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What You Need To Know About FAA Civil Penalty Actions

by Greg Reigel 30. March 2011 10:38
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In recent months we have seen the Federal Aviation Administration ("FAA") aggressively pursuing civil penalty actions against various air carriers and maintenance facilities. In some instances the penalties proposed by the FAA have been millions of dollars. And although the media has a field day each time the FAA announces proposed civil penalties, we usually don't hear anything else about the case until it is resolved with a civil penalty actually assessed against the targeted air carrier or maintenance facility. If the proposed penalty is withdrawn or if the air carrier or maintenance facility beats the charges, we rarely hear anything at all.

In this article I would like to fill in that gap in time by providing you with an overview of the processes and procedures that occur from the time the FAA proposes a civil penalty until the case is resolved.

The Civil Penalty Action


When the FAA believes a certificate holder (whether an airman, air carrier, repair station or otherwise), it may pursue enforcement action against the offending party. The action can be against the party's certificate, also known as a "Certificate Action." In this situation the FAA seeks to suspend or revoke the party's certificate. Alternatively, the FAA could seek to impose a civil penalty or fine against the party, also known as a "Civil Penalty Action."

Civil Penalty Actions are typically used against companies or entities, as opposed to individuals, that hold FAA certificates. However, the FAA will often bring a civil penalty action against an individual to avoid the six month limitation of the NTSB's stale complaint rule in a certificate action, and benefit from the longer 2 year limitation applicable to civil penalty actions. Thus, if the FAA fails to initiate a certificate action within six months of discovering an alleged violation, it will resort to a civil penalty action which allows the FAA 2 years within which to initiate the action.

The FAA determines the amount of the civil penalty using the Sanction Guidance Table in FAA Order 2150.3B, Appendix B, which provides ranges for civil penalties based upon the type and size of the certificate holder, the type of alleged violation and the number of alleged violations. If the amount of the proposed civil penalty is less than $50,000, then the FAA handles the action. However, if the proposed civil penalty is more than $50,000, then the United States Attorney's office handles prosecution of the action. (For purposes of this article we will assume a case is being handled by the FAA).

A Civil Penalty Action is initiated when the FAA serves the certificate holder with a "Notice of Proposed Civil Penalty (the "Notice"). The Notice recites the relevant facts (usually discovered by the FAA during an investigation, inspection or audit), the regulations the FAA believes the certificate holder has violated and the proposed civil penalty.

Options for Responding to the Notice


The Notice is accompanied by an explanation of options for responding to the Notice. The certificate holder has the choice of the following seven options:

  1. Pay the penalty as proposed by the FAA;

  2. Submit written information and evidence demonstrating that a violation of the regulations was not committed or that; if it was, the facts and circumstances do not warrant the proposed civil penalty. The FAA will then consider this information in determining whether a civil penalty should be assessed and the amount of any such civil penalty;

  3. Submit written information and records indicating that the certificate holder is financially unable to pay the proposed civil penalty, or showing that payment of the proposed penalty would put the certificate holder out of business;

  4. Request that a civil penalty be assessed in a specific amount less than that proposed in the Notice, or that no civil penalty be assessed and provide the reasons and support for the requested reduction. The FAA will then consider this information when it determines whether the reduced amount should be assessed. If the FAA accepts the reduced amount that constitutes the certificate holder's agreement that an Order Assessing Civil Penalty in that amount may be issued and the certificate holder waives its right to a hearing regarding the civil penalty;

  5. Request an informal conference during which the certificate holder can discuss the matter with an FAA attorney and present any information the certificate holder might otherwise have wanted to provide under options 1-4;

  6. Request that the FAA impose a civil penalty without making findings of violations, providing reasons and any supporting documentation along with the request. If the FAA accepts the request, that constitutes the certificate holder's agreement that a Compromise Order in that amount may be issued and the certificate holder waives its rights to a hearing; or

  7. Request a formal evidentiary hearing before a Department of Transportation administrative law judge ("ALJ") at which the ALJ will decide issues of fact and law and will determine whether, and in what amount, a civil penalty will be assessed against the certificate holder.

