[Federal Register Volume 85, Number 235 (Monday, December 7, 2020)]
[Rules and Regulations]
[Pages 78707-78718]
[FR Doc No: 2020-26416]

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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: Final rule.

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SUMMARY: The U.S. Department of Transportation (DOT or Department) is
issuing a final rule codifying its longstanding definitions for the
terms ``unfair'' and ``deceptive'' in the Department's regulations
implementing its aviation consumer protection statute. The final rule
also describes the Department's procedural requirements for its
rulemaking and enforcement actions when based on the Department's
authority to prohibit unfair or deceptive practices. Most of the
Department's aviation consumer protection regulations, such as the
Department's rules on overbooking, are based on the Department's
authority to prohibit unfair or deceptive practices. This rule is
intended to provide regulated entities and other stakeholders with
greater clarity and certainty about the Department's interpretation of
unfair or deceptive practices and the Department's process for making
such determinations in the context of aviation consumer protection
rulemaking and enforcement actions.

DATES: Effective on January 6, 2021.

FOR FURTHER INFORMATION CONTACT: Robert Gorman, Kimberly Graber, or
Blane Workie, Office of Aviation Consumer Protection, U.S. Department
of Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-
366-9342,<PHONE_NUMBER> (fax<EMAIL_ADDRESS>
<EMAIL_ADDRESS>f0929c919e95de879f829b9995b0949f84de979f86 (email).

SUPPLEMENTARY INFORMATION:

I. Rulemaking Background

    Much of the background information presented here also appears in
the preamble to the Department's Notice of Proposed Rulemaking on
Defining Unfair and Deceptive Practices published on February 28,
2020.\1\ We have presented background information again here to assist
the public in understanding the issues involved.
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    \1\ ``Defining Unfair or Deceptive Practices,'' 85 FR 11881
(February 28, 2020).
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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 Federal
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 actions that are good candidates for repeal,
replacement, or modification.\2\ In response to the Notice, Airlines
for America (A4A), an airline trade association, urged the Department
to adopt policies defining unfairness and deception in Section 41712
consistent with principles articulated in Federal Trade Commission
(FTC) and Federal court precedent interpreting those terms.\3\ A4A also
urged the Department to adopt various procedures which would, in its
view, ensure that the Department's enforcement and rulemaking
activities were rooted in fairness, due process, and an adequate
factual foundation.
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    \2\ ``Notification of Regulatory Review,'' 82 FR 45750 (October
1, 2017).
    \3\ See Comment of A4A, Docket DOT-OST-2017-0069-2753, available
at www.regulations.gov.
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C. Department's Comprehensive Update of Rulemaking and Enforcement
Procedures

    On December 27, 2019, the Department issued a comprehensive update
and consolidation of its procedural requirements for the Department's
rulemaking and enforcement actions.\4\ This update reflects the
Department's policy that regulations should be straightforward and
clear, incorporate best practices for economic analyses, and provide
for appropriate public participation.\5\ It also reflects the
Department's policy that enforcement actions should satisfy principles
of due process and remain

lawful, reasonable, and consistent with Administration policy.\6\
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    \4\ ``Administrative Rulemaking, Guidance, and Enforcement
Procedures,'' 84 FR 71714 (December 27, 2019), amending 49 CFR part
5 and other provisions.
    \5\ 84 FR 71718-71826.
    \6\ 84 FR 71729-71733.
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D. Summary of Notice of Proposed Rulemaking (NPRM)

    On February 28, 2020, the Department published an NPRM proposing to
define the terms ``unfair'' and ``deceptive'' found in Section 41712,
the Department's aviation consumer protection statute. The NPRM also
proposed a series of amendments to the Department's aviation consumer
protection procedures with respect to both regulation and enforcement.
The proposals were issued to provide greater clarity, transparency, and
due process in future aviation consumer protection rulemakings and
enforcement actions.
    By way of background, the Department described the origin of
section 41712 and explained how it was modeled on Section 5 of the
Federal Trade Commission (FTC) Act. The Department explained that while
Section 5 vests the FTC with broad authority to prohibit unfair or
deceptive practices in most industries, Congress granted the Department
the exclusive authority to prohibit unfair or deceptive practices of
air carriers and foreign air carriers. The Department noted that DOT
and FTC share the authority to prohibit unfair or deceptive practices
by ticket agents in the sale of air transportation.
    Next, the Department explained that 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.\7\ These principles were applied in FTC enforcement cases and
rulemakings, and approved by reviewing Federal courts.\8\ 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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    \7\ 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).
    \8\ 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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    These principles are now reflected in the FTC Act itself. In 1994,
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, but public policy may not be the primary
basis of its decision.
    Next, the Department explained that in 1983, the FTC issued a
Policy Statement on Deception.\9\ 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.
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    \9\ 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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    In the NPRM, the Department proposed to adopt definitions of
``unfair'' and ``deceptive'' that echo FTC precedent. The Department
explained that adopting these definitions would simply codify existing
practice and would not reflect a change of policy, because the
Department's Office of Aviation Consumer Protection (formerly known as
the Office of Aviation Enforcement and Proceedings), a unit within the
Office of the General Counsel that enforces aviation consumer
protection requirements, has often explicitly relied on those
definitions in its enforcement orders.
    Next, the Department proposed a set of procedural rules that would
govern the Department's future discretionary rulemaking and enforcement
efforts in the area of aviation consumer protection. With respect to
rulemaking actions, the Department proposed three measures. First,
future rulemakings declaring certain practices to be ``unfair'' or
``deceptive'' would use the Department's proposed definitions of those
terms.\10\ In prior rulemakings, the Department tended to make a
conclusory statement that a practice was unfair or deceptive and did
not provide its reasoning for that conclusion. In arriving at these
conclusions that certain practices were unfair or deceptive, DOT
employed the same definitions that are set forth in this rule, though
that analysis was done informally at the Department and not further
described in rule preambles.
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    \10\ The proposal recognized that if Congress directed the
Department to issue a rule declaring a specific practice to be
unfair or deceptive, then the Department would do so without
reference to the Department's own definitions.
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    Second, future discretionary rulemakings would be subject to a
hearing procedure. Specifically, if the Department proposes that a
practice was unfair or deceptive in a rulemaking, and that rulemaking
raised scientific, technical, economic, or other factual issues that
are genuinely in dispute, then interested parties may request an
evidentiary hearing to gather evidence on those disputed issues of
fact. Third, future rulemakings would explain the Department's basis
for finding a practice to be unfair or deceptive.
    With respect to enforcement, the Department proposed three
measures. First, when taking enforcement action against an airline or
ticket agent for unfair or deceptive practices, the Department would
use the proposed definitions of ``unfair'' and ``deceptive'' set forth
above (unless a specific regulation issued under the authority of
section 41712 applied to the practice in question, in which case the
terms of the specific regulation would apply). Second, in future
enforcement actions, the Department would provide the airline or ticket
agent with the opportunity to be heard and to present mitigating
evidence. This final rule codifies the longstanding practice of
allowing regulated entities to present mitigating evidence during the
course of informal DOT enforcement actions. In a typical enforcement
action, the Office of Aviation Consumer Protection issues an
investigation letter to an airline or ticket agent, seeking information
about the extent and nature of the violations. During that process, the
Office also allows airlines and ticket agents to present mitigating
evidence (e.g., that consumer harm was low, or that the airline or
ticket agent has taken steps to mitigate the harm to consumers). While
the rule now makes this process explicit, we do not expect an expansion
in its usage; instead, we expect that it

will continue unchanged after the issuance of this final rule. Third,
in future enforcement orders, if a specific regulation does not apply
to the practice in question, the Department would explain the basis for
its finding that a practice was unfair or deceptive. The Department is
of the view that these measures generally codify existing practice.
    In addition, the Department solicited comment on related matters.
For example, the Department asked whether the term ``practice'' should
be defined. The Department also noted that it relies on its general
unfair and deceptive practices authority in certain specialized areas
(e.g., privacy, frequent flyer programs, and air ambulance service) and
asked whether the proposed general definitions of ``unfair'' or
``deceptive'' were sufficient to provide stakeholders sufficient notice
of what constitutes an unfair or deceptive practice in these or other
subject areas.
    The comment period for the NPRM was originally scheduled to expire
on April 28, 2020. However, in response to a request by consumer
advocacy organizations, the comment period was extended to May 28,
2020.

