[Federal Register Volume 85, Number 40 (Friday, February 28, 2020)]
[Proposed Rules]
[Pages 11881-11890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03836]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 399
[Docket No. DOT-OST-2019-0182]
RIN 2105-AE72
Defining Unfair or Deceptive Practices
AGENCY: Office of the Secretary (OST), U.S. Department of
Transportation (DOT).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The U.S. Department of Transportation (Department or DOT) is
seeking comment in this Notice of Proposed Rulemaking (NPRM) on a
proposal that would codify definitions for the terms ``unfair'' and
``deceptive'' in the Department's regulations implementing its aviation
consumer protection statute. While codifying these definitions into the
Department's regulations would be new, the proposed definitions of
``unfair'' and ``deceptive'' reflect the Department's longstanding
interpretation of the terms. This proposal would also require the
[[Page 11882]]
Department to articulate in future enforcement orders the basis for
concluding that a practice is unfair or deceptive where no existing
regulation governs the practice in question, state the basis for its
conclusion that a practice is unfair or deceptive when it issues
discretionary aviation consumer protection regulations, and apply
formal hearing procedures for discretionary aviation consumer
protection rulemakings. In addition, this proposal would codify the
longstanding practice of the Department's Office of Aviation
Enforcement and Proceedings to offer airlines and ticket agents the
opportunity to be heard and present relevant evidence before any
determination is made on how to resolve a matter involving a potential
unfair or deceptive practice. The proposal is intended to provide
regulated entities and other stakeholders with greater clarity and
certainty about the Department's interpretation of unfair or deceptive
practice in the context of aviation consumer protection rulemaking and
enforcement actions.
DATES: Comments should be filed by April 28, 2020. Late-filed comments
will be considered to the extent practicable.
ADDRESSES: You may file comments identified by docket number DOT-OST-
2019-0182 by any of the following methods:
Federal eRulemaking Portal: Go to https://www.regulations.gov and follow the online instructions for submitting
comments.
Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Ave. SE, between 9:00 a.m. and 5:00 p.m. ET,
Monday through Friday, except Federal holidays.
Fax: (202) 493-2251.
Instructions: You must include the agency name and docket number
DOT-OST-2019-0182 or the Regulatory Identification Number (RIN) for the
rulemaking at the beginning of your comment. All comments received will
be posted without change to https://www.regulations.gov, including any
personal information provided.
Privacy Act: Anyone can search the electronic form of all comments
received in any of our dockets by the name of the individual submitting
the comment (or signing the comment, if submitted on behalf of an
association, business, labor union, etc.). You may review DOT's
complete Privacy Act statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78), or you may visit www.dot.gov/privacy.
Docket. For access to the docket to read background documents or
comments received, go to https://www.regulations.gov, or to the street
address listed above. Follow the online instructions for accessing the
docket.
FOR FURTHER INFORMATION CONTACT: Robert Gorman, Senior Trial Attorney,
or Kimberly Graber, Deputy Assistant General Counsel, or Blane Workie,
Assistant General Counsel, Office of Aviation Enforcement and
Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave.
SE, Washington, DC 20590, 202-366-9342, 202-366-7152 (fax);
[email protected]; [email protected]; [email protected]
(email).
SUPPLEMENTARY INFORMATION:
I. Introduction
A. The Department's Unfair and Deceptive Practices Statute
The Department's authority to regulate unfair and deceptive
practices in air transportation or the sale of air transportation is
found at 49 U.S.C. 41712 (``Section 41712'') in conjunction with its
rulemaking authority under 49 U.S.C. 40113, which states that the
Department may take action that it considers necessary to carry out
this part, including prescribing regulations. Section 41712 gives the
Department the authority to investigate and decide whether an air
carrier, foreign air carrier, or ticket agent is engaged in an unfair
or deceptive practice in air transportation or the sale of air
transportation. Under Section 41712, after notice and an opportunity
for a hearing, the Department has the authority to issue orders to stop
an unfair or deceptive practice. A different statute, 49 U.S.C. 46301,
gives the Department the authority to issue civil penalties for
violations of Section 41712 or for any regulation issued under the
authority of Section 41712.
B. Request for Regulatory Reform
On February 24, 2017, President Trump signed Executive Order 13777,
Enforcing the Regulatory Reform Agenda, which requires each agency to
establish a Regulatory Reform Task Force to evaluate existing
regulations, and make recommendations for their repeal, replacement, or
modification. As part of this process, the Department is directed to
seek input and assistance from entities significantly affected by its
regulations. On October 1, 2017, the Department issued a Notice of
Regulatory Reform seeking written input from the public on existing
regulations and other agency actions that are good candidates for
repeal, replacement, or modification.\1\ In response to the Notice,
Airlines for America (A4A), an airline trade association, urged the
Department to adopt policies defining unfairness and deception
consistent with principles articulated in Federal Trade Commission
(FTC) and Federal court precedent interpreting those terms.\2\
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\1\ See Notice of Regulatory Review, available at 82 FR 45750.
\2\ See Comment of A4A, Docket DOT-OST-2017-0069-2753, available
at www.regulations.gov.
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A4A stated that the Department has relied on the phrase ``unfair
and deceptive practice'' to issue detailed regulations and to take
enforcement action without sufficient evidence that the practice at
issue was actually unfair or deceptive. With respect to rulemaking, A4A
stated that many of the Department's past consumer protection
rulemakings were not based on evidence that the benefits of the rules
outweighed their cost. More specifically, they recommended that DOT
issue new regulations only where objective evidence shows that: (1) The
regulation is necessary to prevent deceptive practices that are
occurring or are reasonably likely to occur; (2) the practice is
causing or would cause significant consumer harm if it did occur; and
(3) market forces are unlikely to provide a remedy to such consumer
harm.
With respect to enforcement, A4A similarly claimed that the
Department's Office of Aviation Enforcement and Proceedings
(Enforcement Office) has aggressively pursued enforcement action in
cases involving minor infractions, inadvertent errors, or isolated
incidents with little evidence of a ``practice'' or of significant
consumer harm. A4A recommended that the Department should align its
policies on unfairness and deception with the policies of the FTC, use
evidence for its determinations, and not merely speculate or assume
that actual consumer harm took place.
C. Clarification of Department Interpretation of Statutory Terms in
Aviation Consumer Protection Rules and Enforcement
The Department has considered the issues raised by A4A. In
addition, the Department recently issued updated procedural
requirements for its rulemaking and enforcement actions. The
Department's recently issued updated policies and procedures governing
the development and issuance of regulations are set forth in
[[Page 11883]]
Subpart B of 49 CFR part 5 on Administrative Rulemaking, Guidance, and
Enforcement Procedures.\3\ Rules issued under the authority of Section
41712 must be consistent with the Department's recently updated
rulemaking procedures, including the policy that rules should be
straightforward and clear, incorporate best practices for economic
analyses, and provide for appropriate public participation.
