This edition of the Cozen O’Connor Aviation Regulatory Update discusses DOT’s selection of carriers to operate U.S.-Havana and U.S.-Tokyo (Haneda) air services, the FAA’s implementation of its small unmanned aircraft systems/drone rules, new increases in DOT civil penalty amounts, the FAA’s draft PFC order, GAO’s reporting on FAA oversight of repair stations, and the latest DOT and FAA enforcement actions.

Department of Transportation

Regulatory

DOT Finalizes Selection of U.S. Carriers to Operate Scheduled U.S.-Havana Air Services

DOT issued a final order selecting the following carriers to provide scheduled service between the U.S. and Havana, Cuba: Alaska Airlines (one daily flight from Los Angeles), American Airlines (four daily flights from Miami and one daily flight from Charlotte), Delta Air Lines (one daily flight from each of New York (JFK), Atlanta, and Miami), Frontier Airlines (one daily flight from Miami), JetBlue Airways (two daily flights from Fort Lauderdale (except once on Saturdays) and one daily flight from each of New York (JFK) and Orlando), Southwest Airlines (two daily flights from Fort Lauderdale and one daily flight from Tampa), Spirit Airlines (two daily flights from Fort Lauderdale), and United Airlines (one daily flight from Newark and one weekly flight from Houston). In allocating the 20 available daily U.S.-Havana frequencies, DOT prioritized selecting areas of the United States with large Cuban-American populations, such as Florida (particularly South Florida), the New York City/Newark metropolitan area, and the Los Angeles metropolitan area. DOT also based its carrier selection decision on the goal of “diversifying the allocation [of frequencies] among a variety of carriers” and among a variety of geographic regions to ensure intercarrier and inter-gateway competition.

DOT Issues Final Order Awarding U.S.-Tokyo (Haneda) Slots

DOT also issued a final order confirming its allocation of five daytime slot pairs for daily scheduled combination service between the U.S. and Tokyo’s Haneda Airport, as follows: 1) one slot pair to American Airlines for Los Angeles-Haneda service; 2) two slot pairs to Delta Air Lines for Los Angeles-Haneda and Minneapolis/St. Paul-Haneda services; 3) one slot pair to Hawaiian Airlines for Honolulu-Haneda service; and 4) one slot pair to United Airlines for San Francisco-Haneda service. DOT also awarded backup authority for Delta’s Minneapolis/St. Paul-Haneda service to American for service from Dallas/Fort Worth.

DOT Issues Interim Final Rule Increasing Civil Penalty Amounts

DOT issued an interim final rule increasing certain civil penalty amounts set forth in 14 C.F.R. Part 383 as required under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. In addition to increasing penalty amounts to account for inflation, DOT is also statutorily required to make a ‘‘catch-up adjustment’’ to such civil penalties. Previously, penalty amounts that were greater than $1,000, but less than or equal to $10,000, were rounded to the nearest multiple of $1,000, allowing penalties to be kept at round numbers, but resulting in penalties often not increasing if inflation had increased but not by a large enough amount. Over time, this formula caused penalties to lose value relative to total inflation. The 2015 Act removed these rounding requirements and penalty amounts are now rounded to the nearest $1. The interim final rule ‘‘resets’’ penalty amount inflation calculations by excluding prior inflationary adjustments made under the Inflation Adjustment Act, by requiring agencies to identify, for each penalty, the year and corresponding amount(s) for which the maximum penalty level or range of minimum and maximum penalties was originally enacted by Congress or last adjusted by statute or regulation, other than pursuant to the Inflation Adjustment Act. The interim final rule makes the following adjustments to Part 383 civil penalty amounts:

Some of these penalty amount increases were already included in the FAA’s interim final rule issued on July 5, 2016, which became effective on August 5, 2016. This interim final rule is effective immediately.

Enforcement

DOT Assesses Civil Penalties Against U.S. Airlines for Alleged Denied Boarding and Baggage Liability Violations.

