Transportation Update January 2008

January 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 Topics

NY Passenger Rights Law Survives Court Challenge
A federal district court has ruled that the Airline Deregulation Act of 1978 did not preempt New York State's so-called airline passenger “bill of rights.” Enacted in 2007, the statute requires the provision of fresh air, water, food, and bathroom access to airline passengers who have spent three hours or more aboard an aircraft confined on the ground at an airport [see CCH Aviation Law Reports No. 1361, August 9, 2007]. ADA preempts state laws and regulations related to an air carrier price, route, or service. According to the court, however, the New York law does not fall within even the most expansive definition of airline “services,” which the court said is limited to the contractual arrangements between carrier and passenger or to elements of the air carrier service bargain. The provision of fresh air, water, food, and lavatory access is a health and safety issue that falls outside ADA's scope, is irrelevant to ADA's purpose, and is beyond the reach of its explicit preemption provisions, the court said. Air Transp. Ass'n of Am. v. Cuomo (NDNY) 32 Avi. 15,858.

Proposed Airport Fee Policy Includes Congestion Pricing
The Federal Aviation Administration has proposed three amendments to its 1996 Policy Statement on Airport Rates and Charges that would affect the way in which airports charge landing fees. The proposal includes new and amended provisions that would: (1) define a “congested airport”; (2) explicitly acknowledge the ability of an airport to establish a two-part landing fee consisting of a weight-based charge and a per-operation charge; and (3) allow landing fees to be used to pay for airport facilities that are under construction. Using price as a tool to address airport congestion, the amendments would encourage airports to move away from the practice of charging aircraft landing fees based on aircraft weight. Instead, airports would be able to vary their charges based on the time of day and the volume of traffic. As a result, airports would be able to serve more passengers, reduce delays, and help avoid the need for sustained federal government intervention, according to Transportation Secretary Mary E. Peters. Aviation Law Reports Letter No. 1372, January 30, 2008.

Hazardous Substances List Revised To Align with EPA Guidelines
The Pipeline and Hazardous Materials Safety Administration (PHMSA) is modifying the Hazardous Substances Other Than Radionuclides table found in Appendix A of the Hazardous Materials Table. The revisions are required in order to comply with the Superfund Amendments and Reauthorization Act (SARA) of 1986, which amended the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) to require that PHMSA regulate all hazardous substances designated by the Environmental Protection Agency (EPA).

The adopted changes are based on several EPA final rules that have added, corrected, or removed entries to the list. In addition, the amendments correct typographical errors and insert inadvertent omissions from previous PHMSA rulemakings. The rulemaking will assist shippers and carriers in the identification of CERCLA hazardous substances, thus allowing them to conform with all relevant hazardous materials regulations requirements and to make the necessary notifications in the event that a discharge of a hazardous substance occurs. The changes are effective on March 31, 2008; however, PHMSA has authorized voluntary compliance as of February 29, 2008. 73 FR 1089, January 7, 2008.

Mandatory Training Requirements Proposed for CDL Applicants
The Federal Motor Carrier Safety Administration (FMCSA) is seeking comments on a proposed rulemaking that would revise the training requirements for individuals seeking new commercial driver's licenses (CDL). Under the proposal, persons applying for new or upgraded CDLs would be required to successfully complete specified minimum classroom and behind-the-wheel training from an accredited institution or program. For a ``Class A'' CDL (tractor-trailers), a minimum of 76 hours of classroom instruction and 44 hours of behind-the-wheel training, for a total of 120 hours, would be required, while a ``Class B'' (large ``box'' or van trucks) or a ``Class C'' CDL (hazardous materials or certain passenger-carrying vehicles) would require a minimum of 58 hours of classroom instruction and 32 hours of behind-the-wheel training, for a total of 90 hours. The training curriculum includes CDL safety regulations, vehicle operation, and safe operating practices. If adopted, the revised standards would apply only to applicants seeking a new or upgraded CDL three years after the effective date of the final rule. 72 FR 73226, December 26, 2007.

