This edition of the Cozen O’Connor Aviation Regulatory Update discusses the U.S. House of Representatives’ passage of a five-year Federal Aviation Administration (FAA) reauthorization bill, the FAA’s Airworthiness Directives requiring inspections of fan blades on CFM56-7B model engines as a result of last month’s Southwest Airlines engine incident, the Department of Transportation’s recent award of frequencies for new U.S.-Cuba air service, new DOT requirements for commercial operators of unmanned aircraft systems (UAS)/drones to obtain DOT economic authority in the form of a Part 298 air taxi registration in order to operate air transportation services for hire, the Department of Homeland Security’s increase in the amount of civil penalties imposed by Customs and Border Protection (CBP) and the Transportation Security Administration (TSA), the Government Accountability Office’s implementation of new electronic filing requirements for bid protests, and the latest DOT and FAA enforcement actions.

Congressional Action Impacting Aviation

House Passes Five-Year FAA Reauthorization Bill

The U.S. House of Representatives passed a five-year FAA Reauthorization bill, H.R. 4, by a vote of 393-13. The bill represents the first major reauthorization for the agency in six years and addresses issues ranging from aviation safety and airport funding to consumer protection and UAS/drone oversight. Among the consumer protection provisions, the bill would: 1) prohibit airlines from involuntarily bumping revenue passengers from flights after they have boarded; 2) prohibit passengers onboard an aircraft from using cell phones between take-off and landing during a U.S. domestic scheduled flight; 3) allow airlines and ticket agents to display in an advertisement or solicitation for passenger air transportation the base airfare as long as they clearly and separately disclose the government-imposed fees and taxes associated with the air transportation and the total cost of the air transportation; 4) make it an unfair or deceptive practice for any airline or ticket agent to fail to include in an internet fare quotation for a specific itinerary selected by a consumer a “clear and prominent” statement that additional fees for checked baggage and carry-on baggage may apply and a “prominent” link that connects directly to a list of all such fees; 5) require U.S. airlines to post on their websites a “clear statement” indicating whether they will provide their passengers whose travel is interrupted due to a “widespread disruption” caused by an airline’s computer system failure with (a) hotel accommodations, (b) ground transportation, (c) meal vouchers, (d) air transportation on another airline to the passenger’s destination, and (e) sleeping facilities inside the airport terminal; 6) require DOT to clarify that there is not a maximum level of compensation an airline may pay to a passenger who is involuntarily denied boarding due to an oversold flight; 7) require airlines to “proactively” offer to pay denied boarding compensation to a passenger rather than wait until the passenger requests compensation; 8) require airlines to submit for DOT approval and post on their websites a one-page passenger rights guidelines; 9) establish a DOT Aviation Consumer Advocate to assist consumers in resolving airline service complaints; 10) require DOT to publish an “Airline Passengers With Disabilities Bill of Rights” that sets forth the basic responsibilities of airlines and their employees and contractors and the protections of passengers with disabilities; and 11) require DOT to conduct a rulemaking to define the term “service animal,” develop minimum standards for service and emotional support animals transported in aircraft cabins, and determine whether to align the definition of “service animal” under 14 C.F.R. Part 382 with the definition in Department of Justice regulations implementing the Americans with Disabilities Act of 1990. The bill would also direct the FAA to issue rules that would allow UAS/drone package deliveries to be operated beyond the operator’s visual line of sight, while other provisions are aimed at ensuring the FAA retains flexibility in regulating the safe operation of commercial and recreational UAS/drones. In addition, the bill would require that flight attendants be provided a minimum rest period of 10 consecutive hours for each scheduled duty period of 14 hours or less. The bill also maintains the current amounts of Passenger Facility Charges (PFCs) that airports may collect, but eliminates the restrictions on when PFCs of $4 or $4.50 may be imposed. The bill would also reauthorize Airport Improvement Program grants of $3.35 billion. Additionally, the bill would create a new $5.3 billion discretionary grant program to fund infrastructure projects at rural, non-hub airports. While both programs are still subject to funding from Congressional appropriations, the grant program is considered by proponents of increased federal infrastructure investment as beneficial.

