Case Information
*1 Before M ANION R OVNER , Circuit Judges , C OLEMAN District Judge . [*]
C OLEMAN District Judge . Corporation (“National Power”) seeks Federal Aviation Ad ministration (the “Administrator”) decision finding multiple ‐ hazardous material regulations (“HMRs”), and assessing civil against it. Because conclusions are supported by substantial evidence and his findings arbitrary and capricious an discretion, deny petition review.
I. designs and manufactures custom bat tery packs. At issue are two types lithium battery packs manufactured–the SM ‐ battery pack (“SM ‐ 206”) and ‐ libat ‐ pack (“520 ‐ libat ‐ 2”) (collectively, “Batteries”). Both Batteries reg ulated U.N. 3480, class IX materials.
On May 17, 2010, Christopher Zawarus, an FAA special agent, conducted inspection at facility Chicago, Illinois. Mr. Zawarus discovered between January and March made shipments, air, SM 206s libat 2s customers Santa Rosa, California Burnaby, British Columbia, Canada (the “battery shipments”). Based his inspection, Mr. Zawarus concluded shipments comply with multiple HMRs filed complaint, later amended, with Department Transpor tation. alleged following HMRs: C.F.R. §§ 171.2(e), 171.22(b)1, 171.22(g)(2), 172.604(a)(1), 172.702(a), 173.185(f).
What follows summary evidence testimo ny presented hearing before administrative law judge. During inspection, Zawarus asked docu mentation properly tested ac cordance United Nations Manual Tests Cri teria (“UN Manual Tests”) or, the Batteries had been tested, documentation showing the Pipeline Haz ardous Materials Safety Administration (“PHMSA”) had au thorized the shipments. National provided no such documentation Mr. Zawarus, nor provide any at hearing. According Thomas Vrablik, corporate vice president only witness testify on Power’s behalf, Batteries been tested at time they were offered for shipment. Mr. Vrablik further testified believed, without supporting evidence, exempt from testing similar one Power’s previously tested batteries. shipping papers each shipments indicated shipments conformed standards set forth packaging instruction International Civil Aviation Organization’s Technical Instructions Safe Transport Dangerous Goods (“ICAO Technical Instruc tions”). Maria Munoz, office manager, cer tified each shipping paper. Mr. Zawarus’s compa ny records, revealed that, time she certified shipments, Ms. Munoz’s materials training Department Transportation specific clude training ICAO Technical Instructions. shipping papers listed general office number as emergency contact number. general office number only monitored from 6:00 AM until 6:00 PM. Vrablik characterized listing general office number typographical error. He further explained number shipping papers should Chemtrac’s, one contractors hour responder hotline. Zawarus testified that the shipments, were offered with fiberboard box outer packaging, been packaged according the ICAO Technical Instructions packing group II performance standards. Because the Batter ies untested lithium batteries, should have been packed according the more stringent packing group I performance standards. should have shipped with metal, plastic, plywood drums or box es the outer packaging.
After reviewing the parties’ post hearing briefs, the ALJ found that the FAA satisfied its burden proof demon strated knowingly violated HMRs identified complaint, with exception C.F.R. 173.185(f), therefore assessed civil $12,000. Both parties appealed ALJ’s decision Administra tor. FAA argued ALJ erred applying wrong version section 173.185(f) sanction inconsistent applicable law, precedent, policy. argued it did not knowingly violate HMRs because its violations not deliberate, fine excessive.
On September issued der subject petition review. Admin istrator rejected argument it could HMRs delib erately violate them. He affirmed ALJ’s finding liabil ity HMR reversed finding liability C.F.R. 172.203(f). He found ALJ *5 5 16 3770 erred by applying 2014 version section 173.185(f), which regulated shipment damaged batteries, rather than version, regulated to shipment untested batteries. Administrator Power did not satisfy its burden proof to show exempt from testing, reversed ALJ’s conclusion Power violate 173.185(f) Power special au thorization from PHMSA ship untested batteries. Fi nally, Administrator increased sanctions against Na from based his applica tion statutory factors governing sanctions in U.S.C. 5123(c) FAA criteria guidance set forth in Appendix C Order 2150.3B (“Appendix C”). asks Court review Adminis trator’s conclusion HMRs sanctions assessed.