Aviation News

Libya Ordered to Pay $6 Billion in UTA 772 Bombing
A federal judge has ordered Libya and six of its officials to pay approximately $6 billion in damages in response to the September 19, 1989 suitcase bombing of French-operated UTA Flight 772 enroute to Paris from the African nation of Chad. Seven of the 170 passengers and crew who died on the flight were American. The families of the seven Americans killed and the U.S. company Interlease Inc., which owned the aircraft, brought suit in federal court. Libya came under suspicion in the case because the tragedy had occurred so soon after the Pan Am 103 bombing over Lockerbie, Scotland. Over the last few years, Libya has voluntarily paid several hundred million dollars in damages to the European and African victims of UTA flight 772. The court ruled that the estates and survivors of American victims were entitled to damages from Libya and from individual defendants for economic loss, pain and suffering, and prejudgment interest. The court found no conflicts of law among the states in which the decedents' estates had been probated or the survivors had been domiciled at the time of the bombing, and noted that each state's law provided a basis for recovery under a survival statute, as well as for wrongful death, intentional infliction of emotional distress, battery, and loss of consortium. Significantly, the court trebled the damages awards against the individual defendants who had acted as agents of the Libyan government for purposes of the bombing, in accordance with the federal Anti-Terrorism Act of 1991. Pugh v. Socialist People's Libyan Arab Jamahiriya (DDC) 32 Avi. 15,912.

New Export Airworthiness Approval Rule Effective Soon
Issuance of export airworthiness approvals for Class II and III aeronautical products located at facilities outside the U.S. will be allowed under the terms of a Federal Aviation Administration final rule that takes effect on January 14. Originally included in a comprehensive proposal to standardize production and airworthiness requirements for production approval holders, the new rule was issued ahead of a final rule for the remainder of the proposal due to its simple and uncontroversial nature, FAA said. According to the agency, the new rule makes it easier for manufacturers to produce and obtain aircraft parts in the global marketplace by allowing direct shipping of products from an offshore supplier facility without first having to ship the products to the U.S. to obtain an export airworthiness approval. Resolving the direct-ship issue eliminates the need for affected organizations to file exemption petitions, FAA added. Aviation Law Reports Letter No. 1371, January 10, 2008.

New Rule Limits Lithium Batteries in Passenger Baggage
A new federal safety rule that took effect on January 1 bars airline passengers from packing loose lithium batteries in their checked luggage and limits the number of loose lithium batteries that may be placed in carry-on bags. Designed to reduce the risk of on-board fires, the regulation allows lithium batteries in checked bags only if they are installed in electronic devices. A maximum of two spares is allowed in carry-on baggage, if each is stored in its original retail packaging, a protective pouch, or a plastic bag. Lithium batteries are used in common consumer electronics, such as digital cameras, cellular telephones, and most laptop computers, as well as in professional audio/video/camera equipment. The batteries are considered hazardous materials because they can overheat and ignite under certain conditions. Safety testing conducted by the Federal Aviation Administration found that current aircraft cargo fire suppression systems would not be capable of suppressing a fire if a shipment of non-rechargeable lithium batteries were to ignite in flight. Aviation Law Reports Letter No. 1371, January 10, 2008.

DOT War Risk Insurance Extended
The White House on December 27 issued a memorandum from President Bush to Transportation Secretary Mary E. Peters extending airline war risk insurance and reinsurance for an additional year. White House Deputy Press Secretary Scott Stanzel said that the one-year extension is a continuation of policy and was done “at the advice of transportation officials” with the intent of maintaining a “strong and healthy airline industry.” According to the memorandum, the continuation of insurance coverage is effective through August 31, 2008, and can be extended to December 31, 2008, if the Transportation Secretary cannot find a private insurance company to take over coverage under reasonable terms and conditions. Peters is authorized to continue the airline insurance and reinsurance coverage upon determination that the extension is necessary “in the interest of national security or to carry out the foreign policy of the United States Government.” Aviation Law Reports Letter No. 1371, January 10, 2008.

