This edition of the Cozen O’Connor Aviation Regulatory Update includes an overview of the FAA’s long-awaited proposed rule on small unmanned aircraft commercial operations, the White House’s statement on privacy issues relating to unmanned aircraft, recent Congressional hearings on FAA reauthorization and unmanned aircraft, the DOT Inspector General’s review of DOT’s tarmac delay rule, DOT and ITC actions with regard to U.S.-Cuba air travel, DOT’s clarification of carriers’ animal incident reporting requirements, and DOT and FAA enforcement actions.

Department of Transportation

Regulatory

DOT Inspector General Initiates Audit of Impact of DOT’s Tarmac Delay Rule on Carrier Flight Delay/Cancellation Decisions

DOT’s Office of Inspector General issued a memorandum announcing its plans to audit the impacts of DOT’s tarmac delay rule on carriers’ decisions to delay or cancel flights. The audit was mandated by Congress under the FAA Modernization and Reform Act of 2012. The Inspector General’s Office said the objectives of the audit are to 1) assess the effect of the tarmac delay rule on carriers’ decisions to delay or cancel flights; and 2) evaluate DOT’s recent analysis of this issue.

DOT Issues Advisory Notice on Scheduled Flights Between the United States and Cuba

In response to the Obama administration’s recent policy changes relating to U.S. relations with Cuba, DOT issued a notice regarding scheduled flights between the United States and Cuba. DOT stated that while the Office of Foreign Assets Control’s revised Cuban Assets Control Regulations lifted the prohibition on scheduled U.S.-Cuba flight operations, DOT will defer the reactivation of existing unused U.S. carrier scheduled authority to serve Cuba and not consider new applications to serve Cuba. DOT said that the U.S. government would engage with the Cuban government to assess U.S.-Cuba aviation relations and “establish a bilateral basis for further expansion of air services.” DOT confirmed that U.S.-Cuba charter services would continue to be operated under the revised OFAC regulations.

DOT Requests Comments on Air Carriers’ Confidential Business Information Reporting Requirements

DOT’s Bureau of Transportation Statistics (BTS) issued a request for public comments on whether it should extend the confidentiality period for the Schedule B–7 (Airframe and Aircraft Engine Acquisitions and Retirements) and Schedule B–43 (Inventory of Airframes and Aircraft Engines) cost data that U.S. carriers are required to report to BTS. Currently, BTS routinely grants a 10-year confidentiality period for such data. However, after receiving notification that BTS intended to release the cost data upon the expiration of the 10-year confidentiality period, UPS and United Airlines filed objections to the pending release. Both carriers claim that the cost data, although 10 years old, remains sensitive and its release would result in competitive harm. Comments are due April 13, 2015.

DOT Publishes Notice Regarding Revisions to Animal Incident Reporting Requirements

DOT published a Notice on Reports by Air Carriers on Incidents Involving Animals During Air Transport to clarify which airlines are covered by the new animal incident reporting requirements (the final rule expanding U.S. air carrier reporting of incidents involving the transport of animals was previously discussed in the July 2014 edition of the Cozen O’Connor Aviation Regulatory Update). U.S. air carriers that operate scheduled domestic or international passenger service with at least one aircraft having a designed seating capacity of more than 60 passenger seats are required to submit reports to DOT regarding incidents involving the transport of animals. The requirements do not apply to all-cargo carriers. DOT reminded covered carriers that the new reporting requirements became effective on January 1, 2015, and that any incidents involving the loss, injury or death of an animal during air transport occurring on or after January 1, 2015 must be included in their reports. DOT also reminded carriers that the report must include incidents involving “any warm- or cold-blooded animal” which, at the time of transportation, is being kept as a pet in a family household in the United States and any dog or cat which, at the time of transportation, is shipped as part of a commercial shipment on a scheduled passenger flight.

DOT Issues Statement Regarding United Airlines’ Mistaken Fares

DOT’s Enforcement Office issued a statement regarding its decision to not take enforcement action to require United Airlines to honor the mistaken fares offered on United’s Danish website earlier this month. DOT based its decision on the fact that the fares were not marketed to U.S. consumers, were priced in Danish Krone, and that only consumers who identified “Denmark” as their location/country for billing purposes were able to complete their purchase at the mistaken fare levels. DOT expressed concerns that some purchasers had to “manipulate the search process” by misrepresenting their billing address country as Denmark in order to force the conversion error to Danish Krone to obtain the mistaken fares. DOT asserted that this “evidence of bad faith” by the large majority of purchasers contributed to its decision not to enforce its post-purchase price increase prohibitions against United. DOT also allowed United the option of posting information about its handling of the mistaken fares incident in a prominent location on its website instead of providing individual responses to consumers who submitted an inquiry to United or DOT regarding the honoring of the mistaken fares. DOT said that it had received thousands of inquiries from consumers who purchased tickets from United’s Denmark website at the mistaken fare levels asking that United be required to honor those fares.