II. reviewing order, focus only whether his findings fact are supported substantial ev idence, whether conclusions are “arbitrary, capri cious, an discretion, otherwise in accordance law.” See Yetman v. Garvey , F.3d – (7th Cir. 2001) (discussing administrative standards set forth in U.S.C. 706(2)(A) applied order); see Michael FDIC F3d (7th Cir. 2012). entitled discretion imposing sanctions against violators; abuses discretion only sanc tions are unwarranted law without justification fact. Michael F.3d (citations omitted). No. 16 3770
III. We first turn whether the Administrator’s interpreta tion of “knowingly” as defined by civil penalty statute– U.S.C. § 5123(a)–is in accordance with law. Ad ministrator found section 5123(a) requires only knowledge of facts giving rise violation, knowledge of law is required for willful violations, defined by U.S.C. 5124(c). contends a knowing violation requires intent violate law. Administrator’s interpretation “knowingly” is line with plain language statutes. On its face, 5123(a) does require a deliberate inten violation law; only requires “person has actual knowledge facts giving rise [HMR] viola tion” “a reasonable person acting circumstanc es exercising reasonable care would knowledge.” U.S.C. §§ 5123(a)(1)(A), (B) (2010). Knowledge law, is necessary willful violation HMR. U.S.C. 5124(c) (2010) (requiring knowledge facts giving rise violation knowledge conduct unlawful). difference between knowing willful regulations is al so illustrated penalties proscribed by each subsection. Compare 5123(a) (civil penalties) with 5124(c) (criminal penal ties). interpretation line Seventh Circuit precedent discussing differ ence between knowing willful standards conduct. See , e.g. United States Obiechie F.3d 309, (7th Cir. 1994); Matter of: Scott H. Smalling Order 31, WL *2 (Sept. 1994) (respondent liable transporting fireworks even though *7 7 No. 16 3770 know that were materials that what he did applicable HMRs); Matter of Riverdale Mills Corp. Order 10, WL 22480437, *2 (Sept. 10, 2003) (noting that 5123(a) only requires that violator have knowledge of facts giving rise to vio lation knowledge of law is unnecessary); see McLaughlin Richland Shoe Co. U.S. 128, 133, S. Ct. L. Ed. 2d (1988).
We next consider whether abused discretion finding National Power violat ed HMRs. At time Mr. Zawarus’s investigation, any batteries offered shipment must tested accordance UN Manual Tests. C.F.R. 173.185(a)(1) (2010). Section 38.3 UN Manual Tests requires only new lithium ion batteries be tested prior to transport. A lithium ion is “new” it differs from previously tested by “a change more than 0.1g or 20% by mass … cathode, anode, to elec trolyte” by “[a] change would materially affect test results.” UN Manual Tests §§ 38.3.2.1(a), (c). claimed its batters “new” therefore exempt from UN testing requirements. determined satisfy its burden this affirmative defense, C.F.R. 13.224(c), because it failed show Batteries qualified this exemption. This conclusion supported record. At hearing, Vrablik admitted untested prior transport. He testified believed SM exempt from testing similar construction SM one previously tested batteries. Power, introduce evi dence supporting contention. Further, ‐ failed offer any evidence testimony comparing libat SM ‐ any other previously tested bat ‐ tery. Accordingly, Administrator found National Power violated C.F.R. 173.185(f) (2010) because Power was aware fact Batteries untested Vrablik admitted not special permission from PHMSA ship ments. The finding liability an abuse discretion. Administrator correctly affirmed ALJ’s finding
liability section 171.2(e) section 171.22(b)(1). These sections require hazardous material be shipped in accordance with ICAO Technical Instruc tions packaging standards. aware untested untested lithium ion batteries must be packaged using packing group I perfor mance standards. Power, however, packed Bat teries using packing group II performance standards. ALJ sections 171.22(g)(2) 172.702(a), appropriately af firmed. Sections 171.22(g)(2) 172.702(a) require people involved in shipping hazardous materials be trained international standards used. Here, Ms. Munoz certi fied shipments complied ICAO Technical Instructions. Ms. Munoz, trained on ICAO Technical Instructions. discretion affirm
ing ALJ’s finding liability 172.604(a)(1), requires shippers list emergency response num ber shipping papers. emergency number must be monitored times while material No.