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\3\ See Subpart B, ``Rulemaking Procedures,'' 49 CFR part 5,
which was recently updated in a final rule published at 84 FR 71714
(December 27, 2019).
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Further, enforcement actions taken pursuant to Section 41712 should
be consistent with Subpart D of 49 CFR part 5, which includes the
Department's procedural requirements for enforcement actions.\4\ As
stated in the preamble to the Department's final rule codifying these
procedures, all Department enforcement actions should satisfy
principles of due process and remain lawful, reasonable, and consistent
with Administration policy.\5\ Consistent with the Department's
enforcement policies and procedures, enforcement orders finding
violations of Section 41712 should explain the specific factors
considered and the basis for concluding that a practice either does or
does not violate Section 41712. Similarly, the standards for unfairness
and deception should be specified and an explanation of how any
prohibited or required actions meet those standards should be provided
for clarity and to ensure consistency with the statute.
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\4\ See Subpart D, ``Enforcement Procedures,'' 49 CFR part 5,
which was recently updated in a final rule published at 84 FR 71714
(December 27, 2019).
\5\ See 84 FR 71715.
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II. Background
A. The FTC and the Department's Statutes Regulating Unfair and
Deceptive Practices
The Department's unfair and deceptive practices statute, Section
41712, is closely modeled after Section 5 of the FTC Act, 15 U.S.C. 45
(``Section 5''). As originally enacted in 1914, Section 5 granted the
FTC authority to prohibit ``unfair methods of competition'' but did not
address unfair or deceptive practices. Some early Supreme Court cases
held that Section 5's prohibition on unfair methods of competition
required a showing of harm to competitors and competition, but was not
focused on addressing harm to consumers.\6\ In response, Congress
amended Section 5 of the FTC Act in 1938 to proscribe ``unfair or
deceptive acts or practices'' in order to better protect consumers.\7\
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\6\ See, e.g., FTC v. Raladam Co., 283 U.S. 643, 649 (1931).
\7\ Wheeler-Lea Act, Public Law 75-447, 3, 52 Stat. 111, 114
(1938), amending FTC Act Sec. 5, 52 Stat. 111, 114.
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Section 5 grants the FTC broad enforcement authority to address
unfair or deceptive acts or practices across a wide range of
industries, but excludes the common carrier activities of air carriers
and foreign air carriers from the FTC's jurisdiction. In 1938, the same
year that Congress amended the FTC Act to proscribe unfair and
deceptive practices, Congress passed the Civil Aeronautics Act. Section
411 of the Civil Aeronautics Act granted to the Civil Aeronautics
Authority (CAA) the exclusive power to prohibit unfair and deceptive
practices in air transportation. Section 41712 was previously codified
as Section 411 but in 1994, as part of a comprehensive non-substantive
reorganization of the Transportation Code, Section 411 was re-codified
as Section 41712. Neither Section 5 of the FTC Act, nor Section 41712
(formerly Section 411), specifically defines ``unfair or deceptive
practices.'' In 1940, the CAA's authority was transferred to the Civil
Aeronautics Board (CAB). In 1952, Congress expanded the CAB's authority
to include unfair or deceptive practices in the sale of air
transportation, not just air transportation itself.
The Federal Aviation Act of 1958 created the Federal Aviation
Administration (FAA). This statute transferred safety authority to the
FAA, but the CAB's authority over unfair or deceptive practices
remained intact. In 1978, the Airline Deregulation Act (ADA)
substantially deregulated the U.S. airline industry by prohibiting
regulation of rates, routes, and services. The ADA did not alter the
CAB's authority to prohibit unfair or deceptive practices, however.
Effective January 1, 1985, the CAB was abolished, and the CAB's
authority to regulate unfair and deceptive practices was transferred to
the Department.
1. Jurisdiction of FTC and DOT
Section 41712 grants the Department the authority to prohibit
unfair or deceptive practices, and jurisdiction over air carriers and
foreign air carriers lies exclusively with the Department because those
entities were carved out of FTC jurisdiction in Section 5. However, the
FTC's general Section 5 authority to prohibit unfair and deceptive
practices applies to ticket agents in the sale of air transportation.
As a result, the Department and the FTC have concurrent authority over
ticket agents in the sale of air transportation.
2. FTC's Definitions of Unfair and Deceptive Practices
The FTC Act does not specifically define ``unfair or deceptive acts
or practices,'' but authorizes the FTC to define such acts and
practices through enforcement and rulemaking. 15 U.S.C. 45; 15 U.S.C.
57a.
i. Unfairness
In December 1980, the FTC issued a Policy Statement to Congress,
which articulated general principles drawn from FTC decisions and
rulemakings that the Commission applies in enforcing its mandate to
address unfairness under the FTC Act.\8\ These principles were applied
in FTC enforcement cases and rulemaking and approved by reviewing
Federal courts.\9\ The FTC explained that unjustified consumer injury
is the primary focus of the FTC Act. This concept contains three basic
elements. An act or practice is unfair where it (1) causes or is likely
to cause substantial injury to consumers; (2) cannot be reasonably
avoided by consumers; and (3) is not outweighed by countervailing
benefits to consumers or to competition. The FTC also considers public
policy, as established by statute, regulation, or judicial decisions
along with other evidence in determining whether an act or practice is
unfair.
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\8\ Letter from the FTC to Hon. Wendell Ford and Hon. John
Danforth, Committee on Commerce, Science and Transportation, United
States Senate, Commission Statement of Policy on the Scope of
Consumer Unfairness Jurisdiction (December 17, 1980), Appended to
International Harvester Co., 104 F.T.C. 949, 1070, 1073 (1984).
\9\ See, e.g., International Harvester, 104 F.T.C. 949 (1984);
Credit Practices Rule, Statement of Basis and Purpose, 49 FR 7740
(1984) (``Credit Practices Rule SBP''); Orkin Exterminating Co.,
Inc., 108 F.T.C. 263 (1986); aff'd, FTC v. Orkin, 849 F.2d 1354
(11th Cir. 1988).
