July 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

Drug Testing Validity Requirements Toughened
Laboratories that handle drug testing for transportation workers will be required to analyze every test for tampering, under the terms of a new final rule issued by the Department of Transportation (DOT). According to Transportation Secretary Mary E. Peters, the rule will make it more difficult for workers to cheat on their required drug tests. ``We want to make sure there are no doubts about the ability of anyone working in transportation do their job as safely as possible,'' Peters said. ``There is no margin for error when it comes to the safety of the traveling public.''

The new rule will cover the nation's approximately 12.1 million transportation employers, safety-sensitive transportation employees, collectors, labs, and medical review officers, Peters said, adding that, under the terms of the rule, labs no longer would have the option of testing urine samples for signs of cheating, but instead would be required to test every specimen for possible adulterants and urine substitutes. In addition to the changes facing the labs that process the drug tests, collectors will be required to institute new procedures designed to prevent tampering. For example, observation procedures will include checking employees for items designed specifically to cheat the test. The rule also requires collectors to observe all return-to-duty and follow-up tests for transportation workers who are returning to their jobs following a positive drug test result. DOT will treat any invalid test results as a refusal to be tested by any employee who admits to tampering with or adulterating their test, Peters noted.

The Department regulates drug and alcohol testing of safety-sensitive transportation employees in the aviation, motor carrier, railroad, transit, pipeline, and maritime industries. DOT publishes rules on who must conduct drug and alcohol tests, when to conduct those tests, and what procedures to use when testing. The new rule takes effect on August 25, 2008. Federal Carriers Reports, Report Letter No. 1537, July 3, 2008.

Aviation Excise Tax Extension Signed into Law
The Federal Aviation Administration Extension Act of 2008 (Pub. L. 110-253, 122 Stat. 2417), which lengthens to the end of September a prior extension of federal aviation excise taxes and fees, and similarly extends funding of the Airport Improvement Program, was signed into law by President Bush on June 30. The Senate approved the new measure on June 26, two days after its passage by the House. The last extension, the Airport and Airway Extension Act of 2008 (Pub. L. 110-190, 122 Stat. 643), was enacted on February 28 and expired on June 30. Rising jet fuel prices have driven airlines to raise ticket prices, leading to a higher amount of aviation taxes collected to fund the Airport and Airway Trust Fund. However, the new law keeps the same tax rates in effect, with the extra revenue directed toward addressing problems with airport congestion and airport runway improvements. Aviation Law Reports, Report Letter No. 1383, July 17, 2008.

TSA Releases Security Recommendations for Motor Carriers
The Transportation Security Administration (TSA) has released a set of security recommendations for the transportation of certain quantities of hazardous materials across the nation's highways. The recommendations, which are voluntary, are intended to help ensure the secure transportation of potentially dangerous materials. The voluntary guidelines were developed over a three-year period by TSA's Highway and Motor Carrier Division, in close corporation with government and private sector partners. The resulting recommendations are structured to allow motor carriers and shippers to adopt measures best suited to their particular circumstances or operation.

TSA developed security action items for general security; personnel security; unauthorized access; and en-route security. General security measures include conducting security threat assessments, security planning, protecting critical information and enhancing awareness of industry-security practices. Personnel security and unauthorized access refer to practices affecting the security of a motor carrier's employees, contracted employees and its property. En-route security refers to the actual movement and handling of motor vehicles transporting highway security-sensitive materials.

TSA recognizes that no one solution fits all motor carriers and circumstances. Therefore, the security action items allow for implementation flexibility based on the assessed vulnerability of a particular process or operation. The goal of the affected motor carrier and shipper should be to implement these security action items to the fullest extent practical. TSA plans to build on these recommendations by analyzing the effectiveness of the security action items and feedback the Highway and Motor Carrier Division receives from industry. TSA will consider the security action items for development as regulations. Federal Carriers Reports, Report Letter No. 1538, July 25, 2008.

