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+--------------------------------+-------------------------------------+
| ########                       | 1200 New Jersey Avenue, S.E.        |
|  Office of the General Counsel |                                     |
|                                | Washington, D.C. 20590              |
| Paul M. Geier                  |                                     |
|                                | Telephone: (202) 366-4731           |
| ### Assistant General Counsel  |                                     |
|                                | Fax: (202) 493-0154                 |
| for Litigation                 |                                     |
|                                |                                     |
| Dale C. Andrews                |                                     |
|                                |                                     |
| Deputy Assistant General       |                                     |
| Counsel                        |                                     |
|                                |                                     |
| for Litigation                 |                                     |
+--------------------------------+-------------------------------------+

####### March 18, 2008 Volume No. 8 Issue No. 1

**[Highlights]{.underline}**

**Supreme Court decides Maine's motor carrier law is preempted,**

**page 2**

**Supreme Court decides 4-R Act allows railroads to challenge State
property taxation methodologies, page 3**

**Supreme Court seeks views of the United States in airport property
takings case, page 4**

**Challenge to Mexican truck NAFTA demonstration project argued in Ninth
Circuit, page 6**

**Second Circuit hears preemption challenge to New York Passenger Bill
of Rights legislation, page 6**

**D.C. Circuit denies motion seeking to overturn Hours of Service
Interim Rule, page 8**

**D.C. Circuit denies stay request in FAA NY/NJ/Pa Airspace Redesign
cases, page 13**

**District court dismisses challenges to Inter-County Connector, appeal
taken to Fourth Circuit, page 20**

**[Table of Contents]{.underline}**

**[Page]{.underline}**

Supreme Court Litigation 2

Departmental Litigation in Other Federal Courts 6

Recent Litigation News from DOT Modal Administrations 13

Federal Aviation Administration 13

Federal Highway Administration 20

Federal Railroad Administration 26

National Highway Traffic Safety Administration 28

Federal Transit Administration 32

Maritime Administration 34

Index of Cases Reported in this Issue 37

## [Supreme Court Litigation]{.underline}

**Supreme Court Holds That Maine Motor Carrier Law Is Preempted**

On February 20 the United States Supreme Court in, [Rowe v. New
Hampshire Motor Transport Association]{.underline} (Supreme Court No.
06-457) held that several provisions of a Maine law restricting the
delivery of tobacco products to minors are preempted by a provision of
the Federal Aviation Administration Authorization Act of 1994.

The 1994 Act prohibits State regulations "related to a price, route, or
service" of motor carriers. That provision is modeled after a similar
provision set forth in the Airline Deregulation Act of 1978 that
preempts State laws or regulations related to an air carrier's "price,
route or service." The Supreme Court, in [Morales v. TWA]{.underline},
504 U.S. 324 (1992), broadly interpreted the preemptive effect of the
ADA. The United States, in an [amicus]{.underline} brief, urged that the
Maine ordinances were preempted under a similarly broad reading.

Relying upon [Morales]{.underline} the Court held that the challenged
provisions of the Maine regulation are preempted because "the effect of
the regulation is that carriers will have to offer tobacco delivery
services that differ significantly from those that, in the absence of
the regulation, the market might dictate." The Court concluded that "to
interpret

. . . federal law to permit these, and similar, state requirements could
easily lead to a patchwork of state service-determining laws, rules and
regulations" contrary to the purpose of the 1994 Act.

The Maine laws specifically (1) required retailers of tobacco to use
only delivery

services that required a signature and valid identification from the
addressee of packages of tobacco products, and (2) imputed to the
carriers knowledge of the contents of packages containing tobacco
products when the outside of the packages are properly marked (in
accordance with other provisions) to indicate the presence of tobacco
products.

The State of Maine had argued unsuccessfully before the U.S. Court of
Appeals for the First Circuit that the Federal preemption provisions
applied only to economic regulations rather than to public health laws
like those the State argued were here at issue, and that Maine's laws
did not "relate to" a rate, route or service because they either did not
reference motor carriers or because they did not have any significant
effect on the operations of such carriers.

The First Circuit rejected that argument, as did the Supreme Court. The
Supreme Court's decision held that Federal preemption is not limited to
State economic regulation, that there is no implied "public health"
exception in the statute, and that the Maine laws either directly
regulated motor carriers or had a

forbidden significant effect on their commercial operations. As noted,
the Supreme Court's decision affirmed that holding conclusively.

The decision has significant implications for the aviation industry as
well as the trucking industry because it re-affirms the broad sweep of
the ADA as expressed in [Morales]{.underline} and [American Airlines v.
Wolens]{.underline}, 513 U.S. 219 (1995), and because it holds that any
exceptions to the preemption provision must be found in the language of
the statute itself.

The Supreme Court's decision is available at:

<http://www.supremecourtus.gov/opinions/07pdf/06-457.pdf>

The United States' [amicus]{.underline} brief on the merits is available
at:

<http://www.usdoj.gov/osg/briefs/2007/3mer/1ami/2006-0457.mer.ami.pdf>

**Supreme Court Holds Railroads Have Right to Challenge State Property
Taxation Methodologies under the 4-R Act**

On December 4 the Supreme Court in [CSX Transportation, Inc. v. Georgia
State Board of Equalization]{.underline} (Supreme Court No. 06-1287)
held that the Railroad Revitalization and Regulatory Reform Act ("4-R
Act"), which generally protects railroads from unreasonable or
discriminatory property taxation rates imposed by States, provides a
basis for a railroad to challenge in Federal district court a State's
chosen methodology for the valuation of railroad property that is
subject to State taxation.

The issue presented in the case was a recurring one: whether a Federal
district court in determining the "true market value" of railroad
property for purposes of analyzing discriminatory taxation practices
must accept the valuation method or valuation methodology chosen by the
State. The Court's decision conclusively establishes that district
court's have the authority under section 306 of the 4-R Act to analyze
valuation methodologies.

The Court's decision reverses a more restrictive reading of the 4-R Act
by the U.S. Court of Appeals for the Eleventh Circuit, and resolves an
issue that the Court declined to reach twenty years earlier and on which
the Federal Circuit courts had split. The decision endorses the
arguments set forth in the United States' [amicus]{.underline} brief,
which urged the Court to broadly interpret the 4-R Act and to reverse
the Eleventh Circuit's decision. Chief Justice Roberts, writing for a
unanimous Court, concluded that the Eleventh Circuit's more restrictive
reading of the 4-R Act "would eviscerate the statute by forcing courts
to defer to the valuation estimate of the State, when discriminatory
taxation by States was the very evil the Act aimed to ban."

The proper application of the 4-R Act, which originally was enacted to
address and remedy State taxation practices that were unfair and
discriminatory to railroads, has been of great importance to DOT and
FRA. At our request the United States has previously participated in a
number of 4-R Act cases, and has argued for an expansive application of
the remedial terms of that statute. The United States filed an
[amicus]{.underline} brief in the [CSX]{.underline} case arguing,
consistent with the Court's ultimate holding, that the 4-R Act does
reach unfair State property taxation methodologies.

The Supreme Court's decision is available at:

<http://www.supremecourtus.gov/opinions/07pdf/06-1287.pdf>

The United States' merits brief is available at:

<http://www.usdoj.gov/osg/briefs/2007/3mer/1ami/2006-1287.mer.ami.pdf>

**Supreme Court Seeks Views of the United States in Airport "Takings"
Case**

On January 7 the Supreme Court asked the Solicitor General to provide
the views of the United States concerning whether the Court should grant
a pending certiorari petition in [Clark County, Nevada v. Vacation
Village, Inc.]{.underline} (Supreme Court Certiorari Petition No.
07-373). The petition seeks review of a Ninth Circuit decision holding
that landowners adjacent to McCarran Airport in Las Vegas have an
ownership interest in 500 feet of navigable airspace above the
landowner's property, and that any local zoning ordinance restricting
the use of that space in order to ensure safe aviation operations is a
[per]{.underline} [se]{.underline} taking that requires compensation to
the landowner under the Nevada Constitution.  FAA encourages airports to
adopt such ordinances in conjunction with airport development projects. 
The Ninth Circuit found that no compensable taking had occurred under
the Fifth Amendment of the U.S. Constitution, but concluded that Federal
law did not preempt a separate finding of a taking under the Nevada
Constitution.

Clark County is the proprietor of McCarran, which is the Las Vegas,
Nevada airport. The county has used various means to obtain operational
control over the airspace needed for safe take-offs and landings,
including the use of avigation easements and zoning ordinances that set
height limitations for areas in close proximity to airport runways.

Two more recent ordinances affected a corporate property owner who
ultimately brought suit alleging that Clark County had thereby "taken"
the airspace above the owner's land. Ordinance 1221 imposes a height
limit expressed as a "slope surface" on objects over 35 feet high within
10,000 feet along a runway centerline. Ordinance 1198 limits development
within runway protection zones to uses such as parking lots and
landscaping. The landowner allegedly had planned to build a large
hotel-casino but claimed it was prevented from doing so because of these
two ordinances. The Federal District Court agreed with respect to
Ordinance 1221 and awarded the property owner approximately \$10 million
in damages, fees, and prejudgment interest.

On appeal, the Ninth Circuit examined a recent decision of the Nevada
Supreme Court involving virtually identical facts, [McCarran
International Airport v. Sisolak]{.underline}, 137 P.3d 1110 (Nev.
2006). In that case the Nevada court had determined that (1) under state
law property owners have an ownership right to the airspace above their
land up to 500 feet, and (2) because Ordinance 1221 preserved the
unconditional right of aircraft to fly in that airspace it amounted to a
physical invasion -- a [per]{.underline} [se]{.underline} regulatory
taking -- under both Federal and State Constitutions.

The Ninth Circuit disagreed with the [Sisolak]{.underline} determination
that any [per]{.underline} [se]{.underline} taking had occurred under
the U.S. Constitution, and noted that under Federal law allegations of
regulatory takings are analyzed under a case-by-case balancing approach
that assesses the character and economic impact of the regulation, as
well as the extent of any interference with investment-backed
expectations.

The Ninth Circuit noted, however, that States may adopt takings
standards more stringent than those appropriate under Federal law. The
Ninth Circuit then held that it was bound by the Nevada Supreme Court's
view that under the Nevada Constitution a [per]{.underline}
[se]{.underline} taking occurred every time an aircraft flew through
airspace extending 500 feet above a landowner's property.

The reasoning underlying the Ninth Circuit's holding would also require
payments to other landowners adjacent to the airfield. There are seven
to ten lawsuits pending against the County that could result in
substantial compensation to these additional landowners based upon the
Ninth Circuit's decision.

The Department is working with the Solicitor General's Office in
formulating the position the United States will take in the case.

The Ninth Circuit's decision is available on-line at:

<http://www.ca9.uscourts.gov/coa/newopinions.nsf/E1AD8CF1047CF7138825733300551050/$file/0516173.pdf?openelement>

**Supreme Court Considers Virtual Representational Res Judicata Issue in
FAA FOIA Case**

On January 11 the Supreme Court agreed to review a decision of the U.S.
Court of Appeals for the District of Columbia Circuit in [Taylor v.
Sturgell]{.underline}, (Supreme Court No. 07-371), an FAA FOIA case that
raises unique res judicata issues and a form of privity known as
"virtual representation."

Virtual representation arises in cases where there has been successive
litigation, and where a non-party to the initial case is adequately
represented by a party in the first case such that the non-party in the
subsequent case is held to be bound by the original judgment..

The case was originally brought in a U.S. District Court in Wyoming by
Greg Herrick, an aircraft mechanic and commercial pilot who restores
vintage aircraft, and who is the Executive Director of the Antique
Aircraft Association. Herrick had filed a request under the Freedom of
Information Act (FOIA), 5 U.S.C. 552 seeking to have FAA release the
plans for an antique F-45 aircraft manufactured by a predecessor of
Fairchild Corporation (Fairchild) that Herrick had bought and wished to
restore. The FAA, supported by Fairchild, denied the request after
determining that the plans were non-disclosable trade secrets. The
Wyoming district court and the U.S. Court of Appeals for the Tenth
Circuit upheld FAA's determination.

