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UNITED STATES OFAMERICA FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C. 

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) In the matter of ) ) FAADocketNo. CP10GL0212 FEDERAL AVIATION ) ADMINISTRATION, ) ) FDMS No. FAA-2013-0620

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### ) ) NATIONAL POWER CORPORATION )


### COMPLAINANT'S REPLY BRIEF Pursuantto 14 C.P.R.§ 13.233(e), Complainant submits this Reply Briefin response to Respondent's Appeal from Initial Decision ofAdministrative LawJudge Richard C. Goodwin (the "ALI") issued onJuly 24, 2015 in the above captioned matter. 

### I. STATEMENT OF THE CASE AND STATEMENT OF FACTS The Complainant's statement ofthe case and facts are set forth in its Appeal Brief, which was filed on October 19, 2015. 

### II. STATEMENT OF THE ISSUES 1. Whether the ALJproperly determined thatRespondentviolated the Department ofTransportationHazardous Materials Regulations. 2. WhetherRespondent's contention that theALJ's sanction assessment was excessive is without merit. III. ARGUMENT 1. The ALJ's finding that Respondent knowinglyviolated the Department of TransportationHazardous Materials Regulations is supportedby a preponderance ofthe reliable, probative, and substantial evidence, and is consistentwith applicable law, precedent, and public policy.Respondent argues that the ALI's findings ofviolation should be vacated because Complainant did not "establish scienter onthe part of[Respondent] for the alleged violation ofthe regulations cited." Resp'tAppeal Br. at 2. According to Respondent, Complainantmustprove that a respondent deliberately violated the Department of TransportationHazardous Materials regulations (HMRs) to establish HMR violations. 

### Id. at 2-3. This argument is withoutbasis in law. Section 5123(a)(l) ofTitle 49 U.S.C. provides that a person canbe subject to a civil penalty ifthat person "knowingly" violates a regulation contained in the HMRs. The statute sets forth the test for determining whether a person acted knowingly when offering, accepting, or transporting hazardous materials (HAZMAT) in commerce. Section 5123(a)(l)provides: "[a] person acts knowingly when: (A) the personhas actual knowledge ofthe facts giving rise to the violation; or (B) areasonable person acting in the circumstances and exercising reasonable care would have that knowledge." 

### See, Riverdale Mills Corp., FAA OrderNo. 2003-10, 2003 WL 22480437 at *3 (Sept. 12, 2003), 

### citing49 U.S.C. 

### § 5123(a)(l). "[K]nowledge ofthe lawis unnecessary; persons
are liable even ifthey do not knowthey are breaking the law." 

### Riverdale Mills Corp., 2003 WL 22480437 at *3; 

### Scott H Smalling, FAA Order No. 94-31, 1994 WL 899663 at *3 (Oct. 5, 1994)). Respondent's argument that a violation occurs only whenthere is a deliberate violation is off-base. Complainant must only prove thatrespondent knew ofthe underlying facts or that a reasonable person acting in the circumstances and exercising reasonable care would have that knowledge. Complainantis not required to provethat Respondent actedintentionally to violate the HMRs. Indeed, the results ofoffering

2HAZMAT for airtransportation- whetherintentionally or unintentionally- canbe equally catastrophic. Infact, Respondent would havebeen subject to an aggravated civil penalty hadit intentionally violated theHMRs. See, e.g., In the Matter of AmericanAir Network, FAA Order No. 2006-5,2006 WL 465369 (Feb. 10, 2006); In the Matter ofTCI Corp., FAA Order 92-77, 1992 WL 753226 (Dec. 21, 1992). 1 Respondent's citation to Falcon CrestAviation Supply, Inc., FAA Order 2007-6, 2007 WL 3159415 (Aug. 

### 1, 2007) is not supportive ofits argument. Resp't Appeal Br. at 2. Falcon Crest involved a shipment ofHAZMAT by air after the respondent inthat

case otieredthe shipmentfor transportation by ground and the shipper ofthe HAZMAT expresslytold Falcon Crestthatitwould ship HAZMATby ground and priced the shipmentin accordance to its ground shipment pricing structure. 

