June 2011

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 Pamela Maloney, Managing Editor, at pamela.maloney@wolterskluwer.com.

Hot Topics

Surprise Safety Inspections Conducted to Boost Bus Safety

The Federal Motor Carrier Safety Administration (FMCSA) and its state and local law enforcement partners conducted more than 3,000 surprise passenger carrier safety inspections over a two-week period in May that resulted in 442 unsafe buses or drivers being removed from the nation’s roadways. The strike force issued out-of-service citations to 127 drivers and 315 vehicles during the unannounced inspections that were held from May 1 through May 15. In addition to the strike-force inspections, FMCSA and state safety investigators initiated 38 full safety compliance reviews on commercial passenger bus companies. These reviews are used to determine a carrier’s safety rating.

Over the past five years, FMCSA has doubled the number of unannounced bus safety inspections and comprehensive safety reviews of the nation’s estimated 4,000 passenger bus companies. Roadside safety inspection of motorcoaches jumped from 12,991 in 2005 to 25,703 in 2010, while compliance reviews rose from 457 in 2005 to 1,042 in 2010. These safety inspections and compliance reviews help to keep unsafe carriers and drivers off the road.

Other steps taken to improve passenger carrier safety include a new rule banning commercial drivers from texting behind the wheel and a proposed rule to prohibit hand-held mobile phone use. Further, in a wide-ranging Motorcoach Safety Action plan, the Department of Transportation (DOT) proposed rules that will require buses to have seat belts and electronic on-board recorders to replace easily falsified paper records of driver hours. Finally, DOT launched a new safety measurement system titled Compliance, Safety, Accountability (CSA) that provides detailed safety data to identify bus companies for safety interventions.

Additionally, the FMCSA has unveiled a "Think Safety: Every Trip, Every Time" pre-trip safety checklist that helps consumers review a bus company’s safety record, safety rating, and USDOT operating authority before buying a ticket or hiring a bus company for group travel. The checklist is available online at FMCSA’s Passenger Bus Safety web site: http://www.fmcsa.dot.gov/safety-security/pcs/index.aspx. CCH Federal Carriers Reports, Letter No. 1607, June 20, 2011.

Challenge to TSA’s Enhanced Screening Belongs in Appeals Court

Federal trial courts in Florida and Massachusetts recently have dismissed for lack of subject-matter jurisdiction suits by individuals seeking to challenge the Transportation Security Administration’s airline passenger screening procedures employing Advanced Imaging Technology (AIT) and alternative enhanced pat-down procedures as violative of the U.S. Constitution’s Fourth Amendment. The Massachusetts challengers also alleged a violation of their rights to privacy and interstate travel.

In both actions, the trial courts ruled that the TSA “Screening Checkpoint” Standard Operating Procedure (SOP) was tantamount to a final agency order and, as such, jurisdiction to review the SOP was vested exclusively in the U.S. Courts of Appeal. In the Florida case—the earlier of the two decisions—the court said that, although the individual filing the action had argued that the SOP did not constitute an “order” under the judicial review provision, any meaningful inquiry as to its finality could not be conducted without a copy of the unpublished document. That argument was better addressed by the court of appeals, however, the court cautioned.

The court in the second case expounded further that, while “order” is not defined within the judicial review provision, prior case law has read the term broadly. The “Screening Checkpoint” SOP sets forth the mandatory procedures that TSA officers must apply in screening passengers at all airport checkpoints and with which passengers must comply prior to boarding a commercial aircraft, the court explained, asserting that the screening procedure is a final policy that imposes binding requirements or conditions upon airline passengers and, as such, is an “order” of the TSA even without the formal notice and comment procedures typically required of agency actions.

Moreover, the court in the second case ruled that subject-matter jurisdiction was lacking not only to consider the challenge to the SOP, but also with respect to those claims that did not challenge the SOP directly. The constitutional claims were “inescapably intertwined” with the SOP, given the claimants’ allegation that they had been injured because of TSA’s screening procedures involving the use of AIT scanners and alternative enhanced pat-down procedures, the Massachusetts federal court found, commenting that such screening procedures were implemented as a direct result of the SOP at issue. And, as a corollary matter, direct review of claims by the federal appeals court would not deny the challengers’ constitutional right to procedural due process, the court determined, noting that federal appeals courts have the authority to grant the challengers’ sought-after relief. As such, TSA’s motion to dismiss the action for lack of subject matter jurisdiction was granted in both instances. Corbett v. U.S. (SDFla) 34 Avi. 16,090 and Redfern v. Napolitano (DMass) 34 Avi. 16,107.

