December 2007

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 Topics

Airlines Agree to Flight Caps at JFK
Airlines serving New York's John F. Kennedy (JFK) Airport have agreed to cap the number of flights operating per hour at either 82 or 83, depending on the time of day, the Department of Transportation announced on December 19. The hourly caps will take effect on March 15, 2008, and will remain in place through 2009. According to DOT, carriers will be able to shift their flights to times of the day when the airport has unused capacity, allowing 50 more flights per day than were offered last summer. DOT also directed the Federal Aviation Administration to enter into negotiations to set hourly flight caps at Newark International Airport. As operational improvements increase capacity at area airports, DOT will lease new slots to airlines and use the revenue for airspace and airport improvements in the region. DOT also authorized the appointment of an aviation “czar” to oversee the problems of delays and congestion in New York airspace. By Sarah Borchersen-Keto. Aviation Law Report Letter No. 1370, December 28, 2007.

Federal Terrorism Risk Insurance Extended Through 2014
President Bush on December 26 signed into law a measure (H.R. 2761) that reauthorizes the nation's terrorism insurance program for another seven years while at the same time expanding it to encompass the effects of domestic as well as foreign terrorist attacks. The program, which provides a federally funded backstop for private-sector insurance companies' losses in the event of overwhelming terrorism damage claims, had been set to expire at the end of this year. The Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L. No. 110- ___, 121 Stat. ___) amends the Terrorism Risk Insurance Act of 2002 to extend its funding through December 31, 2014. The 2002 Act's definition of an “act of terrorism” is broadened by eliminating the requirement that those committing a terrorist act be acting on behalf of any foreign person or foreign interest. Aviation Law Report Letter No. 1370, December 28, 2007.

Imams' Discrimination Claims Survive Dismissal Motions
A federal court in Minnesota ruled that six Imams had adequately stated claims against the airline and the airport authority for violations of the passengers' Fourth Amendment right to be free from unreasonable searches and seizures. The Imams, who were traveling by air, alleged that they had been removed from their flight and arrested by airport police officers because three of them had prayed at the gate prior to boarding, two had requested seatbelt extenders, and the group had referred to Saddam Hussein and criticized U.S. involvement in Iraq. According to the court, it was doubtful that such facts would lead a reasonable person to conclude that the passengers were committing or were about to commit a crime and, therefore, the complaint alleged facts that would support the existence of an unconstitutional policy by the airport authority of arresting passengers when an airline reports allegedly suspicious behavior that falls short of probable cause. The court also ruled that a similar claim against the airline could proceed because it adequately alleged that the carrier had been jointly engaged with public officers in the denial of the Imams' civil rights. Although the carrier asserted that the Aviation and Transportation Security Act had immunized it from a state law false arrest claim, its alleged actions in concert with the airport authority to arrest the Imams had constituted conduct that fell outside ATSA's protection, the court found. Shqeirat v. U.S. Airways Group, Inc. (DMinn) 32 Avi. 15,771.

Aviation

Mandatory Airline Pilot Retirement Age Raised to 65
President Bush on December 13 signed into law H.R. 4343, the “Fair Treatment for Experienced Pilots Act” (Pub. L. 110-135, 121 Stat. 1450), which raises the mandatory retirement age from 60 years to 65 years for pilots serving on commercial passenger flights within the U.S. Days earlier, both houses of Congress passed the legislation, which brings the U.S. into line with international standards set last year. Originally included in the Federal Aviation Administration reauthorization bill, the pilot retirement provision was separated in order to ensure its swift passage by the Senate [see CCH Aviation Law Reports No. 1369, December 13, 2007]. Full text of the new statutory provision appears at ¶1829. By Sarah Borchersen-Keto. Aviation Law Report Letter No. 1370, December 28, 2007.