After losing in the Tenth Circuit, petitioner Brent Taylor, who Herrick
had hired to restore the aircraft at issue, filed his own FOIA request
with FAA seeking the same plans that had been denied to Herrick. FAA
similarly denied that request.

Thereafter Taylor, represented by the same attorney who had represented
Herrick in the Tenth Circuit proceeding, appealed the FAA's denial to
the U.S. District Court for the District of Columbia. The district court
granted summary judgment in favor of the FAA and Fairchild.

The U.S. Court of Appeals for the District of Columbia Circuit upheld
that decision, finding that Herrick served as Taylor's virtual
representative because (1) the two parties had an identity of interests,
(2) Taylor's interest was adequately represented by Herrick, and (3) the
parties had a close relationship. Moreover, Taylor's claims were barred
by res judicata because the first case resulted in a final judgment on
the merits by the 10th Circuit and Taylor's claim in the subsequent
lawsuit was the same as Herrick's in the first suit.

The issue before the Supreme Court is whether, given the "public right"
nature of FOIA claims, and the "close associate" relationship between
Taylor and Herrick deriving from their work on the same aircraft, it
comports with due process and principles of res judicata to bar
petitioner from litigating anew Herrick's failed FOIA claim.

The United States brief is due to be filed with the Court by March 19.

The opinion of the D.C. Circuit is available at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200706/05-5279a.pdf>

### **[Departmental Litigation in Other Federal Courts]{.underline}**

**Challenge to Mexican Truck NAFTA Demonstration Project** **Briefed and
Argued in Ninth Circuit**

A collection of interest groups, including the Sierra Club, Public
Citizen, and the Teamsters, petitioned for review of the Department's
one-year Mexican Truck NAFTA Demonstration Project in the U.S. Court of
Appeals for the Ninth Circuit and asked the court for an emergency stay
of the Project. Shortly thereafter, the Owner Operator Independent
Drivers Association (OOIDA) sought judicial review and an emergency stay
of the Project in the U.S. Court of Appeals for the District of Columbia
Circuit. Both courts denied the emergency stay motions, agreeing with
DOT that the petitioners had not met the legal requirements for such
emergency relief. The two petitions were then consolidated in the Ninth
Circuit.

The petitioners allege that the Demonstration Project, under which a
limited number of Mexican trucks may operate beyond zones along the
U.S.-Mexico border, violates various statutory requirements that
Congress has imposed on this project specifically, on such projects
generally, and specifically on the entry of Mexican trucks into the
United States. The petitioners also alleged that DOT's 2008
appropriation bars expenditure of funds on the Project. The Department
contends that it has met or exceeded all statutory requirements for the
program and that the DOT 2008 appropriation only bars expenditure of
funds on future demonstration programs involving Mexican motor carriers.

Oral argument in the case, [Sierra Club v. DOT]{.underline}, (9th Cir.
No. 07-73415), was heard on February 12. The audio file of the oral
argument can be accessed by entering the docket number where indicated
on the following webpage:

[http://www.ca9.uscourts.gov/ca9/media.nsf/Media%20Search?OpenForm&Seq=2](http://www.ca9.uscourts.gov/ca9/media.nsf/Media Search?OpenForm&Seq=2).

Information concerning the Department's Mexican Truck NAFTA
Demonstration Project is available at:

[http://www.fmcsa.dot.gov/rules-regulations/ administration/
rulemakings/ rule-programs/rule_making_details.asp?ruleid=203&year=
2007&cat
=notice](http://www.fmcsa.dot.gov/rules-regulations/ administration/ rulemakings/ rule-programs/rule_making_details.asp?ruleid=203&year= 2007&cat =notice).

**Second Circuit Hears Preemption Challenge to New York Passenger Bill
of Rights Legislation**

On March 5, the United States Court of Appeals for the Second Circuit
heard arguments in [Air Transport Association, Inc. v.
Cuomo]{.underline}, (2d Cir. No. 07-5771), a case in which ATA is
arguing that New York State's recently-enacted passenger bill of rights
legislation addressing aircraft take-off delays is preempted by Federal
law.

The United States is not a party in the litigation. However, on March 3
the Department issued a clarification to an Advanced Notice of Proposed
Rulemaking (ANPRM) published last November. The ANPRM proposed new
Departmental regulations that, if finalized, would prescribe Federal
protections for airline passengers who experience lengthy tarmac delays.
In the "Regulatory Notices" section of the ANPRM the Department had
stated that any final rule would not preempt State law, and that
therefore consultation with States was unnecessary under the provisions
of Executive Order 13132. That statement had been utilized by the State
of New York before the Second Circuit to bolster its argument that the
New York statute was not preempted.

The Department's March 3 clarification explained that while new
Departmental rules addressing tarmac delays would not separately preempt
similar State rules, that is so only because States already lack the
authority to promulgate such rules since the Airline Deregulation Act
currently provides that a State "may not enact or enforce a law,
regulation, or other provision having the force and effect of law
related to a price, route, or service of an air carrier." The
Department's clarification cited the recent Supreme Court decision in
the [Rowe]{.underline} case, discussed above in "Supreme Court
Litigation," for that proposition.

The Department's clarification was relied upon by ATA during the Second
Circuit argument in support of its argument that the New York statute
is, in fact, Federally preempted. We are now awaiting the court's
decision.

**D.C. Circuit Refuses to Overturn Hours of Service Interim Rule**

On January 23, the U.S. Court of Appeals for the District of Columbia
Circuit in [Owner-Operator Independent Drivers Assoc. v.
FMCSA]{.underline}, (D.C. Cir. No. 06-1035), denied Public Citizen's
motion to enforce the court's order that had vacated the 11-hour driving
limit and 34-hour restart provision of FMCSA's motor carrier
hours-of-service regulation.  The court struck down the two provisions
in a July 2007 decision holding that the agency violated the
Administrative Procedure Act by failing to allow comment on the
methodology of the crash-risk model that the agency used to justify an
increase in the maximum daily and weekly hours that truck drivers could
drive and work. The court also held that the agency failed to provide an
explanation for critical elements of that methodology. (The court
rejected separate challenges by OOIDA to the agency's revised sleeper
berth rule and the non-extendable 14-hour on-duty rule.)

FMCSA sought a one-year stay of the effective date of the court's
ruling. The court denied FMCSA's request, but did extend the effective
date by three months through December 27.

On December 17, FMCSA issued an interim final rule (IFR) addressing the
court's concerns and reinstating the two provisions. Petitioner Public
Citizen responded with a motion that effectively asked the court to
overturn the agency's IFR.  The court denied the motion, but explained
that its denial did not prejudice Public Citizen's right to file a new
lawsuit challenging the merits of the IFR.  Public Citizen has not
challenged the IFR, and the statutory deadline for such a challenge has
passed. FMCSA is receiving comments on the IFR and intends to issue a
final rule before the end of the year.

The D.C. Circuit's July 2007 opinion is available at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200707/06-1035a.pdf>.

FMCSA's 2007 IFR is available at:

<http://www.fmcsa.dot.gov/rules-regulations/administration/rulemakings/Interim/E7-24238-HOS-IFR-12-17-07.PDF>.

Information concerning FMCSA's 2005 rule, including the rule itself, is
available at:

<http://www.fmcsa.dot.gov/rules-regulations/topics/hos/hos-2005.htm>.

**Eleventh Circuit Review Sought of Decision that [Forum]{.underline}
[Non]{.underline} [Conveniens]{.underline} Dismissals Are Available in
Cases Brought under the Montreal Convention**

Plaintiffs have sought review before the U.S. Court of Appeals for the
Eleventh Circuit of the September 27 district court decision in [In re:
West Caribbean Airways, S.A.]{.underline} (S.D. Fla. No.
06-22748-civ-Ungaro) holding that the Montreal Convention, to which the
United States is a signatory, allows a district court to determine
whether to dismiss an international aviation negligence action in
circumstances where it is argued that the United States is not the most
convenient forum in which to bring suit.

The case involves an air crash in which foreign passengers were killed
and where the foreign aircraft crashed en route in a flight from Panama
to Martinique. The only ties to the United States in the case are the
fact that an organization that was involved in securing the aircraft
used for the foreign operations is located within the State of Florida.

The court held that a dismissal, under the doctrine of
[forum]{.underline} [non]{.underline} [conveniens]{.underline} (FNC) is
available under the Montreal Convention. The Florida court had asked for
the views of the United States and we previously filed a brief arguing
that dismissals based on the inconvenience of the forum are proper under
the Convention.

The courts are split on this issue. With the exception of the Ninth
Circuit, most Federal courts under both the Montreal Convention and the
previously-applicable Warsaw Convention have applied the doctrine of
[forum]{.underline} [non]{.underline} [conveniens]{.underline} to
determine whether the action should proceed in the United States or be
transferred to the courts of another country participating in the
Convention. [See]{.underline}*,* [e.g]{.underline}*.,* [Air Crash
Disaster Near New Orleans, Louisiana on July 9, 1982]{.underline}, 821
F.2d 1147, 1162 (5th Cir. 1987) (applying FNC but denying motion to
dismiss); [In re Air Crash Off Long Island New York, on July 17,
1996]{.underline}, 65 F. Supp.2d 207, 214 (S.D.N.Y. 1999) (denying
motion to dismiss after applying FNC criteria); [In re Disaster at
Riyadh Airport Saudi Arabia on Aug. 19, 1980]{.underline}, 540 F. Supp.
1141 (D.C. Cir. 1982) (granting FNC motion to dismiss).

In contrast to the many Federal courts applying FNC in Warsaw Convention
cases, the United States Court of Appeals for the Ninth Circuit, in
[Hosaka v. United Airlines]{.underline}, 305 F.3d 989 (9th Cir. 2002),
[cert]{.underline}*.* [denied]{.underline}, 537 U.S. 1227 (2003), has
held that the doctrine is incompatible with the intent of the
contracting parties to the Warsaw Convention and therefore is
inapplicable in actions brought under it. That court specifically
declined to address whether the same result would obtain under the
Montreal Convention.

.

The district court's September 27 decision, consistent with arguments
advanced in the United States' brief, concludes that an FNC motion is
procedural in nature and that the Montreal Convention specifically
contemplates that the forum in which a suit has been brought is free to
apply its own procedural rules. In a subsequent ruling the district
court dismissed the action holding that Florida was not, in fact, a
convenient forum.

The United States is in the process of deciding whether it will appear
as an [amicus]{.underline} party in the Eleventh Circuit proceedings.
Any [amicus]{.underline} brief would be due in mid-April.

**Briefing to Begin in LAX Rates and Charges Case**

On March 6, the Department filed a "Joint Proposed Format and Schedule
for the Submission of Briefs" in response to an order issued by the
Court of Appeals for the D.C. Circuit in the consolidated case of
[Alaska Airlines, Inc. v. DOT]{.underline}, (D.C. Cir. No. 07-1209). The
case includes five consolidated petitions seeking review of the
Department's Final Decision and Refund Order resolving two complaints
that challenged the reasonableness of increased terminal charges at Los
Angeles International Airport.

The schedule proposes that the twenty-one petitioning airlines and
airport operator file their opening briefs 40 days after the scheduling
order is issued, with supporting intervenor briefs by the Air Transport
Association and Airports Council International -- North America due
fifteen days later. The Department's brief would be due fifty days after
the petitioners' opening briefs, and the normal page limit would be
increased so that the Department can adequately respond to the multiple
briefs that would be filed. Reply briefs would be due 40 days later.

As previously reported, between June 15 and August 9, seven U.S.
airlines, twenty-one foreign airlines, and the City of Los Angeles World
Airports ("LAWA") each filed several Petitions for Review,
cross-Petitions and motions to intervene in the Court of Appeals seeking
review of the Department's Final Decision and Refund Order issued June
15. The Petitions and cross-petitions challenge both the Final Decision
and Refund Order issued by the Department.

The Department's Final Decision found that the new and increased
maintenance and operations fees imposed by LAWA are reasonable and not
unjustly discriminatory; however, LAWA's imposition of a market-based
methodology for terminal fees at one domestic terminal was not
reasonably applied because it was not based on an objective
determination of market value.