II. Summary of NPRM Comments and the Department's Responses

A. Overview

    The Department received a total of 224 comments by the end of the
comment period. Approximately 180 comments were filed by individual
consumers, who almost uniformly opposed the NPRM. Individual consumers
typically did not comment on any specific provision, but instead
opposed the NPRM as a whole, viewing it as a weakening of aviation
consumer protection. Many consumers noted with disapproval that the
NPRM was initiated at the request of airlines, which in their view
engage in practices that are anti-consumer.
    Consumer advocacy organizations \11\ and two FTC Commissioners \12\
generally opposed the proposals on the ground that they were either
unnecessary or weakened consumer protection. Four Senators and one
Member of Congress \13\ urged the Department to discontinue the NPRM
for many of the same reasons identified by consumer advocates and the
FTC Commissioners.
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    \11\ Travelers United, Flyersrights.org, National Consumers
League, Consumer Action, American Association for Justice (formerly
American Trial Lawyers' Association), Travel Fairness Now, Consumer
Reports, Consumer Federation of America, and US PIRG.
    \12\ Commissioners Rebecca Kelly Slaughter and Rohit Chopra.
    \13\ Senators Edward J. Markey, Tammy Baldwin, Maria Cantwell,
and Richard Blumenthal and Representative Katie Porter.
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    Airline associations, individual airlines, and a nonprofit public
policy organization \14\ broadly supported the proposals in the NPRM on
the ground that they provided greater transparency and due process in
the Department's rulemaking and enforcement activities. Airlines also
suggested that the Department adopt additional provisions, which will
be discussed in greater detail below.
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    \14\ Airlines for America (A4A), International Air Transport
Association (IATA), National Business Aviation Association (NBAA),
U.S. Tour Operators Association (USTOA), Spirit Airlines, Southwest
Airlines, and the Competitive Enterprise Institute (CEI).
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    Travel agent representatives and a large travel agency \15\
generally supported the NPRM for the reasons expressed by airlines;
however, they opposed the proposal to adopt hearing procedures relating
to discretionary aviation consumer protection rulemakings.
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    \15\ Travel Tech and BCD Travel USA.
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    We will discuss the comments in further detail below.

B. Definitions

1. Definitions of ``Unfair'' and ``Deceptive''
    Consumer advocacy organizations generally recognized that the
proposed definitions of ``unfair'' and ``deceptive'' mirror the FTC's
interpretation of those terms. They argued, however, that the
Department should not limit itself to those specific definitions. They
contended that the flexibility of undefined terms serves as a deterrent
to engaging in practices that do not fit within the proposed
definitions, but which may nevertheless be unfair or deceptive.
    They argued that this flexibility is especially important in the
field of air transportation because the Airline Deregulation Act (ADA)
prohibits States from regulating the unfair and deceptive practices of
airlines. They contended that outside of the field of aviation, State
consumer protection laws serve as a backstop to the FTC's authority,
and that many consumer protection agencies take aggressive and
successful action under State law with respect to practices that would
not qualify as unfair or deceptive under the FTC's definitions. They
also observed that because of ADA preemption, relief in court is
generally limited to Federal class-actions or small claims. Consumer
organizations concluded that the FTC definitions may be used for
guidance, but should not be transformed into regulatory text.
    FTC Commissioner Chopra urged the Department not to adopt the FTC's
definitions, for many of the reasons identified by consumer advocacy
organizations. He also raised several additional concerns. First, he
argued that after the FTC adopted its Policy Statement on Unfairness in
1980, the Commission's ``number of enforcement actions and rulemakings
plummeted, leaving a vacuum that hobbled development of the law.'' \16\
Commissioner Chopra also argued that ``the key planks undergirding the
FTC's unfairness definition--competitive markets, consumer choice, and
a de-emphasis on public policy--are poorly suited to airline
regulation,'' because the aviation market is not competitive, in his
view, and because the Transportation Code affirmatively requires the
Secretary to emphasize certain public policies.\17\ He also argued that
the proposed definitions do not adequately take these policies into
account.
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    \16\ Comment of Commissioner Chopra at 2. He particularly noted
that in the years after adoption of the Policy Statement, the FTC
failed to take action against predatory lending and the deceptive
practices of the tobacco industry; instead, states took the lead,
and the FTC's authority over consumer lending practices was
transferred to the Consumer Financial Protection Bureau (CFPB),
which has a broader standard for taking enforcement action than the
FTC. Id. at 6-8.
    \17\ Id. at 10.
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    Airlines and travel agents supported the proposed definitions,
arguing that they provide much-needed transparency and predictability
to regulated industries. Southwest Airlines argued that the lack of
clear definitions has led DOT to overreach in certain past rulemakings
and enforcement actions. Southwest also argued that the third prong of
the unfairness definition (i.e., that the harm of the practice ``is not
outweighed by countervailing benefits to consumers or to competition'')
correctly reflects departmental policy to place ``maximum reliance on
competitive market forces and on actual and potential competition.''
\18\ Spirit Airlines suggested that the proposed definition of
``deceptive,'' which currently refers to misleading a singular
``consumer'' acting reasonably under the circumstances, should be
written in the plural to reflect that the practice must be misleading
to ``consumers'' in the aggregate. Travel agents argued that because
DOT and FTC share jurisdiction over them, it is important for the two
regulatory standards to be harmonious.
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    \18\ Southwest comment at 4, citing 49 U.S.C. 40101(a)(6), (12).

