The Department of Transportation (DOT) recently issued an interim final rule to increase the maximum aviation-related civil penalty amounts to adjust for inflation. The rule became effective on August 10, 2016, and will apply prospectively.
Under section 701 of the Federal Civil Penalties Inflation Adjustment Act Improvements Act 2015, DOT must promulgate an interim final rule to adjust the maximum civil penalty liability amounts to reflect the adjusted inflation each year. Specifically, the 2015 Act requires agencies to adjust the civil penalties amounts with a “catch-up adjustment” and to make subsequent annual adjustments for inflation.
Prior to the 2015 Act, the Federal Civil Penalties Inflation Adjustment Act 1990 provided that penalty increases between $1,000 and $10,000 would be rounded to the nearest multiple of $1,000 and were capped at 10 percent. Under the 2015 Act, penalties are rounded to the nearest $1, which according to DOT, ensures that penalties will be increased to reflect the adjusted inflation.
Based on the Office of Management and Budget adjustment, DOT increased civil penalties amounts for most violations of aviation statutes and regulations from $27,500 to $32,140 per day, per violation. Similar adjustments were made for individuals and small businesses.
The maximum general civil penalty for violations of aviation-related regulations and statutes has increased from $27,500 to $32,140 and from $1,100 to $1,414 for individual and small businesses.
For individuals and small businesses, the maximum penalties have increased:
- From $11,000 to $12,856 for violations of most of 49 U.S.C. Chapter 401 provisions, which include most aviation-related regulations;
- From $5,500 to $6,428 for violations of air service termination provisions (49 U.S.C. 41719); and
- From $2,750 to $3,214 for violations of unfair and deceptive practices and unfair methods of competition provisions (49 U.S.C. 41712).
The 2015 Act adjusts penalties prospectively and does not change previously assessed or enforced penalties that DOT is currently collecting. Future adjustments will be made annually to reflect the actual calculated inflation.
by Pillsbury Winthrop Shaw Pittman LLP