Aviation News

Fines Enabled for Pointing Lasers into Aircraft Cockpits

Secretary of Transportation Ray LaHood and Federal Aviation Administrator Randy Babbitt announced that civil penalties now can be imposed against people who point a laser into the cockpit of an aircraft. A legal interpretation released by the Federal Aviation Administration’s Chief Counsel’s Office on June 1 determined that directing a laser beam into an aircraft cockpit could interfere with a flight crew performing its duties while operating an aircraft; a violation of Federal Aviation Regulations.

In the past, the agency has taken enforcement action under this regulation against passengers physically on-board an aircraft who interfere with crewmembers, but the new interpretation reflects the fact that a person who points laser at an aircraft from the ground could seriously impair a pilot’s vision and interfere with the flight crew’s ability to safely handle its responsibilities. The maximum civil penalty that FAA can impose upon an individual for breaching the prohibition on interfering with a flight crew is $11,000 per violation.

So far this year, pilots have reported more than 1,100 incidents nationwide of lasers being pointed at aircraft. Laser event reports have steadily increased since FAA created a formal reporting system in 2005 to collect information from pilots. Reported laser-pointing incidents rose from nearly 300 in 2005 to 1,527 in 2009 and 2,836 in 2010.

According to FAA, the increase in reports is likely due to a number of factors, including greater awareness and outreach to pilots to encourage reporting; the availability of inexpensive laser devices on the Internet; stronger power levels that enable lasers to hit aircraft at higher altitudes; and the introduction of green lasers, which are more easily seen than red lasers. Some cities and states have laws making it illegal to shine lasers at aircraft and, in many cases, people can face federal charges, FAA said, indicating that it also will work with federal, state, and local law enforcement agencies to assist with criminal prosecutions arising under those laws. Moreover, legislation aimed at criminalizing the purposeful aiming of a laser device at an aircraft currently is pending in Congress. Full text of the legal interpretation appears at ¶23,995. CCH Aviation Law Reports, Letter No. 1453, June 9, 2011.

ICAO Issues New Standards for Crew Fatigue Management

International requirements for airline Fatigue Risk Management Systems (FRMS) were adopted by the International Civil Aviation Organization at its June 13 Council meeting. Offered by ICAO as an alternative to prescriptive flight and duty limitations to address crew fatigue (which often has been cited as a factor in aircraft accidents), the regulatory scheme becomes applicable on December 15, 2011.

“Current flight and duty time regulations are a ‘one size fits all’ solution,” ICAO’s Air Navigation Bureau Director Nancy Graham said, adding that FRMS recognize the growing complexity of crew fatigue and offer multi-layered, comprehensive approaches to various types of fatigue-related hazards under different operational contexts. “Operators using FRMS have reported greater operational flexibility than current flight and duty time regulations, while maintaining, and even improving on, current safety levels. The new standards will facilitate the development and globally-harmonized implementation of the systems, while making it easier for regulators to assess and monitor their use,” Graham explained.

The new standards are supported by extensive guidance material based on the input of an FRMS Task Force comprised of regulators, operators, scientists, and industry representatives. This material includes an FRMS implementation guide for operators, which was jointly produced by ICAO, the International Air Transport Association (IATA), and the International Federation of Air Line Pilots’ Associations (IFALPA). The standards allow member-nations to choose whether to establish FRMS regulations, but the provision of prescriptive flight and duty time limitations regulations remain mandatory for all.

Both the new requirements and related guidance material will be the focus of an ICAO symposium, followed by a meeting of the International FRMS Forum, to be held from August 30—September 2, 2011, at ICAO’s headquarters in Montreal, Canada. CCH Aviation Law Reports, Letter No. 1454, June 23, 2011.

