Cato’s argument against FAA “common carrier” interpretation is a bit of UBERkill

faa common carrier interpretation
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FAA Common Carrier Interpretation

faa common carrier interpretationIlya Shapiro and Randal John Meyer, of the Cato Institute, filed an amicus curiae brief in the case of Flytenow, Inc. v. Federal Aviation Administration. Counsel find fault not only with the FAA’s legal position but also with the opinion of the DC Circuit which found in favor of the government’s determination that Flytenow’s operations constituted “common carriage.” To summarize the Cato Institute’s policy argument, the FAA is deterring innovation in aviation, the Uber in the sky.

The specific arguments propounded are worthy of analysis:

ARGUMENT: “The FAA decided that these pilots were not simple private individuals sharing cost, but were ‘common carriers,’ subject to heightened liability and expensive professional licensing.”

ANALYSIS: It is a significant misnomer to characterize the FAA’s “certification” as “professional licensing.” The average person on the street knows that and relied upon the fact that the FAA’s primary job is aviation safety (49 USC 41101, et seq.)

ARGUMENT:Common carriers—like buses, trains, and commercial airlines—have been treated specially in the law since medieval times, and they differ from Flytenow’s online bulletin board.”

ANALYSIS:

  • Here was the common carrier of that period:

faa common carrier interpretation

  • Here is the type of communication system in that period:

faa common carrier interpretation

faa common carrier interpretation

  • Way back in 1962, the 9th Circuit ruled on the term “common carriage” in LAS VEGAS HACIENDA, INC. v. CIVIL AERONAUTICS BOARD, 298 F. 2d 430, by stating:

“So far as here pertinent, the term “air transportation” is ultimately defined by the Act as “carriage by aircraft of persons or property as a common carrier for compensation or hire * * *.”6 The term “common carrier,” which is central in this statutory definition of “air transportation,” is an ancient one in our law and has been applied in many legal and factual contexts. It is not surprising that the numerous decisions defining the term are somewhat less than harmonious. The fact is that these precedents leave a considerable area of choice which the Board necessarily exercises in applying the broad definition of the statute to particular carriers to determine whether they are subject to regulation

The Board centered its inquiry in the present case upon whether the alleged common carrier was engaged as a regular business in offering air transportation to the general public in the commercial market. The Board has taken the same approach in other cases.7 This general emphasis is justified by the common law precedents, for the dominant factor in fixing common carrier status at common law is the presence of a “holding out” to transport the property or person of any member of the public who might choose to employ the proffered service. State of Washington ex rel. Stimson Lumber Co. v. Kuykendall, 275 U.S. 207, 211-212, 48 S.Ct. 41, 72 L.Ed. 241 (1927). The test which the Board applies is an objective one, relying upon what the carrier actually does rather than upon the label which the carrier attaches to its activity or the purpose which motivates it.8 So long as the air carrier is competing commercially in the market for the patronage of the general public, the Board holds that it is immaterial that the service offered will be attractive only to a limited group;9 or that it may be performed pursuant to special contract.10 And it is also immaterial that in terms of the carrier’s own bookkeeping the transportation may be furnished at cost,11 at a loss,12 or even without charge.13 The Board thus interprets the Act in a way which makes effective economic regulation under the statute possible by bringing within the regulatory scheme all those who compete in the commercial market in the business of offering air transportation to the public generally.”

[emphasis added]

ARGUMENT: “The D.C. Circuit granted very broad deference to the FAA’s interpretation of what constitutes common carriage, despite that being a term defined at common law. Courts often defer to an agency’s expertise in a particular subject matter—which essentially means that the agency’s decision is usually upheld under some “deference” framework. But according to the Supreme Court’s ruling in Texas Gas Transmission Corp. v. Shell Oil Co.(1960), when an agency interprets the common law, a reviewing court shouldn’t simply defer to the agency’s interpretation.”

ANALYSIS: All of the above courts did in fact defer to the FAA’s and CAB’s interpretation of the words in question. As lawyers are fond of saying, “It’s complicated.”

ARGUMENT: “Such a delegation offends constitutional order and the separation of powers. Because the D.C. Circuit has neatly packed an abdication of the judicial role into a decision that contravenes 600 years of established law, we urge the Supreme Court to take up the case.” To translate our view of the law is smarter/better than the FAA’s.

ANALYSIS: Conservatives have ranted for years about the Warren Court’s activism; now they call the 4 of the Justices’ philosophy strict constructionism, there appears to be a tendency to read the Founders’ words (and/or Cato’s letters) to reach a preferred outcome. It is sad that Justice Scalia is no longer on the court and his originalist creed is diminishing there.

Alternative approaches:

  1. Work with the FAA to design a standard which maximizes safety and protects consumers (adequate disclosures and realistic limitation on dissemination)

flytenow

  1. Convince Congress to amend the FAA’s interpretation of the Act and the FARs. The advocates have taken the first step in that legislative process and briefed the House Aviation Subcommittee

faa common carrier interpretation

and convinced Congressman Mark Sanford (R-S.C.) to offer a bill to bring the innovation of the Uber model to aviation.

faa common carrier interpretation

The FAA has a very demanding  mandate—its primary mission is to assure the highest levels of safety, but it tries also to help aviation grow—in spite of the Congress’ decision to deletepromote” aviation from its statute (hopefully the language will be restored). These two considerations are not symmetrically bimodal in distribution; safety takes precedence. It is understandable that advocates of free enterprise become frustrated with any diminution of the market, but if understanding of the FAA’s uber mission—safety—can be incorporated into the Flytenow’s brief for its new concept, then it is possible, even likely, that the FAA will try to find a win/win solution.

 


ARTICLE: Don’t Ground “Uber in the Sky”
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