### !d. at 2-3. The Decisiomnaker found that "Falcon Crest did not offer or intendthe shipment for air transport withinthe meaning ofthe regulations, and did not knowingly violate them." Falcon Crest, 2007 WL 3159415 at *7. Unlike therespondent inFalcon Crest, Respondent knewthat it was offering the 

### 11 shipments ofHAZMAT for air transportation. Respondent offered 11 separate shipments oflithinm ionbatteries to two separate destinations, one in Santa Rosa, California, the other in Burnaby, British Columbia, and completed 11 separate shipper's declarations for dangerous goods for thatpurpose. (Tr. 23: 4-13; Exh. C1-Cll). Further, Respondentknewit was offering the HAZMATfor air transportation as evidenced by Respondent's preparingthe shipments in accordance with international HAZMA T

1Had Respondent intentionaiJy shipped the batteries, it would have been subject to criminal penalties. See. e.g.. In theMatter of Mole-Master Services Cmp., FAA Order No. 2010-1 I,2010 WL7940347 at *8 (Jun. 16, 2010) (boldface in original) ("[h]ad Mole-Masterknowu and intentionally shipped the hazardous material, it wouldhave been subjectto criminal penalties under 49 U.S.C. § 5124, which provides for criminal fines under Title 18 ofthe U.S. Code and imprisomnent or both").
3shipping standards. (Tr. 71: 14-20; 77: 3-11; Exh. Cl-Cll). Therefore, the ALI's fmding that Respondent knowingly offered HAZMAT for air transportation is supported bythe statute, case law, and the evidence and testimony provided at the hearing. 2. The ALJ's sanction determination was not excessive. Infact, as explained in Complainant's appeal in this case, the ALJ's sanction determination was, itself, significantly below an amount thatwould have been consistent with agency sanction guidance. Respondent argues that the ALJ's sanction of$12,000 is excessive based onits beliefthat such a sanction does not have a deterrent effect onunintentional violations, that its "corrective actions" were worthy ofmitigation, and that it should have been assessed for a single instance ofnon-compliance (albeitresulting in multiple violations). Resp'tAppeal Br. at 4-6. Respondent's arguments are misguided for the following
reasons. A. Sanction is not only appropriate for cases involving intentional violations. Respondent's assertion that sanction provisions inFAA Order 2150.3B "impl[y] that a violationunder the regulations must have been committed withknowledge that it
was wrong" is without merit. The Order provides no such limitation. It states that "[a]s a general matter, a sanction shouldbe imposedthat is sufficiently deterrent but not excessive, in order to comply with the underlying purposes ofthe Federal hazardous material transportation law and HMR." FAA Order 2150.3B at C-2. These laws regulate the shipment ofHAZMAT and proscribe noncompliant shipments whether deliberate or inadvertent. As mentioned above, transporting noncompliant HAZMATby air can have catastrophic consequences whether the noncompliance is due to deliberate or inadvertent actions. In fact, 49 U.S.C. 

### § 5123(c)(2) is clear that in assessing a civilpenalty, the

4degree ofculpability ofthe violator mustbe taken into account. The reference to "degrees ofculpability" embodies a range from inadvertent to deliberate and cannot be reasonably understood to suggest that the lawapplies only to intentional violations ofthe HMRs. While Respondent claims that a civil penalty will not serve to deter it from making a clerical error regarding the emergency contact information or from having the beliefthat the batteries were tested under international standards, a civil penalty
can -- and should-- ensure that Respondent implements swift and positive corrective actions to avoid such violations inthe future. Consistent with applicable HAZMAT laws and agency policy, the Decisionmaker has assessed sanctions innumerous cases inwhich the respondents did not act deliberately 