Aviation News

New Rule Addresses Passenger Jet Fuel Tank Flammability
Within two years, all new aircraft must include technology designed to significantly reduce the risk of center fuel tank fires, under the terms of a final rule issued by the Department of Transportation on July 21. The rule also requires that passenger aircraft built after 1991 be retrofitted with technology designed to keep center fuel tanks from catching fire. Announcing the rule on the day before the anniversary of the crash of TWA Flight 800, Transportation Secretary Mary E. Peters said, “[w]e can't change the past, but we can make the future safer for thousands of air travelers, and this rule does just that.” The rule requires aircraft to have technology to neutralize or eliminate flammable gasses from fuel tanks under the center wing of commercial passenger planes. In the wake of the TWA crash, researchers with the Federal Aviation Administration developed a breakthrough system that replaces oxygen in the fuel tank with inert gas, which effectively prevents the potential ignition of flammable vapors. In addition, Boeing developed a similar system. Aviation Law Reports, Report Letter No. 1384, July 30, 2008.

Delta Not Liable for Negligence in Comair 5191 Crash
A federal court in Kentucky has ruled that Delta Air Lines is not liable for negligence in an action brought on behalf of passengers who were killed in the 2006 crash of Comair Flight 5191. Comair is a wholly-owned subsidiary of Delta. In separate rulings, the court also denied Comair's motion to exclude the flight's cockpit voice recorder (CVR) tape from evidence and dismissed warranty claims against Comair. The court found that Delta was neither liable by reason of its own negligence nor vicariously liable for Comair's alleged negligence stemming from the crash. Although Delta had scheduled, routed, and priced the flight, and Delta's ticket and gate agents had serviced the flight, there was no allegation that the conduct of any Delta employee, or the manner in which the flight had been scheduled, routed, or priced, had caused or contributed to the crash, the court said. In addition, Delta could not be vicariously liable for the allegedly tortious conduct of Comair and/or its employees because Delta had neither the ability nor right to control any of the operational aspects of the flight, the court noted. The court also denied Comair's motion to exclude the flight's CVR audio tape. In re Air Crash at Lexington, Ky., Aug. 27, 2006 (EDKy) 32 Avi. 16,499 and In re Air Crash at Lexington, Ky., Aug. 27, 2006 (EDKy) 32 Avi. 16,527.

DOT Airport Fee Policy Revision Adds Congestion Pricing
The Federal Aviation Administration has amended its 1996 Policy Statement on Airport Rates and Charges, adopting a clarification and two modifications that affect the way in which airports charge landing fees. The new and amended provisions: (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. According to DOT, using price as a tool to address airport congestion should encourage airports to move away from the practice of charging aircraft landing fees based on aircraft weight. Instead, airports will be able to vary their charges based on the time of day and the volume of traffic. In addition, the changes allow airport operators to include the cost of capacity expansion projects in their new landing fees. Previously, airports could include those costs only after the projects had been completed. Full text of the DOT notice containing the amendments appears at. Aviation Law Reporter ¶23,975.

U.S.-European Aviation Safety Pact Expands Collaboration
The Federal Aviation Administration and the European Commission signed an agreement June 30 aimed at enhancing safety by deepening regulatory collaboration. Acting FAA Administrator Robert A. Sturgell and Antonio Tajani, European Commissioner for Transport, signed the agreement, which will provide for reciprocal acceptance of safety findings in aircraft design and manufacturing, continued airworthiness, and repair station oversight. The agreement broadens the scope of potential U.S. acceptance of European aeronautical products from all EU member states, beyond the current 14 states that have signed individual agreements with the U.S. It also provides for regulatory cooperation, particularly in rulemaking and safety data exchange, and establishes a bilateral oversight board to manage implementation of the agreement and to consult on urgent matters. Aviation Law Reports, Report Letter No. 1383, July 17, 2008.