Enforcement

DOT Assesses Civil Penalties Against Foreign Carriers for Alleged Fare Advertising Violations

DOT issued a consent order assessing civil penalties against Air Europa for alleged violations of DOT’s fare advertising rules. DOT contends that Air Europa included a carrier-imposed fee in its description of “taxes” on its U.S.-marketed website, as alleged in a third-party complaint filed against Air Europa by Benjamin Edelman. Edelman said that Air Europa misrepresented its carrier-imposed surcharges as “taxes” during the online booking process on its U.S.-marketed website. DOT dismissed Air Europa’s arguments that although it had been noncompliant in the past, there was no need for DOT to investigate and assess civil penalties because Air Europa had subsequently brought its fare advertisements into compliance with DOT’s fare advertising rules. Air Europa was ordered by DOT to pay $50,000 in civil penalties, payable in five installments, with an additional $50,000 due and payable only if Air Europa violates the consent order’s cease-and-desist provisions by committing a similar violation within one year of the order’s service date, or if it fails to pay the $50,000 civil penalty amount. DOT also issued a consent order assessing $30,000 in civil penalties against Lufthansa for alleged violations of DOT’s fare advertising regulations. DOT alleges that Lufthansa advertised on its website a fare for a specific itinerary that was unavailable for purchase depending on how a consumer entered his or her search parameters during a short period in November 2013. In its defense, Lufthansa stated that the advertised fare was available for purchase at all times through other distribution channels, such as booking through travel agents or through Lufthansa’s own telephone reservations service, but that a technical error prevented consumers from purchasing the fare on its website for a limited time. Lufthansa stated that it did not receive any consumer complaints and that it proactively contacted the one consumer who had complained to DOT about the lack of availability of the fares and honored the quoted fare. Lufthansa also stated that upon learning of the technical problem, it took immediate corrective action. Lufthansa disagreed that a technical malfunction of its website constitutes a violation of 49 U.S.C. § 41712. In settlement, Lufthansa paid $15,000, with the remaining $15,000 only due and payable if Lufthansa commits further similar advertising violations during the next year.

Federal Aviation Administration

Regulatory

FAA Issues Long-Awaited Unmanned Aircraft Proposed Rule

The FAA issued a proposed rule that would allow the commercial use of certain small (under 55 pounds) unmanned aircraft in the National Airspace System. The proposed rule contains limitations on commercial unmanned aircraft operations, including requirements that flights be operated only during daytime and remain within the visual-line-of-sight of the aircraft operator. The proposed rule also limits unmanned aircraft operations to no more than 500 feet, mandates operator certification, provides for the optional use of a visual observer, establishes aircraft registration and marking requirements, and sets other operational limits. The proposed rule also includes additional, more flexible rules for the operation of “micro” unmanned aircraft weighing less than 4.4 pounds. Comments on the proposed rule are due April 24, 2015.

FAA Publishes Third Report on U.S. Airport Capacity Needs

The FAA issued its third Future Airport Capacity Task (FACT3) report on long-term U.S. airport capacity needs. The report concluded that the FAA and airport operators must rely on NextGen technologies and procedures and runway improvements to address future airport capacity constraints, and identified airports that are at risk for significant delays and congestion through 2020 and 2030. The report contends that for the remainder of this decade, most of the U.S. hub airport system has sufficient capacity, except for several “high-demand airports,” including New York, Philadelphia, Atlanta and San Francisco, that have consistent delays.

FAA Sets Deadline for Airport Notification of Intent To Use Airport Improvement Program Funds for FY 2015

The FAA issued a notice setting May 1, 2015, as the deadline for airport sponsors to notify the FAA of their intent to use FY 2015 entitlement funds available for Airport Improvement Program-eligible projects that the sponsor previously identified through the Airports Capital Improvement Plan process during the preceding year.

FAA Lifts Prohibition Against Certain Flights Within the Territory and Airspace of Ethiopia

The FAA issued a final rule removing the prohibition against certain flights within the territory and airspace of Ethiopia contained in Special Federal Aviation Regulation (SFAR) No. 87. The prohibition had applied to flights operated within the territory and airspace of Ethiopia north of 12 degrees north latitude conducted by U.S. air carriers or commercial operators, persons operating with an FAA-issued airman certificate, unless that person was operating U.S.-registered aircraft for a foreign air carrier, and operators using U.S.-registered aircraft, except where the operator of such aircraft was a foreign air carrier. The FAA determined that there are no longer any safety and security concerns prompting flight prohibitions and that it is safe for U.S. civil flights to be operated within the entire territory and airspace of Ethiopia. This final rule became effective on February 4, 2015.

