[Federal Register Volume 68, Number 142 (Thursday, July 24, 2003)]
[Rules and Regulations]
[Pages 43882-43883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18589]



  Federal Register / Vol. 68, No. 142 / Thursday, July 24, 2003 / Rules 
and Regulations  

[[Page 43882]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 399

[Docket No. OST-2003-15592]
RIN 2105-AA46


Preemption in Air Transportation; Policy Statement Amendment

AGENCY: Department of Transportation.

ACTION: Final rule.

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SUMMARY: This action ends a rulemaking commenced by the Civil 
Aeronautics Board in 1979, in which it announced interim policies to 
implement provisions of the Airline Deregulation Act of 1978 dealing 
with federal preemption. The Department of Transportation, which 
succeeded to various Civil Aeronautics Board functions, has concluded 
that the interim policy statement is of limited current value. Its 
major issue--continued intrastate economic regulation of air carriers--
has long since been resolved. Its remaining subjects continue to evolve 
and are more appropriately addressed on a case-by-case basis rather 
than by a statement of general policy. The interim final policy is 
accordingly removed. The Department of Transportation will continue to 
monitor developments and to offer the proper interpretation of the 
statute's preemption provision in appropriate fact-specific 
circumstances.

EFFECTIVE DATE: July 24, 2003.

FOR FURTHER INFORMATION CONTACT: Paul Samuel Smith, Office of the 
Assistant General Counsel for Litigation, or Samuel Podberesky, 
Assistant General Counsel for Aviation Enforcement and Proceedings, 
U.S. Department of Transportation, 400 Seventh Street, SW., Washington, 
DC 20590, (202) 366-9285 or 366-9342, respectively.

SUPPLEMENTARY INFORMATION: In February 1979, the former Civil 
Aeronautics Board (``CAB'' or ``Board'') adopted interim final policies 
devoted in the main to the authority of state and federal governments 
to regulate air carriers operating pursuant to federal authority. 
Policy Statement-83 (February 7, 1979) (``PS-83''); 44 FR 9951 
(February 15, 1979); 14 CFR 399.110. The policy statement addressed 
questions arising about the preemption provision of the then-newly 
enacted Airline Deregulation Act of 1978 (Pub. L. 95-504, 92 Stat. 
1707) (``ADA''), now codified at 49 U.S.C. 41713, and it asked for 
comment to aid in setting final policies. The major features of the 
interim preemption policy have been that states may not enact or 
enforce (1) any economic regulation of carriers having authority under 
Title IV of the Federal Aviation Act, including commuters and those 
registered as air taxis under 14 CFR Part 298; and (2) legal provisions 
governing such matters as air carrier capitalization, insurance, and 
bonding, in-flight amenities, and so forth. There has also been a short 
general statement concerning the authority of airport proprietors.
    Comments were received in 1979 from the following parties: the Air 
Transport Association, the Airport Operators Council International, the 
Illinois Aeronautics Board, the Maryland Department of Transportation, 
the Massachusetts Port Authority, the Michigan Aeronautics Commission, 
the North Dakota Aeronautics Commission, the State of Oregon through 
its Public Utility Commissioner, the Texas Aeronautics Commission, the 
Nebraska Department of Aeronautics, the Delaware Transportation 
Authority, the New York Department of Transportation, and Chapparal 
Airlines.
    The Air Transport Association and the Delaware Transportation 
Authority supported the interim policy statement. The remaining parties 
opposed all or parts of the statement. They contended that the policy 
either (1) unlawfully precluded state regulation of commuter air 
carriers and air taxis; (2) unlawfully curbed state oversight that did 
not amount to the regulation of airline rates, routes, and service 
precluded by the ADA; or (3) improperly restricted the rights of 
airport proprietors.
    Most of the policy statement and many of the comments concern the 
first category above: the regulation of carriers that were governed by 
both the states and the federal government prior to passage of the ADA. 
This once-major issue has long since been resolved by courts and the 
passage of time. It is now well settled that carriers certificated by 
the federal government, as well as commuters and air taxis operating 
under federal authority, are not subject to economic regulation by the 
states. See, e.g., Hughes Air Corporation v. Public Utility Commission, 
644 F.2d 2334 (9th Cir. 1981).
    The second category above, indirect regulation of air 
transportation by states, is of a somewhat different nature. On the one 
hand, time and litigation have clarified to some extent the reach of 
federal preemption in this sphere. In 1979 the CAB declared that states 
``could not interfere with the service that carriers offer in exchange 
for their rates and fares.'' PS-83 at 8. This included charges for 
headsets, excess baggage, and alcoholic beverages, as well as 
requirements for insurance coverage and capitalization. Id.; 14 CFR 
399.110(d). Although some commenters considered this too restrictive of 
states' prerogatives, no court of which the Department is aware has 
held to the contrary with respect to interference with such matters. 
See Hodges v. Delta Airlines, 44 F.3d 334, 336 (5th Cir. 1995)(en banc) 
(airline ``service'' includes ticketing, the provision of food and 
drink, baggage handling, and boarding procedures). Also generally 
Morales v. Trans World Airlines, 503 U.S. 407 (1992) (preempting state-
imposed fare advertising guidelines); American Airlines v. Wolens, 512 
U.S. 1233 (1994) (preempting state-imposed restrictions on airline 
frequent flier programs). On the other hand, controversies about the 
application of the preemption provision have arisen about subjects and 
in contexts never even mentioned by the CAB. A prime example is the 
effect of the ADA on state tort law. See Smith v. Comair, Inc., 134 
F.3d 254 (4th Cir. 1998) (state tort claim may be preempted as 
``related to'' airline ``service''), and Charas v. Trans World 
Airlines, 160 F.3d 1259 (9th Cir. 2000) (airline ``service'' read 
narrowly so as not to preempt state tort claim).
    The Department appreciates that it is not possible in a general 
policy statement to anticipate and address all relevant potential 
issues. Preemption is a dynamic area, in which questions will likely 
continue to arise with some regularity in circumstances that cannot now 
be anticipated. It would be extraordinarily ambitious, and in the end 
probably futile, to attempt to maintain a policy statement that 
provides contemporary and meaningful guidance across a full spectrum of 
situations. Rather, ad hoc administrative determinations, guidance, 
enforcement activities, and intervention in significant legal actions 
seem better suited to ensuring the proper implementation of this 
preemption provision.
    The final subject included in the interim policy statement, the 
ADA's effect on the authority of airport proprietors, garnered only a 
small amount of the Board's attention. There is but one paragraph in 
the preamble and only a single very broad provision in the interim 
statement, to the effect that airport proprietors must exercise their 
authority in reasonable and nondiscriminatory fashion as necessary to 
accomplish legitimate objectives. PS-83 at 9; 14 CFR 399.110(f). The 
CAB also expressly acknowledged that the ``full scope'' of proprietary 
rights and duties had ``yet to be developed.'' PS-83 at 9.