The decision also found that LAWA's new fee methodology to capture
common area (e.g., lobby and restroom) costs at two domestic terminals
was reasonable because it was cost-based, but was nevertheless unjustly
discriminatory because it was unreasonably applied to some airlines at
the airport and not to others. The Final Decision also determined that
domestic carriers may challenge fees imposed upon them as holdover
tenants after their leases have expired.

In addition to seeking review of the Department's Final Decision, three
of the Petitions for Review also seek review of the Department's
subsequent Refund Order, issued on July 13, which implemented the Final
Decision. The Refund Order directed LAWA to refund the complaining
carriers a total of \$7.7 million in fees paid under protest by the
complaining carriers while the case was pending.

The consolidated case is [Alaska Airlines, Inc. v. DOT]{.underline},
(D.C. Cir. No. 07-1209, 07-1223, 07-1273, 07-1276, 07-1318). No date has
been set for or oral argument, and we expect the Court to act soon on
the joint briefing proposals the parties have submitted.

**Department Argues that Flight Attendants Challenge to Virgin America
Order Can Only Be Heard in D.C. Circuit**

On October 5, the Department filed a motion to transfer the petition for
review filed by the Association of Flight Attendants -- CWA ("AFA") in
[Association of Flight Attendants -- CWA v. DOT]{.underline}, (9th Cir..
No. 07-72960), from the U.S. Court of Appeals for the Ninth Circuit to
the U.S. Court of Appeals for the D.C. Circuit. Our motion argues that
the Ninth Circuit is not a proper venue.

On July 27 the AFA, a labor union representing certain flight attendants
in the U.S., filed a petition seeking review of the Department's Final
Order 2007-5-11, issued May 18, which granted Virgin America, Inc. a
certificate of public convenience and necessity under 49 U.S.C. § 41102
to engage in interstate scheduled air transportation of persons,
property, and mail.

AFA contends that Virgin America has not satisfied the U.S. citizenship
requirements of 49 U.S.C. § 41102. Virgin America has moved to intervene
in support of the Department's decision.

The Department's motion to transfer the case to the D.C. Circuit argues
that AFA is an unincorporated association that resides in and has its
principal place of business in the District of Columbia. The controlling
venue provision of 49 U.S.C. § 46110 requires suit in "the circuit in
which the person resides or has its principal place of business. . . ."
We therefore argued that the case can only proceed in the District of
Columbia.

AFA has opposed the motion and argues that the Ninth Circuit is a proper
venue because the union "does business" in the Ninth Circuit. AFA also
argues that the statute allowes it to choose its forum.

The Department's Final Order granting the certificate of public
convenience and necessity resulted from Virgin America's application for
authority filed in 2005, which was initially denied and then
subsequently approved on March 20, by the Department, after substantial
revision by Virgin America. Virgin America began commercial flight
operations in the U.S. on August 8.

Briefing is stayed pending a decision on the Department's motion to
transfer.

**American Airlines Seeks Review of Department's Order Instituting
Proceeding on Service in U.S.-Colombia Market**

On January 22, American Airlines, Inc. ("American"), filed a petition
seeking judicial review by the U.S. Court of Appeals for the District of
Columbia Circuit of the Department's Instituting Order (Order
2007-11-23) and Order on Reconsideration (Order 2007-12-21), issued
November 26 and December 21, respectively, which instituted the
[2007/2008 U.S. Colombia Combination Frequency Allocation
Proceeding]{.underline}. The case before the D.C. Circuit is [American
Airlines, Inc. v. DOT]{.underline}, (D.C. Circuit No. 08-1025). Spirit
Airlines and Delta Airlines have moved to intervene in the judicial
proceeding..

The Department's Orders invited interested U.S. carriers to file
applications for certificate or exemption authority to serve the
U.S.-Colombia market. American's petition challenges the Department's
decision to reexamine whether American should retain seven of its
currently allocated weekly U.S.-Colombia air service frequencies,
previously retained for the Miami-Baranquilla market, but not being used
by American at the time of the Instituting Order. American also
challenges the Department's decision to determine which other U.S.
carriers the seven frequencies should be allocated to, if not to
American.

On April 26, prior to the issuance of the Orders, Spirit had
unsuccessfully applied to the Department for reallocation of 14 weekly
frequencies currently held, but not being used by American for the
U.S.-Colombia market.

American also challenges the Department's order on reconsideration that
denied American's request that Order 2007-11-23 be vacated insofar as it
placed in issue the possible reallocation of seven of American's 42
U.S.-Colombia combination frequencies. The Department denied American's
request because American failed to use the seven frequencies as
proposed. American was put on notice in Order 2007-8-28 of the
Department's intent to reexamine the service allocation if American did
not use its frequencies as it previously announced.

The Department's Orders reflect a new understanding between the
governments of the United States and the Republic of Colombia ("2007
Understanding") relating to air service in the restricted U.S.-Colombia
market. The 2007 Understanding, among other things, resulted in the
removal of frequency limitations for scheduled combination services to
Baranquilla, Colombia. The 2007 Understanding also increased the number
of overall frequencies between the United States and Colombia by 21
additional frequencies.

On March 10 the Department filed a motion that asks the D.C. Circuit to
dismiss American's petition. Our motion argues that the Orders American
seeks review of are interlocutory in nature and are therefore not final
agency action from which a petition for review can be taken. We are
awaiting the court's decision on that motion.

**Department Seeks Summary Judgment in ACDBE Litigation**

On December 6, the Department filed a motion for summary judgment in
[The Grove, Inc. v. DOT]{.underline}, (D.D.C. No. 07-01591), which is
pending in the U.S. District Court for the District of Columbia. The
case was brought by an airport concessionaire owned by a woman, and
seeks review under the Administrative Procedure Act of the final
decision of the Department's Office of Civil Rights, which affirmed a
decision by the State of Washington's Office of Minority and Women's
Business Enterprises denying certification to The Grove to operate as an
Airport Concessionaire Disadvantaged Business Enterprise ("ACDBE") at
Seattle Tacoma International Airport.

The Department upheld the State denial on the basis that the female
owner failed to demonstrate that she is economically disadvantaged.
Specifically, the final decision found that The Grove failed to meet its
burden of proving that: (1) its owner's assets fell below the \$750,000
regulatory threshold; (2) its owner's capital contribution to purchase
the firm was "real and substantial"; and (3) the business was
independent. The Department also moved for summary judgment on the claim
that the Department violated The Grove's equal protection under the
Fifth Amendment to the Constitution when it affirmed the state's denial
of The Grove's ACDBE application.

On January 22, The Grove filed a cross-motion for summary judgment and
opposition to the Department's motion. The Grove argued that it properly
established its eligibility, that the State's grounds for denial were
insufficient, and that the Department relied on grounds not specified in
the State decision.

We are awaiting the court's decision.

## [Recent Litigation News from DOT Modal Administrations]{.underline}

##### Federal Aviation Administration

**FAA Prevails on Emergency Motions as Airspace Redesign Cases
Continue**

On September 5, 2007, the FAA issued a Record of Decision (ROD) for the
much anticipated New York/New Jersey/ Philadelphia Metropolitan Area
Airspace Redesign (Airspace Redesign). This project updates the airspace
in the NY/NJ/PHL Metropolitan Area. Once fully implemented, the FAA will
improve efficiencies in the system resulting in a reduction of delays by
up to 20% compared to taking no action. The redesigned airspace includes
changes to procedures at LaGuardia, JFK, Philadelphia, Newark Liberty
and Teterboro. The FAA is in the first stage of implementation. On
December 19, 2007, the FAA began using new departures dispersal
procedures at PHL and EWR.

We are currently facing twelve legal challenges to the Airspace Redesign
in two jurisdictions. Nine cases currently are before the D.C. Circuit,
and three are before the Second Circuit. One case filed in the U.S.
District Court for New Jersey was dismissed on December 14, 2007.

On December 18, 2007, we filed a Certified Index to our Administrative
Record for all cases pending in the D.C. Circuit. The administrative
record contains approximately 8,000 documents and covers nine years of
work on the part of the FAA. Summaries of the most active cases are set
forth below.

In [County of Rockland, NY, v. FAA]{.underline}, (D.C. Cir. No.
07-1363), petitioners allege the FAA's ROD violates NEPA, Section 4(f)
and the APA. On November 28, we moved to consolidate this case with
[Friends of Rockefeller State Park Preserve]{.underline}, (D.C. Cir. No.
07-1437) and the related challenge to our Presumed to Conform List
([County of Delaware, PA v. DOT]{.underline}, (D.C. Cir. No. 07-1385).
Rockland County opposed the motion to consolidate these cases. The
motion to consolidate is now fully briefed, and we are awaiting a ruling
from the Court.

In [County of Delaware, PA, v. DOT]{.underline}, (D.C. Cir. No.
07-1493), the County of Delaware, PA and several officials and
individuals filed a petition also seeking review of our ROD. On December
5, the U.S. Court of Appeals for the Third Circuit, where the action was
originally filed, granted our motion to transfer the case, together with
6 others, to the D.C. Circuit. On September 18, the County of Delaware
sought an administrative stay from the FAA. We denied that request on
October 5, finding the County had failed to address irreparable harm or
a balancing of the harms. The County had further failed to show a
likelihood of success on the merits concerning their arguments that the
FAA failed to comply with the Clean Air Act, failed to adequately
address cumulative impacts under NEPA, and failed to comply with DOT
Section 4(f) as it relates to the John Heinz Wildlife Refuge. On
December 10, the County sought a stay of implementation of the new
departure dispersal headings at PHL. We opposed this request and on
December 18, the D.C. Circuit denied the County's request for a stay. On
December 19, the FAA began using two of the three dispersal headings for
west-flow departures at PHL. The FAA also began using dispersal headings
for east-flow departures at PHL.

In [City of Elizabeth v. FAA]{.underline}, (D.C. Cir. No. 07-1498), the
same parties that challenged the FEIS in U.S. district court filed a
separate petition for review of the ROD. This case was also originally
filed in the Third Circuit but then was transferred to the D.C. Circuit.
On December 19, Newark Airport began using the fanned (also called
dispersed) departure headings for Runway 22L/R. The very same day the
City asked the FAA to halt implementation of these fanned departure
procedures at EWR and requested a response by 5:00 pm on December 20.
The FAA acknowledged the request but stated that a response would not be
provided until January 8, 2008. On December 21, the City asked the D. C.
Circuit to issue a stay. The United States vigorously opposed this
request and on December 21, the D.C. Circuit denied the motion without
prejudice to any subsequent filing if the City "was not satisfied with
the FAA's disposition of the motion for stay pending before it."

On January 8 the FAA sent a detailed letter by fax transmission to the
City of Elizabeth's attorney denying its request for an administrative
stay of the fanned departure headings for Runway 22L/R at Newark. On
January 18, as we anticipated, the city renewed its motion for a stay
pending judicial review. The city specifically asks the D.C. Circuit to
halt the new fanned departure headings for Runway 22L/R at Newark. Our
opposition was filed on February 4.

The City's renewed motion is similar to the original motion, although
the City also argues an alleged failure by FAA to follow its mitigation
plan (premised on the fact that the FAA is not currently implementing
the night-time ocean routing mitigation measure for Newark). On February
15, the D.C. Circuit denied the motion for stay pending judicial review.

[]{.mark}

In [Town of New Canaan, Conn. v. DOT]{.underline}, (2d Cir. No.
07-4834), the Town of New Canaan together with ten other municipalities
in Connecticut and New York filed their own petition seeking review of
the ROD. On December 12, the United States petitioned the Second Circuit
to transfer all challenges to the Airspace Redesign project to the D. C.
Circuit. The motion is pending but is unopposed.

The municipalities in this lawsuit are also members of the Alliance for
Sensible Airspace Planning. On February 8, attorneys for the Alliance
asked the FAA to prepare a supplement to the FEIS, arguing that the
"demand management measures" at JKF and Newark contain significant new
information. The Alliance claims this raises issues as to the FAA's
compliance with NEPA and the CAA. The FAA is evaluating their request.