U.S., Brazil Agree to Expanded Air Services
The United States and Brazil have concluded an air transport agreement that will provide for a nearly 50 percent increase in passenger flights between the two countries, while eliminating restrictions on the number of airlines that can provide U.S.-Brazil air service. Under the pact, any number of U.S. or Brazilian airlines now may fly between the two countries, removing the previous limit of four carriers from each side. The agreement also permits—in four stages between July 2008 and October 2010—an increase in the number of weekly U.S.-Brazil passenger flights from 105 to 154 for each country's carriers. In addition, the agreement allows air cargo services between the two nations to expand immediately from 24 to 35 weekly flights, and to 42 weekly flights in the year 2010. Cargo charter flights may increase from 750 per year to 1,000 immediately, and to 1,250 in 2010. U.S. cargo companies also will be allowed to transfer freight from aircraft to trucks for door-to-door delivery in Brazil. Aviation Law Reports, Report Letter No. 1383, July 17, 2008.

Code-Share Partner May Be a “Contracting Carrier”
In an action brought under the Montreal Convention by a passenger who suffered personal injuries as a result of a fall on an aircraft boarding stair, a federal court in Florida denied a motion for summary judgment by carrier's the code-share partner. The partner airline argued that its motion should be granted because only a flight's actual carrier can be liable for a passenger's injuries. However, the court found that the plain language of the Convention provides that a person making a contract of carriage with a passenger is a “contracting carrier,” and that both contracting and actual carriers may be liable to a passenger. Because at least some of the evidence in the case suggested that the partner airline was, at minimum, a “contracting carrier,” the court ruled that summary judgment was not appropriate. McCarthy v. American Airlines, Inc. (SDFla) 32 Avi. 16,472.

Surface Transportation News

Highway-Rail Grade Safety Next Focus of DOT Action Plan
Several safety initiatives designed to reduce collisions between motor vehicles and trains will be completed before the end of 2008 as part of the ongoing U.S. Department of Transportation (DOT) Highway-Rail Crossing Safety and Trespass Prevention Action Plan, according to DOT Secretary Mary E. Peters. The Action Plan, which was originally released in June 2004, involves the work of several DOT agencies and has completed numerous projects and activities during the past four years including regulations, research, technology development, technical assistance, and educational efforts.

``Our efforts to improve safety where the rails meet the road are working,'' Peters said, noting that from 2004 to 2007 grade crossing accidents and fatalities declined 10.8 percent and 9.1 percent respectively. However, there were still 2,746 collisions and 338 deaths at America's nearly 227,000 grade crossings last year. ``More needs to be done to make crossing safer,'' she added.

In June, the Federal Railroad Administration (FRA) released a comprehensive report detailing the challenges associated with the nearly 87,000 private roadways that cross over railroad tracks and which are not subject to the same federal safety standards as public crossings. The report describes and proposed possible courses of action to improve safety at private crossings through the development of a national policy or issuance of federal regulations.

In the coming months, FRA plans to issue a multi-year research and development plan that includes several projects specifically addressing grade crossing safety issues. It will support research into innovative and low-cost technologies to modernize existing warning devices, improve detection of oncoming trains by motor vehicle drivers, and apply Intelligent Transportation System solutions, among other research efforts. Finally, by the end of the year, FRA will issue a revised guidebook to assist states and communities in closing or consolidating unneeded or little used public grade crossings along a rail corridor while improving crossing safety at those that remain open.

``Grade crossing safety is a shared responsibility and to achieve further improvements everyone needs to do their part, '' said FRA Administrator Joseph Boardman, stressing the need for motorist, railroads, and federal, state, and local governments and others to act individually and work together. Federal Carriers Reports, Report Letter No. 1538, July 25, 2008.

STB Revises User Fee Schedule
The Surface Transportation Board (STB) issued a final rule revising its user fees to reflect changes in overhead factors. Under federal regulations, the STB is required to annually review and update its user fee schedules, taking into consideration salary increases and overhead costs affecting the agency. As a result of this review, the agency is updating its fee schedule to reflect the government's 2008 salary increases, changes in fringe benefit costs, and other expenses. The revised fee schedule took effect June 18, 2008. Federal Carriers Reports, Report Letter No. 1537, July 3, 2008.