### inviolating theregulations. See, e.g., In the Matter of ScottNovak, FAA OrderNo. 2014-1, 2014 WL493035 (Jan. 2, 2014) (assessing a civilpenalty wherethe respondent did not act deliberately in offering a shipment ofhouse-hold goods that included HAZMAT for air transportation); In the Matter of Frost ad Atelier, Inc., FAA OrderNo. 2013-5,2013 WL 5288992 (Sept. 5, 2013)(assessing a civil penaltyfor nondeliberate conduct whenrespondent attempted to ship HAZMAT in checked luggage aboard an aircraft). In addition, the there is no basis to mitigate the sanction based on Respondent's beliefthatthey were in full compliance resulting inwhat Respondent believes are inadvertent violations. AlthoughRespondent may have thought it was incompliance, it is still responsible for the violations because it knew ofthe facts giving rise to the violations, namelythat it was shipping lithium ion batteries by air transportation. See, In
re ScottNovak, FAA OrderNo. 2014-1, 2014 WL 493035 at *8 (Jan. 2, 2014). Further,

5FAA Order 2150.3B factors in whether or not a respondent acted mistakenly or intentionally. Among the Offense Categories contained inAppendix C is a categoryfor "Deliberate Violation, or other significant aggravation," FAA Order 2150.3B, Appendix C, Figure C-1, which provides heightened penalties where the violations are deliberate. Therefore, the fact that a violation may be inadvertent does notmitigate the penalty. On the contrary, a deliberate act serves to aggravate the penalty. See, e.g., AmericanAir Network, FAA OrderNo. 2006-5, 2006 WL 465369; TCI Corp., FAA Order 92-77, 1992 WL 753226. Respondent contends that deterrence can onlybe effective for intentional violations ofregulations. Resp'tAppeal Br. at 5. Because Respondent acted inadvertently, it believes that any sanction levied would not serve any deterrent effect. 

### !d. Aside from the issue ofdeterrence, as discussed above, Respondent is liable for a civil penalty for its inadvertent violations (and wouldbe liable for a significantly higher penaltyhad the violations been deliberate). In any event, deterrence generally serves two separate functions: (1) specific deterrence in which the person cited for a violation canbe deterred from committing another violation; (2) or general deterrence in which others, upon seeing a person cited for a violation, can also be deterred from committing a similar violation. See, e.g., FAA v. CharlesA Schultz, FAA OrderNo. 89-0005, 1989 WL 550061 at *5 (Nov. 9, 1999) (stating that a civil penalty "hopefully will deter Respondent from such carelessness in the future"
...and that "ifthis decisionis publicized, it will deter others from committing similar violations inthe future"). Here, assessing a civil penalty for Respondent's violations can serve to enhance Respondent's vigilance by compelling

6comprehensive actions inthe future in order to eliminate factors that may lead to inadvertent violations. It can also have a similar effect on similarly situated entities. B. Respondent's violations were not the result ofa single instance of noncompliance. Respondent violated six different regulations for 11 separate shipments. As discussed in Complainant's appeal brief, the statute, Agency guidance, and case law all supportthe fact that a separate penalty should be assessedfor separate violations. Inthis case, there were 11 separate shipments with different airway bills shipped over a twoand a half-monthperiod and to two separate locations. Exh. C1-Cll. 49 U.S.C. 

### § 5123 states "[a] personthatknowing!y violates this chapter ora regulation, order, special permit, or approval issued underthis chapter is liable to the United States Government for a civil penalty ofat least $250 butnot more than $50,000 for 

### each violation." 49 U.S.C. 

### § 5123(a) (2010) (emphasis added). FAA Order 2150.3B provides guidance in this areaby stating:

...for purposes ofdetermining the appropriate sanction, each separate shipmentwith separate air waybill or shipping papers, separate destination, and/or other evidence establishing it as a separate shipment, is ordinarily considered as a separate incidentfor purposes ofapplying the sanction guidance analysis. FAA Order 2150.3B Appendix Cat 6-7. Further, the Decisionrnaker has applied FAA guidance consistently, as seenin case law, to assess separate civilpenalties for each separate shipment. 

### See In re Empire Airlines, FAA Order No. 2012-10, 2012 WL 5378722 at 

## *12 (Oct. 11, 2012) (involving a case inwhich there were two separate hazardous materials shipments and the Decisionrnaker calculated the sanction applicable to each shipment separately). Here, the ALI's decision to disregard the 11 separate



### 7shipments resulting in 66 separate violations for purposes ofsanction is contrary to precedent and is inconsistent with theFAA's validly adopted sanction guidance. C. There was insufficient corrective action taken by Respondent to warrant mitigating the civil penalty. 49 U.S.C. 

