r^ 

IN THE U.S. DEPARTMENT OF TRANSPORTATION 

IN THE MATTER OF: 

FEDERAL AVIATION ADMINISTRATION, 

Complainant, 

V. 

HARRISON YACHT SALES, INC., 

Respondent. 

FAA Docket No. 

CP10EA0006 

FDMS No. 

FAA-2010-0626 

en 

m in 

Suite 600 ~ 

1220 L Street, N.V^ 

Washington, D.C. 

Monday, •(= • 

-O November 1, 2 010 

The parties met for telephone conference, 

pursuant to the notice, at 3:28 p.m. 

BEFORE: HONORABLE RONNIE A. YODER 

Chief Administrative Law Judge 

APPEARANCES: (via telephone) 

For the Complainant: 

MARY MADELINE MCCARTHY, Esquire 

Federal Aviation Administration 

Eastern Region 

1 Aviation Plaza 

Jamaica, New York 11434 

(718) 553-3259 ^-i^ s-.-- ,.„.. 

r^ 

For the Respondent: 

DAVID HARRISON, President 

Harrison Yacht Sales, Inc. f •;! 

106 Wells Cove Road 

P.O. Box 98 

Grasonville, Maryland 21638 

(410) 827-7800 

Heritage Reporting Corporation 

(202) 628-4888 

•-••• ->*•! / 

KET 
1 PROCEEDING S 

2 (3:28 p.m.) 

3 JUDGE YODER: Okay, this is a prehearing 

4 telephone conference in Harrison Yacht Sales, Inc., 

5 FAA Docket CP lOEA 0006, and that is FDMS FAA-2010-

6 0626. And on the phone we have for the FAA Mary 

7 Madeline McCarthy, and for the Respondent we have 

8 David Harrison, the President of Harrison Yacht Sales. 

9 We also have a Court Reporter who will transcribe the 

10 proceeding. A copy of the transcript automatically 

11 goes to the Judge and to the FAA, which pays for the 

12 transcript. Mr. Harrison, if you need a copy you'll 

d ^ ^ 13 need to arrange that with the Court Reporter, okay? 

14 MR. HARRISON: Yes, sir. 

15 JUDGE YODER: Okay. Now I called the 

16 prehearing conference to see if we could clarify just 

17 what we have at issue in this proceeding. Mr. 

18 Harrison, I take it you are not an attorney? 

19 MR. HARRISON: No, sir, I am not. 

20 JUDGE YODER: Okay. I just wanted to make 

21 if clear that when you appear as the Respondent itself 

22 or as an employee of the Respondent you wind up 

23 potentially making statements which could be used at 

24 the subsequent hearing, do you understand what I mean? 

25 MR. HARRISON: I believe I do, sir. 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 3 

1 JUDGE YODER: The people who appear through 

2 attorneys of course the attorneys only make statements 

3 and arguments but they aren't really creating 

4 testimony. And of course you aren't sworn, but the 

5 fact is that statements that you make may be used in a 

6 subsequent proceeding, you need to be aware of that 

7 fact and that false statements if they were wilfully 

8 made could turn out to be a criminal violation, just 

9 to let you know where you are when you come in without 

10 an attorney, okay? 

11 MR. HARRISON: Okay, sir. 

12 JUDGE YODER: All right. Now we recently 

d^*^ 13 received a copy of some financial information 

14 concerning Harrison, and I take it that that went to 

15 the Dockets Section, is that right, Ms. McCarthy? 

16 MS. MCCARTHY: I'm sorry. Your Honor, there 

17 was a beep in between what you said. 

18 JUDGE YODER: Oh. The financial information 

19 that you sent to me, was that also sent to Dockets? 

20 MS. MCCARTHY: Yes, it was. 

21 JUDGE YODER: It has not shown up in the 

22 Docket or on DMS. Mr. Harrison, do you have a concern 

23 about that document being public? 

24 MR. HARRISON: I don't think so, sir. 

25 JUDGE YODER: Okay, fine. Now we received a 

Heritage Reporting Corporation 

(202) 628-4888 
^ ^ 4 

1 motion for partial summary judgment from Ms. McCarthy, 

2 and the answer to that motion isn't due yet so there 

3 is no answer as yet. And we will address the matters 

4 that are placed in issue by that motion, the most, one 

5 of which is if there has been no answer to the 

6 complaint. Now, Mr. Harrison, did you understand when 

7 you received this notice of, the complaint that you 

8 were supposed to file an answer to the complaint? 

9 MR. HARRISON: Your Honor, I thought I did, 

10 I mean I thought we have done everything that we've 

11 been asked to do. 

12 JUDGE YODER: All right. I have your letter 

^ ^ 13 dated September 7, and that says that you're 

14 responding to the notice August 20, 2010. Did you 

15 file something other than that in this matter? 

16 MR. HARRISON: Your Honor, it goes back a 

17 while but I did send something to the FAA, you know, 

18 per their request, but I can't recall what it was. 

19 JUDGE YODER: Okay, all right, but the 

20 complaint was filed, let's see, the complaint was 

21 filed July 20, 2010. Do you have a copy of that? 

22 MR. HARRISON: Is it dated 2010, sir? 

23 JUDGE YODER: Yes, sir. It's dated July 20, 

24 2010, and it's signed by Mary McCarthy, Deputy 

25 Regional Counsel. 

Heritage Reporting Corporation 

(202) 628-4888 
1 MR. HARRISON: You know. Your Honor, I've 

2 got so much stuff I don't know if I do or not. 

3 JUDGE YODER: Well that is the, that's the 

4 document that establishes the parameters of the 

5 proceeding, so it's important that you have it. Now 

6 there was a, I think the motion may have reproduced 

7 most of the allegations, maybe all of the allegation. 

8 MR. HARRISON: Would that be the notice of 

9 proposed civil penalties. Your Honor? 

10 JUDGE YODER: Well there was initially a 

11 notice of proposed civil penalty. 

12 MR. HARRISON: That one is dated December 

^'^ 13 '09. 

14 JUDGE YODER: Yes, that was the, that was 

15 perhaps the first document that was filed. But then 

16 after that there was a complaint filed. And it is, 

17 let me see. 

