UNITE D STATE S O FAMERIC A C ; k i | |J:; , i | DEPARTMEN T O FTRANSPORTATIO N OFFIC EO FHEARING S 5 ^^^ 0 WASHINGTON , D C ^ . ^ . ^ ^ . _

- ^ ' •^ - RANDY BABBIT , ADMINISTRATOR , * FEDERA LAVIATIO N ADMINISTRATIO N*

Complainan t * Served : March4 , 201 0 * FA

A Docke t No . CP09GL00

4 * DMS No . FAA-2009-009 7 FEDERA LEXPRES S CORPORATIO N*

Responden t Judge : Richar

dC . Goodwi

n ****************************************** *

POS T HEARIN GBRIE FO FRESPONDENT - FEDERA LEXPRES S CORPORATIO N• I . INTRODUCTIO N Thi s cas e aros e a s th e resul t o f an inspectio nb y a nagen t o f th e Federa l Aviatio n Administratio n ("FAA" ) at amajo r hu b an dsortin g facility operate db y Federa l Expres s Corporation , d/b/ aFedE x Expres s ("FedEx" ) i nIndianapolis , Indian ao nSeptembe r 11 , 2007 . Durin g th e cours e o f an inspectio no f

shipment s tendere dt o an daccepte db y FedE x pursuan t t o th e Hazardou s Material s an dTransportatio nAct , th e inspecto r foun d3 shipment s ( atota l o f

7 individua l packages ) tha t sh e believe ddi dno t

compl y withth e regulatory requirement s for suc hgoods . A Lette r

o f Investigatio nwa s issue db y th e FA A an danswere db y FedEx , aNotic e o f Propose dCivi l Penalty wa s issued , an dultimatel y a Complain t

wa s file db y th e FAA , an danswere db y FedEx . Th e cas e was se t for hearing , an dthat hearin g occurre di n Chicago , Illinoi s o nOctobe r 23 , 2009 , th e Honorabl e Richar d Goodwin , Administrativ e La w Judge , presiding .II . TH EFACT S AN D TESTIMON Y

Th e thre e shipment s that

wer e at issu e at th e hearin g ar e describe da s follows : A . Advance dChemistry an dTechnology . Thi s consolidate dshipmen t consiste do f

5 boxe s containin g Resi n Solution , aClas s 3 flammabl e liqui dwhic hwa s tendere dunde r Packin g Instructio n 305 . Withon e exception , al l o f th e shipment s me t

th e regulator y requirement s fo r

dangerou s good s shipment s o f thi s type . Tr . 34 . Th e discrepancy , whic h wa s presen t

o n all 5 boxes , wa s th e lac k o f amarking , a s require db y Packin g Instructio n 305 , whic hindicate dthat th e packagin g wa s U NSpecificatio ncompliant . Tr . 34 . Durin g th e testimon y o f

Inspecto r Cheric e McDaniel , sh e spok e o f th e danger s associate d wit hth e shipmen t

o f flammabl e liquid s i nnon-U NSpecificatio nPackaging , bu t admitted , o ncros s examination , tha t becaus e o f

th e smal l quantitie s o f

Resi nSolutio ncontaine di n th e 5 boxe s at

issu e (.7 1 liter s pe r

package) , thes e package s coul dhav e move dlegall y i n non-U NSpecificatio n Packagin g i f th e shippe r

ha dindicate dtha t

ther e wa s a"Limite d Quantity " o f

regulate dmateria l i nth e package s Tr.l06 . Sh e als o concede dtha t th e shipmen t o f thi s material , i n th e quantitie s containe di nth e inspecte dpackages , coul db e don e safel y i n non-specificatio n packaging . Tr . 107 . Th e FA A investigatio n reveale dtha t aFedE x employee , aDangerou s Good s Specialis t at th e origi n location , ha drejected , o r "bumped " thi s shipmen t becaus e o f

th e packagin g discrepancy , bu t

tha t th e boxe s wer e mistakenl y place dint o commerc e b y anothe r FedE x employe e whe n th e Specialis t steppe daway fro mhi s workin g are at o mak e compute r entries . Tr . 51 .B . Do w Comin g . Thi s shipmen t consiste do f

asingl e bo x containin g aFlammabl e SolidjOrganic , aClas s 4. 1 materia l Th e oute r packagin g materia l di dno t hav e amarkin g indicatin g tha t

th e packagin g wa s U N Specificatio ncompliant , bu t th e accompanyin g Shipper' s Declaratio n o f