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    After reviewing the comments, the Department remains of the view
that it should adopt the definitions of ``unfair'' and ``deceptive'' as
proposed. We are guided by the principles set forth in our recent final
rule, ``Administrative Rulemaking, Guidance, and Enforcement
Procedures,'' which seeks to provide greater transparency to regulated
entities when conducting enforcement actions and adjudications.\19\
Offering clear definitions of ``unfair'' and ``deceptive'' will serve
this goal. We note that transparency and clarity is particularly needed
with respect to ticket agents, which are subject to both FTC and DOT
jurisdiction.
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    \19\ 84 FR 71716, citing Executive Order 13892, ``Promoting the
Rule of Law Through Transparency and Fairness in Civil
Administrative Enforcement and Adjudication'' (October 9, 2019).
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    We stress that the definitions that we adopt do not reflect a
substantive departure from past DOT practice. As we explained in the
NPRM, DOT has traditionally relied on these definitions when taking
enforcement and discretionary rulemaking actions. Therefore, the
Department is not of the view that codifying these definitions will
diminish the Department's authority to take enforcement action or to
regulate effectively.
    We recognize the argument of consumer advocacy organizations and
Commissioner Chopra that the ADA preempts State consumer protection
agencies from acting as a more aggressive backstop to DOT action. At
present, however, we are of the view that the proposed definitions are
adequate to ensure regulations continue to prohibit unfair and
deceptive practices while at the same time providing necessary
transparency to the regulated industry. We also recognize that under
FTC practice, the role of public policy is explicitly deemphasized,\20\
while Congress has directed the Department to take into account a
variety of policies in conducting economic regulation of air
transportation.\21\ We are not convinced that this distinction compels
a different result. While the definitions of ``unfair'' and
``deceptive'' will remain the guiding principles for regulation and
enforcement, in doing so, the Department recognizes its statutory
responsibility to consider the public policies enumerated by Congress.
These policies include safety, ensuring economic competition, and
preventing unfair and deceptive practices.\22\
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    \20\ As noted above, pursuant to 15 U.S.C. 45(n), the FTC may
rely on public policy, along with other evidence, for making a
determination of unfairness, but public policy may not be the
primary basis of its decision.
    \21\ 49 U.S.C. 40101 (directing the Department, when engaging in
economic regulation of air transportation, to consider 16 matters,
``among others, as being in the public interest and consistent with
public convenience and necessity.'')
    \22\ See 49 U.S.C. 40101(a)(1), (4), (6), (7), (9), and (12).
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2. Intent as an Element of Unfairness or Deception
    The proposed rule would clarify that intent is not an element of
either unfairness or deception. We received relatively few comments on
this issue. FTC Commissioners Chopra and Slaughter both expressed the
view that the Department's position was legally correct. A4A and IATA,
however, urged the Department to adopt an ``intent to deceive''
standard for both unfairness and deception. In the alternative, they
urged the Department to give lack of intent ``significant weight'' when
exercising its enforcement discretion.
    We remain of the view that intent is not an element of either
unfairness or deception.\23\ We also reject A4A and IATA's suggestion
to adopt an intent requirement. Such a requirement would place the
Department's view of unfairness and deception substantially out of step
with FTC precedent. It would also limit the Department's consumer
protection actions to only those matters where parties establish and
the Department can substantiate the private intent of carriers and
ticket agents. In light of the revisions to the Department's rulemaking
and enforcement procedures adopted in this final rule to enhance the
justifications for actions taken under the Department's statutory
authority, we view this as an unnecessary and unacceptably high bar. We
also decline to include in the regulation the weight that lack of
intent should be given in any future enforcement action, because the
proper exercise of enforcement discretion generally involves an
individualized consideration of a variety of factors.\24\
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    \23\ See 85 FR 11885 (intent is not required under Federal case
law interpreting the FTC Act, and noting that the definition of
``false advertisement'' in the FTC Act makes no reference to intent
to deceive).
    \24\ See 49 CFR 5.97 (``Where applicable statutes vest the
agency with discretion with regard to the amount or type of penalty
sought or imposed, the penalty should reflect due regard for
fairness, the scale of the violation, the violator's knowledge and
intent, and any mitigating factors (such as whether the violator is
a small business)'').
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3. Definition of Additional Terms
    Airlines urged the Department to define further the component
elements of unfairness and deception, such as ``substantial harm,''
``likely to mislead,'' ``reasonably avoidable,'' and ``acting
reasonably under the circumstances.'' In general, airlines asked the
Department to adapt into regulatory text certain aspects (but not all
of the aspects) of the FTC's guidance on these terms, as found in the
1980 Policy Statement on Unfairness and the 1983 Policy Statement on
Deception. We decline this invitation, because the regulatory text
adequately explains the necessary elements of unfairness and
deception.\25\ The Department will continue to look to the FTC Policy
Statements, as well as FTC precedent and the Department's own
precedent, for guidance in determining whether any specific practice
meets all of the component elements of unfairness and deception.
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    \25\ For example, A4A/IATA asks the Department to define
``substantial harm'' as not involving merely trivial or speculative
harm. A4A/IATA comment at 6, citing 1980 FTC Policy Statement on
Unfairness. We are of the view that this clarification is
unnecessary because the term ``substantial harm'' would necessarily
exclude ``trivial or speculative harm.'' (We also observe, however,
that in keeping with 15 U.S.C. 45(n), a practice is unfair not only
if it causes substantial harm, but if also it is likely to cause
substantial harm.)
    Similarly, A4A/IATA asks us to define ``not reasonably avoided''
as excluding circumstances where a consumer's willful, intentional,
or reckless conduct leads to harm (for example, by intentionally
taking advantage of a mistakenly published fare). We are of the view
that in general, the term ``not reasonably avoided'' would
necessarily exclude the types of self-imposed harms described by A4A
and IATA. We also note that mistaken fares are governed by a
specific regulation relating to post-purchase price increases (14
CFR 399.88). The Department has issued guidance with respect to
mistaken fares at https://www.transportation.gov/sites/dot.gov/files/docs/Mistaken_Fare_Policy_Statement_05082015_0.pdf.
    Finally, A4A, IATA, Southwest, and Spirit all stress under the
1983 FTC Policy Statement on Deception, deception should be judged
by reference to reasonable consumers as a whole, and that a single
consumer's unreasonable interpretation of a statement does not make
it deceptive. We agree that deception is judged in reference to a
reasonable consumer and believe that these concepts are adequately
reflected in the phrase ``acting reasonably under the
circumstances,'' regardless of whether the word ``consumer'' is
singular or plural.
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4. Definition of ``Practice''
    In the NPRM, the Department noted that neither the DOT nor the FTC
Act defines ``practice.'' The Department indicated that it did not
believe that a definition of ``practice'' was necessary, because its
aviation consumer protection regulations are always directed to
``practices'' rather than individual acts. The Department also
explained that its enforcement efforts include a determination that the
conduct in question reflects a practice or policy affecting multiple
consumers, rather than an isolated incident. We concluded that ``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.'' \26\ We
sought comment, however, on whether a definition of ``practice'' was
necessary.
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    \26\ 85 FR 11885.
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    We received relatively few comments on this issue. Consumer
advocacy organizations largely did not address it. Spirit, Travel Tech,
and FTC Commissioner Slaughter opined that a definition was not
necessary. The NBAA and USTOA urged the Department to adopt a
definition that reflected the Department's current understanding,
described above. A4A and IATA urged the Department to define
``practice'' as ``a pattern of repetitive conduct that harmed multiple
consumers rather than a single act.'' \27\ A4A and IATA stated that
under this standard, one ``mistaken advertisement'' would not be a
practice even if the same advertisement runs multiple times.\28\
Relatedly, A4A and IATA urged the Department to refrain from taking
enforcement action with respect to ``a single act or isolated acts by a
carrier,'' and instead take action only if the conduct is repeated
after a warning.\29\
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    \27\ Comment of A4A/IATA at 12.
    \28\ Id.
    \29\ Id. at 13.
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    After reviewing the comments on this issue, we remain of the view
that it is not necessary to define ``practice.'' The Department notes
that this issue will arise in relatively rare instances where the
Department seeks to take enforcement action in an area where no
specific regulation applies, and where there is a reasonable
disagreement over whether the conduct reflects a truly isolated
incident. In such cases, regulated entities will have the opportunity
to be heard and to present evidence that the conduct at issue does not
constitute a practice, as set forth in this rule.

