August 2008

From the editors of CCH's Transportation products, here are summaries of the important recent developments in the area for the past month.  Complete coverage of these issues, and many more, appear in our print and electronic products, including: Aviation Law Reporter, Commercial Aircraft Transactions, Issues in Aviation Law and Policy, Federal Carriers Reporter, Federal Motor Carrier Safety Administration Decisions, and Motor Carrier Liability.

If you have comments or suggestions concerning the information provided or the format used, please feel free to contact me directly at aaron.broaddus@wolterskluwer.com.

Hot Topic

TSA Initiates "Checkpoint-Friendly" Laptop Bag Standards
Beginning on August 16, airline passengers will be permitted to leave their notebook computers in bags that meet the Transportation Security Administration's new "checkpoint-friendly" standards, under a new initiative implemented by the agency in order to help streamline the air transportation security process while better protecting passengers' property. Typically, passengers must remove their laptops from most briefcases and travel bags for X-ray screening purposes before carrying them aboard an aircraft.

In March 2008, TSA reached out to manufacturers to design laptop bags that produce a clear and unobstructed image of the computer while it is undergoing X-ray screening. In the ensuing five months, more than 60 manufacturers responded, and 40 submitted prototypes for testing. Under the new standards, a bag should meet the following requirements in order to be considered "checkpoint-friendly":

• The bag should have a designated "laptop-only" section;
• The "laptop-only" section must completely unfold to lie flat on the X-ray belt;
• No metal snaps, zippers, or buckles can be inside, underneath, or atop the "laptop-only" section;
• No pockets may be on the inside or outside of the "laptop-only" section; and
• Other than the computer itself, nothing may be packed in the "laptop-only" section.

A small percentage of sleeve-like carrying cases currently on the market meet the new standards, TSA said, noting that more of the newer-type bags are expected to be available by mid-month. Aviation Law Reports, Report Letter No. 1385, August 14, 2008.

Effective Date Delayed for New DOT Drug-Testing Provision
The effective date of a recent Department of Transportation regulatory change making it more difficult for workers to cheat on their required drug tests was pushed back from August 25 to November 1 of this year by the agency, in response to petitions from certain transportation industry and labor groups seeking reconsideration or delay of the standard's implementation. As previously reported, the testing validity initiative covers the nation's approximately 12.1 million transportation employers, safety-sensitive transportation employees, collectors, labs, and medical review officers, and mandates that laboratories conducting drug testing for transportation workers analyze every test for tampering.

In issuing the final rule, DOT took the position that it is no longer practicable to operate a drug-testing program without adding countermeasures to the well-publicized cheating techniques and devices designed to rig the test results. Accordingly, the initiative included a new provision [49 CFR §40.67(i)] that requires employees undergoing direct observation (DO) urine tests to raise and lower their clothing in order to show the specimen collector or observer that the employee is not using a prosthetic device to cheat on the test. This provision will go into effect on August 25, as scheduled.

However, a corollary provision [49 CFR §40.67(b)] mandating DO testing for all follow-up and return-to-duty tests is being delayed because the Department's 2005 Notice of Proposed Rulemaking did not specifically raise for comment the proposal to make direct observation testing mandatory, rather than discretionary, in those circumstances. At present, employers can require DO testing in follow-up and return-to-duty testing circumstances, but are not required to do so. Therefore, as of August 25, observers in all DO collections must carry out the anti-prosthetic device detection procedure in all directly observed collections—including follow-up and return-to-duty tests where employers choose to use DO (i.e., follow-up and return-to-duty direct observation testing still is at the employer's discretion for the time being). Aviation Law Reports, Report Letter No. 1386, August 28, 2008.