New DT Data Rule Addresses Airliner Fatigue Cracking
In an effort to address fatigue cracking and ensure the continued airworthiness of large transport airplanes, the Federal Aviation Administration has issued a final rule requiring the design approval holders (DAHs) for these planes to provide operators with damage tolerance (DT) data for repairs and alterations to the fatigue critical airplane structure. Specifically, the new rule requires DAHs to develop and provide data and documents that operators need in order to account for possible adverse effects of repairs, alterations, and modifications on fatigue critical structures. The data includes lists of fatigue critical structures, DT inspection information, DT evaluation guidelines, and implementation schedules. 72 FR 70486, December 12, 2007. Aviation Law Report Letter No. 1369, December 13, 2007.

FAR Cleanup Reflects New DOT Address, FDMS Migration
The Federal Aviation Administration issued a rule on December 5 that removes and replaces obsolete information in federal aviation regulations resulting from: (1) relocation of the Department of Transportation's headquarters building; (2) migration of DOT dockets to the government-wide electronic Federal Docket Management System (FDMS); and (3) closure of DOT's Branch Library. Because the actions are merely administrative in nature and remove outdated references, FAA issued the rule without notice and public comment, and found that there was good cause for making the rule effective upon publication. The Federal Aviation Regulations affected by the new rule appear at ¶¶4063, 4067-4068, 4075, 4080, 4168, 4188, 4296o, 4297b-4297d, 4545, 5663, 8431, 8863, and 9771e.

Manufacturer Wins Advisory Circular Challenge
A Federal Aviation Administration Advisory Circular (AC) that imposed a strict test on the product of one manufacturer but not on other, similar products was arbitrary and capricious, the U.S. Court of Appeals for the District of Columbia ruled. The manufacturer's product, a type of airport runway light base, did not pass the test. After ruling that it had subject matter jurisdiction to hear the action, the court found that FAA had provided no evidence to support its contention that its more rigorous test was necessary because the manufacturer's product was of a relatively new design. In addition, the agency failed to provide substantial evidence to support its argument that products of the older, more established design possessed a particular safety feature that products of the newer design lacked, the court said. Safe Extensions, Inc. v. FAA (DCCir) 32 Avi. 15,832.

Artisan's Lien Secured Despite Failure to File with FAA
An aircraft maintenance firm's failure to file notice with the Federal Aviation Administration registry of an artisan's lien against an aircraft that was under lease to a bankrupt air carrier did not invalidate the lien, a federal appeals court ruled. The firm argued that no FAA filing was required because it held a valid non-consensual possessory artisan's lien under state law, and the state did not accept such liens for filing. According to the court, while state laws allowing undocumented or unrecorded transfers of interests in aircraft to affect innocent third parties are preempted by the Federal Aviation Act of 1958, the artisan's lien differed from a transfer in that it required possession, rather than filing, to be valid and to retain priority under the applicable state law. Thus, because the state law did not require, or even provide for, the filing of an instrument to perfect a possessory artisan's lien against an aircraft, the failure to file such an instrument did not render the lien invalid, the court reasoned. Triad Int'l Maint. Corp. v. Southern Air Transp., Inc. (6thCir) 32 Avi. 15,842.

Pact To Demolish Terminal Protected From Antitrust Attack
Two commercial airlines, the Texas cities of Dallas and Fort Worth, and the Dallas Fort Worth International Airport (DFW) Board did not violate federal antitrust law by allegedly having entered into an agreement that: (1) reduced the number of gates at a smaller airport located close to downtown Dallas (Love Field); (2) allocated the remaining Love Field gates to incumbent carriers; and (3) deterred new competition at both airports, a federal district court has ruled. The leaseholders, who had entered into negotiations to assign their leasehold interests to an airline that intended to utilize the terminal to enter into competition for commercial travel in Dallas, maintained that the defendants had conspired in restraint of trade and to monopolize trade over the markets for flights out of northern Texas and for gates at Love Field through secret negotiations conducted over a two-year period with the end goal of demolishing the terminal. However, the court found that the defendants' alleged conduct largely was protected from antitrust scrutiny by the Noerr-Pennington doctrine, under which it is permissible for competitors to lobby the government to change laws in ways that would reduce competition. The vast majority of the defendants' actions followed the introduction of proposed legislation in Congress seeking outright repeal or modification of the “Wright Amendment” that restricts interstate airline operations at Love Field, and did not extend beyond a permissible effort to petition Congress concerning the law, the court concluded. Love Terminal Partners, L.P. v. City of Dallas (NDTex) 32 Avi. 15,807.