DOT issued consent orders assessing civil penalties against a number of U.S. airlines for alleged violations of the Department’s oversales rule (14 C.F.R. Part 250), domestic baggage liability rule (14 C.F.R. Part 254), and Customer Service Plan requirements (14 C.F.R. 259.5). The alleged violations were uncovered by DOT during inspections at various airports across the U.S. DOT inspectors found a number of situations in which the airlines’ agents at boarding gates and ticket counters failed to produce correct copies of the carriers’ written denied boarding policy statement upon request to DOT Enforcement Office staff. In addition, some agents provided documents, including contract of carriage or customer service complaint forms, that did not contain the required denied boarding compensation disclosures, or produced outdated copies of the disclosures with compensation amounts below the minimum value required. DOT inspectors also found that airline agents produced ticket notices or displayed signage at certain airport ticket counters and/or boarding gates which limited the carriers’ domestic baggage liability to amounts less than the required $3,500, and in some cases, displayed liability amounts that were outdated.

DOT Takes Enforcement Action Against Air Canada for Alleged Disabled Passenger-related Violations

DOT also issued a consent order against Air Canada for failing to respond to Part 382 complaints from disabled passengers in a timely manner, as well as for requiring that proof be provided that service animals are properly trained and requiring that they be harnessed before being allowed on flights. The order alleged that Air Canada mistakenly believed that Canadian Air Transport Regulations limited its acceptance of service animals to animals that have been trained by specific organizations and animals that are properly harnessed. DOT previously denied a Part 382 waiver request filed by Air Canada on this issue, ruling that the Canadian regulations did not prevent Air Canada from accepting other types of service animals, and, therefore, did not conflict with 14 C.F.R. Section 382.117.

Federal Aviation Administration

Regulatory

FAA’s Small UAS/Drone Rule Becomes Effective; FAA Grants Waivers from New Part 107

The FAA’s new Part 107 regulations governing small unmanned aircraft systems (UAS)/drones became effective on August 29, 2016. The new rules apply to commercial UAS operations and to UAS weighing no more than 55 pounds, and prohibit operations over 400 feet above ground level or higher than 400 feet above a structure, beyond the visual line of sight of the operator, nighttime operations, and operations over people not directly involved in the UAS operations. The regulations also prescribe new pilot testing and certification requirements for UAS operators and allow the FAA to grant waivers from certain provisions of the rules. The FAA has granted such waivers to 79 UAS operators.

FAA Establishes Procedures for Withholding Information Under the FAA’s Voluntary Disclosure Reporting Program

The FAA issued a notice of proposed order identifying information submitted under the FAA’s Voluntary Disclosure Reporting Program (VDRP) that will be withheld from public disclosure, including disclosure under the Freedom of Information Act. Under 49 U.S.C. 40123, certain voluntarily provided safety and security information is protected from public disclosure to encourage persons to provide such information to the FAA. The FAA is statutorily required to issue an order making certain findings before such information is protected from disclosure. The FAA’s proposed order would retain current disclosure protections provided under FAA Order 8000.89 while designating additional information that may not be disclosed. The content of all submissions by a regulated entity that are accepted by the FAA under the VDRP would be withheld, including information contained in an initial notification to the FAA regarding an apparent violation, as well as descriptions of corrective actions to be taken to correct such violations. Comments on the FAA’s proposed order are due by October 19, 2016.

FAA Issues Safety Alert on Recalled Samsung Galaxy Note 7 Devices

The FAA issued a Safety Alert for Operators following the Consumer Product Safety Commission’s recall of the Samsung Galaxy Note 7 device. The FAA said that U.S. hazardous material regulations prohibit air cargo shipments of recalled or defective lithium batteries and lithium battery-powered devices, and that passengers may not use or charge such devices when they carry them on board aircraft. The FAA also stated that passengers are required to protect the devices from accidental activation, including disabling any features that may turn on the device and must not pack them in checked luggage. The Safety Alert urges airlines to ensure that their employees who process cargo and passengers, as well as those responsible for cabin safety, are aware of the rules and that cargo customers are aware of the rules. The alert also urged airlines to include information and guidance on their websites about damaged or recalled lithium batteries and devices.

FAA Publishes Draft Order on Passenger Facility Charges

The FAA issued a notice and request for comments regarding its draft Order 5500.1B on Passenger Facility Charges (PFCs), which will replace Order 5500.1 issued on August 9, 2001. The draft Order updates and clarifies the responsibilities of: 1) the FAA’s Office of Airports staff overseeing PFCs; 2) airport authorities applying to collect and use PFCs; and 3) air carriers collecting, handling, and remitting PFCs. The draft Order also includes requirements for all PFC-funded projects and is designed to be used as a reference for project-specific requirements. The Order is addressed primarily to FAA employees with PFC responsibilities, airport authorities, and air carriers involved with collecting and reporting PFC revenues. The FAA also published a letter to industry and a summary of notable changes to the Order. The FAA subsequently issued a notice extending the comment period on the draft order from September 30, 2016, to October 31, 2016.

