Buried in Regulations Emerging Issues in the Aviation Industry

ABA Tort Trial and Insurance Practice Section The Brief Spring 2014

By Jennifer P. Henry and Mackenzie S. Wallace

Jennifer P. Henry is a partner in the Fort Worth and Dallas, Texas, offices of Thompson & Knight LLP, focusing her practice on business, aviation, and products liability litigation, with expertise in defending claims arising from mass disasters, such as air crash accidents. She is a frequent speaker and writer on aviation, litigation, and other professional topics. Mackenzie S. Wallace, a licensed private pilot, is an associate in the firm’s Dallas office, focusing her practice on federal and state trial actions involving securities, financial institutions, energy, aviation, and general business and commercial litigation. They may be reached, respectively, at [email protected] and [email protected].

TIP Recent regulations affect nearly all aspects of the aviation industry. Knowing them and how to comply is critical, given that severe penalties and consequences are possible.

In recent years, the aviation industry has grown accustomed to increasing levels of governmental regulation designed to enhance security and safety, improve technology, and protect consumers. For exam- ple, in April 2010, the Department of Transportation’s (DOT’s) rules on tarmac delay times and other passenger protections took effect. In 2013, the Federal Aviation Administration (FAA) issued rules to protect passengers with disabilities as part of the DOT’s continuing implementation of the Air Carrier Access Act of 1986. The FAA Modernization and Reform Act of 2012 spawned new regulations and studies by the DOT, and the Airline Safety and FAA Extension Act led to new flightcrew member duty and rest requirements. The FAA has also published new rules on repair stations and fatigue tolerance evaluation of metallic structures. In 2013, the FAA issued a final rule that increased the qualification standards for commercial air carrier pilots. Also in 2013, the FAA determined that airlines can safely expand passenger use of portable electronic devices during all phases of flight. Not all of the rules and regulations are imposed by the DOT, though. Some in the aviation industry are being affected by the Office of Foreign Assets Control’s embargoes and regulations imposing economic sanctions for trading with prohibited countries. This article examines each of these new regulations and the response to—or effect of—the regulations within the industry.

Rules to Enhance Airline Passenger Protections The DOT’s new rules on tarmac delay times and other passenger protections were triggered by a series of highly publicized incidents where travelers were left on the tarmac for long periods of time. Several lawsuits were filed in the wake of these events, and passenger advocacy groups were formed, demand- ing that a passenger bill of rights be adopted and putting pressure on the DOT to take action. As Con-

Published in The Brief Spring 2014, Volume 43, Number 3, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

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gress debated legislation to address the issue, the DOT published a notice of proposed rulemaking on enhancing airline passenger protections.1 After reviewing and considering the comments on the proposed rule, the DOT published a final rule, the stated purpose of which was “to mitigate hardships for airline passengers during lengthy tarmac delays and . . . bolster air carriers’ accountability to consumers.”2 The original rule became effective on April 29, 2010,3 and the amended rule became effective by October 24, 2011.4

The tarmac delay rule (TDR) applies to all flights (foreign or domestic) of a certificated or commuter air carrier if the carrier operates scheduled passenger service or public charter service using any aircraft with 30 or more passenger seats, with certain exceptions, and requires the carriers to adopt contingency plans for lengthy tarmac delays; respond to consumer problems; post flight delay information on their websites; and adopt, follow, and audit customer service plans.5

Contingency plans for lengthy tarmac delays. Under the TDR, certificated and commuter foreign and U.S. air carriers must adopt contingency plans in cases of long tarmac delays at each non-hub, small hub, medium hub, and large hub airport, including diversion airports, at which they operate.6 Each plan must, among other things, limit the number of hours an aircraft may sit on the tarmac before it must permit passengers to deplane.7

When the rule was published, then-Secretary of Transportation Ray LaHood explained that airlines that do not provide food and water after two hours or a chance to disembark after three hours as required by the TDR could face penalties of up to $27,500 per passenger.8 The rule provides exceptions where: (1) the pilot-in-command ascertains that the plane must remain on the tarmac because of safety or security reasons; or (2) air traffic control informs the pilot-in-command that leaving the tarmac to deplane passengers would significantly disturb airport operations.9 Foreign carriers with international flights arriving at or departing from U.S. airports must also have a contingency plan, ensuring that the carrier will not permit an aircraft to remain on the tarmac for more than four hours before allowing passengers to deplane, subject to the same exceptions.10

The TDR requires notification regarding the status of delays every 30 minutes, including reasons for the delay if known.11 The TDR also requires the air carrier to provide passengers with adequate food and potable water within two hours of the plane leaving the gate for departure or touching down on arrival.12 An exception exists where the pilot-in-command determines that security or safety reasons prevent the provision.13 Additionally, all air carriers must assure operating bathrooms and medical attention if needed.14 Failure to comply with the contingency plan is considered to be an unfair and deceptive practice and is subject to enforcement by the DOT.15

Customer service plans. The TDR also requires foreign and U.S. air carriers to adopt customer service plans applicable to their scheduled flights.16 Such plans must contain provisions regarding:

1. disclosing the lowest fare available; 2. notifying customers of known delays, cancellations, and diversions; 3. delivering baggage on time; 4. allowing reservations to be held without payment or canceled without penalty for a defined amount of time;