C. Rulemaking Proposals

    In the NPRM, the Department proposed a hearing procedure that would
be available when the Department proposed a discretionary aviation
consumer protection rulemaking declaring a practice to be unfair or
deceptive. To summarize, after the issuance of an NPRM, interested
parties could request a formal hearing on the ground that the proposed
rule raised one or more disputed technical, scientific, economic, or
other complex factual issues. The General Counsel would have the
authority to grant or deny the hearing using criteria set forth in this
rule. If the hearing is granted, an Administrative Law Judge or other
neutral hearing officer would conduct the formal hearing using
procedures adapted from the Administrative Procedure Act (APA) or
similar rules adopted by the Secretary. The hearing officer would issue
a detailed report on the disputed factual issue(s), after which the
General Counsel would determine whether the proposed rule should be
continued, amended, or terminated.
    Consumer advocacy organizations strongly urged the Department not
to adopt these hearing procedures. They argued that the Department did
not demonstrate that the typical notice-and-comment procedures of the
APA were inadequate to gather a proper factual basis for discretionary
rulemakings. Some commenters noted that these hearing procedures were
unnecessary given the updates to the Department's general rulemaking
procedures in 49 CFR part 5. They also contended that formal hearing
procedures will inevitably create lengthy delays and numerous
opportunities for regulated entities to lobby against the proposed
rule. Some commenters argued that the proposed rulemaking has more
liberal standards for granting a hearing than there are for denying a
hearing; as a result, hearings will threaten to become the norm. Other
advocates observed that the proposal does not have a clear mechanism
for consumers to argue that a hearing is not necessary.
    FTC Commissioner Slaughter commented on the FTC's own experience
with similar formal hearing procedures, which were imposed by Congress,
known as ``Mag-Moss'' procedures.\30\ Commissioner Slaughter argued
that such hearing procedures do not make rulemaking impossible, but
``the great difficulty of undergoing a Mag-Moss rulemaking compared
with rulemaking under the APA should not be understated. The additional
procedural requirements represent an enormous drain on staff resources,
to say nothing of the additional time and effort they require of
stakeholders.'' \31\ She argued that there is a growing bipartisan
consensus for the FTC to issue privacy regulations not under Mag-Moss,
but instead under APA procedures. Commissioner Slaughter argued that if
the Department issues its own privacy regulations using the proposed
formal hearing procedures, the Department will ``create a regulatory
incongruence in which the Department is the slowest and least capable
regulator in the privacy arena.'' \32\
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    \30\ See 15 U.S.C. 57a (codifying the Magnuson-Moss Warranty--
Federal Trade Commission Improvement Act of 1975, Public Law 93-637
(``Mag-Moss'').
    \31\ Comment of Commissioner Slaughter at 3.
    \32\ Id. at 4.
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    Ticket agents also urged the Department not to adopt formal hearing
procedures, for many of the reasons cited by consumer advocates and
Commissioner Slaughter. Travel Tech noted the incongruity of the
Department requiring heightened hearing procedures only for its
highest-cost rules and for discretionary aviation consumer protection
rules, which generally do not impose nearly such a high economic
burden.\33\ Travel Tech also argued that the Department's institutional
expertise in aviation consumer protection matters ensures that formal
hearing will generally not be necessary. Travel Tech contended that
formal hearings should only be required when directed by Congress or
under very limited and unusual circumstances.\34\
---------------------------------------------------------------------------

    \33\ Comment of Travel Tech at 6-7.
    \34\ Id. at 9 (``Travel Tech thus proposes that a formal fact-
finding hearing would only be appropriate in the very unusual
circumstance when either Congress directs that a specific rule be
adopted only after an on the record hearing or when the agency's
General Counsel finds that a specific factual issue critical to a
claim that a particular practice is unfair or deceptive (and not an
economic or policy consideration) is in dispute and cannot be
adequately resolved through the usual notice-and-comment process.)''
---------------------------------------------------------------------------

    Airlines generally favored the proposal on the ground that it
provides regulated entities with an opportunity to test thoroughly the
factual assumptions on which discretionary consumer protections are
based. They argued that such hearings are helpful to determine whether
a market failure has taken place such that regulation is necessary.\35\
---------------------------------------------------------------------------

    \35\ A4A Comment at 16, citing 49 CFR 5.11 (before initiating a
rulemaking, the Department should identify ``the need for the
regulation, including a description of the market failure or
statutory mandate necessitating the rulemaking''). See also comment
of Spirit Airlines (arguing that the Department's repealed NPRM on
dissemination of ancillary fees to third party ticket sellers was
based on conflicting/misleading information regarding passengers'
ability to get this information). Spirit also argued that the
Department should engage in Advance Notice of Proposed Rulemaking
(ANPRM) to gather comment on whether practices are unfair or
deceptive.
---------------------------------------------------------------------------

    After careful review of the comments in this area, the Department
has decided to retain a hearing procedure that would be available when
the Department proposes a discretionary aviation consumer protection
rulemaking declaring a practice to be unfair or deceptive. This is
consistent with section 41712, 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 an unfair method of competition. The
Department sees value in offering additional hearing procedures for
low-cost discretionary aviation consumer protection rules where
scientific, technical, economic, or other factual issues are genuinely
in dispute. At the same time, the Department recognizes the concerns
raised by commenters that formal hearing procedures may add time to the
rulemaking process. As such, the hearing procedures for discretionary
aviation consumer protection rules set forth in this final rule differ
from the procedures set forth in the Department's general rulemaking
procedures in 49 CFR part 5 for the Department's high-impact or
economically significant rules. For example, under this final rule, the
General Counsel would be free to adopt more flexible rules for the
hearing than would be required for a high-impact or economically
significant rulemaking. The General Counsel also has more flexibility
with respect to appointing an appropriate hearing officer for such
hearings. Finally, the presiding officer is not required to issue a
report; the officer need only place on the docket minutes of the
hearing with sufficient detail as to reflect fully the evidence and
arguments presented on the disputed issues of fact, along with proposed
findings addressing those issues. By adopting hearing procedures for
discretionary aviation consumer protection rulemakings that are less
stringent and more flexible than the formal hearing procedures for high
impact or economically significant rules, the Department ensures that
interested parties have an opportunity to test factual assumptions on
which discretionary consumer protection rulemaking actions are based,
consistent with the underlying statutory authority under which the
Department is regulating, while minimizing the likelihood of extensive
delays or a drain on staff resources.
    These procedures, as modified, reflect the Department's continued
view that interested parties should have the opportunity to be heard
when the Department proposes discretionary rulemakings that may be
based on complex and disputed economic, technical, or other factual
issues. We also note that the ordinary notice and comment procedures of
the APA remain the default process: To obtain a hearing, the party
requesting the hearing has the initial burden of showing that, among
other factors, the ordinary notice and comment procedures are unlikely
to provide an adequate examination of the issues to permit a fully
informed judgment. The rule retains the safeguard that the General
Counsel may decline a hearing if it would unreasonably delay the
rulemaking. We also generally disagree with commenters who stated that
the standards for granting a hearing are necessarily more lenient than
the standards for denying them.
    We also note that the Department's use of similar procedures to
supplement traditional notice-and-comment is not new.\36\ For example,
in 2011, the Department's Bureau of Transportation Statistics held a
public meeting to gather information about industry practices for
processing and accounting for baggage and wheelchairs, in connection
with a pending rulemaking.\37\ More recently, the Department asked the
Architectural and Transportation Barriers Compliance Board (Access
Board) to hold a hearing to gather public input on potential new
standards for on-board wheelchairs, also in connection with a pending
rulemaking.\38\ The Department recognizes certain differences between
the public meetings that sometimes were held in the context of earlier
rulemakings \39\ and the hearings contemplated by this rule. For
example, hearings will be held before a neutral officer, who must make
findings on the record, while public meetings were previously led by
staff from the government office involved in the rulemaking and
findings were not separately summarized and placed on the record but
rather were noted in the preamble if they were relied on in the
rulemaking. Moreover, this rule clearly identifies procedures to all
interested persons that hearings may be requested, while previously
there was no formal process to request a public meeting so they were
more likely to have been instituted by the Department or requested only
by those parties that knew that the Department was open to holding
public meetings in appropriate instances. In sum, while the hearing
procedures reflected in the final rule may result in some additional
delays to the rulemaking process beyond what was experienced with
public meetings, on the whole the new procedures will promote fairness,
due process, and well-informed rulemaking, without unduly delaying the
proceeding itself, and represent a reasonable and balanced approach
consistent with the Department's rulemaking and enforcement policies.
---------------------------------------------------------------------------