Dangerou s Good s indicate dthat th e shipmen t

wa s "overpacked" , meanin g tha t

ther e existe dinne r

packagin g tha t

me t th e regulator y requirements . Th e regulation s requir e notic e o f overpackin g t o b e marke do nth e outsid e o f th e packaging , bu t i n thi s instanc e th e notic e wa s presen t onl y o nth e attache dShipper s Declaration . I nal l othe r respects , th e shipmen t

me t th e regulator y requirement s fo r shipmen t

o f dangerou s good s o f thi s type . Tr . 38 . C . Custo mPac k

Products . Thi s shipmen t o f asingle bo x containin g Isopropy l Alcohol , a Clas s 3 flammable liquid . Th e shipmen t me t al l o f th e regulator y requirement s fo r shipmen t o f dangerou s good s o f

thi s typ e an dclassification , excep t for th e lac k o f a markin g tha t

indicate dtha t

th e packagin g wa s U NSpecificatio ncompliant . Tr . 41 . Th e FA A assesse daCivi l Penalt y agains t FedE x o f

$182,500 . Th e shipper s o f thes e goods , wh o als o mus t

compl y wit hth e stric t

requirement s o f

th e Hazardou s Material s Transportatio n Act , an dimplementin g regulations , wer e issue dn o civi l penalties . Instead , th e FA A issue deac ho f

th e shipper s aLette r

o f Warning , a nadministrativ e measure . Mr . Rand y Drymiller , aHazardou s Material s Specialis t for th e FAA , testifie dtha t

h e conducte d th e "Regiona l Review " o f th e cas e agains t

FedE x an dfully conciure dwit hth e amoun t o f th e civi l penalty . H e testifie dtha t FA A considere dth e followin g factor s i ndeterminin g th e appropriatenes s o f

th e sanction : th e natur e o f th e violation , th e circumstances , th e exten t o f th e violatio n an dth e gravity o f th e violation . Also , h e considere dth e culpabilit y o f th eFedEx , it s violatio n history , it s abilit y t o pay , an dit s ability t o continu e i nbusines s Tr . 125

-

126 . Counse l for

th e FA A introduce dExhibi t C-11 , acomplianc e histor y for FedE x tha t indicate dtha t

fi-om200 4 unti l th e dat e o f th e inspectio ni n2007 , FedE x ha dviolation s tha t resulte dseve n civi l penaltie s an deigh t administrativ e actions . Tr.2 8 Th e civi l penaltie s assesse dagains t

FedE x durin g tha t

perio drange dfi-om$300 0 t o $25,000 . Mr . Drymille r testifie dtha t

suc hanumbe r

o f regulator y violation s constitute dacomplianc e histor y tha t wa s deeme dpoor , an dthu s considere da naggravatin g facto r whe nth e $162,00 0 civi l penalt y wa s calculated . Tr.l29 . H e indicate dtha t h e wa s unawar e o f

th e fac t tha t FedE x normall y transport s fro m30,000-35,00 0 regulate dhazardou s materia l shipment s pe r day , an dindicate dtha t

th e FA A considere donl y th e ra w numbe r o f violations , not

th e rat e o f violation s base dupo n th e numbe r o f shipment s handle db y FedEx . Tr . 129 . Herefiisedt o conced e tha t

th e opportunit y for

huma nerro r

an dresultin g regulator y noncomplianc e wa s greate r for acarrie r tha t transporte d30,00 0 shipment s o nadail y basi s whe ncompare dwit h on e transportin g 100 shipment s pe r day . Tr . 129-130 .III . STATEMEN T O FTH EISSUE S

A . Wer e ther e violation s o f th e regulation s pertainin g t o th e acceptanc e an d transportatio n o f

hazardou s material s i nthi s case ?

FedE x doe s no t

den y tha t ther e wer e violation s o f

th e regulation s a s th e resul t o f it s acceptanc e an dtransportatio n o f th e shipment s at

issu e i nthi s proceeding . I t doe s assert , however , tha t

multipl e mitigatin g factor s wer e present , bu t generall y disregarde do r minimize db y th e FA A i n thi s case . Thes e shipment s me t substantiall y al l o f

th e regulator y requirements , an dth e error s committe db y employee s o f FedE x wer e no t

intentional , reckles s o r

wanton . Ther e wa s als o substantia l testimon y tha t FedE x take s it s regulator y responsibilitie s very seriousl y an dha s create dahug e infrastructur e t o ensur e tha t it s transportatio n o f

regulate dhazardou s material s i s accomplishe dreliabl y an dsafely . FedE x handle s mor e regulate dshipment s pe r day tha nan y carrie r

i nth e world , th e overwhelmin g majority o f

whic hmee t

all regulatory requirements . B . I s th e civi l penalt y assesse dagains t FedE x i nthi s case , $182,500 , reasonabl e unde r th e fact s an dcircumstanc e o f thi s case ? Absolutel y not . Give n th e clos e an dcandi dworkin g relationshi p tha t FedE x ha s develope d wit hth e FA A ove r