Claim Barred for Weather Forecast, but Not for Failure to Warn
An action against the United States alleging that government-employed weather forecasters had negligently failed to exercise reasonable care in forecasting clear air turbulence (CAT) was barred under the discretionary function exception to the Federal Tort Claims Act, a federal court ruled. According to the court, the plaintiffs —who alleged that the negligence had resulted in the fatal crash of a small aircraft that had encountered CAT conditions —pointed to no rule or regulation governing the development of weather forecasts or the determination of whether a weather event is taking place at any given moment. The court found that distinguishing types of turbulence is a subjective evaluation of the meteorologist based on a number of factors and requiring the exercise of judgment. In addition, the court determined that weather forecasts are the kinds of decisions that the discretionary function exception was meant to protect from liability under the FTCA because they implicate policy concerns that include: (1) the dangers of over-warning; (2) the economic impact of certain forecasts; and (3) meteorologist staffing limitations. However, the court ruled that the FTCA did not bar the plaintiffs' claim that federal employees had knowingly failed to warn the aircraft's crew of the presence of CAT. Government policy and regulations provide no discretion to decline to issue a warning to pilots once a meteorologist has determined that a warning is warranted, the court said. U.S. Aviation Underwriters Inc. v. U.S. (MDGa) 32 Avi. 15,852.

Products Liability Action Was Not Preempted by FAA
A federal district court in Connecticut ruled that the Federal Aviation Act of 1958 and its regulations did not preempt a state law products liability action brought against an aircraft parts manufacturer by a pilot who had sustained injuries when his aircraft crashed. While noting that the Act established the standard of care for aircraft operation, the court added that Congress had rejected the creation of national products liability standards for the general aviation industry. Furthermore, there is no clear proof of Congress' intent to impliedly preempt state products liability laws, especially in light of subsequent amendments of the FAA that specifically preempt air rates and routes, and limit the express preemption of products liability actions to those involving products more than 18 years old, the court concluded. Wong v. Precision Airmotive, LLC (DConn) 32 Avi. 15,908.

Interference With Flight Crew Requires No Specific Intent
In a federal criminal action alleging that an airline passenger had intimidated two flight attendants, thereby interfering with and lessening their abilities to perform their duties, a federal court ruled that expert testimony of the passenger's post-traumatic stress disorder or other mental disease was inadmissible at trial for the purpose of negating the mens rea or voluntariness of the passenger's alleged criminal actions. According to the court, the statute under which the passenger was charged does not require a specific intent to interfere. In addition, the court noted that intimidation, which focuses on the reasonableness of the flight crew's feeling of intimidation, is a general intent crime. As such, the passenger's alleged crime required only a general intent to intimidate, for which expert testimony is irrelevant and inadmissible to show intent, the court said. U.S. v. Murphy (DColo) 32 Avi. 15,955.

Increase in Flight Attendants' Hours Was a Major Dispute
An air carrier's unilateral decision to increase its flight attendants' maximum hours constituted a “major dispute” within the meaning of the Railway Labor Act, a federal court ruled. Under the RLA, a “minor dispute,” which involves the interpretation of a collective bargaining agreement, is subject to mandatory arbitration, while a “major dispute,” which involves the formation or alteration of a CBA, is within a federal district court's jurisdiction. Although the parties' collective bargaining agreement stated that the flight attendants were subject to “Federal Aviation Regulation maximum” flight time limits, the CBA did not specify the FAR governing pilots or a different FAR governing flight attendants, the court noted. However, the court found that the parties' practice for 13 years was to apply the pilots' FAR, and its consistent reliance on the pilots' FAR qualified as an established and recognized custom between the parties. Thus, the maximum flight time contained in the pilots' FAR was an implied term of the CBA, and the carrier's unilateral imposition of the higher flight attendants' FAR limit during negotiations for a new CBA was an attempt to change the terms of the CBA and as such, constituted a “major dispute,” the court concluded. Ass'n of Flight Attendants-CWA v. Mesa Air Group, Inc. (DAriz) 32 Avi. 15,883.