    \36\ See https://cms7.dot.gov/regulations/rulemaking-process,
under ``May an agency supplement the APA requirements?'' (``We may
use public meetings or hearings before or after a proposal is issued
for a variety of reasons. Public meetings allow us to ask questions.
They allow for interaction among participants with different views
on the issues involved, and they provide a better opportunity for
members of the public who believe they are more effective making
oral presentations than submitting written comments.'')
    \37\ See https://www.regulations.gov/document?D=RITA-2011-0001-0280.
    \38\ 84 FR 43100 (August 20, 2019); see https://www.regulations.gov/document?D=ATBCB-2019-0002-0001.
    \39\ E.g., 77 FR 25105 (April 27, 2012).
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D. Enforcement Proposals

    In the NPRM, the Department proposed to codify certain enforcement
practices. First, the Department proposed that before the Office of
Aviation Consumer Protection determined how to resolve a matter
involving a potential unfair or deceptive practice, it would provide an
opportunity for the alleged violator to be heard and to present
relevant evidence in its defense. Such evidence would include, but not
be limited to, the following: (1) Evidence that the consumer protection
regulation at issue was not violated; (2) evidence that the conduct was
not unfair or deceptive (if no specific regulation applied); and (3)
evidence that that consumer harm was limited or that the alleged
violator has taken steps to mitigate the harm. The Department also
proposed that when the Office issued a consent order declaring that a
practice was unfair or deceptive, and no specific regulation applied to
the conduct at issue, then the Office would explain the basis for its
finding that the conduct was unfair or deceptive, using the definitions
set forth in this rule. Finally, the Department clarified that if the
Office took enforcement action against a regulated entity by filing a
complaint with an Administrative Law Judge, then the entity would have
the opportunity for notice and a hearing as set forth in 14 CFR part
302. We noted that these procedures reflected the longstanding
practices of the Office of Aviation Consumer Protection.
    We received few comments on this element of the proposed rule. Most
consumer advocates did not opine on the issue, while National Consumers
League and Consumer Action advised that they were unnecessary. Travel
Fairness Now generally did not object to the measures, but urged the
Department to declare that an unfair or deceptive practice with limited
consumer harm would still be subject to enforcement action. Airlines
and ticket agents generally supported these proposals.
    In the final rule, we will adopt these measures as proposed in the
NPRM. They reflect current practice, and afford reasonable due process
to regulated entities. These specific measures are also consistent with
the general principles set forth in the Department's

recent final rule relating to enforcement.\40\
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    \40\ See, e.g., 49 CFR 5.57 (``Enforcement adjudications require
the opportunity for participation by directly affected parties and
the right to present a response to a decision maker, including
relevant evidence and reasoned arguments''); 49 CFR 5.59
(Department's enforcement action should conclude with, among other
things, a ``well-documented decision as to violations alleged and
any violations found to have been committed.'')
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E. Privacy, Air Ambulance, and Frequent Flyer Programs

    The Department solicited comment on whether the general definitions
of ``unfair'' or ``deceptive'' were sufficient to give notice to
stakeholders of what constitutes unfair or deceptive practices with
respect to the specialized fields of privacy, air ambulance service,
and frequent flyer programs. While we did not receive specific comments
related to frequent flyer programs, we did receive comment with respect
to privacy and air ambulance service.
    A4A asked the Department to declare that the Department has
exclusive jurisdiction over airlines with respect to privacy practices.
A4A also asked the Department to adopt detailed privacy regulations.
A4A's proposal would declare that ``mishandling private information may
be considered an unfair or deceptive practice,'' and that ``specific
examples of unfair or deceptive practices with regard to the private
information of consumers include'' violating the terms of the airline's
privacy policy, failing to maintain reasonable data security measures
for passengers' private information, and violating various privacy
statutes.
    We generally agree with the substance of A4A's proposal; indeed, it
appears to be adapted from the privacy page of the Department's
consumer protection website, which recites many of these
principles.\41\ Nevertheless, we decline to adopt it for procedural
reasons. As noted above, one of the Department's stated policies is to
improve transparency and public participation in the rulemaking
process. If the Department were to adopt detailed privacy regulations
affecting air transportation and the sale of air transportation, it
should first engage in the full notice-and-comment procedures of the
APA, as well as the procedures set forth in this final rule.
---------------------------------------------------------------------------

    \41\ https://www.transportation.gov/individuals/aviation-consumer-protection/privacy.
---------------------------------------------------------------------------

    Next, we received comments from insurers, air ambulance providers,
and other interested parties about the regulation of air ambulance
providers. The National Association of Insurance Commissioners and nine
researchers on health law, economics, and policy \42\ urged the
Department to declare that balance billing is an unfair practice
because it imposes substantial harm on patients who had no ability to
avoid the charges, without countervailing benefits to consumers or to
competition. Separately, the researchers urged the Department to find
that charging full out-of-network prices for air ambulance service is
an unfair practice, in part because of its effect on the private
insurance market. Air ambulance operators \43\ argued that specific
regulation of air ambulance providers in this rulemaking would be
premature at best, because the Air Ambulance and Patient Billing (AAPB)
Advisory Committee has been established to address these issues
comprehensively. Air ambulance operators also argued that balance
billing should not be considered an unfair or deceptive practice. They
contend that much of the consumer harm from balance billing arises from
the practices of insurers, rather than air ambulance providers (for
example, by under paying out-of-network air ambulance bills, or denying
claims that were medically necessary). They also argue that many
patients who receive a large balance bill ultimately pay a small
fraction of that amount out-of-pocket.
---------------------------------------------------------------------------

    \42\ See https://www.regulations.gov/document?D=DOT-OST-2019-0182-0193.
    \43\ Association of Air Medical Services, Air Methods, and PHI
Health, LLC.
---------------------------------------------------------------------------

    After consideration of the comments submitted on this issue, we
decline to adopt specific regulations relating to air ambulance
providers. Section 418 of the FAA Reauthorization Act of 2018 (FAA
Reauthorization Act) requires the Secretary, in consultation with the
Secretary of Health and Human Services, to establish an advisory
committee to review options to improve the disclosure of charges and
fees for air medical services, better inform consumers of insurance
options for such services, and protect consumers from balance billing.
The FAA Reauthorization Act also contemplates that the Advisory
Committee's report and recommendations will serve as the basis for
future regulations or other guidance as deemed necessary to provide
other consumer protections for customers of air ambulance
providers.\44\ We agree that the most prudent course of action is to
allow the work of the AAPB Advisory Committee to run its course, rather
than to issue more detailed regulations relating to air ambulance
providers in this final rule.
---------------------------------------------------------------------------