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5. providing prompt ticket refunds; 6. providing prompt accommodations for passengers with disabilities and other special needs; 7. seeing to passengers’ basic needs during lengthy tarmac delays; 8. handling “bumped” passengers with fairness and consistency in the case of oversales; 9. disclosing cancellation policies, frequent flyer rules, aircraft seating configuration, and changes in travel itineraries; 10. guaranteeing good customer service from code-share partners; 11. guaranteeing responsiveness to customer complaints; and 12. identifying the services it provides to mitigate passenger inconveniences resulting from cancellations and misconnects.17

Each airline must self-audit its adherence to the customer service plan annually and maintain those audit records for up to two years for review by the DOT.18

Notice of contingency plans, customer service plans, and contract of carriage. The DOT wanted to require carriers to include their contingency plans and customer service plans in their contracts of carriage, but this proposal met with resistance by industry groups. A compromise was reached: If the carrier’s contract of carriage does not include the carrier’s contingency plan for lengthy tarmac delays and/or customer service plan, the carrier must post the plan(s), including all updates, on its website in easily accessible forms.19

Response to consumer problems. The DOT’s regulations also address how foreign and U.S. air carriers should respond to consumer problems. Carriers must designate an employee to monitor the effects on passengers of flight delays, flight cancellations, and lengthy tarmac delays.20 This employee helps decide which flights to cancel and which flights will be delayed the longest. Each carrier also must provide the mailing address and e-mail or web address of the department that handles passenger complaints (1) on its website, (2) on e-ticket confirmations, and (3) if requested by a passenger, at each ticket counter and boarding gate staffed by the air carrier.21 When a carrier receives a complaint, defined as “a specific written expression of dissatisfaction concerning a difficulty or problem . . . expe- rienced when using or attempting to use [the] airline’s services,” the carrier must acknowledge receipt within 30 days and provide a substantive response within 60 days.22

The DOT also has focused on the regulation of certain flight schedules and chronically delayed flights in its efforts to provide passenger protection. “The holding out of a chronically delayed flight for more than four consecutive one-month periods represents one form of unrealistic scheduling and is an unfair or deceptive practice and an unfair method of competition,” and is subject to enforcement by the DOT.23 “Chronically delayed flight” is defined as any domestic flight, operating at least 10 times a month, that arrives more than 30 minutes late more than 50 percent of the time during that month.24 Chronically delayed flights include cancelled flights.

Oversales. In the 2011 amendments, the DOT increased the compensation limits for passengers who are involuntarily denied boarding from an oversold flight as follows: (1) 200% of the fare to the passenger’s destination or first stopover (up to $650) if the carrier offers alternate transportation planned to arrive at the stopover or destination more than one hour but less than two hours after the planned arrival time of the original flight; and (2) 400% of the fare to the passenger’s destination or first

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stopover (up to $1,300) if the carrier does not offer alternate transportation planned to arrive at the stopover or destination less than two hours after the planned arrival time of the original flight.25 Fur- ther, the DOT clarified that denied boarding compensation must be offered to involuntarily bumped “zero fare” (i.e., frequent flyer award) ticket holders; carriers must verbally offer as denied boarding compensation cash or a check as an alternative to a travel voucher; and carriers must inform passengers solicited to volunteer for denied boarding compensation about all material restrictions on the use of the travel vouchers.26

Baggage and other fees. The DOT also included in the 2011 amendments a requirement for U.S. and foreign air carriers to disclose changes in baggage fees or allowances on their homepages for three months.27 Carriers and ticket agents must also include on e-ticket confirmations and disclose during the first screen of a fare quotation the free baggage allowances and applicable baggage fees.28 The DOT refused to limit the applicability of these requirements based on the size of the aircraft because “[c]onsumers want to be informed of the fees that they will be required to pay for optional services regardless of the size of the aircraft on which they travel.”29

Post-purchase price increases. The DOT proposed to revise its regulation that allowed post-purchase price increases as long as the consumer received direct notice on or with the ticket of any contract of carriage term.30 In the final rule, the DOT banned the practice of post-purchase price increases in air transportation unless the increase is due to government-imposed taxes or fees and only if the passenger was provided full disclosure of the potential for the increase and affirmatively agreed to that potential prior to purchase.31

Choice-of-forum provisions. Finally in the 2011 amendments, the DOT prohibited U.S. and foreign air carriers from limiting a passenger’s forum to pursue litigation to a particular inconvenient forum.32 Consumer groups, individual consumers, and most carriers supported the amendment (because most carriers did not have such restrictive choice-of-forum provisions in their contracts of carriage). The DOT apparently believes that if a carrier reaches out to do business in a particular jurisdiction, it is fair and reasonable to expect the carrier to defend itself against litigation brought by a consumer who resides in that jurisdiction.33

Fines and Penalties for Violating Passenger Protection Rules The DOT Aviation Enforcement Office assessed $3,610,000 in fines in 2012, exceeding the previous record of $3,264,000 in fines issued in 2011.34 Many of these fines pertain to violations of the TDR. In November 2011, the DOT issued its first fine since it imposed a limit on tarmac delays in April 2010.35 American Eagle paid $900,000 for keeping 608 passengers on board 15 different flights for more than three hours at Chicago O’Hare International Airport (O’Hare). At that time, the fine was the largest penalty ever paid by an airline in a consumer protection case not involving civil rights violations, but still fell short of the maximum penalty that could have been imposed—$16.7 million, or $27,500 for each of the 608 passengers.36