18 MR. HARRISON: There is another one that's 

19 not dated but it's the complainant's motions for 

20 partial summary judgment. 

21 JUDGE YODER: No, that's the most recent 

22 document and it includes in it, let me see if it --

23 yes, attached to that is a copy of the complaint. It 

24 should be on page 21. 

25 MR. HARRISON: Oh boy, it just stops at page 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 6 

1 7. 

2 JUDGE YODER: Oh. 

3 MR. HARRISON: Because we did, we received a 

4 fax and --

5 MR. HARRISON: It Stops at page 7, you say? 

6 MR. HARRISON: Yes, sir, but again we 

7 received a fax that had gazillion pages. Let's see, 

8 what page, sir? 

9 JUDGE YODER: 21. There's a page number in 

10 the middle of the page and then there's a page number 

11 out in the right hand corner. 

12 MR. HARRISON: Right. 

^ ^ 13 JUDGE YODER: And when you say it stops at 

14 page 7 are you talking about the number in the middle 

15 of the page? 

16 MR. HARRISON: Yes, sir, I do. 

17 JUDGE YODER: Okay, do you see out on the 

18 corner, that probably says 14. 

19 MR. HARRISON: All right, and then I've got 

20 for example one, this is page 1 of 5 so if I could 

21 find that group? 

22 JUDGE YODER: Well I don't know. You don't 

23 have the exhibits to that motion? 

24 MR. HARRISON: Well, then I, now I've found 

25 one. Your Honor, that says complaint, is that the one? 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 7 

1 JUDGE YODER: Yeah, that's it. 

2 MR. HARRISON: All right, if we could try to 

3 get that in some order. 

4 JUDGE YODER: Do you have that in front of 

5 you? 

6 MR. HARRISON: That was faxed in on the 22nd 

7 of October. 

8 JUDGE YODER: Okay, but you have that 

9 document that is the complaint? 

10 MR. HARRISON: Yes, sir, right. 

11 JUDGE YODER: Okay. Now Ms. McCarthy states 

12 in her motion that you have basically acknowledged the 

{ ^ ^ 13 factual allegations in this complaint, and I wanted to 

14 clear, I wanted to clarify whether that in fact is 

15 correct, okay? 

16 MR. HARRISON: Okay. 

17 JUDGE YODER: Can you look at Roman 1, that 

18 basically says you've got a final notice of proposed 

19 civil penalty that they proposed $8,000 penalty? 

20 MR. HARRISON: Right. 

21 JUDGE YODER: You agree to that? 

22 MR. HARRISON: Do I agree to it or do I? 

23 JUDGE YODER: That you agree that that 

24 happened? 

25 MR. HARRISON: I did see that, yes, sir. 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 8 

1 JUDGE YODER: Okay, then it says on July 10, 

2 2009 you offered an undeclared shipment of hazardous 

3 materials to UPS, is that correct? 

4 MR. HARRISON: Okay, Your Honor, can I 

5 explain that? 

6 JUDGE YODER: Certainly. 

7 MR. HARRISON: Well we run a small boatyard 

8 here on the Eastern Shore. 

9 JUDGE YODER: Yes. 

10 MR. HARRISON: Our supplies are shipped in 

11 by the vendor's own trucks. 

12 JUDGE YODER: Yes. 

^ ^ 13 MR. HARRISON: We're not in the business of 

14 shipping. And in this case we were shipped 6 gallons 

15 of bottom paint by the supplier but it came UPS 

16 because their truck was broken, so they agreed to ship 

17 it UPS. We had a gallon left over, we contacted the 

18 supplier and said, you know, can we return this? Yes. 

19 And then we said, okay, we'll put it on your truck. 

20 The truck is still broken, we want you to ship it UPS 

21 back to us. So and they actually sent us the air 

22 bill, or not the air bill number, but the waybill 

23 number they called it, to ship it back. The regular 

24 girl that handles our service was off on maternity 

25 leave so my bookkeeper is doing her job. And we did 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 9 

1 in fact inadvertently mark "2-day air" on that gallon 

2 of bottom paint and shipped it. 

3 JUDGE YODER: Yes. 

4 MR. HARRISON: And that we did do, yes, sir. 

5 We made a mistake in doing it, we had no reason to 

6 want to ship it back by air, nothing to gain by doing 

7 it. 

8 JUDGE YODER: Yes. 

9 MR. HARRISON: Once we shipped it, and 

10 apparently it leaked when it got to Lanham. 

11 JUDGE YODER: Yes. 

12 MR. HARRISON: We were notified by UPS of 

/^*^ 13 it. We contacted the paint manufacturer and they 

14 immediately called UPS because there was some question 

15 of what was in that paint. And the. Haddock, this was 

16 the name of the company that manufactured it, called 

17 us back and said, okay we've got this resolved with 

18 them, no problem. 

19 JUDGE YODER: Yes. 

20 MR. HARRISON: Well apparently there was. 

21 Now to the point, it was a water based paint, and I 

22 assume that that's what, you know, put it to bed. But 

23 then later on obviously we started getting the 

24 correspondence from FAA. 

25 JUDGE YODER: Yes. Well we'll jump ahead 

Heritage Reporting Corporation 

(202) 628-4888 
f ^ 10 

1 just a little bit because of what you've said, you 

2 have essentially said that you did ship a hazardous 

3 material by air, that's what you just said. 

4 MR. HARRISON: I did. 

5 JUDGE YODER: Yes, and it may be that the 

6 status of hazardous materials is not as well known as 

7 it should be in the industry. I've had occasion to 

8 say that to industry representatives in the past, and 

9 this can come as quite a shock to business people who 

10 wind up shipping something without knowing the 

11 regulations that apply. But the fact is that you 

12 don't have to know about the regulations in order to 

^ ^ 13 violate them. 

14 The law is there in order to prevent the 

15 introduction of hazardous materials into the stream of 

16 transportation without their being properly marked and 

17 packaged because they can become very hazardous in a 

18 transportation setting. And unfortunately for those 

19 who are well meaning and don't realize what they're 

20 doing, that doesn't really affect the question of 

21 violation or liability. 

