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I NTH E U.S . DEPARTMEN T O F TRANSPORTATIO N

I NTH E MATTE ROF : FEDERA L AVIATIO NADMINISTRATION , Complainant ,

V . HARRISO NYACH T SALES , INC. , Respondent . FAADocke t No . CP10EA000 6 FDM S No . FAA-2010-062 6

e n m i n Suit e 60 0 ~ 122 0 L Street , N.V ^ Washington , D.C . Monday , •(= •

- O Novembe r 1 , 2 01 0 Th e partie s me t fo r telephon e conference , pursuan t t o th e notice , a t 3:2 8 p.m .

BEFORE : HONORABL E RONNI E A . YODE R

Chie f Administrativ e La wJudg e APPEARANCES : (vi a telephone ) Fo r th e Complainant : MAR YMADELIN E MCCARTHY , Esquir e Federa l Aviatio nAdministratio n Easter nRegio n 1 Aviatio nPlaz a Jamaica , Ne wYor k1143 4 (718 ) 553-325 9 ^-i ^ s-.-- ,.„. .



# r ^ Fo r th e Respondent : DAVI D HARRISON , Presiden t Harriso nYach t Sales , Inc . f •;! 10 6 Well s Cov e Roa d P.O . Bo x9 8 Grasonville , Marylan d2163 8 (410 ) 827-780 0 Heritag e Reportin g Corporatio n

(202 ) 628-488 8 •-•• • ->*•! / 

# KE T

### 1 PROCEEDING S

2 (3:2 8 p.m. ) 3 JUDG E YODER : Okay , thi s i s a prehearing 4 telephon e conferenc e i nHarriso nYach t Sales , Inc. , 5 FA

ADocke t C P lOE A0006 , an dtha t i s FDM S FAA-2010

- 6 0626 . Ando nthe phon e w e hav e fo r the FA AMary 7 Madelin e McCarthy , andfo r the Responden t w e hav e 8 Davi dHarrison , the Presiden t o f Harriso nYach t Sales . 9 W e als o hav e a Cour t Reporte r wh o wil l transcrib e the 1 0 proceeding . Acopyo f the transcrip t automaticall y 1 1 goe s t o the Judg e an dt o the FAA , whic hpay s fo r the 1 2 transcript . Mr . Harrison , i f yo unee da copyyou'l l d ^ ^1 3 nee dt o arrang e tha t wit hthe Cour t Reporter , okay ?

1 4 MR . HARRISON : Yes , sir . 1 5 JUDG E YODER : Okay . No wI calle dthe 1 6 prehearing conferenc e t o se e i f w e coul dclarif yjus t 1 7 wha t w e hav e a t issu e i nthi s proceeding . Mr . 1 8 Harrison , I tak e i t yo uar e no t a nattorney ? 1 9 MR . HARRISON : No , sir , I a mnot . 2 0 JUDG E YODER : Okay . I jus t wante dt o mak e 2 1 i f clea r tha t whe nyo uappea r a s the Responden t itsel f 2 2 o r a s a nemploye e o f the Responden t yo uwindup 2 3 potentiall ymaking statement s whic hcoul db e use da t 2 4 the subsequen t hearing , d o yo uunderstandwha t I mean ? 2 5 MR . HARRISON : I believ e I do , sir . Heritag e Reporting Corporatio n

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1 JUDG E YODER : Th e peopl e wh o appea r throug h 2 attorney s o f cours e th e attorney s onl ymak e statement s 3 an dargument s bu t the yaren' t reall ycreatin g 4 testimony . An do f cours e yo uaren' t sworn , bu t th e 5 fac t i s tha t statement s tha t yo umak e ma yb e use di na 6 subsequen t proceeding , yo unee dt o b e awar e o f tha t 7 fac t an dtha t fals e statement s i f the ywer e wilfull y 8 mad e coul dtur nou t t o b e a crimina l violation , jus t 9 t o le t yo ukno wwher e yo uar e whe nyo ucom e i nwithou t 1 0 a nattorney , okay ? 1 1 MR . HARRISON : Okay , sir . 1 2 JUDG E YODER : Al l right . No ww e recentl y d^* ^ 1 3 receive da cop yo f som e financia l informatio n

1 4 concernin g Harrison , an dI tak e i t tha t tha t wen t t o 1 5 th e Docket s Section , i s tha t right , Ms . McCarthy ? 1 6 MS . MCCARTHY : I' msorry . You r Honor , ther e 1 7 wa s a bee p i nbetwee nwha t yo usaid . 1 8 JUDG E YODER : Oh . Th e financia l informatio n 1 9 tha t yo usen t t o me , wa s tha t als o sen t t o Dockets ? 2 0 MS . MCCARTHY : Yes , i t was . 2 1 JUDG E YODER : I t ha s no t show nu p i nth e 2 2 Docke t o r o nDMS . Mr . Harrison , d o yo uhav e a concer n 2 3 abou t tha t documen t bein g public ? 2 4 MR . HARRISON : I don' t thin kso , sir . 2 5 JUDG E YODER : Okay , fine . No ww e receive da Heritag e Reportin g Corporatio n

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1 motio nfo r partia l summar yjudgmen t fro mMs . McCarthy , 2 an dth e answe r t o tha t motio nisn' t du e ye t s o ther e 3 i s n o answe r a s yet . An dw e wil l addres s th e matter s 4 tha t ar e place di nissu e b ytha t motion , th e most , on e 5 o f whic hi s i f ther e ha s bee nn o answe r t o th e 6 complaint . Now , Mr . Harrison , di dyo uunderstan dwhe n 7 yo ureceive dthi s notic e of , th e complain t tha t yo u 8 wer e suppose dt o fil e a nanswe r t o th e complaint ? 9 MR . HARRISON : You r Honor , I though t I did , 1 0 I mea nI though t w e hav e don e everythin g tha t we'v e 1 1 bee naske dt o do . 1 2 JUDG E YODER : Al l right . I hav e you r lette r ^ ^1 3 date dSeptembe r 7 , an dtha t say s tha t you'r e

1 4 respondin g t o th e notic e Augus t 20 , 2010 . Di dyo u 1 5 fil e somethin g othe r tha ntha t i nthi s matter ? 1 6 MR . HARRISON : You r Honor , i t goe s bac ka 1 7 whil e bu t I di dsen dsomethin g t o th e FAA , yo uknow , 1 8 pe r thei r request , bu t I can' t recal l wha t i t was . 1 9 JUDG E YODER : Okay , al l right , bu t th e 2 0 complain t wa s filed , let' s see , th e complain t wa s 2 1 file dJul y20 , 2010 . D o yo uhav e a cop yo f that ? 2 2 MR . HARRISON : I s i t date d2010 , sir ? 2 3 JUDG E YODER : Yes , sir . It' s date dJul y20 , 2 4 2010 , an dit' s signe db yMar yMcCarthy , Deput y 2 5 Regiona l Counsel . Heritag e Reportin g Corporatio n

(202 ) 628-488 81 MR . HARRISON : Yo uknow . You r Honor , I've

2 go t s o muc hstuf f I don' t kno wi f I d o o r not . 3 JUDG E YODER : Wel l tha t i s the , that' s th e 4 documen t tha t establishe s th e parameter s o f th e 5 proceeding , s o it' s importan t tha t yo uhav e it . No w 6 ther e wa s a , I thin k th e motio nma yhav e reproduce d 7 mos t o f th e allegations , mayb e al l o f th e allegation . 8 MR . HARRISON : Woul dtha t b e th e notic e o f 9 propose dcivi l penalties . You r Honor ? 1 0 JUDG E YODER : Wel l ther e wa s initiall ya 1 1 notic e o f propose dcivi l penalty . 1 2 MR . HARRISON : Tha t on e i s date dDecembe r

^' ^ 1 3 '09 .