In August 2012, the DOT fined JetBlue $90,000 for failing to tell passengers on a flight delayed at the gate that they were allowed to deplane.37 The DOT closed 2012 by fining Copa Airlines of Panama $150,000 and Virgin America Airlines $55,000 for violating the TDR.38 Copa passengers were stranded aboard an aircraft at New York’s John F. Kennedy International Airport (JFK) for five hours and 34 min-

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utes and were not offered food until more than four hours into the delay. Copa also failed to report the tarmac delay as required; the FAA only learned of it after two consumers filed complaints with the DOT. Virgin America failed to notify passengers in an aircraft delayed at the gate for two hours and 16 minutes at O’Hare that they could leave the aircraft prior to its departure for San Francisco.39

In March 2013, the DOT fined Caribbean Airlines $100,000 for failing to provide passengers with an opportunity to leave a plane delayed on the tarmac at JFK for more than four hours, or with food and water until almost four hours after the plane left the gate during the delay.40 The plane was unable to depart after pushing back from the gate due to poor weather conditions and the need to refuel, and then remained on the tarmac with passengers on board until the airline was able to obtain a staircase four hours and 28 minutes later. Although weather was a factor in the delay, the carrier did not cite any weather-related safety, security, or air traffic control-related reason for failing to allow the passengers to leave the plane.41

In July 2013, the DOT fined American Eagle Airlines $200,000 for lengthy tarmac delays that took place at Dallas/Fort Worth International Airport on December 25, 2012, in a snow and ice storm; 10 flights exceeded the three-hour limit, eight of which fell under exceptions to the TDR.42

In October 2013, United Airlines was fined $1.1 million—the largest fine assessed to date for a tarmac delay violation—for 13 lengthy tarmac delays that took place at O’Hare when severe thunderstorms and lightning caused several ramp closures and disrupted the movement of aircraft.43 Delays by United and its United Express code-share affiliates reportedly exceeded the three-hour limit for tarmac delays by as little as two minutes and as much as 77 minutes. Although United had a contingency plan for tarmac delays, the DOT’s Aviation Enforcement Office found that the airline did not implement the plan during these delays, and that the plan was inadequate to cover foreseeable weather emergencies in which there were more planes on the ground than space at gates. The office also found that United did not contact airport personnel or other airlines for assistance during the tarmac delays. Of the $1.1 million, United will pay the United States $475,000; the remainder covers mitigation measures for affected passengers and corrective actions by United to enhance future compliance with tarmac delay requirements.44

The DOT has been especially strict on webpage posting requirements. Orbitz was fined $50,000 for pushing a baggage fee disclaimer too far down on its webpage.45 The DOT fined a foreign air carrier $80,000 for failing to post its tarmac delay contingency plan and customer service plan on its website.46 Another foreign carrier was fined $250,000 for failing to include on its website a tarmac delay contingency plan or link from the homepage to baggage and other optional service fees; violating the full- fare advertising requirement; and failing to post its contract of carriage in an easily accessible form and to include information on how consumers could file a complaint.47 Finally, the DOT fined British Airways $250,000 for violating its rules on full-fare advertising and an international treaty on reim- bursements for mishandled baggage.48

New DOT Rules for Passengers with Disabilities As part of the agency’s ongoing effort to ensure equal access to air transportation for all passengers, the FAA issued final rules, effective December 12, 2013, requiring airline websites and automated airport kiosks to be accessible to passengers with disabilities.49 Within two years, U.S. and foreign airlines

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with websites marketing to U.S. consumers for travel within, to, or from the United States must make their webpages containing core travel information and services accessible to persons with disabilities, and must make all of their webpages accessible within three years. The rule also requires ticket agents to disclose and offer web-based discount fares to customers unable to use their sites due to a disability. At least 25 percent of kiosks installed at U.S. airports for services such as printing boarding passes and baggage tags must be accessible to passengers with disabilities.50

The DOT’s wheelchair rule provides airlines with more flexibility because it permits airlines to transport passenger wheelchairs by strapping them across a row of seats in new aircraft using a strap kit that complies with applicable safety standards, in addition to stowing them in a closet or similar compart- ment.51

FAA Modernization and Reform Act of 2012 On February 14, 2012, the FAA Modernization and Reform Act of 2012 (Reform Act) was signed into law with the intended goal of modernizing the nation’s aviation system.52 The Reform Act was enacted to streamline programs, create efficiencies, reduce waste, improve aviation safety and capacity, and provide stable funding for the national aviation system. One of the most significant elements of the Act is that it will provide $63.4 billion in FAA funding over four years, including approximately $11 billion toward the modernization of the air traffic control system (NextGen).53