22 It may affect the level of penalty, but in 

23 terms of liability it really only requires that you do 

24 the act that constitutes a violation. We have had 

25 cases in fact where someone that the shipper didn't 

r^ .. . 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 11 

1 even know put these hazardous materials into the line 

2 of transportation, but they knew they were their 

3 agent, and because they were their agent they were 

4 charged with the liability that the agent encountered 

5 when they, in that case it was a battery was put into 

6 an air transportation setting. 

7 One of the reasons of course that Congress 

8 recently raised the -- I say recently, quite some 

9 years back now -- raised the potential penalty in 

10 these cases was because of the possibility of disaster 

11 if things are loaded when they shouldn't be in a way 

12 they shouldn't be. I just wanted to explain all that 

r ^ - 13 so you'd have some better understanding of where you 

14 are from a legal standpoint. 

15 If we look down, what this complaint does is 

16 to set forth a series of facts, and based on what 

17 you've said it's not clear to me that you disagree 

18 with any of them. It says the shipment traveled on 

19 2nd day air under the UPS waybill, it said that at the 

2 0 UPS center in Laurel it was discovered to be leaking 

21 red paint. It says that the shipment was a one-gallon 

22 can of red paint in a 4-G fiberboard box. It says it 

23 was a product regulated by the DOT hazardous materials 

24 regulations. 

25 It then talks about your company being a 

Heritage Reporting Corporation 

(202) 628-4888 
^ 12 

1 hazmat employer, and again this is an area where 

2 people who don't deal with this on a regular basis may 

3 not understand the implications of sending off any 

4 kinds of hazardous material. The regulations with 

5 respect to shipment and training apply to hazardous 

6 materials employers, hazmat employers, but the problem 

7 is that you're a hazmat employer if you have a hazmat 

8 employee. 

9 And you have a hazmat employee if you have 

10 someone who handles a hazmat material and puts it in a 

11 shipment. Do you see the problem? That's the way the 

12 regulations are set up. And so the rest of the 

^ ^ 13 allegations which relate to the fact that you didn't 

14 have your employees trained, you didn't have them 

15 trained because you didn't realize they were subject 

16 to this regulation, is that what I'm hear you saying 

17 in your letter? 

18 MR. HARRISON: Exactly. 

19 JUDGE YODER: Yes. 

20 MR. HARRISON: You know, we don't ship 

21 hazmat. I guess if paint is a hazardous material we 

22 use it. 

23 JUDGE YODER: Yes. 

24 MR. HARRISON: We certainly take every 

25 precaution here in the yard of using it. 

Heritage Reporting Corporation 

(202) 628-4888 
/ ^ 13 

1 JUDGE YODER: Sure. 

2 MR. HARRISON: You know, as far as masks and 

3 so forth. 

4 JUDGE YODER: Well I understand what you're 

5 saying, Mr. Harrison. I think, Ms. McCarthy, maybe 

6 you can correct me on this, but there are well over 

7 100 pages of regulations in the Code of Federal 

8 Regulations that list things that are hazardous 

9 materials. 

10 MS. MCCARTHY: That's probably about 

11 correct. Your Honor. 

12 JUDGE YODER: Yes, I mean there are hundreds 

r ^ 13 and hundreds and hundreds of things. And among the 

14 things, for instance unless I misrecollect, is hair 

15 spray. And so if you get asked by someone to send 

16 them some hair spray by air you may want to think 

17 twice before you respond to that. And whenever you 

18 get into a situation where you're sending things by 

19 air you really need to have in the back of your mind 

20 or in the front of your mind that you have these 

21 hazmat regulations that you have to worry about. 

22 So the rest of the complaint then says you 

23 didn't train your hazmat employees, you didn't ensure 

24 they had general training, you didn't instruct them in 

25 the responsibility of preparing hazardous materials. 

Heritage Reporting Corporation 

(202) 628-4888 
^ 14 

1 you didn't ensure the shipment met the DOT HMRs. You 

2 offered in and did not mark the shipment. My 

3 experience with these is in general when someone makes 

4 a shipment and that is a hazardous material shipment, 

5 it often if not usually will result in 17 violations 

6 because of the different regulations that apply. 

7 And with the maximum violation being $25,000 

8 per violation that means one shipment exposes you to a 

9 potential of almost half a million dollars. I mean 

10 Congress did this because they take this very 

11 seriously. Anyway, it then says you didn't mark it 

12 and then it says you didn't ensure that it was 

^ ^ 13 labeled, you didn't ensure it was accompanied by 

14 shipping papers with emergency response information. 

15 And all those things are detailed because all of those 

16 are separate violations under the regulations. 

17 And so based on what you've said here and in 

18 your letter it would seem that there really isn't any 

19 factual issue in this case as to whether there was a 

20 violation of the regulations. And consequently that 

21 would leave us with the question of the level of 

22 penalty. And let me just take a look here. Ms. 

23 McCarthy, can you tell me how many violations are 

24 alleged in this complaint? 

25 MS. MCCARTHY: I believe, let's see. 

Heritage Reporting Corporation 

(202) 628-4888 
15 

1 approximately nine violations. Your Honor. 

2 JUDGE YODER: Okay, and that was the basis 

3 on which the penalty was calculated? 

4 MS. MCCARTHY: Yes. 

5 JUDGE YODER: And can you tell us how the 

6 penalty level was reached? I should say the proposed 

7 penalty level. 

8 MS. MCCARTHY: Yes. Hold on one second, 

9 just looking for the --

10 JUDGE YODER: Somebody told me a couple 

11 weeks ago that the issue before me was the propriety 

12 of the assessment made by the FAA, and that of course 

13 is not the issue. The issue is what is the 

14 appropriate penalty level, and Ms. McCarthy, I 

15 referred to her earlier as representing the FAA, she 

16 actually represents the region that, the field 

17 administrator that brings this complaint. And she 

18 would need to prove the penalty that she seeks if the 

19 case goes to hearing. So why don't you tell us if you 

20 can how you arrived at this penalty level? 