Over-the-Road Bus Transportation Accessibility Act of 2007 Enacted
On July 30, 2008, President Bush signed into law the “Over-the-Road Bus Transportation Accessibility Act of 2008'' (Pub. L. No. 110-291, 122 Stat. 2915). The Act amends Title 49, United States Code, to direct the Secretary of Transportation to register a person providing transportation by an over-the-road bus as a motor carrier of passenger only if the person is willing and able to comply with certain accessibility requirements in addition to other existing requirements. Federal Carriers Reports, Report Letter No. 1540, August 26, 2008.

Aviation News

Aviation Safety Inspector Airport Access Standards Issued
A new Federal Aviation Administration final rule reestablishing the authority of Aviation Safety Inspectors (ASIs) to access airport operations areas, security identification display areas, and other secured and restricted airport areas was implemented by the agency in an effort to restore, clarify, and reiterate the authority of properly credentialled ASIs to access these areas in order to conduct FAA-mandated safety inspections. Originally contained in 14 CFR Parts 107 and 108, the requirements were transferred to the Transportation Security Administration in 2001 by the Aviation and Transportation Security Act (Pub. L. No. 107-71, 115 Stat. 597), and were promulgated by TSA regulations located in 49 CFR Parts 1542 and 1544.

Since that time, ASIs often have encountered difficulties in accessing airport restricted areas in order to perform their safety oversight duties, FAA indicated. Along with the continued coordination and cooperation between airport operators and their local TSA, the new initiative will allow ASIs to perform their official duties without compromising airport safety or security, FAA advanced. The new standards take effect on September 15, and are now codified at 14 CFR Part 153. Aviation Law Reports, Report Letter No. 1386, August 28, 2008.

Improved Safety for Transport of Batteries Proposed
Seeking to maintain alignment with international standards, the Pipeline and Hazardous Materials Safety Administration (PHMSA) has proposed amendments to federal standards governing hazardous materials that, among other things, would elucidate the requirements for the safe transportation of batteries and battery-powered devices. Consistent with recent changes to the International Civil Aviation Organization's Technical Instructions, the proposed changes would clarify the prohibition against transporting electrical devices --including batteries and battery-powered devices that are likely to create sparks or generate a dangerous amount of heat. PHMSA also is proposing to modify and enhance requirements for the packaging and handling of these items/devices in air commerce in order to emphasize the safety precautions necessary to prevent incidents during transportation. The action was undertaken in conjunction with the Federal Aviation Administration.

Currently, batteries and battery-powered devices are subject to a number of requirements in the Hazardous Materials Regulations, including packaging standards and restrictions on air transportation. These requirements primarily address the hazards posed by the chemicals contained in batteries, as opposed to the electrical energy stored therein. Given the increasing number of batteries and battery-powered portable and handheld devices carried by airline passengers (e.g., laptop computers, cellular phones, etc.) and the growing number of incidents involving batteries and battery-powered devices aboard aircraft that have produced smoke, fire, or a dangerous amount of heat, the PHMSA initiative includes the following provisions to enhance transportation safety:

• Required reporting of incidents involving batteries and battery-powered devices (including equipment) or vehicles;
• Clarification of the requirement that such items, devices, and vehicles be offered for transportation and transported in a manner that prevents short-circuiting, dangerous evolution of heat, damage to battery terminals, and unintentional activation;
• For cargo carriage, required certification on the shipping documentation that batteries and battery-powered devices have met the conditions and requirements for transport; and
• Elimination of the requirement to disconnect terminals when a battery-powered wheelchair or mobility aid is transported as checked baggage, provided that the devices' design provides an effective means of preventing unintentional activation.

Except for the incident-reporting requirements, the proposal does not include any amendments pertaining to the transportation of lithium batteries, PHMSA indicated, noting that it is working to evaluate and reduce lithium battery risks through targeted enforcement, inspections/testing, public outreach, and other non-regulatory initiatives. Aviation Law Reports, Report Letter No. 1385, August 14, 2008.