Martinique Deemed Better Forum for Foreign Crash Suit
In an action stemming from the fatal crash of a foreign airliner during an international flight, a federal court in Florida granted a motion by a U.S. defendant for dismissal on the grounds of forum non conveniens. The defendant, a “contracting air carrier” within the meaning of the Montreal Convention, had contracted with the foreign carrier for its aircraft and crew, and independently had contracted to supply the air transportation to a travel agent/tour operator in Martinique. The plaintiffs argued that dismissal on forum non conveniens grounds was improper because it was likely that the defendant would assert third-party claims against U.S.-based manufacturers. However, there was no argument that the U.S. entities could not be impled in Martinique, and the defendant did not claim prejudice due to its inability to implead third parties. Furthermore, while potential third-party claims would be considered in the context of private and public interest factors in a forum non conveniens analysis, the plaintiffs' arguments concerning the defendant's ability to implead third parties did not carry the same weight as when a defendant has claimed prejudice from its inability to implead potential tortfeasors, the court reasoned. In re W. Caribbean Airways, S.A. (SDFla) 32 Avi. 15,764.

No Private Right of Action to Challenge FBO's Operating Rights
A federal district court has ruled that the Federal Aviation Act of 1958 did not provide a private right of action for a municipal airport board to challenge a lease provision that allegedly gave an airport tenant an impermissible exclusive right to operate as a fixed base operator (FBO) at the airport. FAA provides no express private right of action. According to the court, no implied private right of action was shown to exist because: (1) the statute did not identify a class other than U.S. citizens generally for whom it created a special benefit; and (2) despite the statute's lack of an administrative remedy, there was no evidence of congressional intent to provide a private right of action. Thus, the court concluded that it lacked subject matter jurisdiction to adjudicate the action. Bowling Green and Warren County Airport Bd. v. Martin Land Dev. Co. (WDKy) 32 Avi. 15,798.

Airworthiness Directive Was Reasonably Adopted
A Federal Aviation Administration airworthiness directive mandating reduced life limits on certain helicopter engine components was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, a federal appeals court ruled in an unpublished opinion. FAA's decision to rely on the engine manufacturer's analysis and field inspection data in reaching its determination that the previous life limits for the affected parts had created an unsafe condition was reasonable and was supported by substantial evidence, the court found. The court also found that the agency's cost-of-compliance estimate had reasonably adopted a “lost value” approach that properly captured the cost of the earlier replacement of the affected parts. Restricted Category Aircraft Ass'n v. Sturgell (9thCir) 32 Avi. 15,806.

FSIA Trumped Jury Trial Despite Carrier's Switch to Private Status
A federal district court improperly granted a jury trial demand by two tour operators in their breach of contract action against a foreign air carrier, the U.S. Court of Appeals for the Seventh Circuit ruled. A foreign government was the carrier's majority owner at the time the suit had been filed in state court, and the carrier had removed the action to federal court under the Foreign Sovereign Immunities Act of 1974 (FSIA). Under FSIA, a foreign government instrumentality may remove a case to federal court, where it must be tried without a jury. Nevertheless, following removal of the action, the plaintiffs demanded a jury trial after the foreign government sold its majority interest in the carrier. The jury trial was held and judgment was rendered for the plaintiffs. Disagreeing with the district court's conclusion that the carrier's conversion to a private firm had changed the jurisdictional basis for the suit from foreign sovereign immunity to diversity of citizenship, the appeals court held that a defendant's status as a foreign state is to be determined on the basis of the facts in existence when the suit was filed. Olympia Express, Inc. v. Linee Aeree Italiane, S.P.A. (7thCir) 32 Avi. 15,801.

