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How Does The FAA Calculate A Civil Penalty?

by Greg Reigel 28. February 2017 08:16
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Every so often the Federal Aviation Administration ("FAA") will issue a press release about its proposed assessment of a civil penalty action against an air carrier, maintenance facility or some other business. In some instances the penalties proposed by the FAA may be millions of dollars. And while the FAA’s press release may cite to some of the violations the carrier or facility allegedly committed, the FAA never explains exactly how it arrived at the amount of the civil penalty it proposes to assess.

To provide a little background, when the FAA believes a certificate holder (whether an airman, air carrier, repair station or otherwise) has violated a regulation, it may pursue legal enforcement action against the alleged violator. 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 alleged violator, 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. The FAA may also pursue civil penalty actions against companies or individuals who do not hold FAA certificates (e.g. companies or individuals who violate hazmat regulations or individuals who violate passenger regulations such as interfering with a flight crewmember).

Sometimes, the FAA will bring a civil penalty action to avoid the six month limitation of the NTSB's stale complaint rule in a certificate action, and benefit from the longer two year limitation applicable to civil penalty actions. For example, 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 two years within which to initiate the action.

In order to determine the appropriate amount of the civil penalty for a given regulatory violation, the FAA uses the Sanction Guidance Table in FAA Order 2150.3B, Appendix B. 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.

The Sanction Guidance Table provides a range of penalties based upon the type and size of the violator, the type of alleged violation and the number of alleged violations. The sanction guidance indicates a minimum and maximum range civil penalty for each instance of a violation of various regulations. And while the Sanction Guidance Table’s sanction ranges generally account for different types of violations, as well as the nature, extent and gravity of each general type of violation, a sanction isn’t calculated through a “strict mathematical formula”, but rather is determined based upon a judgment “of where a case lies along a spectrum of gravity.”

To calculate a civil penalty sanction, the FAA first determines the type and size of the violator and also whether the violator is a Small Business Concern. Next, the FAA starts with the middle of the range for the particular act or omission that caused the violation. It then specifically looks at a variety of factors that may be considered aggravating factors, which would result in increase in sanction, or mitigating factors which would decrease the sanction. These factors include:

  1. the nature of the violation;

  2. whether the violation was inadvertent and not deliberate;

  3. the certificate holder’s level of experience;

  4. the attitude of the violator (Note: The FAA does not consider a good compliance attitude, by itself, a basis for reducing a sanction. Fortunately, the FAA also does not consider a violator’s failure to respond to a letter of investigation, representation by counsel or contesting of a violation a poor compliance attitude);

  5. the degree of hazard;

  6. whether an employer or other authority has taken any action (i.e. if the employer took disciplinary action or criminal prosecution was involved);

  7. use of a certificate;

  8. violation history (i.e. a history of prior violations. Since compliance is expected, a violation-free history is not considered a mitigating factor);

  9. decisional law;

  10. the violator’s ability to absorb the sanction (i.e. whether the violator is able to pay a civil penalty and the effect the civil penalty will have on the violator’s ability to continue in business);

  11. consistency of sanction;

  12. whether the violation was reported voluntarily (this takes into consideration whether the violator reported the violation through a program such as the Aviation Safety Reporting Program, the Voluntary Disclosure Reporting Program or the Aviation Safety Action Program); and

  13. corrective action (e.g. corrective action that exceeds the minimum regulatory or statutory requirements. Corrective action taken after the violator becomes aware of the deficiency and before the FAA learns of the violation warrants greater mitigation than if the action is taken after the FAA takes enforcement action).

In some cases, where the degree of the violator’s fault is minimal, the potential hazard is very low, and no aggravating circumstances are present, the FAA may select a civil penalty amount that is below the range specified in the Sanction Guidance Table. Conversely, the FAA may select a civil penalty above the range if the violator’s fault was significant, the violation involved significant safety risks, the violator failed to take corrective action over an extended period of time, the violator has a poor compliance attitude or history, or the FAA feels it needs to make an example of the violator (or, as the FAA puts it, “to provide an economic disincentive or regulatory noncompliance”).