The certificate holder must respond to the FAA with one of the seven options within 30 days after receiving the Notice. If the certificate holder selects any option other than option 7 and the case settles, either the case will be dismissed, which doesn't happen very often, or an order for a reduced civil penalty will be issued, which happens frequently. If the latter, then the certificate holder simply pays the penalty and the case is closed. If the case does not settle, or if the certificate holder elects option 7, then a hearing is held before an ALJ.

The Evidentiary Hearing


Prior to the hearing, the FAA issues a complaint that contains the same factual and regulatory allegations contained in the Notice. The certificate holder then submits an answer specifically admitting or denying the allegations contained in the FAA's complaint.

The certificate holder and FAA may also engage in discovery before the hearing. Discovery allows each party to ask the other to identify witnesses and produce evidence that will be introduced at the hearing and also provides an opportunity to depose witnesses. Through discovery, the certificate holder should be able to ascertain all of the facts and evidence upon which the FAA will be relying when it presents its case to the ALJ.

At the hearing, the FAA has the burden of proving its allegations by a preponderance of reliable, probative and substantial evidence. The FAA will present witness testimony and evidence and the certificate holder has the opportunity to cross-examine the FAA's witnesses and to present witnesses and evidence on its own behalf. At the end of the hearing, the ALJ will issue a decision regarding whether a civil penalty is supported by the facts and law, and if it is, the appropriate amount.

Appeal


If either the certificate holder or the FAA is unhappy with the ALJ's decision, that party may file a notice of appeal with the "FAA administrator." Yes, the same administrator responsible for the FAA. To make matters worse, the FAA Chief Counsel's office, which also prosecutes civil penalty cases, writes the decisions for the FAA administrator. If you are thinking this, at a minimum, appears unfair and biased, you are not alone. However, such is the system established by the current regulations.

The regulations require that the FAA administrator review the record, the briefs on appeal, and the oral argument, if any, and then issue the final decision and order of the FAA administrator on appeal. The FAA administrator may (1) affirm, modify, or reverse the initial decision of the ALJ; (2) make any necessary findings; or (3) remand the case for any proceedings that the FAA administrator determines may be necessary. If either party is unsatisfied with the FAA administrator's decision, that decision can be appealed to the United States Court of Appeals pursuant to a petition for review.

Conclusion


As you can see, a lot can happen after the FAA proposes a civil penalty against a certificate holder. Knowing the process and the options available, along with the assistance of an aviation attorney, can help you respond and successfully resolve an FAA civil penalty action.

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Greg Reigel

GlobalAir.com Expands Aircraft Comparisons Tool capabilities

by GlobalAir.com 15. March 2011 10:58
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GlobalAir.com Expands Aircraft
Comparisons Tool capabilities
New tool’s success spurs update for specific type aircraft
 
FOR IMMEDIATE RELEASE
March 15, 2011
  LOUISVILLE, Ky. — Since the revamp of its successful Aircraft Exchange site in early 2010, Globalair.com keeps adding new tools. The latest is an expansion of the popular tool used for researching aircraft.

  Globlair.com’s comparison tool has been expanded so not only can you compare specific make and model you now may use it to compare aircraft across a specific platform. Not only can you compare side by side an equipment list, for example, of several Hawker 850XP’s. You will now be able to compare a specific Hawker 850XP to a Gulfstream G200 or Learjet 60XR at the same time.

  Jeffrey Carrithers, President and CEO explains, “When a person or flight department decides it is time for a new aircraft generally speaking they will have developed different choices pertaining to the mission profiles they fly. In today’s economy it’s all about the most bang for the buck. The expansion of the comparison tool will allow flight departments, aircraft management firms or aircraft brokerage firms the capability to examine several makes and models at one time. There’s nothing like it on the web.”

  The tool enables the prospective buyer or agent to contrast an unlimited number of aircraft, save it for future use or print a PDF. Programmers at GlobalAir.com used feedback from its clients and developed an in-depth aircraft comparison tool. Buyers can use it to look at specific features such as interior layout, an avionics suite or maintenance updates.

  Other comparison aspects include when and what particular paint job looks like, engine specifications, propeller / APU times, and a section for options and features.