21 MS. MCCARTHY: Certainly, Your Honor. We 

22 took into account the category of the hazmat and the 

23 type of hazmat. We essentially have, based on the 

24 category of hazmat and the class and division, the 

25 type of hazmat, we determine that the penalty was 

Heritage Reporting Corporation 

(202) 628-4888 
^ 16 

1 approximately $1,500 for failure to have shipping 

2 papers, for the failure to label, the failure to mark, 

3 the improper packaging, the failure to train, the 

4 failure to have an emergency response, and for the 

5 release, the fact that there was a release. Given all 

6 that, given all of that the total sanction we 

7 initially calculated would have been $10,5. The fact 

8 that, and we did look at minimum sanction levels. The 

9 fact that the company is a small business with no 

10 previous violations, we took a $2,500 reduction and 

11 came to $8,000. 

12 JUDGE YODER: And you said because of the 

^ ^ 13 category and the type you determined that each of the 

14 violations would be at the $1,500 level? 

15 MS. MCCARTHY: Yes, that's in the minimal 

16 range. 

17 JUDGE YODER: And that's, so that's $10,500 

18 times 7, is that? 

19 MS. MCCARTHY: No, that was $1,500 times --

20 JUDGE YODER: I mean $1,500 times 7? 

21 MS. MCCARTHY: Yes. 

22 JUDGE YODER: That's how you got to $10,500? 

23 MS. MCCARTHY: Yes. 

24 JUDGE YODER: But you said you were claiming 

25 nine violations? 

Heritage Reporting Corporation 

(202) 628-4888 
^ 17 

1 MS. MCCARTHY: Well nine violations but 

2 seven categories of violation. When we look at the 

3 appropriate sanction we also look at categories, 

4 categories of violation. If it's a --

5 JUDGE YODER: Could you just mention the 

6 seven categories that you? 

7 MS. MCCARTHY: Sure. Shipping papers, 

8 labeling, marking, packaging, training, emergency 

9 response, and release. 

10 JUDGE YODER: What is release? 

11 MS. MCCARTHY: The fact that the paint 

12 spilled. 

/•"^ 13 JUDGE YODER: Oh, all right. And where do 

14 you get the figure $1,500 from? 

15 MS. MCCARTHY: From our sanction guidance. 

16 JUDGE YODER: And that's a public document? 

17 MS. MCCARTHY: Yes it is. Your Honor. 

18 JUDGE YODER: So that $1,500 figure takes 

19 into account what? 

20 MS. MCCARTHY: Well it takes into account --

21 JUDGE YODER: What's the range that is 

22 available there? 

2 3 MS . MCCARTHY: Well it would be anywhere 

24 from $250 through $32,5 I believe is the top of the 

2 5 range. 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 18 

1 JUDGE YODER: $37,500? 

2 MS. MCCARTHY: Yes, I believe that that's 

3 the maximum. 

4 JUDGE YODER: Yes. There is an inflation 

5 escalator, Mr. Harrison, that has resulted in this 

6 maximum penalty per violation going up since it 

7 started out at $25, and it's now gone from $25 to 

8 $37,5? I thought it was $27,5 but it's now up to 

9 $37,5, is that right, Ms. McCarthy? 

10 MS. MCCARTHY: I believe it's, well I know 

11 for hazmat I believe it has gone up to $37,5. 

12 JUDGE YODER: Okay. 

< ^ 13 MS. MCCARTHY: $32,5, I'm sorry. 

14 JUDGE YODER: $32,5? 

15 MS. MCCARTHY: Yes. 

16 JUDGE YODER: Okay. All right, and so what 

17 in the guidelines gets you to the $1,500 level for 

18 these particular violations? 

19 MS. MCCARTHY: Well if we look at an 

20 undeclared shipment within the hazmat quantity 

21 limitations for a business entity the minimum is 

22 $1,500, $8,200 would be the maximum that we would 

23 normally go --

24 JUDGE YODER: I see. 

25 MS. MCCARTHY: For those types of companies. 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 19 

1 And $1,500 is the minimum. 

2 JUDGE YODER: Is that true in each of these 

3 seven categories? 

4 MS. MCCARTHY: Yes. 

5 JUDGE YODER: Okay. And you say that's the 

6 minimum for these kinds of shippers. Is that supposed 

7 to take into account the size of the business? 

8 MS. MCCARTHY: To some extent it does, yes, 

9 but we also did a deduction at the end because of the 

10 size of the business. 

11 JUDGE YODER: Right. And did you have 

12 information concerning ability to pay? 

ll^^ 13 MS. MCCARTHY: At the time that we proposed 

14 an $8,000 civil penalty we did not. 

15 JUDGE YODER: Okay, but now you do? 

16 MS. MCCARTHY: Yes we do. 

17 JUDGE YODER: Do you have what you would 

18 need to consider that factor? 

19 MS. MCCARTHY: Yes we do. Your Honor. 

20 JUDGE YODER: And how has that affected your 

21 request? 

22 MS. MCCARTHY: Well after looking at it, 

23 while I believe that $8,000 still is a reasonable 

24 civil penalty we have made offers to try and settle 

25 the matter. 

Heritage Reporting Corporation 

(202) 628-4888 
20 

1 JUDGE YODER: Yes. And, Mr. Harrison, I 

2 gather that you referred to an offer of $3,000 in your 

3 letter, is that right? 

4 MR. HARRISON: I did. 

5 JUDGE YODER: What can you tell us about the 

6 impact of a $3,000 penalty on the business? 

7 MR. HARRISON: Well, Your Honor, a couple of 

8 points. One, the financial you have is based off the 

9 year 2008. 

10 JUDGE YODER: Right. 

11 MR. HARRISON: The best year we ever had, 

12 that was before we went into this slide. I can also 

r * ' 13 tell you that our gross for this year will probably 

14 represent about half of that. In the month of October 

15 alone I've laid off three more employees. I'm down to 

16 two, and they are working four-day work weeks. 

17 JUDGE YODER: Yes. 

18 MR. HARRISON: That leaves me two in the 

19 yard, I've got an office girl, and myself, and quite 

20 frankly I'm going to take a half a pay cut --

21 JUDGE YODER: Yes. 

22 MR. HARRISON: Of what I'm not making 

23 starting the middle of November. 