What happens if the case involves multiple violations (e.g. multiple violations of a single regulation, a single violation of multiple regulations, or multiple violations of multiple regulations)? Fortunately, the FAA doesn’t just determine the amount for each violation and then add them up. Rather, the FAA is required to consider the totality of the circumstances relating to the multiple violations, paying special attention to the seriousness of the potential hazard caused by the violations as well as the degree of the violator’s fault for the multiple violations.

At the end of the day, the Sanction Guidance Table is just that, guidance. And while the FAA, and its inspectors and attorneys, are required to follow the guidance, the FAA still has prosecutorial discretion. That is, the FAA ultimately has the discretion and authority to determine not only whether to pursue a civil penalty action, but also the type and amount of the sanction. But at least the Sanction Guidance Table provides some insight as to how the FAA may have arrived at a proposed sanction and what aggravating or mitigating circumstances it may, or should, have considered.

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Greg Reigel

What Happens To A Certificate When The FAA Suspends Or Revokes It?

by Greg Reigel 3. January 2017 10:06
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Is a certificate suspension or revocation the end of the story for a certificate holder? Not usually. A certificate holder (whether airman, mechanic, air carrier, medical etc.) has some additional responsibilities, as well as liability exposure if he or she fails to fulfill those obligations. However, before we talk about the aftermath of certificate suspension or revocation, we should briefly discuss how a certificate holder can find him or herself in that position.

Once the FAA has determined that legal enforcement action is appropriate, the FAA will either issue a Notice of Proposed Certificate Action (“NPCA”) to the certificate holder seeking to suspend or revoke a certificate for alleged violation of the FARs, or it will issue an emergency order suspending or revoking the certificate. The difference between the two is significant: the emergency order is effective immediately (e.g. the certificate is revoked as soon as the FAA issues it), while the NPCA is not.

Both an NPCA and an emergency order will provide a recitation of the facts supporting the FAA’s allegations. The NPCA also includes a list of options from which a certificate holder may choose how he or she wants to respond to the NPCA. Under the first option, the certificate holder may elect to simply admit or concede the FAA’s allegations and surrender the certificate to the FAA. The emergency order, on the other hand, requires the certificate holder to immediately surrender the certificate to the FAA.

Suspension or revocation of a certificate may also be imposed by an NTSB administrative law judge (“ALJ”) after the certificate holder has received a hearing on the merits of the allegations contained in the NPCA. In the case of suspension or revocation following a hearing, the ALJ will order that the certificate holder surrender the suspended or revoked certificate to the FAA. The FAA may also follow up with a letter to the certificate holder demanding surrender of the certificate. But, does the certificate holder really have to surrender the certificate? If the case is not appealed, the answer is “yes.”

If a certificate holder fails to surrender the certificate, the FAA can and oftentimes will try to assess a civil penalty against the certificate holder for failure to surrender the certificate as required by the order of suspension or revocation. Under 14 CFR 383.2, depending upon the type of operator (e.g. individual, small business, air carrier etc.), the civil penalties for failure to surrender a certificate can range from $1,414 for an individual (and in some cases a small business) up to $32,140 per day.

So, what do you need to know if you find yourself in this situation? First, if you receive a NPCA or emergency order you need to take action immediately (especially in the case of an emergency order where the time limits are very short) and, if you dispute the FAA’s allegations, you need to properly and timely appeal the order and request an evidentiary hearing. Second, if your appeal is unsuccessful and your certificate is suspended or revoked, you are required to physically surrender your certificate to the FAA. If you fail to do so, you risk being assessed a civil penalty that could potentially be very expensive. And, of course, if you receive an emergency order or NPCA and are unsure of your rights and responsibilities, contact an aviation attorney who can answer your questions and help you through the process.

