Modernizing Payment of Denied Boarding Compensation, 11658-11668 [2019-05858]

Agencies

• DEPARTMENT OF TRANSPORTATION
• Office of the Secretary

[Federal Register Volume 84, Number 60 (Thursday, March 28, 2019)]
[Proposed Rules]
[Pages 11658-11668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05858]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 250

[Docket No. DOT-OST-2019-0025]
RIN No. 2105-AE67


Modernizing Payment of Denied Boarding Compensation

AGENCY: Office of the Secretary (OST), Department of Transportation 
(DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Department of Transportation is proposing to amend its 
rule on oversales to allow airlines to use electronic payment medias 
that are equivalent to cash as an option in lieu of check or cash 
payment to compensate passengers who are denied boarding involuntarily 
due to oversales; and allow airlines to provide a mandatory written 
denied boarding notice in an oversales situation by electronic means 
upon passengers' consent, in lieu of a paper copy. This action would 
not impact airlines' ability to offer a consumer who is denied boarding 
involuntarily a choice between flight vouchers or credits and the 
required denied boarding compensation.

DATES: Comments should be filed by May 28, 2019. Late-filed comments 
will be considered to the extent practicable.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2019-0025 by any of the following methods:
    [cir] Federal eRulemaking Portal: Go to https://www.regulations.gov 
and follow the online instructions for submitting comments.
    [cir] Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE, Room W12-140, Washington, DC 
20590-0001.
    [cir] Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Ave. SE, between 9:00 a.m. and 5:00 p.m. ET, 
Monday through Friday, except Federal Holidays.
    [cir] Fax: (202) 493-2251.
    Instructions: You must include the agency name and docket number 
DOT-OST-2019-0025 or the Regulatory Identification Number (RIN) for the 
rulemaking at the beginning of your comment. All comments received will 
be posted without change to https://www.regulations.gov, including any 
personal information provided.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received in any of our dockets by the name of the individual 
submitting the comment (or signing the comment if submitted on behalf 
of an association, a business, a labor union, etc.). You may review 
DOT's complete Privacy Act statement in the Federal Register published 
on April 11, 2000 (65 FR 19477-78), or you may visit https://DocketsInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov or to the street 
address listed above. Follow the online instructions for accessing the 
docket.

FOR FURTHER INFORMATION CONTACT: Clereece Kroha or Blane A. Workie, 
Office of Aviation Enforcement and Proceedings, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-
9342 (phone), 202-366-7152 (fax), [email protected] or 
[email protected] (email).

SUPPLEMENTARY INFORMATION:

[[Page 11659]]

Executive Summary

1. Purpose of the Deregulatory Action

    The purpose of this action is to explore additional means for U.S. 
and foreign air carriers to compensate passengers who are involuntarily 
denied boarding in an oversales situation. Currently, carriers must 
provide Denied Boarding Compensation (DBC) by issuing cash or checks. 
This NPRM proposes to allow carriers to use electronic payment methods 
in lieu of cash or check DBC payments. This NPRM also proposes to allow 
U.S. and foreign air carriers to provide a mandatory written notice to 
consumers explaining DBC and boarding priorities in electronic form. 
Currently, carriers are required to provide this notice in print 
format.
Summary of the Major Provisions of the Deregulatory Action in Question
    This NPRM proposes to amend the following provisions in 14 CFR part 
250:
    (1) 14 CFR 250.5 Amount of denied boarding compensation for 
passengers denied boarding involuntarily.
    This provision would be amended to incorporate the proposal of 
allowing cash equivalent electronic payments for compensating 
passengers who are denied boarding involuntarily.
    (2) 14 CFR 250.8 Denied boarding compensation.
    This provision would be amended to incorporate the proposal of 
allowing cash equivalent electronic payments for DBC payments, and 
specify certain conditions for these electronic payments to ensure that 
they are indeed equivalent to cash.
    (3) 14 CFR 250.9 Written explanation of denied boarding 
compensation and boarding priorities, and verbal notification of denied 
boarding compensation.
    This provision sets forth the written statement that carriers must 
provide to passengers regarding involuntarily denied boarding. This 
provision would be amended to incorporate the proposal to allow 
carriers to provide the written statement by electronic means upon 
passengers' consent. The written statement would also be amended to 
incorporate the proposal of allowing cash equivalent electronic DBC 
payments.

2. Summary of Costs and Benefits

    The proposed rule would provide regulatory relief to airlines, 
while maintaining aviation consumer protections for passengers. The 
rule would not have a significant economic impact on airlines or their 
passengers, and those economic impacts that are anticipated are 
expected to be beneficial to both airlines and passengers, and modest 
in magnitude.