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ii. Congress Codifies FTC's Approach to Unfairness
In 1994, Congress codified existing case law defining the elements
of unfairness. Specifically, Congress enacted 15 U.S.C. 45(n), which
states that the FTC shall have no enforcement authority or rulemaking
authority to declare an act or practice unfair unless it is likely to
cause substantial injury to consumers which is not reasonably avoidable
by consumers themselves and not outweighed by countervailing benefits
to consumers or to competition. Congress further provided in section
45(n) that the FTC could rely on public policy, along with other
evidence, for making a determination of unfairness,
[[Page 11884]]
but public policy may not be the primary basis of its decision.
iii. FTC's Definition of Deception
In 1983, the FTC issued a Policy Statement on Deception.\10\ Like
the 1980 Policy Statement on Unfairness, the 1983 Policy Statement
clarified the general principles that the FTC applies in enforcing its
mandate to address deception under the FTC Act. As explained in the
policy statement, an act or practice is deceptive where: (1) A
representation, omission, or practice misleads or is likely to mislead
the consumer; (2) a consumer's interpretation of the representation,
omission, or practice is considered reasonable under the circumstances;
and (3) the misleading representation, omission, or practice is
material. Practices that have been found misleading or deceptive in
specific cases include false oral or written representations,
misleading price claims, sales of hazardous or systematically defective
products or services without adequate disclosures, failure to disclose
information regarding pyramid sales, use of bait and switch techniques,
failure to perform promised services, and failure to meet warranty
obligations.
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\10\ FTC Policy Statement on Deception (Oct. 14, 1983), 103
F.T.C. 174, 175 (1984) (appended to Cliffdale Assocs., Inc., 103
F.T.C. 110 (1984)).
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Congress has not enacted the FTC's 1983 Policy Statement on
Deception into law, unlike the FTC's 1980 Policy Statement on
Unfairness, but the Policy Statement was adopted by the FTC in formal
adjudication, see In the Matter of Cliffdale Assocs., Inc., 103 F.T.C.
110, 174 (1984), and has been regularly cited by Federal courts.\11\
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\11\ See, e.g., FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir.
1994), cert. denied, 514 U.S. 1083 (1995); Novartis Corp. v. FTC,
223 F.3d 783, 786 (D.C. Cir. 2000).
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3. Rulemaking Authority of FTC and DOT
The FTC enforces a broad range of consumer protection laws
affecting most of the country's commercial entities, with some
exceptions such as airlines. The FTC Act prescribes several specific
statutory requirements for issuing rules prohibiting an act or practice
as unfair or deceptive. As described above, to issue a rule defining an
act or practice as unfair, FTC must first determine that the act or
practice is likely to cause substantial injury to consumers which is
not reasonably avoidable by consumers themselves and not outweighed by
countervailing benefits to consumers or to competition.\12\ The FTC may
consider public policy as evidence to be considered with all other
evidence, but public policy considerations may not serve as a primary
basis for its determination. Moreover, Section 18 of the FTC Act, 15
U.S.C. 57a, specifies particular procedures for the promulgation of FTC
rules that define with specificity acts or practices which are unfair
or deceptive.\13\ Before issuing binding regulations defining specific
acts or practices to be unfair or deceptive, the FTC must provide an
opportunity for an informal hearing, and provide in the rule's
statement of basis and purpose: (1) A statement as to the prevalence of
the acts or practices treated by the rule; (2) a statement as to the
manner and context in which such acts or practices are unfair or
deceptive; and (3) a statement as to the economic effects of the rule,
taking into account the effect on small business and consumers.\14\
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\12\ 15 U.S.C. 45(n).
\13\ Section 18 rulemaking procedures apply to FTC rules to
define ``unfair or deceptive acts or practices'' prohibited under
Section 5 of the FTC Act unless Congress grants the agency authority
to issue rules under the Administrative Procedure Act in a specific
context. See, e.g., Children's Online Privacy Protection Act, 15
U.S.C. 6501-6508; Fairness to Contact Lens Consumers Act, 15 U.S.C.
7601-7610.
\14\ 15 U.S.C. 57a.
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There are no comparable statutory requirements for rulemaking by
the Department finding a practice to be unfair or deceptive. Under 49
U.S.C. 40113, Congress granted the Secretary of Transportation the
authority to take action that he or she considers necessary to carry
out his or her statutory duties, including prescribing regulations and
issuing orders. Like other Federal agencies, the Department is subject
to the general provisions of the Administrative Procedure Act when
issuing regulations. The Department is also subject to the rulemaking
procedures found in Subpart B of 49 CFR part 5.
III. Proposal for New Procedural Requirements
This rulemaking would codify the Department's definitions of
``unfair'' and ``deceptive'' when engaging in aviation consumer
protection rulemaking or enforcement action under the authority of
Section 41712. This rulemaking would also require the Department to
follow certain procedures when engaging in aviation consumer protection
rulemaking and enforcement. For example, this rulemaking would require
the Department to provide an explanation of how specific conduct meets
the standard for an ``unfair'' or ``deceptive'' practice when engaging
in an aviation consumer protection rulemaking or enforcement action, as
further described below.
A. Defining Unfairness and Deception in Rulemaking and Enforcement
Proceedings
When the Department issued its existing aviation consumer
protection rules, the Department followed the Administrative Procedure
Act and related statutory and administrative requirements to ensure
that these rules are authorized by law and justified on a benefit-cost
basis. However, more can be done to better inform the public and
regulated entities how the Department determines what constitutes an
unfair and deceptive practice when issuing discretionary aviation
consumer protection rulemakings under the authority of Section 41712
and when issuing enforcement orders based on Section 41712 where there
has not been a regulation that already specifies required or prohibited
conduct.
This proposed rule would define the terms ``unfair'' and
``deceptive'' for aviation consumer protection enforcement or
rulemaking actions brought pursuant to Section 41712. First, it would
define a practice as ``unfair'' if it causes or is likely to cause
substantial injury, which is not reasonably avoidable, and the harm is
not outweighed by benefits to consumers or competition. Second, the
proposed rule would define a practice as ``deceptive'' if it is likely
to mislead a consumer acting reasonably under the circumstances with
respect to a material issue. Under the proposal, an issue is
``material'' if it is likely to have affected the consumer's conduct or
decision with respect to a product or service. These definitions mirror
the definitions used by the FTC.
The Department has used its general authority to prohibit unfair or
deceptive practices of air carriers, foreign air carriers, and ticket
agents to conduct oversight in the area of airline privacy \15\ and
frequent flyer programs.\16\ Also, in the FAA Reauthorization Act of
2018, Congress specified that the Department's authority to prohibit
unfair or deceptive practices covers air ambulance providers and
authorized the Department to investigate air ambulance
[[Page 11885]]
complaints.\17\ Because the Department has not issued specific
regulations with respect to complex and specialized issues, including
privacy, frequent flyer programs, and air ambulances, it relies on the
general provisions of section 41712. Are the general definitions of
unfairness and deception proposed in this NPRM sufficient to provide
the regulated entities, consumers and other stakeholders sufficient
notice of what constitutes an unfair or deceptive practice in these or
other specialized subject areas?