1 4 JUDG E YODER : Yes , tha t wa s the , tha t wa s 1 5 perhap s th e firs t documen t tha t wa s filed . Bu t the n 1 6 afte r tha t ther e wa s a complain t filed . An di t is , 1 7 le t m e see . 1 8 MR . HARRISON : Ther e i s anothe r on e that' s 1 9 no t date dbu t it' s th e complainant' s motion s fo r 2 0 partia l summar yjudgment . 2 1 JUDG E YODER : No , that' s th e mos t recen t 2 2 documen t an di t include s i nit , le t m e se e i f i t - - 2 3 yes , attache dt o tha t i s a cop yo f th e complaint . I t 2 4 shoul db e o npag e 21 . 2 5 MR . HARRISON : O hboy , i t jus t stop s a t pag e Heritag e Reportin g Corporatio n

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1 7 . 2 JUDG E YODER : Oh . 3 MR . HARRISON : Becaus e w e did , w e receive da 4 fa xan d- - 5 MR . HARRISON : I t Stop s a t pag e 7 , yo usay ? 6 MR . HARRISON : Yes , sir , bu t agai nw e 7 receive da fa xtha t ha dgazillio npages . Let' s see , 8 wha t page , sir ? 9 JUDG E YODER : 21 . There' s a pag e numbe r i n 1 0 th e middl e o f th e pag e an dthe nthere' s a pag e numbe r 1 1 ou t i nth e righ t han dcorner . 1 2 MR . HARRISON : Right . ^ ^1 3 JUDG E YODER : An dwhe nyo usa yi t stop s a t

1 4 pag e 7 ar e yo utalkin g abou t th e numbe r i nth e middl e 1 5 o f th e page ? 1 6 MR . HARRISON : Yes , sir , I do . 1 7 JUDG E YODER : Okay , d o yo use e ou t o nth e 1 8 corner , tha t probabl ysay s 14 . 1 9 MR . HARRISON : Al l right , an dthe nI've go t 2 0 fo r exampl e one , thi s i s pag e 1 o f 5 s o i f I coul d 2 1 fin dtha t group ? 2 2 JUDG E YODER : Wel l I don' t know . Yo udon' t 2 3 hav e th e exhibit s t o tha t motion ? 2 4 MR . HARRISON : Well , the nI , no wI've foun d 2 5 one . You r Honor , tha t say s complaint , i s tha t th e one ? Heritag e Reportin g Corporatio n

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1 JUDG E YODER : Yeah , that' s it . 2 MR . HARRISON : Al l right , i f w e coul dtr yt o 3 ge t tha t i nsom e order . 4 JUDG E YODER : D o yo uhav e tha t i nfron t o f 5 you ? 6 MR . HARRISON : Tha t wa s faxe di no nth e 22n d 7 o f October . 8 JUDG E YODER : Okay , bu t yo uhav e tha t 9 documen t tha t i s th e complaint ? 1 0 MR . HARRISON : Yes , sir , right . 1 1 JUDG E YODER : Okay . No wMs . McCarth ystate s 1 2 i nhe r motio ntha t yo uhav e basicall yacknowledge dth e { ^ ^1 3 factua l allegation s i nthi s complaint , an dI wante dt o

1 4 clear , I wante dt o clarif ywhethe r tha t i nfac t i s 1 5 correct , okay ? 1 6 MR . HARRISON : Okay . 1 7 JUDG E YODER : Ca nyo uloo ka t Roma n1 , tha t 1 8 basicall ysay s you'v e go t a fina l notic e o f propose d 1 9 civi l penalt ytha t the ypropose d$8,00 0 penalty ? 2 0 MR . HARRISON : Right . 2 1 JUDG E YODER : Yo uagre e t o that ? 2 2 MR . HARRISON : D o I agre e t o i t o r d o I ? 2 3 JUDG E YODER : Tha t yo uagre e tha t tha t 2 4 happened ? 2 5 MR . HARRISON : I di dse e that , yes , sir . Heritag e Reportin g Corporatio n

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1 JUDG E YODER : Okay , the ni t say s o nJul y10 , 2 200 9 yo uoffere da nundeclare dshipmen t o f hazardou s 3 material s t o UPS , i s tha t correct ? 4 MR . HARRISON : Okay , You r Honor , ca nI 5 explai nthat ? 6 JUDG E YODER : Certainly . 7 MR . HARRISON : Wel l w e ru na smal l boatyar d 8 her e o nth e Easter nShore . 9 JUDG E YODER : Yes . 1 0 MR . HARRISON : Ou r supplie s ar e shippe di n 1 1 b yth e vendor' s ow ntrucks . 1 2 JUDG E YODER : Yes . ^ ^1 3 MR . HARRISON : We'r e no t i nth e busines s o f

1 4 shipping . An di nthi s cas e w e wer e shippe d6 gallon s 1 5 o f botto m

pain t byth e supplie r bu t i t cam e UP S 1 6 becaus e thei r truc kwa s broken , s o the yagree dt o shi p 1 7 i t UPS . W e ha da gallo nlef t over , w e contacte dth e 1 8 supplie r an dsaid , yo uknow , ca nw e retur nthis ? Yes . 1 9 An dthe nw e said , okay , we'l l pu t i t o nyou r truck . 2 0 Th e truc ki s stil l broken , w e wan t yo ut o shi p i t UP S 2 1 bac kt o us . S o an dthe yactuall ysen t u s th e ai r 2 2 bill , o r no t th e ai r bil l number , bu t th e waybil l 2 3 numbe r the ycalle dit , t o shi p i t back . Th e regula r 2 4 gir l tha t handle s ou r servic e wa s of f o nmaternit y 2 5 leav e s o mybookkeepe r i s doin g he r job . An dw e di d Heritag e Reportin g Corporatio n

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1 i nfac t inadvertentl ymar k "2-da yair " o ntha t gallo n 2 o f botto m

pain t an dshippe dit . 3 JUDG E YODER : Yes . 4 MR . HARRISON : An dtha t w e di ddo , yes , sir . 5 W e mad e a mistak e i ndoin g it , w e ha dn o reaso nt o 6 wan t t o shi p i t bac kb yair , nothin g t o gai nbydoin g 7 it . 8 JUDG E YODER : Yes . 9 MR . HARRISON : Onc e w e shippe dit , an d 1 0 apparentl yi t leake dwhe ni t go t t o Lanham . 1 1 JUDG E YODER : Yes . 1 2 MR . HARRISON : W e wer e notifie db yUP S o f /^* ^ 1 3 it . W e contacte dth e pain t manufacture r an dthe y

1 4 immediatel ycalle dUP S becaus e ther e wa s som e questio n 1 5 o f wha t wa s i ntha t paint . An dthe . Haddock , thi s wa s 1 6 th e nam e o f th e companytha t manufacture dit , calle d 1 7 u s bac kan dsaid , oka ywe'v e go t thi s resolve dwit h 1 8 them , n o problem . 1 9 JUDG E YODER : Yes . 2 0 MR . HARRISON : Wel l apparentl yther e was . 2 1 No wt o th e point , i t wa s a wate r base dpaint , an dI 2 2 assum e tha t that' s what , yo uknow , pu t i t t o bed . Bu t 2 3 the nlate r o nobviousl yw e starte dgettin g th e 2 4 correspondenc e fro mFAA . 2 5 JUDG E YODER : Yes . Wel l we'l l jum p ahea d Heritag e Reportin g Corporatio n

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1 jus t a littl e bi t becaus e o f wha t you'v e said , yo u 2 hav e essentiall ysai dtha t yo udi dshi p a hazardou s 3 materia l b yair , that' s wha t yo ujus t said . 4 MR . HARRISON : I did . 5 JUDG E YODER : Yes , an di t ma yb e tha t th e 6 statu s o f hazardou s material s i s no t a s wel l know na s 7 i t shoul db e i nth e industry . I've ha doccasio nt o 8 sa ytha t t o industr yrepresentative s i nth e past , an d 9 thi s ca ncom e a s quit e a shoc k t o busines s peopl e wh o 1 0 win du p shippin g somethin g withou t knowin g th e 1 1 regulation s tha t apply . Bu t th e fac t i s tha t yo u 1 2 don' t hav e t o kno wabou t th e regulation s i norde r t o

^ ^ 1 3 violat e them .

1 4 Th e la wi s ther e i norde r t o preven t th e 1 5 introductio no f hazardou s material s int o th e strea mo f 1 6 transportatio nwithou t thei r bein g properl ymarke dan d 1 7 package dbecaus e the yca nbecom e ver yhazardou s i na 1 8 transportatio nsetting . An dunfortunatel yfo r thos e 1 9 wh o ar e wel l meanin g an ddon' t realiz e wha t they'r e 2 0 doing , tha t doesn' t reall yaffec t th e questio no f 2 1 violatio no r liability . 2 2 I t ma yaffec t th e leve l o f penalty , bu t i n 2 3 term s o f liabilit yi t reall yonl yrequire s tha t yo ud o 2 4 th e ac t tha t constitute s a violation . W e hav e ha d 2 5 case s i nfac t wher e someon e tha t th e shippe r didn' t 

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.. . Heritag e Reportin g Corporatio n

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## r ^1 1 1 eve nkno wpu t thes e hazardou s material s int o th e lin e 2 o f transportation , bu t the ykne wthe ywer e thei r 3 agent , an dbecaus e the ywer e thei r agen t the ywer e 4 charge dwit hth e liabilit ytha t th e agen t encountere d 5 whe nthey , i ntha t cas e i t wa s a batter ywa s pu t int o 6 a nai r transportatio nsetting . 7 On e o f th e reason s o f cours e tha t Congres s 8 recentl yraise dth e - - I sa yrecently , quit e som e 9 year s bac k no w- - raise dth e potentia l penalt yi n 1 0 thes e case s wa s becaus e o f th e possibilit yo f disaste r 1 1 i f thing s ar e loade dwhe nthe yshouldn' t b e i na wa y 1 2 the yshouldn' t be . I jus t wante dt o explai nal l tha t r ^

