UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

IN RE HAWAIIAN INSPECTION FEE 

PROCEEDING Docket DOT-OST-2010-0243 

SUPPLEMENTAL COMMENTS OF THE AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. IN SUPPORT OF PETITION FOR DECLARATORY ORDER 

Roy Goldberg 

Sheppard Mullin Richter & 

Hampton, LLP 

1300 I Street, N.W. 

Suite 1100 East 

Washington, D.C. 20005-3314 

Tel. (202) 218-0007 

Facsimile (202) 312-9425 

Email: rgoldberg@sheppardmullin.com 

David A. Berg 

Doug Mullen 

Air Transport Association of 

America, Inc. 

1301 Pennsylvania Avenue, N.W. 

Suite 1100 

Washington, D.C. 20004-1278 

Tel. (202) 626-4234 

Facsimile (202) 626-4139 

Email: dberg@airlines.org 

dmullen@airlines.org 

Dated: February 17, 2011 
The Air Transport Association of America, Inc. ("ATA") respectfully submits 

these supplemental comments to the docket in this proceeding to inform the U.S. 

Department of Transportation ("DOT") of relevant, recent developments — since the 

filing of ATA's "Reply Comments" on November 16, 2010 — concerning the Hawaiian 

Freight Fee that is the subject of the DOT's pending consideration of the "Petition for 

Declaratory Order" submitted by ATA in this matter. Specifically, members of the 

Hawaiian Legislature on January 24, 2011 introduced new legislation to: (1) double the 

amount of the Freight Fee imposed by the State of Hawaii on air cargo coming into the 

State (H.B. 865); and (2) expand the scope of the State's cargo inspection program and 

fee regime beyond the search for agricultural threats to cover "any material constituting a 

threat directly or indirectly to the security of life or property," in the State, including, 

without limitation, "explosives," and "illegal drugs" (H.B. 970). 1 

Although the Hawaiian Legislature has yet to act on the proposed bills, the ATA 

is bringing these developments to the DOT' s attention because they demonstrate that the 

Hawaiian State government officials who seek to impose costs and administrative 

burdens on airlines in connection with the transportation of cargo into the State are not 

stopping with the Freight Fee Law as it currently exists (and is the subject of the pending 

proceeding before the DOT). Rather, it is clear that the imposition of the Freight Fee 

Law (Act 170, as amended), was the proverbial "camel's nose under the tent." With the 

Freight Fee law, the State attempted to establish a precedent for requiring airlines to 

invoice their cargo customers the Freight Fee, and to remit the collected amounts to the 

'Copies of the two bills are enclosed as Exhibits 1 and 2 hereto. 
State, along with related record-keeping and reporting requirements. However, the 

suggestion by the State in its comments to this docket that the impact of the Freight Fee 

Law on the airlines is de minimis because the amount of the Freight Fee is "only" 50 

cents per 1,000 pounds of freight was not only fully rebutted by the ATA in its Reply 

Comments, but it is also belied by the newly-revealed intention of Hawaiian authorities to 

double the amount of that fee, and the attempt to broaden the scope of the Fee to cover a 

new and comprehensive range of perceived threats from cargo being transported into the 

State. 

These new attempts by Hawaiian State authorities to further increase the financial 

and administrative burden on airlines transporting cargo to Hawaii demonstrate that the 

Freight Fee Law violates and is preempted by the Anti-Head Tax Act and the Airline 

Deregulation Act (as set forth in the ATA's Opening and Reply Comments). 

1. The Proposed Doubling of the Hawaiian Freight Fee. 

■ H.B. No. 865 would increase the amount of the Hawaiian Freight Fee from fifty 

‘ 

cents per 1,000 pounds of freight to one dollar per 1,000 pounds of freight — an increase 

of 100 percent. Section 1 of the proposed law provides that: 

Section 150A-5.3 is amended to read . . . 

(b) The fee shall be assessed and collected on the net weight of the 

imported freight computed on the basis of $1 for every one thousand 

pounds of freight brought into the State, or part thereof. 

Section 3 provides that the fee increase "shall take effect upon its approval." 

Not only would this new law double the amount of the Freight Fee, but it also sets 

a precedent for the State to systematically increase the amount of the fee. It is impossible 

to know at what level the State will say that it is collecting enough. What this makes 

-2- 
clear is that the DOT should not assume that the amount of the Freight Fee is only fifty 

cents per 1,000 pounds of freight. If the new bill is enacted, the level of the Fee will soon 

increase to $1.00, and there is no reason to expect that the amount will not continue to 

rise. 

