This edition of the Cozen O’Connor Aviation Regulatory Update discusses the latest FAA reauthorization bills, the Department of Homeland Security’s enhanced aviation security measures, the DOT Inspector General’s audit reports regarding the FAA’s oversight of suspected unapproved parts and check pilot qualifications, the Department of Commerce’s investigations regarding aircraft imports from Canada, and the latest DOT and FAA enforcement actions.

Department of Homeland Security

DHS Enhances Aviation Security Measures for All Commercial Flights to the United States

The Department of Homeland Security (DHS) issued a release and fact sheet on new aviation enhanced security measures. The measures include enhanced passenger screening and heightened screening of personal electronic devices that will be conducted at 280 international airports that serve as the last point of departure for commercial flights to the U.S. In DHS Secretary John F. Kelly’s remarks on the new measures, he stated that “it is time to raise the global baseline of aviation security.”

Department of Transportation

Regulatory

DOT Inspector General Issues Audit Report Critical of FAA’s Oversight of Unapproved Parts

DOT’s Office of the Inspector General (“OIG”) issued an audit report that criticized the FAA’s oversight of suspected unapproved aircraft parts. OIG found that recordkeeping weaknesses and a lack of management control hindered the effectiveness of the FAA’s ability to identify and remove suspected unapproved parts from the aviation industry. The report stated that the FAA’s unapproved parts database contains numerous errors and the FAA’s hotline personnel are not adequately trained on how to record suspected unapproved parts-specific information. The report also stated that FAA inspectors did not uniformly follow the FAA’s established guidelines when performing unapproved parts investigations, which results in “varying and inconsistent results.” OIG also contended that the FAA’s risk-based oversight system is unable to incorporate suspected unapproved parts as a risk indicator for aviation manufacturers. The report also criticized the FAA’s inability to consistently implement procedures for notifying the industry about unapproved parts and ensuring that operators destroy or remove unapproved parts from the aviation supply chain. OIG issued a number of recommendations to improve FAA oversight of suspected unapproved parts, including providing better training to hotline employees on how to accurately record data about suspected unapproved parts in the FAA's database; development of improved management control to ensure inspectors follow guidance when conducting unapproved parts investigations; incorporating a “risk indicator” for manufacturers where unapproved parts have been found as part of the FAA’s risk-based oversight system; development of a management control to ensure inspectors require operators to remove unapproved parts from use and their inventories; and requiring the FAA to forward all confirmed suspected unapproved parts cases to federal law enforcement agencies, whether or not criminal activity is suspected.

DOT Inspector General Criticizes FAA’s Regulatory Oversight of Check Pilots

OIG also issued an audit report contending that the FAA’s processes for approving air carrier check pilots and aircrew program designees (APDs) to act on behalf of the FAA to certificate pilots and oversee check pilots are “insufficient to ensure that required training and observations for check pilots and APDs are completed or documented.” The report found that in many cases, FAA inspectors failed to verify check pilot applicants completed mandatory training and had been observed by an FAA inspector. OIG’s audit also found that a number of check pilots did not receive any recurring training. In addition, the report stated that the FAA is “not ensuring that carriers are consistently meeting check pilot requirements.” The OIG’s report recommended that the FAA improve its training for FAA inspectors to increase the verification of check pilot qualifications; develop guidelines requiring inspectors or their designees to verify that check pilots have met training requirements prior to their performing “recurrent observations;” change requirements for inspectors to ensure that check pilot records are regularly evaluated to assess the accuracy of air carrier training; and establish a training program on approving and overseeing check pilots under Advanced Qualification Programs for inspectors assigned to airlines using those programs.

Enforcement

Delta Air Lines Assessed $120,000 in Civil Penalties for Animal Reporting Violations

DOT issued a consent order against Delta Air Lines for alleged failure to file accurate animal reporting statistics with DOT’s Aviation Consumer Protection Division (ACPD). On January 15, 2016, Delta reported that it transported 98,779 animals during 2015. After an inquiry by the ACPD into the methodology used to calculate the total number of animals reported during a calendar year, Delta stated that its first calculation was incorrect and that it actually transported 159,747 animals during 2015. After an investigation by DOT’s Office of Aviation Enforcement and Proceedings, Delta changed its animal reporting numbers a third time stating that it transported 96,630 animals in 2015. Delta explained that the miscalculations were part of protocols and methodologies it had to develop to meet DOT’s new reporting requirement. DOT found that Delta violated 49 U.S.C. § 41721 and 14 C.F.R. Part 235, and assessed Delta $120,000 in civil penalties. Delta was ordered to pay $60,000 in civil penalties within 30 days, with the remaining $60,000 due and payable only if, within one year of the service date of the consent order, Delta violates the order’s cease and desist or penalty payment provisions.