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\15\ The Department considers the mishandling of private
consumer information by airlines or ticket agents to be an unfair or
deceptive practice. See https://www.transportation.gov/individuals/aviation-consumer-protection/privacy.
\16\ Section 408 of the FAA Modernization and Reform Act of 2012
authorized the Department to investigate complaints relating to
frequent flyer programs. Public Law 112-95; 126 Stat. 87 (2012). See
also https://www.transportation.gov/individuals/aviation-consumer-protection/frequent-flyer-programs.
\17\ Public Law 115-254, 132 Stat. 3186, section 419 (2018).
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The proposal makes clear that proof of intent is not necessary to
establish unfairness or deception. In other words, the Department is
not required to find that an air carrier or ticket agent acted with the
intent to cause harm before finding a practice to be unfair to a
consumer. Likewise, it is not necessary for the Department to find that
an air carrier, foreign air carrier, or ticket agent acted with the
intent to deceive before finding such a practice is deceptive. These
principles are reflected in Federal case law applying Section 5 of the
FTC Act. In addition, under the FTC Act, disseminating false
advertisements, or causing false advertisements to be disseminated, is
an unfair or deceptive act or practice. 15 U.S.C. 52. The FTC Act, and
its definition of ``false advertisement,'' make no reference to intent
to deceive.
Section 5 of the FTC Act prohibits unfair ``acts or practices'' in
or affecting commerce, while Section 41712 grants the Department
authority over unfair or deceptive practices in air transportation or
the sale of air transportation. The FTC Act and FTC regulations do not
define ``practice.'' It is possible that a definition is not necessary
in the FTC context because the FTC's authority applies to specific
acts, even if they do not rise to the level of a practice. At present,
the Department does not believe that it is necessary to define
``practice.'' The Department's rules with respect to unfairness or
deception in air transportation or the sale of air transportation are
always directed to practices of air carriers, foreign air carriers, and
ticket agents, rather than to individual acts. In the aviation consumer
protection enforcement context, when analyzing complaints, the
Department regularly seeks to determine the extent to which one or more
unfair or deceptive acts actually reflects a broader ``practice'' (for
example, by investigating to determine whether multiple consumers have
been harmed at different times by the same repetitive conduct, or by
finding that a single act reflects company policy and therefore
concluding that the policy is likely to have affected more consumers
than just the individual complainant). In general, the Department is of
the view that proof of a practice in the aviation consumer protection
context requires more than a single isolated incident. On the other
hand, even a single incident may be indicative of a practice if it
reflects company policy, training, or lack of training. The Department
solicits comment on the question of whether a definition of
``practice'' is necessary, and if so, what the proposed definition
should be.
This proposed rule would add a new section 399.75 to 14 CFR 399
Subpart F (Policies Relating to Rulemaking Proceedings). The proposed
rule would state that when the Department issues a new discretionary
aviation consumer protection rulemaking declaring that a specific
practice in air transportation or the sale of air transportation is
unfair or deceptive within the meaning of Section 41712, the Department
shall employ the definitions of ``unfair'' and ``deceptive'' that are
set forth in new Section 399.79. These definitions are consistent with
the Department's past practice and are based on FTC case precedent and
policy.
B. Establishing Procedures for Aviation Consumer Protection Rulemaking
Proceedings
1. Formal Hearing Procedures
In this NPRM, the Department proposes to apply formal hearing
procedures for discretionary aviation consumer protection rulemakings
issued under the authority of Section 41712 that are not defined as
high-impact or economically significant within the meaning of the
Department's regulatory procedures found in 49 CFR 5.17(a). Any such
high-impact or economically significant rulemakings are subject to the
special procedures outlined in 49 CFR 5.17.
The Department proposes to adopt formal hearing procedures for
discretionary aviation consumer protection rulemakings similar to the
formal hearing procedures that apply to high-impact and economically
significant rulemakings. These procedures would allow interested
parties to request a formal hearing before the Department issues a
final aviation consumer protection rule. These formal hearing
procedures would not apply to rulemakings specifically mandated by
Congress. Rather, they would apply to discretionary aviation consumer
protection rulemakings, where the Department proposes to declare
specific practices to be unfair or deceptive. The addition of formal
hearing procedures is also consistent with Section 41712(a), which
requires notice and an opportunity for a hearing before a finding that
an air carrier, foreign air carrier, or ticket agent is engaged in an
unfair or deceptive practice or unfair method of competition.
The purpose of the formal hearing would be to address disputed
issues of fact through the presentation of testimony and written
submissions in front of a neutral administrative hearing officer. The
Department is proposing to allow interested parties to request a formal
hearing if one or more scientific, technical, economic or other factual
issues are in dispute. Interested parties would be permitted to make
such a request to the Department's General Counsel after the notice of
proposed rulemaking is filed, but before the end of the comment period.
In general, the purpose of the formal hearing is to ensure that rules
are based on facts and not unfounded assumptions. The formal hearing
would provide an opportunity to explore complex or disputed factual
issues before proceeding beyond the proposed rule stage. The Department
would use the developed factual record of the formal hearing to
determine whether the rulemaking should proceed as originally proposed,
be modified, or be terminated entirely.
Under this proposal, for a formal hearing to be granted, the
interested party would be required to make a plausible initial showing
that the rulemaking concerns one or more specific scientific,
technical, economic, or other factual issues that are in dispute, that
the ordinary notice and comment process is insufficient to provide an
adequately informed judgment on the issue, and that resolution of the
issue would have a material effect on the costs and benefits of the
rule. Under the delegation of authority to the General Counsel to
conduct rulemakings on these matters found in 49 CFR 1.27(n), the
General Counsel would be authorized to deny a hearing, even if the
interested party makes the plausible initial showing described above,
so long as the General Counsel determines that the requested hearing
would not in fact advance the consideration of the proposed rule, or
that the hearing would unreasonably delay completion of the rulemaking.
The General Counsel would explain in writing the basis of that
decision.
Under this proposal, if the Department grants the request for a
hearing, the Department would publish
[[Page 11886]]
a notice, specifying the proposed rule at issue and the specific
factual issues to be considered in the hearing. The Department proposes
that the rules for conducting the formal hearing itself would be
adopted from relevant sections of the Administrative Procedure Act
relating to hearings, or similar rules adopted by the Secretary.