- 1 3 s o you' dhav e som e bette r understandin g o f wher e yo u

1 4 ar e fro m

a lega l standpoint . 1 5 I f w e loo k down , wha t thi s complain t doe s i s 1 6 t o se t fort ha serie s o f facts , an dbase do nwha t 1 7 you'v e sai dit' s no t clea r t o m e tha t yo udisagre e 1 8 wit han yo f them . I t say s th e shipmen t travele do n 1 9 2n dda yai r unde r th e UP S waybill , i t sai dtha t a t th e 2 0 UP S cente r i nLaure l i t wa s discovere dt o b e leakin g 2 1 re dpaint . I t say s tha t th e shipmen t wa s a one-gallo n 2 2 ca no f re dpain t i na 4- Gfiberboar dbox . I t say s i t 2 3 wa s a produc t regulate db yth e DO T hazardou s material s 2 4 regulations . 2 5 I t the ntalk s abou t you r compan ybein g a Heritag e Reportin g Corporatio n

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1 hazma t employer , an dagai nthi s i s a nare a wher e 2 peopl e wh o don' t dea l wit hthi s o na regula r basi s ma y 3 no t understan dth e implication s o f sendin g of f any 4 kind s o f hazardou s material . Th e regulation s wit h 5 respec t t o shipmen t an dtrainin g appl yt o hazardou s 6 material s employers , hazma t employers , bu t th e proble m 7 i s tha t you'r e a hazma t employe r i f yo uhav e a hazma t 8 employee . 9 An dyo uhav e a hazma t employe e i f yo uhav e 1 0 someon e wh o handle s a hazma t materia l an dput s i t i na 1 1 shipment . D o yo use e th e problem ? That' s th e wa yth e 1 2 regulation s ar e se t up . An ds o th e res t o f th e ^ ^1 3 allegation s whic hrelat e t o th e fac t tha t yo udidn' t

1 4 hav e you r employee s trained , yo udidn' t hav e the m 1 5 traine dbecaus e yo udidn' t realiz e the ywer e subjec t 1 6 t o thi s regulation , i s tha t wha t I' mhea r yo usayin g 1 7 i nyou r letter ? 1 8 MR . HARRISON : Exactly . 1 9 JUDG E YODER : Yes . 2 0 MR . HARRISON : Yo uknow , w e don' t shi p 2 1 hazmat . I gues s i f pain t i s a hazardou s materia l w e 2 2 us e it . 2 3 JUDG E YODER : Yes . 2 4 MR . HARRISON : W e certainl ytak e ever y 2 5 precautio nher e i nth e yar do f usin g it . Heritag e Reportin g Corporatio n

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1 JUDG E YODER : Sure . 2 MR . HARRISON : Yo uknow , a s fa r a s mask s an d 3 s o forth . 4 JUDG E YODER : Wel l I understan dwha t you'r e 5 saying , Mr . Harrison . I think , Ms . McCarthy , mayb e 6 yo uca ncorrec t m e o nthis , bu t ther e ar e wel l ove r 7 10 0 page s o f regulation s i nth e Cod e o f Federa l 8 Regulation s tha t lis t thing s tha t ar e hazardou s 9 materials . 1 0 MS . MCCARTHY : That' s probabl yabou t 1 1 correct . You r Honor . 1 2 JUDG E YODER : Yes , I mea nther e ar e hundred s r ^1 3 an dhundred s an dhundred s o f things . An damon g th e

1 4 things , fo r instanc e unles s I misrecollect , i s hai r 1 5 spray . An ds o i f yo uge t aske db ysomeon e t o sen d 1 6 the msom e hai r spra yb yai r yo uma ywan t t o thin k 1 7 twic e befor e yo urespon dt o that . An dwheneve r yo u 1 8 ge t int o a situatio nwher e you'r e sendin g thing s by 1 9 ai r yo ureall ynee dt o hav e i nth e bac ko f you r min d 2 0 o r i nth e fron t o f you r min dtha t yo uhav e thes e 2 1 hazma t regulation s tha t yo uhav e t o worr yabout . 2 2 S o th e res t o f th e complain t the nsay s yo u 2 3 didn' t trai nyou r hazma t employees , yo udidn' t ensur e 2 4 the yha dgenera l training , yo udidn' t instruc t the mi n 2 5 th e responsibilit yo f preparin g hazardou s materials . Heritag e Reportin g Corporatio n

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1 yo udidn' t ensur e th e shipmen t me t th e DO T HMRs . Yo u 2 offere di nan ddi dno t mar k th e shipment . M y 3 experienc e wit hthes e i s i ngenera l whe nsomeon e make s 4 a shipmen t an dtha t i s a hazardou s materia l shipment , 5 i t ofte ni f no t usuall ywil l resul t i n1 7 violation s 6 becaus e o f th e differen t regulation s tha t apply . 7 An dwit hth e maximu mviolatio nbein g $25,00 0 8 pe r violatio ntha t mean s on e shipmen t expose s yo ut o a 9 potentia l o f almos t hal f a millio ndollars . I mea n 1 0 Congres s di dthi s becaus e the ytak e thi s ver y 1 1 seriously . Anyway , i t the nsay s yo udidn' t mar ki t 1 2 an dthe ni t say s yo udidn' t ensur e tha t i t wa s ^ ^1 3 labeled , yo udidn' t ensur e i t wa s accompanie dby

1 4 shippin g paper s wit hemergenc yrespons e information . 1 5 An dal l thos e thing s ar e detaile dbecaus e al l o f thos e 1 6 ar e separat e violation s unde r th e regulations . 1 7 An ds o base do nwha t you'v e sai dher e an di n 1 8 you r lette r i t woul dsee mtha t ther e reall yisn' t any 1 9 factua l issu e i nthi s cas e a s t o whethe r ther e wa s a 2 0 violatio no f th e regulations . An dconsequentl ytha t 2 1 woul dleav e u s wit hth e questio no f th e leve l o f 2 2 penalty . An dle t m e jus t tak e a loo khere . Ms . 2 3 McCarthy , ca nyo utel l m e ho wman yviolation s ar e 2 4 allege di nthi s complaint ? 2 5 MS . MCCARTHY : I believe , let' s see . Heritag e Reportin g Corporatio n

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1 approximatel ynin e violations . You r Honor . 2 JUDG E YODER : Okay , an dtha t wa s th e basi s 3 o nwhic hth e penalt ywa s calculated ? 4 MS . MCCARTHY : Yes . 5 JUDG E YODER : An dca nyo utel l u s ho wth e 6 penalt yleve l wa s reached ? I shoul dsa yth e propose d 7 penalt ylevel . 8 MS . MCCARTHY : Yes . Hol do non e second , 9 jus t lookin g fo r th e - - 1 0 JUDG E YODER : Somebod ytol dm e a coupl e 1 1 week s ag o tha t th e issu e befor e m e wa s th e propriet y 1 2 o f th e assessmen t mad e byth e FAA , an dtha t o f cours e 1 3 i s no t th e issue . Th e issu e i s wha t i s th e 1 4 appropriat e penalt ylevel , an dMs . McCarthy , I 1 5 referre dt o he r earlie r a s representin g th e FAA , sh e 1 6 actuall yrepresent s th e regio nthat , th e fiel d 1 7 administrato r tha t bring s thi s complaint . An dsh e 1 8 woul dnee dt o prov e th e penalt ytha t sh e seek s i f th e 1 9 cas e goe s t o hearing . S o wh ydon' t yo utel l u s i f yo u 2 0 ca nho wyo uarrive da t thi s penalt ylevel ? 2 1 MS . MCCARTHY : Certainly , You r Honor . W e 2 2 too k int o accoun t th e categor yo f th e hazma t an dth e 2 3 typ e o f hazmat . W e essentiall yhave , base do nth e 2 4 categor yo f hazma t an dth e clas s an ddivision , th e 2 5 typ e o f hazmat , w e determin e tha t th e penalt ywa s Heritag e Reportin g Corporatio n