Background

    To compensate for ``no-shows,'' many airlines overbook their 
scheduled flights by selling more confirmed reservations for a flight 
than they have seats. At times, it may also be necessary to 
involuntarily deny boarding to passengers holding confirmed 
reservations to comply with safety or operational requirements, or to 
make room for Federal Air Marshall, or other law enforcement personnel. 
The Department's regulation on oversales, 14 CFR part 250, establishes 
the minimum standards for the treatment of airline passengers holding 
confirmed reservations who are involuntarily denied boarding 
(``bumped''). Among other requirements, 14 CFR 250.8 requires that U.S. 
and foreign air carriers must offer compensation in the form of cash or 
immediately negotiable check to bumped passengers. The amount of the 
cash or negotiable check depends on the price of the airline ticket, 
whether the passenger was bumped from a domestic flight or 
international flight, and the projected length of the delay caused by 
the bumping. Under DOT rules, if a passenger is bumped involuntarily, 
the cash or check must be tendered on the day and place the denied 
boarding occurs, or, under certain circumstances, by mail or other 
means within 24 hours.
    The Department's oversales rule was initially promulgated by its 
predecessor, the Civil Aeronautics Board (CAB) in 1967 (32 FR 11939, 
Aug. 18, 1967). In that final rule, carriers were required to tender to 
a passenger eligible for DBC, on the day and place the denied boarding 
occurs, a ``draft'' for the appropriate amount. The rule further 
provides that when a carrier arranges alternate means of transportation 
that departs before the draft can be prepared and tendered to the 
passenger, tender shall be made by mail or other means within 24 hours 
after the time the denied boarding occurs. In 1984, the CAB issued an 
interpretive amendment to the rule to make it clear that passengers 
involuntarily denied boarding must be paid by cash or an immediately 
negotiable check (49 FR 43622, Oct. 31, 1984). The amended rule retains 
the original rule's requirement regarding the timing of DBC payment, 
that DBC must be paid at the time and place of denied boarding, or 
tendered within 24 hours after the denied boarding occurs. However, it 
replaced the word ``draft'' as appeared in the rule with the phrase 
``cash or immediately negotiable check.'' In doing so, the CAB rebutted 
a carrier's argument that the undefined term ``draft'' can be 
interpreted to include carrier-issued flight vouchers. The CAB 
reiterated that one of the main goals of the oversales rule was to 
provide ``prompt, effective, and adequate'' compensation to bumped 
passengers and pointed out that the intended results of the rule, one 
of which being that DBC must be paid by ``cash or cash equivalent'', 
are clear and that the intent had been uniformly interpreted by the 
industry since 1967. The phrase ``cash or immediately negotiable 
check'' remains to be the rule as of today.
    The Department recognizes that the means of money transfer offered 
by the banking systems and other financial institutions have evolved 
over the last few decades. In 1984, when the CAB required that DBC must 
be paid by cash or check, an immediately negotiable check was likely 
the only form of cash equivalent that was widely available and 
accessible to the public. Since then, prepaid access payments \1\ have 
been introduced to and accepted by many merchants. In addition, in 
recent years, electronic fund transfer \2\ services, previously only 
available for transfers between financial institutions, is now 
available for transferring money from the account holder of a bank to 
an individual consumer. Further, various digital money transfer 
networks offered by non-banking business entities, such as PayPal, 
Zelle, Square Cash, Google Wallet, and Venmo, are becoming more and 
more popular among consumers due to their accessibility via mobile 
phone applications.
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    \1\ ``Prepaid access'' is defined as access to funds or the 
value of funds that have been paid in advance and can be retrieved 
or transferred at some point in the future through an electronic 
device or vehicle, such as a card, code, electronic serial number, 
mobile identification number, or personal identification number. See 
31 CFR 1010.100(ww).
    \2\ ``Electronic fund transfer'' means any transfer of funds 
that is initiated through an electronic terminal, telephone, 
computer or magnetic tape for purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit a consumer's 
account. The term includes, but is not limited to: (i) Point-of-sale 
transfers; (ii) Automated teller machine transfers; (iii) Direct 
deposits or withdrawals of funds; (iv) Transfers initiated by 
telephone; and (v) Transfers resulting from debit card transactions, 
whether or not initiated through an electronic terminal. See 12 CFR 
1005.3.
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    As a result of the aforementioned money storage and transfer 
technology evolution, various airlines have urged the Department to 
consider allowing them to provide DBC payments to passengers via a 
prepaid card or other forms of electronic funds. In 2011, in the 
Department's final rule titled ``Enhancing Airline Passenger

