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Recent federal court action could threaten continued essential air service to certain communities. In Mesa Air Group, Inc. v. Department of Transp.,1 the United States Court of Appeals for the District of Columbia Circuit overturned a DOT order denying Mesa Air Group, Inc. ("Mesa") and WestAir Commuter Airlines, Inc. ("WestAir") requests to terminate certain subsidized air service pursuant to the Essential Air Services ("EAS") Program2 and requiring the carriers to continue providing air transportation services to the affected communities. Under the EAS Program, DOT subsidizes air transportation at airports in certain eligible communities where it is determined that the community would not otherwise be able to generate sufficient demand to sustain air service.3 Additionally, the Secretary of Transportation, inter alia, is authorized under the program to enter into agreements with private air carriers to provide air transportation4 and to prescribe regulations setting subsidy payment rates.5 Both Mesa and WestAir had entered into and provided air services to specified communities pursuant to EAS subsidy agreements.

 In Mesa Air Group, the dispute arose after DOT issued an order on November 17, 1995, reducing EAS subsidy payments and service levels "on an emergency basis" to private air carriers.6 DOT claimed that this action was necessary due to the lack of sufficient funding that was caused by a reduction in Fiscal Year 1996 appropriations for the program.7 On December 8, 1995, Mesa and WestAir notified DOT that, as a result of the emergency order, they would terminate subsidized service to certain communities8 as of January 1, 1996 pursuant to the termination clauses of their subsidy agreements, and on December 21, 1995, Mesa and WestAir filed petitions for reconsideration of DOT's order.9 The next day, DOT denied the carriers' petitions and ordered them to continue providing service to the communities. 10 In response, Mesa and WestAir filed a complaint in federal court seeking declaratory and injunctive relief from DOT's emergency order.

 The Court in Mesa Air Group, first agreed with Mesa and WestAir that the DOT orders establishing the EAS subsidies were contractual in nature, and thus were subject to interpretations under the "neutral principles of contract law, not the deferential principles of regulatory interpretation."11 The Court next considered whether DOT could mandate Mesa and WestAir's continued service under the EAS program. Despite DOT's assertions that: (1) DOT was authorized by statute and regulation to make appropriate adjustments to subsidy and service levels; (2) individual EAS subsidy agreements allow carriers to discontinue service only if the government completely terminates subsidies (rather than when the exact payments contemplated by the contracts are reduced); and (3) Congress directed DOT to maintain essential air service despite appropriation reductions, the Court found these arguments unpersuasive.12 Specifically, the Court determined that adjustments to the subsidies "could be accomplished by negotiation, not administrative fiat."13 Additionally, the Court disagreed with DOT's interpretation of the word "termination" -- which it determined was at odds with Congress' intent to protect carriers through making subsidy agreements contractual obligations of the government.14 The Court also determined that while Congress may have directed DOT to maintain service in spite of appropriation reductions, DOT could have individually negotiated with the affected carriers necessary subsidy adjustments, rather than unilaterally imposing cuts.15 Finally, the Court found moot DOT's argument that it had no legal authority to spend nonappropriated funds or to contract for their future expenditure, since Mesa and WestAir were not seeking to collect on the contracts, but rather, were simply attempting to be excused from performance.16

 The Court thus determined that, because DOT unilaterally reduced the payments contemplated by the subsidy agreements, Mesa and WestAir were authorized to immediately terminate service as authorized under the termination clauses of their subsidy agreements.17 The case was remanded back to DOT for appropriate action.

Despite DOT's assertion that a Massachusetts' licensing rule requiring carriers to post at least a $10,000 bond before transporting hazardous waste in the state was preempted by federal law, the United States Court of Appeals for the District of Columbia Circuit has upheld the state bonding requirement. The case, Massachusetts v. Department of Transp.,18 involved a challenge to the Massachusetts' bonding requirement that applied only to carriers of hazardous wastes who sought to pick up or drop off waste at a location in the state.19 DOT had initially determined that the state bonding rule was preempted by the Hazardous Materials Transportation Act ("HMTA"),20 because it interfered with the Act's goal of uniform federal hazardous-waste regulation. The District Court upheld that determination, and that decision was appealed to the District of Columbia Circuit, which reversed.

