September 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

Boeing Machinists Walk Out, New Aircraft Assembly Stalls
Members of the International Association of Machinists and Aerospace Workers went on strike against Boeing Company on September 6, following the failure of federally mediated talks to result in a collective bargaining agreement. The job action involves 27,000 machinists at Boeing's facilities in Kansas, Oregon, and Washington. Negotiations broke down with three major issues still on the table, pension, retiree medical payments, and job security. “The absence of job security language was a key reason why members rejected the company's earlier offer and it is why Boeing is now facing the second major strike in three years," International President Tom Buffenbarger asserted, adding "[w]e've learned it's not enough to have a good-paying job if that job can disappear at any time." Boeing said it will continue to deliver airplanes that were completed prior to the work stoppage and will keep providing its customers with spare parts, but aircraft will not be assembled during the strike. Aviation Law Reports, Report Letter No. 1387, September 11, 2008.

Airline Losses in 2008 Projected at $5.2 Billion
The global airline industry is projected to lose $5.2 billion in 2008, based on falling demand and a fuel bill that is $50 billion higher than the previous year, according to the International Air Transport Association (IATA). "The situation remains bleak. The toxic combination of high oil prices and falling demand continues to poison the industry's profitability," said Giovanni Bisignani, IATA's Director General. He noted that fuel is expected to account for 36 percent of operating costs in 2008, compared with 13 percent in 2002.

At the same time, service cuts appear not to be keeping pace with the fall in demand, IATA reported, as July year-on-year passenger demand growth fell to 1.9 percent—its lowest level in five years. IATA is estimating that passenger traffic grows by 3.2 percent this year, with air freight volumes up 1.8 percent. This is only half the pace of expansion seen in 2007, with the projected increases reflecting stronger growth at the start of the year, IATA noted. Turning to the North American market, carriers are seen posting losses of $5.0 billion in 2008, while profits at Asia-Pacific carriers will drop to $300 million in 2008 from $900 million the year before. Profits at European carriers will fall to $300 million in 2008 from $2.1 billion in 2007.

Looking ahead to 2009, IATA expects the difficult business environment to continue, with industry losses projected at $4.1 billion. "This crisis is highlighting the need for greater commercial freedom. Airlines are facing enormous challenges. To be successful ... airlines must be able to do business like any other business," Bisignani said, calling for a "strong dose" of liberalization, and adding that U.S.-European Union (EU) talks later this month will provide an opportunity to address ownership restrictions. Aviation Law Reports, Report Letter No. 1387, September 11, 2008.

House Votes to Halt Mexican Trucks
The U.S. House of Representatives voted on September 9 to end a one-year Department of Transportation pilot program that had allowed Mexican trucks onto the highways of the United States. Democrats and Republicans united to pass the bill, H.R. 6630, with a bipartisan vote of 395-18. The pilot program has its roots in the North American Free Trade Agreement (NAFTA). Under the program, Mexico-domiciled trucks were allowed past the U.S.-Mexico border area into the continental U.S. Originally, the Transportation Department set the pilot program for a one-year duration before its potentially permanent extension. Critics allege that the Department was already preparing for this extension.

According to the House bill's supporters, the pilot program must be stopped now and assessed by Congress because of concerns regarding security and the safety of the American driving public. The supporters contend that Mexico has less stringent rules than the U.S. in the areas of vehicle safety, hours-of-service, and driver training. In addition, advocates argue the legislation would protect American trucking jobs.

“Before the border is completely opened to Mexican trucks, we must ensure the safety of motorists on our highways,'' commented the ranking Republican on the House Transportation and Infrastructure Highways Subcommittee, John J. Duncan, Jr. (Tenn). “No matter how much we want to have good relations with our friends in Mexico, our first obligation is to the American people. H.R. 6630 will help ensure the safety of our nation's highways and help protect our American trucking companies, our small businesses, and our truck drivers.''

President Bush and his Administration are opposed to the House bill. In a statement released this week, the White House said it would veto the measure in its current form. According to the statement, the bill ``would prevent the United States from meeting its obligations under the North American Free Trade Agreement (NAFTA) and decrease that agreement's benefits to the United States.'' Stopping the cross-border pilot program, the Administration argues, would compromise the “opportunities and investment returns currently afforded U.S. motor carriers participating in the project.''

