This section contains the nature of the case and procedural background.

Congress passed a series of amendments to the FAA Act that authorized the FAA to issue administrative penalties for the violation of the act's requirements. At the same time, Congress remained attentive to the adjudicative rights of civil penalty defendants. Congress provided that the FAA could assess a civil penalty 'only after notice and opportunity for a hearing on the record in accordance with section 554 of [the APA].' Nine months after enactment, the FAA promulgated the Penalty Rules, The FAA issued rules for the program without notice and opportunity for comment. The penalties were in force the minute they were issued and established fines of up to $10,000 for violation of safety standards of the FAA and related regulations. There was also a delineation of a comprehensive adjudicatory scheme providing formal notice, settlement procedures, discovery, an adversary hearing before an ALJ and an administrative appeal. The FAA claimed that these regulations were exempt as they established procedures for adjudicating civil penalty actions. P challenged the FAA regulations, claiming that the FAA failed to comply with the notice and comment provisions of § 553. P also attacked the substantive adequacy of the Rules on the ground that they establish adjudicatory procedures inconsistent with section 554 of the APA. The FAA claimed an exception, as provided in § 553(b)(3)(A)-(B).

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