 The central question in the case was whether DOT's determination that federal law preempted Massachusetts from issuing state bonding requirements for hazardous waste transporters in the state could withstand the Supreme Court's two-step Chevron test.21 After examining the statute to determine the clear intent of Congress under Chevron's first step, the Court determined that the text of section 5125(a)(2) of HMTA, which precludes any "obstacle to accomplishing and carrying out [HMTA] or a regulation prescribed under [HMTA]," when read in light of "traditional tools of statutory construction," was not intended to preempt state regulation "with a broad brush."22 Such an interpretation was at odds with DOT's finding that the statute specifically preempted Massachusetts' bonding requirement. Additionally, the Court determined that DOT's interpretation of preemption was contrary to the traditional notion of state control over the regulation of waste and that courts should "be reluctant to find pre-emption" over such matters.23

 The Court next determined that, even if DOT were to pass Chevron's first step, and be afforded deference as to its interpretation on preemption, such an interpretation was not reasonable under Chevron's second step "[i]n light of the powerful and well-established presumption against extending a preemption statute to matters not clearly addressed in the statute in areas of traditional state control."24 The Court determined that HMTA's "limited goal of `greater uniformity' is a far cry from DOT's implicit claim that HMTA demands absolute uniformity in matters of bonding requirements."25

DOT's interpretation that HMTA preempts Massachusetts' bonding requirements over hazardous waste was therefore held to be impermissible.

• The National Highway Traffic Safety Administration ("NHTSA") on August 8, 1996 issued a final rule requiring truck manufacturers to install reflectors or reflective tape on the back end of new large truck trailers by July 1, 1997.26 Additionally, the Federal Highway Administration ("FHWA") has expressed the agency's intention to issue a notice of proposed rulemaking to require that large truck trailers already on the highways be equipped with reflectors or reflective tape.27 The FHWA proposal would apply to trailers made before December 1, 1993. NHTSA estimates that nighttime side and rear-impact collisions with tractor trailers results in 8,700 injuries and 540 deaths annually, and that the installation of standardized reflectors could lead to a 25 percent reduction in rear end collisions and a 15 percent reduction in side impact collisions. The American Trucking Association has estimated that it could cost as much as $1,400 to retrofit some trailers under FHWA's proposal.
• Air carrier operating certificates for ValuJet, Pan American World Airways ("Pan Am"), and Pro Air have tentatively been approved by DOT. Under the consent agreement imposed when ValuJet was grounded, the carrier was required to take steps to revise its organizational structure and overhaul its maintenance program and procedures, complete conformity checks and a records review on each of its aircraft, and retrain personnel. ValuJet plans initially to resume operations with five to nine aircraft. Meanwhile, long-time carrier Pan Am also plans to begin domestic operations again. The carrier intends to initially operate three aircraft on routes from New York to Los Angeles and New York to Miami. New-entrant Pro Air plans on offering service from Detroit to Baltimore and Boston to Milwaukee.
• DOT has moved forward on a high speed rail project between the 456-mile corridor from Washington to Boston. Construction has commenced on a power supply system to extend electrification to the final 157 miles of Amtrak's Northeast Corridor from New Haven, Connecticut to Boston. Travel time between Boston and New York City will be reduced from four-and- one-half hours to three hours when construction is completed in 1999. The $400 million project will permit high-speed electrified rail operations along the entire Northeast corridor, eliminating the current time consuming switching of electric and diesel locomotives along the route.