Also, the NPRM specifies that after the formal hearing and after
the record is closed, the presiding hearing officer would render a
report containing findings and conclusions addressing the disputed
issues of fact identified in the hearing notice. Interested
participants in the formal hearing would have the opportunity to file
statements of agreement or objection in response to the hearing
officer's report. The Department would then consider the record of the
formal hearing and determine whether to terminate the rulemaking,
proceed with it as proposed, or modify the proposed rule. If the
Department decides either to proceed with the rule as originally
proposed, or to terminate the rulemaking, the Department would explain
those decisions in writing. If the Department decides to modify the
proposed rule in light of the formal hearing, then the Department would
issue a new or supplemental NPRM, and explain its decision in the
preamble to that modified proposal. Finally, this NPRM clarifies that
the formal hearing procedures shall not impede or interfere with the
interagency rulemaking review process of the Office of Information and
Regulatory Affairs. The Department solicits input on whether the public
and regulated entities find the Department's utilization of this type
of process for the promulgation of unfair and deceptive regulations to
be helpful and, if so, how. Further, if this process would not be
helpful, the Department solicits comment on what elements of these
proposed procedures should be modified, and why.
2. Explaining Findings of Unfairness and Deception
This proposal states that when the Department issues a
discretionary aviation consumer protection rulemaking declaring a
practice to be unfair or deceptive, it shall explain the basis for its
conclusion that the practice is unfair or deceptive. The intent is to
ensure that when issuing new aviation consumer protection regulations
under the authority of Section 41712, the Department provides greater
transparency to the public and to regulated entities about the reasons
supporting the Department's finding that a practice is unfair or
deceptive. For example, if the Department proposes a final rule
determining that a particular practice is unfair, the Department would
be required to explain how the practice is likely to cause substantial
injury, which is not reasonably avoidable, and that the harm is not
outweighed by benefits to consumers or to competition. The Department's
explanation would provide its basis for reaching that conclusion.
Similarly, when proposing a rulemaking finding a particular practice
deceptive, the Department would follow the same practice of outlining
the factors of deception and the basis for its conclusion.
The Department solicits comment on the support needed for
rulemakings finding a practice unfair or deceptive. The proposed rule
does not specifically indicate the type or extent of evidence that
would be necessary to support a finding of unfairness or deception. In
many instances, the Department identifies issues that may be
problematic and addresses them in an aviation consumer protection
rulemaking as an unfair or deceptive practice based on information in
the Department's consumer complaint database. In other instances,
aviation consumer protection rulemaking is instituted in response to
recommendations from entities such as consumer advocates or advisory
committees. The Department envisions that the formal hearing procedures
described above will provide another means of gathering information,
data, and evidence that may be helpful in making these determinations.
What type of evidence should be necessary to demonstrate that a
practice is unfair or deceptive to support the Department issuing a
rule prohibiting that practice? How should the Department gather that
information? During the rulemaking process, consumers may comment that
a practice is harmful while regulated entities may disagree. In those
instances, how should the Department determine whether a practice is
harmful?
C. Establishing Procedures for Aviation Consumer Protection Enforcement
Proceedings
1. Providing Opportunity To Present Evidence
The Department is proposing to codify a longstanding practice of
the Department with regard to aviation consumer protection enforcement
proceedings. Specifically, proposed paragraph 399.79(e) states that,
before issuing an order finding that an air carrier, foreign air
carrier, or ticket agent violated any regulation issued under the
authority of Section 41712, or Section 41712 itself, the Department
shall afford the party the opportunity to present evidence in support
of its position. For example, under current practice, the party is
permitted to present evidence tending to establish that: (1) The
regulation at issue was not violated; (2) the violation took place, but
mitigating circumstances apply; (3) the conduct at issue was not unfair
or deceptive (in cases where a consumer protection regulation does not
already apply to the conduct at issue); and (4) consumer harm was
limited, or that the party has taken steps to mitigate past or future
consumer harm (for example, by issuing compensation and/or refunds to
affected passengers, or by implementing innovative practices and
procedures to ensure that the violations will not recur). This list is
intended to provide examples, but not to be complete or exhaustive. The
Enforcement Office considers all information provided when determining
whether a violation of aviation consumer rights took place and, if a
violation took place, the appropriate civil penalty to seek for the
violations at issue. The Department has incorporated the opportunity to
present relevant evidence and mitigating circumstances into its
proposal.
Paragraph 399.79(e) applies to informal nonpublic investigations of
potential violations of aviation consumer rights, which represent the
overwhelming majority of the Enforcement Office's enforcement
efforts.\18\ These investigations typically conclude with the
Enforcement Office issuing a consent order, a warning letter, or other
appropriate disposition that does not involve the filing of a complaint
with an Administrative Law Judge (ALJ). The Department is aware that
paragraph 399.79(e) does not propose a formal ``hearing'' for the
regulated entity to present evidence. The Department is also aware that
Section 41712(a) requires the Department to provide air carriers,
foreign air carriers, and ticket agents with the opportunity for a
``hearing'' before declaring that a practice is unfair or deceptive.
The Department is of the view that a hearing is not required in the
course of informal nonpublic investigations, because full hearings are
already available at a later stage.
[[Page 11887]]
Specifically, where the Department and the regulated entity cannot
agree on a disposition of a dispute regarding a potential aviation
consumer rights violation, the Enforcement Office has the option of
filing a formal complaint with an ALJ.\19\ These procedures are set
forth in 14 CFR part 302, subpart D (14 CFR 302.407-302.420), and they
include the opportunity for a hearing before an ALJ. See 14 CFR
302.415. The Department seeks comment on all aspects of this proposal.
---------------------------------------------------------------------------
\18\ 14 CFR part 305 sets forth additional rules of practice in
informal nonpublic investigations. Part 305 does not explicitly
state that regulated entities have the opportunity to present
mitigating evidence, but the opportunity to present such evidence
traditionally has been available to regulated entities during
investigations by the Enforcement Office and prior to any
determination to take enforcement action.
\19\ Since 2014, the Enforcement Office has filed one formal
complaint with an ALJ. See Docket DOT-OST-2014-0229.
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2. Explaining Findings of Unfairness and Deception
i. Current Practice for Enforcement of Regulations Issued Under Section
41712
Many of the Department's aviation consumer protection regulations
that are issued under the authority of Section 41712 state that a
violation of the rule amounts to an unfair and deceptive practice. For
example, the tarmac delay rule states that covered carriers must adopt
and adhere to contingency plans providing various assurances to
consumers in the event of a lengthy tarmac delay.\20\ The rule
explicitly states that failure to comply with the required assurances
is considered an unfair and deceptive practice within the meaning of
Section 41712.\21\ Similarly, the Department has issued regulations
explicitly declaring that it is an unfair or deceptive practice within
the meaning of Section 41712 to engage in certain types of post-
purchase price increases.\22\ Other regulations issued under the
authority of Section 41712 (e.g., the oversales/denied boarding
compensation rule and the requirement that carriers issue and comply
with a Customer Service Plan) do not specifically declare that a
violation of the regulation also constitutes a violation of Section
41712.\23\
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\20\ 14 CFR 259.4(a).