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1 approximatel y$1,50 0 fo r failur e t o hav e shippin g 2 papers , fo r th e failur e t o label , th e failur e t o mark , 3 th e imprope r packaging , th e failur e t o train , th e 4 failur e t o hav e a nemergenc yresponse , an dfo r th e 5 release , th e fac t tha t ther e wa s a release . Give nal l 6 that , give nal l o f tha t th e tota l sanctio nw e 7 initiall ycalculate dwoul dhav e bee n$10,5 . Th e fac t 8 that , an dw e di dloo k a t minimu msanctio nlevels . Th e 9 fac t tha t th e compan yi s a smal l busines s wit hn o 1 0 previou s violations , w e too k a $2,50 0 reductio nan d 1 1 cam e t o $8,000 . 1 2 JUDG E YODER : An dyo usai dbecaus e o f th e

^ ^ 1 3 categor yan dth e typ e yo udetermine dtha t eac ho f th e

1 4 violation s woul db e a t th e $1,50 0 level ? 1 5 MS . MCCARTHY : Yes , that' s i nth e minima l 1 6 range . 1 7 JUDG E YODER : An dthat's , s o that' s $10,50 0 1 8 time s 7 , i s that ? 1 9 MS . MCCARTHY : No , tha t wa s $1,50 0 time s - - 2 0 JUDG E YODER : I mea n$1,50 0 time s 7 ? 2 1 MS . MCCARTHY : Yes . 2 2 JUDG E YODER : That' s ho wyo ugo t t o $10,500 ? 2 3 MS . MCCARTHY : Yes . 2 4 JUDG E YODER : Bu t yo usai dyo uwer e claimin g 2 5 nin e violations ? Heritag e Reportin g Corporatio n

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1 MS . MCCARTHY : Wel l nin e violation s bu t 2 seve ncategorie s o f violation . Whe nw e loo ka t th e 3 appropriat e sanctio nw e als o loo ka t categories , 4 categorie s o f violation . I f it' s a - - 5 JUDG E YODER : Coul dyo ujus t mentio nth e 6 seve ncategorie s tha t you ? 7 MS . MCCARTHY : Sure . Shippin g papers , 8 labeling , marking , packaging , training , emergenc y 9 response , an drelease . 1 0 JUDG E YODER : Wha t i s release ? 1 1 MS . MCCARTHY : Th e fac t tha t th e pain t 1 2 spilled . /•" ^ 1 3 JUDG E YODER : Oh , al l right . An dwher e d o

1 4 yo uge t th e figur e $1,50 0 from ? 1 5 MS . MCCARTHY : Fro mou r sanctio nguidance . 1 6 JUDG E YODER : An dthat' s a publi c document ? 1 7 MS . MCCARTHY : Ye s i t is . You r Honor . 1 8 JUDG E YODER : S o tha t $1,50 0 figur e take s 1 9 int o accoun t what ? 2 0 MS . MCCARTHY : Wel l i t take s int o accoun t - - 2 1 JUDG E YODER : What' s th e rang e tha t i s 2 2 availabl e there ? 2 3 MS . MCCARTHY : Wel l i t woul db e anywher e 2 4 fro m$25 0 throug h$32, 5 I believ e i s th e to p o f th e 2 5 range . Heritag e Reportin g Corporatio n (202 ) 628-488 8

### r ^1 8 1 JUDG E YODER : $37,500 ? 2 MS . MCCARTHY : Yes , I believ e tha t that' s 3 th e maximum . 4 JUDG E YODER : Yes . Ther e i s a ninflatio n 5 escalator , Mr . Harrison , tha t ha s resulte di nthi s 6 maximu m

penalt ype r violatio ngoin g u p sinc e i t 7 starte dou t a t $25 , an dit' s no wgon e fro m$2 5 t o 8 $37,5 ? I though t i t wa s $27, 5 bu t it' s no wu p t o 9 $37,5 , i s tha t right , Ms . McCarthy ? 1 0 MS . MCCARTHY : I believ e it's , wel l I kno w 1 1 fo r hazma t I believ e i t ha s gon e u p t o $37,5 . 1 2 JUDG E YODER : Okay . < ^ 1 3 MS . MCCARTHY : $32,5 , I' msorry .

1 4 JUDG E YODER : $32,5 ? 1 5 MS . MCCARTHY : Yes . 1 6 JUDG E YODER : Okay . Al l right , an ds o wha t 1 7 i nth e guideline s get s yo ut o th e $1,50 0 leve l fo r 1 8 thes e particula r violations ? 1 9 MS . MCCARTHY : Wel l i f w e loo ka t a n 2 0 undeclare dshipmen t withi nth e hazma t quantit y 2 1 limitation s fo r a busines s entit yth e minimu mi s 2 2 $1,500 , $8,20 0 woul db e th e maximumtha t w e woul d 2 3 normall yg o - - 2 4 JUDG E YODER : I see . 2 5 MS . MCCARTHY : Fo r thos e type s o f companies . Heritag e Reportin g Corporatio n

(202 ) 628-488 8

### f ^1 9

1 An d$1,50 0 i s th e minimum . 2 JUDG E YODER : I s tha t tru e i neac ho f thes e 3 seve ncategories ? 4 MS . MCCARTHY : Yes . 5 JUDG E YODER : Okay . An dyo usa ythat' s th e 6 minimu m

fo r thes e kind s o f shippers . I s tha t suppose d 7 t o tak e int o accoun t th e siz e o f th e business ? 8 MS . MCCARTHY : T o som e exten t i t does , yes , 9 bu t w e als o di da deductio na t th e en dbecaus e o f th e 1 0 siz e o f th e business . 1 1 JUDG E YODER : Right . An ddi dyo uhav e 1 2 informatio nconcernin g abilit yt o pay ? ll^ ^1 3 MS . MCCARTHY : A t th e tim e tha t w e propose d

1 4 a n$8,00 0 civi l penalt yw e di dnot . 1 5 JUDG E YODER : Okay , bu t no wyo udo ? 1 6 MS . MCCARTHY : Ye s w e do . 1 7 JUDG E YODER : D o yo uhav e wha t yo uwoul d 1 8 nee dt o conside r tha t factor ? 1 9 MS . MCCARTHY : Ye s w e do . You r Honor . 2 0 JUDG E YODER : An dho wha s tha t affecte dyou r 2 1 request ? 2 2 MS . MCCARTHY : Wel l afte r lookin g a t it , 2 3 whil e I believ e tha t $8,00 0 stil l i s a reasonabl e 2 4 civi l penalt yw e hav e mad e offer s t o tr yan dsettl e 2 5 th e matter . Heritag e Reportin g Corporatio n (202 ) 628-488 82 0

1 JUDG E YODER : Yes . And , Mr . Harrison , I 2 gathe r tha t yo ureferre dt o a noffe r o f $3,00 0 i nyou r 3 letter , i s tha t right ? 4 MR . HARRISON : I did . 5 JUDG E YODER : Wha t ca nyo utel l u s abou t th e 6 impac t o f a $3,00 0 penalt yo nth e business ? 7 MR . HARRISON : Well , You r Honor , a coupl e o f 8 points . One , th e financia l yo uhav e i s base dof f th e 9 yea r 2008 . 1 0 JUDG E YODER : Right . 1 1 MR . HARRISON : Th e bes t yea r w e eve r had , 1 2 tha t wa s befor e w e wen t int o thi s slide . I ca nals o r * ' 1 3 tel l yo utha t ou r gros s fo r thi s yea r wil l probabl y

1 4 represen t abou t hal f o f that . I nth e mont ho f Octobe r 1 5 alon e I've lai dof f thre e mor e employees . I' mdow nt o 1 6 two , an dthe yar e workin g four-da ywor kweeks . 1 7 JUDG E YODER : Yes . 1 8 MR . HARRISON : Tha t leave s m e tw o i nth e 1 9 yard , I've go t a noffic e girl , an dmyself , an dquit e 2 0 frankl yI' mgoin g t o tak e a hal f a pa ycu t - - 2 1 JUDG E YODER : Yes . 2 2 MR . HARRISON : O f wha t I' mno t makin g 2 3 startin g th e middl e o f November . 2 4 JUDG E YODER : Yes . 2 5 MR . HARRISON : We'r e i nth e marin e business . Heritag e Reportin g Corporatio n