FAA Releases New Schedule of Charges for FAA Flight Standards Aviation Safety Inspector Services Performed Outside the United States 

The FAA issued a notice announcing the availability of Advisory Circular 187-1K, which contains an updated schedule of charges for FAA Flight Standards Aviation Safety Inspector services performed outside the U.S., including for airman certification and testing, repair station certification/approval/authorization/inspection/ renewal actions, and certification and inspection of pilot schools, airmen training centers, and aviation maintenance technician schools. The Advisory Circular and the new charges are effective on October 1, 2016.

Enforcement

FAA Proposes $500,000 Civil Penalty Against SeaPort Airlines

The FAA proposed a $500,000 civil penalty against SeaPort Airlines, Inc. of Portland, Ore., for allegedly operating three single-engine Cessna Caravans when they were not airworthy. The FAA alleges SeaPort failed to perform initial and recurring borescope inspections of the planes’ turbine compressor blades. The inspections are required by an Airworthiness Directive intended to prevent compressor turbine blade failures, which could cause an engine to lose power. In addition to operating three aircraft on a total of 583 flights without conducting the required inspections, the FAA also alleges that SeaPort failed to record its method of compliance with the Airworthiness Directive when the next recurring inspections were required for the three aircraft as well as another Cessna Caravan.

Gordon Food Service Faces $54,000 Civil Penalty for Alleged HazMat Violations

Gordon Food Service of Wyoming, Michigan, is facing a proposed $54,000 penalty from the FAA for allegedly violating the Hazardous Materials Regulations. According to the FAA, on August 11, 2014, Gordon Food Service offered UPS a shipment of 30 four-ounce Fryer Boil-Out Foaming tablets made of corrosive sodium hydroxide for air transportation from Plant City, Florida, to Greensboro, North Carolina. The FAA alleges that the package was not properly marked, labeled or accompanied by shipping papers indicating the amount, type and hazardous nature of the material inside. The FAA also alleges that the company did not provide required emergency response information with the shipment nor did it ensure that its employees received required hazardous materials training, among other allegations.

FAA Proposes $892,500 Civil Penalty Against Air Methods Corp

Air Methods Corp. of Englewood, Colo., is facing an $892,500 civil penalty for allegedly operating an Airbus EC-135 helicopter on passenger-carrying flights when it was not airworthy. According to the FAA, during a November 4, 2014, inspection in Tampa, Fla., an FAA inspector discovered that the helicopter’s pitot tubes were severely corroded. Despite being notified of the corrosion, the FAA claims that Air Methods Corp. continued to operate the helicopter on 51 passenger-carrying revenue flights between November 4 and November 11, 2014, without repairing or replacing the pitot tubes. Air Methods Corp. is subject to the penalty for allegedly operating the helicopter when it was not airworthy in violation of its operations specifications; failing to correct a known defect in the aircraft; and operating the helicopter in a careless or reckless manner that endangered lives and property.

Government Accountability Office

GAO Publishes Report Critical of FAA’s Safety Oversight of Repair Stations

GAO published a report critical of the FAA’s ability to oversee repair stations, alleging that the FAA faces “challenges” in its foreign repair station oversight due to FAA inspectors' inability to conduct routine and unannounced inspections of foreign repair stations. The report also questioned the FAA’s coordination of the inspection responsibilities of its oversight offices for airlines and its oversight offices for repair stations. GAO stated that the FAA’s newly deployed Safety Assurance System (SAS), a risk-based, data-supported oversight system, does not allow the FAA to consider a repair station's volume of work when determining safety risk. The report also stated that the FAA has not developed a process for determining the effectiveness of SAS, and without the ability to measure progress toward its repair station safety-related goals, the FAA risks not knowing whether its new, risk-based oversight approach is a success or could be improved. The report recommended that the FAA should: (1) develop and implement a process for incorporating into SAS volume data for U.S. airlines’ maintenance contracted to repair stations and (2) develop a process to evaluate the effectiveness of SAS.