Baggage, Reservation-Change Fees Top $5B in 2010

U.S. airlines collected almost $5.7 billion from baggage fees and reservation-change fees in 2010, according to airline financial data recently released by the U.S. Department of Transportation’s Bureau of Transportation Statistics. Last year, the nation’s airlines received $3.4 billion from baggage fees and $2.3 billion from reservation-change fees—the only two fees paid by passengers that can be identified separately by BTS. All other fees paid by passengers are included in larger categories with other types of revenue, the Bureau said, adding that additional fourth-quarter 2010 data are not yet available. CCH Aviation Law Reports, Letter No. 1454, June 23, 2011.

Price-Fixing Suit Against Transpacific Air Carriers Dismissed

Although a federal district court in San Francisco determined that a conspiracy to fix the prices of transpacific air passenger travel was plausibly alleged, a motion to dismiss the Sherman Act claims based on the Foreign Trade Antitrust Improvements Act (FTAIA) was granted. The action was brought on behalf of a class of individuals who had purchased air transportation services from one or more of the 26 defending airlines that included at least one flight segment between the United States and Asia/Oceania. The plaintiffs alleged that, beginning around January 2000, the airlines had agreed and begun to impose air fare increases—including fuel surcharge increases—that were in substantial lockstep both in their timing and amount.

Seeking to recover overcharges associated with flights originating in Asia, the individuals specifically alleged that the airlines had reached various agreements to coordinate pricing and detailed certain communications between the airlines that supported an inference of conspiracy. Among other things, they alleged that the carriers had participated in various code-sharing agreements and professional alliances that reinforced and facilitated the conspiracy; that there had been a pattern of identical or virtually identical pricing by the defendant airlines’ closest competitors on routes between the United States and Asia or Oceania; that the defendant airlines had charged identical fuel surcharges for passenger traffic from Hong Kong, including to the United States; and that the U.S. Department of Justice, the European Commission, and other competition authorities were investigating price fixing of passenger and cargo fares.

Nevertheless, the court ruled that it lacked subject-matter jurisdiction over the claims of foreign injury. FTAIA limits a court’s subject-matter jurisdiction over claims involving foreign commerce brought under federal antitrust law, according to the court, which asserted that under FTAIA, the Sherman Act does not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless the conduct has a direct, substantial, and reasonably foreseeable effect upon domestic commerce, and that effect gives rise to the claim.

In addition, the challenged conduct did not fall within the “import trade or commerce” or “domestic effects” exceptions to the FTAIA, the court held, explaining that the complaining individuals’ price-fixing claims did not involve import commerce and did not have domestic effects that gave rise to the foreign claims. The term “import” generally denotes a product or service that has been brought into the United States from abroad, the court observed, adding that it was too great of a leap to either equate air passenger travel with the importing of people or to characterize air passengers as a product or service.

Additionally, the complaining individuals’ allegations of domestic effect—and indeed, their overall theory of harm—were insufficient, the court determined. While a direct effect upon U.S. trade or commerce could be based on the fact that U.S. residents and citizens had paid more for air passenger transportation as a result of the alleged conspiracy, the individuals here could not establish that the domestic effect actually had caused the foreign injury. In that respect, the foreign injury had not been the result of the domestic effect but, rather, had been the result of the global price-fixing conspiracy that caused the domestic effect.

Moreover, the domestic effects exception required proximate causation, the court said. The complaining individuals contended that the prices for travel originating in foreign countries and travel originating in the U.S. were inextricably bound up with and dependent upon each other. “Bound up” was not proximate causation, however, the court advised. The fact that the individuals’ foreign injuries were not caused by the domestic effect of the global conspiracy also prevented them from establishing standing. Their claims for foreign injuries were not the type of injury Congress had intended to prevent through the Sherman Act, the court concluded. In re Transpacific Passenger Air Transp. Antitrust Litig. (NDCal) 34 Avi. 16,114.

Curbside Bag-Check Fee Challenge Preempted

The Airline Deregulation Act of 1978 preempted an action alleging that an air carrier's imposition of a service charge on baggage checked at the airport curbside violated a state tips law by having diverted revenue from skycaps to the carrier, a federal appeals court ruled, reversing and remanding the trial court’s contrary conclusion. The plaintiff skycaps, who claimed that few passengers had continued to tip them after the fee was imposed, sued the carrier under Massachusetts’ tips law.

