The Facts
ARSA’s lawsuit, initiated in March 2006, challenged the Federal Aviation Administration (FAA) mandate that anti-drug and alcohol testing programs apply to aviation maintenance contractors “at any tier”. In a decision handed down July 17, 2007, the U.S. Court of Appeals for the District of Columbia Circuit agreed with ARSA that the FAA violated the Regulatory Flexibility Act (RFA) by not properly considering the impact of its drug and alcohol testing rules on small businesses (ARSA, et. al. v. FAA, 494 F. 3d 161). While the Court upheld the agency’s new testing requirements, it remanded the rule, directing the FAA to conduct the proper RFA analysis.
For more than three years, the FAA failed to make any effort to comply with the court’s ruling. On Feb. 17, 2011, ARSA filed a petition for a writ of mandamus to force the FAA into compliance. On March 1, 2011, the court sided with ARSA and gave the FAA until March 10 to show why the court should not grant ARSA’s petition and stay the D&A testing requirements for subcontractor employees at any tier while the agency performs the Final Regulatory Flexibility Act (FRFA) analysis.
On March 8, 2011, the FAA released a supplemental regulatory flexibility determination (SRFD) on the D&A testing rules through publication in the Federal Register. In an April 13, order, the court accepted this as cause and denied ARSA’s petition. However, the order required that the FAA update the court every 60 days of the agency’s progress toward completion of the required RFA analysis.
On May 9, ARSA submitted comments to the FAA’s SRFD challenging its conclusion. In its supplemental determination, the FAA failed to use reliable and independently verifiable data to justify their determination as required by the RFA and the Data Quality Act. Additionally, the FAA did not look at the full economic picture of those affected, using only unsubstantiated revenue data instead of a full and accurate picture of costs.
Background
The RFA (5 U.S.C. § 603 (a)), is a law passed by Congress in 1980 to address the disproportionate economic impact of federal regulations on small businesses. The RFA does not require special treatment or regulatory exemptions for small businesses, but mandates an analytical process for determining how best to achieve public policy objectives without unduly burdening small businesses. The law requires a federal agency to conduct such an analysis during the rule making process unless the agency can present a compelling reason for not doing so.
To avoid having to perform the FRFA analysis, the FAA stated that its expanded drug and alcohol testing rules would only affect 297 subcontractors being used by repair stations. To address the FAA’s estimates, ARSA conducted a member survey and engaged noted aviation economist Daryl Jenkins, Ph.D. who estimated that, more accurately, the number of subcontractors affected was at least 12,000. This information was submitted to the FAA as part of the Association’s comments to the proposed rule. The discrepancy caused the Small Business Administration’s Office of Advocacy (SBA OA) to weigh in against the FAA’s analysis. SBA OA reasoned that the FAA did not consider all the industries that would be affected by the expanded rule and, therefore, the agency’s economic analysis was flawed because it was based on inadequate data. SBA OA recommended that the FAA conduct a full analysis, expanding consideration to small entities outside of the aviation industry. The FAA ultimately refused to consider either ARSA’s or SBA OA’s opposition to its economic analysis and issued a final rule on January 10, 2006(71 Fed. Reg. 1666).
On March 10, 2006, ARSA filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit challenging the new rule on several grounds, including the FAA’s violation of the RFA.
In a decision issued July 2007, the court agreed with ARSA that the FAA violated the RFA by not properly considering the impact of its drug and alcohol testing rule on small businesses (ARSA, et. al. v. FAA 494 F. 3d 161). The court ruled that despite the FAA’s contentions to the contrary, repair stations and their subcontractors are directly affected by the expanded rule. It reasoned that although the regulations are immediately addressed to air carriers, the employees of their contractors are actually required to be tested. Thus, the rule imposes responsibilities directly on the contractors and small businesses to which the expanded rule applied. Therefore, the FAA must to consider the impact of the rule on those entities.
Since it abrogated this duty, the court instructed the FAA to conduct a proper analysis under the RFA. It further stated that the analysis conducted during the rulemaking stages was not enough to satisfy the requirement because it was not a final regulatory flexibility analysis and did not properly consider any alternatives to the final rule.
For more than three years the FAA made no effort to comply with the ruling. This blatant disregard of the court’s mandate forced ARSA to take action. On Feb. 17, 2011, ARSA filed a writ of mandamus with the U.S. Court of Appeals to force the FAA’s compliance. A writ of mandamus is a command from a superior court to compel an entity under its jurisdiction to do something that the court previously determined or required.
On March 1, 2011, the Court sided with ARSA, and ordered the FAA, “Show cause why the court should not issue the requested writ requiring the FAA to comply with the court’s mandate by preparing a final regulatory flexibility analysis within 90 days . . . and pending completion of the analysis, why the court should not stay the FAA drug and alcohol testing regulations insofar as they require alcohol and drug testing of subcontractor employees ‘at any tier.’” In recognition of the agency’s long delay in complying with this requirement, the court demanded a response by 4:00 PM on March 10, 2011.
On March 8, the FAA released a supplemental regulatory flexibility determination on the D&A testing rules through publication in the Federal Register. This supplemental determination was released to show cause as to why the court should not issue the requested writ and stay the rules as they apply to subcontractor employees at any tier while the FAA completes the final RFA analysis.
On April 13, the court accepted this as cause and denied ARSA’s petition. However, the court also ordered the FAA to file status reports every 60 days appraising the court of its progress toward publication of a final rule containing the required RFA analysis.
After closely scrutinizing the supplemental regulatory flexibility determination, ARSA submitted comments to the FAA on May 9, 2011. The association challenged the FAA’s reassertion that the final rule did not pose a significant economic impact. In its supplemental determination, the FAA failed to use reliable and independently verifiable data to justify their determination as required by the RFA and the Data Quality Act. Additionally, the FAA did not look at the full economic picture of those affected, using only unsubstantiated revenue data instead of a full and accurate picture of costs.
ARSA’s comments hold the FAA’s feet to the fire while ensuring the agency does not indefinitely neglect its duties.
Though the negative economic consequences of the agency’s failure to properly analyze the 2006 rule have already driven small business away from aviation services, ARSA’s action attempts to give teeth to the RFA’s protections and establish a precedent of accountability for neglecting regulatory protections.
More information on the Regulatory Flexibility Act is available here.