[[Page 43883]]

    Some commenters felt that the Board had an overly narrow view of 
airport proprietors' authority. We disagree. This part of the interim 
policy statement remains an accurate statement of a fundamental 
principle of law: Airport proprietors clearly have rights, but those 
rights are not unfettered or unconstrained. They must be exercised in a 
reasonable, nondiscriminatory manner, and designed to achieve 
legitimate objectives. Arapahoe County Public Airport Authority v. FAA, 
242 F.3d 1213, 1223 (10th Cir. 2001); American Airlines v. DOT, 202 
F.3d 788, 806-08 (5th Cir. 2000); National Helicopter Corp. v. City of 
New York, 137 F.3d 81, 89 (2nd Cir. 1998). It is also true that airport 
proprietors may not impede federal airspace management interests or 
unreasonably interfere with interstate or foreign commerce. But these 
statements are so basic and so broad that they are of limited utility 
in any particular setting; they can only frame the proper inquiry. 
Questions about the scope and exercise of proprietary rights, like 
preemption generally, are most often fact-specific. Arapahoe County, 
242 F.3d at 1223. Thus, litigation and administrative proceedings will 
likely continue to refine the contours of this authority, and no single 
policy statement is apt to comprehend or anticipate its precise 
parameters.
    In sum, the interim policy statement either discusses subjects that 
have been overtaken by events in the last twenty-five years since the 
ADA was enacted, or offers statements so general in nature that their 
value is limited where, as here, new issues continue to evolve. The 
policy statement has provided assistance in the past, but it has 
increasingly become less helpful as the industry has changed and 
evolved over the years. In these circumstances the Department has 
decided to remove the interim policy statement at 49 CFR 399.110 and 
end this proceeding. We intend to continue to monitor developments, and 
to take action to apply the ADA's preemption provision when that is 
appropriate in individual fact-specific situations. This approach has 
proven itself in guarding against state and local government actions 
that improperly interfere with the deregulation of the airline 
industry. See Wolens and Arapahoe County, both supra.

Regulatory Analyses and Notices

    This final rule is not considered a significant regulatory action 
under section 3(f) of Executive Order 12866, and therefore it was not 
reviewed by the Office of Management and Budget. This rule is not 
considered significant under the Department's regulatory policies and 
procedures. The change is being made solely for the purposes of 
eliminating an obsolete statement.
    The Department also has determined that this rule has no economic 
impact. This rule does not impose unfunded mandates or requirements 
that will have any impact on the quality of the human environment.

Executive Order 12612

    The Department has analyzed this rule under the principles and 
criteria contained in Executive Order 12612 (``Federalism'') and has 
determined that the rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment.

Paperwork Reduction Act

    This action does not contain information collection requirements 
for purposes of the Paperwork Reduction Act of 1995.

Regulatory Flexibility Act

    The Department has evaluated the effects of this rule on small 
entities. I certify this rule will not have a significant economic 
impact on a substantial number of small entities, because we are merely 
removing an obsolete policy statement.

List of Subjects in 14 CFR Part 399

    Administrative practice and procedure, Air carriers, Air rates and 
fares, Air taxis, Consumer protection, Small business.

0
For the reasons set forth in the preamble, the Department amends 14 CFR 
part 399 as follows:

PART 399--STATEMENTS OF GENERAL POLICY

0
1. The authority citation for part 399 continues to read as follows:

    Authority: 49 U.S.C. 40101 et seq.


Sec.  399.110  [Removed]

0
2. Part 399, subpart J is amended by removing Sec.  399.110.

    Issued in Washington, DC on June 13, 2003, under the authority 
of 49 CFR part 1.
Norman Y. Mineta,
Secretary of Transportation.
[FR Doc. 03-18589 Filed 7-23-03; 8:45 am]
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