The language in the ADA preemption provision is broad but vague, the appellate panel advised, citing the dividing line between “preempted” or “not preempted” as turning upon the statutory language “related to a price, route, or service” of an airline. In that respect, the state tips law does more than simply regulate the employment relationship between the skycaps and the airline; it has a direct connection to the air carrier prices and services, and fairly could be said to regulate both, the panel declared.

The carrier’s conduct in arranging for the transportation of bags from the airport curbside into the airline terminal en route to the baggage loading facilities is part of the “service” referred to in the ADA, and the airline’s “price” includes charges for such ancillary services as well as the flight itself, the panel elucidated. Thus, as applied, the tips law directly regulates how an airline service is performed and how its price is displayed to customers. the panel held, reasoning that, to avoid having state law deem the curbside check-in fee a “service charge” would require changes in the way the service is provided or advertised. Accordingly, the judgment of the trial court granting recovery and awarding attorneys’ fees on the basis that ADA did not preempt the state tips law was erroneous.  DiFiore v. Am. Airlines, Inc. (1stCir) 34 Avi. 16,098.

FAA-Certified Maintenance Firm Deemed “Federal Officer”

Removal to federal court of an action asserting negligence and products liability claims against an aircraft maintenance firm arising from an airplane crash was warranted, a California federal court concluded, ruling that the firm had established that it was a “federal officer” under the federal procedural rule permitting any agency, officer, or person acting under that officer engaged in a civil action or criminal prosecution commenced in state court to remove the action to federal court.

In order to determine the applicability of the rule and consequent existence of federal jurisdiction, the firm had to satisfy three elements—namely, that: (1) it was a “person” within the meaning of the statute; (2) it acted under the direction of a federal officer by demonstrating a causal nexus between the plaintiff’s claims and the acts it had performed under color of federal office; and (3) it raised a colorable defense. In that regard, the firm established that it was a private corporation and that a private corporation is a “person” entitled to invoke the rule, the court held. The firm also demonstrated that it had been “acting under” an officer of the United States because it had been performing pursuant to an Air Agency Certificate issued by the Federal Aviation Administration under the authority of FAA regulations, the court added.

Finally, the firm proffered a colorable defense that it had complied with the federal standards established by FAA and that the subject engine and component parts would have been maintained, repaired, serviced, licensed, and otherwise certified as airworthy pursuant to the firm’s Air Agency Certificate as supervised and overseen by FAA, the court said, reasoning that the relevant transportation law explicitly grants the FAA Administrator the power to delegate to a qualified private person matters relating to examination, inspection, and certification. Because FAA had delegated that power to the maintenance firm, the firm sufficiently demonstrated that it was “acting under” the authority of the agency, the court reasoned. As such, the evidence was sufficient to establish subject matter jurisdiction, the court said. Weidler v. Prof’l Aircraft Maint. (CDCal) 34 Avi. 16,150.

Surface Transportation News

Hazardous Substances List Revised To Align with EPA Rules

The Pipeline and Hazardous Materials Safety Administration (PHMSA) is modifying the "List of Hazardous Substances and Reportable Quantities" 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 change is based on an EPA final rule that removed saccharin and its salts from the list of hazardous substances. The rulemaking will assist shippers and carriers in the identification of CERCLA hazardous substances, thus allowing those entities 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 change took effect on June 27, 2011. CCH Federal Carriers Reports, Letter No. 1608, June 30, 2011.

FRA Revises Accident/Incident Reporting Requirements

In response to a petition for reconsideration, the Federal Railroad Administration (FRA) is revising a recently-enacted final rule dealing with railroad accident/incident reporting requirements. The original rulemaking [see CCH Federal Carriers Reporter ¶22,429], which took effect on June 1, 2011, was intended to clarify ambiguous regulations and enhance the quality of information available for railroad casualty analysis. The changes adopted in the latest proceeding amend and clarify the original rule based on the agency’s review of the petition for reconsideration, as well as make necessary technical and clarifying revisions. The final rule is effective on July 1, 2011. The regulation preamble appears at ¶22,442. CCH Federal Carriers Reports, Letter No. 1607, June 20, 2011.