(202 ) 628-488 8^2 1

1 an di nth e lette r t o yo uI sai di t wa s 6 2 percent , bu t 2 close r t o 7 0 percen t o f th e boa t dealer s tha t ar e no w 3 ou t o f business , gone . 4 JUDG E YODER : Yes . 5 MR . HARRISON : An dw e ar e hangin g on , bu t 6 that' s al l we'r e doing , it' s no t lik e there' s a 7 profit . Quit e frankl yw e don' t se e a lo t o f sunshine . 8 Bu t I d o hav e som e goo dpeopl e an dwe'r e doin g wha t w e 9 ca nt o kee p th e doo r open . 1 0 JUDG E YODER : Right . 1 1 MR . HARRISON : An dthat' s al l we'r e doing , 1 2 sir . 1 3 JUDG E YODER : Wel l yo usai dtha t thi s wa s 1 4 th e bes t yea r yo uha dan dyo uexpec t thi s yea r t o b e - 1 5 - I mea nth e yea r i nthes e document s wa s th e bes t yea r 1 6 yo uha dan dyo uexpec t thi s yea r t o no t b e hal f a s 1 7 goo da s th e yea r i nthi s document ? 1 8 MR . HARRISON : That' s right , sir . 1 9 JUDG E YODER : An dth e documen t show s incom e 2 0 o f $31,000 ? 2 1 MR . HARRISON : Right . 2 2 JUDG E YODER : An di t show s a balanc e shee t 2 3 ne t o f $977,000 ? 2 4 MR . HARRISON : Sir , that's , yo uknow , myCP A 2 5 doe s that , i t ha s n o tru e reflectio no nthis . Bac ki n Heritag e Reportin g Corporatio n

(202 ) 628-488 8^2 2

1 th e lat e '80 s thi s companywa s profitable , an dthat' s 2 reall ya loan , a fictitiou s loa ni f yo uwan t t o kno w 3 th e truth , tha t thi s busines s owe s me , whic hobviousl y 4 i t can' t pa ym e becaus e w e don' t hav e th e money . 5 JUDG E YODER : Wel l i t als o show s a ne t 6 los s - - oh , income . Ne t incom e o f $26,765 . That' s o n 7 Schedul e M-2 , th e las t pag e o f th e document ? 8 MR . HARRISON : I don' t hav e i t here , sir . 9 JUDG E YODER : Oh , I see . 1 0 MR . HARRISON : An di f I di dI probabl y 1 1 couldn' t rea di t becaus e agai nmyCP Adoe s it . 1 2 JUDG E YODER : Yes . Anyway , i f yo utoo ktha t

^^ ^ 1 3 figure , $26,00 0 an dthi s yea r wer e hal f a s goo dyou' d

1 4 b e dow nt o $13,000 ? 1 5 MR . HARRISON : An dw e wil l be . 1 6 JUDG E YODER : Yes . 1 7 MR . HARRISON : I f w e ca nkee p th e door s 1 8 open . Quit e frankly , I'l l b e hones t wit hyou , th e 1 9 onl yreaso nw e ca nexis t a t thi s poin t i s th e fac t 2 0 tha t w e don' t hav e a hig hrent . 2 1 JUDG E YODER : Yes . 2 2 MR . HARRISON : I f w e di dw e woul dhav e bee n 2 3 toas t a yea r ago . 2 4 JUDG E YODER : Right . Wel l hav e yo utalke d 2 5 wit hMs . McCarthyabou t a leve l tha t yo uthin k Heritag e Reportin g Corporatio n

(202 ) 628-488 8

### f ^ 2 3

1 Harriso ncoul dpa yi norde r t o ge t thi s matte r 2 resolved ? 3 MR . HARRISON : Well , an dquit e frankly , You r 4 Honor , sayin g t o you , tha t numbe r tha t w e woul db e 5 ticke dpin k wit hi s nothing . Becaus e agai n 6 financiall ywe'r e no t i na positio nt o d o it , an dtwo , 7 yo uknow , t o penaliz e u s fo r a mistak e tha t w e made , 8 an dw e admi t t o makin g it , bu t we'r e just , yo uknow , 9 i f we'r e a t faul t we'r e a t fault , bu t we'r e no t i n 1 0 tha t business . M ygirl , i t wa s a typ o error . I mea n 1 1 th e stuf f wa s shippe dt o u s UPS , i t sa t her e i nth e 1 2 UP S box , w e shippe di t ou t i nth e sam e box , an d 1 3 becaus e sh e hi t tha t Xunde r 2da yai r we'r e havin g 1 4 thi s conversation . 1 5 JUDG E YODER : Yes . 1 6 MR . HARRISON : Bu t we'r e goo dpeople , w e pa y 1 7 ou r taxes , w e wor khard . 1 8 JUDG E YODER : Yes . 1 9 MR . HARRISON : An dI guess , an dI hat e t o d o 2 0 it , bu t we'r e jus t askin g fo r a littl e forgivenes s i n 2 1 a tim e wher e al l we'r e tryin g t o d o i s survive . 2 2 JUDG E YODER : Well , yo uknow , I wis hth e 2 3 issu e wer e whethe r yo uwer e goo dpeople . I mea nI 2 4 don' t tr ytha t issue , that' s no t th e thin g I hav e t o 2 5 try . I hav e t o tr ywhethe r ther e wer e violation s an d Heritag e Reportin g Corporatio n

(202 ) 628-488 82 4

1 i f s o wha t th e leve l o f penalt yshoul dbe . S o i f i t 2 come s t o a hearing , wha t you'r e goin g t o win du p wit h' 3 i s a findin g o f violatio nan dthe nth e onl yissu e i s 4 goin g t o b e wha t th e leve l o f penaltie s shoul dbe . 5 MR . HARRISON : Right . 6 JUDG E YODER : I've bee ndoin g thi s a t DO T 7 fo r 2 5 year s an da t th e Civi l Aeronautic s Boar dfo r 8 te nyear s befor e that . I don' t thin kI hav e eve r see n 9 a cas e i nwhic hther e wa s a findin g o f violatio nan d 1 0 n o penalty , okay ? An dthi s i s a difficul t concep t t o 1 1 ge t you r hea daround , I know , becaus e i t i s a 1 2 determinatio no f wha t penalt yleve l i s consisten t wit h 1 3 you r abilit yt o pay , that' s on e o f th e thing s w e hav e 1 4 t o consider . 1 5 Ms . McCarth yi s suppose dt o conside r tha t i n 1 6 proposin g th e penalt yan dI hav e t o conside r i t i n 1 7 determinin g a penalty , okay ? S o w e hav e t o loo ka t 1 8 th e abilit yt o pa yan dw e hav e t o loo ka t whethe r th e 1 9 leve l o f penalt yi s suc htha t i t migh t caus e th e 2 0 Responden t t o b e unabl e t o continu e i nbusiness , o r t o 2 1 determin e th e effec t o nit s business , d o yo u 2 2 understan dwha t I mean ? 2 3 MR . HARRISON : Sure . 2 4 JUDG E YODER : S o thos e ar e th e categorie s 2 5 tha t yo unee dt o thin ki nterm s o f a s yo uasses s wha t Heritag e Reportin g Corporatio n

(202 ) 628-488 8f^

^ 2 5

1 yo uthin ki s goin g t o happe ni f th e cas e goe s t o a 2 hearing . D o yo uunderstan dwha t I mean ? 3 MR . HARRISON : I thin kso . You r Honor . 4 JUDG E YODER : Yes . I' mjus t tryin g t o ge t 5 yo ut o focu s o nsomethin g I kno wyo udon' t wan t t o 6 confront . Bu t th e fac t i s tha t i f i t goe s t o hearin g 7 you'r e goin g t o win du p wit ha findin g o f liabilit y 8 an dyou'r e goin g t o win du p wit hsom e determinatio no f 9 penalty . An ds o a t tha t poin t i t become s incumben t 1 0 upo nyo ut o d o th e bes t yo uca nt o demonstrat e wha t 1 1 tha t leve l shoul dbe . 1 2 MR . HARRISON : An dho wwoul dI d o that . You r

^ ^ 1 3 Honor ?

1 4 JUDG E YODER : Sayin g yo udon' t wan t t o pa y 1 5 anypenalt yi s o f cours e understandabl e bu t I' mno t 1 6 sur e that' s you r bes t argument . 1 7 MR . HARRISON : Right . 1 8 JUDG E YODER : Becaus e tha t lead s t o - - 1 9 MR . HARRISON : Ho wd o I determin e that ? I 2 0 mea ni f th e governmen t withou t anyinformatio no nmy 2 1 companysays , oka yh e owe s u s 8 grand , the nI sen d 2 2 the m

informatio nan dI stil l ow e the m8 gran d- - 2 3 JUDG E YODER : No , sh e sai d- - 2 4 MR . HARRISON : The nI say , hey , an dI sa y 2 5 tha t I' m

dow nt o tw o - - Heritag e Reportin g Corporatio n

(202 ) 628-488 82 6

1 JUDG E YODER : Sh e brough t i t dow nt o $3,00 0 2 a s a noffe r a s I understan dit . 3 MR . HARRISON : Sh e did . And , You r Honor , w e 4 jus t fee l that , yo uknow , it' s crippling . I mea n 5 agai nal l we'r e tryin g t o d o i s sta yi nbusiness , 6 that' s all . 7 JUDG E YODER : Right . 8 MR . HARRISON : An dI' mdow nt o tw o employee s 9 now , whateve r i t i s it' s goin g t o hurt . But , yo u 1 0 know . 1 1 JUDG E YODER : Yes . Ca nyo ug o ge t bac kt o 1 2 thinkin g abou t determinin g a leve l o f penalt yan d 1 3 figur e ou t wha t yo ucoul dstan dtha t Ms . McCarthy 1 4 migh t agre e to ? That' s th e challeng e tha t yo uar e 1 5 presentl yconfronte dwith . An di f i t come s t o a 1 6 hearin g that' s wha t I'l l b e confronte dwith , d o yo u 1 7 understan dwha t I mean ? 1 8 MR . HARRISON : I' mno t sur e - - 1 9 JUDG E YODER : Yo uwil l hav e t o demonstrat e 2 0 t o m e wha t th e appropriat e leve l o f penalt y- - sh e ha s 2 1 t o prov e it , bu t yo uwan t t o hav e a sa yo nwha t a n 2 2 appropriat e leve l o f penalt yshoul dbe . An di f yo u 2 3 jus t sa yther e shouldn' t b e an ypenalt ythat' s no t 2 4 goin g t o hel p m e ver ymuch . 2 5 MR . HARRISON : Right . Heritag e Reportin g Corporatio n