Rail Relocation and Improvement Grant Program Rules Adopted
The Federal Railroad Administration (FRA) has adopted a final rule establishing guidelines for the awarding of capital grants under the rail line relocation and improvement program authorized in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) legislation. In order to be eligible for a grant under the new guidelines, a project must mitigate the adverse effects of rail traffic on safety, motor vehicle traffic flow, community quality of life, including noise mitigation, or economic development, or involve a lateral or vertical relocation of any portion of a rail line to reduce the number of grade crossings and/or alleviate noise, visual issues, or other externality that negatively impact a community. Under the new requirements, half of all grant funds will be reserved for projects costing less than $20 million each. A state or other eligible entity will be required to pay at least 10 percent of the shared costs of the project. The new guidelines are effective August 11, 2008. Federal Carriers Reports, Report Letter No. 1538, July 25, 2008.

DOT Okays Reporting of Drug/Alcohol Rule Violations to State
The Department of Transportation (DOT) is accepting comments on an interim final rule authorizing employers and third-party administrators (TPAs) to disclose violations of federal drug and alcohol rules by commercial motor vehicle (CMV) drivers and owner-operators to state commercial driver licensing (CDL) authorities where state law requires such reporting. Under the interim rule, employers and TPAs are permitted to comply with state law reporting requirements without violating confidentiality mandates. The interim final rule took effect June 13, 2008. Federal Carriers Reports, Report Letter No. 1537, July 3, 2008.

FRA Responds to Petitions for Reconsideration with Final Rule
The Federal Railroad Administration (FRA) has issued a final rule amending certain provisions of a previously-released rulemaking addressing the human factors contributing to train accidents and railroad employee injuries. The original rulemaking, which was published in February, 2008, mandated certain changes to a railroad's operational tests and inspection program, and established new requirements for the handling of equipment, switches, and fixed derails. Following publication of the final rule, four petitions for reconsideration were filed with the FRA seeking, among other things, more time to comply with the new requirements. In response, the agency issued a rulemaking clarifying certain requirements currently contained in the regulations, adding a new definition for ``departure track,'' and delaying the implementation deadline for compliance with the new requirements by about six months. The final rule took effect June 16, 2008. Federal Carriers Reports, Report Letter No. 1537, July 3, 2008.

State Regulation of Train Speed Preempted by FRSA
A federal court of appeals reversed a lower court's decision, finding a state law limiting train speeds through a municipality within the state to be exempt from preemption under the Federal Railroad Safety Act's (FRSA's) saving clause. The state of Minnesota had enacted a special law limiting the speed trains could travel through the City of Orr. The railroad challenged the state law, arguing that it was preempted by the FRSA. A federal district court ruled in favor of the state, holding that, while a state law regulating train speeds normally would have been preempted by the FRSA, the special law, in this case, had met the three requirements of the FRSA's saving clause.

Under the saving clause, a state law that otherwise would be preempted will be exempt from preemption if the state can show that the law: (1) is necessary to eliminate or reduce an essentially local safety or security hazard; (2) is not incompatible with a law, regulation, or order of the United States Government; and (3) does not unreasonably burden interstate commerce. Based on the evidence, the district court held that five conditions in Orr-swampy soil; extreme temperatures; lake; buildings; and propane tanks adjacent to track-had combined to create an essentially local safety hazard. Furthermore, it found that the special law was not incompatible with federal law and did not unreasonably burden interstate commerce.