Surface Transportation

Carmack Preempts Shipper's State Law Negligence Claims
A federal district court ruled that a shipper's state law claims against a household goods carrier arising from damages incurred during the interstate movement of their property were preempted by the Carmack Amendment. The carrier had been hired to transport the shipper's household goods from Texas to Rhode Island. While in the carrier's possession, the goods suffered significant mold damage. Upon delivery, the mold contaminated the shipper's home, forcing the shipper to vacate the premises pending remediation. The shipper filed suit against the carrier in state court alleging state law negligence claims. The carrier removed the action to federal court and the shipper amended its complaint to include a Carmack claim.

The carrier filed a motion for summary judgment, arguing that the state law claims were preempted by the Carmack Amendment and its liability under the Carmack claim was limited to $15,000. The shipper asserted that its state law negligence claims were not preempted because the harm occurred after the goods were delivered and it was the shippers, themselves, who were harmed, not their goods. The shipper failed to make any assertion related to the carrier's limitation of liability claim. Based on the evidence, the court concluded that the shippers had failed to establish that their damages were the result of conduct separate and apart from the movement of their goods, ruling that their state law claims were directly related to the damage to their goods; therefore they were preempted by Carmack. Moreover, the shipper's failure to challenge the liability limitation claim resulted in a finding that the carrier's liability was limited to $15,000. Accordingly, the carrier's motions for summary judgment were granted. York v. Day Transfer Co. (DRI) CAR ¶84,519.

Bus Drivers Not Entitled to Overtime Wages
Bus drivers employed by a charter/shuttle bus operation were not entitled to recover overtime wages under the Fair Labor Standards Act (FLSA), a federal district court ruled. The drivers transported passengers on interstate highways from hotels, train stations, and airports to various points within and outside of the State of Florida. Even though the drivers' routes generally were intrastate, a large number of the passengers they transported came from outside the state. Two drivers filed suit against their employer, alleging that it failed to pay overtime wages for hours worked in excess of 40 in a workweek as required by the FLSA. The employer challenged the employees' claim, arguing that it was exempted from the overtime requirement of the FLSA by the Motor Carrier Act (MCA).

Employees are covered by the MCA and exempt from the overtime requirements if they are employed by a motor carrier and engaged in activities affecting the safe operation of motor vehicles transporting goods in interstate commerce. The drivers asserted that the exemption was not applicable because they had only provided intrastate transportation during their employment. Notwithstanding the lack of actual interstate activities by the drivers, the court ruled that the carrier was operating in interstate commerce based on its solicitation of interstate business and its continuous engagement in the recognized interstate activity of transporting airline crews and passengers from airports to hotels. Based on the evidence, the motor carrier exemption to the overtime provision of the FLSA was applicable because all drivers employed by the carrier could reasonably have been expected to drive interstate routes and intrastate routes that are considered interstate under the governing law. Thus, the carrier was not required to pay its drivers overtime wages. Garcia v. Fleetwood Limousine, Inc. (MDFla) CAR ¶84,520.

Application for Adverse Discontinuance of Rail Service Denied
The Surface Transportation Board (STB) denied an application by two municipalities for an adverse discontinuance of rail service because the applicants had not satisfied the public convenience and necessity (PC&N) standard. The municipalities sought to force a rail carrier operating a 8.29-mile rail line under a lease agreement to cease its operations, so that a portion of the line's right-of-way could be converted into a recreational trail. The application claimed that the agreement, under which the carrier had been operating had expired and that its services no longer were required on the line because a new carrier had been engaged to provide transportation services until new connecting tracks were completed.

The carrier and a shipper on the line opposed the discontinuance application, arguing that it would lead to diminished rail service, increased costs, and reduced routing options. Furthermore, the carrier claimed that the potential to develop new rail traffic on the line existed. Based on the evidence submitted, including the potential for new rail traffic on the line and the withdrawal by the replacement carrier of its petition to discontinue service on the line, it was determined that the applicants had failed to meet their burden of establishing that the PC&N required or permitted the adverse discontinuance of the carrier's operations. Thus, the application was denied. City of Peoria and the Village of Peoria Heights, IL-Adverse Discontinuance-Pioneer Industrial Railway Company (STB) CAR ¶37,253.