Due to a lack of majority support from House members, the bill did not include provisions from an earlier House version of the bill that would have transferred the management and operation of the U.S. air traffic control system from the FAA to an independent non-profit air traffic control corporation. Instead, the bill contains provisions to assist the FAA’s progress in implementing its NextGen air traffic control modernization program, including establishing an integrated “cyber testbed” focused on research, development, evaluation, and validation of air traffic control modernization programs and technologies.

Before the bill becomes law, the Senate must consider its version of FAA Reauthorization legislation. While no date has yet been scheduled for Senate consideration, the Senate’s passage of a bill is expected soon to allow members sufficient time to reconcile any differences with the House-passed bill and finalize FAA reauthorization legislation prior to the expiration of the current short-term FAA reauthorization on September 30, 2019.

Federal Aviation Administration

Regulatory

FAA Issues Airworthiness Directives for CFM56-7B Model Engines

In response to the April 17, 2018, engine failure involving a Southwest Airlines B737-700 aircraft powered by CFM56-7B turbofan engines, the FAA issued an emergency airworthiness directive to address potential engine fan blade failure due to cracking. The directive requires that a one-time ultrasonic inspection be performed within 20 days of all 24 fan blade dovetail concave and convex sides, specifically including those with 30,000 or more total accumulated flight cycles, to detect cracking. That directive was effective immediately. The FAA also issued an airworthiness directive that requires an ultrasonic inspection (USI) or eddy current inspection (ECI) of the concave and convex sides of the fan blade dovetail: 1) before the fan blade accumulates 20,000 cycles since it was new or within 113 days from the effective date of the directive, whichever occurs later; 2) within 113 days from the effective date of the directive if the cycles since new on a fan blade are unknown; and 3) after this initial inspection, no later than 3,000 cycles since the last inspection. The FAA has directed that if any “unserviceable indications” are found during the inspections, the affected fan blades are to be removed from service. This directive is effective May 14, 2018. The FAA invited the submission of public comments and written data regarding the directive to be filed no later than June 18, 2018.

Enforcement

FAA Revokes Air America’s Air Carrier Certificate for Alleged Safety Violations

The FAA issued a release announcing that the agency had issued an emergency order revoking Air America, Inc.’s air carrier certificate for allegedly operating passenger-carrying flights with a pilot who had not received adequate rest, using an untrained and unqualified pilot, operating aircraft in an overweight condition, not properly loading aircraft, and failing to provide the FAA with pilot flight and duty records when requested to do so by an FAA inspector. The FAA alleges that a twin-engine Piper Aztec aircraft operated by Air America that was overweight and improperly loaded crashed on June 3, 2017, killing a passenger. In revoking the carrier’s certificate, FAA stated that Air America’s actions were “careless and reckless” and that its numerous violations posed a threat to aviation safety. Air America surrendered its certificate to the FAA.

Department of Transportation

Regulatory

DOT Awards U.S.-Havana Frequencies to Five U.S. Airlines

In the 2017 U.S.-Cuba Frequency Allocation Proceeding, the Department of Transportation (DOT) issued a final order awarding four daily and six weekly frequencies to be utilized by five U.S. airlines for service between the U.S. and Havana, Cuba. The frequencies were awarded to: 1) American Airlines to operate an additional daily Miami-Havana roundtrip flight; 2) Delta Air Lines to operate an additional daily Miami-Havana roundtrip flight; 3) JetBlue Airways to operate an additional Fort Lauderdale-Havana roundtrip flight six days per week and a weekly Boston-Havana roundtrip flight; 4) Southwest Airlines to operate an additional daily Fort Lauderdale-Havana roundtrip flight; and 5) United Airlines to operate a Houston-Havana roundtrip flight six days per week. The carriers are required to begin service by July 19, 2018. The frequencies are subject to DOT’s standard 90-day dormancy condition, whereby any frequency not used for a period of 90 days would become dormant and revert automatically to DOT for reallocation.