No-Fly List Challenger Gets Another Day in (Trial) Court
Claims by a Malaysian Muslim woman related to the placement of her name on the federal government's No-Fly List were given a second chance when a federal appeals court overturned a California federal district court's conclusion that it lacked original jurisdiction to hear the suit [see Ibrahim v. Dep't of Homeland Security, previously reported at 31 Avi. 18,036]. As a threshold matter, the appellate panel rejected the trial court's determination that it was without subject matter jurisdiction over the passenger's Administrative Procedure Act claim against the Terrorist Screening Center (TSC), the agency that had put her name on the List. The TSC was part of the Federal Bureau of Investigation and not the Transportation Security Administration, the appellate panel asserted. As such, TSC was not among the agencies named in the federal transportation law provision that grants exclusive jurisdiction to review final agency orders to the federal courts of appeal, the panel advised.

And, contrary to the government's assertion that the decision to put the name on the List was so "inescapably intertwined" with the Transportation Security Administration's orders as to render it subject to the transportation law provision's jurisdictional reservation, the court remarked that the statute itself says nothing about "intertwining," escapable or otherwise. The government advanced no good reason why the word "order" should have been interpreted to mean "order or any action inescapably intertwined with it," the appellate panel articulated. Moreover, inasmuch as there had been no hearing before an administrative law judge, no notice-and-comment procedure, and no administrative record for the appellate court to review, if any court was going to review the government's decision to put a name on the No-Fly List, it made sense that it be a court with the ability to admit evidence, the appellate panel reasoned.

In contrast, the TSA's Security Directive implementing the No-Fly List—which requires airlines to check passengers' identification against the List and establishes other policies and procedures to be followed in the event of a match-up—is an "order" of the TSA that is reviewable under the appeals courts' exclusive jurisdiction, the appellate panel distinguished. In that respect, federal transportation law stripped the federal trial court of the jurisdiction it otherwise would have had over the passenger's APA claim regarding the government's policies and procedures for implementing the List, the panel indicated, differentiating between the placement of a name on the List and the policies/procedures underpinning the List itself.

Furthermore, the passenger's civil rights claims against federal government officials and the carrier, United Air Lines, failed because none of the individuals/entities had acted under color of state law, according to the appeals court, which ruled that tort claims against the federal officials failed as well, because the officials could not be liable for state-law torts absent Congressional waiver of the United States' sovereign immunity. Tort claims against the carrier and its employee also failed, the court said, asserting that the only supposedly tortious act had been the employee's call to local police. That call was privileged under state law and, as such, could not be the basis for tort liability, the panel determined. Ibrahim v. Dep't of Homeland Security (9thCir) 32 Avi. 16,647.

DVT Warning Failure Not an "Accident" Under Warsaw Treaty
The refusal by air carriers to warn passengers on international flights of the risk of Deep Vein Thrombosis (DVT) was not an unexpected "event" under the Warsaw Convention and, as such, was not an "accident" under the treaty, the U.S. Court of Appeals for the Ninth Circuit ruled late last month. The panel of judges determined that neither requests by public agencies nor the airlines' public commitment to safety converted the carriers' failure to warn into an "event" or an "accident."

Countering the assertion that it had been unexpected and unusual for air carriers not to warn effectively about DVT because the airlines had been requested to do so by the International Air Transport Association, the English House of Lords, and airline doctors, the appellate panel advised that generalized requests to warn by public agencies are quite different from particularized requests for assistance by individual passengers and the airlines' responses to them. In that respect, prior case law involving particular requests was inapposite, the court found.

Moreover, an airline's failure to follow through on a promise to take care of a specific, health-related request does not mean that every injury to a passenger is an unexpected "event" simply because carriers have declared that avoiding injury to passengers is a priority, the court said. At its core, the gravaman of the cases at bar remained a failure to warn, the court added. The passengers presented no substantial evidence of an industry standard with respect to warning about the risks of DVT and, given the absence of a duty to warn, it followed that there was no duty to warn in any particular way, the court held. Therefore, to the extent that passengers maintained that the airlines had elected not to give warnings (or effective warnings), those actions were too remote from the embarking, disembarking, and on-board processes for injury to be compensable under the Convention, the court concluded, affirming the trial court's decision. Twardowski v. Am. Airlines, Inc. (9thCir ) 32 Avi. 16,585.