th e years , an dgive nth e circumstance s surroundin g thes e violations , FedE x was , an dis , mystifie dan dastonishe dat th e amoun t

o f th e civi l penalt y demande d b y th e FAA . Firs t

o f all , whe n on e compare s th e penalt y demande di nthi s cas e t o th e civi l penaltie s reference di n FedEx' s complianc e an dpenalt y histor y introduce db y th e FA A at th e hearing , th e differenc e i s staggering . Obviously , somethin g ha s occurre dwhic hha scause dth e FA A t o adop t amuc hmor e punitiv e approac ht o FedEx , bu t th e circumstanc e o f thi s cas e d o not , i n ou r

view , warran t

suc ha napproach . Second , i t i s ver y tellin g that

th e FA A chos e t o foreg o enforcemen t actio nagains t

thos e entitie s that

place dthes e non-complyin g shipment s i nth e streamo f commerce . Thes e entitie s hav e clear

an dnondelegabl e obligation s unde r th e federal statute s an dregulations , an di t i s unfathomabl e t o FedE x tha t th e FA A woul dchoos e t o giv e thes e companie s a mer e administrativ e warnin g whil e at th e sam e tim e clobberin g FedE x witha$182,50 0 civi l penalty . I t

appear s t o FedE x tha t

th e FA A ha s minimize dth e relativ e culpabilit y o f th e shippers , ha s ignore dth e overal l totalit y o f th e circumstances , ha s drasticall y overstate d th e seriousnes s o f

th e complianc e recor do f FedEx , an dha s bee narbitrary , capriciou s an d unreasonabl e i n it s calculatio n o f th e civi l penalty . FedE x i s cognizan t o f th e sanctionin g guidanc e whic hi s utilize db y th e FA A i nthes e cases , bu t w e submi t

tha t th e guidanc e ha s bee n manipulate dt o creat e apenalt y tha t i s overl y punitiv e t o th e extreme . C . Doe s th e Administrativ e La w Judg e hav e th e authority , unde r th e statute s an d regulations , t o reduc e th e civi l penalt y demande db y th e FA A i nthi s case ?

FedE x believe s tha t

Administrativ e La w Judges , unde r th e provision s o f

th e FA A Civi l Penalt y Administrativ e Assessmen t Act , an dth e provision s o f 1 4 C.F.R . 13.1 6 hav e th e statutory an dregulator y authority t o reduc e th e penalt y t o anamoun t that the y dee mjus t an dappropriate .1 4 C.F. R13.16(d ) (3 ) reads : Unles s an appea l i s filedwithth e FA A decisionmake r i natimel y manner , a n initia l decisio n o r

orde r o f a nadministrativ e la w judg e shal l b e considere da n orde r

assessin g civi l penalt y i f a nadministrativ e la w judg e finds tha t

a nallege dviolatio noccurred , an ddetermine s tha t acivi l penalty , i n a namoun t

foun dappropriat e b y th e administrativ e la w judge , i s warranted . (Emphasi s added) . Th e clear an dunambiguou s languag e o f th e regulatio nindicates tha t th e Administrativ e La w Judg e no t onl y ha s th e authorit y an dobligatio nt o determin e whethe r aregulator y violatio n ha s occurred , bu t i s als o taske dwithdecidin g whethe r acivi l penalt y i s warrante dat all , an di f

so , for what amount . FedE x believe s tha t

whil e th e AL J shoul daffordareasonabl e amoun t o f deferenc e t o th e FAA' s enforcemen t

mechanisms , includin g th e Sanctio nGuidance , suc hdeferenc e doe s no t equat e t o a"rubbe r

stamp" . Jus t

a s th e FA A i s require db y 1 4 C.F.R . 13.1 6 (c ) t o conside r

anumbe r

o f factor s i ndeterminin g a

nappropriat e penalty , includin g "[s]uc hothe r

matter s a s justic e ma y require" , FedE x assert s tha t th e AL J share s tha t

regulator y obligatio n a s well . Thi s translates , w e believe , i n Conclusion s o f

La w tha t ar e basedo nth e totalit y o f th e circumstances , a s wel l a s th e individua l categorie s o f consideration s containe di nth e Sanctio nGuidance . FedE x full y support s th e lega l reasonin g o f Judg e Goodwi ni nFA A v . Gintz . FA A Docke t CP06GL001 1 (January 24 , 2008 ) i nhi s assessmen t th e legal authority o f

Administrativ e La w Judges : Th e administrativ e la w judg e (ALJ ) whil e boun db y agenc y polic y an d goals , i s no t

compelle dt o conformhi s decisio nt o th e civi l penalt y amoun t suggeste db y Orde r