\21\ 14 CFR 259.4(f).
\22\ 14 CFR 399.88(a).
\23\ 14 CFR part 250; 14 CFR 259.5.
---------------------------------------------------------------------------
In instances where an enforcement action is based on regulations
issued under the authority of Section 41712, the Department's
enforcement orders set forth the relevant regulation or regulations,
describe the facts of the case, including the problematic conduct, and
identify the manner in which the regulation has been violated. In such
orders, there is typically a statement that a violation of the
regulation is also considered an unfair and deceptive practice in
violation of Section 41712. In such cases, the orders have not
explained in detail how the practice is unfair and deceptive, because
the underlying regulation was issued under the authority of Section
41712.
ii. Current Practice for Enforcement of ``Standalone'' Violations of
Section 41712
The Department also has the authority to investigate and enforce
where an air carrier, foreign air carrier, or ticket agent may be
engaging in conduct that does not violate a specific consumer
protection regulation, but which may nevertheless be unfair or
deceptive to consumers. These are potential ``standalone'' violations
of Section 41712 and such cases are infrequent. When deciding whether
to take enforcement action in these matters, the Department has relied
on the FTC's approach to both unfairness and deception. Departmental
orders issued in cases where the Department declined to take action
have explicitly recited FTC precedent in the course of explaining why
the acts were not unfair or deceptive. For example, in a case against a
large airline, DOT Order 2016-12-11 (2016), a passenger filed a formal
complaint alleging that the airline improperly penalized him 60,000
frequent flyer miles when it wrongly accused him of manipulating the
airline's website to gain favorable seating upgrades. The passenger was
flagged by the airline's security department for engaging in suspicious
activity on its website. While no regulation covered the airline's
behavior, the Department applied the standard articulated in the FTC's
Policy Statement on Unfairness and relevant precedent and found that
the harm of losing miles, while substantial, could have been reasonably
avoided by not logging into the airline's website in suspicious and
unusual ways.\24\ The Department also found that it was not deceptive
for the airline to fail to warn the passenger that he was subject to a
penalty before imposing that penalty. Applying the standard articulated
in the FTC's Policy Statement on Deception and relevant precedent, the
Department reasoned that the passenger was not acting as a reasonable
consumer would. The Department dismissed the formal complaint.
Similarly, in another case, DOT Order 2018-2-18 (2018), a passenger
missed the check-in deadline for a multi-city itinerary and was
informed his reservations for the remaining flights would be cancelled
if he did not change his reservation and pay the applicable fees. After
outlining the relevant facts, the Department applied the standard for
unfairness and found that the alleged practices were not unfair. In
addition, using the FTC standard for deception, and noting that the
consumer was not actually deceived, the Department also found that the
airline's practice at issue was not deceptive and the complaint was
dismissed.
---------------------------------------------------------------------------
\24\ The airline presented evidence that in the 96 hours prior
to the flight, the passenger created 28 bookings using fictitious
names, while omitting the passenger's frequent flyer number. This
laborious process created temporary passenger name records that took
upgraded seats out of inventory. While the passenger contended that
he simply wanted to view the available seating to see if upgraded
seats were available, the airline presented evidence that its
website had a simple method to view available seating that did not
take seating out of inventory; he could have also simply called the
airline.
---------------------------------------------------------------------------
The Department has also issued orders finding that violations of
civil rights laws constitute violations of Section 41712, without
explaining in detail how the violations were either unfair or
deceptive, e.g., DOT Order 2012-5-2 (2012); DOT Order 2011-11-2 (2011).
The resulting consent orders reflect the unfair/deceptive determination
of the Department but do not provide the underlying description of how
the relevant standard was met. Department aviation consumer protection
enforcement orders should provide valuable information for regulated
entities; accordingly, this rulemaking proposes that going forward,
such orders would contain a more detailed statement of the relevant
standard and how the particular facts of the case met the standard.
iii. Explaining Findings of Unfairness and Deception in Aviation
Consumer Protection Enforcement Proceedings
In this NPRM, we propose that when the Department issues an
enforcement order relying on Section 41712, and where no existing
regulation governs the practice in question (where the Department
relies solely on the phrase ``unfair or deceptive'' in Section 41712),
then the enforcement order must articulate the Department's basis for
concluding that the practice is unfair or deceptive, as defined in this
rule. For example, if the Department issues an order declaring that a
particular practice is unfair, the Department would be required to
explain that the practice is likely to cause substantial injury, which
is not reasonably avoidable, and that the harm is not outweighed by
benefits to consumers or competition. The Department would be required
not only to recite these conclusions, but also to recite the basis for
how it arrived at those conclusions. The proposed rule makes clear that
when the conduct of an air carrier, foreign air carrier, or ticket
agent also violates a regulation that was
[[Page 11888]]
issued under the authority of Section 41712, then the explanation of
unfairness or deception is not required. Instead, by establishing a
violation of the regulation, the Enforcement Office has necessarily
established a violation of Section 41712. Nevertheless, the Department
seeks comment on whether such an order should reiterate the explanation
of unfairness or deception as well.
The Department is undertaking this rulemaking because it is
appropriate to provide an explanation, in enforcement orders, of the
basis for concluding that a practice either does or does not violate
Section 41712. Specifically, this rulemaking proposes that enforcement
orders will identify the factors used to determine whether a practice
is unfair or deceptive and will identify the facts and conduct relevant
to each factor, so that the rationale for the determination is clear in
the order. This is particularly important in orders based on Section
41712 alone, where there has not been a regulation that already
specifies required or prohibited conduct. In cases involving conduct
that violates a regulation that was issued under the authority of
Section 41712, enforcement orders should continue to identify the
relevant facts and conduct that violates the regulation at issue. For
example, in a case involving a violation of the Department's oversales
rule, the specific facts and conduct at issue should be stated and the
rationale for a determination that the oversales rule has been violated
should be clear. However, this rulemaking is not proposing changes to
enforcement orders regarding violations of existing regulations. The
new proposed requirement regarding explaining the standards for
unfairness and deception that are stated in this rulemaking and rely on
FTC precedent are reflected in new proposed Section 399.79.
The proposed rule does not specifically indicate the type or extent
of evidence that would be necessary to support a finding of unfairness
or deceptiveness for standalone violations of Section 41712. The
Department solicits comment on this question.
Finally, the Department seeks comment on the benefits and costs of
this rule. The Department's description of the benefits and costs are
described immediately below in Section A of the Regulatory Analyses and
Notices section.
