UNITED STATES OF AMERICA C ; k i | |J:;, i | 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 5 ^^^0 

WASHINGTON, DC ^ . ^. ^ ^. _ 

- ^ ' •^ -

RANDY BABBIT, ADMINISTRATOR, * 

FEDERAL AVIATION ADMINISTRATION * 

Complainant 

* Served: March 4, 2010 

* FAA Docket No. CP09GL004 

* DMS No. FAA-2009-0097 

FEDERAL EXPRESS CORPORATION * 

Respondent 

Judge: Richard C. Goodwin 

****************************************** * 

POST HEARING BRIEF OF RESPONDENT - FEDERAL EXPRESS CORPORATION • 

I. INTRODUCTION 

This case arose as the result of an inspection by an agent of the Federal Aviation 

Administration ("FAA") at a major hub and sorting facility operated by Federal Express 

Corporation, d/b/a FedEx Express ("FedEx") in Indianapolis, Indiana on September 11, 

2007. During the course of an inspection of shipments tendered to and accepted by FedEx 

pursuant to the Hazardous Materials and Transportation Act, the inspector found 3 

shipments (a total of 7 individual packages) that she believed did not comply with the 

regulatory requirements for such goods. A Letter of Investigation was issued by the FAA 

and answered by FedEx, a Notice of Proposed Civil Penalty was issued, and ultimately a 

Complaint was filed by the FAA, and answered by FedEx. The case was set for hearing, 

and that hearing occurred in Chicago, Illinois on October 23, 2009, the Honorable Richard 

Goodwin, Administrative Law Judge, presiding. 
II. THE FACTS AND TESTIMONY 

The three shipments that were at issue at the hearing are described as follows: 

A. Advanced Chemistry and Technology. This consolidated shipment consisted of 5 

boxes containing Resin Solution, a Class 3 flammable liquid which was tendered under 

Packing Instruction 305. With one exception, all of the shipments met the regulatory 

requirements for dangerous goods shipments of this type. Tr. 34. The discrepancy, which 

was present on all 5 boxes, was the lack of a marking, as required by Packing Instruction 

305, which indicated that the packaging was UN Specification compliant. Tr. 34. 

During the testimony of Inspector Cherice McDaniel, she spoke of the dangers associated 

with the shipment of flammable liquids in non-UN Specification Packaging, but admitted, 

on cross examination, that because of the small quantities of Resin Solution contained in 

the 5 boxes at issue (.71 liters per package), these packages could have moved legally in 

non-UN Specification Packaging if the shipper had indicated that there was a "Limited 

Quantity" of regulated material in the packages Tr.l06. She also conceded that the 

shipment of this material, in the quantities contained in the inspected packages, could be 

done safely in non-specification packaging. Tr. 107. 

The FAA investigation revealed that a FedEx employee, a Dangerous Goods Specialist at 

the origin location, had rejected, or "bumped" this shipment because of the packaging 

discrepancy, but that the boxes were mistakenly placed into commerce by another FedEx 

employee when the Specialist stepped away from his working area to make computer 

entries. Tr. 51. 
B. Dow Coming . This shipment consisted of a single box containing a Flammable 

SolidjOrganic, a Class 4.1 material The outer packaging material did not have a marking 

indicating that the packaging was UN Specification compliant, but the accompanying 

Shipper's Declaration of Dangerous Goods indicated that the shipment was "overpacked", 

meaning that there existed inner packaging that met the regulatory requirements. The 

regulations require notice of overpacking to be marked on the outside of the packaging, but 

in this instance the notice was present only on the attached Shippers Declaration. In all 

other respects, the shipment met the regulatory requirements for shipment of dangerous 

goods of this type. Tr. 38. 

C. Custom Pack Products. This shipment of a single box containing Isopropyl Alcohol, a 

Class 3 flammable liquid. The shipment met all of the regulatory requirements for 

shipment of dangerous goods of this type and classification, except for the lack of a 

marking that indicated that the packaging was UN Specification compliant. Tr. 41. 

The FAA assessed a Civil Penalty against FedEx of $182,500. The shippers of these 

goods, who also must comply with the strict requirements of the Hazardous Materials 

Transportation Act, and implementing regulations, were issued no civil penalties. Instead, 

the FAA issued each of the shippers a Letter of Warning, an administrative measure. Mr. 

Randy Drymiller, a Hazardous Materials Specialist for the FAA, testified that he conducted 

the "Regional Review" of the case against FedEx and fully conciured with the amount of 

the civil penalty. He testified that FAA considered the following factors in determining the 

appropriateness of the sanction: the nature of the violation, the circumstances, the extent of 

the violation and the gravity of the violation. Also, he considered the culpability of the 
FedEx, its violation history, its ability to pay, and its ability to continue in business Tr. 125-

126. 