Enforcement

FAA Proposes Civil Penalties Against Sears Holdings for Alleged Hazmat Violations

The FAA issued a release proposing to assess $533,000 in civil penalties against Sears Holdings Management Corp. for alleged violations of the Hazardous Materials Regulations. The FAA alleges that Sears failed to correctly package 27 boxes containing DieHard non-spillable batteries for air transportation to various U.S. locations. The FAA also alleges the shipment was not accompanied by shipping papers to indicate the hazardous nature of the contents, and was not marked or labeled.

FAA Alleges SkyWest Airlines Operated Aircraft Lacking Required Maintenance

The FAA alleges that SkyWest Airlines operated 15 flights with aircraft that were not in compliance with FAA safety regulations, proposing to assess $450,000 in civil penalties. In a release issued January 16, the FAA stated that SkyWest failed to perform required maintenance on air conditioning units in three Bombardier CL-600 jets and on the auxiliary generator in one Embraer EMB-120 turbo-prop plane after pilots reported problems with those systems, resulting in one of the CL-600 jets depressurizing due to an air conditioning unit failure and the deployment of passenger oxygen masks, and an emergency descent.

FAA Proposes $275,000 Civil Penalty Against Hallmark Aviation for Alleged Drug/Alcohol Testing Violations

The FAA issued a release alleging that Hallmark Aviation Services, Inc. of Los Angeles  violated FAA’s drug and alcohol testing regulations by failing to conduct pre-employment or random drug and alcohol testing on certain employees who performed safety-sensitive functions. The FAA proposed to assess $275,000 in civil penalties against the company.

FAA Alleges United Airlines, Two Other Companies, Violated Hazmat Regulations

The FAA proposed a $1.3 million civil penalty against United Airlines for alleged violations of FAA hazmat regulations. In a release issued January 27, the FAA stated that during its inspections, it found that United failed to provide the pilot in command with accurate information about hazardous materials onboard the aircraft, including the location of the materials on the aircraft; the materials’ type, quantity, weight, proper shipping name, identification number and hazard class, dates of the flights, and confirmation that no damaged or leaking packages had been loaded onto the aircraft. The FAA also alleged that United improperly accepted hazardous materials for air transportation and failed to retain copies of shipping papers. The FAA also issued a release proposing to assess civil penalties of $63,000 and $70,020 against Wholesale Electric Supply of Houston and Viabox of Elkhart, Ind., respectively, for alleged hazmat violations. The FAA said the two companies shipped packages that were not declared to contain hazardous materials and that the materials offered were not properly classed, described, packaged, marked, labeled and in proper condition for shipment, and that the companies failed to ensure their employees received required training and to provide emergency response information with the shipment.

FAA Takes Enforcement Action Against U.S. Airlines

The FAA proposed to assess civil penalties against Trans States Airlines, ExpressJet Airlines and Alaska Airlines for alleged violations of the Federal Aviation Regulations. The FAA issued a release proposing $122,000 in civil penalties against Trans States Airlines for allegedly failing to test and inspect an Embraer aircraft’s fuel system components within the timeframe required by an FAA Airworthiness Directive. The FAA also issued a release proposing civil penalties totaling $147,375 against ExpressJet Airlines for allegedly violating the FAA’s drug and alcohol testing and aircraft maintenance regulations. In addition, the FAA issued a release proposing civil penalties totaling $1.6 million against Alaska Airlines for allegedly operating aircraft that were not in compliance with Federal Aviation Regulations. The FAA also issued a release proposing $390,000 in civil penalties against Horizon Air for allegedly operating Bombardier DHC-8 aircraft with transponders that had not been tested and inspected.

FAA Alleges Amazon.com, Rheem Violated Hazmat Regulations

The FAA issued a release proposing to assess civil penalties of $54,000 and $96,800 against Amazon.com and Rheem Manufacturing Co. of Atlanta, respectively, for violating the hazardous materials regulations by offering flammable liquids for shipment by air that were not properly classed, described, packaged, marked, labeled and in proper condition for shipment.

Pipeline and Hazardous Materials Safety Administration

PHMSA Retains Compliance Deadline for New Rules on Air Transportation of Lithium Batteries; Extends Compliance Date for Other Transportation Modes

PHMSA issued a notice extending the compliance date for its recently issued final rule revising hazard communication and packaging provisions for lithium batteries. The rule’s compliance deadline was extended to August 7, 2015 for modes of transportation other than air, but PHMSA retained the February 6, 2015 compliance date for air transport. The extension was prompted by a petition by various retail organizations that contended that the 6-month transitional implementation period adopted in the final rule was too challenging for the retail industry to implement for surface transportation of lithium batteries.