    \44\ For further information about the AAPB Advisory Committee,
see https://www.transportation.gov/airconsumer/AAPB and the
Committee's docket, available at https://www.regulations.gov/docket?D=DOT-OST-2018-0206.
---------------------------------------------------------------------------

F. Other Comments

    We will address briefly a number of comments that do not fall
squarely within the categories described above. First, A4A and IATA
urge the Department to adopt a ``clear and convincing evidence''
standard for enforcement of unfair and deceptive practices. We decline
to enact such a burden of proof standard here, particularly in light of
the fact that most enforcement cases are adjudicated not through the
courts, but rather through voluntary consent orders. We also note that
during these informal proceedings, regulated entities have the
opportunity to present mitigating evidence as set forth above.
    Next, A4A and IATA urge the Department to require the Office of
Aviation Consumer Protection to present evidence on all of the elements
of unfairness and deception, even in cases where a specific regulation
enacted under the authority of section 41712 applies to the conduct in
question. We decline this request because doing so would be unduly
burdensome with limited or no benefit. By enacting a regulation under
the authority of section 41712, the Department has already determined,
after notice and comment, that the conduct in question is unfair or
deceptive; in such cases, it should be sufficient to establish that the
regulation itself was violated.\45\ A4A and IATA also urge that they
should be able to present mitigating evidence with respect to all of
the prongs of unfairness and deception. We note that in informal
enforcement proceedings involving the violation of specific
regulations, regulated entities would have the opportunity to present
relevant evidence, including evidence that consumer harm was limited.
---------------------------------------------------------------------------

    \45\ See Comment of Travel Fairness Now (urging the Department
to clarify that it will not use this final rule as a vehicle for
repealing existing regulations, because they were well justified).
---------------------------------------------------------------------------

    Next, A4A and IATA argue that the Office of Aviation Consumer
Protection should affirmatively furnish ``exculpatory evidence'' in its
possession. We agree with this practice, and the Office is required to
do so under the Department's existing enforcement procedures, which are
set forth in another rule.\46\
---------------------------------------------------------------------------

    \46\ 49 CFR 5.89 (duty to disclose exculpatory evidence).

---------------------------------------------------------------------------

G. Formal Enforcement Proceedings

    In the NPRM, the Department proposed to clarify that if regulated
entities do not enter into a negotiated settlement with the Office of
Aviation Consumer Protection with respect to potential violations of
section 41712, then the Office may initiate a formal enforcement
proceeding, and that hearings are available through this process. The
Department did not receive comments on this provision, which restates
current procedures found in 14 CFR part 302. In this final rule, the
Department has made nonsubstantive editorial changes to the regulatory
text such as adding a citation to a specific section of part 302. The
Department has determined that good cause exists to dispense with
notice and comment for these nonsubstantive editorial changes because
they are ministerial in nature; therefore, public comment is
unnecessary under 5 U.S.C. 553(b)(B).

III. 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 (49 CFR Part 5)

    This final rule is a significant regulatory action under section
3(f) of E.O. 12866, ``Regulatory Planning and Review'' (Oct. 4, 1993),
supplemented by E.O. 13563, ``Improving Regulation and Regulatory
Review'' (Jan. 21, 2011). Accordingly, the Office of Management and
Budget (OMB) has reviewed it under that Order. This final rule is
issued in accordance with the Department's rulemaking procedures found
in 49 CFR part 5 and DOT Order 2100.6.
    This rule primarily involves agency procedure and interpretation.
It clarifies how the Department interprets the terms ``unfair'' and
``deceptive'' and requires enhanced departmental procedures for
regulation and enforcement in the area of aviation consumer protection.
Clarifying and explicitly defining terminology advances the
Department's goal of improved transparency. Adopting enhanced
procedures for future rulemaking and enforcement activities will help
to ensure that the activities are rooted in fairness, due process, and
an adequate factual foundation. These goals are described in the
Department's final rule, ``Administrative Rulemaking, Guidance, and
Enforcement Procedures.'' \47\
---------------------------------------------------------------------------

    \47\ 84 FR 71714 (Dec. 27, 2019).
---------------------------------------------------------------------------

    This rule aligns the Department's policies and rules involving
unfairness and deception in aviation consumer protection explicitly
with principles adopted by the FTC. In the Department's view, aligning
the terms ``unfair'' and ``deceptive'' does not represent a substantive
departure from past DOT practice. The definitions simply provide
additional clarification to the public and regulated industries, and
are not expected to affect the Department's ability to prohibit unfair
and deceptive practices. While clarifying the terms is not expected to
lead to changes that would impact the Department, public, or any
regulated entity, it provides a foundation for the other elements of
this rule pertaining to future rulemaking and enforcement actions.
Effects on Future Rulemakings
    This final rule will require the Department to use specific
definitions of the terms ``unfair'' and ``deceptive'' when declaring
certain practices to be unfair or deceptive in future discretionary
rulemakings.
    Specifically, this final rule requires the Department to support a
finding of an ``unfair'' practice by demonstrating that the harm to
consumers is (1) substantial; (2) not reasonably avoidable; and (3) not
outweighed by offsetting benefits to consumers or competition.
Similarly, it requires the Department to support a finding that a
practice is ``deceptive'' by showing that: (1) The practice actually
misleads or is likely to mislead consumers; (2) who are acting
reasonably under the circumstances; (3) with respect to a material
matter.
    The Department has declared certain practices to be unfair or
deceptive in several prior rulemakings, including the full fare
advertising rule (14 CFR 399.84) and oversales rule (14 CFR part 250).
In the supporting analysis for these rulemakings, the Department
justified its finding of unfairness or deception without using the full
three-pronged analysis for unfairness or deception found in this final
rule.\48\
---------------------------------------------------------------------------

    \48\ See 76 FR 23110 (April 25, 2011).
---------------------------------------------------------------------------

    In other instances, the Department has based its discretionary
regulations on both section 41712 and other statutes. For example, the
rule requiring on-time performance information during booking (14 CFR
234.11(b)) was based on both section 41712 and section 41702 (requiring
carriers to provide safe and adequate interstate air
transportation).\49\ While the Department partly relied on a finding of
consumer harm under section 41712 as the basis for that requirement, it
did not engage in the full three-part analysis for unfairness found in
this final rule.
---------------------------------------------------------------------------

    \49\ See 73 FR 74586 (December 8, 2008) (NPRM: ``Enhancing
Passenger Airline Protections'').
---------------------------------------------------------------------------