24 JUDGE YODER: Yes. 

25 MR. HARRISON: We're in the marine business. 

Heritage Reporting Corporation 

(202) 628-4888 
^ 21 

1 and in the letter to you I said it was 62 percent, but 

2 closer to 70 percent of the boat dealers that are now 

3 out of business, gone. 

4 JUDGE YODER: Yes. 

5 MR. HARRISON: And we are hanging on, but 

6 that's all we're doing, it's not like there's a 

7 profit. Quite frankly we don't see a lot of sunshine. 

8 But I do have some good people and we're doing what we 

9 can to keep the door open. 

10 JUDGE YODER: Right. 

11 MR. HARRISON: And that's all we're doing, 

12 sir. 

13 JUDGE YODER: Well you said that this was 

14 the best year you had and you expect this year to be -

15 - I mean the year in these documents was the best year 

16 you had and you expect this year to not be half as 

17 good as the year in this document? 

18 MR. HARRISON: That's right, sir. 

19 JUDGE YODER: And the document shows income 

20 of $31,000? 

21 MR. HARRISON: Right. 

22 JUDGE YODER: And it shows a balance sheet 

23 net of $977,000? 

24 MR. HARRISON: Sir, that's, you know, my CPA 

25 does that, it has no true reflection on this. Back in 

Heritage Reporting Corporation 

(202) 628-4888 
^ 22 

1 the late '80s this company was profitable, and that's 

2 really a loan, a fictitious loan if you want to know 

3 the truth, that this business owes me, which obviously 

4 it can't pay me because we don't have the money. 

5 JUDGE YODER: Well it also shows a net 

6 loss -- oh, income. Net income of $26,765. That's on 

7 Schedule M-2, the last page of the document? 

8 MR. HARRISON: I don't have it here, sir. 

9 JUDGE YODER: Oh, I see. 

10 MR. HARRISON: And if I did I probably 

11 couldn't read it because again my CPA does it. 

12 JUDGE YODER: Yes. Anyway, if you took that 

^^^ 13 figure, $26,000 and this year were half as good you'd 

14 be down to $13,000? 

15 MR. HARRISON: And we will be. 

16 JUDGE YODER: Yes. 

17 MR. HARRISON: If we can keep the doors 

18 open. Quite frankly, I'll be honest with you, the 

19 only reason we can exist at this point is the fact 

20 that we don't have a high rent. 

21 JUDGE YODER: Yes. 

22 MR. HARRISON: If we did we would have been 

23 toast a year ago. 

24 JUDGE YODER: Right. Well have you talked 

25 with Ms. McCarthy about a level that you think 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 23 

1 Harrison could pay in order to get this matter 

2 resolved? 

3 MR. HARRISON: Well, and quite frankly, Your 

4 Honor, saying to you, that number that we would be 

5 ticked pink with is nothing. Because again 

6 financially we're not in a position to do it, and two, 

7 you know, to penalize us for a mistake that we made, 

8 and we admit to making it, but we're just, you know, 

9 if we're at fault we're at fault, but we're not in 

10 that business. My girl, it was a typo error. I mean 

11 the stuff was shipped to us UPS, it sat here in the 

12 UPS box, we shipped it out in the same box, and 

13 because she hit that X under 2day air we're having 

14 this conversation. 

15 JUDGE YODER: Yes. 

16 MR. HARRISON: But we're good people, we pay 

17 our taxes, we work hard. 

18 JUDGE YODER: Yes. 

19 MR. HARRISON: And I guess, and I hate to do 

20 it, but we're just asking for a little forgiveness in 

21 a time where all we're trying to do is survive. 

22 JUDGE YODER: Well, you know, I wish the 

23 issue were whether you were good people. I mean I 

24 don't try that issue, that's not the thing I have to 

25 try. I have to try whether there were violations and 

Heritage Reporting Corporation 

(202) 628-4888 
24 

1 if so what the level of penalty should be. So if it 

2 comes to a hearing, what you're going to wind up with ' 

3 is a finding of violation and then the only issue is 

4 going to be what the level of penalties should be. 

5 MR. HARRISON: Right. 

6 JUDGE YODER: I've been doing this at DOT 

7 for 25 years and at the Civil Aeronautics Board for 

8 ten years before that. I don't think I have ever seen 

9 a case in which there was a finding of violation and 

10 no penalty, okay? And this is a difficult concept to 

11 get your head around, I know, because it is a 

12 determination of what penalty level is consistent with 

13 your ability to pay, that's one of the things we have 

14 to consider. 

15 Ms. McCarthy is supposed to consider that in 

16 proposing the penalty and I have to consider it in 

17 determining a penalty, okay? So we have to look at 

18 the ability to pay and we have to look at whether the 

19 level of penalty is such that it might cause the 

20 Respondent to be unable to continue in business, or to 

21 determine the effect on its business, do you 

22 understand what I mean? 

23 MR. HARRISON: Sure. 

24 JUDGE YODER: So those are the categories 

25 that you need to think in terms of as you assess what 

Heritage Reporting Corporation 

(202) 628-4888 
f^^ 25 

1 you think is going to happen if the case goes to a 

2 hearing. Do you understand what I mean? 

3 MR. HARRISON: I think so. Your Honor. 

4 JUDGE YODER: Yes. I'm just trying to get 

5 you to focus on something I know you don't want to 

6 confront. But the fact is that if it goes to hearing 

7 you're going to wind up with a finding of liability 

8 and you're going to wind up with some determination of 

9 penalty. And so at that point it becomes incumbent 

10 upon you to do the best you can to demonstrate what 

11 that level should be. 

12 MR. HARRISON: And how would I do that. Your 

^ ^ 13 Honor? 

14 JUDGE YODER: Saying you don't want to pay 

15 any penalty is of course understandable but I'm not 

16 sure that's your best argument. 