Regarding safety, the White House contends that the Transportation Department's Federal Motor Carrier Safety Administration, working with states, has effectively addressed this concern as shown by recent data on out-of-service vehicles. Finally, the Administration says increased trade with Mexico is important to our economy, and curtailing it would pose “significant and immediate risks'' to our interests. Nevertheless, the House vote on the bill was strong enough to easily override a presidential veto. On September 10, the bill was sent to the Senate, where it was referred to the Committee on Commerce, Science and Transportation. Federal Carriers Reports, Report Letter No. 1542, September 19, 2008.

Aviation News

Surgeon General Sounds Alarm on Deep Vein Thrombosis
Acting Surgeon General Steven K. Galson, M.D., M.P.H., has issued a Call to Action to reduce the number of cases of deep vein thrombosis and pulmonary embolism in the U.S., with a multifaceted plan that includes tips for airline travelers to reduce their potential risks of DVT. According to the Surgeon General's Office, the majority of DVT/PE events are related to specific, identifiable, triggering events, one of which is a prolonged period of immobility such as can occur during a long airline flight.

A passenger's risk for developing DVT is small, but increases if the travel time is longer than four hours or if the individual has other health-related risk factors, the Surgeon General cautioned, advising that, during long trips, it might help to frequently walk up and down the aisles of the airplane, wear loose/comfortable clothing, consume plenty of fluids (especially water), and avoid alcohol and caffeine. When sitting, passengers should move their legs and stretch their feet often by tightening and releasing their leg muscles, as well as raising/lowering their heels while keeping their toes on the floor, followed by raising/lowering their toes while keeping their heels on the floor. Individuals with underlying medical conditions should consult with their physicians about wearing compression stockings during travel or taking a blood-thinning medication prior to traveling. Aviation Law Reports, Report Letter No. 1388, September 25, 2008.

Secure Flight Privacy Protections in Place
Privacy protections are now in place for Secure Flight, the system whereby the Transportation Security Administration (TSA) checks airline passenger information against government watchlists, and the program is on schedule to start operating in January 2009. At a September 9 hearing of the House Subcommittee on Transportation Security and Infrastructure Protection, TSA Assistant Secretary Kip Hawley told members, "[t]he system is now built. The privacy protections are in place. The Government Accountability Office (GAO) is going to review that over the next 90 days. And we should be good to go starting in January."

Hawley noted that the final rule to implement Secure Flight is expected to be published by November. Greg Wellen, the Assistant Administrator of TSA's Office of Transportation Threat Assessment and Credentialing --which oversees Secure Flight --added that, while it is difficult to balance increased security while protecting individual rights, "TSA is very clear that privacy and security are essential ingredients, and both have been built directly into the Secure Flight program." Aviation Law Reports, Report Letter No. 1387, September 11, 2008.

FAA to Bolster Airworthiness Directives Compliance
The Federal Aviation Administration will have guidance in place by the end of the year to ensure that airworthiness directives and their deadlines are fully understood by all appropriate FAA officials and airlines, Transportation Secretary Mary E. Peters stated September 10. Implementing such a step is a key recommendation in the September 2 report of an independent review panel appointed by Secretary Peters in May to examine FAA's safety culture and approach to safety management.

In all, the panel made 13 safety recommendations, another of which called for more rigorous and systematic oversight of FAA's voluntary disclosure programs, which the panel said should be maintained. Here, Peters noted that the agency has changed its procedures to require senior managers to review voluntary disclosure reports. Moving forward, FAA also will implement use of a new automated data system to help track and ensure compliance, Peters indicated. The panel also recommended new safeguards against FAA personnel developing "overly cozy" relationships with the airlines they regulate through regular audits of field offices where the managerial team has been in place for more than three years. "The intent is clear: make sure everyone understands that the only customer that matters in the end is the flying public," Peters asserted.

Consistent with recommendations to improve FAA's safety culture, the Secretary also charged the agency with developing and implementing within six months a new training program for safety managers and inspectors. By this time next year, FAA also will have the results of the recommended study on the right balance between the time that inspectors spend inputting/analyzing data and the time spent in the field, the Secretary announced, adding "[u]nderstanding safety data is essential, but making sure it is accurate is vital." The panel's full report, Managing Risks in Civil Aviation: A Review of the FAA's Approach to Aviation Safety, is available at http://www.dot.gov/affairs/IRT_Report.pdf. Aviation Law Reports, Report Letter No. 1388, September 25, 2008.