Regulatory Analyses and Notices
A. Executive Order 13771 (Reducing Regulation and Controlling
Regulatory Costs), Executive Order 12866 (Regulatory Planning and
Review), Executive Order 13563 (Improving Regulation and Regulatory
Review), and DOT Regulatory Policies and Procedures
This proposed rule is not a significant regulatory action under
section 3(f) of E.O. 12866 (58 FR 51735, October 4, 1993), Regulatory
Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January
21, 2011), Improving Regulation and Regulatory Review. Accordingly, the
Office of Management and Budget (OMB) has not reviewed it under that
Order. It is also not significant within the meaning of DOT regulatory
policies and procedures. This NPRM is issued in accordance with the
Department's rulemaking procedures found in 49 CFR part 5 and DOT Order
2100.6.
The Department does not anticipate that this rulemaking will have
an economic impact on regulated entities. This is primarily a rule of
agency procedure and interpretation. The NPRM would clarify how the
Department interprets the terms ``unfair'' and ``deceptive,'' and
potentially require enhanced departmental procedures in analyzing,
enforcing, and regulating in this area. This rulemaking could impose a
social cost on the public if increased procedural requirements are
adopted, as the opportunity cost of these enhanced procedural
requirements could translate into the Department performing fewer
enforcement and rulemaking actions. In addition, enhanced procedures
would likely lengthen the time needed to complete these actions.
However, the Department anticipates that these social costs would be
outweighed by the benefits associated with improved and more
transparent departmental decision making, informed by enhanced analyses
and public participation. The Department seeks comment on the costs,
benefits, and cost savings associated with this rulemaking.
This proposed rule is not expected to be an E.O. 13771 regulatory
action because this proposed rule is not significant under E.O. 12866.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to review regulations to assess their impact on small entities
unless the agency determines that a rule is not expected to have a
significant economic impact on a substantial number of small entities.
A direct air carrier or foreign air carrier is a small business if it
provides air transportation only with small aircraft (i.e., aircraft
with up to 60 seats/18,000-pound payload capacity). See 14 CFR 399.73.
The Department does not expect this rule to have a significant economic
impact on a substantial number of small entities. However, we invite
comment on the potential impact of this rulemaking on small entities.
C. Executive Order 13132 (Federalism)
This NPRM has been analyzed in accordance with the principles and
criteria contained in Executive Order 13132 (``Federalism''). This NPRM
does not include any provision that: (1) Has substantial direct effects
on the States, the relationship between the national government and the
States, or the distribution of power and responsibilities among the
various levels of government; (2) imposes substantial direct compliance
costs on State and local governments; or (3) preempts State law. States
are already preempted from regulating in this area by the Airline
Deregulation Act, 49 U.S.C. 41713. Therefore, the consultation and
funding requirements of Executive Order 13132 do not apply.
D. Executive Order 13175
This NPRM has been analyzed in accordance with the principles and
criteria contained in Executive Order 13175 (``Consultation and
Coordination with Indian Tribal Governments''). Because this NPRM does
not significantly or uniquely affect the communities of the Indian
Tribal governments or impose substantial direct compliance costs on
them, the funding and consultation requirements of Executive Order
13175 do not apply.
E. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.)
requires that DOT consider the impact of paperwork and other
information collection burdens imposed on the public and, under the
provisions of PRA section 3507(d), obtain approval from the Office of
Management and Budget (OMB) for each collection of information it
conducts, sponsors, or requires through regulations. The DOT has
determined there are no new information collection requirements
associated with this NPRM.
F. Unfunded Mandates Reform Act
The Department has determined that the requirements of Title II of
the Unfunded Mandates Reform Act of 1995 do not apply to this
rulemaking.
[[Page 11889]]
G. National Environmental Policy Act
The Department has analyzed the environmental impacts of this
proposed action pursuant to the National Environmental Policy Act of
1969 (NEPA) (42 U.S.C. 4321 et seq.) and has determined that it is
categorically excluded pursuant to DOT Order 5610.1C, Procedures for
Considering Environmental Impacts (44 FR 56420, Oct. 1, 1979).
Categorical exclusions are actions identified in an agency's NEPA
implementing procedures that do not normally have a significant impact
on the environment and therefore do not require either an environmental
assessment (EA) or environmental impact statement (EIS). See 40 CFR
1508.4. In analyzing the applicability of a categorical exclusion, the
agency must also consider whether extraordinary circumstances are
present that would warrant the preparation of an EA or EIS. Id.
Paragraph 10.c.16.h of DOT Order 5610.1D categorically excludes
``[a]ctions relating to consumer protection, including regulations.''
Since this rulemaking relates the definition of unfair and deceptive
practices under Section 41712, the Department's central consumer
protection statute, this is a consumer protection rulemaking. The
Department does not anticipate any environmental impacts, and there are
no extraordinary circumstances present in connection with this
rulemaking.
List of Subjects in 14 CFR Part 399
Consumer protection, Policies, Rulemaking proceedings, Enforcement,
Unfair or deceptive practices.
For the reasons discussed in the preamble, the Department proposes
to amend 14 CFR part 399 as follows:
PART 399--STATEMENTS OF GENERAL POLICY
0
1. The authority citation for Part 399 is revised to read as follows:
Authority: 49 U.S.C. 41712, 40113(a).
0
2. Add Sec. 399.75 to Subpart F to read as follows:
Subpart F--Policies Relating to Rulemaking Proceedings
Sec. 399.75 Rulemakings relating to unfair and deceptive practices.
(a) General. When issuing a proposed or final regulation declaring
a practice in air transportation or the sale of air transportation to
be unfair or deceptive to consumers under the authority of 49 U.S.C.
41712(a), unless the regulation is specifically required by statute,
the Department shall employ the definitions of ``unfair'' and
``deceptive'' set forth in Sec. 399.79.
(b) Procedural requirements. When issuing a proposed regulation
under paragraph (a) of this section that is defined as high impact or
economically significant within the meaning of 49 CFR 5.17(a), the
Department shall follow the procedural requirements set forth in 49 CFR
5.17. When issuing a proposed regulation under paragraph (a) of this
section that is not defined as high impact or economically significant
within the meaning of 49 CFR 5.17(a), unless the regulation is
specifically required by statute, the Department shall follow the
following procedural requirements:
(1) Request for a hearing. Following publication of a proposed
regulation, and before the close of the comment period, any interested
party may file in the rulemaking docket a petition, directed to the
General Counsel, to hold a formal hearing on the proposed regulation.