2l50.3A' s table s o r

recommende db y regiona l counsel . ALJ s mak e decision s independently . Thei r independenc e i s codifie di nth e agency' s ow nRule s o f

Practic e i nFA A Civi l Penalty Actions , 1 4 C.F.R . Sectio n 13.20 1 e t

seq . ("Rules") . Th e Rule s authoriz e ALJ s t o "mak efmding s o f fac t an dconclusion s o f

law " (1 4 C.F.R . Sectio n13.205(a ) (9)) . ALJ s als o are specificall y grante dth e powe r t o determin e i f

acivi l penalt y i s warranted , and , i f

so , t o asses s apenalty tha t th e ALF—i nhi s sol e discretion—deem s "appropriate" . (Sectio n13.232(d)) . Th e AL J ma y consul t th e Sanctio n Guidanc e Table , but onl y th e AL J determine s whethe r acivi l penalty i s t o b e assessed , an di f so , i nwha t

amount . FedE x doe s no t

kno w i f th e opinio no f

Judg e Goodwi ni nGint z i s presentl y unde r appeal , o r i f so , whethe r

th e FA A decisionmake r

ha s opine ddifferently . Bu t FedE x believe s tha t th e opinio ncorrectl y state s th e law . Thi s i s particularl y tru e i f th e administrativ e la w judg e believe s tha t

th e FA A ha s acte darbitrarily , capriciously , unreasonably , o r ha s misuse dth e sanctionin g guidance . I n thi s case , FedE x believe s that th e FA A arbitrarily , capriciously , an dunreasonabl y misuse dth e Sanctio nGuidanc e t o reac haresul t tha t ignore dth e real , no t possible , danger s associate dwit hth e shipments ; place dvirtuall y al l o f th e culpability o n FedE x whil e administerin g a"wris t slap " t o th e partie s that

prepare dth e shipment s an d place dthe mi n th e strea mo f commerce ; an drefiise dt o recogniz e th e hundred s o f thousand s o f

regulate dshipment s tha t FedE x handle s i ncomplianc e wit hth e regulation s o n amonthl y basi s whe n i t

deeme dFedEx' s complianc e history a s "poor" , an dan "aggravatin g factor " i n th e calculatio no f th e penalty . FedE x fiirther believe s tha t

th e Administrativ e La w Judg e ha s ampl e evidenc e i nth e recor dt o orde r asubstantia l reductio n o f th e civi l penalty assesse di n thi s case , give nth e misus e o f th e Sanctio nGuidanc e b y th e FAA . FedE x als o assert s tha t th e extensiv e infrastructur e tha t i t ha s created , i nth e for

mo f trainin g program s an dsystems , t o ensur e th e saf e an dcomplian t

transportatio no f hazardou s materials , i s indicativ e o f apositiv e regulatory attitude , an dshoul db e considere damitigatin g facto r i n th e equatio nfor

assessin g culpability , no t a naggravatin g facto r a s argue db y th e FA A i n it s Post-Hearin g Brie f Complainant' s Brie f

p.9 .IV . CONCLUSIO N

Respondent , FedE x Express , respectfull y request s th e Cour t t o reasses s th e civi l penalt y demande db y th e FA A t o a n amoun t consisten t

wit hth e severit y o f

th e regulator y infractions , th e administrativ e action s take nagains t othe r culpabl e partie s i nthi s case , an d withprio r enforcemen t

action s take nb y th e FA A agains t FedE x i nth e complianc e histor y introduce dat

hearin g b y th e FAA . Respectfiill y submitted , FEDERALEXPRES S CORPORATIO N \Mar k Hanse n Leg ^ Counse l Regulatory Affair s 901.434.858 3 Offic e 901.434.828 3 Fa x1 0 CERTIFICAT EO FSERVIC E I hereb y certif

y tha t th e foregoin g Post-Hearin g Brie f o f Closin g Argumen t

ha s bee n maile db y Federa l Expres s t o th e following : Th e Honorabl e Richar dC . Goodwi n Administrativ e La w Judg e Offic e o f Hearings , M-5 0 Roo m541 1 U.S . Departmen t

o f Transportatio n 40 0 SeventhStreet , S W Washington , D C 2059 0 FAX : (202)366-753 6 Kat e Barber , Attorne y Offic e o f th e Regiona l Counsel , AGL-7 B Federa l Aviatio n Administratio n 230 0 Eas t Devo n Avenu e DesPlaines,I L6001 8 FAX : (847)294-829 3 TEL : (847)294-786 2 Hearin g Docke t FAA , AGC-40 0 60 0 Independenc e Avenue , S W Roo m201 4 Washington , D C 2059 0 FAX : (202)493-502 0 TEL : (202)385-822 9

Offic e o f J . Mark Hanse n

Date d