Counsel for the FAA introduced Exhibit C-11, a compliance history for FedEx that 

indicated that fi-om 2004 until the date of the inspection in 2007, FedEx had violations that 

resulted seven civil penalties and eight administrative actions. Tr.28 The civil penalties 

assessed against FedEx during that period ranged fi-om $3000 to $25,000. Mr. Drymiller 

testified that such a number of regulatory violations constituted a compliance history that 

was deemed poor, and thus considered an aggravating factor when the $162,000 civil 

penalty was calculated. Tr.l29. He indicated that he was unaware of the fact that FedEx 

normally transports from 30,000-35,000 regulated hazardous material shipments per day, 

and indicated that the FAA considered only the raw number of violations, not the rate of 

violations based upon the number of shipments handled by FedEx. Tr. 129. Herefiisedto 

concede that the opportunity for human error and resulting regulatory noncompliance was 

greater for a carrier that transported 30,000 shipments on a daily basis when compared with 

one transporting 100 shipments per day. Tr. 129-130. 
III. STATEMENT OF THE ISSUES 

A. Were there violations of the regulations pertaining to the acceptance and 

transportation of hazardous materials in this case? 

FedEx does not deny that there were violations of the regulations as the result of its 

acceptance and transportation of the shipments at issue in this proceeding. It does assert, 

however, that multiple mitigating factors were present, but generally disregarded or 

minimized by the FAA in this case. These shipments met substantially all of the regulatory 

requirements, and the errors committed by employees of FedEx were not intentional, 

reckless or wanton. There was also substantial testimony that FedEx takes its regulatory 

responsibilities very seriously and has created a huge infrastructure to ensure that its 

transportation of regulated hazardous materials is accomplished reliably and safely. FedEx 

handles more regulated shipments per day than any carrier in the world, the overwhelming 

majority of which meet all regulatory requirements. 

B. Is the civil penalty assessed against FedEx in this case, $182,500, reasonable under 

the facts and circumstance of this case? 

Absolutely not. Given the close and candid working relationship that FedEx has developed 

with the FAA over the years, and given the circumstances surrounding these violations, 

FedEx was, and is, mystified and astonished at the amount of the civil penalty demanded 

by the FAA. First of all, when one compares the penalty demanded in this case to the civil 

penalties referenced in FedEx's compliance and penalty history introduced by the FAA at 

the hearing, the difference is staggering. Obviously, something has occurred which has 
caused the FAA to adopt a much more punitive approach to FedEx, but the circumstance of 

this case do not, in our view, warrant such an approach. 

Second, it is very telling that the FAA chose to forego enforcement action against those 

entities that placed these non-complying shipments in the stream of commerce. These 

entities have clear and nondelegable obligations under the federal statutes and regulations, 

and it is unfathomable to FedEx that the FAA would choose to give these companies a 

mere administrative warning while at the same time clobbering FedEx with a $182,500 

civil penalty. It appears to FedEx that the FAA has minimized the relative culpability of 

the shippers, has ignored the overall totality of the circumstances, has drastically overstated 

the seriousness of the compliance record of FedEx, and has been arbitrary, capricious and 

unreasonable in its calculation of the civil penalty. FedEx is cognizant of the sanctioning 

guidance which is utilized by the FAA in these cases, but we submit that the guidance has 

been manipulated to create a penalty that is overly punitive to the extreme. 

C. Does the Administrative Law Judge have the authority, under the statutes and 

regulations, to reduce the civil penalty demanded by the FAA in this case? 

FedEx believes that Administrative Law Judges, under the provisions of the FAA Civil 

Penalty Administrative Assessment Act, and the provisions of 14 C.F.R. 13.16 have the 

statutory and regulatory authority to reduce the penalty to an amount that they deem just 

and appropriate. 
14 C.F.R 13.16(d) (3) reads: 

Unless an appeal is filed with the FAA decisionmaker in a timely manner, 

an initial decision or order of an administrative law judge shall be 

considered an order assessing civil penalty if an administrative law judge 

finds that an alleged violation occurred, and determines that a civil penalty, 

in an amount found appropriate by the administrative law judge, is 

warranted. (Emphasis added). 

The clear and unambiguous language of the regulation indicates that the 

Administrative Law Judge not only has the authority and obligation to determine 

whether a regulatory violation has occurred, but is also tasked with deciding 

whether a civil penalty is warranted at all, and if so, for what amount. FedEx 

believes that while the ALJ should afford a reasonable amount of deference to the 

FAA's enforcement mechanisms, including the Sanction Guidance, such deference 

does not equate to a "rubber stamp". Just as the FAA is required by 14 C.F.R. 