  “This is technology-driven information, another tool. It is informative, easy to navigate and pleasing to the eye,” said Carrithers, “Now it will be so much easier for users to have a research tool to compare an unlimited number of aircraft at the click of a button. The more details you can give a buyer, especially on a large-ticket item like an aircraft, the more readily they can make a decision. After visiting our site, all they have to do is call, email or text a seller. Then the deal process is one step closer to being done.”

  You can visit the new comparison tool that Globalair.com has to offer at www.globalair.com/aircraft_for_sale

About GlobalAir.com
  Launched in 1995, GlobalAir.com is one of the largest aviation Web sites on the Internet. It provides aircraft-for-sale listings, FBO fuel prices and flight data for regional airlines, business jets and general aviation operators. It keeps the aircraft community connected.
  Based in Louisville, Ky., the site averages more than 2.3 million page views each month. Services include its Airport Resource Center, at globalair.com/airport, aircraft fuel-route mapping through its Max-Trax system, at airportfuelprices.com, and aircraft leasing and sales through its Aircraft Exchange, at globalair.com/aircraft_for_sale.

  To get more information on the GlobalAir.com aircraft comparison feature, or to schedule an interview, please contact Jeffrey Carrithers by phone at (888) 236-4309 or by e-mail at press@globalair.com.
  Find additional press releases at globalair.com/press/press.aspx. Get real-time updates by following us at blog.globalair.com, twitter.com/globalair and facebook.com/globalair.com.


Visit GlobalAir.com at EAA Airventure, Oshkosh, Wisc.
July 26 - Aug. 1, Hangar D, Booth 4028
.

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GlobalAir.com

Wave of the furture for FBO Safety: Cutter Aviation Implements Unique Cross-Business SMS Within FBO Network

by GlobalAir.com 10. March 2011 14:28
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Cutter Aviation - ABQ  at Albuquerque International Sunport (KABQ), Albuquerque, NM

Cutter Aviation Implements Unique Cross-Business SMS Within FBO Network
Unique Integrated Safety Management System Combines SMS Standards for Both Line & Ground Service and Aircraft Technical Service Departments

March 10, 2011 - PHOENIX, AZ – Continuing a tradition of innovation and leadership within the Fixed Base Operator (FBO) industry, Cutter Aviation announced this week the completion of its implementation of a first-of-its-kind comprehensive FBO Safety Management System specifically developed to provide total safety management for two primary FBO business units: Line Service / Ground Handling and Aircraft Technical Service (Maintenance & Repair).  The implementation of the Cutter Aviation FBO Integrated Safety Management System (FBO-ISMS) marks the culmination of the year-long initiative to develop an industry leading SMS program to address the unique safety requirements of both departments while establishing common cross-business safety practices and standards utilized by both units.  The aim of the Cutter Aviation FBO-ISMS program is the establishment of a culture of safety to better protect technicians and team members of both departments in addition to ensuring a consistent standard of safety for customers and their assets at all Cutter Aviation FBO locations for both line service and maintenance service.

The Cutter Aviation FBO-ISMS program is unique in its business-like approach to safety management of two different business units, still considered by many in the industry to be mutually-exclusive operational entities, combined under one integrated and comprehensive SMS program. In addition to the benefit of enhancing the safety-focused environment of the two departments within the company with the largest work forces, Cutter Aviation also determined the creation of the FBO-ISMS program was a proactive measure to meet possible requirements in the future for FBO operations to have an active SMS program to serve operators. As the domestic and international aviation industry moves closer to mandating Scheduled Air Carriers and Air Charter Operators to implement and maintain SMS programs, Cutter Aviation identified the potential for such SMS programs to include requirements for operators to exclusively utilize vendors, such as ground and maintenance service providers, with established SMS programs.

“We realized early in the process that the development of the FBO-ISMS program would not only benefit our team members and customers with a managed and measured environment of safety at our FBO locations, but it also would become a competitive advantage for Cutter Aviation” said Scott Andre, Director of Safety for Cutter Aviation.  “A culture of safety with an SMS program extending from the ramp to the hangar and into the shop is the new standard for FBO operators as flight departments use it to differentiate between businesses above and beyond their amenities and perks that drove business before.”  

Over the past year Andre worked with Senior Leadership including Department Directors and facility General Managers as well Supervisors and Technicians to develop the comprehensive SMS program. The Cutter Aviation FBO-ISMS Program clearly outlines safety policies, standards, objectives and goals for each service area while providing the right equipment, time, and personnel resources to establish and maintain the program as a part of the core standards of service within the company.