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Flying | Greg Reigel

As Long As You Hold An Airman Certificate You Must Report Motor Vehicle Actions To The FAA

by Greg Reigel 4. October 2016 09:29
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If you hold an airman certificate you know, or at least you should know, that you are subject to the reporting requirements of 14 C.F.R. §61.15. That is, §61.15(e) requires an airman to report a motor vehicle action ("MVA") to the FAA Civil Aviation Security Division within 60 days. The written report must include: “(1) The person's name, address, date of birth, and airman certificate number; (2) The type of violation that resulted in the conviction or the administrative action; (3) The date of the conviction or administrative action; (4) The State that holds the record of conviction or administrative action; and (5) A statement of whether the motor vehicle action resulted from the same incident or arose out of the same factual circumstances related to a previously reported motor vehicle action.”

What is an MVA? According to the regulation an MVA is (1) a violation of any Federal or State statute relating to the operation of a motor vehicle while intoxicated by alcohol or a drug, while impaired by alcohol or a drug, or while under the influence of alcohol or a drug; (2) the cancellation, suspension, or revocation of a license to operate a motor vehicle, for a cause related to the operation of a motor vehicle while intoxicated by alcohol or a drug, while impaired by alcohol or a drug, or while under the influence of alcohol or a drug; or (3) the denial of an application for a license to operate a motor vehicle for a cause related to the operation of a motor vehicle while intoxicated by alcohol or a drug, while impaired by alcohol or a drug, or while under the influence of alcohol or a drug.

It is important to realize that this definition includes more than just being arrested for or convicted of a DWI, OWI etc. A civil action that often accompanies a DWI arrest in most states and that results in suspension of the driver's license is also considered an MVA. Thus, an arrest for DWI could create the obligation for an airman to provide multiple reports to the FAA depending upon how the civil and criminal cases proceed. And if an airman fails to report an MVA, §61.15(f) states that he or she could be subject to (1) Denial of an application for any certificate or rating for a period of up to 1 year after the date of the arrest; or (2) Suspension or revocation of any certificate or rating.

But what happens if you hold an airman certificate but you no longer hold a medical certificate, or you have "retired" from flying? Are you still subject to this reporting requirement? The short answer is "yes", as a recent NTSB decision explains. In Administrator v. Street, the airman was an experienced airline pilot who failed to report four MVAs arising from two DWIs. When the FAA found out, it issued an order suspending the airman's ATP certificate for 240 days. On appeal, the administrative law judge ("ALJ") agreed that the airman had violated sections 61.15(d) and (e) but determined that the sanction should only be a thirty day suspension.

Not surprisingly, the FAA was unhappy with that decision and appealed to the full Board. The FAA argued that the 240 days should stick and, of course, the airman argued that the ALJ's decision should stand. Specifically, the airman argued that at the time of the violations he did not have a medical certificate and was not actively flying, which should serve as mitigating factors in support of the lower sanction. However, the Board rejected that argument stating the reporting requirements of §61.15(e) are applicable to an airman who temporarily “retires” from flying. The Board explained that "[w]hile respondent testified that he did not plan to return to flying, his obligation to comply with the FARs continued regardless of whether he was actively flying at the time the MVAs occurred. Sections 61.15(d) and (e) are exclusively concerned with conduct outside the scope of an airman’s certificate. It is immaterial whether respondent was actively flying or had a medical certificate at the time the MVAs occurred because his status as an ATP certificate holder rendered the requirements of §§ 61.15(d) and (e) applicable to him."

So, the moral of the story is: If you hold an airman certificate, you need to be familiar with, and comply with, the requirements of §61.15. Until you no longer hold your airman certificate (whether the certificate has been surrendered, suspended or revoked) you will need to report any MVA to the FAA.

