2011-1617. Atlantic Southeast Airlines, a Subsidiary of Skywest, Inc., Airport Customer Service Division, Fort Smith, AR; Notice of Negative Determination on Second Remand

On November 4, 2010, the United States Court of International Trade (USCIT) granted the Department of Labor's second request for voluntary remand to conduct further investigation in Former Employees of Atlantic Southeast Airlines, a Subsidiary of Skywest, Inc., Airport Customer Service Division v. United States Secretary of Labor (Court No. 09-00522).

On September 28, 2009, the Department of Labor (Department) issued a Negative Determination regarding eligibility to apply for Trade Adjustment Assistance (TAA) applicable to workers and former workers of Atlantic Southeast Airlines, a Subsidiary of Skywest, Inc., Airport Customer Division, Fort Smith, Arkansas (subject firm). AR 35. Workers at the subject firm (subject worker group) provided airline customer services. AR 4,8,14,37. The Department's Notice of determination was published in the Federal Register on November 17, 2009 (74 FR 59251). AR 48.

For the Department to issue a certification for workers under Section 222(a) of the Trade Act of 1974, as amended (the Act), 19 U.S.C. 2272(a), the following criteria must be met:

I. The first criterion (set forth in Section 222(a)(1) of the Act, 19 U.S.C. 2282(a)(1)) requires that a significant number or proportion of the workers in the workers' firm must have become totally or partially separated or be threatened with total or partial separation.

II. The second criterion (set forth in Section 222(a)(2) of the Act, 19 U.S.C. 2272(a)(2)) may be satisfied in one of two ways:

(A) Increased Imports Path:

(i) sales or production, or both, at the workers' firm must have decreased absolutely, and

(ii)(I) imports of articles or services like or directly competitive with articles or services produced or supplied by the workers' firm have increased, OR

(II)(aa) imports of articles like or directly competitive with articles into which the component part produced by the workers' firm was directly incorporated have increased; OR

(II)(bb) imports of articles like or directly competitive with articles which are produced directly using the services supplied by the workers' firm have increased; OR

(III) imports of articles directly incorporating component parts not produced in the U.S. that are like or directly competitive with the article into which the component part produced by the workers' firm was directly incorporated have increased.

(B) Shift in Production or Supply Path:

(i)(I) there has been a shift by the workers' firm to a foreign country in the production of articles or supply of services like or directly competitive with those produced/supplied by the workers' firm; or

(i)(II) there has been an acquisition from a foreign country by the workers' firm of articles/services that are like or directly competitive with those produced/supplied by the workers' firm.

III. The third criterion requires that the increase in imports or shift/acquisition must have contributed importantly to the workers' separation or threat of separation. See Sections 222(a)(2)(A)(iii) and 222(a)(2)(B)(ii) of the Act, 19 U.S.C. 2272(a)(2)(A)(iii), 2272(a)(2)(B)(ii).

For the Department to issue a certification for adversely-affected secondary workers under Section 222(c) of the Act, 19 U.S.C. 2272(c), the following criteria must be met:

(1) A significant number or proportion of the workers in the workers' firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated;

(2) the workers' firm is a Supplier or Downstream Producer to a firm that employed a group of workers who received a certification of eligibility under Section 222(a) of the Act, 19 U.S.C. 2272(a), and such supply or production is related to the article or service that was the basis for such certification; and

(3) either:

(A) the workers' firm is a supplier and the component parts it supplied to the firm described in paragraph (2) accounted for at least 20 percent of the production or sales of the workers' firm; or

(B) a loss of business by the workers' firm with the firm described in paragraph (2) contributed importantly to the workers' separation or threat of separation.

Section 222(d)(3)(A) of the Act, 19 U.S.C. 2272(d)(3)(A), states that a “downstream producer means a firm that performs additional, value-added production processes or services directly for another firm for articles or services with respect to which a group of workers in such other firm has been certified under subsection (a).” Section 222(d)(3)(B) of the Act, 19 U.S.C. 2272(d)(3)(B), states that “value-added production processes or services include final assembly, finishing, testing, packaging, or maintenance or transportation services.”

The negative determination states that, although there was a significant proportion or number of workers of the subject firm that were separated, the remaining criteria of Section 222(a) and Section 222(c) of the Act were not met. AR 37. The negative determination stated that the subject firm did not import like or directly competitive services during the relevant period or shift these services abroad. AR 38.

In the request for reconsideration, the petitioner alleged that because the workers at the subject firm provided services to individuals that are part of worker groups eligible to apply for TAA, the workers at the subject firm should also be eligible for TAA as “downstream producers.” AR 42,43.

