D 

UNITED STATES OF AMERICA 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

l 8 20!5 

DOCKI=T 

) 

In the matter of ) 

) FAADocketNo. CP10GL0212 

FEDERAL AVIATION ) 

ADMINISTRATION, ) 

) FDMS No. FAA-2013-0620 

~ ) 

) 

NATIONAL POWER CORPORATION ) 

COMPLAINANT'S REPLY BRIEF 

Pursuant to 14 C.P.R.§ 13.233(e), Complainant submits this Reply Brief in 

response to Respondent's Appeal from Initial Decision of Administrative Law Judge 

Richard C. Goodwin (the "ALI") issued on July 24, 2015 in the above captioned matter. 

I. STATEMENT OF THE CASE AND STATEMENT OF FACTS 

The Complainant's statement of the 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 ALJ properly determined that Respondent violated the 

Department of Transportation Hazardous Materials Regulations. 

2. Whether Respondent's contention that the ALJ's sanction assessment was 

excessive is without merit. 

III. ARGUMENT 

1. The ALJ's finding that Respondent knowingly violated the Department of 

Transportation Hazardous Materials Regulations is supported by a 

preponderance of the reliable, probative, and substantial evidence, and is 

consistent with applicable law, precedent, and public policy. 
Respondent argues that the ALI's findings of violation should be vacated because 

Complainant did not "establish scienter on the part of [Respondent] for the alleged 

violation of the regulations cited." Resp't Appeal Br. at 2. According to Respondent, 

Complainant must prove that a respondent deliberately violated the Department of 

Transportation Hazardous Materials regulations (HMRs) to establish HMR violations. Id. 

at 2-3. This argument is without basis in law. 

Section 5123(a)(l) of Title 49 U.S.C. provides that a person can be subject to a 

civil penalty if that 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 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." See, 

Riverdale Mills Corp., FAA Order No. 2003-10, 2003 WL 22480437 at *3 (Sept. 12, 

2003), citing 49 U.S.C. § 5123(a)(l). "[K]nowledge of the law is unnecessary; persons 

are liable even if they do not know they 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 when there is a deliberate 

violation is off-base. Complainant must only prove that respondent knew of the 

underlying facts or that a reasonable person acting in the circumstances and exercising 

reasonable care would have that knowledge. Complainant is not required to prove that 

Respondent acted intentionally to violate the HMRs. Indeed, the results of offering 

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HAZMAT for air transportation- whether intentionally or unintentionally- can be 

equally catastrophic. In fact, Respondent would have been subject to an aggravated civil 

penalty had it intentionally violated the HMRs. See, e.g., In the Matter of American Air 

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 Crest Aviation Supply, Inc., FAA Order 2007-6, 

2007 WL 3159415 (Aug. 1, 2007) is not supportive of its argument. Resp't Appeal Br. 

at 2. Falcon Crest involved a shipment ofHAZMAT by air after the respondent in that 

case otiered the shipment for transportation by ground and the shipper of the HAZMAT 

expressly told Falcon Crest that it would ship HAZMAT by ground and priced the 

shipment in accordance to its ground shipment pricing structure. !d. at 2-3. The 

Decisiomnaker found that "Falcon Crest did not offer or intend the shipment for air 

transport within the meaning of the regulations, and did not knowingly violate them." 

Falcon Crest, 2007 WL 3159415 at *7. 

Unlike the respondent in Falcon Crest, Respondent knew that it was offering the 

11 shipments of HAZMAT for air transportation. Respondent offered 11 separate 

shipments oflithinm ion batteries 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 that purpose. (Tr. 23: 4-13; Exh. C1-Cll). Further, 

Respondent knew it was offering the HAZMAT for air transportation as evidenced by 

Respondent's preparing the shipments in accordance with international HAZMA T 

1 Had Respondent intentionaiJy shipped the batteries, it would have been subject to criminal penalties. See. 

e.g.. In the Matter of Mole-Master Services Cmp., FAA Order No. 2010-1 I, 2010 WL 7940347 

at *8 (Jun. 16, 2010) (boldface in original) ("[h]ad Mole-Masterknowu and intentionally shipped the 

hazardous material, it would have been subject to criminal penalties under 49 U.S.C. § 5124, which 

provides for criminal fines under Title 18 of the U.S. Code and imprisomnent or both"). 