### § 5123(c) requires that when considering a penalty the FAA shall consider the nature and circumstances oftheviolation, the culpability ofthe violator, whether the violator has a history ofprior violations, the violator's ability to pay, and other matters thatjusticerequires. FAA Order2150.3B incorporates these considerations into the categories established inthe guidelines as well as the weighting analysis that is performed in accordance with the guidelines. 64 FR 19443, 19444. These guidelines were established to promote consistency among similar cases. Jd. Respondent's contention that its corrective actions are sufficient for mitigationis without merit. FAA Order 2150.3B states the FAAmay take into account corrective actions in order to reduce sanction but "[c]orrective actions thatjustifY reduction ofthe recommended penalty must exceed the minimum legal requirements." FAA Order 2150.3B, Appendix Cat4-5; See also,In re Atlas Frontiers, LLC, FAA OrderNo. 2010- 10,2010 WL 7940346 at *7 (June 16, 2010) (quoting FAA Order 2150.3A for the proposition that in order for corrective action to bemitigating, it must exceed the minimum legal requirements). Further, it is a respondent's burden to prove corrective action as an affirmative defense. In re Seven's Paint & Wallpaper Co., FAA OrderNo. 2001-6,2001 WL 629388 at *3 (May 15, 2001). Inthis case, there is no evidence that the corrective actions put into effect byRespondent did any more thanmeet the legal requirements for transporting untested prototype batteries and training employees who ship HAZMAT. (Tr 56-8: 19-4;

883-4: 17-20). Respondent updated the emergency response number, "instructed its employees to discontinue air freight shipments ofuntested prototype batteries pending a receipt ofspecial approval from PHMSA", and its "employees were provided functions 

### (sic) specific training." (Tr. 56: 3-9; 57: 7-13; 114-5: 13-8). Having a correct emergency response number that is answered 24-hours a day (as required bytheregulations), receiving special approval from PHMSA (as required by the regulations), and providing function specific training to employees who ship HAZMAT (as required by the regulations), are not sufficient to mitigate the sanction because these corrective actions did nothing more than help Respondent meet its regulatory obligations. Inthis case there is no evidence that the corrective actions put into effect byRespondent did any more than meetthe legal requirements for transporting untestedprototype batteries and training employees who ship HAZMAT. (Tr 56-8: 19-4; 83-4: 17-20). Respondent did not present the kind ofpositive, comprehensive, and overarching corrective action beyond regulatory requirements that will bestprevent the violations that it committed inthis case from occurring again. 

### IV. CONCLUSION For all ofthe foregoing reasons, Complainantrespectfully requests the FAA Decisionmaker to affirm the ALI's finding that Respondent knowingly committedthe violations alleged, deny Respondent's appeal that the ALI'spenalty assessment was excessive, and assess a civil penalty of$66,000.



### 9Dated: November 12,2015 Respectfully submitted, Peter Lynch Assistant ChiefCounsel

for Enforcement 

# By:C-1!2

Charles Raley, Senior Attorney Enforcement Division, AGC-300 Office ofthe ChiefCounsel Federal Aviation Aclnllnistration 800 Independence Avenue, S.W. Washington, DC 20591 Phone: (202) 267-3357 Facsimile: (202) 267-5106

10Certificate ofService I herebycertifY that onthis date I have served by certified mail, one original and
one copy ofComplainant's Reply BriefIn the Matter of National Power Corporation, FDMS No. FAA-2013-0620, to: Federal AviationAdministration 800 Independence Avenue, S.W. Washington, D.C. 20591 Attn: FAA Decisiomnaker, AGC-430 WilburWrightBuilding- Suite 2W1000 In addition, I hereby certifY that on this date I have served one copy ofthe foregoing documentby certified mail to: Martin A. Blumenthal, Esq. 1Northfield Plaza, Suite 300 Northfield, IL 60093

Dated: November 12, 2015