(202 ) 628-488 8f

^ 2 7

1 JUDG E YODER : I' mjus t goin g t o hav e he r 2 positio nan dwha t I nee di s somethin g fro myo utha t 3 say s i f th e penalt ywer e $1,00 0 I coul dmanag e it , i f 4 it' s $1,50 0 I' mgoin g t o clos e th e doors . Thos e ar e 5 jus t number s take nou t o f th e air , bu t it' s th e kin d 6 o f thinkin g tha t yo unee dt o reflec t o nan dse e wha t 7 yo uca nd o t o resolv e thi s issue . Give nth e curren t 8 economi c time s I' msur e n o on e i s intereste di naddin g 9 unnecessaril yt o th e burden s o f smal l business . 1 0 Unfortunatel yyou'r e i na proces s wher e ou r 1 1 functio ni s no t primaril ydesigne dt o remed ythos e 1 2 problems . I t i s primaril ydesigne dt o se e t o i t tha t

^ ^ 1 3 ther e i s som e significan t penalt yi nth e contex t o f

1 4 th e Respondent' s finance s i nth e even t o f a violatio n 1 5 o f th e regulations . An dth e fac t tha t it' s 1 6 inadverten t goe s int o tha t conclusion , th e fac t tha t 1 7 it' s no t bee ndon e before , tha t it' s no t th e norma l 1 8 lin e o f business . 1 9 Bu t I ca ntel l yo utha t w e hav e ha dcase s 2 0 previousl y- - a s a matte r o f fac t w e ha da pain t cas e 2 1 previousl ya s I recall . No weac hon e o f thes e case s 2 2 i s su i generis , I mea neac hcas e yo uhav e t o loo ka t 2 3 th e fact s an dloo ka t th e responden t an ddecid e wha t 2 4 a nappropriat e significan t penalt yi s tha t i s 2 5 consisten t wit hth e abilit yo f th e responden t t o pay . Heritag e Reportin g Corporatio n

(202 ) 628-488 82 8

1 An di f yo ug o t o a hearin g an dyo usay , I can' t pa y 2 $50 , tha t woul db e you r testimony . 3 Bu t yo umigh t wan t t o loo ka t wha t yo uthin k 4 yo uca npay , particularl yi nrespons e t o Ms . 5 McCarthy' s proffe r o f a $3,00 0 settlement , an dse e 6 wha t i t i s yo uthin kyo uca npa yt o en dthi s matte r 7 withou t a hearing . No wi f there' s goin g t o b e a 8 hearin g I woul dsuppos e tha t w e woul dd o i t her e i n 9 Washington . I gathe r yo uar e jus t eas t o f Annapolis , 1 0 i s tha t right ? 1 1 MR . HARRISON : Yes , sir . 1 2 JUDG E YODER : An dwel l that's , wit hgoo d 1 3 traffi c that' s abou t a nhou r away . 1 4 MR . HARRISON : Right . 1 5 JUDG E YODER : S o w e could , w e woul dprobabl y 1 6 d o tha t her e a t th e Department . Yo uwoul dnee dt o 1 7 com e wit hwhateve r witnes s yo uwoul dwan t t o brin g t o 1 8 prov e th e finance s tha t ar e se t ou t i nthes e sheet s 1 9 an dth e impac t o f penaltie s o f variou s level s o nyou r 2 0 business . An dyo unee dt o loo ka t tha t o f cours e a s a 2 1 cos t o f doin g busines s an dho wmuc hit' s wort ht o yo u 2 2 t o settl e thi s issu e 2 3 MR . HARRISON : Right . 2 4 JUDG E YODER : Becaus e it' s no t goin g t o ge t 2 5 settle db ym e shor t o f a hearing . I t ca nb e settle d Heritag e Reportin g Corporatio n

(202 ) 628-488 82 9

1 byth e tw o o f yo uwithou t a hearing . Now , Ms . 2 McCarthy , di dI understan dyo ut o sa ytha t th e $3,00 0 3 offe r wa s mad e afte r you r receip t o f thes e finances ? 4 MS . MCCARTHY : Yes , You r Honor . 5 JUDG E YODER : And , Mr . Harrison , yo usai d 6 tha t sinc e th e tim e o f thes e document s th e financia l 7 pictur e i s heade dsouth . D o yo uhav e an ylate r 8 document s tha t woul dsho wlowe r levels ? 9 MR . HARRISON : I do . An dno t onl ythat , 1 0 You r Honor . 1 1 JUDG E YODER : Yes . 1 2 MR . HARRISON : Eve nth e CP Atha t prepare d 1 3 that , he' s n o longe r wit hme . I f yo uwan t t o kno wth e 1 4 trut hI've go t a custome r that' s a naccountant . 1 5 JUDG E YODER : Right . 1 6 MR . HARRISON : An dw e ar e takin g car e o f hi s 1 7 boa t an dhe' s doin g ou r book s fo r u s now . 1 8 JUDG E YODER : Right . 1 9 MR . HARRISON : Yo uknow , it' s th e sam e wa y 2 0 tha t I don' t hav e a nattorne ytoda y- - 2 1 JUDG E YODER : Yes . 2 2 MR . HARRISON : Becaus e I kno wtha t I can' t 2 3 affor dt o pa ya nattorne yt o d o this . 2 4 JUDG E YODER : Right . Wel l th e goo dnews , 2 5 Mr . Harrison , i s tha t yo uhav e falle nint o th e to p Heritag e Reportin g Corporatio n

(202 ) 628-488 8r

^ 3 0

1 leve l o f administrativ e adjudication . I f yo uhav e a n 2 Administrativ e La wJudg e presidin g i nyou r cas e yo u 3 ca nb e sur e tha t you'r e goin g t o ge t a fai r hearin g 4 whethe r yo ulik e th e resul t o r not , an dyou'r e goin g 5 t o ge t someon e wh o i s independen t i ndecidin g th e 6 issue . Bu t i f yo ui nfac t hav e othe r documentatio n 7 tha t woul dsho wa differen t picture , th e penalt yneed s 8 t o b e assesse di nth e contex t o f wha t you r curren t 9 financia l postur e is , no t i nterm s o f wha t i t wa s a t 1 0 th e tim e o f th e violation . 1 1 MR . HARRISON : Okay . 1 2 JUDG E YODER : D o yo uunderstan dwha t I mean ?

^1 3 MR . HARRISON : I do .

