UNITED STATES DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 

WASHINGTON, D.C. 

IN THE MATTER OF 

TGIFREIGHT 

FAA DOCKET NO. CP10NM0012 

(Civil Penalty Action) 

DMS NO. FAA-2010-1079 

RECE\VED 

JAN 2 4 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 by mail on 

October 29, 2013, the law judge found that the Agency had failed to prove that TGI Freight 

knowingly offered hazardous materials, and he dismissed the complaint. On November 8, 2013, . 

the Agency timely served its Notice of Appeal. Nevertheless, on November 11,2013, TGI 

Freight served a document entitled, "Motion for Fees and Costs" in which 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 

implementing the Equal Access to Justice Act, and no net worth exhibit, which is required by 

§ 14.10, was included. On November 20,2013, the Agency submitted an opposition to the 

application in which it points out that 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 Reply to Opposition to TGI Freight's Application for EAJA Fees 

In the Matter ofTGI Freight 

Docket No. CP10NM0012 

Page 1 of8 
§ 14.02, EAJA does not apply. In re Dominion Concepts, FAA Order No. 2005-4 (March 8, 

2005). On December 10, 2013, TGI Freight filed its reply in which it points out that the Agency 

did not challenge it assertion that it was the prevailing party or address substantial justification. 

It asserts, therefore, that the Agency "concedes that its Complaint was substantially unjustified." 

While a reference is made to the description of a net worth exhibit in § 14.11, none was included. 

On December 12, 2013, the Agency withdrew its notice of appeal, 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, it has not sought to supplement or amend its application. 

II. AGENCY'S RESPONSE 

The Agency did not address any of the other matters in its November 20, 2013, 

opposition because no determination as to who was the prevailing party had been made, and in 

accordance with 14 C.F.R. § l4.20(b) the EAJA proceedings were stayed pending the final 

disposition of the Agency's appeal. Thus it was premature to even discuss substantial 

justification or other issues raised by the application. These matters are now ripe, and the 

Agency's response is set forth below. 

As an initial matter, there are a number of requirements that must be met in order for an 

entity to be eligible for an award under EAJA. One of these is that the entity have a net worth 

that is less than the maximum specified for it in the statute. As an eligibility criterion, it is a 

matter that the application must establish, and of which the Agency's regulations (14 C.F.R. 

§ l4.10(b)) require proof as part of the application. Because TGI Freight has failed to submit 

such proof, it has failed to establish its eligibility. For this 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 of TGI Freight 

Docket No. CPIONM0012 

Page 2 of8 
In its December 10,2013, reply, TGI Freight takes issue with the Agency's conclusion 

that EAJA does not apply to proceedings under the Federal hazardous material transportation act. 

It acknowledges that 49 U.S.C. § 5123(b) specifically provides that a violation may be found 

"only after notice and an opportunity for a hearing" while EAJA is applicable "in adjudications 

required by statute to be determined on the record after opportunity for an agency hearing." 

What TGI Freight fails to acknowledge is the lack of any requirement in § 5123 that the 

adjudication be "on the 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 substantially justified in proceeding as it did in this matter. 

What it takes for the Agency's position to be substantially justified is well established. In In 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 that the term "substantially justified," as used 

in the EAJA, means 'justified to a degree that could satisfy a reasonable person," 

or having a "reasonable basis in both law 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). It has been held that the term 

'"substantially justified' does not mean 'justified to a high degree."' Pierce v. 

Underwood, 487 U.S. at 565. Instead, the substantialjustification standard "is 

satisfied ifthere is a 'genuine dispute,' or if reasonable people could differ as to 

the appropriateness of the contested action."(Id). 

Failure to prevail in the underlying action does not raise a presumption of lack of 

substantial justification warranting the payment ofEAJA fees. Bay Area Peace 

Nation Navy v. United States, 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 of Wendt, FAA Order No. 1993-9 at 3 (March 23, 1993). The 

government does not need to show that it had a substantial likelihood of 

prevailing to prove that its litigation position was substantially justified for the 

FAA's Response to Reply to opposition to TGI Freight's Application for EAJA Fees 

In the Matter of TGI Freight 

Docket No. CPIONM0012 

Page 3 of8 
purposes ofEAJA. Bay Area Peace Navy v. United States, 914 F.2d at 1230; In 

the Matter of Wendt, FAA Order No. 1993-4. 

Also in Kuhling, the FAA Decisionmaker 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 law that 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, reprinted in 1980 U.S. Code Cong. & Ad. 