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Greg Reigel

Waiver of Emergency Procedures in an NTSB Appeal Will Not Cure a Missed Deadline

by Greg Reigel 3. August 2016 09:07
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Since the FAA began implementing its new compliance philosophy last year, fewer case are being appealed to the NTSB.  However, it appears that the cases that are being appealed the most are emergency orders of either suspension or revocation.  As you may recall from past articles, when a certificate holder appeals an emergency order to the NTSB, emergency procedures apply to the case which require that a hearing be held within 30 days after the appeal is filed.  Other deadlines are also much shorter under the emergency procedures than they are under the procedures for a non-emergency appeal.  The purpose for the accelerated hearing and deadlines is to ensure that a certificate holder whose certificate has been suspended or revoked on an emergency basis (i.e. the order is effective immediately) receives a hearing and decision as soon as possible to minimize the impact of the suspension or revocation if the NTSB administrative law judge ("ALJ") ultimately reverses the FAA's order.

But in some situations, this expedited timeline can also be a problem for a certificate holder who may need more time to properly prepare for a hearing.  So, it is also possible to waive the emergency procedures in an appeal of an emergency order.  Whether the emergency procedures should be waived is a decision that will depend upon the circumstances of each case.  But the certificate holder must be sure to comply with the deadlines applicable to the case, whether under the emergency or non-emergency procedures.  Failure to comply can result in harsh consequences.  If a certificate holder is going to waive the emergency procedures, the waiver should occur before any applicable deadline has passed.  A recent decision by the NTSB illustrates the unfortunate consequences of an untimely waiver.

In Administrator v. Jimenez; the airman appealed an emergency order revoking his commercial pilot certificate.  The airman appealed the order to the NTSB, but failed to file his answer to the FAA's complaint within the five days required by the Board's emergency procedures.  As a result, the FAA subsequently filed a motion to deem the facts admitted and requesting summary judgment.  One day after the FAA filed its motion, the airman waived the emergency procedures and filed his answer which would have still been timely under the proceedures applicable to a non-emergency case.  In the absence of good cause for the late filing, the ALJ granted the FAA's motion based upon the airman's failure to timely file his answer.  The airman then appealed the ALJ's decision to the full Board.

On appeal, the airman argued that his answer was timely under the non-emergency procedures that were applicable to the case once the airman had waived the emergency procedures.  However, the Board rejected the airman's argument.  While the Board observed that Section 821.52(d) permits an airman to waive the the accelerated time limits applicable to emergency cases, it then referred to the rule's limitation that “such a waiver shall not serve to lengthen any period of time for doing an act prescribed by this subpart which expired before the date on which the waiver was made.”  Thus, the Board held that the express language of the rule precluded the airman's argument that the 20-day deadline, which would apply in a non-emergency case, was applicable because the airman did not waive the the emergency procedures until after the time to file his answer expired.

The rules for emergency and non-emergency cases can sometimes be confusing.  And, unfortunately, the consequences of failing to comply with the rules can be significant.  This case is yet another example of why it makes sense to have an experienced aviation attorney assist you with appeal of an FAA order of suspension or revocation. If you find yourself in this situation, make sure you get the help you need.

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Greg Reigel

Drone Operators Beware: Drone Operations Are Subject To FAA Enforcement

by Greg Reigel 3. March 2016 09:03
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So, you just purchased a fancy new drone (“unmanned aircraft system” or “UAS”) and you have been flying it around. About a week later, you receive a phone call from an FAA inspector in which the inspector tells you that you have been operating your drone in violation of the Federal Aviation Regulations (“FARs”). And now you are wondering what’s going on and what can you expect?

As you may be aware, the FAA considers both UAS and model aircraft subject to regulation (although two civil lawsuits are pending disputing the FAA’s position, at least as it relates to “model aircraft”). And with that regulation also comes the responsibility for compliance and enforcement of the FARs applicable to UAS and their operation.

With the proliferation of UAS operations within the United States, the FAA is concerned about the safety risk posed by UAS operations that may be contrary to the FARs. To address these concerns, the FAA has stated that it “will use its resources to educate UAS operators about regulatory compliance and, when appropriate, use administrative and legal enforcement action to gain compliance.”