[City of Elizabeth v. FAA]{.underline}, (D. N.J. No. 07-4240 (D.N.J.)),
is a challenge to the FAA's Final Environmental Impact Statement (FEIS).
The complaint was filed on September 4, one day before the FAA signed
the ROD. On December 14, the district court dismissed the complaint for
lack of jurisdiction and denied the pending request for a preliminary
injunction and a TRO. The United States believes an appeal is unlikely.
The City still has a pending petition for review in the D.C. Circuit.

On the challenge to the Presumed to Confirm Clean Air Act issue, [County
of Delaware, PA v. DOT]{.underline}, (D.C. Cir. No. 07-1385). on
September 26, the county together with additional petitioners, filed a
petition for review challenging the FAA's Presumed to Conform (PTC)
List. The petition appears to be a collateral attack on FAA's final
decision since the agency partially relied on the PTC list to determine
compliance with the Clean Air Act (CAA).

On October 2, the county requested that the FAA stay implementation of
the PTC list and the FAA denied this request on November 23. On November
13, the agency filed a certified index to the administrative record. In
mid-November, the petitioners sought an emergency stay. The United
States opposed that request and cross moved to dismiss. On December 11,
the Court denied Delaware County's request to stay implementation of the
PTC List. The court did not rule on the pending motion to dismiss.

Petitioners have opposed the United States' motion to consolidate this
case with Rockland County and Friends of Rockefeller State Park
Preserve.

**Second Circuit Lifts Temporary Stay Following Oral Argument in Florida
Airport Relocation Project**

In [Natural Resources Defense Council, v. FAA,]{.underline} (2d Cir.,
No. 06-5267-ag), petitioners challenge FAA\'s approval of the relocation
of the Panama City Bay County International Airport (PFN) from its
current location in Panama City, Florida, to a new location in western
Bay County in the panhandle of Florida.

Briefing on the merits of the case was completed on June 18, and the
parties were awaiting an order scheduling oral argument before the
Second Circuit. At the time the briefing was completed, the airport
sponsor was still awaiting a Clean Water Act Section 404 permit allowing
the filling of wetlands, which was the last remaining hurdle preventing
the onset of construction. The Army Corps of Engineers issued the 404
permit on August 16. As time passed and no date for oral argument was
forthcoming, the airport sponsor began making plans to begin
construction of the airport. On October 25 the airport sponsor sent a
notice to petitioners of its intent to commence construction in 30 days,
with the potential for filling of wetlands to begin an additional 30
days after the start of physical alteration at the site.

In order to prevent the filling of wetlands, on November 29, petitioners
Friends of PFN and NRDC filed an emergency motion for a stay pending
appeal. Their claims focused on the irreparable injury that they argued
would occur if the airport sponsor were permitted to begin filling
wetland prior to a decision on the merits of the case.

The Second Circuit issued a temporary administrative stay on November 29
pending oral argument on the motion for emergency stay. On December 14
in response to the Court's issuance of the temporary administrative
stay, the Army Corps of Engineers suspended the 404 permit for the
project, indicating its intention to be consistent with the Court's
order.

Oral argument on the emergency motion for stay pending appeal was held
on December 17. At the end of the argument, the panel indicated its
intent to issue an order partially lifting the administrative stay that
was entered on November 29.

Later that day, the Court issued an order permitting certain
construction activities to commence that would not impact wetlands. In
addition, the Army Corps of Engineers' 404 permit allowing wetland
impacts was still under suspension. In an effort to prevent the airport
sponsor from an unnecessary delay in commencing full construction, the
Court agreed to an expedited hearing on the merits of the case. Oral
argument on the merits of the case was therefore set for January 23.

At oral argument, the airport sponsor again expressed its concern about
the monetary and other damages it would suffer from a continued delay of
commencement of full construction activities, including the filling of
wetlands on site. Following oral argument the court, on January 25,
vacated the stay. On February 1 the Army Corps of Engineers reinstated
the wetland permit for the project, thereby removing all impediments to
the airport sponsor's ability to commence full construction activities.

However, opponents to the project took their fight to the next available
forum, suing the Army Corps of Engineers under the Clean Water Act, the
Endangered Species Act, and the National Environmental Policy Act in the
United States District Court for the Middle District of Florida, in
Jacksonville, Florida. [Florida Clean Water Network v.
Grosskrueger]{.underline}, (M.D. Fla. No. 3:08-cv-00120-TJC-TEM). The
project's opponents filed a complaint, a motion for a temporary
restraining order, and a motion for a preliminary injunction on February
4.

The district court immediately held a telephonic oral argument on
February 4, and denied the requested TRO. Oral argument on the request
for PI was held on February 14. Shortly after concluding the oral
argument the District Court issued a brief order denying the requested
PI.

At this time, the Corps will still need to file an answer to the
complaint, and the Court has not yet issued a schedule for summary
judgment briefing. The airport sponsor intends to initiate full
construction activities in the near future.

**D.C. Circuit Finds FAA Advisory Circular to Be**

**A Final Reviewable Order Unsupported By Substantial Evidence**

On December 11, the U.S. Court of Appeals for the District of Columbia
Circuit in [Safe Extensions, Inc. v. FAA]{.underline}, (D. C. Cir. No.
06-1412) ruled that Advisory Circular 150/5345-42F, [Specification For
Airport Light Bases, Transformer Housings, Junction Boxes, and
Accessories]{.underline}, which imposes a freestanding torque test on
adjustable airport runway light bases, was a final reviewable order
under 49 U.S.C. § 46110(a). The Court (Henderson, Tatel, Kavanaugh) also
held that the agency's administrative record did not contain substantial
evidence to support the agency's ultimate decision. As a result, the
imposition of a freestanding torque test in the circular was held to be
arbitrary and capricious and the petition was granted.

Safe Extensions, which manufactures bases that house lights that
illuminate airport runways and taxiways, challenged the advisory arguing
that it was arbitrary and capricious agency action violative of the
Administrative Procedure Act. Essentially, the company argued that the
circular, which revised a prior agency issuance on the same subject, did
not promote air safety and placed the products it makes at an unfair
competitive disadvantage.

The United States argued that the court lacked jurisdiction over the
petition for three reasons. First, we argued that the Circular was
neither an order under section 46110(a), nor an agency action reviewable
under the APA. Second, we argued that the manufacturer lacked prudential
standing to challenge the circular. Third, we argued that matters
covered by the circular were committed to agency discretion by law and
were therefore unreviewable. The United States alternatively argued on
the merits that the FAA acted reasonably in imposing different technical
requirements and tests on two competing light base technologies,
especially given that one had a long history of reliability in the field
that the other lacked.

The Court's decision applied its prior holdings in [Dania Beach v.
FAA]{.underline}, 485 F.3d 1181(D.C. Cir. 2007) and [Bensenville v.
FAA]{.underline}, 457 F.3d 52, 68 (D.C. Cir. 2006), which stand for the
proposition that agency actions are reviewable orders under section
46110 of title 49 so long as they are final, mark the consummation of
the agency's decision-making process and determine rights or obligations
or give rise to legal consequences.

The court proceeded to find that SAFE had prudential standing and a
substantial interest in the order. In addition, the court noted that
there were reasonable grounds to permit SAFE to challenge changes made
in the AC prior to the current version. Having disposed of the FAA's
jurisdictional arguments, the court turned to the merits and held that
the determinations in the circular were only supported by the agency's
unsupported assertion and that these did not amount to substantial
evidence. The Court found that the FAA record provided no evidence
substantiating the change made in the advisory circular.

The D.C. Circuit's decision is available at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200712/06-1412a.pdf>

**Compliance with D.C. Circuit [Dania Beach]{.underline} Order
Questioned**

On May 11, the U.S. Court of Appeals for the District of Columbia
Circuit in [City of Dania Beach, Florida v. FAA]{.underline}, (D.C. Cir.
No. 05-1328) ruled that an FAA letter providing a new interpretation of
the Fort Lauderdale-Hollywood International Airport's noise
compatibility program was a final reviewable order of the FAA, and that,
as a result, the agency was required to undertake a NEPA environmental
analysis before issuing the interpretation.

The FAA's letter changed the runway use procedures at Fort
Lauderdale-Hollywood International Airport in light of increasing
congestion at the air field. The City of Dania Beach argued before the
D.C. Circuit that the new procedures would route more jet aircraft onto
two previously restricted runways, thus increasing noise, soot, and
exhaust fumes over residential areas. They contended that the FAA made
this change without engaging in the required environmental review
process.

The United States argued that the letter was not reviewable, because it
merely explained the existing procedures and did not actually change the
manner in which the runways would be used.

The D.C. Circuit disagreed. The FAA's letter, in the court's view,
provided new "marching orders" about how air traffic will be managed at
the airport. As a result, the court concluded that the FAA letter was
final action requiring review under section 4(f) of the Department of
Transportation Act, 49 U.S.C. § 303(c), and an environmental assessment
under the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321
[et]{.underline} [seq]{.underline}.

In implementing the court's order, the FAA went back to the
[status]{.underline} [quo]{.underline} [ante]{.underline}, while the
agency proceeded with a NEPA review. This allowed the agency to proceed
with a secondary runway use to relieve congestion under a general
communication plan with the County of Broward. The court had discussed
the possibility of seeking specific permission from the county before
any use of the runways. Based on existing documents, however, that had
not been presented to the court, the FAA maintained, with Department of
Justice concurrence, that the blanket communication was sufficient.

On January 11, the FAA received a letter from opposing counsel
questioning the agency's specific compliance. Specifically, the letter
questioned: (1) FAA's interpretation of [status]{.underline}
[quo]{.underline} [ante]{.underline}; and (2) whether FAA had
sufficiently briefed air traffic controllers about the limitations of
the court order.

FAA responded on February 1, explaining the agency's compliance with the
court's order. The explanation set forth the [status]{.underline}
[quo]{.underline} [ante]{.underline} as it existed, based on the new
documents, and explained FAA's compliance. The agency also explained how
the directions to follow the court's order were carried through from
management in D.C. to the air traffic controllers in Florida. FAA has
heard nothing further from opposing counsel.

The D.C. Circuit's decision is available at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200705/05-1328a.pdf>

**Township Challenges Logan Airport's Boston Overflight Noise Study**

On December 14, the Town of Marshfield, Massachusetts filed a petition
seeking review of the FAA's categorical exclusion Record of Decision
adopting the Boston Overflight Noise Study. [Town of Marshfield v.
FAA]{.underline}, (1st Cir. No. 07-0280). The Study approved
implementation of noise abatement arrival and departure procedures for
turbojet aircraft at Boston Logan International Airport.

These procedures will reduce noise for residents of some of the
communities to the northeast and southeast of the airport. The town of
Marshfield, however, would receive additional noise and overflights from
aircraft arrivals at the airport. The town also maintains that special
properties, including schools, parks, historic properties and
conservation areas, are under the new flight path and would be adversely
affected.

On February 22, the town sought a judicial stay before the First
Circuit. Marshfield claims that FAA's decision not to prepare an
environmental assessment or an environmental impact study, and instead
to rely on a categorical exclusion violated NEPA. Briefing has yet to
begin and no date has as yet been set for oral argument.

##### Federal Highway Administration

**Maryland District Court Dismisses Challenges to Construction of the
Inter-County Connector**

On November 8, Judge Alexander Williams of the U.S. District Court for
the District of Maryland issued a decision in [Audubon Naturalist
Society v. DOT]{.underline}, (D. Md. No. 8:06-cv-03386-RWT), reported at
524 F. Supp2d 642, that upheld the government's environmental decisions
approving the construction of the Intercounty Connector (ICC).

In the 106 page decision Judge Williams found that the extensive
administrative record supported the government's decision to approve the
project and that there was no legal or equitable basis to prevent the
construction of the ICC from moving forward. On January 7, the Sierra
Club and the Environmental Defense filed a notice of appeal with the
U.S. Court of Appeals for the Fourth Circuit.