Airport improvement program modifications. The Reform Act provides $3.35 billion for airport improvement program modifications.54 The Act requires an airport master plan and airport planning to consider passenger convenience, airport ground access, access to airport facilities, and an environmen- tal management system.55 But in April 2013, Congress passed a bill (Reducing Flight Delays Act of 2013) that allowed the FAA to transfer $253 million of these funds to the FAA’s operation account to prevent reduced operations and staffing (i.e., the furlough of air traffic controllers and the closing of air traffic control towers) that had been planned to meet federal sequester demands.56

NextGen air transportation system and air traffic control modernization. The Reform Act will allow the FAA to rebuild its air traffic control system to the next generation technology, which will include switching from radar to a GPS air traffic control system.57 The Act establishes deadlines for adopting existing NextGen navigation and surveillance technology and mandates development procedures at the nation’s 35 busiest airports.58

Safety. The Reform Act prohibits personal use of electronic devices on the flight deck and provides for enhanced training of flight attendants.59 The Act also requires inspection of repair stations located outside the United States, but in a manner consistent with U.S. obligations under international agree- ments.60 Additionally, the Act directs the FAA to develop and implement a plan to improve runway safety by reducing the number and severity of runway incursions.61

Air service improvements. The Reform Act provides for passenger air service improvements, including: conducting studies on air carrier flight delays, cancellations, and delayed baggage; requiring approval of emergency contingency plans; and establishing a consumer complaint hotline.62 Further, the Act authorizes appropriations to the essential air service reform of $143 million in 2012, $118 million in 2013, $107 million in 2014, and $93 million in 2015.63

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Provision affecting the TDR. In addition to the above major provisions, the Reform Act required U.S. carriers operating scheduled passenger service or public charter service using aircraft with 30 or more seats, and operators of large hub, medium hub, small hub, or non-hub U.S. airports, to submit contingency plans for lengthy tarmac delays to the Secretary of Transportation for review and approval no later than May 14, 2012.64 The Act also requires each covered carrier and airport to ensure public access to its plan after DOT approval by posting the plan on its website. The requirements of the Act do not conflict with the DOT’s existing TDR.

Response to the Reform Act. In commenting on the progress the Act makes toward the implementation of NextGen, John Mica, chairman of the House Transportation and Infrastructure Committee, stated: “This critical effort to shift from our antiquated air traffic control technology to a GPS-based system will improve air traffic efficiency and safety, reduce fuel burn and pollution from aircraft, and bring costs down for consumers.”65 The Coalition of Airline Pilots Associations, which represents over 28,000 commercial airline pilots, applauded the passage of the Act, finding that it “enhances aviation safety.”66 In July 2013, the FAA released a detailed implementation plan to deploy the new systems and monitor the process improvement and effectiveness.67 Unfortunately, progress under the Act has been slow. In January 2014, the Office of the Inspector General (OIG) issued a report on the FAA’s progress, finding that the FAA has yet to implement several provisions that are key to achieving the full benefits of NextGen.68 The FAA plans to provide more information to Congress and other stakeholders regarding its progress moving forward.

Flightcrew Member Duty and Rest Requirements In response in large part to the 2009 crash of Colgan Air Flight 3407, Congress passed the Airline Safety and Federal Aviation Administration Extension Act (Airline Safety Act) in August 2010.69 This Act required additional training and flight hours for pilots, development of new procedures to address pilot fatigue, and an FAA-operated database of pilot employment records.

To address concerns related to pilot fatigue, the Airline Safety Act required the FAA to make a rule regarding flightcrew rest requirements, and in January 2012, the FAA issued its final rule.70 The rule recognizes the universality of factors that lead to fatigue in most individuals and regulates those factors to prevent flightcrew members in passenger operations from becoming susceptible to fatigue. The underlying philosophy of the rule is that no single element mitigates the risk of fatigue to an accept- able level; rather, both the carrier and the pilot accept responsibility for mitigating fatigue. In Novem- ber 2013, the FAA amended the regulations to provide different requirements based upon the time of day, whether an individual is acclimated to a new time zone, and the likelihood of being able to sleep under different circumstances.71

Fitness for duty. The rule places a joint responsibility on the certificate holder and each flightcrew member when considering if the flightcrew member is fit for duty. If a flightcrew member reports that he or she is fatigued, the airline must remove him or her from duty immediately.72

Fatigue education and training. Carriers must annually provide, as part of their fatigue risk management plan, fatigue-related education and training to increase the trainees’ awareness of (1) fatigue, (2) the effect of fatigue on pilots, and (3) fatigue countermeasures.73

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Operations. The rule restricts flightcrew members’ maximum flight duty period (FDP). The FAA adopted as part of the regulatory text a table limiting maximum FDP based on the time of day and the number of segments flown during the FDP. Flight time is limited to eight or nine hours, depending on the time of day the FDP commences.74

Consecutive night operations. In formulating the rule, the FAA was particularly concerned about cumulative fatigue caused by repeatedly flying at night. As modeling shows substantially deteriorating performance after the third consecutive nighttime FDP for flightcrew members who work nightshifts, the rule limits consecutive nighttime flight duty periods to three periods.75

Cumulative limits. The rule addresses potential cumulative fatigue by placing weekly and 28-day limits on actual flight time and the amount of time a flightcrew member may be assigned any type of flight duty. It also requires that flightcrew members have at least 30 consecutive hours free from duty on a weekly basis, a 25 percent increase over the previous rules.76