Federal Aviation Administration

Enforcement

FAA Proposes $435,000 Civil Penalty Against United Airlines for Alleged Aircraft Airworthiness Violation

The FAA issued a release proposing the assessment of $435,000 in civil penalties against United Airlines for allegedly operating a Boeing 787 aircraft in a non-airworthy condition. The FAA alleges that United failed to perform a required inspection of a fuel pump pressure switch it replaced prior to returning the aircraft to service. The FAA stated that the carrier operated the aircraft on 23 passenger flights before performing the required inspection on June 28, 2014, with two of those flights allegedly occurring after the FAA had notified United that it had not performed the required inspection.

FAA Assesses Civil Penalties Against Terrazzo USA & Associates, Inc. for Alleged Hazardous Materials Violations

Terrazzo USA & Associates, Inc. of McLoud, Oklahoma, was assessed $63,000 in civil penalties for allegedly violating hazardous materials regulations. The FAA issued a release alleging that on June 23, 2016, Terrazzo USA tendered a box containing a corrosive liquid to UPS to be transported by air. According to the FAA, the box was not accompanied by required shipping papers or emergency response information. Furthermore, the FAA stated that the package was not properly marked, was not in the “proper condition” to transport the hazardous materials, and the company failed to ensure its employees had been properly trained to handle hazardous materials.

FAA Assesses Civil Penalty Against Gladwin Paint Company for Alleged Hazardous Materials Violations

Gladwin Paint Company of Arlington, Texas, was assessed a $63,000 civil penalty for alleged hazardous materials violations, according to a release issued by the FAA. The FAA alleges that Gladwin provided a box of flammable paint to FedEx for shipment by air from Arlington to Abilene, Texas. According to the FAA, the shipment was not accompanied by proper shipping papers and was not properly marked, labeled, or packaged to prevent the release of hazardous materials. The FAA also alleges that Gladwin failed to ensure its employees had been properly trained to handle hazardous materials and include emergency response information with the shipment.

Department of Commerce International Trade Administration

ITA Initiates “Less-Than-Fair-Value” and “Countervailing Duty” Investigations of Aircraft Imports from Canada

The Department of Commerce’s International Trade Administration (ITA) issued a notice initiating an investigation of the importation into the United States of Bombardier 100- to 150-seat aircraft from Canada in response to an anti-dumping petition filed by The Boeing Company. Boeing’s petition alleges that the aircraft are being or will be sold in the United States at a less-than-fair-value within the meaning of section 731 of the Tariff Act of 1930, as amended. In addition, ITA issued a notice initiating a “Countervailing Duty Investigation” regarding the aircraft in response to Boeing’s petition. Boeing’s petition also alleges that the Canadian government, the provincial government of Quebec, and the government of the United Kingdom are providing “countervailable subsidies” for the imported aircraft and that such imports were “threatening material injury” to U.S. industry. Comments on the scope of the investigations were due June 6, 2017, and rebuttal comments were due June 16, 2017.

Federal Communications Commission

FCC Proposes to Amend Rules Governing Satellite Earth Stations Mounted on Aircraft

The Federal Communications Commission published a notice of proposed rulemaking that would amend rules governing earth stations in motion (ESIMs) used to provide satellite-based services on aircraft and other transportation modes communicating with geostationary satellite orbit (GSO), fixed-satellite service (FSS) satellite systems. The proposed rule would eliminate duplicative rules that apply to ESIMs and require that ESIMs meet the same requirements as fixed and temporary fixed earth stations. The NPRM would also reorganize and consolidate rules, including technical, operational, and application rules for Earth Stations Aboard Aircraft (ESAAs). The proposed rules would also allow the operation of ESIMs in the conventional “Ka-band” by applying to ESIMs communicating with GSO FSS space stations operating in 18.3–18.8 GHz and 19.7–20.2 GHz (space-to-Earth), and 28.35–28.6 GHz and 29.25–30.0 GHz (Earth-to-space) frequency bands, resulting in the promotion of “innovative and flexible use of satellite technology” and “new opportunities for a variety of uses.” Comments on the proposed rule are due July 31, 2017, with reply comments due August 30, 2017.