The Environmental Defense Fund (ED), Sierra Club (SC), Audubon Society,
and local individuals originally filed two lawsuits in December 2006
against DOT and FHWA in the U.S. District Courts for the District of
Marylandand for the District of Columbia in an attempt to stop
construction of the ICC project. Plaintiffs challenged the adequacy of
the Record of Decision (ROD) authorizing the ICC and alleged violations
of the National Environmental Policy Act (NEPA), Section 109 of the
Federal Aid to Highways Act (FAHA), the Clean Water Act (CWA), the Clean
Air Act (CAA), Section 4(f) of the DOT Act and other statutes and
regulations.

The D.C. case was transferred to Maryland and the cases were
consolidated. In reaching its decision rejecting each of the plaintiffs'
challenges, the district court considered over 1,000 pages of pleadings
and a 200,000 page administrative record filed by the parties.
Additionally several hearings were held in September 2007.  The State of
Maryland also participated as an intervenor in the consolidated cases.

The \$2.4 billion ICC project will be a controlled access multi modal
electronic toll highway with eight interchanges, extending approximately
18 miles from I‑370/I‑270 near the Shady Grove Metrorail Station to U.S.
1 between Beltsville and Laurel, Maryland. The ICC will follow a route
that represents a significant departure from prior rejected iterations.
A comprehensive \$370 million package of mitigation and stewardship
activities is a condition of funding the project**.** The study,
completed in anticipation of the project, was conducted with
unprecedented public involvement including an interactive website.

This appeal to the Fourth Circuit only addresses Judge Williams'
findings with respect to the Clean Air Act, the Federal Aid to Highway
Act and certain NEPA rulings. The Audubon Society, the major plaintiff
in the Maryland case, and the individual Maryland plaintiffs, have not
appealed the decision and therefore their Section 4(f) and the Clean
Water Act allegations, as well as certain NEPA claims that only they
raised, will not be part of the appeal.

The State of Maryland is currently proceeding with construction of the
project.

The district court's decision is available online at:

[http://www.mdd.uscourts.gov/Opinions152/Opinions/06-3386%20Memo%20Op%20DENY%20PL%20MSJ.pdf](http://www.mdd.uscourts.gov/Opinions152/Opinions/06-3386 Memo Op DENY PL MSJ.pdf)

**Sixth Circuit Narrowly Upholds FHWA in Hiring Practices Dispute**

On November 21, the U.S. Court of Appeals for the Sixth Circuit in [City
of Cleveland v. FHWA]{.underline}, (6th Cir. No. 06-3611) upheld the
FHWA determination that Cleveland's local hiring preference lawviolated
FHWA contracting statute and regulation.  The Sixth Circuit's decision
affirmed the judgment of the District Court in its January 13, 2006,
grant of FHWA's motion for summary judgment.

This case arose after the FHWA informed the Ohio DOT that FHWA was
withdrawing funds for the Kinsman Road project in Cleveland, Ohio,
because Cleveland's local hiring preference violated the provisions of
23 C.F.R. §635.117(b) by imposing a local hiring preference that
discriminated against non-Cleveland, Ohio residents.

Cleveland's local hiring ordinance requires that 20% of the total hours
of work performed by construction workers on City projects are to be
performed by residents of the City. Under the ordinance failure to do so
could result in a stiff bonding penalty that would be levied against the
contractor on future contracts.

In its decision, the Sixth Circuit Court rejected the argument that
Cleveland lacked standing, and held that the city had standing to
challenge the FHWA's funding decision because Cleveland suffered an
injury in fact when FHWA forbade ODOT to provide previously committed
Federal funds to the Kinsman Project. The court also rejected FHWA's
argument that as a subgrantee to ODOT, Cleveland lacked independent
standing to challenge FHWA's funding decision.

However, on the merits the court held that provisions set forth at 23
USC § 112(b) provided FHWA with discretionary authority to effectuate
the Act's purposes, including determining whether all contract
requirements were set forth in the advertised specifications. The Court
rejected FHWA's interpretation that 23 USC § 112(b)'s competitive
bidding language prohibited a contracting requirement for local hiring
preferences, such as the Cleveland ordinance, inserted after bidding had
ended. However, because Cleveland inserted the local hiring preference
requirement after the contract was advertised and bid, the court upheld
FHWA's decision that the contract violated the statute by not including
the local hiring preference in the advertised specification.

The court upheld only one of FHWA regulatory arguments. The Court
rejected FHWA's argument that the local hiring preference violated
FHWA's regulations at 23 CFR § 635.110(b) as a noncompetitive contract
provision. However, the Court upheld as reasonable FHWA's determination
that the ordinance violated the 23 CFR § 635.110(b) regulation because
the bond penalty provision of the local hiring preference "could
discourage" contractors who had once failed to meet the local hiring
preference "from submitting subsequent bids because they uniquely would
be required to provide a twenty percent bond." Slip Op. at 13-14.

The court held that the Cleveland ordinance did not violate 23 CFR §
635.112(d) because the regulation dealt only with bidding procedures,
and the ordinance was not a bidding procedure. Also the regulation was
not, in the court's view, demonstrably contrary to Federal Requirements.
The court stated, "\[a\]lthough the FHWA has discretionary authority to
decline to approve contracts that may not reflect the efficient use of
federal dollars, the FHWA has not demonstrated that local hiring
preference styled in the manner of the \[Cleveland hiring preference\]
are impermissible [per]{.underline} [se]{.underline} due to their
conflict with federal law." Slip Op. at 14.

The court also rejected FHWA's argument that 23 CFR §635.117(b)
prohibits local hiring preferences such as the Cleveland ordinance,
because the exact wording of the regulation only prohibited
discrimination against out-of-state workers, and not the in-state,
non-Cleveland, Ohio, residents targeted in this case.

The court ultimately upheld FHWA's decision that the Cleveland local
hiring preference violated 23 USC § 112(b) and 23 CFR § 635.110(b), and
so violated the Common Rule provisions that state subgrants must not
violate Federal statutes and regulations. Finally, the court also
determined that FHWA's decision to withdraw Federal funds from the
Kinsman Road project did not violate the "clear statement" rule set
forth in [Pennhurst State Sch. & Hospital v. Halderman]{.underline}, 451
U.S. 1 (1981), because 23 U.S.C. § 112(b) fairly apprised States that
any contract specification, regardless of its substantive viability
under the federal regulations, cannot be "imposed as a condition
precedent to the award of a contract . . . unless such requirement or
obligation . . . is specifically set forth in the advertised
specifications." 23 USC § 112(b)(1), as cited in Slip Op. at 18.

Therefore, despite disagreeing with elements of the district court's
opinion supporting FHWA, the Sixth Circuit affirmed the lower court's
judgment and upheld FHWA's decision to withdraw Federal funding from the
Kinsman Road project.

The Sixth Circuit's decision is available at:

<http://www.ca6.uscourts.gov/opinions.pdf/07a0460p-06.pdf>

**D.C. District Court Upholds Cincinnati Commuter Project**

On January 8, the U.S. District Court for the District of Columbia in
[Rivers Unlimited v. DOT]{.underline}, (D.D.C. No. 1:06-cv-01775-JR)
granted summary judgment in favor of FHWA and the Ohio Department of
Transportation in a case involving a dispute concerning a new
transportation project designed to improve commuting between downtown
Cincinnati and its east-lying suburbs.

To meet the need of the project, two highway options were considered:
(1) a new bridge across the Little Miami River; and (2) expansion of the
existing river crossing. The Ohio DOT chose to tier the environmental
process and exclude Option 2 at the conclusion of Tier 1. As a result,
plaintiffs launched four attacks upon the Tier 1 FEIS. Their first claim
was that the exclusion of Option 2 from the FEIS runs afoul of the NEPA
requirement that an EIS assess alternatives to a proposed plan that
would also meet the project's purpose and need. Their second claim was
that FHWA substantively erred in finding that the new bridge would not
result in a constructive use of the Little Miami River under Section
4(f). The third and fourth claims were, respectively, that the agency
failed to perform a new EIS in response to new information, and that the
agency used a faulty gas price in conducting its environmental
assessment. The district court rejected each of these claims.

The Little Miami River is designated as a valuable resource under the
Wild and Scenic Rivers Act. The plaintiffs alleged that the proposed
bridge would constitute a constructive use by substantially impacting
the current visual and aural characteristics of the river. However, the
Court ruled that the agency's determination of no constructive use must
be upheld because the river was already disturbed by man-made
distractions such as sewage overflow pipes, clearings for farmland, and
other semi-industrial uses. The Court also noted that because the river
was classified as a recreational river, (the lowest classification under
the Wild and Scenic Rivers Act) it deserved the least amount of
protection.

Plaintiffs also alleged that FHWA's assessment of noise levels was
arbitrary and capricious because the agency classified the Little Miami
River as a Class B rather than a Class A receptor. The Court disagreed,
and ruled that FHWA's assessment of noise levels was done according to
its established procedures and as a result, was entitled to substantial
deference.

The court also rejected the allegation that a new EIS was required.
Plaintiffs had argued that significant new information submitted by the
NPS indicated that more careful noise sampling procedures would yield
lower levels of noise pollution (thereby rendering the river as a Class
A receptor) than previously suggested by the Ohio and FHWA. The court
rejected this, holding that a report suggesting that the Little Miami is
in fact quieter than FHWA concluded does not qualify as significant new
information requiring a new EIS.

Plaintiffs finally alleged that the modeling price of \$1.13/gallon used
for the project was unrealistic and argued that its use violated the
requirement that an EIS be based on accurate data. The court again
disagreed, and ruled that while FHWA may have based its calculations on
unrealistic estimations, those calculations did not skew the analysis in
the agency's favor.

**Indiana District Court Upholds FHWA's Tiered EIS**

FHWA's first important legal test of a tiered Environmental Impact
Statement (EIS) resulted in a December 10 grant of summary judgment in
[Hoosier Environmental Council v DOT]{.underline}, (S.D. Ind. No.
1:06-cv-1442). The case involved a proposed 142 mile, new-location
highway from Indianapolis to Evansville, Indiana, a part of the national
I-69 project that will eventually stretch from the Canadian to the
Mexican border.

The plaintiffs, three environmental groups and several individuals,
brought suit in October 2006 against the FHWA, the U.S. Fish and
Wildlife Service, and the Indiana Department of Transportation (INDOT),
claiming alleged violations of the National Environmental Policy Act
(NEPA), the Endangered Species Act (ESA), the Clean Water Act, and
Section 4(f).

The Tier 1 EIS winnowed nineteen possible route alternatives down to
five basic corridors (with some variations) for the interstate highway
between Indianapolis and Evansville. Based upon three core goals, the
FHWA chose alternative 3C, a 2000 foot wide corridor that passes near
Bloomington and further south traverses a planned national wildlife
refuge. Six separate Tier 2 EISs will determine the actual location of
the highway within six smaller segments of the corridor.

The plaintiffs claimed that by using a tiered approach FHWA avoided
decisions on key environmental issues, which the court acknowledged was
a danger unless there is strong coordination among agencies. However,
the district court held that a tiered approach was "an accepted and
useful tool that can enable agencies to navigate efficiently and
responsibly through large highway projects." The court noted that the
"art of effective tiering is to find the appropriate level of detail at
each level" and went on to conclude that it was "impractical and
unnecessary to require a site-specific analysis for each alternative
considered in a project the size of Interstate 69."

The court did warn that is was possible, if not probable, that more
detailed field studies on the chosen alternative could force FHWA and
INDOT to reconsider previously rejected alternatives because of serious
impacts. The level of detail for a tiered document, however, was
adequate in the court's view for FHWA to select the alternative it did.

On the ESA counts, the court, after a lengthy discussion of the
endangered Indiana bat, found that the amended 2006 Biological Opinion
(BO) was sufficient for Tier 1. The BO was, the court noted, an evolving
document that will be reevaluated at the Tier 2 level.

On the Clean Water Act counts, the court found that the coordination
between FHWA and the Corps of Engineers was sufficient for Tier 1
purposes. The court noted that the Corps would still have to make a
determination that Alternative 3C was the least environmentally damaging
alternative as well as issue section 404 permits at the Tier 2 EIS
level.