    Demonstrating support for findings of unfairness or deception
requires an analysis of data, which is generally collected and
organized as part of a regulatory impact analysis (RIA). Factors such
as potential harm to consumers, benefits to consumers or competition,
whether a consumer can avoid harm, and whether a harm is ``material''
relate to the economic benefits and costs of regulating a practice.
These benefits and costs are analyzed in an RIA and offer a rationale
for finding a practice ``unfair'' or ``deceptive.''
    The Department customarily prepares a RIA or other regulatory
evaluation as part of the E.O. 12866 review process for rulemakings
involving aviation consumer protection. Further, the Department's final
rule on ``Administrative Rulemaking, Guidance, and Enforcement
Procedures'' requires that all rulemakings including a supporting
economic analysis. The Department will therefore need to continue to
collect, organize, and analyze data and facts to address economic
impacts.
    The Department's current practice of collecting and analyzing data,
either for E.O. 12866 or departmental review, allows it to generate the
necessary factual basis to support an explicit discussion of unfair or
deceptive findings with little additional effort. While this final rule
may result in the Department expending additional resources to prepare
future discretionary aviation consumer protection rules and supporting
analyses, the resources are expected to be small and more than
justified by better, more deliberative internal decisions. Better
internal decisions will improve rulemaking efficiency by reducing the
resources needed to follow E.O. 12866 processes. The additional
procedures required by this rule are expected to result in improved
regulations that achieve their goals of protecting consumers without
imposing any more burdens on regulated industry than necessary.
    This rule does not require that the Department review existing
rules to determine whether previous ``unfair'' or ``deceptive''
declarations would have been supported by the criteria described above.
Existing rules are subject to retrospective review requirements under
the Department's rulemaking procedures found in 49 CFR part 5, DOT
Order 2100.6, and other legal requirements, as applicable. The
Department will consider whether

existing discretionary aviation consumer protection rules such as full
fare advertising, oversales and refunds meet the standards found in
this rule when performing the retrospective reviews, but it is not
possible to judge the impact of this rule on the rules until the
Department conducts the reviews. The Department considers many factors
when conducting its retrospective reviews, including the continuing
need for the rule and whether the rule has achieved its intended
outcomes. It is unlikely that an existing rule would fail the standards
set forth in this rule without failing existing standards that would
prompt the Department to revise or rescind the rule. Judging the impact
of this rule is confounded further because some existing rules do not
rely solely on section 41712, as is the case with the rule requiring
on-time performance information during booking noted above.
    Under this rule, future discretionary rulemakings could be subject
to a hearing procedure. The rule allows interested parties to request a
hearing when the Department proposes a rule to classify a practice as
unfair or deceptive, when the issuance of the NPRM raises one or more
disputed technical, scientific, economic, or other complex factual
issues, or when the NPRM may not satisfy the requirements of the
Information Quality Act. Allowing interested parties an opportunity for
a hearing ensures that they can test the information informing
discretionary consumer protection regulations. However, following this
rule's requirements to provide a sufficient factual basis to support an
``unfair'' or ``deceptive'' finding should reduce the need for the
Department to hold such hearings.
    Nevertheless, requests for hearings are expected to occur
occasionally. While the Department lacks data that would allow it to
distinguish the costs and time of conducting the hearings from the
costs of conducting its normal business operations, the Department
believes that any incremental costs and time would be small relative to
the baseline scenario in which the Department did not enact the rule.
Previous discretionary rulemakings involving unfair and deceptive
practices in aviation consumer protection have attracted substantial
interest from consumer advocates, airline industry advocates, and the
general public. The Department engaged with these interested parties
without the benefit of a formal process, and the engagements required
investments of time and resources by the Department and interested
parties. Because these engagements were informal and with uncertain
scopes, they were not as efficient as would be expected under a more
formal process as would be the case under this rule. Without a formal
process, parties tend to overinvest in preparation, incurring
unnecessary costs, or underinvest, leading to additional engagements
and administrative costs. For future rulemakings, establishing formal
hearing procedures may reduce costs and time for both groups by
increasing certainty about opportunities for engagement.
    The hearing procedures established in this final rule are less
stringent and more flexible than the hearing procedures for high-impact
or economically significant rules detailed in the Department's general
rulemaking procedures in 49 CFR part 5 and DOT Order 2100.6. In
addition, the Department has experience using hearing procedures to
supplement traditional notice-and-comment rulemaking, as described
earlier for baggage and wheelchair accounting and for potential on-
board wheelchair standards. Finally, the hearing procedures will
provide consistency in the Department's exercise of its 41712 authority
by mirroring the statute's hearing requirement to ensure rulemakings
enacted under the same authority ensure due process, and are grounded
in fairness and supported by an adequate factual foundation.
    The Department believes that its experience with hearings, coupled
with reduced complexity of the hearing procedures, will limit the
additional staff resources needed to comply with the requirement and
prevent it from leading to excessive delays in issuing aviation
consumer protection rules. The General Counsel may also decline a
hearing request if following the procedures would unreasonably delay
the rulemaking. When deciding to decline a hearing request, the General
Counsel will balance the impact of the hearing on departmental
resources against the potential value of any information to be
collected during the hearing process, and consider the quality of
evidence presented, including but not limited to that presented by
interested parties and in the Department's RIA and other supporting
analyses.
Effects on Future Enforcement Actions
    This final rule adds requirements for future enforcement actions
analogous to the requirements for discretionary aviation consumer
protection rulemakings. The Department will use the same definitions of
unfair and deceptive when taking enforcement action against an airline
or ticket agent for unfair or deceptive practices. In future
enforcement actions, the Department would also provide the airline or
ticket agent with the opportunity to be heard and to present mitigating
evidence. The opportunity for a hearing before a finding that any air
carrier, foreign air carrier, or ticket agent is engaged in an unfair
or deceptive practice or an unfair method of competition already exists
under section 41712. Finally, in future enforcement orders, if a
specific regulation does not apply to the practice in question, the
Department would explain the basis for its finding that a practice was
unfair or deceptive.
    As explained in the NPRM, the Department views these measures as a
codification of existing practice, rather than a change in policy,
because the Department has typically relied on the explicit definitions
of ``unfair'' and ``deceptive'' in prior enforcement orders. Applying
these terms and providing an opportunity for a hearing in enforcement
proceedings is largely noncontroversial, and the Department received
few comments on this element of the rule at the NPRM stage. The
Department does not expect to need to expend additional resources in
aviation consumer protection proceedings due to this rule, or expect
that the rule will increase the amount of time needed to come to
resolution. The Department believes that regulated entities could see
some benefit, however, from upfront clarification of the guidelines and
criteria that the Department follows when enforcing aviation consumer
protection regulations involving unfair and deceptive practices.
    This rule is not an E.O. 13771 regulatory action because it is does
not impose any more than de minimis regulatory costs. This final rule
provides an additional mechanism for industry to provide input to the
Department on its discretionary aviation consumer protection
rulemakings. Private industry should not experience more than minimal
additional costs relative to the status quo because it already engages
in significant information exchange with the Department. Industry has
the option of continuing use of historical mechanisms for providing
input to discretionary aviation consumer protection, and is not
required to make use of the alternatives set forth in this rule. The
Department should not experience significant additional costs because
it has considerable experience conducting analysis in support of
aviation consumer protection rules as well as hearings analogous to
those in

this rule. Such efforts are consistent with the Department's normal
business operations, and any additional resources needs could be
accommodated through a simple and temporary realignment of internal
resources.

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 has determined that this rule does not have a
significant economic impact on a substantial number of small entities.

C. Executive Order 13132 (Federalism)

    This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13132 (``Federalism''). This
final rule 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 final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13175 (``Consultation and
Coordination with Indian Tribal Governments''). Because this final rule
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 final rule.

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.

G. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this final
rule 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 to 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.

H. Privacy Act

    Anyone may search the electronic form of all comments received into
any of OST's dockets by the name of the individual submitting the
comment, or signing the comment if submitted on behalf of an
association, business, labor union, or any other entity. You may review
USDOT's complete Privacy Act Statement published in the Federal
Register on April 11, 2000, at 65 FR 19477-8.