How Does a UAS Operator Violate the Regulations?

What does this mean for UAS operators? It means the operator of a UAS is now subject to the FAA’s compliance and enforcement procedures in the event that the UAS operator violates applicable FARs or other statutory requirements when the operator is operating its UAS. For example, if the UAS is being operated for hobby or recreational purposes and the operation “endangers the safety of the National Airspace”, the FAA may cite the operator for violation of operational FARs such as §§ 91.13-91.15, 91.113, 91.126-135, 91.137-145, and 14 C.F.R. Part 73.

If the UAS is operated for commercial purposes (e.g. other than for hobby and recreational purposes) and the operator does not have FAA authorization for the operation in the form of a Certificate of Authorization (“COA”), an exemption or an airworthiness certificate and civil aircraft COA, then the FAA could cite the operator for lack of the appropriate authorizations such as pilot and aircraft certification as well as any applicable operational FARs. Or if the UAS operator does have a COA or exemption but operates contrary to the operational requirements associated with the authorizations then the operator could be cited for violating those requirements.

How Will the FAA Respond to Violations?

In order to determine what type of action the FAA will take to respond to violations by a UAS operator, the FAA will analyze

  • Whether the violation was a first-time and inadvertent violation;

  • Whether the violation involves repeated or intentional violations; and

  • Whether the safety risk resulting from the operation in terms of actual or potential endangerment to the National Airspace was low/medium/high.

If the UAS operator’s violation is a first-time, inadvertent violation and education or counseling by the FAA will ensure future compliance, then the case will be resolved as a “compliance action” using education or informal counseling. When a situation involves a first-time, inadvertent violation by a UAS operator that poses a low actual or potential risk to safety but the FAA determines compliance cannot be gained through education, then the FAA will pursue administrative action using a warning notice or letter of correction with possible remedial training. And if the FAA determines that a UAS operator’s violation poses a medium or high actual or potential risk to safety, then the FAA will pursue legal enforcement action through a certificate or civil penalty action.

So, when will a UAS operator’s conduct subject the operator to legal enforcement action? One example would be when a UAS operator’s conduct has a medium or high risk of endangering the operation of another aircraft or endangering persons or property on the ground. Another example would be when the UAS operator’s conduct involves repeated or intentional violations.

What Type of Sanction Will the FAA Impose?

Once the FAA decides that legal enforcement action is necessary or appropriate, it must next determine what sanction it should impose for the violation. The sanction will vary depending upon whether the operator is an individual or an entity and, if an entity, what size of entity. FAA Order 2150.3B, Appendix B (the sanction guidance table) identifies a range of sanctions.

If a UAS operator’s violation poses a medium actual or potential risk to safety then the FAA may seek to impose a civil penalty in the minimum to moderate range. Alternatively, a violation by a UAS operator that poses a high actual or potential risk to safety would likely result in assessment of a civil penalty in the maximum range. And, not surprisingly, if a UAS operator repeatedly or intentional violates the regulations then the FAA would impose a civil penalty in the applicable maximum range.

UAS operators who also hold airman certificates (e.g. a pilot, mechanic or other certificate) are at even greater risk. The FAA has stated “[f]or a deliberate, egregious violation by a certificate holder, regardless of whether the certificate holder is exercising the privileges of the certificate in connection with the violations associated with a UAS operation, certificate action, may be appropriate. Such certificate action may be in addition to a civil penalty.” So, not only could an airman operating a UAS be subject to a civil penalty, but his or her airman certificate could also be at risk if the FAA thinks the airman’s UAS violation was serious enough.

Conclusion

For the operator of the shiny new UAS I mentioned above, my advice is to proceed with caution. How the operator was operating the UAS as well as what the operator tells the FAA will have a significant impact upon how the FAA views the case and what action it feels is necessary to deal with any regulatory violations. Knowing what to expect can help UAS operators be prepared to respond to the FAA appropriately.

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Greg Reigel



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