Finally, the court also determined that FHWA complied with section 4(f).
Although the selected alternative runs through a prime 4(f) resource,
the Patoka River National Wildlife Refuge, the court accepted the joint
planning exception to 4(f) and found a longstanding agreement by the
State and Federal agencies that the highway would run throughthe refuge.

The plaintiffs have not appealed the decision.

Work on the Tier 2 EISs for I-69 is proceeding quickly for three
sections. In fact, the FHWA issued a Record of Decision for the
southernmost section on December 12. A notice for the Federal Register
is being prepared to institute the 180 day statute of limitation for
filing a lawsuit against the Tier 2 Section 1 ROD.

**Buffalo Federal-Aid Highway Project Challenged in New York District
Court**

In [Buffalo Niagra Riverkeeper, Inc v. FHWA]{.underline} (W.D. N.Y.) the
plaintiffs are seeking to prevent a federal-aid highway project from
proceeding pending compliance with NEPA, the NHPA, and Section (f).

The complaint was filed by several citizens groups, which include
members of the Buffalo City Council, alleging that the EIS for the
relevant highway project failed to adequately address adverse impacts of
the project and failed to meet section 4(f) requirements, and that the
Federal and State agencies failed to comply with the National Historic
Preservation Act and various State laws.

The highway project is in the vicinity of the Buffalo inner harbor area,
and is a central component of the City's urban redevelopment efforts
around the waterfront. Construction is scheduled to begin in the spring.
FHWA expects the plaintiffs to seek a preliminary injunction in an
attempt to forestall that construction.

**Denton Texas Federal-Aid Highway Project Challenged in Texas District
Court**

[Highland Village Parents Group v. FHWA]{.underline}, (E.D. Tex., No.
4:07-cv-00548-RAS) was filed on December 10 against FHWA and several
Departmental officials. The complaint seeks to enjoin construction of a
federal-aid highway project in Denton County, Texas, pending compliance
with NEPA and Section 4(f). The Plaintiff is the Highland Village
Parents Group (HVPG). The group has also sued the Texas Department of
Transportation and its officials.

The subject project will provide a new segment of FM 2499 from FM 407 to
FM 2181 in Denton County. The new roadway will be approximately 4.7
miles in length and will pass through or abut the City of Highland
Village, the Town of Copper Canyon, unincorporated Denton County land,
the Town of Corinth, and U.S. Corps of Army Engineers (USACE) land and
water associated with the Poindexter and Hickory Creek Branches of
Lewisville Lake. Since the project does take USACE lands, a 4(f)
analysis was completed. Also, the USACE served as a participating agency
on this EA.

The FONSI was issued in June 2005. In July of 2006 the public notice of
the approval was published in the Federal Register. This notice was
published in order to take advantage of the Congressionally-created
statute of limitation in 23 U.S.C. § 139(l), which, in the circumstances
of this case, required any judicial challenge to the final agency action
to be brought by or before January 27, 2007.

Following the issuance of the FONSI, the Texas Department of
Transportaion did make several minor design changes to the construction
plans, changes that normally occur during the design phase of a highway
or bridge project. The design changes were reviewed by the FHWA in a
re-evaluation completed and approved in October 2007.

The changes triggered an internal FHWA analysis to ascertain if there
were any changes or impacts to the environment from the design changes
or the passage of time that might require a supplemental NEPA study and
documentation. 23 C.F.R. § 771.129. The re-evaluation found that the
FONSI remained valid and that no new or renewed NEPA scrutiny was
required. However, we anticipate that the plaintiff will argue that the
re-evaluation reopened the EA/FONSI for legal challenge. If so, this
will be the first legal challenge to a project that utilized the statute
of limitations provisions of 23 U.S.C. § 139(l).

The United States filed a motion to dismiss in January, arguing that the
challenge is time-barred.

###### **Federal Railroad Administration**

**D.C. Circuit Hears Argument in Engineers' Action against FRA, LERB,
and Union Pacific Railroad**

On May 18, 2006 Mr. C.L. Daniels, a former Union Pacific Railroad
Company (UP) locomotive engineer, and the Brotherhood of Locomotive
Engineers and Trainmen filed a complaint in the U.S. District Court for
the District of Columbia, [Daniels v. Union Pacific Railroad
Co.]{.underline}, (D.D.C. No. 1:06-CV-00939). The complaint named FRA,
FRA's Locomotive Engineer Review Board (LERB), and UP and alleged that
the defendants committed constitutional torts against Mr. Daniels. In
particular, the complaint alleged that UP, acting under color of Federal
law through FRA's locomotive engineer certification regulations, revoked
Mr. Daniels' locomotive engineer certification without a pre-deprivation
hearing or a prompt post-deprivation hearing, in violation of the Due
Process Clause of the Constitution. The complaint further alleged that
FRA and the LERB (the Federal defendants) acquiesced in UP's denial
decision and were biased against Mr. Daniels in denying his petitions
for administrative review.

Meanwhile, on May 19, 2006, one day after filing in the District Court,
Mr. Daniels filed an administrative appeal to the FRA Administrator from
the FRA's Administrative Hearing Officer's (AHO) adverse ruling
pertaining to the denial of his re-certification. The FRA Administrator
issued his decision on July 31, 2006, affirming the AHO's decision. The
Administrator's decision constituted final agency action.

On August 24, 2006, the Federal defendants filed a dispositive motion to
dismiss the lawsuit in the District Court on the grounds of (i)
sovereign immunity, (ii) the plaintiffs' failure to exhaust their
administrative remedies, and (iii) the exclusive jurisdiction of the
Court of Appeals under the Hobbs Act for appeals of final administrative
orders. (UP also moved to dismiss the lawsuit on the ground that it was
not a state actor or engaged in state action). On March 29, 2007, the
District Court granted the defendants' motions and dismissed the case.
The District Court dismissed the plaintiffs' claims against the Federal
defendants for failure to exhaust their administrative remedies. The
District Court also dismissed the plaintiffs' claims against the Federal
defendants because it found that the Hobbs Act deprived it of
jurisdiction to decide Constitutional claims as to the application or
enforcement of Federal regulations that were not attacked as per se
unconstitutional. Finally, the District Court dismissed all claims
against UP, as it found that it was not a State actor.

On April 12, 2007, plaintiffs filed an appeal with the U.S. Court of
Appeals for the District of Columbia, [Daniels v. Union Pacific Railroad
Co.]{.underline}, (D.C. Cir. No. 07-5114). The Federal defendants and UP
then moved for summary affirmance of the District Court's decision. On
September 27, the D.C. Circuit denied the defendants' respective motions
for summary affirmance and set the case for full briefing on the merits.
Briefing was completed on January 31, focused primarily on (i) whether
the District Court lacked subject matter jurisdiction over the
plaintiffs' claims because the plaintiffs failed to properly exhaust
their administrative remedies before the FRA, (ii) whether the District
Court lacked subject matter jurisdiction over the claims because the
Hobbs Act provides that the Court of Appeals has exclusive jurisdiction
over final actions of the Secretary of Transportation, and (iii) whether
UP's roll in issuing locomotive engineer certifications converts it into
a state actor. On March 13, the Court heard oral argument in the case,
focusing on those three issues. The Court of Appeals has not yet issued
a final decision.

**Union Challenges FRA Responses to FOIA Request and Petitions for
Rulemaking**

On November 13, a United Transportation Union local, and other named
plaintiffs, filed a lawsuit, [United Transportation Union Local 418 v.
Boardman]{.underline}, (N.D. Iowa No. C 07-4100MWB), against the FRA
Administrator, the Secretary of Transportation, and the United States,
in the United States District Court for the Northern District of Iowa.
The lawsuit alleges that FRA failed to comply with various statutory and
regulatory requirements related to responding to three petitions for
rulemaking and a Freedom of Information Act request.  Plaintiffs seek a
declaratory judgment and a mandatory injunction.  It appears that the
Department was not served notice of the filing until December 3, 2007.

The United States responded to the lawsuit on March 5, filing a motion
to dismiss, or in the alternative a motion for summary judgment. The
United States contends that the district court has no jurisdiction in
this matter, because FRA has fully and properly responded to the Freedom
of Information Act request, and each of the petitions for rulemaking.
Therefore, the claims involved in the lawsuit are moot, with the
exception of the claim for the waiver of fees associated with the
Freedom of Information Act request, as to which the United States
contends the court also lacks jurisdiction because plaintiffs had failed
to exhaust their administrative remedies.

The District Court has not yet ruled on the Motion to Dismiss. 

**National Highway Traffic Safety Administration**

**D.C. Circuit Dismisses Public Citizen Challenge to Tire Pressure
Monitoring System Rule on Standing Grounds**

On January 22 the U.S. Court of Appeals for the District of Columbia
Circuit in [Public Citizen, Inc. v. Mineta,]{.underline} (D.C. Cir. No.
05-1188) dismissed Public Citizen's challenge to NHTSA's Tire Pressure
Monitoring System Rule after concluding that Public Citizen lacked
standing to prosecute the action. Neither Public Citizen nor the Federal
government raised standing issues initially, but the D.C. Circuit raised
the issue and eventually scheduled a rare second oral argument limited
solely to the standing issue.

This litigation originally encompassed the consolidation of two groups
of petitions for review: (1) petitions for review of the Tire Pressure
Monitoring System (TPMS) rule, and (2) a petition seeking review of
NHTSA's denial of an administrative petition for rulemaking on tire
reserve load (TRL).

On June 15, the D.C. Circuit issued its first opinion in the case. There
the Court first held that a challenge to the denial of a petition for
rulemaking under the National Traffic and Motor Vehicle Safety Act, as
amended, can only be heard in the district court, rather than a court of
appeals. Accordingly, the court dismissed the petition seeking review of
NHTSA's denial of the petition for rulemaking, finding that the D.C.
Circuit lacked jurisdiction.

Second, as to the challenge to the TPMS rule, the Court held that the
tire company petitioners, which were not regulated by the rule, lacked
standing to challenge it. The court therefore dismissed their petitions.

Third, the court ordered more briefing addressing whether Public Citizen
had standing to challenge the rule. Thereafter the court issued an order
setting forth a supplemental briefing schedule relating to the standing
issue. Standing had been raised by intervenor Alliance of Automobile
Manufacturers (Alliance) but not by the United States.

In order to establish standing the court's order specifically required
Public Citizen to demonstrate whether NHTSA's TPMS Rule created a
substantial increase in the risk of death, physical injury, or property
loss and whether the ultimate risk of harm to which Public Citizen's
members might be exposed would be "substantial" and sufficient "to take
a suit out of the category of the hypothetical." Public Citizen also was
required to show causation by demonstrating a substantial probability
that automakers would not adopt safety standards more stringent than
NHTSA specified, and that consumers on their own would not check their
tires so as to prevent injuries to others and consumers would pay
attention to the warning lights.

On January 22, the D.C. Circuit issued its second opinion, which
dismissed Public Citizen's petition. The Court agreed with the Alliance
that Public Citizen had not met its burden regarding the rules'
requirements on replacement tires. When replacement tires that are
incompatible with the TPMS system are installed, the rule did not
require that the system warn the operator of low tire pressure; instead,
the rule required that the TPMS indicate that incompatible tires had
been installed. The Court noted that Public Citizen proposed two
alternatives to address replacement tires but made no attempt to
demonstrate the difference in risk between the TPMS standard and the
list proposal.

Public Citizen had also argued that the 20 minute potential lag time
between an actual under-inflation situation and the activation of a
dashboard warning was, in Public Citizen's view, inconsistent with the
TREAD Act. Public Citizen had argued for closer to a one minute time
period. The court, however, noted Public Citizen's admission that it was
difficult to quantify the risks between the two approaches and stated
that Public Citizen's attempts to do so were simplistic and unreliable.
By contrast, the court credited NHTSA's declarations as a more accurate
depiction of commuting and driving patterns and deemed Public Citizen's
statistics unreliable.