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shipping 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 by the 

statute, case law, and the evidence and testimony provided at the hearing. 

2. The ALJ's sanction determination was not excessive. In fact, as explained in 

Complainant's appeal in this case, the ALJ's sanction determination was, 

itself, significantly below an amount that would have been consistent with 

agency sanction guidance. 

Respondent argues that the ALJ's sanction of$12,000 is excessive based on its 

belief that such a sanction does not have a deterrent effect on unintentional violations, 

that its "corrective actions" were worthy of mitigation, and that it should have been 

assessed for a single instance of non-compliance (albeit resulting in multiple violations). 

Resp't Appeal 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 in FAA Order 2150.3B "impl[y] 

that a violation under the regulations must have been committed with knowledge that it 

was wrong" is without merit. The Order provides no such limitation. It states that "[a]s a 

general matter, a sanction should be imposed that is sufficiently deterrent but not 

excessive, in order to comply with the underlying purposes of the 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 HAZMAT by 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 civil penalty, the 

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degree of culpability of the violator must be taken into account. The reference to 

"degrees of culpability" embodies a range from inadvertent to deliberate and cannot be 

reasonably understood to suggest that the law applies only to intentional violations of the 

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 

belief that 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 in the future. 

Consistent with applicable HAZMAT laws and agency policy, the Decisionmaker 

has assessed sanctions in numerous cases in which the respondents did not act 

deliberately in violating the regulations. See, e.g., In the Matter of Scott Novak, FAA 

Order No. 2014-1, 2014 WL 493035 (Jan. 2, 2014) (assessing a civil penalty where the 

respondent did not act deliberately in offering a shipment of house-hold goods that 

included HAZMAT for air transportation); In the Matter of Frost ad Atelier, Inc., FAA 

Order No. 2013-5,2013 WL 5288992 (Sept. 5, 2013)(assessing a civil penalty for nondeliberate conduct when respondent 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 

belief that they were in full compliance resulting in what Respondent believes are 

inadvertent violations. Although Respondent may have thought it was in compliance, it is 

still responsible for the violations because it knew of the facts giving rise to the 

violations, namely that it was shipping lithium ion batteries by air transportation. See, In 

re Scott Novak, FAA Order No. 2014-1, 2014 WL 493035 at *8 (Jan. 2, 2014). Further, 

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FAA Order 2150.3B factors in whether or not a respondent acted mistakenly or 

intentionally. Among the Offense Categories contained in Appendix C is a category for 

"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 not mitigate the penalty. On 

the contrary, a deliberate act serves to aggravate the penalty. See, e.g., American Air 

Network, FAA Order No. 2006-5, 2006 WL 465369; TCI Corp., FAA Order 92-77, 1992 

WL 753226. 

Respondent contends that deterrence can only be effective for intentional 

violations of regulations. Resp't Appeal Br. at 5. Because Respondent acted 

inadvertently, it believes that any sanction levied would not serve any deterrent effect. !d. 

Aside from the issue of deterrence, as discussed above, Respondent is liable for a civil 

penalty for its inadvertent violations (and would be liable for a significantly higher 

penalty had the violations been deliberate). In any event, deterrence generally serves two 

separate functions: (1) specific deterrence in which the person cited for a violation can be 

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. Charles A Schultz, FAA Order No. 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 "if this decision is publicized, it will deter 

others from committing similar violations in the future"). Here, assessing a civil penalty 

for Respondent's violations can serve to enhance Respondent's vigilance by compelling 