2. The Proposed Expansion of the Scope of the Hawaiian 

Air Cargo Inspection Regime. 

H.B. 970, which is proposed to take effect July 1, 2011, would authorize the 

Hawaiian Department of Transportation ("HDOT") to inspect all air cargo containers 

coming into the state to search for material posing a threat to the State, and to assess a fee 

on air cargo to cover the cost of the inspections. Section 1 states that it "is imperative 

that the State broaden its authority to inspect incoming cargo to safeguard airport 

facilities, air passengers, and Hawaii residents against dangerous cargo arriving in the 

State," and that the "purpose of this Act is to enhance inspections of incoming air cargo 

containers." Section 2 would amend Chapter 261, Hawaii Revised Statutes, by adding 

the following new section: 

261. Air cargo container inspections. 

(a) In addition to any other powers provided by law, the Department 

may: 

(1) Inspect any incoming air cargo container to detect and 

confiscate any material constituting a threat directly or 

indirectly to the security of life or property in the State, 

including explosives, invasive plant and animal species, 

and illegal drugs. 

(2) Collaborate with any federal, state, or county agency to 

effectuate air cargo container inspections under this 

section; and 
(3 ) Assess and collect a reasonable fee upon any article of air 

cargo for the cost of conducting inspections under this 

section. 

Thus, the State officials are proposing to dramatically expand the scope of current 

inspection activities targeting perceived agricultural threats to cover any and all cargo 

that the State believes constitutes a direct or indirect threat "to the security of life or 

property in the State," including, without limitation, such non-agricultural items as 

"explosives" and "illegal drugs." 

The Hawaiian government is entirely without legal authority to conduct 

inspections, which is the sole province of the federal government. The U.S. Department 

of Homeland Security is responsible for the screening and security of air cargo. See 49 

U.S.C. §§ 44901(a) ("The Under Secretary of Transportation for Security shall provide 

for the screening of all passengers and property, including United States mail, cargo, 

carry-on and checked baggage, and other articles, that will be carried aboard a passenger 

aircraft operated by an air carrier or foreign air carrier in air transportation or intrastate 

air transportation"), and (f) ("a system must be in operation to screen, inspect, or 

otherwise ensure the security of all cargo that is to be transported in all-cargo aircraft in 

air transportation and intrastate air transportation as soon as practicable after the date of 

enactment of the Aviation and Transportation Security Act"). The State cannot charge 

shippers or airlines for the State's duplication of these functions. 

This new attempt by Hawaiian authorities to impose additional financial and 

administrative burdens on airlines transporting cargo into the State by significantly 

increasing the scope and breadth of the State's air cargo inspection regime beyond 

agricultural concerns demonstrates why it is so vital that the DOT grant ATA's Petition 

-4- 
for Declaratory Order and rule that the Freight Fee Law violates and is preempted by the 

AHTA and the ADA.2As demonstrated in ATA's Opening and Reply Comments, the 

Freight Fee Law as it currently exists is inconsistent with and preempted by the AHTA 

and the ADA. The State's new efforts to further increase the financial and administrative 

burden on airlines transporting cargo into Hawaii only serves to demonstrate further how 

the State intends to continue to impose fees on the "sale of air transportation" (in 

violation of the AHTA) and inflict fiscal and administrative burdens on air carriers that 

relate to the price, service and routes of carriers transporting air cargo into Hawaii. 

Respectfully submitted: 

Roy Gold 

Sheppard ullin Richter & Hampton, LLP 

1300 I Street, N.W. 

Suite 1100 East 

Washington, D.C. 20005-3314 

Tel. .(202) 218-0007 

Facsimile (202) 312-9425 

Email: rgoldberg@sheppardmullin.com 

Nod 

David A. Berg 

Doug Mullen 

Air Transport Association of 

America, Inc. 

1301 Pennsylvania Avenue, N.W. 

Suite 1100 

Washington, D.C. 20004-1278 

Tel. (202) 626-4234 

Facsimile (202) 626-4139 

Email: dberg@airlines.org 

dmullen@airlines.org 

Dated: February 17, 2011 

2In a letter to Hawaiian legislative leaders dated January 31, 2011 (Exhibit 3 hereto), ATA objected to H.B. 

970 and requested that it "be withdrawn because it would be prohibited and preempted by federal law." 

-5- 
Roy Go erg 

CERTIFICATE OF SERVICE 

I hereby certify that on February 17, 2011, I caused a true and accurate copy of 

these Supplemental Comments to be filed on the regulations.gov website with regard to 

the docket number of this matter, and that a copy of these Supplemental Comments was 

emailed to the State of Hawaii via its representative, Deputy Attorney General Myra M. 