Rest. Carriers are required to provide their crew with a 10-hour rest opportunity prior to commencing a duty period that includes flying. The actual amount of time required for a sleep opportunity may not be reduced below eight hours.77

Response to the final rule. The mandatory provisions of the rule do not apply to all-cargo operations; instead, all-cargo operations may voluntarily opt into the new flight, duty, and rest limitations.78 The decision to exempt all-cargo operations has incited opposition. The Independent Pilots Association, the union representing UPS pilots, filed a lawsuit against the FAA.79 The Cargo Airline Association intervened in the lawsuit to defend the FAA’s decision making. The case has been stayed pending further rulemaking. In 2013, a bill was reintroduced to include cargo pilots in the regulatory agency’s rule.80

The FAA acknowledges that these new rules alone will not solve the fatigue problem; a system safety approach in which the operator and pilots both assume responsibility for fatigue management is still needed. But the FAA is implementing mandatory updates to each airline’s fatigue risk management plan.

Repair Stations In May 2012, the FAA published a notice of proposed rulemaking on repair stations,81 which received more than 300 public comments. The proposed rule would revise the system of ratings, the repair station certification requirements, and the regulations on repair stations providing maintenance for air carriers.82

System of ratings. The former system of rating (14 C.F.R. pt. 145) did not address current technology or industry practices, was not dynamic, and could not adapt as new technologies were introduced. Under the proposed rule, the rating system would be reduced from eight to five ratings and would clearly indicate the type of work that a repair station is authorized to perform.83

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Certification requirements. Under the proposed rule, the FAA could deny an application for a repair station if the applicant has a repair station certificate currently being revoked or previously held a repair station certificate that was revoked.84

Repair stations providing maintenance for air carriers. The proposed rule also would clarify that when a repair station performs work as a maintenance provider to an air carrier, the repair station must perform that work in accordance with the maintenance instructions provided by the air carrier or air operator.85

Security. Repair stations, primarily those located on or adjacent to an airport, have also recently been affected by rules published by the Transportation Security Administration (TSA) and Department of Homeland Security (DHS). On January 13, 2014, the TSA issued regulations to improve the security of domestic and foreign aircraft repair stations, requiring certain repair stations to allow TSA and DHS officials to enter, conduct inspections, and view and copy records as needed to carry out TSA’s duties.86 The regulations also require certain repair stations to implement a number of security measures, such as (1) designating a point of contact to carry out specified responsibilities, (2) preventing the unauthorized operation of unattended aircraft, and (3) verifying background information of the TSA points of contact and those who have access to any keys or other means used to prevent the unauthorized operation of unattended aircraft. The regulations also establish procedures for TSA to notify repair stations of any deficiencies with their security measures and to determine whether a particular repair station presents an immediate risk to security.87 These TSA-issued regulations became effective February 27, 2014.

Fatigue Tolerance Evaluation of Metallic Structures In December 2011, the FAA amended the airworthiness standards for fatigue tolerance evaluation of transport category rotorcraft metallic structures.88 The final rule provides an increased level of safety by avoiding or reducing the likelihood of the catastrophic fatigue failure of a metallic structure. The FAA determined that, in general, standards for the safest metallic structures use both inspections and retirement times together to mitigate the risk of catastrophic failure due to fatigue.89

The rule requires a fatigue tolerance evaluation of each principal structural element.90 Each fatigue tolerance evaluation required must include: (1) in-flight measurements to determine the fatigue loads or stresses; (2) the loading spectra as severe as those expected in operations based on loads or stresses; (3) takeoff, landing, and taxi loads when evaluating landing gear; (4) a threat assessment; (5) a deter- mination of the fatigue tolerance characteristics; and (6) analyses supported by test evidence and, if available, service experience.91 The FAA estimated the total cost of this final rule to be about $9 million, with the potential benefits of avoiding at least two of the nine avoidable historical transport category helicopter accidents worth $12.9 million.92

Qualification, Service, and Use of Crewmembers and Aircraft Dispatchers The FAA recently issued several rules in response to a congressional mandate in the Airline Safety Act.93 One rule requires first officers—also known as copilots—to hold an airline transport pilot (ATP) certificate, requiring 1,500 hours total time as a pilot. Previously, first officers were required to have only a commercial pilot certificate, which requires 250 hours of flight time. Among other provisions,

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pilots must have a minimum 1,000 flight hours as a copilot in air carrier operations prior to serving as a captain for a U.S. airline and enhanced training for an ATP certificate, including 50 hours of multi- engine flight experience and completion of a new FAA-approved training program.94

Another rule issued at the end of 2013 will significantly advance the way commercial air carrier pilots are trained. The final rule requires:

• Ground and flight training that enables pilots to prevent and recover from aircraft stalls and upsets, which will impact future simulator standards as well; • Air carriers to use data to track remedial training for pilots with performance deficiencies, such as failing a proficiency check or unsatisfactory performance during flight training; • Training for more effective pilot monitoring; • Enhanced runway safety procedures; and • Expanded crosswind training, including training for wind gusts.95

Air carriers will have five years to comply with the rule’s new pilot training provisions, which will allow time for necessary software updates in flight simulation technology. The cost of the rule to the aviation industry is estimated to be $274.1 to $353.7 million.96