Standards for Safe Havens Adopted by PHMSA

The Pipeline and Hazardous Materials Safety Administration (PHMSA), in cooperation with the Federal Motor Carrier Safety Administration (FMCSA), has adopted the National Fire Protection Association’s (NFPA’s) standard 498 as the federally approved standard for the construction and maintenance of safe havens to be used for the unattended storage of explosives during transportation. Under existing FMCSA regulations, a motor vehicle carrying Division 1.1, 1.2, or 1.3 materials either must be attended at all times by the driver or a qualified representative of the motor carrier operator or be parked in a safe haven.

A “safe haven” is an area specifically approved in writing by federal, state, or local government authorities for the parking of unattended vehicles containing explosives. This final rule is intended to enhance existing oversight requirements for explosives by providing clear, consistent, and measurable requirements for the development and operation of safe havens. The final rule takes effect on July 7, 2011; however, voluntary compliance was authorized as of June 7, 2011. The regulation preamble appears at ¶22,443. The updated regulations will appear in a future Report. CCH Federal Carriers Reports, Letter No. 1607, June 20, 2011.

Toxic Materials Advisory Committee Plan Shelved by STB

The Surface Transportation Board (STB) abandoned its plans to form an advisory committee to study and suggest ways to safely move toxic cargo, such as chlorine, in a cost-effective manner. In August 2010, STB sought comments on its plan to establish the Toxic by Inhalation Hazard Common Carrier Transportation Advisory Committee, which was to be charged with providing the STB with independent advice and policy suggestions related to the common carrier obligation of railroads to transport toxic by inhalation hazards (TIH). The committee would have focused on the amount of economic responsibility for liability that railroads could reasonably ask TIH shippers to assume before the carrier would transport the cargo.

“Common carrier obligation” is the statutory duty of railroads to provide transportation or service on reasonable request. In recent years, the STB has seen an increasing number of issues and controversy regarding the common carrier obligation to transport TIH cargo. Through the creation of the advisory committee, the STB had hoped to facilitate dialogue among TIH shippers, railroads, insurers or underwriters and tank-car owners, lessors or manufacturers with a goal of resolving economic concerns surrounding the transportation of TIH cargo.

However, comments raised a number of antitrust issues and revealed sharply conflicting positions on fundamental legal questions. In order to avoid exposing stakeholders to potential antitrust liability by participating in the advisory group, and given the wide difference of opinions between stakeholders on basic liability-sharing issues, the Board decided not to move forward with this advisory group. The Board will continue to address the liability-sharing issues on a case-by-case basis, it said. CCH Federal Carriers Reports, Letter No. 1607, June 20, 2011.

STB Approval Not Required for Acquisition of Rail Assets

The Surface Transportation Board (STB) properly held that the acquisition of railroad track and other physical rail assets by a state department of transportation did not amount to the acquisition of a "railroad line" requiring approval from the Board, a federal court of appeals ruled. The Massachusetts Department of Transportation (MassDOT) entered into a transaction with CSX Transportation (CSX), under which MassDOT was to acquire the physical assets of a railroad, while the current owner, CSX, would retain a permanent, exclusive freight easement over the line. The STB determined that the transaction did not require STB approval or an exemption.

A group of labor unions, including the Brotherhood of Railroad Signalmen, the Brotherhood of Maintenance of Way Employees Division/IBT and the American Train Dispatchers Association (collectively, "the unions"), challenged the decision, asserting that either STB approval or an exemption was required. The unions argued that federal law mandates that a noncarrier obtain a certificate of authorization in order to "acquire a railroad line." The STB disputed the unions’ argument, contending that the transaction did not constitute the acquisition of a railroad line because it did not include the right to operate as a common carrier.

Under a line of precedent dating back 20 years, the STB has consistently held that the acquisition of physical railroad assets do not constitute the acquisition of a railroad line triggering mandatory review because no common carrier rights or obligations are transferred. Based on the facts presented, the appellate panel concluded that the unions failed to establish that a departure from the precedent followed in more than 60 cases was warranted as a matter of law or policy. Furthermore, the STB’s reasoning behind the adopted policy was reasonable and in line with established rail transportation policy, the appellate panel concluded, denying the unions’ petition for review. Brotherhood of Railroad Signalmen v. STB (DCCir) CCH Federal Carriers Cases ¶84,692.