Petition to Reject Control Exemption Denied
A rail carrier's petition to reject a verified notice of exemption seeking to permit a noncarrier to acquire indirect control of a rail carrier following the consummation of a merger agreement was denied by the Surface Transportation Board (STB). Patriot Rail Corp. (Patriot) filed a petition seeking to reject a verified notice of exemption filed by Genesee & Wyoming, Inc. (GWI). The challenged notice, submitted by GWI, sought permission to acquire indirect control of Maryland Midland Railway (MMID) following the consummation of a merger agreement.

Under the applicable regulation, an acquisition of control will be exempt if the transaction will not connect the railroads with each other or any railroads in their corporate family, the acquisition of control is not part of a series of anticipated transactions that would connect the railroads with each other or any railroad in their corporate family, and the transaction does not involve a Class I carrier. Patriot challenged the exemption, asserting that the second criterion had not been met. In support of its claim, it pointed to statements made by individuals associated with the parties to the merger transaction that insinuated that the transaction was part of a series intended to connect rail lines. Additionally, the petitioner claimed that the exemption notice was flawed because it did not use the exact language set forth in the regulations for such exemptions.

GWI responded by providing a sufficient explanation rebutting Patriot's assertions regarding the intent of the transaction, and asserting that the verbatim use of the regulatory language was not required. The STB agreed with GWI, finding that the petitioner had failed to show that the verified notice of exemption should be rejected. Accordingly, the petition was denied. Genesee & Wyoming Inc.-Control Exemption-Maryland Midland Railway, Inc. (STB) CAR ¶37,254.

STB Rejects HHG Carriers' Petition for Clarification
A petition seeking clarification of a decision to terminate approval of motor carrier rate bureau agreements was denied by the Surface Transportation Board (STB). The petition filed by the Household Goods Carriers' Bureau Committee (HGCBC) requested that STB clarify its decision by providing that HGCBC member-carriers could adopt, on an individual basis, the tariffs that were established collectively by the HGCBC before the termination of STB approval of its bureau agreements. As part of the clarification request, HGCBC wanted the STB to state that it saw no potential antitrust problems with such actions. HGCBC further asked STB to permit individual HGCBC member-carriers to use the rate bureau as a publishing agent to establish individual tariffs going forward.

In support of its request, HGCBC cited two decisions by STB's predecessor agency, the Interstate Commerce Commission. In both decisions the ICC addressed transition issues by stating that individual members of the rate bureaus could continue to use tariffs that had been collectively established before the antitrust immunity was lost. While the agency recognized the challenges facing the HGCBC and its member-carriers in transitioning from collective to individual pricing, it declined to grant the clarification request because doing so could provide a partial shield over behavior that STB has concluded should be fully subject to antitrust laws. Furthermore, unlike the circumstances in the cited decisions in which the bureaus were given relatively short periods of time to adapt to the loss of immunity, STB is dealing with transitional issues by providing an extended period of time before the termination becomes effective so that the bureaus and their member-carriers can take advantage of the business review procedures administered by the Department of Justice's Antitrust Division or consult other experts. Motor Carrier Bureaus-Periodic Review Proceeding (STB) CAR ¶37,255.

Petition to Revoke Exemption Authority Denied
A petition to revoke an exemption authorizing a rail carrier to acquire and operate a rail line was denied by the Surface Transportation Board (STB). The City of Riverview filed a petition seeking to revoke a notice of exemption granted to Riverview Trenton Railroad Company (RTR). The challenged exemption allowed RTR to acquire trackage and begin operations as a railroad common carrier.

The City argued that the exemption should be revoked because the carrier was not committed to beginning rail service and was using the acquired property for storage of containers in violation of the environmental conditions set by the STB. Upon review, the STB determined that the City's claims were unsupported by the record. The agency found that, while the carrier's progress in commencing rail operations had been slower than anticipated due to circumstances beyond its control, the steps taken to date supported its claims that it was committed to establishing rail service. In addition, the alleged violations of the environmental conditions did not justify revocation of the exemption because most of the conditions did not take effect until after rail operations were started. Based on the evidence, STB found that the petitioner had failed to meet its burden of proof to show that the exemption should have been revoked. Consequently, the petition to revoke was denied. Riverview Trenton R.R. Co.-Petition for Exemption from 49 U.S.C. 10901 to Acquire and Operate a Rail Line in Wayne County, MI (STB) CAR ¶37,256.