Finally, Public Citizen had argued that the minimum trigger to activate
the warning light for under-inflation under the TPMS rule -- 25 per cent
below placard pressure measure -- also violated the TREAD Act. Public
Citizen attempted to demonstrate injury in fact relating to this
allegation by quantifying the increased risk of injury from the 25%
below placard pressure standards as adopted compared to the minimum
pressure in Tire & Rim Association (T&RA) tables. According to the tire
industry submissions, this pressure is set as the minimum tire pressure
required to safely carry a car operating at its maximum load. Public
Citizen argued that there was an increase in risk between the trigger in
NHTSA's rule and a trigger based on the T&RA tables.

The court found two statistical flaws in Public Citizen's argument.
First, it was based in part on data that included recalled tires. The
court credited the NHTSA declarants for explaining that recalled tires
must be omitted from any tire-failure data, because the recalled tires
typically contain a performance defect. Second, the court concluded that
Public Citizen had overstated the risk of using NHTSA's 25% below
placard standard as opposed to the T&RA table pressure standard. Public
Citizen's statistician had estimated that 58% of cars would benefit from
Public Citizen's preferred standard. However, as the court noted, these
same statistics also indicated that 39% of cars would benefit from the
standard as adopted. The court criticized Public Citizen's analysis for
attempting to take all of the benefits while ignoring all of the costs.

Neither the court's January 22 decision, nor its earlier June 8 decision
reached the merits of the NHTSA rule.

The June 8 decision is available online at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200706/05-1188a.pdf>

The January 22 decision is available online at:

<http://pacer.cadc.uscourts.gov/docs/common/opinions/200801/05-1188b.pdf>

**Ninth Circuit Remands NHTSA's CAFE Rule for Light Trucks and NHTSA
Seeks Rehearing**

On November 15 the U.S. Court of Appeals for the Ninth Circuit in
[Center for Biological Diversity v. NHTSA]{.underline} (9th Cir. No.
06-71891) remanded NHTSA's final rule setting corporate average fuel
economy (CAFE) standards for light trucks. Notably, the decision did not
vacate the NHTSA rule, which will therefore remain in effect during the
remand proceeding.

NHTSA's rule was challenged by the Center for Biological Diversity, the
Sierra Club, Public Citizen, Environmental Defense, Natural Resources
Defense Fund, the State of Minnesota, and a coalition of twelve States
and cities (including California, the State and City of New York, and
the District of Columbia).  The Ninth Circuit panel's decision found
that the light truck rule was arbitrary and capricious and contrary to
requirements of the Energy Policy and Conservation Act of 1975 because
(1) NHTSA's marginal cost benefit analysis failed to monetize the value
of carbon emissions, (2) the rule failed to set a fleet-wide backstop
fuel economy level for manufacturers, (3) the rule failed to close the
existing "SUV loophole" because it did not revise passenger
automobile/light truck definitions so as to include SUV's within the
category of passenger vehicles, and (4) the rule did not set fuel
economy standards for certain vehicles in the 8,500 to 10,000 gross
vehicle weight range.

The court also held that NHTSA's Environmental Assessment (EA) was
inadequate, and that the petitioners had raised a substantial question
as to whether the light truck rule may have a significant impact on the
environment, thereby requiring the agency to prepare an Environmental
Impact Statement (EIS), rather than an EA. On remand the court ordered
NHTSA to prepare an EIS and "to promulgate new standards consistent with
this opinion as expeditiously as possible and for the earliest model
year practicable."

Since the ruling, new legislation, the Energy Independence and Security
Act of 2007, P. L. 110-140, has gone into effect that substantially
revises NHTSA's responsibilities for issuing CAFE standards and that
imposes the new standards beginning with model year 2011, which was the
last model year covered by the remanded rule.

Additionally, on February 6, NHTSA sought rehearing by the full court of
the panel's decision to order NHTSA to perform an EIS for its CAFE
standard rulemaking, noting that there is conflicting law both within
the Ninth Circuit and outside the Circuit as to whether a court may
order an agency to perform an EIS instead of an EA. On February 15 the
panel ordered the petitioners to respond to NHTSA's rehearing motion by
March 7. A response to a rehearing petition can be filed only if ordered
by the court, and such an order typically indicates that at least some
judges on the court might be inclined to grant rehearing.

The Ninth Circuit's November 2007 opinion is available at:

<http://www.ca9.uscourts.gov/ca9/newopinions.nsf/775202DBA504085C88257393007B9729/$file/0671891.pdf?openelement>.

NHTSA's Final Rule is available at:

<http://frwebgate2.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=608335319654+2+0+0&WAISaction=retrieve>.

**California District Court Holds DOT CAFE Standards Do Not Preempt
California Emissions Regulations**

On December 11, the United States District Court for the Eastern
District of California in [Central Valley Chrysler-Jeep, Inc. v.
Goldstone]{.underline}, (E.D. Cal., 04-6663), rejected a challenge
brought by motor vehicle manufacturers and dealers to California's
greenhouse gas (GHG) emission standards for passenger cars, light-duty
trucks, and medium duty passenger vehicles.

The central issue in the case was whether California's GHG emission
regulations are preempted under the Energy Policy and Conservation Act
(EPCA), which authorizes NHTSA's adoption of Corporate Average Fuel
Economy (CAFE) standards.  The Court held that California's GHG
regulations are not preempted by EPCA and, if a waiver of Clean Air Act
(CAA) preemption were to be granted by EPA, can co-exist with NHTSA's
CAFE standards.  Subsequently, however, EPA announced that it would deny
California's request for a CAA waiver for these regulations. An EPA
waiver denial would prevent California's regulations, and any such
regulations adopted by other states, from going into effect.

The United States was not a party to this case and did not intervene or
participate in the case as an [amicus]{.underline}*.* As reported in the
last issue of Litigation News, the United States is considering
participating in the appeal of a similar ruling by the U.S. District
Court for the District of Vermont that rejected auto industry preemption
arguments regarding Vermont's GHG emission regulations, which are
identical to California's. That case is [Green Mountain Chrysler
Plymouth Dodge Jeep v. Crombie]{.underline}, (D. Vt. Nos. 05-302,
05-304).

**DOT and California Seek Summary Judgment in CAFE Preemption FOIA
Suit**

DOT (and co-defendants OMB and EPA) together with the State of
California filed cross-motions for summary judgment in [California v.
NHTSA]{.underline}, (N.D. Calif. No. 07-02055), a suit filed in the U.S.
District Court for the Northern District of California appealing agency
decisions denying FOIA requests filed by the State of California.
California has sought documents related to NHTSA's statements in the
preamble to its light truck CAFE standard regarding the preemptive
effect of the standards on State requirements limiting CO~2~ emissions
and documents related to certain meetings regarding the standard.

The government's summary judgment brief argues that the agencies have
demonstrated that all relevant documents were properly withheld under
one or more of FOIA's exemptions.  The Department has provided
responsive, non-exempt documents to the requester, and has submitted an
index of the documents that the Department asserts are exempt from
disclosure.

**Federal Transit Administration**

**District Court Rules Against FTA in Rochester School Bus Case**

On January 24, Judge David G. Larimer of the U.S. District Court for the
Western District of New York granted a partial summary judgment motion
in favor of the Rochester-Genesee Regional Transportation Authority
(RGRTA) in its complaint contesting an FTA administrative determination
that RGRTA is operating school bus services in violation of 49 U.S.C.
Section 5323(f) and FTA's regulations at 49 CFR Part 605. [RGRTA v.
FTA]{.underline}*,* (W.D. N.Y. No. 07 CV 6378T).

Judge Larimer unexpectedly employed a very narrow interpretation of
FTA's authorizing statute. Specifically, the court ruled that RGRTA is
not operating "school bus transportation that [exclusively]{.underline}
transports students and school personnel in competition with a private
school bus operator" (emphasis added*)* so long as the routes in
question "from an objective standpoint" are "genuinely open" to the
general public. Thus, Judge Larimer found it immaterial that the routes
are designed primarily to serve high schools in Rochester.

The Court then proceeded to find FTA's administrative decision to be
arbitrary and capricious under the Administrative Procedure Act and
effectively squelched the efforts of Laidlaw Transit, Inc. --- the
private school bus operator that intervened in the suit --- to protect
its own interests and investments in school bus service Laidlaw has
provided in metropolitan Rochester over the past several years.

FTA and the Justice Department are in the process of analyzing whether
to appeal the decision to the U.S. Court of Appeals for the Second
Circuit. FTA is also considering instituting a rulemaking to amend its
regulations at Part 605, specifically to strengthen the protections for
private school bus operators.

**Manhattan Residents Challenge Relocation of Proposed Second Avenue
Subway Entrance**

On February 4 residents of two apartment buildings in Manhattan brought
a NEPA action in the U.S. District Court for the Southern District of
New York against the Department, FTA, and the Metropolitan
Transportation Authority (MTA). [325 East 72nd Street Corp. v.
DOT]{.underline}, (S.D.N.Y. No. 08-Civ.-1127 ). Plaintiffs challenge a
proposed change in the entrance location to the 72nd Street station
along the planned Second Avenue Subway line (Phase I). The proposed line
is the subject of a Full Funding Grant Agreement between FTA and MTA.

FTA issued its latest NEPA determination in an April 2004 Record of
Decision. At that time MTA had planned to locate the station at the
corner of 72nd Street and 2nd Avenue. Plaintiffs allege that MTA now
intends to relocate the station to a space along 72nd Street between 1st
and 2nd Avenues -- in front of plaintiffs' apartment buildings -- and
that MTA has begun the process of acquiring the property needed for the
new location before completing the environmental review process.

Other 72nd Street residents filed a separate action in New York State
court against MTA, seeking to stop MTA's property acquisition process
under New York State eminent domain and environmental laws.

FTA recently wrote to MTA to remind the transit system of its NEPA
obligations, and MTA intends to respond with assurances of NEPA
compliance, hopefully addressing any actions it has taken to date
relating to property acquisition.

**FTA Awaits Decision in Delaware Riverkeeper Case**

** **

On December 13 the U.S. District Court for the Eastern District of
Pennsylvania heard oral argument in [The Delaware Riverkeeper and
American Littoral Society v. Simpson,]{.underline} (E.D. Pa. No.
2:07-cv-02489).* * The litigation seeks to enjoin the Lehigh and
Northampton Transportation Authority (LANTA) and the Easton Parking
Authority from constructing -- and FTA from funding -- a 5-story,
555-space parking garage and bus transfer facility with a privately
constructed 7-story, 147-unit condominium development on top, on a
parking lot next to a highway along the Delaware River in downtown
Easton. The complaint alleges violations of NEPA and Executive Order
11988 (Floodplain Management). 

Shortly after the complaint was filed, FTA revoked its original
Categorical Exclusion determination, and ordered LANTA to prepare and
circulate for public comment an Environmental Assessment (EA).  Oral
argument took place shortly after the public hearing on the EA.
Plaintiffs argued, in support of their injunction request, that there
had been "procedural harm" when the parking authority continued to
solicit bids for the project pending completion of the NEPA process, and
that but for the fact that the bids were two times above the estimated
cost of the project, the authority would have gone forward with
construction before completing the NEPA process. 

FTA argued that because it has not completed its NEPA review, the case
against FTA is not ripe for adjudication.

Attorneys representing the other defendants also moved to dismiss on a
variety of grounds. The project is indefinitely on hold as it has gone
well over budget. In all likelihood, the local agencies will have to
redesign or relocate the project and prepare a new EA covering the
changes.

**Maritime Administration**

**Injunction Sought Against MarAd LNG Port Decision**

On February 15, Atlantic Sea Island Group LLC (ASIG) filed a complaint
against MarAd in the U.S. District Court for the District of Columbia in
[Atlantic Sea Island Group LLC v. Connaughton]{.underline}, (D.D.C., No.
08-00259) seeking to enjoin the agency's decision designating New Jersey
as an "adjacent coastal State" for purposes of consideration of ASIG's
application for a Federal license to construct and operate a liquefied
natural gas (LNG) port in waters off the coasts of New York and New
Jersey. 

Under the terms of the licensing statute, once a State is designated as
"adjacent," a project may not proceed without the approval of the
Governor of that State and could become subject to certain conditions
sought by the Governor.  New York is already a designated State for the
project under the terms of the statute because the port will be
connected by pipeline to New York. 