The Department issued a Notice of Negative Determination Regarding Application for Reconsideration applicable to workers of the subject firm on November 5, 2009, based on the finding that the petitioner did not provide new information. AR 44. The Department's Notice was published in the Federal Register on December 8, 2009 (74 FR 64736). AR 54.

In the complaint to the USCIT, the Plaintiff asserted that workers at the subject firm are eligible to apply for TAA as secondarily affected workers, that the decline in travel in the Fort Smith, Arkansas area is attributable to a reduction in the operations of firms in the local area due to trade impact, and that this decline in travel contributed to subject worker group separations.

First Remand Investigation

During the first remand investigation, the Department carefully reviewed previously submitted information, obtained additional information from the subject firm, and solicited input from the Plaintiff.

In the course of the first remand investigation, the Plaintiff provided information alleging that trade impact caused the layoffs in the subject worker group. SAR 9.

The Department's findings on remand revealed that the subject worker group provided airline customer services such as airline ground handling, baggage, and ticketing, under contract exclusively for Delta Air Lines (Delta). These services were provided to individual passengers and the ticket purchases were made by individuals, travel agencies, corporate accounts, and the United States military. SAR 3,19,21,27,29.

The information obtained by the Department to address the allegation that the domestic merger between Delta and Northwest Airlines demonstrates trade impact confirmed the Department's findings. Subject worker group separations are attributable to Delta ceasing operations with the subject firm at the Fort Smith, Arkansas location, but the newly-merged airline maintained operations out of the Fort Smith, Arkansas location using a different airline customer service provider. Further, the services provided by the worker group cannot be imported or shifted abroad as they are used directly by domestic passengers. AR 17,24,25, SAR 3,19,21,27,29.

Based on careful consideration of all previously submitted information and new facts obtained during the first remand investigation, the Department determined that the subject worker group did not meet the eligibility criteria of the Act and issued a Negative Determination on Remand on September 3, 2010. SAR 34. The Notice of determination was published in the Federal Register on September 21, 2010 (75 FR 57517). SAR(II) 1.

Second Remand Investigation

The Department requested, and was granted, a second voluntary remand to obtain additional information to clarify the reason Delta ceased using services supplied by the subject firm, to clarify “directly” for purposes related to Section 222(d)(3)(A), and to determine whether the petitioning workers are eligible to apply for TAA.

During the second remand investigation, the Department obtained additional information from the subject firm, SAR(II) 6,8,44-48, solicited input from the Plaintiff, SAR(II) 6,10-15, and obtained new information from Delta regarding the reason that it ceased using services supplied by the subject firm in its operations at the Fort Smith airport. SAR(II) 7-9,29-42,50-52.

Information provided by Delta and the subject firm confirmed that the subject firm failed to win a bid to continue to supply services at the Fort Smith airport. When Delta and Northwest Airlines merged, regional vendors were invited to submit bids to acquire ground handling operations at the Fort Smith location. The subject firm had the same opportunity to bid to win the contract to supply services at the Fort Smith, Arkansas airport as other firms, but did not win the contract. SAR(II) 46-48,51.

Section 222(d)(3)(A) of the Act requires that a “downstream producer” perform “additional, value-added production processes or services directly for another firm for articles or services with respect to which a group of workers in such other firm has been certified under subsection (a) [of Section 222 of the Act].” Section 222(d)(3)(B) includes “transportation services” among those services.

The Department's interpretation of “directly” in Section 222(d)(3)(A) is that there may not be an intervening customer or supplier. The subject firm provided services exclusively for Delta, so Delta is the only direct recipient of the services provided by the subject worker group. SAR(II) 46. The services supplied by the subject firm must be to a firm that employs workers eligible to apply for TAA on a primary certification. Delta does not have a worker group certified as eligible to apply for TAA, SAR(II) 53, so subject firm workers may not be certified under the secondary worker provisions of the statute.

Further, Section 222(c)(2) of the Act does not permit secondary worker certification unless the service provided by the subject firm “is related to the article or service that was the basis for such certification [under Section 222(a) of the Act].” This clause confirms Department's finding that it is not necessary to survey Delta's customers because the articles or services those customers produce or provide are not related to the supply of airline customer services that the subject firm provides.

Based on a careful review of both previously-submitted information and new information obtained during the second remand investigation, the Department reaffirms that the petitioning workers have not met the eligibility criteria of Section 222(c) of the Trade Act of 1974, as amended.

Conclusion

After careful reconsideration, I affirm the original notice of negative determination of eligibility to apply for worker adjustment assistance for workers and former workers of Atlantic Southeast Airlines, a Subsidiary of Skywest, Inc., Airport Customer Division, Fort Smith, Arkansas.

Signed at Washington, DC, January 18, 2011.

Del Min Amy Chen,

Certifying Officer, Office of Trade Adjustment Assistance.