17 MR. HARRISON: Right. 

18 JUDGE YODER: Because that leads to --

19 MR. HARRISON: How do I determine that? I 

20 mean if the government without any information on my 

21 company says, okay he owes us 8 grand, then I send 

22 them information and I still owe them 8 grand --

23 JUDGE YODER: No, she said --

24 MR. HARRISON: Then I say, hey, and I say 

25 that I'm down to two --

Heritage Reporting Corporation 

(202) 628-4888 
26 

1 JUDGE YODER: She brought it down to $3,000 

2 as an offer as I understand it. 

3 MR. HARRISON: She did. And, Your Honor, we 

4 just feel that, you know, it's crippling. I mean 

5 again all we're trying to do is stay in business, 

6 that's all. 

7 JUDGE YODER: Right. 

8 MR. HARRISON: And I'm down to two employees 

9 now, whatever it is it's going to hurt. But, you 

10 know. 

11 JUDGE YODER: Yes. Can you go get back to 

12 thinking about determining a level of penalty and 

13 figure out what you could stand that Ms. McCarthy 

14 might agree to? That's the challenge that you are 

15 presently confronted with. And if it comes to a 

16 hearing that's what I'll be confronted with, do you 

17 understand what I mean? 

18 MR. HARRISON: I'm not sure --

19 JUDGE YODER: You will have to demonstrate 

20 to me what the appropriate level of penalty -- she has 

21 to prove it, but you want to have a say on what an 

22 appropriate level of penalty should be. And if you 

23 just say there shouldn't be any penalty that's not 

24 going to help me very much. 

25 MR. HARRISON: Right. 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 27 

1 JUDGE YODER: I'm just going to have her 

2 position and what I need is something from you that 

3 says if the penalty were $1,000 I could manage it, if 

4 it's $1,500 I'm going to close the doors. Those are 

5 just numbers taken out of the air, but it's the kind 

6 of thinking that you need to reflect on and see what 

7 you can do to resolve this issue. Given the current 

8 economic times I'm sure no one is interested in adding 

9 unnecessarily to the burdens of small business. 

10 Unfortunately you're in a process where our 

11 function is not primarily designed to remedy those 

12 problems. It is primarily designed to see to it that 

^ ^ 13 there is some significant penalty in the context of 

14 the Respondent's finances in the event of a violation 

15 of the regulations. And the fact that it's 

16 inadvertent goes into that conclusion, the fact that 

17 it's not been done before, that it's not the normal 

18 line of business. 

19 But I can tell you that we have had cases 

20 previously -- as a matter of fact we had a paint case 

21 previously as I recall. Now each one of these cases 

22 is sui generis, I mean each case you have to look at 

23 the facts and look at the respondent and decide what 

24 an appropriate significant penalty is that is 

25 consistent with the ability of the respondent to pay. 

Heritage Reporting Corporation 

(202) 628-4888 
28 

1 And if you go to a hearing and you say, I can't pay 

2 $50, that would be your testimony. 

3 But you might want to look at what you think 

4 you can pay, particularly in response to Ms. 

5 McCarthy's proffer of a $3,000 settlement, and see 

6 what it is you think you can pay to end this matter 

7 without a hearing. Now if there's going to be a 

8 hearing I would suppose that we would do it here in 

9 Washington. I gather you are just east of Annapolis, 

10 is that right? 

11 MR. HARRISON: Yes, sir. 

12 JUDGE YODER: And well that's, with good 

13 traffic that's about an hour away. 

14 MR. HARRISON: Right. 

15 JUDGE YODER: So we could, we would probably 

16 do that here at the Department. You would need to 

17 come with whatever witness you would want to bring to 

18 prove the finances that are set out in these sheets 

19 and the impact of penalties of various levels on your 

20 business. And you need to look at that of course as a 

21 cost of doing business and how much it's worth to you 

22 to settle this issue 

23 MR. HARRISON: Right. 

24 JUDGE YODER: Because it's not going to get 

25 settled by me short of a hearing. It can be settled 

Heritage Reporting Corporation 

(202) 628-4888 
29 

1 by the two of you without a hearing. Now, Ms. 

2 McCarthy, did I understand you to say that the $3,000 

3 offer was made after your receipt of these finances? 

4 MS. MCCARTHY: Yes, Your Honor. 

5 JUDGE YODER: And, Mr. Harrison, you said 

6 that since the time of these documents the financial 

7 picture is headed south. Do you have any later 

8 documents that would show lower levels? 

9 MR. HARRISON: I do. And not only that, 

10 Your Honor. 

11 JUDGE YODER: Yes. 

12 MR. HARRISON: Even the CPA that prepared 

13 that, he's no longer with me. If you want to know the 

14 truth I've got a customer that's an accountant. 

15 JUDGE YODER: Right. 

16 MR. HARRISON: And we are taking care of his 

17 boat and he's doing our books for us now. 

18 JUDGE YODER: Right. 

19 MR. HARRISON: You know, it's the same way 

20 that I don't have an attorney today --

21 JUDGE YODER: Yes. 

22 MR. HARRISON: Because I know that I can't 

23 afford to pay an attorney to do this. 

24 JUDGE YODER: Right. Well the good news, 

25 Mr. Harrison, is that you have fallen into the top 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 30 

1 level of administrative adjudication. If you have an 

2 Administrative Law Judge presiding in your case you 

3 can be sure that you're going to get a fair hearing 

4 whether you like the result or not, and you're going 

5 to get someone who is independent in deciding the 

6 issue. But if you in fact have other documentation 

7 that would show a different picture, the penalty needs 

8 to be assessed in the context of what your current 

9 financial posture is, not in terms of what it was at 

10 the time of the violation. 

11 MR. HARRISON: Okay. 

12 JUDGE YODER: Do you understand what I mean? 

^ 13 MR. HARRISON: I do. 

14 JUDGE YODER: So you want to make sure that 

15 you have the most current data that is available to 

16 you for showing what your current situation is. And 

17 you could put that together, let's see, do you have a 

18 tax return after the one in this data? 

19 MR. HARRISON: We would have '09, but at the 

20 same way I would rather give you something that's 

21 current with our new accountant. 

22 JUDGE YODER: Well sure, you could send '09 

23 and you could send to the extent you can a current 

24 balance sheet and income statement. 