Carrier's Failure to Offer Deplaning Aid Wasn't Actionable
An air carrier did not violate its standard of care by not having offered or provided deplaning assistance to a passenger who, while using crutches, fell and injured himself exiting an aircraft, a Pennsylvania federal court ruled. Although he was an amputee, the passenger did not use a wheelchair. And, while federal standards require carriers to inform passengers who state that they use a wheelchair that assistance in enplaning/deplaning is available, the carrier in this instance did not violate the applicable standard of care by not providing the passenger with this information because he was not using a wheelchair. Moreover, the passenger's reliance upon the more broadly worded "careless or reckless" general regulatory standard was untenable because a specific provision (i.e., assistance to wheelchair-using passengers) was applicable. Even if the more general standard applied, the passenger failed to pinpoint any caselaw or expert testimony to establish that the carrier's failure to offer assistance constituted careless or reckless conduct. Consequently, the carrier was entitled to summary judgment on the passenger's claims, the court concluded. Elassaad v. Independence Air, Inc. (EDPa) 32 Avi. 16,689.

Carrier Wasn’t Liable for Failure to Provide Continuous O2 Supply
An air carrier was entitled to summary judgment on claims of negligence, negligent misrepresentation, and disability discrimination by a passenger with chronic obstructive pulmonary disease who charged that she had been deprived of oxygen aboard a flight, a Mississippi federal court determined. At the root of the claims was the passenger's assertion that, while she could not take her own personal oxygen supply aboard the aircraft, oxygen would be available aboard the aircraft for her use on the flight.

To prevail on a claim of misrepresentation, the court explained that the passenger had to prove that: (1) there had been a misrepresentation or omission of a fact; (2) the misrepresentation/omission was material or significant; (3) the person/entity charged with the negligence had failed to exercise that degree of diligence and expertise the public is entitled to expect of such persons/entities; (4) she reasonably had relied upon the misrepresentation/omission; and (5) she had suffered damages as a direct and proximate result of such reasonable reliance. According to the court, the passenger failed to present evidence sufficient to support a finding of any misrepresentation on the part of the carrier employee who had told her that oxygen would be available. The passenger's evidence revealed that, upon her inquiry whether the carrier would supply oxygen on the plane, the employee had said "yes." Because oxygen was, in fact, available aboard the aircraft, there was no misrepresentation, the court observed.

As for negligence, the passenger failed to demonstrate that the carrier owed a duty to provide continuous oxygen to a passenger, the court opined, noting that both of the negligence-related claims failed for the additional reason that the passenger had failed to present any evidence tending to show that her lack of access to a continuous supply of oxygen from the time that she boarded the flight had proximately caused or contributed to the injuries alleged. The passenger failed to come forward with any expert medical opinion as to the cause of her alleged injuries, while the carrier offered the opinion of an expert that the absence of supplemental oxygen neither had caused the passenger's shortness of breath during the flight nor had caused an exacerbation of her pre-existing condition, the court explained.

Finally, the carrier was not liable under Americans with Disabilities Act, the court said, pointing out that, although the ADA prohibits discrimination against individuals on the basis of disability in places of "public accommodation" and the provision of "specified public transportation services provided by a private entity that is primarily engaged in the business of transporting people," aircraft expressly are excluded from the definition of "specified public transportation." Accordingly, the claim was not actionable because the ADA simply does not cover air travel, the court concluded. Berry v. Southwest Airlines Co. (SDMiss) 32 Avi. 16,686.

Air Marshal's Text Message Properly Deemed "Sensitive"
A Transportation Security Administration order that a federal air marshal's text message regarding the alleged cancellation of certain missions on overnight flights—which the marshal had disclosed to the press out of concern for public safety—contained "sensitive security information" correctly applied the agency's regulatory designation of that term, a federal appeals court ruled last week. As a threshold matter, the court determined that it had jurisdiction to review the order. Although it was only two pages, the order was supported by a reviewable record, was a definitive statement of the agency's position regarding the contents of the text message, and had an immediate and prospective impact upon the marshal's challenge of his subsequent termination, the court said.