FAA's Decision to Forgo SEIS for Logan Taxiway Upheld
The Federal Aviation Administration did not act arbitrarily or capriciously in issuing a final order permitting the construction of a new taxiway at Boston's Logan International Airport without having compiled a Supplemental Environmental Impact Statement (SEIS), a federal appeals court held. In 2007, the agency had conducted a Written Reevaluation and Record of Decision (ROD) which affirmed that the data and analysis in a 2002 ROD on the taxiway still were adequate, accurate, current, and valid. A nearby community concerned with the impact that would result from the expansion filed suit, seeking review of the agency's 2007 findings.

Under agency requirements, the mere passage of time does not require the preparation of an SEIS, only a written reevaluation, the court observed, instructing that an SEIS is required if "substantial change" or "significant change" has occurred involving the earlier data or other conditions relevant to the initial ROD. FAA's determination of what constitutes "substantial change" is owed considerable deference, however, the court cautioned, adding that deference was owed to the agency's conclusion that the data in the Final Environmental Impact Statement (FEIS) prepared in conjunction with the 2002 ROD remained accurate, adequate, and current.

It could not be said that the 2007 ROD had failed to adequately evaluate the continuing validity of the data underlying the FEIS, the court advanced. Further bolstering FAA's position, an outside expert's report concluded that its results had not changed any of the conclusions reached in the FEIS, the court advised. Given that validation, FAA reasonably could have concluded that there had been no "substantial change" in conditions since the data used in the FEIS were gathered (i.e., it was reasonable for the agency to have assumed that the mere passage of time had not invalidated the original data/analyses), the court determined, ruling that FAA reasonably concluded that all the data continued to reflect current conditions. Consequently, the agency's determination that there had been no significant new information warranting an SEIS was not a clear error in judgment, nor was the agency's decision not to prepare an SEIS arbitrary or capricious, the court determined. Town of Winthrop v. Fed. Aviation Admin. (1stCir) 32 Avi. 16,597.

Profiled Passengers Cleared Pleading Sufficiency Threshold
A federal court in Michigan ruled that passengers of Iraqi descent had alleged sufficient facts to state a claim against an air carrier under federal anti-discrimination law with respect to their allegedly impermissible removal from one of the carrier's flights without reasonable security concerns, as well as their detention and interrogation by law enforcement officials in front of other passengers on the flight. Noting that, although the federal appeals court for the jurisdiction has not yet addressed the substantive analysis to be applied when a passenger alleges that an airline, citing security concerns, impermissibly removes him/her from an airplane on the basis of race or national origin, the Michigan court held that the "arbitrary and capricious" analysis adopted by other federal appellate circuits was applicable to the airline's decision. Therefore, the Iraqi passengers satisfied their basic pleading requirement with the implication that the carrier had arbitrary and capricious motives rather than a reasonable concern for safety, the court determined, denying the carrier's motion to dismiss and ruling that the issue of whether the Airline Deregulation Act of 1978 preempted the passengers' state-law tort claims of false imprisonment, intentional infliction of emotional distress, and negligence was best reserved for determination at the summary judgment stage. Al-Tawan v. Am. Airlines, Inc. (EDMich) 32 Avi. 16,637.

Surface Transportation News

U.S.-Mexico Trucking Demonstration Project Extended
The Federal Motor Carrier Safety Administration (FMCSA) has announced that the U.S.-Mexico trucking demonstration project will be extended for another two years so that it can be evaluated on a more comprehensive set of data. John H. Hill, FMCSA Administrator, said participation in the project has been limited by uncertainty regarding its longevity. “We intend this extension to reassure trucking companies that they will have sufficient time to realize a return on their investment, and we anticipate additional participation with this extra time,'' Hill said.