(2) Grant of petition for hearing. Except as provided in paragraph
(b)(3) of this section, the petition shall be granted if the petitioner
makes a plausible prima facie showing that:
(i) The proposed rule depends on conclusions concerning one or more
specific scientific, technical, economic, or other factual issues that
are genuinely in dispute or that may not satisfy the requirements of
the Information Quality Act;
(ii) The ordinary public comment process is unlikely to provide an
adequate examination of the issues to permit a fully informed judgment;
and
(iii) The resolution of the disputed factual issues would likely
have a material effect on the costs and benefits of the proposed rule.
(3) Denial of petition for hearing. A petition meeting the
requirements of paragraph (b)(2) of this section may be denied if the
General Counsel determines that:
(i) The requested hearing would not advance the consideration of
the proposed rule and the General Counsel's ability to make the
rulemaking determinations required by this section; or
(ii) The hearing would unreasonably delay completion of the
rulemaking.
(4) Explanation of denial. If a petition is denied in whole or in
part, the General Counsel shall include a detailed explanation of the
factual basis for the denial including findings on each of the relevant
factors identified in paragraphs (b)(2) or (b)(3) of this section.
(5) Hearing notice. If the General Counsel grants the petition, the
General Counsel shall publish a notice of the hearing in the Federal
Register. The notice shall specify the proposed rule at issue and the
specific factual issues to be considered at the hearing. The scope of
the hearing shall be limited to the factual issues specified in the
notice.
(6) Hearing process. (i) A formal hearing under this section shall
be conducted using procedures set forth in sections 556 and 557 of
Title 5, United States Code, or similar procedures as approved by the
Secretary, and interested parties shall have a reasonable opportunity
to participate in the hearing through the presentation of testimony and
written submissions.
(ii) The General Counsel shall arrange for an administrative judge
or other neutral administrative hearing officer to preside over the
hearing and shall provide a reasonable opportunity to question the
presenters.
(iii) After the formal hearing and after the record of the hearing
is closed, the hearing officer shall render a report containing
findings and conclusions addressing the disputed issues of fact
identified in the hearing notice.
(iv) Interested parties who participated in the hearing shall be
given an opportunity to file statements of agreement or objection in
response to the hearing officer's report. The complete record of the
hearing shall be made part of the rulemaking record.
(7) Actions following hearing. (i) Following the completion of the
formal hearing process, the General Counsel shall consider the record
of the hearing and shall make a reasoned determination whether to
terminate the rulemaking; to proceed with the rulemaking as proposed;
or to modify the proposed rule.
(ii) If the General Counsel decides to terminate the rulemaking,
the General Counsel shall publish a notice in the Federal Register
announcing the decision and explaining the reasons for the decision.
(iii) If the General Counsel decides to finalize the proposed rule
without material modifications, the General Counsel shall explain the
reasons for the decision and its responses to the hearing record in the
preamble to the final rule.
(iv) If the General Counsel decides to modify the proposed rule in
material respects, the General Counsel shall publish a new or
supplemental Notice of Proposed Rulemaking in the Federal Register
explaining the General Counsel's responses to and analysis of the
hearing record, setting forth the modifications to the proposed rule,
and providing additional reasonable opportunity for public comment on
the proposed modified rule.
[[Page 11890]]
(8) The formal hearing procedures under this paragraph shall not
impede or interfere with the interagency review process of the Office
of Information and Regulatory Affairs for the proposed rulemaking.
(c) Basis for rulemaking. When issuing a proposed or final
regulation declaring a practice in air transportation or the sale of
air transportation to be unfair or deceptive to consumers under the
authority of 49 U.S.C. 41712(a), unless the regulation is specifically
required by statute, the Department shall articulate the basis for
concluding that the practice is unfair or deceptive to consumers as
defined in Sec. 399.79.
0
3. Add Sec. 399.79 to Subpart G to read as follows:
Subpart G--Policies Relating to Enforcement
Sec. 399.79 Policies relating to unfair and deceptive practices.
(a) Applicability. This policy shall apply to the Department's
aviation consumer protection actions pursuant to 49 U.S.C. 41712(a).
(b) Definitions. (1) A practice is ``unfair'' to consumers if it
causes or is likely to cause substantial injury, which is not
reasonably avoidable, and the harm is not outweighed by benefits to
consumers or competition.
(2) A practice is ``deceptive'' to consumers if it is likely to
mislead a consumer, acting reasonably under the circumstances, with
respect to a material matter. A matter is material if it is likely to
have affected the consumer's conduct or decision with respect to a
product or service.
(c) Intent. Proof of intent is not necessary to establish
unfairness or deception for purposes of 49 U.S.C. 41712(a).
(d) Specific regulations prevail. Where an existing regulation
applies to the practice of an air carrier, foreign air carrier, or
ticket agent, the terms of that regulation apply rather than the
general definitions set forth in this section.
(e) Informal Enforcement Proceedings. (1) Before any determination
is made on how to resolve a matter involving a potential unfair or
deceptive practice, the U.S Department of Transportation's Office of
Aviation Enforcement and Proceedings will provide an opportunity for
the alleged violator to be heard and present relevant evidence,
including but not limited to:
(i) In cases where a specific regulation applies, evidence tending
to establish that the regulation at issue was not violated and, if
applicable, that mitigating circumstances apply;
(ii) In cases where a specific regulation does not apply, evidence
tending to establish that the conduct at issue was not unfair or
deceptive as defined in paragraph (b); and
(iii) Evidence tending to establish that consumer harm was limited,
or that the air carrier, foreign air carrier, or ticket agent has taken
steps to mitigate consumer harm.
(2) During this informal process, if the Office of Aviation
Enforcement and Proceedings reaches agreement with the alleged violator
to resolve the matter with the issuance of an order declaring a
practice in air transportation or the sale of air transportation to be
unfair or deceptive to consumers under the authority of 49 U.S.C.
41712(a), and when a regulation issued under the authority of section
41712 does not apply to the practice at issue, then the Department
shall articulate in the order the basis for concluding that the
practice is unfair or deceptive to consumers as defined in this
section.
(f) Formal Enforcement Proceedings. When there are reasonable
grounds to believe that an airline or ticket agent has violated 49
U.S.C. 41712, and efforts to settle the matter have failed, the Office
of Aviation Enforcement and Proceedings may issue a notice instituting
an enforcement proceeding before an administrative law judge. After the
issues have been formulated, if the matter has not been resolved
through pleadings or otherwise, the administrative law judge will give
the parties reasonable written notice of the time and place of the
hearing as set forth in 14 CFR 302.415.
Authority: 49 U.S.C. 41712; 49 U.S.C. 40113(a).
Issued this 19h day of February 2020, in Washington, DC, under
authority delegated in 49 CFR 1.27(n).
Steven G. Bradbury,
General Counsel.
[FR Doc. 2020-03836 Filed 2-27-20; 8:45 am]
BILLING CODE 4910-9X-P