FAA Relaxation of Rules for Use of PEDs Also in late 2013, the FAA announced that airlines could safely expand passenger use of portable electronic devices (PEDs) during all phases of flight. The FAA based its decision on input from a group of experts that included representatives from the airlines, aviation manufacturers, passengers, pilots, flight attendants, and the mobile technology industry. Passengers will eventually be able to use PEDs during all phases of flight, with very limited exceptions. The FAA did not consider changing the regulations regarding the use of cell phones for voice communications during flight—even though some foreign carriers permit such use—because the issue is under the jurisdiction of the Federal Communications Commission (FCC), and cell phones differ from most PEDs in that they are designed to send out signals strong enough to be received at great distances.97

In contrast, recent regulations ban the personal use of PEDs by certain flightcrew members on the flight deck while the aircraft is being operated.98 This rule, which conforms FAA regulations with legislation, is intended to ensure that certain nonessential activities on the flight deck do not contribute to the challenge of task management or a loss of situational awareness resulting from attention to nonessential tasks.

OFAC Regulations Affecting Aviation The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, regimes, and terrorists. OFAC administers and enforces comprehensive or selective sanctions by blocking assets and using trade restrictions to accomplish foreign policy and national security goals with Iran, Syria, Cuba, and other nations.

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Following 9/11, increased focus was placed on sanctions as a foreign policy tool to combat terrorists. Comprehensive economic sanctions may prohibit: (1) U.S. export or import trade with a target country; (2) with limited exceptions, third-country export trade that involves any U.S. person and/or U.S.-origin products or technologies and foreign items with more than de minimis U.S. content; (3) investment in a target country; and (4) dealings in property of a target country.

OFAC regulations have and will continue to affect the aviation industry. The Trading with the Enemy Act makes it unlawful for any person, in the absence of a license of the president, to directly or indi- rectly trade or attempt to trade with any other person, with knowledge or reasonable cause to believe that such other person is an enemy or ally of an enemy or is acting on behalf of any enemy or its ally.99 Specifically, without receiving an exception from OFAC, no U.S. persons or businesses are allowed to do business with Iran, import Iran’s products, participate in petroleum development, or sell aircraft and/or aircraft repair parts to aviation companies in Iran.100 OFAC has implemented enforcement guidelines and is applying heavier penalties in its civil enforcement actions.101 But what if a manufac- turer learns that its product is located in a targeted foreign country and it is requested (or required) to provide maintenance support?

In United States v. Balli Aviation Ltd., Balli Aviation pleaded guilty to economic and trade sanctions offenses involving the export of three Boeing 747 aircraft to Iran.102 The United States sued Balli, asserting both criminal and civil charges and alleging that Balli conspired to export three aircraft from the United States to Iran in violation of the U.S. embargo.103 Balli was fined $15 million under the set- tlement of the civil enforcement action, with $2 million suspended if no further violations occurred.104 Under a suspended denial order, Balli’s export privileges were made subject to denial for five years, but that denial was suspended provided Balli paid the civil penalty and refrained from further export violations.105

Because of the increase in civil enforcement actions and the possibility of sanctions pursuant to OFAC embargoes and regulations, companies in the aviation industry should avoid business in target countries and should educate themselves regarding business in other countries that could pose a potential problem.

Conclusion With the recent increase in government regulations affecting those in the aviation industry, it is important that those in the industry stay informed about the regulations and adopt practices to ensure compliance. As evidenced above, a broad array of regulations exist (from mechanical to safety to consumer protection), putting companies in the aviation industry at risk for noncompliance. Compliance may not ensure that profit margins will be maintained, but failing to comply with regulations may result in severe penalties.

Notes 1. Enhancing Airline Passenger Protections, 73 Fed. Reg. 74,586 (proposed Dec. 8, 2008) (to be codified at 14 C.F.R. pts. 234, 259, 399). 2. Enhanced Protections for Airline Passengers, 14 C.F.R. § 259.1 (2012). 3. Enhancing Airline Passenger Protections, 74 Fed. Reg. 68,983 (Dec. 30, 2009) (codified at 14 C.F.R. pts. 234, 253, 259, 399).