Government Accountability Office

GAO Issues Report on Air Carriers' Disability-Training Programs and DOT Oversight

The Government Accountability Office (GAO) issued a report on its review of 12 U.S. and foreign airlines’ disabled passenger-related training programs and DOT oversight of airlines’ compliance with the Air Carrier Access Act (ACAA) and DOT’s disabled passenger regulations under 14 C.F.R. Part 382. GAO found that each airline it reviewed was able to demonstrate that it has in place sufficient training programs for its employees and contractors who interact with disabled passengers. GAO's review also found that some airlines have voluntarily implemented quality assurance programs to “improve and sustain their disability training programs' performance.” GAO also stated that some airlines have created “disability boards,” which serve as forums for increasing awareness among airline employees regarding disability-related issues, even though this is not required by the ACAA or DOT regulations. GAO reviewed DOT’s oversight methods for ensuring ACAA compliance by airlines, including its analysis of disabled passenger complaint data, regulatory compliance inspections, and enforcement actions and the imposition of civil penalties for violations. The report found that DOT analyzes passenger complaints for trends and patterns and for “potential egregious violations.” DOT conducts compliance reviews at airline headquarters, including compliance with disability-related rules. GAO stated that since 2008, DOT has conducted 38 reviews at airline headquarters, resulting in 12 ACAA violations. In addition, DOT has initiated compliance audits of airlines at a number of airports.

Congressional Action Impacting Aviation

House and Senate Mark-Up FAA Reauthorization Bills Featuring Air Traffic Control Reorganization and Consumer Protection Provisions

The U.S. Senate and House of Representatives unveiled their long-awaited FAA reauthorization bills. The Senate bill, S. 1405, would reauthorize FAA appropriations through fiscal year 2021, make limited changes to Passenger Facility Charges (PFCs), and require airlines and ticket agents to disclose their fees for certain services in a standardized format and provide automated refunds to passengers for any ancillary service fees paid for services that were not received. The bill would also prohibit passengers who were involuntarily bumped from being removed from aircraft except for safety, security or health reasons. In addition, the bill would amend family assistance plan requirements for families of victims of air accidents and change certain flight attendant duty time and rest period rules. The bill would also require the FAA to order aircraft manufacturers to install secondary cockpit barriers on new aircraft manufactured for delivery to U.S. Part 121 air carriers.

The House bill, H.R. 2997, reauthorizes funding for FAA programs through fiscal year 2023 and includes House Transportation Committee Chairman Bill Shuster’s (R-Pa.) proposal to create a private, non-profit organization to oversee the nation’s air traffic control system. The ‘‘21st Century Aviation Innovation, Reform, and Reauthorization Act’’ or the ‘‘21st Century AIRR Act’’ would transfer air traffic control operations currently provided by the FAA to a separate not-for-profit corporate entity, the “American Air Navigation Services Corporation,” which would be governed by a 13-member board of directors comprised of a CEO, two directors appointed by DOT, and one director nominated by each the following groups: 1) passenger air carriers; 2) cargo air carriers; 3) regional air carriers; 4) general aviation; 5) business aviation; 6) air traffic controllers; 7) airports; and 8) commercial pilots, plus two directors nominated and selected by the other directors. The corporation would assume operational control of air traffic services from the FAA on October 1, 2020. The bill also contains a number of consumer protection provisions. The bill would: 1) prohibit the use of cell phones during flight; 2) clarify that airlines and ticket agents may separately disclose government-imposed taxes and fees in fare advertisements as long as the total cost of the air transportation is also provided; 3) require that fare quotations include the disclosure of baggage fees that may apply; 4) prohibit the bumping of airline passengers already onboard an aircraft except for emergency or safety-related reasons; 5) require airlines to provide additional information on their websites’ homepages regarding how consumers can submit complaints to DOT and the airline; 6) require airlines to provide information on the amenities and accommodations that would be provided by the airline to passengers in the event of a “widespread disruption” in service; and 7) clarify compensation requirements for passengers who are involuntarily denied boarding due to an oversold flight. The bill would also substantially increase spending on the Essential Air Service Program.

Both bills were considered and passed by their respective committees. The House Transportation and Infrastructure Committee held its markup on June 27, 2017, and passed the bill by a vote of 32-25. The Senate Commerce, Science and Transportation Committee held a markup on June 28, 2017, and passed its bill by voice vote. Both Committee chairmen have indicated a desire to have the bills considered by the full House and Senate before Congress recesses for the August break on July 28. With only 15 days in session before the break, no formal schedule for consideration has been set. If both bills pass their respective bodies, a conference to reconcile the two bills would be held later this summer.