International Trade Commission

Regulatory

ITC Schedules Hearing on Cuba Travel Restrictions and U.S. Exports of Goods and Services to Cuba

The U.S. International Trade Commission issued a notice that it has instituted an investigation and scheduled a hearing on U.S. restrictions on Cuban imports of goods and services from the United States, including restrictions on U.S. citizen travel to Cuba. ITC has set the following hearing and reporting schedule: a March 10, 2015 deadline for filing requests to appear at the public hearing; a March 12, 2015 deadline for filing prehearing briefs and statements; March 24, 2015 as the date for the public hearing; a March 31, 2015 deadline for filing post-hearing briefs and statements; an April 15, 2015 deadline for filing all other written submissions; and September 15, 2015 as the date for transmittal of ITC’s report requested by the Senate Finance Committee.

White House

Obama Administration Releases FY2016 FAA Budget Proposal

The Obama administration released its FY2016 budget, which would leave funding for the FAA relatively flat. This year’s budget excluded a $100 million air traffic control user fee that had been included in several budget proposals from years past. Basic components of the budget include, $174 million in additional funding for operations, $255 million in additional funding for facilities and equipment, and a decrease of airport funding by $450 million. The budget would allow airports to increase the Passenger Facility Charge from $4.50 to $8.00 to help mitigate the decreased funding to airports proposed in the budget. The budget also contains a slight increase in funding for aviation inspectors and engineers as well as for the FAA’s Aviation Safety Oversight office.

White House Issues Memorandum on Safeguarding Privacy, Civil Rights and Civil Liberties in Use of Unmanned Aircraft

The Obama administration issued a memorandum discussing steps the U.S. government will take to protect privacy, civil rights and civil liberties with regard to the operation of unmanned aircraft in the United States. Federal agencies that use unmanned aircraft will be required to review their existing unmanned aircraft policies and procedures regarding the collection, use, retention and dissemination of information obtained by government-operated unmanned aircraft to ensure that privacy, civil rights and civil liberties are protected. The U.S. government will also create a “multi-stakeholder engagement process” with the private sector to develop and communicate best practices for privacy, accountability and transparency issues regarding commercial and private unmanned aircraft use in the United States.

Congressional Action Impacting Aviation

House Transportation and Infrastructure Committee Names Ranking Members

The House Transportation and Infrastructure Committee named their minority members and ranking member positions for both the full committee and its subcommittees. The full committee ranking member will continue to be Peter DeFazio (D-Ore.) and the Subcommittee on Aviation ranking member will be Rick Larsen (D-Wash.). A full roster of the Aviation Subcommittee members can be found here.

Senate Commerce Committee Names Aviation Subcommittee Leadership

The Senate Commerce Committee named its chairperson and ranking member for the Subcommittee on Aviation, Operations, Safety and Security. Senator Maria Cantwell (D-Wash.), former chairperson of the committee, will now take the ranking member spot, while Senator Kelly Ayotte (R-N.H.) will now chair the subcommittee. Senator John Thune (R-S.D.) is the full committee chairman and Senator Bill Nelson (D-Fla.) will be the full committee ranking member.

First House Transportation Committee Hearing Focuses on FAA Reauthorization

The House Transportation and Infrastructure Committee held its first hearing of the new congressional session on FAA reauthorization, focusing on the FAA’s aircraft and flight standards certification processes and the progress the FAA has made to streamline those processes since the last FAA reauthorization bill was signed into law. The committee heard testimony from Ray Conner, president and CEO of Boeing Commercial Airplanes, Aaron Hilkemann, president and CEO of Duncan Aviation, Chris Hart, acting NTSB chairman, Dorenda Baker, director of the FAA’s Aircraft Certification Service, and Gerald Dillingham, director of Civil Aviation Issues for GAO. Chairman Bill Shuster (R-Pa.) confirmed that he will work to pass a bill before the current FAA authorization expires in September.

House Science, Space and Technology Committee Holds Hearing on Unmanned Aircraft

The House Science, Space and Technology Committee held a hearing on Unmanned Aircraft Systems (UAS) Research and Development to review work performed by the FAA and NASA in the area of UAS integration into the National Airspace System. The committee heard testimony from Dr. Ed Waggoner, director of NASA’s Integrated Systems Research Program, James Williams, manager of FAA’s UAS Integration Office, Dr. John Lauber, co-chair of the National Research Council’s Committee on Autonomy Research for Civil Aviation, Brian Wynne, CEO and president of the Association for Unmanned Vehicle Systems International, Colin Guinn, CRO of 3D Robotics, and Dr. John R. Hansman, Massachusetts Institute of Technology professor of Aeronautics and Astronautics.

UAS Crash Landing at White House Spurs More Legislation Discussions

After a small unmanned aircraft crash-landed on the White House lawn in January, many congressional members urged the FAA to finalize its small UAS guidelines. Senator Dianne Feinstein (D-Calif.) has indicated that she is working on a UAS bill that will create new penalties for those that fly small unmanned aircraft unsafely and will increase the FAA’s safety oversight authority with regard to UAS usage.