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4. Enhancing Airline Passenger Protections, 76 Fed. Reg. 23,110 (Apr. 25, 2011) (codified at 14 C.F.R. pts. 244, 250, 253, 259, 399). 5. 14 C.F.R. pt. 259. 6. Id. §§ 259.3–.4. 7. Id. § 259.4(b)(1). 8. Matthew L. Wald, Stiff Fines Are Set for Long Wait on the Tarmac, N.Y. TIMES, Dec. 21, 2009, www.nytimes.com/2009/12/22/business/22passengers.html. 9. 14 C.F.R. § 259.4(b)(1). 10. Id. § 259.4(b)(2). 11. Id. § 259.4(b)(5). 12. Id. § 259.4(b)(3). 13. Id. 14. Id. § 259.4(b)(4). 15. Id. § 259.4(f). 16. Id. § 259.5(a). 17. Id. § 259.5(b). 18. Id. § 259.5(c). 19. Id. § 259.6. 20. Id. § 259.7(a). 21. Id. § 259.7(b). 22. Id. § 259.7(c). 23. Id. § 399.81(c)(4). 24. Id. § 399.81(c)(2). 25. Id. § 250.5(a). 26. Id. § 250.9. 27. Id. § 399.85. 28. Id. 29. Enhancing Airline Passenger Protections, 76 Fed. Reg. 23,110, 23,145 (Apr. 25, 2011). 30. Id. at 23,152; 14 C.F.R. § 253.7. 31. 76 Fed. Reg. at 23,152. 32. Id. at 23,155. 33. Id. 34. Press Release, U.S. Dep’t of Transp., DOT Issues Two Fines against Passenger Carriers for Tarmac Delay Violations (Jan. 2, 2013), www.dot.gov/briefing-room/dot-issues-two-fines-against-passenger- carriers-tarmac-delay-violations [hereinafter DOT 01-13 Press Release]. 35. Jad Mouawad, Sending a Harsh Message, U.S. Issues First Fine for Tarmac Delays, N.Y. TIMES, Nov. 14, 2011, www.nytimes.com/2011/11/15/business/us-issues-first-fine-for-tarmac-delays.html. 36. Id. 37. Matt Tolnar, DOT Fines JetBlue and Orbitz over Tarmac Delay and Baggage Fee Rules, NYC AVIA- TION (Aug. 21, 2012), www.nycaviation.com/2012/08/dot-fines-jetblue-and- orbitz-over-tarmac-delay- and-baggage-fees/. 38. DOT 01-13 Press Release, supra note 34; see Docket ID DOT-OST-2012-0002: Aviation Enforce- ment and Proceeding Consent Order, REGULATIONS.GOV, www.regulations.gov/#!searchResults;rpp=25;po=0;s=DOT-OST-2012-0002;fp=true;ns=true (last vis- ited Mar. 25, 2014).

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39. DOT 01-13 Press Release, supra note 34. 40. Press Release, U.S. Dep’t of Transp., DOT Fines Caribbean Airlines for Denying Passengers Opportunity to Leave Plane, Failing to Provide Food and Water during Lengthy Tarmac Delay (Mar. 29, 2013), www.dot.gov/individuals/air-consumer/dot-fines-caribbean-airlines-denying-passengers- opportunity-leave-plane. 41. Id. 42. Press Release, U.S. Dep’t of Transp., American Eagle Fined $200,000 for Lengthy Christmas 2012 Tarmac Delays (July 23, 2013), www.dot.gov/briefing-room/american-eagle-fined-200000-lengthy- christmas-2012-tarmac-delays. 43. Press Release, U.S. Dep’t of Transp., United Fined for Lengthy O’Hare Tarmac Delays in July 2012 (Oct. 25, 2013), www.dot.gov/briefing-room/united-fined-lengthy-o%E2%80%99hare-tarmac-delays- july-2012. 44. Id. 45. Tolnar, supra note 37. 46. Air India, Ltd., Consent Order, Docket No. DOT-OST-2012-0002 (May 3, 2012), available atwww.regulations.gov/#!documentDetail;D=DOT-OST-2012-0002-0021. 47. Press Release, U.S. Dep’t of Transp., DOT Fines Brazilian Airline for Violations of Airline Con- sumer Rules (Nov. 26, 2013), www.dot.gov/briefing-room/dot-fines-brazilian-airline-violations- airline-consumer-rules. 48. Press Release, U.S. Dep’t of Transp., DOT Fines British Airways for Violating Price Advertising, International Baggage Compensation Rules (Oct. 1, 2012), www.dot.gov/briefing-room/dot-fines- british- airways-violating-price-advertising- international-baggage. 49. Press Release, U.S. Dep’t of Transp., New DOT Rules Make Flying Easier for Passengers with Dis- abilities (Nov. 4, 2013), www.dot.gov/briefing-room/new-dot-rules-make-flying-easier-passengers- disabilities [hereinafter DOT 92-13 Press Release]; see Docket ID DOT-OST-2011-0177: Nondiscrimination on the Basis of Disability in Air Travel, REGULATIONS.GOV, www.regulations.gov/#!searchResults;rpp=25;po=0;s=DOT-OST-2011-0177;fp=true;ns=true (last vis- ited Mar. 25, 2014). 50. DOT 92-13 Press Release, supra note 49. 51. Id. 52. Pub. L. No. 112-95, 126 Stat. 11 (2012) [hereinafter Reform Act]. 53. Mike Mitchell, President Obama Signs the FAA Modernization and Reform Act of 2012, AVIATION ONLINE MAG., Feb. 15, 2012, http://avstop.com/news_february_2012/presi- dent_obama_signs_the_faa_modernization_and_reform_act_of_2012_hr_658.htm. 54. Reform Act § 101, 126 Stat. at 15–16. 55. Id. § 131, 126 Stat. at 21. 56. Pub. L. No. 113-9, 127 Stat. 443 (2013). 57. Mitchell, supra note 53. 58. Reform Act § 101, 126 Stat. at 15–16. 59. Id. §§ 307, 309, 126 Stat. at 61–62, 64. See also infra text accompanying note 98. 60. Reform Act § 308, 126 Stat. at 62–63. 61. Id. § 314, 126 Stat. at 67–68. 62. Id. §§ 406, 407, 415, 126 Stat. at 86–87, 92–96. 63. Id. § 428, 126 Stat. at 99–100.