In its complaint ASIG alleges that the authority to make "adjacent
State" designations resides in the Coast Guard, not MarAd, and that in
any event, MarAd's decision was untimely, contrary to the substantive
standard governing such decisions, and not supported by record evidence.

**Litigation Continues Concerning Suisun Bay National Defense Reserve
Fleet**

In [Natural Resources Defense Council v. DOT]{.underline}, (E.D. Cal.
No. 2:07-CV-2320-GEB-GGH) the Natural Resources Defense Council as well
as two other environmental plaintiffs have sued MarAd under the National
Environmental Policy Act and the Resource Conservation Recovery Act with
respect to the operations of the National Defense Reserve Fleet in
Suisun Bay, California.

On December 6, NRDC amended its previously-filed complaint to add a
Clean Water Act count to the existing NEPA and RCRA claims. The United
States has answered the amended complaint and requested a stay
concerning the NEPA portion of the litigation pending the completion of
the environmental assessment process later this year. MarAd has
committed not to do any in-water hull cleaning of SBRF vessels until the
NEPA process is completed. In the interim, settlement discussions are
continuing.

**ACT Appeals Dismissal of Cargo Preference Suit to Ninth Circuit**

American Cargo Transport ("ACT"), an operator of ocean going vessels
registered in the United States, has filed a notice of appeal with the
U.S. Court of Appeals for the Ninth Circuit seeking to reverse the
district court's decision in In [America Cargo Transport, Inc. v. United
States]{.underline}, (W.D. Wash. No. C05-393 JLR).

In its district court complaint ACT alleged that it was deprived of its
right to carry U.S. preference cargo, which, consistent with the Cargo
Preference Act of 1954, codified in section 901(b) of the Merchant
Marine Act, 1936, 46 App. U.S.C. § 1241(b), is statutorily reserved in
substantial part for carriage on vessels flying the U.S. flag.

ACT's amended complaint specifically named two Federal agencies as
defendants: the Agency for International Development ("AID") -- the
agency statutorily charged with the obligation to arrange shipment of
certain government impelled relief cargo, and MarAd -- the agency
statutorily charged with administering the cargo preference laws of the
United States. DOJ's early representation in the case did not take into
account the competing policy concerns of the two named Federal defendant
agencies.

DOT objected to the litigation strategy of the United States in a
December, 2005 letter to the Department of Justice. After two years of
deliberation DOJ in September of 2007 decided that AID had, in fact,
acted contrary to MarAd's regulations when it allowed foreign carriage
of a full vessel load of AID cargo in circumstances where the U.S. flag
vessel offered by ACT was available to carry the cargo.

The United States thereafter successfully sought dismissal of the
underlying complaint, arguing that the matter is now moot and has been
resolved in ACT's favor for future cases. The district court also
dismissed ACT's motion seeking attorney fees, holding that ACT had not
substantially prevailed in the litigation as required by the Equal
Access to Justice Act.

**Able UK Secures Required Local Permits to Dismantle MarAd Vessels**

In October 2007, Able U.K. successfully reacquired its local planning
permits and licenses from the Hartlepoole Borough Council (HBC)
authorizing it to recycle obsolete ships at its U.K. facility.  Able
U.K. is in the process of reapplying for its national waste management
licensing from the UK Environmental Agency (UKEA) which would permit the
recycling work to begin on Maritime Administration vessels in the near
future.

After over two years of litigation, in 2006 the U.S. District Court for
the District of Columbia dismissed on summary judgment [Basel Action
Network v. Maritime Administration]{.underline}, (D.D.C. No. 03CV2000),
a complaint that sought to enjoin MarAd from exporting from moorings on
the James River in Virginia thirteen vessels from the National Defense
Reserve Fleet for dismantling and recycling in the United Kingdom.
Plaintiff's contended that the export of these vessels, containing PCBs,
violated the Toxic Substances Control Act ("TSCA"), the Resource
Conservation and Control Act ("RCRA"), the National Maritime Heritage
Act ("NMHA"), the Administrative Procedure Act, and the National
Environmental Policy Act of 1969 ("NEPA").

In an October 2, 2003 decision, the district court had previously
allowed four of the thirteen vessels to depart the United States after
finding that the plaintiffs did not have a likelihood of success on the
merits with respect to the TSCA, APA, and NMHA issues.

Those four vessels were transported to the United Kingdom to be recycled
at the facility of Able U.K. in Teesside. Although Able U.K. had the
necessary approvals for recycling the vessels at the time MarAd awarded
the contract, it subsequently lost those recycling approvals as a result
of litigation in the U.K. Since that time Able U.K. has been attempting
to regain the necessary approvals.

After a vote in October 2006 by the HBC, which resulted in refusal to
approve Able U.K.'s applications, and which was contrary to the strong,
nearly unanimous recommendation for approval by HBC's own planning
review committee, MarAd entered into contractual discussions with Able
U.K. Those discussions resulted in a 2007 modification that limited the
recycling of obsolete ships under the original contract to only the four
ships currently in the UK.  The additional tonnage (approximately
equivalent to nine vessels) specified in the original contract have
already been disposed of by MarAd at U.S. domestic facilities.

**[Index of Cases Reported in this Issue]{.underline}**

[325 East 72nd Street Corp. v. DOT]{.underline} (S.D.N.Y. No.
08-Civ.-1127) (Manhattan residents challenge relocation of proposed
Second Avenue subway entrance), page 33

[Air Transport Association, Inc. v. Cuomo]{.underline}, (2d Cir. No.
07-5771) (Second Circuit hears preemption challenge to New York
Passenger Bill of Rights legislation), page 7

[Alaska Airlines, Inc. v. DOT]{.underline} (D.C. Cir. No. 07-1209)
(Briefing to begin in LAX rates and charges case), page 10

[American Airlines, Inc. v. DOT]{.underline} (D.C. Circuit No. 08-1025)
(American Airlines seeks review of Department's order instituting
proceeding on service in U.S.-Colombia market), page 12

[America Cargo Transport, Inc. v. United States]{.underline} (W.D. Wash.
No. C05-393 JLR) (ACT appeals dismissal of cargo preference suit to
Ninth Circuit), page 35

[Association of Flight Attendants -- CWA v. DOT]{.underline} (9th Cir..
No. 07-72960) (Department argues that flight attendants challenge to
Virgin America order can only be heard in D.C. Circuit), page 11

[Atlantic Sea Island Group LLC v. Connaughton]{.underline} (D.D.C., No.
08-00259) (Injunction sought against MarAd LNG port decision), page 34

[Audubon Naturalist Society v. DOT]{.underline} (D. Md. No.
8:06-cv-03386-RWT) (Maryland district court dismisses challenges to
construction of the Inter-County Connector), page 20

[Basel Action Network v. Maritime Administration]{.underline} (D.D.C.
No. 03CV2000) (Able UK secures required local permits to dismantle MarAd
vessels), page 36

[Buffalo Niagra Riverkeeper, Inc v. FHWA]{.underline} (W.D. N.Y.)
(Buffalo Federal-Aid Highway project challenged in New York district
court), page 25

[California v. NHTSA]{.underline} (N.D. Calif. No. 07-02055) (DOT and
California seek summary judgment in CAFE preemption FOIA suit), page 32

[Center for Biological Diversity v. NHTSA]{.underline} (9th Cir. No.
06-71891) (Ninth Circuit remands NHTSA's CAFE rule for light trucks and
NHTSA seeks rehearing), page 30

[Central Valley Chrysler-Jeep, Inc. v. Goldstone]{.underline} (E.D.
Cal., 04-6663) (California district court holds DOT CAFE standards do
not preempt California emissions regulations), page 31

[City of Cleveland v. FHWA]{.underline} (6th Cir. No. 06-3611) (Sixth
Circuit Narrowly Upholds FHWA in Hiring Practices Dispute), page 21

[City of Dania Beach, Florida v. FAA]{.underline}, (D.C. Cir. No.
05-1328) (Compliance with D.C. Circuit [Dania Beach]{.underline} order
questioned), page 18

[Clark County, Nevada v. Vacation Village, Inc.]{.underline} (Supreme
Court Certiorari Petition No. 07-373) (Supreme Court seeks views of the
United States in airport "takings" case), page 4

[CSX Transportation, Inc. v. Georgia State Board of
Equalization]{.underline} (Supreme Court No. 06-1287) (Supreme Court
holds railroads have right to challenge State property taxation
methodologies under the 4-R Act), page 3

[County of Rockland, NY, v. FAA]{.underline} (D.C. Cir. No. 07-1363)
(FAA prevails on emergency motions as airspace redesign cases continue),
page 13

[Daniels v. Union Pacific Railroad Co.]{.underline} (D.D.C. No.
1:06-CV-00939) (D.C. Circuit hears argument in engineers' action against
FRA, LERB, and Union Pacific Railroad), page 26

[Highland Village Parents Group v. FHWA]{.underline} (E.D. Tex., No.
4:07-cv-00548-RAS) (Denton Texas Federal-Aid Highway project challenged
in Texas district court), page 25

[Hoosier Environmental Council v DOT]{.underline} (S.D. Ind. No.
1:06-cv-1442) (Indiana district court upholds FHWA's tiered EIS), page
24

[In re: West Caribbean Airways, S.A.]{.underline} (S.D. Fla. No.
06-22748-civ-Ungaro) (Eleventh Circuit review sought of decision that
[Forum]{.underline} [Non]{.underline} [Conveniens]{.underline}
dismissals are available in cases brought under the Montreal
Convention), page 9

[Natural Resources Defense Council v. DOT]{.underline} (E.D. Cal. No.
2:07-CV-2320-GEB-GGH) (Litigation continues concerning Suisun Bay
National Defense Reserve Fleet), page 35

[Natural Resources Defense Council, v. FAA]{.underline} (2d Cir. No.
06-5267-ag) (Second Circuit lifts temporary stay following argument in
Florida airport relocation project), page 16

[Owner-Operator Independent Drivers Assoc. v. FMCSA]{.underline} (D.C.
Cir. No. 06-1035) (D.C. Circuit refuses to overturn Hours of Service
interim rule), page 8

[Public Citizen, Inc. v. Mineta]{.underline} (D.C. Cir. No. 05-1188)
(D.C. Circuit dismisses Public Citizen challenge to tire pressure
monitoring system rule on standing grounds), page 28

[RGRTA v. FTA]{.underline} (W.D. N.Y. No. 07 CV 6378T) (District court
rules against FTA in Rochester school bus case), page 32

[Rivers Unlimited v. DOT]{.underline} (D.D.C. No. 1:06-cv-01775-JR)
(D.C. district court upholds Cincinnati commuter project), page 23

[Rowe v. New Hampshire Motor Transport Association]{.underline} (Supreme
Court No. 06-457) (Supreme Court holds that Maine motor carrier law is
preempted), page 2

[Safe Extensions, Inc. v. FAA]{.underline} (D. C. Cir. No. 06-1412)
(D.C. Circuit finds FAA advisory circular to be a final reviewable order
unsupported by substantial evidence), page 17

[Sierra Club v. DOT]{.underline} (9th Cir. No. 07-73415) (Challenge to
Mexican truck NAFTA demonstration project briefed and argued in Ninth
Circuit), page 6

[Taylor v. Sturgell]{.underline} (Supreme Court No. 07-371) (Supreme
Court considers representational res judicata issue in FAA FOIA case),
page 5

[The Delaware Riverkeeper and American Littoral Society v.
Simpson]{.underline} (E.D. Pa. No. 2:07-cv-02489) (FTA awaits decision
in Delaware Riverkeeper case), page 33

[The Grove, Inc. v. DOT]{.underline} (D.D.C. No. 07-01591) (Department
seeks summary judgment in ACDBE litigation), page 13

[Town of Marshfield v. FAA]{.underline} (1st Cir. No. 07-0280) (Township
challenges Logan Airport's Boston overflight noise study), page 19

[United Transportation Union Local 418 v. Boardman]{.underline} (N.D.
Iowa No. C 07-4100MWB) (Union challenges FRA responses to FOIA request
and petitions for rulemaking), page 28