60-day Employee Notice Requirement Waived
The Surface Transportation Board (STB) approved a rail carrier's request for a waiver from the 60-day employee notice requirements mandated by federal statute. The Class III carrier filed the petition for waiver along with a verified notice of exemption to acquire by purchase and operate approximately 74 miles of rail line owned by another railroad. Because the purchasing carrier's revenue exceeded $5 million, it was required to certify to the STB that it had posted, at least 60 days prior to the effective date of the exemption, a notice of the proposed transaction at the workplace of employees and had served a copy of the notice on the national offices of the labor unions having members employed on the affected lines, unless its received a waiver from the notice requirement.

In support of its waiver request, the railroad asserted that no purpose would be served by requiring the full 60-day notice because no employees would be adversely affected by the transaction and none were represented by a labor union. The petition claimed that: (1) no employee of the seller had worked on the line in over 10 years; (2) no employees of either the seller or the buyer were represented by a labor union; and (3) notices of the transaction were posted at the workplaces of the buyer's employees. While the STB normally does not grant a waiver of the advance notice requirements, it was determined that because no employees of the seller had worked on the line in more than 10 years, there was no apparent need for advance notice to them. As for the buyer's employees, it was concluded that because the transaction would not change the existing operations, but merely convert them from a lease to direct ownership, the limited notice provided to the buyer's employees was sufficient. Thus, the waiver request was granted. Columbia Basin R.R. Co. Inc.-Acquisition and Operation Exemption-BNSF Ry. Co. and BNSF Acquisition, Inc. (STB) CAR ¶37,258.

Summary Judgment on GPS Issue Not Appropriate
An administrative law judge (ALJ) ruled that a prior administrative adjudication by the Chief Safety Officer of the Federal Motor Carrier Safety Administration (FMCSA) validating the use of global positioning system (GPS) data to verify drivers' duty status logs did not prevent the issue from being reexamined in an administrative hearing order by the Agency. Following a compliance review that uncovered false log violations, a carrier's satisfactory safety fitness rating was downgraded to conditional. The violations were discovered after safety investigators compared the drivers' logs to the carrier's GPS data. The carrier challenged the compliance review, arguing that the use of the GPS data to verify drivers' logs violated FMCSA policy. An administrative hearing was called to determine whether the use of the GPS data was in violation of agency policy.

The Field Administrator (FA) filed a motion for summary judgment, arguing that the validity of the use of the GPS data already had been adjudicated in its favor, and therefore, could not be relitigated. In theory, the FA's claim was correct because a prior decision by the Chief Safety Officer of the FMCSA had ruled that the conditions in the agency's instructions for the use of GPS data to monitor hours-of-service compliance had been satisfied. However, a subsequent order issued by the Assistant Administrator appointed an ALJ to rule on the validity of the investigators' acquisition of the GPS records when they performed their initial compliance review. Based on this order, it was determined that the agency wished to permit the relitigation of the issue in a trial-type proceeding. As such, the FA's motion for summary judgment was denied. New Prime, Inc. dba Prime, Inc. (FMCSA) CAR ¶51,212.

Carrier's Reply Missing Critical Elements
The FMCSA entered a default judgment against a motor carrier that failed to properly reply to a Notice of Claim. The Notice of Claim cited the carrier with four violations for using a driver before receiving a negative pre-employment drug test result, and two violations for operating a motor vehicle without the proper operating authority, and sought a civil penalty in the amount of $8,180. The carrier replied to the Notice, contesting both the findings and the penalty. The Field Administrator challenged the reply, arguing that the carrier's response was inadequate because it failed to include a payment, did not request an administrative adjudication or seek arbitration, and did not include a statement providing the grounds for contesting the claim.