Kaichi, at the email address: Myra.M.Kaichi@hawaii.gov . 
EXHIBIT 1 
HOUSE OF REPRESENTATIVES 

TWENTY-SIXTH LEGISLATURE, 2011 

STATE OF HAWAII KB. NO. 1365 

A BILL FOR AN ACT 

RELATING TO INSPECTION FEES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: 

1 SECTION 1. Section 150A-5.3 is amended to read as 

2 follows: 

3 "5150A-5.3 Inspection, quarantine, and eradication service 

4 fee and charge. (a) There is imposed a fee for the inspection, 

5 quarantine, and eradication of invasive species contained in any 

6 freight, including marine commercial container shipment, air 

7 freight, or any other means of transporting freight, foreign or 

8 domestic, but not including aggregate bulk freight, cement bulk 

9 freight, coal bulk freight, or liquid bulk freight, that is 

10 brought into the State. The transportation company shall bill 

11 the fee to the person responsible for paying the freight charges 

12 to the transportation company within fifteen days of the 

13 delivery of the freight. The fee shall be paid by the person 

14 responsible for paying the freight charges to the transportation 

15 company within forty-five days of receipt of the bill. The 

16 transportation company shall collect the fee from the person 

17 responsible and forward the payment to the department at the 

18 port of disembarkation within forty-five days of receipt of the 
INTRODUCED BY: 

Page 2 H.B. NO. gc.5 

1 fee; provided that the transportation company shall not be 

2 liable for any fee that is not paid by the person responsible 

3 for paying the freight charges to the transportation company. 

4 The department shall deposit the fee into the pest 

5 inspection, quarantine, and eradication fund under section 150A6 4.5. 

7 (b) The fee shall be assessed and collected on the net 

8 weight of •he imported freight computed on the basis of [§4 

9 ccnts] $1 for every one thousand pounds of freight brought into 

10 the State, or part thereof." 

11 SECTION 2. Statutory material to be repealed is bracketed 

12 and stricken. New statutory material is underscored. 

13 SECTION 3. This Act shall take effect upon its approval. 

14 

• C1)119:2::: -. ::!!7-7 

JAN 2 4 2011 

HB HMS 2011-1428 

1111111111111111111111111111111111111111111 
Page 3 H.B. NO. $65 

Report Title: 

Relating to Inspection Fees 

Description: 

Increases the fee assessed for the inspection, quarantine and 

eradication of . invasive species contained in any freight from 50 

cents to $1 for every 1,000 pounds of freight brought into the 

State. 

The summary description of legislation appearing on this page is for informational purposes only and Is 

not legislation or evidence of legislative intent. 
EXHIBIT 2 
HOUSE OF REPRESENTATIVES 

TWENTY-S1XTH LEGISLATURE, 2011 

STATE OF HAWAII 

H.B. NO. 110 

A BILL FOR AN ACT 

RELATING TO CARGO INSPECTIONS. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: 

1 SECTION 1. The legislature finds that in light of the 

2 State's geographical isolation and the numerous cargo containers 

3 arriving by air, it is imperative that the State broaden its 

4 authority to inspect incoming cargo to safeguard airport 

5 facilities, air passengers, and Hawaii residents against 

6 dangerous cargo arriving in the State. 

7 The purpose of this Act is to enhance inspections of 

8 incoming air cargo containers. 

9 SECTION 2. Chapter 261, Hawaii Revised Statutes, is 

10 amended by adding a new section to be appropriately designated 

11 and to read as follows: 

12 "§261- Air cargo container inspections. (a) In 

13 addition to any other powers provided by law, the department 

14 may: 

15 (1) Inspect any incoming air cargo container to detect and 

16 confiscate any material constituting a threat directly 

17 or indirectly to the security of life or property in 

IIIIIRI Blinilifiii 6ilifill 

HB ) 
INTRODUCED BY: 

Page 2 H.B. NO. 6110 

1 the State, including explosives, invasive plant and 

2 animal species, and illegal drugs; 

3 (2) Collaborate with any federal, state, or county agency 

4 to . effectuate air cargo container inspections under 

5 this section; and 

6 (3) Assess and collect a reasonable fee upon any article 

7 of air cargo for the cost of conducting inspections 

8 under this section. 

9 (b) The department shall adopt rules pursuant to chapter 

10 91 necessary to implement this section." 