As for the agency's action, the court held that TSA has the authority to designate information as "sensitive security information" under both federal law and regulations. The relevant regulation defines "sensitive security information" as including "information concerning specific numbers of federal air marshals, deployments or missions, and the methods involved in such operations." Therefore, the text message, which contained "specific details of aviation security measures" regarding air marshals' "deployment or missions," qualified as "sensitive security information" and, given the deference owed to the agency, an alternate reading was not compelled by the regulation's plain language. The order also was supported by substantial evidence, the court asserted, noting that TSA demonstrated an adequate factual basis upon which its determination had been made.

Furthermore, neither federal whistleblower protection law, an anti-gag provision in a federal appropriations statute, nor constitutional Due Process considerations applied to the order, the court instructed, respectively reasoning that: (1) the fact that the order had some impact on the marshal's proceedings challenging his subsequent termination did not convert it into a "personnel action" within the meaning of the whistleblower provisions; (2) the anti-gag statute is an uncodified appropriations measure that provides no express right of action, and nothing supported the determination that the statute contains an implied right of action; and (3) the order's designation of information within the text message as "sensitive security information" had only a tangential relation to the marshal's interest in his job, and did not directly deprive him of any liberty or property interests in that job. MacLean v. Dept. of Homeland Security (9thCir) 32 Avi. 16,729.

Surface Transportation News

Changes to Transportation Security Plan Requirements Proposed
The types and quantities of hazardous materials subject to transportation security plan requirements found in the Hazardous Materials Regulations (HMR) would be limited under a proposed rulemaking issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA). Currently, persons who offer for transportation or who transport certain hazardous materials in commerce must develop and implement security plans to assess possible risks and appropriate measures to address the assessed risk. The existing list of materials subject to security plan requirements was established as a baseline when the regulations were originally adopted. PHMSA has received two petitions for rulemaking seeking reevaluation of the current HMR security plan requirements.

As a result, PHMSA undertook an analysis of the security threats associated with specific types and quantities of hazardous materials, which considered the following factors: (1) physical and chemical properties of the material or class of materials and how those properties could contribute to a security incident; (2) quantities shipped and mode of transportation; (3) past terrorist use; (4) potential use; and (5) availability. Based on the findings of that review, the agency has proposed revisions to the regulations governing transportation security plan requirements for hazardous materials shipments. The proposed rulemaking also would clarify certain requirements related to security planning, training, and documentation, and would incorporate and build on recent international standards governing hazardous materials security. Federal Carriers Reports, Report Letter No. 1542, September 19, 2008.

Proposed Changes to Align HMRs with International Standards
The Pipeline and Hazardous Materials Safety Administration (PHMSA) is accepting comments on a proposed rulemaking that would amend the Hazardous Materials Regulations (HMRs) to align them with international standards. Due to recent revisions in the International Maritime Dangerous Goods Code (IMDG Code), the International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions), and the United Nations Recommendations on the Transport of Dangerous Goods (UN Recommendations), these amendments are necessary to facilitate the transportation of hazardous materials in international commerce.

The proposed revisions include, among other things, changes to proper shipping names, hazard classes, packing groups, special provisions, packaging authorizations, air transport quantity limitations, and vessel stowage. In addition, the rulemaking aims to promote the safe transportation of batteries and battery-powered devices, particularly during air transport, through clarification, modification, and enhancement of existing regulations governing such movements. Federal Carriers Reports, Report Letter No. 1541, September 8, 2008.

Proposal Would Expand Rail Accident/Incident Reporting
A proposed revision to federal rail safety regulations that would require railroads to report new and more detailed information about train accidents, highway-rail grade crossing incidents, and injuries and illnesses that occur on rail property has been issued by the Federal Railroad Administration (FRA). Under the proposal, railroads would be required to notify the National Response Center of any highway-rail grade crossing fatality occurring within 24 hours of the incident and to provide greater detail about grade crossing incidents, such as whether a locomotive-mounted video recorder captured the event. They would also have to report, for the first time, suicides and attempted suicides to help FRA better quantify such incidents and develop mitigation strategies.

Railroads would also have to disclose all injuries and illnesses that appear or occur anywhere in the railroad-operating environment, regardless of cause. In addition, passenger railroads would be required to identify whether a locomotive was pulling or pushing a train at the time of a reportable accident or incident, and to report incidents in which a rail passenger is hurt or killed when boarding or alighting a train due to any gaps that exist between railcars and station platforms.