News 4984, 4990. 

Id. at 6. See also, Application of Sun Quest Executive Air 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 it was offering Pro-Poxy, yet it did 

not comply with any of the requirements for the shipment of hazardous materials. There is no 

indication TGI Freight knew at the time of the shipment that Pro-Poxy is a hazardous material, 

but this information was readily available on the Materials Data Safety Sheet prepared by its 

manufacturer. Further, TGI Freight holds itself out as having particular expertise in the 

transportation of hazardous materials. 

The Agency's primary position regarding the law was that under§ 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 on In the Matter of Riverdale Mills Corporation, 

FAA Order No. 2003-10 (September 10, 2003). In Riverside Mills Corporation, the FAA 

Decisionmaker specifically states that whether something is a hazardous material is a question of 

law rather than a question of fact. Thus, because the knowledge requirement of§ 5123(a) 

extends to knowledge of the facts 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 ofTGI Freight 

Docket No. CPIONM0012 

Page 4 of8 
require proof that the person offering a shipment was aware that items in the shipment were 

hazardous. Riverdale Mills Corporation, supra; In the Matter of Smalling, FAA Order No. 94-

31 (September 30, 1994). 1 Because subsections (A) and (B) of§ 5123(a) are separated by the 

disjunctive or rather than the conjunctive and, it was implicitly the Agency's position that the 

reasonable care determination in subsection (B) is not relevant in the analysis of subsection (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 law judge's rejection of it 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 of subsection (A) into question or otherwise even 

attempted to explain how it could possibly have been unreasonable for the Agency to rely on the 

FAA Decisionmaker's decisions in Riverside Mills Corporation and Smalling under the facts and 

circumstances here. 

The primary focus of the inquiry under EAJA is whether the case as a whole was 

substantially justified. Hence, it isn't appropriate to parse each and every position taken during 

the proceeding and separately determine whether it was substantially justified. Hence, that the 

Agency was substantially justified in its position with respect to§ 5123(a)(l)(A) is enough to 

establish that its position with respect to the overall case was substantially justified. 

Nevertheless, the Agency was substantially justified in its alternative position based on 

§ 5123(a)(l)(B). The essence of this alternative position is that because TGI Freight holds itself 

out as having expertise, the trigger terms that were present, and precisely because the shipment 

1 That the Agency did not have to prove knowledge ofthe hazardous nature of a substance was recently reaffirmed 

in In the Matter of Scott Novak, 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 of TGI Freight 

Docket No. CP10NM0012 

Page 5 of8 
had been brought to TGI Freight because of concern it might be hazardous, a reasonable person 

in those circumstances would have inquired further. While there were no specific warnings on 

the packages, the record is devoid of any evidence or indication that such warnings were 

required. Hence, in the Agency's view, it was not reasonable for TGI Freight to have relied on 

the lack of such waruings. Instead, TGI Freight should have obtained an MSDS. 

As with the 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 law judge 

concluded that it amounted to overreaching on the part of the Agency, but that doesn't resolve 

the issue of whether it was a reasonable position for the Agency to have taken. As noted above, 

the legislative history of EAJA indicates it doesn't cover situations in which the Agency has 

advanced in good faith the novel but credible extensions and interpretations of the law. In this 

regard, TGI Freight has not pointed to any interpretations or decisions that the Agency failed to 

consider in pressing this alternate position, and it has not explained how it 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 "on the record." EAJA is not, therefore applicable to proceedings under 

the Federal hazardous materials act. The application should, therefore, be dismissed. 

Even if EAJA were applicable to actions brought under the Federal hazardous materials 

act, TGI Freight has 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 law judge 

FAA's Response to Reply to Opposition to TGI Freight's Application for EAJA Fees 

In the Matter of TGI Freight 

Docket No. CPIONM0012 

Page 6 of8 
rejected its arguments and dismissed the complaint does not establish a lack of substantial 

justification for those positions. 

Based on the foregoing, the ALJ should deny TGI Freight's application for fees and 

expenses under EAJA. 

Respectfully submitted this 16th day of January 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 of8 
CERTIFICATE OF SERVICE 

Re: TGI Freight 

FAA Docket No. CP10NM0012 

DMS NO. FAA-2010-1079 

I certify that on this date I have served a copy of the FAA's Rebuttal Brief by placing it in the United 

States Mail, postage-prepaid, certified mail, return receipt requested, 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 of Hearings, M-20 

U.S. Department of Transportation 

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 of TGI Freight 

Docket No. CPIONM0012 

Page 8 of8