DOT Requires UAS/Drone Operators Planning to Engage in Commercial Air Transportation to Obtain Economic Authority

DOT issued a notification requiring companies planning to operate unmanned aircraft systems UAS/drones that will engage in commercial air transportation, including the delivery of goods for compensation, to obtain certificate or exemption authority under 49 U.S.C. §§ 41101 or 40109 from DOT before they engage in such air transportation. The notice suggests that UAS/drone operators register under 14 C.F.R. Part 298 for air taxi authority in order to be exempted from the certificate requirements of 49 U.S.C. § 41101. Such registrants are required to be citizens of the United States as defined in 49 U.S.C. § 40102(a)(15) and maintain liability insurance required by 14 C.F.R. Part 205. DOT said that for UAS/drone operators that plan to transport goods for compensation, an exemption under Part 298 “is an appropriate form of economic authority.”

Enforcement

DOT Takes Enforcement Action Against Allegiant Air for Alleged Violations of DOT’s Consumer Protection and Disabled Passenger Regulations

DOT issued a consent order alleging that Allegiant Air violated DOT’s regulations governing the provision by carriers of assistance to passengers with disabilities in moving within an airport terminal, timely dispositive written responses to disability-related air travel complaints, timely responses to general consumer complaints, and prompt refunds to consumers, as well as DOT’s customer service plan rules. The order assesses $250,000 in civil penalties against Allegiant Air. The alleged violations were discovered during an on-site regulatory compliance inspection by DOT’s Office of Aviation Enforcement and Proceedings in March 2015, and during DOT’s review of carrier records in 2016 and 2017. DOT found numerous instances in which the carrier’s ground handling staff and contractors failed to provide adequate and timely assistance to disabled passengers in moving within the airport terminal and with wheelchairs, check-in and boarding, meeting arrivals, and ramp services. DOT found that in certain cases, passengers needing mobility assistance were asked to wait until the ground handling staff completed other tasks before assisting the passengers. DOT stated that this did not constitute adequate assistance under 14 C.F.R. Part 382. Additionally, in certain cases, ground personnel suggested that passengers with disabilities ask for assistance from a family member or a fellow passenger instead of providing the assistance as required. DOT also found that Allegiant failed to respond to complaints in a timely and complete manner. DOT also alleges that Allegiant Air did not provide customer refunds promptly as required by 14 C.F.R. § 374.3. and failed to acknowledge certain other consumer complaints within 30 days and provide substantive responses within 60 days, as required by 14 C.F.R. § 259.7(c).

DOT Assesses Civil Penalties Against Qantas Airways for Alleged Cabotage Violations

DOT issued a consent order assessing $125,000 in civil penalties against Qantas Airways for alleged cabotage violations. The order states that for a period of time in 2015 and 2016, Qantas “held out, and enplaned revenue passengers on, flights that it operated wholly between two points within the United States,” with the passengers then being transported on connecting Qantas codeshare flights operated by another air carrier to points outside the U.S. DOT stated that Qantas’ U.S.-marketed website held out and sold flights from John F. Kennedy International Airport (JFK) to Fa’a’ā International Airport (PPT) in Tahiti, French Polynesia, with a connection at Los Angeles International Airport (LAX). The JFK-LAX segment was operated by Qantas on Qantas’ aircraft, but passengers were deplaned at LAX and continued as Qantas codeshare passengers on flights operated by other carriers to PPT. DOT also alleges that Qantas’ U.S.-marketed website held out and sold flights from JFK to Auckland International Airport (AKL) in New Zealand, with a connection at LAX, with the JFK-LAX segment operated by Qantas on Qantas’ aircraft, but with passengers deplaning at LAX and continuing as Qantas codeshare passengers on flights operated by other carriers to AKL. DOT contends that by holding out flights and transporting revenue passengers between two U.S. points and then transporting those passengers on flights operated by other carriers for onward transportation to foreign destinations, Qantas “engaged in unauthorized cabotage in violation of 49 U.S.C. § 41703, violated the terms, conditions, and restrictions of its foreign air carrier permit in violation of 49 U.S.C. § 41301, and engaged in an unfair and deceptive practice in violation of 49 U.S.C. § 41712.” In its defense, Qantas asserted that the flights operated by other carriers that connected to the Qantas-operated JFK-LAX flights were sold as codeshare flights with a “QF” flight number and that as the carrier that was transporting the traffic into and out of the U.S. under its codeshare arrangements with other carriers, Qantas believes the flights were “fully consistent” with U.S. law. DOT ordered the carrier to pay $62,500 within 30 days, with the remaining $62,500 due and payable only if, within one year, Qantas violates the order’s cease and desist or penalty payment provisions.