25 MR. HARRISON: Okay. 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 31 

1 JUDGE YODER: And I would suggest that what 

2 you want to do is send that to Ms. McCarthy and the 

3 two of you talk and see whether you can come to some 

4 resolution of this. And if you don't then I'll set it 

5 for a hearing here in Washington and we will decide. 

6 The good news is that if you and Ms. McCarthy agree on 

7 something you don't have to worry about what I might 

8 decide. Do you understand what I mean? 

9 MR. HARRISON: I do. 

10 JUDGE YODER: Yes. 

11 MR. HARRISON: I do have a question though. 

12 JUDGE YODER: Yes, sir. 

^ ^ 13 MR. HARRISON: The last conversation the 

14 $3,000 was the bottom offer. Is that still on the 

15 table? 

16 JUDGE YODER: Well that's between you and 

17 Ms. McCarthy, but if she made that offer I assume that 

18 it's still out there somewhere. But that offer was --

19 MR. HARRISON: No, I'm meaning is that the 

20 lowest offer that? 

21 JUDGE YODER: Well that's why I said you 

22 need to do your homework in terms of presenting your 

23 best case for the impact of a penalty on your 

24 business, do you understand what I mean? 

25 MR. HARRISON: I do. 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 32 

1 JUDGE YODER: And you've got to do your 

2 homework on that subject. You've sent her material 

3 which is two years old and she's come back with a 

4 proposed settlement based on that data. Now you're 

5 telling me that the current data is going to show that 

6 it's only about 50 percent of what this data did. 

7 MR. HARRISON: Right. 

8 JUDGE YODER: Now if I were a fourth grade 

9 student I might apply that 50 percent to the $3,000 

10 and see what I came up with. But I don't know how Ms. 

11 McCarthy will approach your new data, I don't know 

12 what your data is going to be. But that's what you 

^ ^ 13 want to do. 

14 MR. HARRISON: Okay. 

15 JUDGE YODER: And neither Ms. McCarthy nor I 

16 want to see a penalty in this case causing you to 

17 close your doors. First of all we don't like to see 

18 that, but more significantly that's the law. 

19 MR. HARRISON: Right. Your Honor, just to 

20 make one other comment as a small business guy trying 

21 to make it. 

22 JUDGE YODER: Sure. 

23 MR. HARRISON: You shouldn't say, do I send 

24 the government 3 grand or do I keep paying medical 

25 insurance for the little girl sitting over here, or do 

Heritage Reporting Corporation 

(202) 628-4888 
f^ 33 

1 I tell her we don't have the money for it? 

2 JUDGE YODER: Well, you know, that's all 

3 part of continuing in business, Mr. Harrison. If that 

4 is one of your expenses and it can't be met at a 

5 penalty of X dollars then that's something you should 

6 point out, because you can't, presumably you would 

7 suggest that you can't continue in business without 

8 employees. 

9 MR. HARRISON: Right. 

10 JUDGE YODER: And in order to have employees 

11 you have to compensate them. And presumably what you 

12 just described is part of the compensation. And what 

13 you want to do is to describe the income flow you have 

14 and the resources you have and the income flow you 

15 need in order to stay in business. Now I don't think 

16 that Ms. McCarthy is going to be willing to settle 

17 this with her paying you money. 

18 That would be very surprising to me, as a 

19 matter of fact I don't think she has any authority to 

20 do that. But I'm not presented with that question so 

21 I won't decide it. But what you want to do is to look 

22 at your financial resources, your financial 

23 obligations, and determine based on them what sort of 

24 a penalty your business could absorb within its 

25 current ability without causing your business serious 

Heritage Reporting Corporation 

(202) 628-4888 
34 

1 harm or causing you to go out of business, do you see 

2 what I mean? 

3 MR. HARRISON: I do. 

4 JUDGE YODER: Okay. Now I've been about as 

5 explicit as I can in trying to explain to you what you 

6 need to do in order to try to get this resolved. So I 

7 would hope that you would take that to heart and see 

8 what you can do in trying to meet Ms. McCarthy, the 

9 vernacular would be to meet her halfway, I don't mean 

10 by that half of her proposed penalty. What I mean is 

11 that you need to come up with something that is 

12 consistent with the ability of your company to 

13 continue to function. And you're telling me $3,000 is 

14 not consistent with that. Okay, if you go to hearing 

15 you're going to have to prove that. What you want to 

16 do is put together the evidence that will demonstrate 

17 what is possible for your business, okay? 

18 MR. HARRISON: Right. 

19 JUDGE YODER: Because it's not going to go 

20 away on its own, okay? 

21 MR. HARRISON: Right. 

22 JUDGE YODER: I know you would like it to 

23 but that's not going to happen, I don't think it can 

24 happen. I don't think Ms. McCarthy can settle a case 

25 with just drop hands and go home. She's got a problem 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 35 

1 that she has to vindicate regulations that are 

2 designed to protect the public from the shipment of 

3 hazardous materials by air. And the shipment of 

4 hazardous materials by air can cause planes to fall 

5 out of the sky. So it's a significant charge that she 

6 has and a significant law that needs to be vindicated. 

7 Now what you need to do is give her information that 

8 will assist you in demonstrating the level of penalty 

9 that's consistent with your ability to pay and your 

10 need to stay in business, okay? 

11 MR. HARRISON: Okay, sir. 

12 JUDGE YODER: And if you want to you can 

^ ^ 13 send that information to me when you send it to her. 

14 And unless you want it in the Dockets Section you 

15 don't need to send it to the Dockets Section, do you 

16 understand what I'm saying? 

17 MR. HARRISON: Right. 

18 JUDGE YODER: All right. And then I want 

19 you and Ms. McCarthy to talk and see whether you can 

20 come to a settlement figure. I have reason to hope 

21 that the two of you can, okay? 

22 MR. HARRISON: Okay. 

23 JUDGE YODER: If you don't, then we'll have 

24 a hearing and I'll decide what the penalty level will 

25 be, and you will need to prove to me the things that 

Heritage Reporting Corporation 

(202) 628-4888 
36 

1 I've just said you need to try to demonstrate to Ms. 

2 McCarthy, all right? 

3 MR. HARRISON: All right, sir. 

4 JUDGE YODER: Okay. Now how long do you 

5 think you will need in order to assemble the 

6 information we just talked about? 