The Cutter Aviation FBO-ISMS Program is in operation at all company FBO facilities offering Line & Fuel Service including Phoenix Sky Harbor (PHX), Phoenix Deer Valley (DVT), Albuquerque (ABQ), El Paso (ELP), Dallas-McKinney (TKI) and Colorado Springs (COS).  The FBO-ISMS Program is also in operation at Cutter Aviation Technical Services locations at Phoenix Sky Harbor (PHX), Phoenix Deer Valley (DVT), Albuquerque (ABQ), San Antonio (SAT) and Dallas-McKinney (TKI). 

 

Air Travel: A Target For Social Innovation

by Allen Howell 3. March 2011 14:10
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An industry in crisis is an industry ripe for transformation.

America’s air travel system is in crisis. In response to rising fuel prices, air-space congestion and industry losses during the recession, airlines have cut capacity and raised rates. These challenges follow on the heels of delays and hassles that have cost the nation almost $33 billion in the past year alone, according to a recent study commissioned by the FAA / DOT.

Some blame the problems on government regulations over airlines and the lack of modernized air traffic control infrastucture. Others see the problem as dysfunctional management of the airline system.

Could it be that “the system of air travel” is being re-engineered before our eyes and all the current problems are part of the process?

I remember when airline travel used to be a social experience. Today it is anything but social, with the majority of passengers frustrated by the experience and loss of productivity.  Yet air travel is necessary for both leisure and business purposes.

How big is air travel and its impact on the economy here in the US?

 

Research from the US Travel Association says:

 

1.          About 42 percent of U.S. adults reported traveling by air for leisure trips.  The percentage of air travelers increases to 48 percent among U.S. adults who traveled for business purposes in the past year.

2.          A study by the U.S. Travel Association revealed a deep frustration among air travelers that caused them to avoid an estimated 41 million trips over the past 12 months at a cost of more than $26 billion to the U.S. economy.

3.          Business travel in the U.S. is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and 1 million American jobs are linked directly to meetings and events. For every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits.

4.          The Internet was used by approximately 90 million American adults to plan travel during the past year with 76 percent of online travelers planning leisure trips online.

 

The Social Market of Travel Is Hot Every other day or two, you hear about a new travel app, a travel related company, or a mega travel player partnering, acquiring, or developing the next industry killer app. Consider some of the recent developments in the travel space over the last year:

 

1.          Tripit acquired for 120M

2.          Google’s purchase of ITA

3.          Facebook buys Nextstop

4.          Google managed to get the folks behind Ruba – a travel site – to join its organization

5.          Hotwire, Kayak, Orbitz and Farecast, are now part of Microsoft’s Bing

6.          Plancast launches a site enabling people to post and share events they are attending

7.          Gowalla Offers Trips & Travel Guides with USA TODAY

8.          Dopplr makes your travel planning smarter. Share travel plans with the people you trust.

9.          Facebook now drives 12%, and growing, of the airline’s traffic compared with Google 17.6%, and Yahoo 10%.

10.      Mobile travel apps are flooding into the market in numbers too large to follow.

 

The list goes on, but by now you should conclude that “social” and “travel” are hot and competition between Google and Facebook will continue to rage. Will Facebook trump Google as the most important travel site?

Time will tell but none of these applications or developments really do anything to improve the efficiency of the travel experience.

 

What Will Improve the Travel Experience?

Providing social technology to travelers may help people find things faster, get recommendations and collaborate with friends and associates, but it still doesn’t improve the existing system of travel. Will social technology reduce delays, hassles and loss of productivity? Not likely, but then again it could if applied to a different travel system.

Private Aviation represents $8 Billion in annual revenue, just a small fraction of the entire travel spend,  but little has been done to bring innovation to the industry, and it lags way behind all markets in use of social technology.

Private Aviation offers a superior experience for travelers. If social technology was applied innovatively just maybe the cost of flying private could be reduced. Just maybe, friends could form “travel tribes” and buy seats on private aircraft. Just maybe, brands would sponsor flights to reach this new market of travelers and thus bring down the cost.

 

Consider the possibilities.

 

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