11 SECTION 3. There is appropriated out of the airport 

12 revenue fund the sut of or so much thereof as may 

13 be necessary for fiscal year 2011-2012 and the same sum or so 

14 much thereof as may be necessary for fiscal year 2012-2013 

15 for permanent full-time equivalent ( FTE) air cargo 

16 inspector positions. 

17 The sums appropriated shall be expended by the department 

18 of transportation for the purposes of this Act. 

19 SECTION 4. New statutory material is underscored. 

20 SECTION 5. This Act shall take effect on July 1, 2011. 

21 
H. B. NO. 110 

Report Title: 

DOT; Air Cargo Container Inspections; Fee 

Description: 

Authorizes DOT to conduct incoming air cargo container 

inspections to detect and confiscate material posing a threat to 

the State and to assess a fee on air cargo to cover the costs of 

inspections. 

The summary description of legislation appearing on this page is for informational purposes only and is 

not legislation or evidence of legislative intent. 

iiiiiiiiiiiiiii 
EXHIBIT 3 
AIR TRANSPORT ASSOCIATION 

1301 PENNYINA NIA AvmIE, NW SUITE I 100 

13(.2 20004-1707 

202.626.4000 

www.airluw:.org 

• David A. Berg 

Vice President, General Counsel and Secretary 

January 31, 2011 

By Hand Delivery 

Rep. Henry J.C. Aquino 

House Public Safety & Military Affairs Chair 

Hawaii State Capitol Room 419 

Honolulu, HI 96813 

Rep. Joseph M. Souki 

House Transportation Chair 

Hawaii State Capitol Room 433 

Honolulu, HI 96813 

Re: H.B. 970 

Dear Chairmen Aquino and Souki: 

The Air Transportation Association of America is the principal trade association of the U.S. 

scheduled airline industry. Our members include all of the major U.S. passenger and cargo 

airlines, which together carry more than 90% of domestic and passenger cargo traffic.' One 

of our primary missions is to advocate for laws and policies that foster a stable and 

economically viable U.S. airline industry. 

H.B. 970 would establish a new State air cargo container inspection program to detect and 

confiscate any material constituting a threat to the security of life or property in Hawaii, 

including explosives, invasive plant and animal species, and illegal drugs. The bill would also 

require the State to collaborate with federal, state, or county agencies to effectuate air cargo 

1ATA member carriers are ABX Air, Inc.; AirTran Airways; Alaska Airlines, Inc.; American Airlines, Inc.; 

ASTAR Air Cargo, Inc.; Atlas Air, Inc.; Continental Airlines, Inc.; Delta Air Lines, Inc.; Evergreen International 

Airlines, Inc.; Federal Express Corporation; Hawaiian Airlines; JetBlue Airways Corp.; Southwest Airlines Co.; 

United Air Lines, Inc.; United Parcel Service Co.; and US Airways, Inc. ATA Airline Associate Members are 

Air Canada and Air Jamaica Ltd. 
Hon. Henry J.C. Aquino 

Hon. Joseph M. Souki 

January 31, 2011 

Page 2 

container inspections and assess and collect a fee upon any article of air cargo for the cost of 

conducting inspections under this section. This bill should be withdrawn because it would be 

prohibited and preempted by federal law. 

Federal law provides that the Department of Homeland Security (DHS) is responsible for the 

screening and security of air cargo. See 49 U.S.C. 44901(a) and (f). In implementing this 

statutory directive, DHS has developed a multilayered air cargo screening initiative. 2State 

legislation that attempts to impose an additional air cargo security screening and inspection 

process would be inconsistent with and preempted by federal law. The bill's directive to 

collaborate with federal officials would not save this legislation because DHS has fully 

occupied the field of air cargo screening and collaboration on a preempted statute has no 

impact. 

In addition, the Anti-Head Tax Act (AHTA) prohibits the imposition of taxes, fees, and 

charges by state and local jurisdictions on airlines. See 49 U.S.C. 40116. Therefore the 

imposition of a State cargo screening fee upon "any article of air cargo" also would be 

prohibited by the AHTA because it would impose a "charge" on the sale of transportation of 

"property by aircraft." As you may know, ATA has challenged the validity of Act 173 

(S.B.2523), 2010, before the U.S. Department of Transportation and the federal courts on this 

and other grounds. 

Should you have any questions, we would be happy to meet with you to discuss this matter 

further. 

Very truly yours, 

David A. Berg 74—de------Th 

2 http://www.tsa.gov/what we do/tsnm/air cargo/index.shtm