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comprehensive actions in the 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 of a 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 

support the fact that a separate penalty should be assessed for separate violations. In this 

case, there were 11 separate shipments with different airway bills shipped over a twoand a half-month period and to two separate locations. Exh. C 1-Cll. 49 U.S. C. § 5123 

states "[a] person that knowing! y 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." 49 

U.S.C. § 5123(a) (2010) (emphasis added). FAA Order 2150.3B provides guidance in 

this area by stating: 

... for purposes of determining the appropriate sanction, each separate 

shipment with separate air waybill or shipping papers, separate 

destination, and/or other evidence establishing it as a separate shipment, is 

ordinarily considered as a separate incident for purposes of applying the 

sanction guidance analysis. 

FAA Order 2150.3B Appendix Cat 6-7. Further, the Decisionrnaker has applied FAA 

guidance consistently, as seen in case law, to assess separate civil penalties for each 

separate shipment. See In re Empire Airlines, FAA Order No. 2012-10, 2012 WL 

53 78722 at * 12 (Oct. 11, 2012) (involving a case in which 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 

7 
shipments resulting in 66 separate violations for purposes of sanction is contrary to 

precedent and is inconsistent with the FAA'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 ofthe violation, the culpability of the violator, 

whether the violator has a history of prior violations, the violator's ability to pay, and 

other matters that justice requires. FAA Order 2150.3B incorporates these considerations 

into the categories established in the 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 mitigation is 

without merit. FAA Order 2150.3B states the FAA may take into account corrective 

actions in order to reduce sanction but "[c]orrective actions that justifY reduction of the 

recommended penalty must exceed the minimum legal requirements." FAA Order 

2150.3B, Appendix Cat 4-5; See also ,In re Atlas Frontiers, LLC, FAA Order No. 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 be mitigating, 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 Order No. 2001-6,2001 WL 629388 

at *3 (May 15, 2001). In this case, there is no evidence that the corrective actions put into 

effect by Respondent did any more than meet the legal requirements for transporting 

untested prototype batteries and training employees who ship HAZMAT. (Tr 56-8: 19-4; 

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83-4: 17-20). Respondent updated the emergency response number, "instructed its 

employees to discontinue air freight shipments of untested prototype batteries pending a 

receipt of special 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 by the regulations), 

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. In this case there 

is no evidence that the corrective actions put into effect by Respondent did any more than 

meet the legal requirements for transporting untested prototype batteries and training 

employees who ship HAZMAT. (Tr 56-8: 19-4; 83-4: 17-20). Respondent did not 

present the kind of positive, comprehensive, and overarching corrective action beyond 

regulatory requirements that will best prevent the violations that it committed in this case 

from occurring again. 

IV. CONCLUSION 

For all of the foregoing reasons, Complainant respectfully requests the FAA 

Decisionmaker to affirm the ALI's finding that Respondent knowingly committed the 

violations alleged, deny Respondent's appeal that the ALI's penalty assessment was 

excessive, and assess a civil penalty of $66,000. 

9 
Dated: November 12,2015 

Respectfully submitted, 

Peter Lynch 

Assistant Chief Counsel 

for Enforcement 

By:C-1!2 

Charles Raley, Senior Attorney 

Enforcement Division, AGC-300 

Office of the Chief Counsel 

Federal Aviation Aclnllnistration 

800 Independence Avenue, S.W. 

Washington, DC 20591 

Phone: (202) 267-3357 

Facsimile: (202) 267-5106 

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Certificate of Service 

I hereby certifY that on this date I have served by certified mail, one original and 

one copy of Complainant's Reply Brief In the Matter of National Power Corporation, 

FDMS No. FAA-2013-0620, to: 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

Washington, D.C. 20591 

Attn: FAA Decisiomnaker, AGC-430 

Wilbur Wright Building- Suite 2W1 000 

In addition, I hereby certifY that on this date I have served one copy of the 

foregoing document by certified mail to: 

Martin A. Blumenthal, Esq. 

1 Northfield Plaza, Suite 300 

Northfield, IL 60093 

Dated: November 12, 2015