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64. Submission of U.S. Carrier and Airport Tarmac Delay Contingency Plans to Department of Trans- portation for Approval, 77 Fed. Reg. 27,267 (May 9, 2012). 65. Mitchell, supra note 53. 66. Id. 67. FED. AVIATION ADMIN., U.S. DEP’T OF TRANSP., DETAILED IMPLEMENTATION PLAN FOR THE FEDERAL AVI- ATION ADMINISTRATION MODERNIZATION AND REFORM ACT OF 2012 (2013), available atwww.faa.gov/ regu- lations_policies/rulemaking/ committees/documents/media/ ACPRR.ARC.Implementation%20Plan.20130731.pdf. 68. OFFICE OF INSPECTOR GEN., FAA MADE LIMITED PROGRESS IN IMPLEMENTING NEXTGEN PROVISIONS OF THE FAA MODERNIZATION AND REFORM ACT OF 2012 (2014), available atwww.oig.dot.gov/library-item/ 6298. 69. Pub. L. No. 111-216, 124 Stat. 2,347 (2010). 70. Flightcrew Member Duty and Rest Requirements, 77 Fed. Reg. 330 (Jan. 4, 2012) (codified at 14 C.F.R. pts. 117, 119, 121). 71. Clarification of Flight, Duty, and Rest Requirements, 78 Fed. Reg. 14,166 (Mar. 5, 2013) (codified at 14 C.F.R. pts. 117, 121). 72. 77 Fed. Reg. at 330–31. 73. Id. at 331. 74. Id. 75. Id. at 331, 340. 76. Id. at 332. 77. Id. 78. Id. at 333. 79. Indep. Pilots Ass’n v. FAA, No. 11-1483 (D.D.C. Dec. 22, 2011). 80. Safe Skies Act of 2013, S. 1692, 113th Cong. (2013). 81. Repair Stations, 77 Fed. Reg. 30,054 (proposed May 21, 2012) (to be codified at 14 C.F.R. pts. 43, 91, 145). 82. Id. 83. Id. at 30,055–56. A comparison of the proposed and former ratings can be found at www.gpo.gov/ fdsys/pkg/FR-2012-05-21/pdf/2012-11984.pdf. 84. 77 Fed. Reg. at 30,055–56. 85. Id. at 30,057. 86. Aircraft Repair Station Security, 79 Fed. Reg. 2119 (Jan. 13, 2014) (codified at 49 C.F.R. pt. 1554). 87. Id. 88. Fatigue Tolerance Evaluation of Metallic Structures, 76 Fed. Reg. 75,435 (Dec. 2, 2011) (codified at 14 C.F.R. pt. 29). 89. Id. at 75,435–36. 90. Fatigue Tolerance Evaluation of Metallic Structure, 14 C.F.R. § 29.571(a) (2012). 91. Id. § 29.571(e). 92. 76 Fed. Reg. at 75,438. 93. Press Release, FAA, FAA Boosts Aviation Safety with New Pilot Qualification Standards (July 10, 2013), www.faa.gov/news/press_releases/news_story.cfm?newsId=14838. 94. Pilot Certification and Qualification Requirements for Air Carrier Operations, 78 Fed. Reg. 42,324 (July 15, 2003) (codified at 14 C.F.R. pts. 61, 121, 135, 141, 142).

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95. Qualification, Service, and Use of Crewmembers and Aircraft Dispatchers, 78 Fed. Reg. 67,800 (Nov. 12, 2013) (codified at 14 C.F.R. pt. 121). 96. Press Release, FAA, FAA Issues Final Rule on Pilot Training (Nov. 5, 2013), www.faa.gov/news/ press_releases/news_story.cfm?newsId=15314&cid_=%20TW191. 97. Press Release, FAA, FAA to Allow Airlines to Expand Use of Personal Electronics (Oct. 31, 2013), www.faa.gov/news/press_releases/news_story.cfm?newsId=15254. 98. Prohibition on Personal Use of Electronic Devices on the Flight Deck, 79 Fed. Reg. 8257 (Feb. 12, 2014) (codified at 14 C.F.R. pt. 121). 99. 50 U.S.C. app. §§ 1, 3(a). 100. 13 C.F.R. § 560.206. 101. Economic Sanctions Enforcement Guidelines, 74 Fed. Reg. 57,593 (Nov. 9, 2009) (codified at 31 C.F.R. pt. 501). 102. Press Release, U.S. Dep’t of Justice, U.K. Firm Pleads Guilty to Illegally Exporting Boeing 747 Aircraft to Iran (Feb. 5, 2010), www.justice.gov/opa/pr/2010/February/10-nsd-131.html [hereinafter DOJ 10-131 Press Release]. 103. See 31 C.F.R. pt. 560. 104. Government’s Sentencing Memorandum, United States v. Balli Aviation Ltd., No. 09-366 (ESH) (D.D.C. Apr. 20, 2010); see also 18 U.S.C. § 357(c)(3) (providing that the maximum criminal fine is $1 million per felony). 105. DOJ 10-131 Press Release, supra note 102.