Reply to Opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGI Freight Docket No. CP10NM0012 Page 5 of8had beenbroughtto TGI Freight because ofconcern it mightbe hazardous, a reasonable person in those circumstances would have inquired further. While there were no specific warnings on the packages, the record is devoid ofany evidence or indicationthat such warnings were required. Hence, inthe Agency's view, it was not reasonable for TGI Freight to have relied on the lack ofsuch waruings. Instead, TGI Freight should have obtained anMSDS. As withthe Agency's position with respect to§ 5123(a)(l)(A), the issue now is not whether the Agency was correct, but, rather, whether its position was reasonable. The lawjudge concluded that it amounted to overreaching on the part ofthe Agency, butthat doesn'tresolve the issue ofwhether itwas a reasonable position for the Agency to have taken. As noted above, the legislative history ofEAJA indicates it doesn't cover situations in which the Agency has advanced in good faith the novel butcredible extensions and interpretations ofthe law. Inthis regard, TGI Freighthas notpointed to any interpretations or decisions thatthe Agency failed to consider inpressing this alternate position, and it has not explained howit concludes it was unreasonable for the Agency to have made the argument. III. SUMMARY The Federal hazardous materials act requires an opportunity for a hearing, but does not require a deterruination "onthe record." EAJA is not, therefore applicable to proceedings under the Federal hazardous materials act. The application should, therefore, be dismissed. Even ifEAJA were applicable to actions brought under the Federal hazardous materials act, TGI Freighthas not established its eligibility for an award. Further, as discussed above, the Agency had a reasonable basis in law and fact for its positions in this matter. That the lawjudge

FAA's Response to Reply to Opposition to TGI Freight's Application for EAJA Fees In the Matter ofTGI Freight DocketNo. CPIONM0012 Page 6 of8rejected its arguments and dismissed the complaint does not establish a lack ofsubstantial justificationfor those positions. Based onthe foregoing, the ALJ should deny TGI Freight's application for fees and expenses under EAJA. Respectfully submitted this 

### 16th day ofJanuary 

### 2014.

HOWARD L.MARTIN, JR. Regional Counsel

By:
_________ _ Cheryl M. Jones Senior Attorney

FAA's Response to Reply to Opposition to TGI Freight's Application for EAJAFees In the Matter ofTGl Freight Docket No. CPIONM0012 Page 7 of8CERTIFICATE OF SERVICE

Re: TGI Freight FAADocketNo. CP10NM0012 DMS NO. FAA-2010-1079 I certifythat onthis date I have served a copy ofthe FAA'sRebuttal Briefby placing it inthe United States Mail, postage-prepaid, certified mail, return receiptrequested, addressed as follows: Original and 1 Copy Federal Aviation Administration 800 Independence Avenue, SW Washington, DC 20591 ATTN: Hearing Docket Clerk, AGC-430 Wilbur Wright Building-Suite 2Wl000 One Copy
The Honorable Richard C. Goodwin Office ofHearings, M-20 U.S. Department ofTransportation 1200 New Jersey Avenue, S.E. (Ell-310) Washington, D.C. 20590 Fax: 202-366-7536
Rebecca J. Hozubin, Esq. Wilkerson Hozubin 310 K Street, Suite 405 Anchorage,AK 99501 Fax: 907-276-5291

FAA's Response to Reply to Opposition to TGI Freight's Application for BAJA Fees In the Matter ofTGI Freight DocketNo. CPIONM0012 Page 8 of8