How Best to Respond to a Letter of Investigation

Nov. 17, 2006
Q: We just got a letter from an FAA inspector claiming that one of our plants knowingly offered an "undeclared" hazardous material package for air shipment.

Q: We just got a letter from an FAA inspector claiming that one of our plants knowingly offered an "undeclared" hazardous material package for air shipment. What should we expect?

A: What you received is generally described as a "letter of investigation" or LOI. You have to answer it quickly, but usually you can get additional time if necessary.

Don't be thrown off by the word "knowingly." This does not mean intentionally. It only means your people knew their actions and that those actions happen to constitute a violation of the regulations. Focus instead on what happened and the corrective actions you can take immediately to assure it is not happening again today.

An undeclared hazardous material shipment, in FAA parlance, means a hazardous material package that offers no clues as to its regulated status—no hazmat marks, labels, or a shipper's declaration. Nothing warns the air carrier that they are being given hazmat, so they can do proper inspection and handling.

Often these experiences result from inadequate training, so you want to make sure that anyone with access to such products and air transportation gets trained, including the specific employees involved in this case. Make sure the training includes the unique elements applicable to air transport of hazmat.

Do a quick root cause analysis to find out why this package got through your system, and take steps to fix the system. Just telling this employee not to do it again is insufficient. If you cannot finish your corrections in time to describe the completed action in your response to the LOI, at least describe your intentions and follow through to completion on those actions. Document everything you do.

If the FAA's basic allegation is correct, despite your corrective action you are likely to receive a civil penalty letter from FAA counsel. This may not come right away; the FAA can take up to two years from the date of the shipment to issue a penalty letter.

The dollar claim in the letter is likely to be substantial. Penalty assessments exceeding $50,000 are typical, even for a single package. Each violation, and with an undeclared package there are many separate violations, is punishable. If this is a repeat offense, or if the material was particularly hazardous or if it leaked, the penalty will be even higher.

Take the opportunity given in the penalty letter to have at least an informal telephone conference with the attorney bringing the case. It is helpful to have your own lawyer on the phone as well.

In the conference, specify all the corrective actions you took immediately and in the time since the original LOI. Provide documents to verify your actions. If you have had subsequent inspections that were satisfactory, or your own audits confirm that corrective actions have been effective, show it.

At the conclusion of your presentation, be prepared to offer a dollar amount somewhat below the initial FAA claim. If you make your offer too low, it will not be taken seriously, so give this some thought. If you have financial problems, you can obtain additional relief but will need to prove such problems. If you reach an accord with the agency lawyer, upon payment of the agreed amount this case will be closed. It will be used in future cases, however, to enlarge the next initial penalty.

If you cannot reach an accord with FAA counsel, and this may take more than one conversation, you still have the right to a hearing before an Administrative Law Judge. Although less formal than a federal court, an ALJ hearing is still a judicial proceeding involving definite costs and an uncertain outcome, so be realistic about your likelihood of success before you give up on negotiations with counsel and ask to see the judge.

Lawrence Bierlein is a partner with McCarthy, Sweeney & Harkaway, P.C., Washington, D.C. His practice is devoted to issues involving transportation of hazardous materials. He can be reached at (202) 775-5560, [email protected],

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