On appeal, the railroad argued that the factors used to determine the existence of an ``essentially local safety hazard,'' were not unique to the city and were actually conditions that could and did exist in other areas. The appellate court agreed, finding that the state had not satisfied the first requirement of the savings clause because none of the factors cited as local safety hazards were unique to the city. The court held that, in order to satisfy the first requirement of the saving clause, an essentially local safety hazard must be a local situation that is not statewide in character and not capable of being properly addressed within the confines of a national uniform standard. Because the conditions identified by the state were not unique to the City of Orr, they did not constitute an essentially local safety hazard. Accordingly, the state law regulating train speeds in Orr was unenforceable because it was preempted by the FRSA. Duluth, Winnipeg, and Pac. Ry. Co. v. City of Orr (8thCir) Federal Carriers Reporter ¶84,549.

FRSA Preempts State Law Aiding Injured Rail Employees
A federal court of appeals reversed a decision finding a provision of a state law intended to ensure that railroad employees injured in the course of their employment received prompt medical treatment without interference or harassment from their employer was not preempted by the Federal Railroad Safety Act (FRSA). The state law was adopted to address concerns that railroad employees injured on the job were not afforded prompt medical treatment due to employer interference. Under the law, an employer or person convicted of a violation of the state statute would be guilty of a misdemeanor and could face a fine of up to $1,000. A group of railroads operating in the state filed an action against the state official responsible for the enforcement of the law. The railroads sought an injunction barring enforcement of the law, and a declaration that the law was preempted by the FRSA.

The challenged state law contained two provisions which prohibited employers from: (1) intentionally denying, delaying, or interfering with medical treatment or first aid treatment to a railroad employee injured on the job and (2) disciplining, harassing, or intimidating employees injured in the course of the employment in an effort to discourage them from seeking medical treatment. The railroads claimed that Federal Railroad Administration (FRA) regulations mandating that railroad employers comply with internal control plans (ICPs), asserting the railroad's commitment to the accurate reporting of job-related injuries, and prohibiting the harassment and intimidation of injured employees preempted the state law. A federal district court disagreed with the railroad's as to the first provision, determining that the FRA regulations had not addressed the subject matter covered in that provision because the state statute established an ``affirmative duty'' on the part of the railroad to provide prompt medical treatment to injured employees, which the federal regulations did not do. Consequently, the lower court ruled that the first state law provision was enforceable, while the second provision which prohibited rail employers from disciplining, harassing, or intimidating an employee to discourage them from receiving medical treatment was preempted. The railroad appealed the district court's decision.

Upon review, the appellate court disagreed with the lower court's conclusion that the state statute established an ``affirmative duty'' requiring railroads to provide prompt medical treatment to employees injured on the job, finding that it was unsupported by the language of the state statute. The court held that the ICP regulations, issued by the FRA pursuant to the FRSA, addressed the same safety concerns as the state law, and created an administrative regulatory framework that both prohibited all employer interference with employee medical treatment and established an enforcement mechanism to punish such interference. Consequently, it determined that the state statute had been preempted in its entirety by federal statute. Thus, the district court's decision as to the first provision was reversed and remanded. BNSF Ry. Co. v. Swanson (8thCir) Federal Carriers Reporter ¶84,550.

Railroad's Storage and Demurrage Charges Reasonable
A decision by the Surface Transportation Board (STB), finding a railroad's imposition of storage and demurrage charges on empty private freight cars held on railroad property beyond an established ``free time'' period to be reasonable, was not arbitrary and capricious. A group of private freight car owners challenged the fees, arguing that the imposition of such charges was an unreasonable practice. The railroad contended that the fees furthered rail transportation policy by eliminating cross-subsidies and encouraging freight car owners to better utilize their equipment. The STB agreed with the railroad, finding that the fees were proper and likely to improve efficiencies and compensate the railroad for the use of its tracks.

The freight car owners sought review of the decision, alleging that the STB had arbitrarily concluded that the new fee provisions were reasonable. Upon review, the appellate court ruled that the STB's interpretation of the applicable federal statutory requirements related to the imposition and collection of such fees was not arbitrary and capricious, but was well-reasoned and supported by law. As a result, the decision was affirmed and the petition for review denied. N. Am. Freight Car Assoc. v. STB (DCCir) Federal Carriers Reporter ¶84,551.