Hawaiian Airlines Ordered to Pay $125,000 in Civil Penalties for Alleged Violations of DOT’s Disabled Passenger and Oversales Rules

DOT assessed $125,000 in civil penalties against Hawaiian Airlines under a consent order alleging that the carrier violated DOT’s disabled passenger and oversales regulations. DOT found that Hawaiian’s 2016 disability-related complaints report incorrectly counted service-animal denial explanation letters, required by 14 C.F.R. § 382.117(g), as disability complaints, and that the carrier failed to accurately report complaints received from passengers that involved damage to assistive devices. DOT also said the carrier “systematically failed to provide a dispositive response to passengers who filed written complaints about damage to their assistive device.” The consent order also alleges that Hawaiian Airlines violated DOT’s oversales regulations in 2015 and 2016.

DOT Assesses $100,000 in Civil Penalties Against Icelandair for Alleged Violations of DOT’s Complaint Response Regulations

DOT issued a consent order assessing $100,000 in civil penalties against Icelandair for alleged violations of DOT regulations requiring carriers to provide consumers with written acknowledgment of their complaints within 30 days and a written substantive response within 60 days. DOT found that in 2014 and 2015, Icelandair failed to provide an initial response to complaints within 30 days of receipt in over 20 percent of the consumer complaints reviewed by DOT’s Enforcement Office, and failed to provide a substantive response within 60 days of receipt of a complaint in over 40 percent of the consumer complaints reviewed, in violation of the carrier’s customer service plan under 14 C.F.R. § 259.7. DOT stated that the carrier’s failure to comply with these regulations also constituted unfair and deceptive practices in violation of 49 U.S.C. § 41712. Icelandair was ordered to pay $50,000 within 30 days, with the remaining $50,000 due and payable if, within one year, the carrier violates the order’s cease and desist or payment provisions.

Norwegian Air Shuttle Assessed $100,000 in Civil Penalties for Alleged Violations of DOT’s Post-Purchase Price Increase Prohibition

A consent order issued by DOT alleged that Norwegian Air Shuttle (NAS) violated DOT’s rule prohibiting post-purchase price increases and assessed $100,000 in civil penalties against the carrier. In response to a June 2016 consumer complaint, DOT’s Office of Aviation Enforcement and Proceedings investigated NAS’s procedures for informing consumers of a retroactive tax on passengers flying from Norwegian airports imposed by the Norwegian government and collection of such tax. DOT alleges that although the carrier knew of the potential tax, it failed to notify consumers of, or request their prior written consent to, the potential for a post-purchase price increase due to the new air passenger tax, as required under 14 C.F.R. § 399.88(b). DOT stated that NAS e-mailed customers informing them that if they did not pay the tax online with a credit card by August 1, 2016, they would automatically receive an invoice including an additional administration fee of one Euro. DOT said such conduct also violated DOT’s prohibition against unfair or deceptive practices under 49 U.S.C. § 41712. DOT ordered the carrier to pay $50,000 by April 28, 2018, with the remaining $50,000 due and payable if, within one year, NAS violates the order’s cease and desist or payment provisions.