1 4 JUDG E YODER : S o yo uwan t t o mak e sur e tha t 1 5 yo uhav e th e mos t curren t dat a tha t i s availabl e t o 1 6 yo ufo r showin g wha t you r curren t situatio nis . An d 1 7 yo ucoul dpu t tha t together , let' s see , d o yo uhav e a 1 8 ta xretur nafte r th e on e i nthi s data ? 1 9 MR . HARRISON : W e woul dhav e '09 , bu t a t th e 2 0 sam e wa yI woul drathe r giv e yo usomethin g that' s 2 1 curren t wit hou r ne waccountant . 2 2 JUDG E YODER : Wel l sure , yo ucoul dsen d'0 9 2 3 an dyo ucoul dsen dt o th e exten t yo uca na curren t 2 4 balanc e shee t an dincom e statement . 2 5 MR . HARRISON : Okay . Heritag e Reportin g Corporatio n

(202 ) 628-488 8r^3 1

1 JUDG E YODER : An dI woul dsugges t tha t wha t 2 yo uwan t t o d o i s sen dtha t t o Ms . McCarth yan dth e 3 tw o o f yo utal k an dse e whethe r yo uca ncom e t o som e 4 resolutio no f this . An di f yo udon' t the nI'l l se t i t 5 fo r a hearin g her e i nWashingto nan dw e wil l decide . 6 Th e goo dnew s i s tha t i f yo uan dMs . McCarth yagre e o n 7 somethin g yo udon' t hav e t o worr yabou t wha t I migh t 8 decide . D o yo uunderstan dwha t I mean ? 9 MR . HARRISON : I do . 1 0 JUDG E YODER : Yes . 1 1 MR . HARRISON : I d o hav e a questio nthough . 1 2 JUDG E YODER : Yes , sir . ^ ^1 3 MR . HARRISON : Th e las t conversatio nth e

1 4 $3,00 0 wa s th e botto moffer . I s tha t stil l o nth e 1 5 table ? 1 6 JUDG E YODER : Wel l that' s betwee nyo uan d 1 7 Ms . McCarthy , bu t i f sh e mad e tha t offe r I assum e tha t 1 8 it' s stil l ou t ther e somewhere . Bu t tha t offe r wa s - - 1 9 MR . HARRISON : No , I' mmeanin g i s tha t th e 2 0 lowes t offe r that ? 2 1 JUDG E YODER : Wel l that' s whyI sai dyo u 2 2 nee dt o d o you r homewor k i nterm s o f presentin g you r 2 3 bes t cas e fo r th e impac t o f a penalt yo nyou r 2 4 business , d o yo uunderstan dwha t I mean ? 2 5 MR . HARRISON : I do . Heritag e Reportin g Corporatio n

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^3 2

1 JUDG E YODER : An dyou'v e go t t o d o you r 2 homewor k o ntha t subject . You'v e sen t he r materia l 3 whic hi s tw o year s ol dan dshe' s com e bac kwit ha 4 propose dsettlemen t base do ntha t data . No wyou'r e 5 tellin g m e tha t th e curren t dat a i s goin g t o sho wtha t 6 it' s onl yabou t 5 0 percen t o f wha t thi s dat a did . 7 MR . HARRISON : Right . 8 JUDG E YODER : No wi f I wer e a fourt hgrad e 9 studen t I migh t appl ytha t 5 0 percen t t o th e $3,00 0 1 0 an dse e wha t I cam e u p with . Bu t I don' t kno who wMs . 1 1 McCarth ywil l approac hyou r ne wdata , I don' t kno w 1 2 wha t you r dat a i s goin g t o be . Bu t that' s wha t yo u ^ ^1 3 wan t t o do .

1 4 MR . HARRISON : Okay . 1 5 JUDG E YODER : An dneithe r Ms . McCarthyno r I 1 6 wan t t o se e a penalt yi nthi s cas e causin g yo ut o 1 7 clos e you r doors . Firs t o f al l w e don' t lik e t o se e 1 8 that , bu t mor e significantl ythat' s th e law . 1 9 MR . HARRISON : Right . You r Honor , jus t t o 2 0 mak e on e othe r commen t a s a smal l busines s gu ytryin g 2 1 t o mak e it . 2 2 JUDG E YODER : Sure . 2 3 MR . HARRISON : Yo ushouldn' t say , d o I sen d 2 4 th e governmen t 3 gran do r d o I kee p payin g medica l 2 5 insuranc e fo r th e littl e gir l sittin g ove r here , o r d o Heritag e Reportin g Corporatio n

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### f ^ 3 3

1 I tel l he r w e don' t hav e th e mone yfo r it ? 2 JUDG E YODER : Well , yo uknow , that' s al l 3 par t o f continuin g i nbusiness , Mr . Harrison . I f tha t 4 i s on e o f you r expense s an di t can' t b e me t a t a 5 penalt yo f Xdollar s the nthat' s somethin g yo ushoul d 6 poin t out , becaus e yo ucan't , presumabl yyo uwoul d 7 sugges t tha t yo ucan' t continu e i nbusines s withou t 8 employees . 9 MR . HARRISON : Right . 1 0 JUDG E YODER : An di norde r t o hav e employee s 1 1 yo uhav e t o compensat e them . An dpresumabl ywha t yo u 1 2 jus t describe di s par t o f th e compensation . An dwha t 1 3 yo uwan t t o d o i s t o describ e th e incom e flo wyo uhav e 1 4 an dth e resource s yo uhav e an dth e incom e flo wyo u 1 5 nee di norde r t o sta yi nbusiness . No wI don' t thin k 1 6 tha t Ms . McCarth yi s goin g t o b e willin g t o settl e 1 7 thi s wit hhe r payin g yo umoney . 1 8 Tha t woul db e ver ysurprisin g t o me , a s a 1 9 matte r o f fac t I don' t thin k sh e ha s anyauthorit yt o 2 0 d o that . Bu t I' mno t presente dwit htha t questio ns o 2 1 I won' t decid e it . Bu t wha t yo uwan t t o d o i s t o loo k 2 2 a t you r financia l resources , you r financia l 2 3 obligations , an ddetermin e base do nthe mwha t sor t o f 2 4 a penalt yyou r busines s coul dabsor bwithi nit s 2 5 curren t abilit ywithou t causin g you r busines s seriou s Heritag e Reportin g Corporatio n

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1 har mo r causin g yo ut o g o ou t o f business , d o yo use e 2 wha t I mean ? 3 MR . HARRISON : I do . 4 JUDG E YODER : Okay . No wI've bee nabou t a s 5 explici t a s I ca ni ntryin g t o explai nt o yo uwha t yo u 6 nee dt o d o i norde r t o tr yt o ge t thi s resolved . S o I 7 woul dhop e tha t yo uwoul dtak e tha t t o hear t an dse e 8 wha t yo uca nd o i ntryin g t o mee t Ms . McCarthy , th e 9 vernacula r woul db e t o mee t he r halfway , I don' t mea n 1 0 bytha t hal f o f he r propose dpenalty . Wha t I mea ni s 1 1 tha t yo unee dt o com e u p wit hsomethin g tha t i s 1 2 consisten t wit hth e abilit yo f you r compan yt o 1 3 continu e t o function . An dyou'r e tellin g m e $3,00 0 i s 1 4 no t consisten t wit hthat . Okay , i f yo ug o t o hearin g 1 5 you'r e goin g t o hav e t o prov e that . Wha t yo uwan t t o 1 6 d o i s pu t togethe r th e evidenc e tha t wil l demonstrat e 1 7 wha t i s possibl e fo r you r business , okay ? 1 8 MR . HARRISON : Right . 1 9 JUDG E YODER : Becaus e it' s no t goin g t o g o 2 0 awa yo nit s own , okay ? 2 1 MR . HARRISON : Right . 2 2 JUDG E YODER : I kno wyo uwoul dlik e i t t o 2 3 bu t that' s no t goin g t o happen , I don' t thin ki t ca n 2 4 happen . I don' t thin k Ms . McCarthyca nsettl e a cas e 2 5 wit hjus t dro p hand s an dg o home . She' s go t a proble m Heritag e Reportin g Corporatio n

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1 tha t sh e ha s t o vindicat e regulation s tha t ar e 2 designe dt o protec t th e publi c fro mth e shipmen t o f 3 hazardou s material s b yair . An dth e shipmen t o f 4 hazardou s material s b yai r ca ncaus e plane s t o fal l 5 ou t o f th e sky . S o it' s a significan t charg e tha t sh e 6 ha s an da significan t la wtha t need s t o b e vindicated . 7 No wwha t yo unee dt o d o i s giv e he r informatio ntha t 8 wil l assis t yo ui ndemonstratin g th e leve l o f penalt y 9 that' s consisten t wit hyou r abilit yt o pa yan dyou r 1 0 nee dt o sta yi nbusiness , okay ? 1 1 MR . HARRISON : Okay , sir . 1 2 JUDG E YODER : An di f yo uwan t t o yo uca n ^ ^1 3 sen dtha t informatio nt o m e whe nyo usen di t t o her .