Carrier Liable for Travel Agent's Flight Booking Error
A New York court ruled that a foreign air carrier was liable for damages incurred by a passenger who missed his international flight because a travel agent had booked him on a domestic connecting flight that arrived after the international flight's closing time. As a result, the passenger had to purchase a ticket on another airline in order to complete his journey. The court found that the passenger had failed to establish that the carrier breached its contract by overbooking the international flight and declining to offer alternative transportation. Nonetheless, the court held the carrier liable for the travel agent's error in writing a ticket that did not comply with the carrier's rules governing connection times. The travel agent, who was bound by those rules, had acted as the carrier's agent when it sold the ticket, the court reasoned. Thus, the carrier, as principal, was responsible for the agent's error and was liable for the purchase price of the passenger's replacement ticket, the court concluded. Rottman v. El Al Israel Airlines (NYCityCivCt) 32 Avi. 15,910.

Surface Transportation News

Proof of Condition of Goods Needed for Prima Facie Case
A shipper was not entitled to summary judgment in an action against a motor carrier stemming from the alleged damage to a shipment of goods, because genuine issues of material fact existed as to the establishment of a prima facie case under the Carmack Amendment, a federal district court ruled. The shipper had hired the carrier through a broker to transport frozen meat products from Oklahoma to Florida. The goods were rejected by the shipper's customer because they had exceeded the maximum allowed temperature and were no longer frozen. The shipper filed suit against the carrier after its damage claim was rejected and filed a subsequent motion for summary judgment. The carrier challenged the summary judgment motion, denying that the goods were damaged and alleging that the shipper had not established a prima facie case under the Carmack Amendment.

A prima facie case is made by showing delivery of the property to the carrier in good condition, arrival at destination in damaged condition, and the amount of damages. In support of its claim that the goods were delivered in good condition and arrived damaged, the shipper offered the affidavit of its risk manager. However, during a deposition, the risk manager testified that he was not present when the product was loaded or unloaded and therefore lacked personal knowledge of the condition of the property. As a result of this admission, it was found that the shipper had failed to present competent evidence to satisfy the prima facie requirements. Thus, its motion for summary judgment was denied because questions of material fact remained. Advance Food Co. v. Large Car Logistics, LLC (WDOkla) ¶84,522.

Employer Need Only Exercise Ordinary Care Under FELA
A federal court of appeals affirmed a district court's ruling, finding that a railroad employer was not liable for injuries sustained by an employee in the course of his employment under the Federal Employer's Liability Act (FELA). The employee had been injured during the course of his employment when a defective door failed to properly close. As a result of his injury, the employee filed an action against his employer under FELA, alleging that the employer had failed to provide a reasonably safe workplace. A federal district court ruled in favor of the employer, finding that it had not been negligent in its pre-trip inspection procedures and granting its motion for summary judgment. The employee appealed the decision.

Upon review, the appellate court held that, in order to survive the summary judgment motion, the employee had to have proved that: (1) he was injured within the scope of his employment; (2) his employment was in furtherance of the employer's interstate transportation business; (3) the employer was negligent; and (4) the employer's negligence contributed to his injury. Furthermore, in order to satisfy the third requirement and show that the employer had been negligent under FELA, the employee had to prove the traditional elements of negligence-duty, breach, foreseeability, and causation. In support of its claim, the employee contended that the employer had a duty to provide a reasonably safe workplace. He further alleged that the duty was breached by the use of an inadequate pre-trip inspection process, which failed to uncover the defective door that resulted in his injury.

Based on the evidence presented, the appellate court ruled that the employee had satisfied the first two requirements of FELA, but had failed to establish that the employer had breached its duty to provide a reasonably safe workplace. It concluded that the pre-trip inspection was reasonable and found that the employer had exercised ordinary care in its performance of the inspection. Thus, the district court's decision was affirmed. Van Gorder v. Grand Trunk W. R.R., Inc. (6thCir) ¶84,523.

Exemption from Prior Approval Requirements Granted
A rail carrier's petition for exemption from the prior approval requirements needed to acquire and operate a rail line owned by another rail carrier was approved by the Surface Transportation Board, subject to labor protective conditions. The Kansas City Southern Railway Company (KCSR) sought to acquire and operate a 2.23-mile rail line owned by Columbus and Greenville Railway Company (CAGY), subject to CAGY's reservation of nonexclusive limited local trackage rights. In furtherance of this goal, KCSR filed a petition for exemption from the prior approval requirements. Normally, the acquisition of control of a rail line by a rail carrier requires prior approval from the Surface Transportation Board (STB). Under federal transportation law, the STB can grant an exemption from this requirement where it is found that the regulation of the transaction is not necessary to carry out federal rail transportation policy (RTP) and either the transaction or service is of limited scope, or regulation is not needed to protect shippers from market power abuses.