Meanwhile, the House Transportation and Infrastructure Committee marked up legislation July 31 that would prohibit the Department of Transportation (DOT) from conducting a pilot program involving cross-border trucking with Mexico for more than one year. “DOT sold its proposal as a one-year trial, after which a thorough evaluation would be conducted of the program before any further action is taken,'' said Committee Chairman James L. Oberstar (D-Minn.) “I have no reason to believe that the Administration has any plans to terminate the pilot program and revoke the authority of participating carriers' unless Congress compels it to do so,'' Oberstar added.

In addition, FMCSA Administrator Hill said the agency has adhered to the law and exceeded the requirements established by Congress for implementing its obligations under the North American Free Trade Agreement (NAFTA.) “To date, the project has shown that U.S. and Mexican carriers can engage in cross-border trucking operations in compliance with applicable laws and with no compromise to public safety or security,'' Hill asserted. He further noted that Mexican trucks and drivers have established compliance rates equal or better to those of U.S. trucks and drivers. Federal Carriers Reports, Report Letter No. 1539, August 8, 2008.

Employers Required to Convey Accurate Information to Employees
The Transportation Security Administration (TSA) is accepting comments on an interim final rule codifying in the Code of Federal Regulations certain provisions of the Implementing Recommendations of the 9/11 Commission Act of 2007. The applicable statutory provisions prohibit public transportation agencies, railroad carriers, and their respective contractors and subcontractors from knowingly misrepresenting federal guidance or regulations addressing security background checks for covered individuals. Under the interim rule, entities operating mass transit systems, passenger rail systems, and freight rail carriers must understand TSA's regulations and guidance concerning security background checks, and be able to accurately explain them to their employees. Currently, TSA has issued one regulation and several guidance documents relating to background checks in the public transportation and railroad sectors. The interim rulemaking took effect July 31, 2008. Federal Carriers Reports, Report Letter No. 1540, August 26, 2008.

Rulemaking Addressing Railroad Workplace Safety Withdrawn
A Notice of Proposed Rulemaking (NPRM) that would have amended the federal regulations governing railroad workplace safety was withdrawn by the Federal Railroad Administration (FMCSA) effective August 13, 2008. Issued in July, the NPRM had solicited input on a proposal that would have required railroads to adopt on-track safety procedures to protect certain roadway work groups from the movement of trains or other on-track equipment on “adjacent track,'' and mandated that railroads, contractors to railroads, and roadway workers comply with the adopted procedures. The NPRM was developed in order to respond to fatal train incidents and in response to recommendations from the Railroad Safety Advisory Committee (RSAC). Based on the comments received, the agency concluded that inadvertent discrepancies between the proposal and the RSAC recommendation, the need for clarification of certain critical issues, and the occurrence of several “ex-parte'' communications regarding the proposed rule warranted the withdrawal of the rulemaking in order to allow the agency an opportunity to reexamine the proposal. As such, FRA has withdrawn the proposal and closed the rulemaking. Federal Carriers Reports, Report Letter No. 1540, August 26, 2008.

Cargo Insurer Not Entitled to Recover Under Carmack Amendment
A cargo insurer, acting as the subrogee of a purchaser of electronic equipment, was not entitled to seek recovery from a motor carrier for goods lost during interstate transportation under the Carmack Amendment, a federal district court ruled. The seller of the goods contracted with the carrier to ship the equipment under a bill of lading issued by the carrier. When the goods were delivered, some of the equipment was missing. The shipper filed a claim with the carrier at the behest of the buyer, which was settled pursuant to the terms of the carrier's limitation-of-liability clause. At the same time, the buyer filed a claim with its cargo insurer. The insurer paid the claim, and then filed an action against the carrier as the subrogee of the purchaser.