1 4 An dunles s yo uwan t i t i nth e Docket s Sectio nyo u 1 5 don' t nee dt o sen di t t o th e Docket s Section , d o yo u 1 6 understan dwha t I' msaying ? 1 7 MR . HARRISON : Right . 1 8 JUDG E YODER : Al l right . An dthe nI wan t 1 9 yo uan dMs . McCarth yt o tal kan dse e whethe r yo uca n 2 0 com e t o a settlemen t figure . I hav e reaso nt o hop e 2 1 tha t th e tw o o f yo ucan , okay ? 2 2 MR . HARRISON : Okay . 2 3 JUDG E YODER : I f yo udon't , the nwe'l l hav e 2 4 a hearin g an dI'l l decid e wha t th e penalt yleve l wil l 2 5 be , an dyo uwil l nee dt o prov e t o m e th e thing s tha t Heritag e Reportin g Corporatio n

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1 I've jus t sai dyo unee dt o tr yt o demonstrat e t o Ms . 2 McCarthy , al l right ? 3 MR . HARRISON : Al l right , sir . 4 JUDG E YODER : Okay . No who wlon g d o yo u 5 thin kyo uwil l nee di norde r t o assembl e th e 6 informatio nw e jus t talke dabout ? 7 MR . HARRISON : Wel l I woul dlik e th e 8 opportunit yt o tal k t o ou r ne waccountan t t o se e - - 9 JUDG E YODER : Wel l o f course , yo utel l - - 1 0 MR . HARRISON : Ho wlong . 1 1 JUDG E YODER : Yo utel l m e a dat e bywhic h 1 2 yo uthin k yo uca nprovid e tha t information . 1 3 MR . HARRISON : Wel l obviously , yo uknow , I' m 1 4 goin g t o cal l hi ma s soo na s w e han g up . 1 5 JUDG E YODER : Yes . 1 6 MR . HARRISON : I s 3 0 day s a reasonabl e 1 7 perio dt o pu t tha t together ? 1 8 JUDG E YODER : I f that' s wha t yo uthin ki s 1 9 neede dw e ca nd o that . 2 0 MR . HARRISON : Right , becaus e w e jus t 2 1 brough t hi mo nboar dan dI' djus t lik e to , yo uknow . 2 2 JUDG E YODER : That' s a littl e mor e tha nI 2 3 woul dnormall ysay , bu t i f yo uthin kyo unee d3 0 day s 2 4 t o d o it , Ms . McCarthy , d o yo uhav e a nobjectio nt o 2 5 that ? Heritag e Reportin g Corporatio n (202 ) 628-488 8r

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1 MS . MCCARTHY : Non e a t all . You r Honor . 2 JUDG E YODER : Okay , s o 3 0 day s fro mno w 3 woul db e Decembe r 1 . An dlet' s see , it' s Decembe r 1 4 i s tha t a rea l day ? 5 MR . HARRISON : It' s a Wednesday . 6 JUDG E YODER : It' s a Wednesday ? Okay , wel l 7 fo r m e date s ar e i nmyhand s dates , deliver yt o me , 8 okay ? I f yo uhav e a proble mw e ca nexten ddates , bu t 9 fo r date s tha t w e se t i t mean s th e documen t need s t o 1 0 b e i nmyhands , yo ueithe r FedE xi t o r yo udelive r it . 1 1 Neve r sen dm e anythin g b ymail . Yo uca nfa xit , yo u 1 2 ca nemai l it . Bu t normall ything s tha t com e t o m e ^ ^1 3 hav e t o als o g o t o th e Docke t bu t sinc e we'r e dealin g

1 4 wit hyou r financia l dat a an dit' s i nconnectio nwit h 1 5 a neffor t t o settl e th e cas e thi s won' t nee dt o g o t o 1 6 Dockets . Bu t i t wil l nee dt o b e i nmyhand s o nth e 1 7 dat e tha t w e se t unles s yo uge t a nextende dtime , 1 8 okay ? 1 9 MR . HARRISON : Okay . 2 0 JUDG E YODER : S o that' s Decembe r 1st . An d 2 1 the nafte r Decembe r 1 th e tw o o f yo uwil l tal kan dge t 2 2 thi s cas e settled , becaus e i t ough t t o be . Ms . 2 3 McCarthy , i s tw o week s afte r tha t enoug htime ? 2 4 MS . MCCARTHY : I t shoul dbe . You r Honor . 2 5 JUDG E YODER : Mr . Harrison , wil l tw o week s Heritag e Reportin g Corporatio n

(202 ) 628-488 8n 3 8

1 afte r tha t b e enoug htim e fo r yo ufolk s t o se e whethei f 2 yo uca nge t thi s settled ? 3 MR . HARRISON : Sure , I woul dhop e so . You r 4 Honor . 5 JUDG E YODER : Okay , S O we'l l mak e tha t 6 Decembe r 15 . An ds o byDecembe r 1 5 someon e wil l ge t 7 bac k t o me , eithe r on e o f yo ui s fine , Ms . McCarthy 8 ca nd o that , yo uca nd o it , an dtel l m e whethe r o r no t 9 th e cas e i s settling . I f th e it' s settlin g the ntha t 1 0 wil l resolv e it . I f it' s no t settlin g I wil l se t a 1 1 hearin g dat e i nD.C . W e don' t normall yconsul t th e 1 2 partie s fo r thos e dates , w e jus t fi xth e date . I t

^ ^1 3 woul dnormall yb e a t leas t tw o week s an dprobabl ymor e

1 4 lik e betwee ntw o week s an da month , mayb e a mont h 1 5 afte r th e dat e w e se t it . Okay ? 1 6 MR . HARRISON : Okay . 1 7 JUDG E YODER : Anythin g furthe r fro meithe r 1 8 o f you ? 1 9 MS . MCCARTHY : You r Honor , I recogniz e tha t 2 0 th e tim e t o respon dt o th e motio nha s no t ye t expired , 2 1 bu t perhap s a reminde r th e motio ndoe s nee dt o b e 2 2 replie dto ? 2 3 JUDG E YODER : Wel l I thin kwe'v e covere d 2 4 everythin g tha t wa s i nth e motio ntoday . 2 5 MS . MCCARTHY : Okay . Heritag e Reportin g Corporatio n

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1 JUDG E YODER : We'v e go t a findin g 2 essentiall ytha t th e violatio noccurre dan dtha t 3 leave s u s wit hth e questio no f leve l o f penalty . Yo u 4 thin k there' s somethin g els e i nyou r motio ntha t yo u 5 nee dt o hav e addressed ? 6 MS . MCCARTHY : No , You r Honor . 7 JUDG E YODER : Okay . I don' t expec t t o 8 furthe r addres s i t then . Ms . McCarth yma yknow , 9 there' s n o reaso nyo uwould , Mr . Harrison , bu t I tr y 1 0 t o avoi dissuin g order s tha t don' t resolv e rea l 1 1 problems , an dthat' s whyI prefe r t o addres s thes e 1 2 thing s i nprehearin g conference s wher e w e ca nactuall y ^ ^1 3 tal kabou t wha t th e rea l issue s are . S o i s ther e

1 4 anythin g furthe r then ? 1 5 MS . MCCARTHY : No , You r Honor . 1 6 MR . HARRISON : No , sir , I don' t hav e anyan d 1 7 I appreciat e you r tim e o nthis . 1 8 JUDG E YODER : Okay , wel l than kyo uboth . 1 9 Tha t conclude s th e prehearin g conference . We'l l hea r 2 0 fro m

someone , we'l l ge t you r document s byDecembe r 2 1 1st , Mr . Harrison . 2 2 MR . HARRISON : Al l right , sir . 2 3 JUDG E YODER : An dthe nw e wil l hea r fro m 2 4 someon e b yth e 15th , okay ? 2 5 MR . HARRISON : Than kyo ufo r you r time . Heritag e Reportin g Corporatio n

(202 ) 628-488 84 0 1 JUDG E YODER : Than k you . Tha t conclude s th e 2 prehearin g conference . 3 MS . MCCARTHY : Than k you , You r Honor . 4 JUDG E YODER : By e bye . 5 (Whereupon , a t 4:2 9 p.m. , th e telephon e 6 conferenc e i nth e above-entitle dmatte r wa s 7 concluded. ) 8 / / 9 / / 1 0 / / 1 1 / / 1 2 / / 1 3 / / 1 4 / / 1 5 / / 1 6 / / 1 7 / / 1 8 / / 1 9 / / 2 0 / / 2 1 / / 2 2 / / 2 3 / / 2 4 / / 2 5 / / Heritag e Reportin g Corporatio n (202 ) 628-488 8

# r ^ REPORTER' S CERTIFICAT E 4 1

DOCKE T NO. : CAS E TITLE : HEARIN GDATE : LOCATION : C P lOE A000 6

Harriso nYach t Sales , Inc . Novembe r 1 , 201 0 Washington , D.C .

I herebycertif ytha t th e proceeding s an d evidenc e ar e containe dfull yan daccuratel yo nth e tape s an dnote s reporte db ym e a t th e hearin g i nth e abov e cas e befor e th e Departmen t o f Transportation .

Date : Novembe r 1 , 201 0 

# :^ju ^ ^MJ L ,tc

_ Edwi nWesle y Officia l Reporte r Heritag e Reportin g Corporatio n Suit e 60 0 122 0 L Street , N.W . Washington , D.C . 20005-401 8

Heritag e Reportin g Corporatio n

(202 ) 628-488 8