Department of Homeland Security

Regulatory

DHS Issues Final Rule Increasing Civil Penalty Amounts for Inflation

The Department of Homeland Security (DHS) issued a final rule increasing the amount of civil penalties imposed by its various agencies, including CBP and TSA. The new civil penalty amounts are as follows:

Agency

Penalty Name and Citation

New Penalty Amount

CBP

Penalties for non-compliance with arrival and departure manifest requirements for passengers, crewmembers, or occupants transported on commercial vessels or aircraft arriving to or departing from the United States. 8 U.S.C. 1221(g); 8 CFR 280.53(b)(1) (INA section 231(g)).

$1,360

CBP

Penalties for non-compliance with landing requirements at designated ports of entry for aircraft transporting aliens. 8 U.S.C. 1224; 8 CFR 280.53(b)(2) (INA section 234).

$3,695

CBP

Penalties for violations of removal orders relating to aliens transported on vessels or aircraft under section 241(d) of the INA, or for costs associated with removal under section 241(e) of the INA. 8 U.S.C. 1253(c)(1)(A); 8 CFR 280.53(b)(4) (INA section 243(c)(1)(A)).

$3,116

CBP

Penalties for failure to remove alien stowaways under section 241(d)(2) of the INA. 8 U.S.C. 1253(c)(1)(B); 8 CFR 280.53(b)(5) (INA section 243(c)(1)(B)).

$7,791

CBP

Penalties for bringing to the United States aliens without required documentation. 8 U.S.C. 1323(b); 8 CFR 280.53(b)(13) (INA section 273(b)).

$5,543

TSA

Violation of 49 U.S.C. ch. 449 (except secs. 44902, 44903(d), 44907(a)–(d)(1)(A), 44907(d)(1)(C)–(f), 44908, and 44909), or 49 U.S.C. 46302 or 46303, a regulation prescribed, or order issued thereunder by a person operating an aircraft for the transportation of passengers or property for compensation. 49 U.S.C. 46301(a)(1), (4); 49 CFR 1503.401(c)(2).

$33,333 (up to a total of $533,324 per civil penalty action)

TSA

Violation of 49 U.S.C. ch. 449 (except secs. 44902, 44903(d), 44907(a)–(d)(1)(A), 44907(d)(1)(C)–(f), 44908, and 44909), or 49 U.S.C. 46302 or 46303, a regulation prescribed, or order issued thereunder by an individual (except an airman serving as an airman), any person not operating an aircraft for the transportation of passengers or property for compensation, or a small business concern.

$13,333(up to a total of $66,666 total for small business, $533,324 for others)

TSA

Violation of any other provision of title 49 U.S.C. or of 46 U.S.C. ch. 701, a regulation prescribed, or order issued thereunder.

$11,410 (up to a total of $57,051 total for small businesses, $456,409 for others)

The new penalty amounts apply to penalties assessed after April 2, 2018, where the associated violation occurred after November 2, 2015, and do not apply to previously assessed penalties that are being actively collected or have been collected. The final rule became effective on April 2, 2018.

Government Accountability Office

GAO Issues Final Rule on Electronic Filing and Public Availability of Bid Protests

The Government Accountability Office (GAO) issued a final rule that establishes an electronic filing and document dissemination system, the Electronic Protest Docketing System (EPDS), for the filing of bid protests with GAO, including those involving Fly America awards for U.S. government air travel. EPDS will be the only available method of filing a bid protest, except for protests containing classified information. The final rule implements a $350 filing fee to be charged to persons filing a protest through EPDS. GAO will be required to issue a decision on a bid protest within 100 days after the protest is filed. The final rule was prompted by a statutory requirement imposed by the Consolidated Appropriations Act for 2014, Public Law 113–76, 128 Stat. 5 (Jan. 14, 2014), which required GAO to “establish and operate an electronic filing and document dissemination system” and required that all documents and information regarding a bid protest be “disseminated and made available to the parties to the protest through electronic means.” The final rule was effective May 1, 2018.