I. Statutory/Legal Authority for This Rulemaking

    This rulemaking is issued under the authority of 49 U.S.C.
40113(a), which grants the Secretary the authority to take action that
the Secretary considers necessary to carry out 49 U.S.C. Subtitle VII
(Aviation Programs), including conducting investigations, prescribing
regulations, standards, and procedures, and issuing orders.

J. Regulation Identifier Number

    A Regulation Identifier Number (RIN) is assigned to each regulatory
action listed in the Unified Agenda of Federal Regulations. The
Regulatory Information Service Center publishes the Unified Agenda in
Spring and Fall of each year. The RIN set forth in the heading of this
document can be used to cross-reference this action with the Unified
Agenda.

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 amends 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).

Subpart F--Policies Relating to Rulemaking Proceedings

0
2. Section 399.75 is added to subpart F to read as follows:

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 adhere to 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 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 paragraph (b)(2) or (3) of this section.
    (5) Hearing notice. If the General Counsel grants the petition, the
General Counsel shall publish notification of the hearing in the
Federal Register. The document 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 hearing under this section shall be
conducted using procedures approved by the General Counsel, 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 a neutral officer to
preside over the hearing and shall provide a reasonable opportunity to
question the presenters.
    (iii) After the hearing and after the record of the hearing is
closed, the hearing officer shall place on the docket minutes of the
hearing with sufficient detail as to fully reflect the evidence and
arguments presented on the issues, along with proposed findings
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 proposed findings. The complete
record of the hearing shall be made part of the rulemaking record.
    (7) Actions following hearing. (i) Following the completion of the
hearing process, the General Counsel shall consider the record of the
hearing, including the hearing officer's proposed findings, 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 document 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.
    (8) Interagency review process. The hearing procedures under this
paragraph (b)(8) 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.

Subpart G--Policies Relating to Enforcement

0
3. Section 399.79 is added to subpart G to read as follows:

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) Informal enforcement
proceedings will be conducted pursuant to the policies and procedures
found in 49 CFR part 5, subpart D. 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
Consumer Protection 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) of this section; 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
Consumer Protection 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 Consumer Protection may issue a notice instituting an
enforcement proceeding before an administrative law judge pursuant to
14 CFR 302.407. After the issues have been formulated, if the matter
has not been resolved through pleadings or otherwise, the parties will
receive reasonable written notice of the time and place of the hearing
as set forth in 14 CFR 302.415.

    Issued this 24th day of November, 2020, in Washington, DC, under
authority delegated in 49 CFR 1.27(n).
Steven G. Bradbury,
General Counsel.
[FR Doc. 2020-26416 Filed 12-4-20; 8:45 am]
BILLING CODE 4910-9X-P


[Federal Register: December 18, 2007 (Volume 72, Number 242)]
[Proposed Rules]
[Page 71608-71610]
[DOCID:fr18de07-9]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2007-29373; Airspace Docket No. 7-ASW-10]

Proposed Establishment of Class D Airspace; Georgetown, TX

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This action proposes to establish Class D airspace at
Georgetown Municipal Airport, TX. The establishment of an air traffic
control tower has made this action necessary for the safe control of
aircraft within this airspace.

DATES: Comments must be received on or before February 1, 2008

ADDRESSES: Send comments on this proposal to the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. You
must identify the docket number FAA-2007-29373/Airspace Docket No. 7-
ASW-10, at the beginning of your comments. You may also submit comments
on the Internet at http://www.regulations.gov. You may review the

public docket containing the proposal, any comments received, and any
final disposition in person in the Dockets Office between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The Docket Office
(telephone 1-800-647-5527) is on the ground floor of the building at
the above address.

FOR FURTHER INFORMATION CONTACT: Rich Hall, Central Service Center,
System Support Group, Federal Aviation Administration, Southwest
Region, Fort Worth, TX 76193-0530; at telephone:<PHONE_NUMBER>

SUPPLEMENTARY INFORMATION:

Comments Invited

    Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments, as
they may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers and be submitted in
triplicate to the address listed above. Commenters wishing the FAA to
acknowledge receipt of their comments on this notice must submit with
those comments a self-addressed, stamped postcard on which the
following statement is made: ``Comments to Docket No: FAA-2007-29373/
Airspace Docket No. 7-ASW-10.'' The postcard will be date/time stamped
and returned to the commenter.

Availability of NPRMs

    An electronic copy of this document may be downloaded through the
Internet at http://www.regulations.gov Recently published rulemaking documents can also be accessed through the FAA's Web page at http://.

www.faa.gov or the Superintendent of Document's Web page at http://www.access.gpo.gov/nara
.

    Additionally, any person may obtain a copy of this notice by
submitting a request to the Federal Aviation Administration (FAA),
Office of Air Traffic Airspace Management, ATA-400, 800 Independence
Avenue, SW., Washington, DC 20591, or by calling<PHONE_NUMBER>.
Communications must identify both docket numbers for this notice.
Persons interested in being placed on a mailing list for future NPRMs
should contact the FAA's Office of Rulemaking<PHONE_NUMBER>, to
request a copy of Advisory Circular No. 11-2A, Notice of Proposed
Rulemaking Distribution System, which describes the application
procedure.

The Proposal

    This action proposes to amend Title 14, Code of Federal Regulations
(14 CFR) part 71 by establishing a Class D airspace area extending
upward from the surface to and including 3,300 feet MSL within a 5.0-
mile radius of Georgetown Municipal Airport, Georgetown, TX. The
establishment of an air traffic control tower has made this action
necessary. The intended effect of this proposal is to provide
controlled airspace for flight operations at Georgetown Municipal
Airport, TX. The area would be depicted on appropriate aeronautical
charts.
    Class D airspace are published in Paragraph 5000 of FAA Order
7400.9R, dated August 15, 2007, and effective September 15, 2007, which
is incorporated by reference in 14 CFR 71.1. The Class D airspace
designation listed in this document would be published subsequently in
the Order.
    The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore, (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a Regulatory Evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule, when promulgated, will not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.
    This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the
FAA is charged with prescribing regulations to assign the use of the
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
since it improves the safety of aircraft executing IFR procedures at
Georgetown Municipal Airport, TX.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (Air).

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, CLASS B, CLASS C, CLASS D, AND
CLASS E AIRSPACE AREAS; AIRWAYS; ROUTES; AND REPORTING POINTS

    1. The authority citation for part 71 continues to read as follows:

    Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

    2. The incorporation by reference in 14 CFR 71.1 of Federal
Aviation Administration Order 7400.9R, Airspace Designations and
Reporting Points, dated August 15, 2007, and effective September 15,
2007, is amended as follows:

Paragraph 5000 Class D Airspace.

* * * * *

ASW TX D Georgetown, TX [New]

Georgetown Municipal Airport, TX
    (Lat. 30[deg]40'44'' N., long. 97[deg]40'46'' W.)

    That airspace extending upward from the surface to and including
3,300 feet MSL within a 5.0-mile radius of Georgetown Municipal
Airport. This Class D airspace area is effective during the specific
dates and times established in advance by a Notice to Airmen. The
effective date and time will thereafter be continuously published in
the Airport/Facility Directory.*COM019*
* * * * *

    Issued in Fort Worth, TX on December 5, 2007.
Rick Farrell,
Acting Manager, System Support Group, ATO Central Service Center.
[FR Doc. 07-6064 Filed 12-17-07; 8:45 am]

BILLING CODE 4910-13-M