Under the current rules of practice, a carrier must reply to a Notice of Claim by choosing one of the following three options: (1) pay the full amount of the civil penalty; (2) contest the claim by requesting administrative adjudication; or (3) seek binding arbitration. The regulations further state that if a carrier contests the claim, the reply must contain an admission or denial of each allegation and provide a concise statement of facts constituting each defense. While the carrier did contest the charges, it did not comply with the regulatory requirements by providing a statement of fact outlining its defenses or stating its grounds for contesting the claim. As such, its response was not a proper reply; therefore, the carrier was found to have defaulted. Accordingly, the Notice of Claim, including the assessed civil penalty, became the final agency order. Autobus La Quebecoise, Inc. (FMCSA) CAR ¶51,213.

Improper Reply Results in Default Order
A motion for a default order was granted by FMCSA against a carrier that had failed to properly reply to a Notice of Claim. The Notice of Claim charged the carrier with violating federal household goods consumer protection regulations. The carrier submitted a timely reply to the Notice of Claim, but failed to satisfy the regulatory requirements for a proper reply. The Field Administrator claimed that the carrier's reply was inadequate because it failed to include a payment, did not request a administrative adjudication, or seek arbitration. Under the current rules of practice, a carrier must reply to a Notice of Claim by choosing one of the following three options: (1) pay the full amount of the civil penalty; (2) contest the claim by requesting administrative adjudication; or (3) seek binding arbitration. The regulations further state that any allegation not specifically denied is deemed admitted. Consequently, the carrier's silence was deemed an admission of the violations. As such, the carrier was required either to pay the penalty or seek arbitration. Since it did neither, it was found to have defaulted. Thus, the Notice of Claim, including the assessed civil penalty, became the final agency order. 123 Express Moving, Inc. (FMCSA) CAR ¶51,214.

Civil Penalty Denied Against Defunct Carrier
A motor carrier was found to have violated federal drug and alcohol testing regulations by the Federal Motor Carrier Safety Administration, but was not required to pay a civil penalty since the carrier no longer was operating as a motor carrier. The carrier was cited for violating a number of household goods consumer protection requirements. The carrier admitted the violations, but challenged the proposed civil penalty.

As a result of the carrier's admission, the Field Administrator was not required to establish a prima facie case. Thus, the motion for final order as to the violations was granted. As to the proposed penalty, the Field Administrator submitted evidence showing that it had given appropriate consideration to the applicable statutory factors. However, due to the fact that the carrier no longer was conducting motor carrier operations, and the purpose of the civil penalty is to encourage future compliance, no civil penalty was imposed. Smooth Move, Inc. (FMCSA) ¶51,215; Suissa, Gabriel (FMCSA) CAR ¶51,216.

Interim Final Rule Issued to Maintain Status Quo on HOS Rules
The Federal Motor Carrier Safety Administration (FMCSA) is seeking comments on an interim final rule amending the federal hours of service regulations for motor carriers. The interim rulemaking will allow commercial motor vehicle (CMV) drivers to drive for up to 11 hours within a 14-hour, non-extendable window from the start of the workday, following 10 consecutive hours off-duty. Additionally, the interim rule allows motor carriers and drivers to restart calculations of the weekly on-duty time limits after the driver has had at least 34 consecutive hours off duty.

The interim rulemaking, which takes effect December 27, 2007, was necessary to prevent disruptions to enforcement and compliance with the hours-of-service (HOS) rules when a court-issued stay of a decision overturning two provisions of the latest HOS rule expires. The decision to overturn the provisions was based on the agency's failure to satisfy Administrative Procedure Act requirements by not providing an opportunity for public comment on the methodology of the operator-fatigue model used to assess costs and benefits of alternative changes to the rules and for not providing an adequate explanation for certain critical elements in the model's methodology. The interim rule will ensure that a familiar and uniform set of rules govern motor carrier transportation while the FMCSA gathers public comments on all aspects of the interim rule, conducts peer review of its analysis, and contemplates the appropriate final rule that will address the issues identified by the court. 72 FR 71247, December 17, 2008.