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 Footnotes:

 1 - 87 F.3d 498 (d.C. Cir. 1996) (2-1 decision). Return

 2 - The EAS program was originally enacted as part of the Airline Deregulation Act of 1978, Section 33(a), Pub. L. No. 95-504, 92 Stat. 1705, 1732-40 (codified as amended at 49 U.S.C. Sections 41731-41742 (1994). Return

 3 - Mesa Air Group, 87 F.3d at 498. Return

 4 - 49 U.S.C. Section 41737(d). Return

 5 - See Id. Section 41737(a). Return

 6 - Mesa Air Group, 87 F. 3d at 501 (hereinafter "emergency order"). Return

 7 - Id. Return

 8 - Id. at 502. The communities to whch Mesa sought to discontinue service included: (1) Silver City, New Mexico, (2) Kinghman, Arizona, (3) Goodland, Kansas, and (4) Lamas, Colorado. WestAir sought to discontinue service to Visalia, California and Merced, California. Return

 9 - Id. at 502. The carriers relied on a provision contained in the orders that established their EAS subsidies allowing for termination of service if the "Government terminates payments provided for under this order." Id. Normally, when a carrier enters into a subsidy arrangment, it must give ninety datys notice before ending or reducing service. 49 U.S.C. Section 41734(a). If, at the end of 90 days, no replacement carrier has been found to provide the serice, the carrier can be required to continue the sercice for an addtiona thirty days. Id. Section 41734(b). Successive thirty-day extensions of the service can also be required until a replacement carrier is found. Id. Section 41734(c). Return

 10 - Mesa Air Group, 87 F.3d at 502-03. Return

 11 - Id. at 503. Specifically, the Court rejected DOT's argument that the orders were equivalent to departmental regulations, and thus subject to "substantial deference" by the Court. Id. Return

 12 - Id. at 504. Return

 13 - Id. Return

 14 - Id. Return

 15 - Id. On the same grounds, the Court also found unconvincing DOT's argument that subsidy reductions were anticipated by the parties due to the fact that the subsidy agreements specified that future year subsidies were subject to the availability of fudns, and therefore, that subsidy reductions were anticpated by the parties. Id. Return

 16 - Id. at 505. Return

 17 - Id. Return

 18 - No. 95-5175, 1996 U.S. App. LEXIS 21973, (D.C. Cir. August 27, 1996). Return

 19 - Id. at 5. Return

 20 - Pub. L. No. 93-633, 88 Stat. 445 (codified as amended at 49 U.S.C. Sections 417313-42 (1994)). Return

 21 - Massachusetts v. Department of Transp., 1996 U.S. App. LEXIS 21973, at 7-11. Under the Chevron inquiry, a court first analyzes whether it can clearly determine the intent of Congress with regard to the statute under traditional rules of statutory construction. Id. at 8. If the court can determine such a clear meaning, it should reject any administrative constructions of the statute in questions hat are contrary to the clear congressional intent. Id. If a clear intent cannot be ascertained, the court then proceeds to Chevron's second step. Id. Under the second step, the court must decide whether the agency interpretation in question was "reasonable" -- depending on the nature and extent of the ambiguity of the statute as ascertained under Chevron's first step. Id. at 8-10. Return

 22 - Id. at 15. Specifically, the court held that the statute only preemptd state rules in explicitly defined catergores, or state rules that were directly inconsistent with, or posed an obstance to fulfilling, specific HMTA provisions, Id. The Court also determined that Section 5119 of HMTA, a second preemption provision, preventing DOT from taking action to override state procedures for hazardous material transportation in a state unless approved by twenty-six states, also suggest that preemption is not to be cosntrued broadly. Id. at 16-17. Return

 23 - Id. at 17-18 (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993). Return

 24 - Id. at 20-21. Specifically, the Court noted that such a broad reading of preemption would render superflous HMTA Section 5125(b)(1) -- the list of expressly preempted provisions, and HMTA Section 5119(c) -- which established the framework for making state rules consistent with the statute. Id. at 21. Return

 25 - Id. at 21-22. Return

 26 - Federal Motor Vehicle Safety Standards; Lamps, Reflective Devices and Associated Equipment, 61 Fed. Reg. 41355 (1996) (to be codified at 49 C.F.R. pt. 571). Return

 27 - Parts and Accessories Necessary for Safe Operation; Lighting Devices, Reflectors, and Electrical equipment, 61 Fed. Reg. 40781 (1996) (proposed August 6, 1996). Return

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