Finally, railroads that are comprised of multiple operating entities or subsidiaries would be permitted to provide consolidated accident or incident reporting in order to minimize potential reporting inaccuracies. FRA is seeking comments on the proposed rule and several other issues, including: what additional information might be gathered to address the causes of grade crossing accidents and whether railroads should provide longitude and latitude data for rail trespass incidents to assist in identifying ``hot spots'' for such activity. The agency is also seeking comments on whether railroads should report certain accidents and incidents directly to FRA in addition to notifying the National Response Center, and how best to ensure that proper restrictions are in place on the use and public availability of suicide data. Federal Carriers Reports, Report Letter No. 1542, September 19, 2008.

Denial of Discrimination Claim Under STAA Affirmed
A petition for review of a decision finding that a motor carrier employer had not discriminated against an employee in violation of the Surface Transportation Assistance Act (STAA) when it transferred the employee from its Dedicated Fleet to its National Fleet was denied by a federal court of appeals. The employee claimed that he had been transferred from the more prestigious Dedicated Fleet to the National Fleet in retaliation for his refusal to drive more hours than were allowed under federal regulations. As a result, he filed an STAA discrimination claim against his employer. The carrier-employer asserted that the transfer had not been in retaliation for anything, but had resulted from the employee's inability to effectively plan his timing and routes in order to complete his dispatches on time, which is of critical importance for drivers operating in the Dedicated Fleet, and not as vital for drivers in the National Fleet.

The employee filed a complaint with the Occupational Safety and Health Administration (OSHA), an agency within the Department of Labor (DOL), alleging discrimination. After OSHA made an initial determination that there had been no violation of the STAA, the employee requested a hearing before an Administrative Law Judge (ALJ). Upon review, the ALJ recommended that the carrier's motion for summary judgment be granted, holding that the employee had failed to establish a claim under the STAA. The DOL's Administrative Review Board (ARB), accepted the ALJ's recommendations and dismissed the employee's complaint, ruling that the employee had failed to refute the carrier's legitimate non-discriminatory justification for the transfer.

The employee then filed a petition for review with the appellate court. Based on the evidence presented, the court ruled that the conclusions reached by the ARB and the ALJ were supported by substantial evidence. Therefore, the petition for review was denied. Bettner v. U.S. Dep't of Labor (7thCir) Federal Carriers Reporter ¶84,558.

Carrier Effectively Limited its Liability
A federal district court ruled that a motor carrier, that was found to be liable for damages incurred to woodworking equipment during interstate transportation, had effectively limited its liability. The carrier had been hired to transport the equipment from Texas to Massachusetts. Upon delivery, the equipment was found to be damaged. Consequently, the shipper filed suit against the carrier in an effort to recover its damages.

Initially, the carrier asserted it was entitled to summary judgment, asserting that the shipper could not establish of prima facie case under the Carmack Amendment. The carrier based its claim on the fact that the shipper had no personal knowledge of the condition of the goods when they were tendered to the carrier because he had not seen them since he had placed them in storage eight year before. In the alternative, the carrier argued that, if the shipper was able to establish liability, then that liability was limited to $1 per pound with a maximum liability of $100,000. The court rejected the carrier's argument regarding the shipper's ability to prove a prima facie case for liability, finding that, while the shipper may have lacked personal knowledge of the condition of the equipment at the time the carrier took possession, the testimony of the general manager of the storage facility, who had personally witnessed the loading of the goods, was sufficient to establish that the equipment was tendered in good condition. Furthermore, the court held that, since the carrier did not dispute that the goods had been damaged when they arrived and the shipper had been able to establish the existence of a genuine issue of fact related to the amount of its damages, the shipper had satisfied its burden of proof with respect to the question of liability.

After having concluded that the shipper had asserted a prime facie case under the Carmack Amendment by showing: (1) that the goods were delivered to the carrier in good condition; (2) that the goods arrived damaged; and (3) the amount of damages incurred, the court found that the carrier had effectively limited its liability. Based on the evidence, the court found that the carrier had satisfied the regulatory requirements for limiting its liability. It had a valid tariff that was available to the shipper upon request, it had provided the shipper the option to declare a higher value for a higher freight charge, the shipper had agreed to the liability limitation by not declaring a higher value, and the carrier issued a bill of lading prior to shipment. Thus, the carrier's liability was limited to $13,115 based on the established weight of the shipment. Center v. Roadway Express, Inc. (DMass) Federal Carriers Reporter ¶84,557.