7 MR. HARRISON: Well I would like the 

8 opportunity to talk to our new accountant to see --

9 JUDGE YODER: Well of course, you tell --

10 MR. HARRISON: How long. 

11 JUDGE YODER: You tell me a date by which 

12 you think you can provide that information. 

13 MR. HARRISON: Well obviously, you know, I'm 

14 going to call him as soon as we hang up. 

15 JUDGE YODER: Yes. 

16 MR. HARRISON: Is 30 days a reasonable 

17 period to put that together? 

18 JUDGE YODER: If that's what you think is 

19 needed we can do that. 

20 MR. HARRISON: Right, because we just 

21 brought him on board and I'd just like to, you know. 

22 JUDGE YODER: That's a little more than I 

23 would normally say, but if you think you need 3 0 days 

24 to do it, Ms. McCarthy, do you have an objection to 

25 that? 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 37 

1 MS. MCCARTHY: None at all. Your Honor. 

2 JUDGE YODER: Okay, so 3 0 days from now 

3 would be December 1. And let's see, it's December 1 

4 is that a real day? 

5 MR. HARRISON: It's a Wednesday. 

6 JUDGE YODER: It's a Wednesday? Okay, well 

7 for me dates are in my hands dates, delivery to me, 

8 okay? If you have a problem we can extend dates, but 

9 for dates that we set it means the document needs to 

10 be in my hands, you either FedEx it or you deliver it. 

11 Never send me anything by mail. You can fax it, you 

12 can email it. But normally things that come to me 

^ ^ 13 have to also go to the Docket but since we're dealing 

14 with your financial data and it's in connection with 

15 an effort to settle the case this won't need to go to 

16 Dockets. But it will need to be in my hands on the 

17 date that we set unless you get an extended time, 

18 okay? 

19 MR. HARRISON: Okay. 

2 0 JUDGE YODER: So that's December 1st. And 

21 then after December 1 the two of you will talk and get 

22 this case settled, because it ought to be. Ms. 

23 McCarthy, is two weeks after that enough time? 

24 MS. MCCARTHY: It should be. Your Honor. 

25 JUDGE YODER: Mr. Harrison, will two weeks 

Heritage Reporting Corporation 

(202) 628-4888 
n 38 

1 after that be enough time for you folks to see whetheif 

2 you can get this settled? 

3 MR. HARRISON: Sure, I would hope so. Your 

4 Honor. 

5 JUDGE YODER: Okay, SO we'll make that 

6 December 15. And so by December 15 someone will get 

7 back to me, either one of you is fine, Ms. McCarthy 

8 can do that, you can do it, and tell me whether or not 

9 the case is settling. If the it's settling then that 

10 will resolve it. If it's not settling I will set a 

11 hearing date in D.C. We don't normally consult the 

12 parties for those dates, we just fix the date. It 

^ ^ 13 would normally be at least two weeks and probably more 

14 like between two weeks and a month, maybe a month 

15 after the date we set it. Okay? 

16 MR. HARRISON: Okay. 

17 JUDGE YODER: Anything further from either 

18 of you? 

19 MS. MCCARTHY: Your Honor, I recognize that 

20 the time to respond to the motion has not yet expired, 

21 but perhaps a reminder the motion does need to be 

22 replied to? 

23 JUDGE YODER: Well I think we've covered 

24 everything that was in the motion today. 

25 MS. MCCARTHY: Okay. 

Heritage Reporting Corporation 

(202) 628-4888 
C^ 39 

1 JUDGE YODER: We've got a finding 

2 essentially that the violation occurred and that 

3 leaves us with the question of level of penalty. You 

4 think there's something else in your motion that you 

5 need to have addressed? 

6 MS. MCCARTHY: No, Your Honor. 

7 JUDGE YODER: Okay. I don't expect to 

8 further address it then. Ms. McCarthy may know, 

9 there's no reason you would, Mr. Harrison, but I try 

10 to avoid issuing orders that don't resolve real 

11 problems, and that's why I prefer to address these 

12 things in prehearing conferences where we can actually 

^ ^ 13 talk about what the real issues are. So is there 

14 anything further then? 

15 MS. MCCARTHY: No, Your Honor. 

16 MR. HARRISON: No, sir, I don't have any and 

17 I appreciate your time on this. 

18 JUDGE YODER: Okay, well thank you both. 

19 That concludes the prehearing conference. We'll hear 

20 from someone, we'll get your documents by December 

21 1st, Mr. Harrison. 

22 MR. HARRISON: All right, sir. 

23 JUDGE YODER: And then we will hear from 

24 someone by the 15th, okay? 

25 MR. HARRISON: Thank you for your time. 

Heritage Reporting Corporation 

(202) 628-4888 
40 

1 JUDGE YODER: Thank you. That concludes the 

2 prehearing conference. 

3 MS. MCCARTHY: Thank you, Your Honor. 

4 JUDGE YODER: Bye bye. 

5 (Whereupon, at 4:29 p.m., the telephone 

6 conference in the above-entitled matter was 

7 concluded.) 

8 // 

9 // 

10 // 

11 // 

12 // 

13 // 

14 // 

15 // 

16 // 

17 // 

18 // 

19 // 

20 // 

21 // 

22 // 

23 // 

24 // 

25 // 

Heritage Reporting Corporation 

(202) 628-4888 
r^ 

REPORTER'S CERTIFICATE 

41 

DOCKET NO.: 

CASE TITLE: 

HEARING DATE: 

LOCATION: 

CP lOEA 0006 

Harrison Yacht Sales, Inc. 

November 1, 2010 

Washington, D.C. 

I hereby certify that the proceedings and 

evidence are contained fully and accurately on the 

tapes and notes reported by me at the hearing in the 

above case before the Department of Transportation. 

Date: November 1, 2010 

:^ju^ ^MJ L ,tc_ 

Edwin Wesley 

Official Reporter 

Heritage Reporting Corporation 

Suite 600 

1220 L Street, N.W. 

Washington, D.C. 20005-4018 

Heritage Reporting Corporation 

(202) 628-4888