transit. National Power contends that it was aware fact that it listed incorrect number shipping papers shipments, therefore it could have HMR. Section 5123(a)(1)(B), howev ‐ er, imputes knowledge facts giving rise a violation “a reasonable person acting circumstances exer ‐ cising reasonable care would have knowledge.” In Matter Interstate Chem. Co. , Order. 29, WL 31957045, at *7 (Dec. 2, 2002). other words, 5123(a)(1)(B) “requires inquiry treats a person pos ‐ sessing whatever knowledge inquiry would have pro duced.” Id. (quoting Contract Courier Servs., Inc. v. Research & Special Programs Admin. , F.2d (7th Cir. 1991)). A reasonable person would have reviewed number listed shipping papers discovered it was incorrect. National introduce any evidence per formed even cursory review. We find reasonable person Power’s position would aware emergency number was improper, therefore Na was aware facts gave rise this vio lation.
Finally, we address whether sanction discretion. During highly def erential review, must determine whether Administra tor’s sanction, falls within statutory limitations, is ra tionally related offenses. Monieson CFTC F.2d (7th Cir. 1993); Michael F.3d 348. argument assessment arbitrary capricious fatally flawed. contends record clearly shows Zawarus arbitrarily determined sanction amount requested. Power, ig 3770 nores fact Administrator, Mr. Zawarus, im ‐ posed penalty. We focus our Administra ‐ tor’s considerations, Zawarus’s.
At time Power’s violations, was authorized to impose sanctions between $250 and $50,000 per HMR violation. U.S.C. §§ 5123(a)(1), (3) (2010). as ‐ sessing sanctions, Administrator was to consider factors such as nature, circumstances, and gravity viola ‐ tion, violator’s degree culpability history viola ‐ tions, other matters justice required. U.S.C. 5123(c) (2010). Administrator was to look to Ap ‐ pendix C for guidance.
Pursuant to Appendix C, Administrator determined case a minimum to moderate “weight,” se verity, based material was being shipped, Na high degree culpability as a manu facturer, unintentional violations HMRs. Next, Administrator consulted matrix Appendix C penalties related to declared ship ments determined was subject penalties applied entities regularly offered, accepted, transported materials. These penal ties ranged between $1,000 $5,500. split range into thirds, each representing a minimum, moderate, maximum severity. The ranges $1,000 ‐ 2,500, $2,501 4,000, and $4,000 5,500, respectively. Because he applied a minimum to moderate weight to this case, he determined penalty range each Pow er’s HMR was to be between $1,000 and $4,000. Administrator also categorized six HMRs Na into four groups: packing, training, emergency response, and “other.” Administrator, based precedent, further cor rective actions not mitigating factors because exceed minimum legal requirements. He chose to reduce penalty he assessed Pow er failed demonstrate an inability to pay a fine. determined FAA’s request impose fine would result a $1,500 penal ty per violation group, per shipment. He determined this average penalty per violation group was reason able based analysis case guidance. considered numerous factors when de termined appropriate penalty. Accordingly, find penalty, was within statutory limits, was rational ly related multiple offenses penalty imposed arbitrary capricious discretion. For all these reasons, deny peti tion affirm order all respects.
comic books screen, is “street judge” dystopian future who is empowered summarily arrest, convict, sentence, execute offenders. See https://en.wikipedia.org/wiki/Judge_Dredd (visited July 2017). It obvious us engage type justice Judge Dredd embodies. arbi trarily declare, “I am law!” hand down without con sidering relevant factors.
[*] Honorable Sharon Johnson Coleman, United States District Court Northern District Illinois, sitting designation.
[1] charge violation 172.203(f) its amended complaint.
[2] Prior engaging his analysis, identified multiple errors ALJ made. ALJ’s chief error decision impose a fine encompassing all violations single HMR. (i.e. ($2,000 per single HMR) x (6 HMRs) = penal ty). Administrator, applying Appendix C considering U.S.C. 5123(a)(4), determined appropriate apply sanc tion amount each shipments they constitut ed separate shipments occurred under different airway bills.
[3] ($1,500 per violation group) x (4 violation groups) x (11 shipments) = $66,000.
[4] cites Wikipedia article about Judge Dredd claim imposed arbitrary capricious “a police officer arrested bank robber, summarily declared robber’s guilt sentenced him prison time … .” Judge Dredd, both pages