In support of its exemption request, the petitioner claimed that the transaction would not affect existing rail service because the current owner would retain limited local trackage rights, and would benefit customers through enhanced competition by providing existing shippers with access to two carriers, rather than one. Based on the evidence presented, the STB determined that exemption from the prior approval requirements was warranted. Thus, the exemption request was granted, subject to labor protective conditions. The Kansas City Southern Railway Co.-Acquisition and Operation Exemption-Columbus and Greenville Railway Co. (STB) ¶37,259.

Safety Violation and Penalty Affirmed
A final order affirming a charge that a commercial motor carrier had operated in interstate commerce without the required registration, or beyond the scope of its registration, and assessing a civil penalty, was granted by the Federal Motor Carrier Safety Administration. The carrier was cited for operating a motor vehicle providing transportation services requiring registration under federal law without the proper registration, or beyond the scope of the registration, and was assessed a civil penalty in the amount of $4,000. The carrier filed a timely reply to the Notice of Claim, in which he admitted the violation, but challenged the amount of the civil penalty and the length of time in which he was required to pay it.

As a result of the carrier's admission, the Field Administrator was not required to present evidence showing that the violation had occurred. Thus, the motion for final order related to the violation was granted. As for the assessed penalty, the affidavit of the transportation specialist who prepared the Uniform Penalty Assessment Worksheet, along with a copy of the Worksheet, was sufficient to establish that the proposed fine had taken into consideration all of the statutory requirements. Thus, the carrier was ordered to pay the assessed penalty. Jeffrey Atkins dba Atkins Transportation (FMCSA) ¶51,219.

Carrier Entitled To Hearing on OOS Order
A motor carrier's request for an administrative review of an out-of-service order was granted by the Federal Motor Carrier Safety Administration. The carrier was issued an out-of-service order (OOSO) declaring its motor coach operations an imminent hazard to public safety following a compliance review (CR). In support of the OOSO, the agency asserted that the carrier had permitted and/or required its interstate commercial motor vehicle drivers to falsify records of duty status reports and/or to exceed maximum hours of service regulations in clear disregard for the safety of the driver and the public.

The carrier challenged the order, arguing that the OOSO was overbroad, contained no supporting documentation, and was inconsistent with previous determinations of a satisfactory safety rating. Furthermore, the carrier questioned why the OOSO was issued almost one month after the CR was completed if the hazard was imminent. Based on the evidence presented, and in accordance with federal law, it was determined that the carrier was entitled to administrative review of the OOSO within 10 days. As a result, the carrier's request for a hearing was granted and an administrative law judge was appointed. Tornado Bus Co., Inc. (FMCSA) ¶51,220.

Objection to Hearing Due Within 60-days
The Federal Motor Carrier Safety Administration (FMCSA) granted a motor carrier's request for a hearing after the Field Administrator (FA) failed to file a reply to the request. When the carrier filed its petition for a hearing, the FA filed a motion, which was granted, for an extension of time in which to object or consent to the request. More than a year later, the FA still had not filed its reply. Under the rules of practice, the FA had 60 days from the date of service of the reply to consent or object to a hearing. Under federal regulations, a failure to serve an objection within the required time period may result in the matter being called for a hearing. Because the FA had failed to object to the carrier's request, the matter was called for a hearing and an administrative law judge was appointed. Infinity Transit Systems, Inc. (FMCSA) ¶51,221.

Denial of HMSP Application Affirmed
The Federal Motor Carrier Safety Administration (FMCSA) disallowed a motor carrier's petition for administrative review of a denial of its application for a Hazardous Materials Safety Permit (HMSP). Under federal regulations, motor carriers transporting certain hazardous materials are required to obtain a safety permit from the FMCSA. In order to receive a permit, the carrier must have adopted a security plan that complies with all regulatory requirements and must not have a driver, vehicle, hazardous materials, or total out-of-service (OOS) rate in the top 30 percent of the national average, as indicated in the FMCSA's Motor Carrier Management Information System. The petitioner's application was denied because its vehicle OOS rate was in the top 30 percent of the national average and it had not maintained the minimum financial responsibility required under federal regulations.