The carrier challenged the suit, arguing that the insurer had no standing to bring the action because the purchaser had not been listed on the bill of lading as the owner of the equipment; nor had it contracted with the carrier to ship the goods. The insurer argued that it had standing because its insured, as the owner of the lost goods, was entitled to seek recovery against the carrier under Carmack, even if it was not identified on the bill of lading. The court disagreed, holding that allowing someone not a party to the bill of lading to sue the carrier after it had reached an accord and satisfaction with the shipper would discourage carriers from settling claims and would be contrary to the goals of the Carmack Amendment. Thus, it was determined that the insurer lacked standing to bring the action against the carrier under the Carmack Amendment.

The insurer also opposed the carrier's limitation of liability, arguing that the Carmack Amendment required all shipments to proceed at full value unless the shipper declared a lower value. The court rejected this argument, asserting that the Carmack Amendment provides that the liability of the carrier can be limited by agreement, not that it can be lowered by agreement. As such, the court ruled that the carrier had effectively limited its liability by: (1) having a valid tariff available to the shipper upon request; (2) providing the shipper with an option to declare a higher value for the shipment for a higher freight charge; (3) obtaining the shipper's agreement as to the liability limitation through the shipper's failure to declare a higher value; and (4) issuing a bill of lading prior to shipment. Accordingly, the insurer was not entitled to recover damages from the carrier under the Carmack Amendment. OneBeacon Ins. Co. v. Haas Industries, Inc. (NDCal) Federal Carriers Reporter ¶84,553.

ICCTA Preempts Property Owner's Action Against Railroad
A federal district court's decision finding that the Interstate Commerce Commission Termination Act (ICCTA) preempted a property owner's claim that he held a possessory interest based in state law in four railroad crossings adjacent to his property was affirmed by a federal court of appeals. The railroad had informed the property owner of its intent to close the four rail crossings that were located on rail lines that ran along the eastern border of the property. The owner objected to the removal, arguing that he possessed the right to use the four crossings under state law. After the railroad destroyed and closed two of the four crossings, the property owner filed suit in state court seeking an injunction to compel the railroad to restore the destroyed crossings and to prevent the other two from being closed. The case was removed to federal court on diversity grounds.

The district court dismissed the action, finding that the property owner's claims were preempted by the ICCTA. The property owner appealed the lower court's decision, arguing that its claim was not preempted because railroad crossings did not fit within the purview of “transportation by rail carriers.'' The appellate court disagreed, finding that railroad crossings were covered by the definition of transportation by rail because they were property or equipment related to the movement of passengers or property by rail. Based on the evidence presented, the court concluded that the rail crossings were within the jurisdiction of the Surface Transportation Board (STB), and ruled that the property owner's state law claim asserting a property interest in the crossings was preempted. Franks Inv. Co. v. Union Pac. R.R. Co. (5thCir) Federal Carriers Reporter ¶84,554.

Shipper's Suit for Damages Time-Barred Under Carmack
A shipper's action against two motor carriers involved in the interstate transportation of its goods was time-barred under the Carmack Amendment's statute of limitations, a federal district court ruled. The shipper filed suit against the carriers more than two years after having received written notice that its damage claim had been denied. The Carmack Amendment provides a minimum two-year statute of limitations for filing civil actions.

The carrier asserted that it had denied the shipper's claims on October 12, 2005. The shipper disagreed, arguing that the correspondence had not been a denial because it had left the claim open by asking for the claim to be resubmitted using replacement costs instead of market value. In order for a denial to be effective, if must be clear and unequivocal, the court instructed. Here, the denial stated that ``neither the carrier nor [the broker/carrier] are liable for this claim.'' It also advised the shipper that if it wished to pursue its claim, it should revise its request for damages. Notwithstanding the carrier's advice to the shipper regarding the resubmission of its claim, the denial was found to be clear and unequivocal. Thus, the shipper's claim was time-barred. Destination Prods. Int'l Ltd. v. Wilson Transp., Inc. (NDTex) Federal Carriers Reporter ¶84,555.