13.16 (c) to consider a number of factors in determining an appropriate penalty, 

including "[s]uch other matters as justice may require", FedEx asserts that the ALJ 

shares that regulatory obligation as well. This translates, we believe, in 

Conclusions of Law that are based on the totality of the circumstances, as well as 

the individual categories of considerations contained in the Sanction Guidance. 

FedEx fully supports the legal reasoning of Judge Goodwin in FAA v. Gintz. FAA Docket 

CP06GL0011 (January 24, 2008) in his assessment the legal authority of Administrative 

Law Judges: 

The administrative law judge (ALJ) while bound by agency policy and 

goals, is not compelled to conform his decision to the civil penalty amount 

suggested by Order 2l50.3A's tables or recommended by regional counsel. 

ALJs make decisions independently. Their independence is codified in the 

agency's own Rules of Practice in FAA Civil Penalty Actions, 14 C.F.R. 

Section 13.201 et seq. ("Rules"). The Rules authorize ALJs to "make 
fmdings of fact and conclusions of law" (14 C.F.R. Section 13.205(a) (9)). 

ALJs also are specifically granted the power to determine if a civil penalty is 

warranted, and, if so, to assess a penalty that the ALF—in his sole 

discretion—deems "appropriate". (Section 13.232(d)). The ALJ may 

consult the Sanction Guidance Table, but only the ALJ determines whether 

a civil penalty is to be assessed, and if so, in what amount. 

FedEx does not know if the opinion of Judge Goodwin in Gintz is presently under appeal, 

or if so, whether the FAA decisionmaker has opined differently. But FedEx believes that 

the opinion correctly states the law. This is particularly true if the administrative law judge 

believes that the FAA has acted arbitrarily, capriciously, unreasonably, or has misused the 

sanctioning guidance. In this case, FedEx believes that the FAA arbitrarily, capriciously, 

and unreasonably misused the Sanction Guidance to reach a result that ignored the real, not 

possible, dangers associated with the shipments; placed virtually all of the culpability on 

FedEx while administering a "wrist slap" to the parties that prepared the shipments and 

placed them in the stream of commerce; and refiised to recognize the hundreds of 

thousands of regulated shipments that FedEx handles in compliance with the regulations on 

a monthly basis when it deemed FedEx's compliance history as "poor", and an 

"aggravating factor" in the calculation of the penalty. FedEx fiirther believes that the 

Administrative Law Judge has ample evidence in the record to order a substantial reduction 

of the civil penalty assessed in this case, given the misuse of the Sanction Guidance by the 

FAA. FedEx also asserts that the extensive infrastructure that it has created, in the form of 

training programs and systems, to ensure the safe and compliant transportation of 

hazardous materials, is indicative of a positive regulatory attitude, and should be 

considered a mitigating factor in the equation for assessing culpability, not an aggravating 

factor as argued by the FAA in its Post-Hearing Brief Complainant's Brief p.9. 
IV. CONCLUSION 

Respondent, FedEx Express, respectfully requests the Court to reassess the civil penalty 

demanded by the FAA to an amount consistent with the severity of the regulatory 

infractions, the administrative actions taken against other culpable parties in this case, and 

with prior enforcement actions taken by the FAA against FedEx in the compliance history 

introduced at hearing by the FAA. 

Respectfiilly submitted, 

FEDERAL EXPRESS CORPORATION 

\ Mark Hansen 

Leg^ Counsel 

Regulatory Affairs 

901.434.8583 Office 

901.434.8283 Fax 
10 

CERTIFICATE OF SERVICE 

I hereby certify that the foregoing Post-Hearing Brief of Closing Argument has been 

mailed by Federal Express to the following: 

The Honorable Richard C. Goodwin 

Administrative Law Judge 

Office of Hearings, M-50 

Room 5411 

U.S. Department of Transportation 

400 Seventh Street, SW 

Washington, DC 20590 

FAX: (202)366-7536 

Kate Barber, Attorney 

Office of the Regional Counsel, AGL-7B 

Federal Aviation Administration 

2300 East Devon Avenue 

DesPlaines,IL 60018 

FAX: (847)294-8293 

TEL: (847)294-7862 

Hearing Docket 

FAA, AGC-400 

600 Independence Avenue, SW 

Room 2014 

Washington, DC 20590 

FAX: (202)493-5020 

TEL: (202)385-8229 

Office of J. Mark Hansen 

Dated