In support of its petition for review, the carrier asserted that it had the required insurance, but admitted that its vehicle OOS rate was in the top 30 percent of the national average. Despite the carrier's compliance with the insurance regulations, it had not satisfied the requirements to obtain a HMSP. The regulations strictly prohibit the issuance of a permit to a carrier that has an OOS rate in the top 30 percent of the national average. As such, the denial of the carrier's safety permit application was affirmed. C.W. Wright Construction Co., Inc. (FMCSA) ¶51,222.

New Accident Reporting Threshold Calculation Adopted
The Federal Railroad Administration (FRA) has set the monetary threshold for reporting certain railroad accidents/incidents involving railroad property damage for calendar year 2008 at $8,500. This threshold reflects an increase of $300 over the 2007 threshold amount of $8,200. The revised threshold was calculated based on a formula using STB wage data. The threshold is reviewed annually to ensure that it keeps pace with any increases or decreases in equipment and labor costs so that each year's reportable accidents involve the same minimum amount of railroad property damage. The final rule was effective January 1, 2008. 72 FR 73659, December 28, 2007.

PHMSA Seeks Input on Proposed Recommended Practices
The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued a notice and is soliciting comments on proposed recommended practices for the loading and unloading of bulk packagings used to transport hazardous materials. The proposed practices were developed using input from interested parties, recommendations from the National Transportation Safety Board and the Chemical and Safety Hazard Investigation Board, and analysis of bulk loading and unloading incidents.

The recommended practices address safety analysis, operational procedures, emergency management, maintenance and testing of equipment, and training. If adopted, the recommended practices will supplement the current Hazardous Material Regulations (HMRs). For example, the recommendations applicable to training would not replace the current requirements for general awareness, function specific, safety, and security training established in the regulations, but would be considered additions to current training requirements and programs.

In an effort to develop strategies for enhancing the safety of bulk loading and unloading operations, PHMSA invites interested persons to submit comments addressing the proposed recommended practices, the existing PHMSA regulations, the National Consensus Standards, and/or any additional accident/incident information, particularly information related to non-transportation-related incidents. 73 FR 917, January 4, 2008.

NTSB Urges Mandatory Use of Electronic On-Board Recorders
Following an investigation into an accident involving two tractor-trailers and a passenger vehicle on Interstate 94 near Chelsea, Michigan, the National Transportation Safety Board (NTSB) issued safety recommendations to the Federal Motor Carrier Safety Administration (FMCSA). The incident occurred when the driver of the first tractor-trailer (accident driver) failed to slow down when traffic backed up, causing his vehicle to collide with the rear of the second tractor-trailer, propelling it into the passenger vehicle in front of it. The incident resulted in the death of the accident driver and minor injuries to the second truck driver and a passenger in the car.

NTSB determined that the probable cause of the accident was the accident driver's failure to stop upon encountering traffic congestion likely due to a reduced state of alertness associated with failure to obtain adequate rest. Contributing to the accident was the motor carrier's insufficient regard for, and oversight of, driver compliance with Federal commercial motor vehicle hours-of-service regulations; FMCSA's failure to require motor carriers to use tamperproof driver's logs; and the Michigan Department of Transportation's failure to conduct a merge traffic capacity analysis as part of a bridge rehabilitation project.

Based on its findings, NTSB recommended that the FMCSA:

Require all interstate commercial vehicle carriers to use electronic on-board recorders that collect and maintain data concerning driver hours of service in a valid, accurate, and secure manner under all circumstances, including accident conditions, to enable the carriers and their regulators to monitor and assess hours-of-service compliance.
Prevent log tampering and submission of false paper logs by requiring motor carriers to create and maintain audit control systems that include, at least, the retention of all original and corrected paper logs and the use of bound and sequentially numbered logs, until industrywide use of electronic on-board recorders is mandated.

Additional information is available on NTSB's website, www.ntsb.gov. NTSB Safety Recommendations H-07-41 and 42, December 17, 2007.