[[Page 11660]]

Protections'' (76 FR 23109, Apr. 25, 2011), we responded to some 
carriers' comments that the Department should allow the use of prepaid 
cards \3\ for DBC payments. In our response, we acknowledged the 
convenience and security features offered by electronic funds, but 
declined to implement a rule allowing use of electronic funds as a 
substitute for cash or check payments because we had not had the 
opportunity to fully examine the potential benefits and limitations of 
the use of electronic funds in that rulemaking proceeding. We stated 
that we may explore this issue in future rulemaking. Further, in 
October 2017, the Department published a Notification of Regulatory 
Review (82 FR 45750, October 2, 2017), seeking public input on existing 
rules and other agency actions that are good candidates for repeal, 
replacement, suspension, or modification. Among the comments received, 
Airlines for America (A4A), the trade association for most large U.S. 
air carriers, suggests that the Department should eliminate the 
requirement that DBC be paid in cash or check, and allow airlines to 
make DBC payments by electronic transfer, credit or flight vouchers. 
A4A avers that the requirement of cash or check DBC payment is obsolete 
in today's society where electronic payments have become the norm. By 
this NPRM, we fulfill our stated intention in the 2011 final rule and 
take the opportunity to examine this subject fully, including issues 
raised by A4A in its regulatory review comment.
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    \3\ The comments submitted by these carriers use the term 
``debit cards.'' A debit card is linked to a specific bank account, 
and in contrast, a prepaid card stores a specific amount of money 
prepaid and stored in a media and is not linked to a bank account. 
For the purpose of providing DBC, we believe a prepaid card is the 
intended form of payment referred to by these commenters.
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    The CAB's 1967 final rule establishing the oversales regulation 
also included a provision that requires greater public disclosure of 
boarding procedures and passengers' rights in the event of an oversold 
flight. In a 1978 final rule that strengthened this disclosure 
requirement, CAB stated that its adoption of a more stringent public 
disclosure requirement was intended to afford passengers, who were 
otherwise generally ignorant of the rule, the opportunity to take steps 
to protect themselves from involuntary bumping or to verify that 
carriers have in fact acted in accordance with the stated priorities. 
See 43 FR 24277, at 24281. Under the current rule, carriers must 
provide a written notice explaining the computation of DBC and the 
carrier's boarding priority in determining which passenger(s) would be 
subject to involuntarily denied boarding in an oversales situation, if 
necessary. This notice must be provided verbatim to any passenger who 
was involuntarily denied boarding, immediately following the denied 
boarding, and to any other persons, upon request, at (1) all airport 
ticket selling positions that are exclusively or jointly under the 
carrier's control, and (2) at boarding locations (e.g., gates).
    For several decades, carriers complied with this requirement by 
preprinting a large quantity of pamphlets containing the written notice 
as prescribed by the rule, and distributing the pamphlets to each 
station so they would be available on demand at the ticket counters and 
gates. In recent years, some carriers began to use computer terminals 
at the ticket counters and gates to generate printed notices on demand. 
By doing so, carriers may avoid the cost of preprinting a large amount 
of pamphlets that may be rendered obsolete on a later date because the 
regulatorily mandated DBC maximum amounts contained in the notice are 
subject to inflation adjustments. It also avoids the possibility of 
running out of or misplacing the pamphlets at a station so all agents 
are able to locate and produce the document on a short notice.
    In comments submitted to the aforementioned 2017 regulatory reform 
docket, A4A states that the rule was originally implemented long before 
the internet and email existed, when airlines had to rely on paper-
based forms of communication with consumers. A4A asserts that airlines' 
compliance with this paper-based notice requirement creates unnecessary 
logistical challenges and ignores the greater efficiency and more 
environmentally beneficial ability to deliver such notification to 
consumers electronically. According to A4A, airlines are required to 
expend considerable resources to print and distribute these written 
statements to consumers, including destroying existing notices and 
reprinting such statements each time the Department adjusts the amount 
of denied boarding compensation it requires. A4A recommends that the 
Department amend the regulation to allow carriers to provide passengers 
the involuntary denied boarding information explanation in an 
electronic format in order to modernize the delivery of such 
information to consumers, to better ensure up-to-date information is 
provided, reduce the cost of document destruction as carriers destroy 
outdated documents, and eliminate paper waste.
    Improvement of regulations is a continuous focus for the 
Department. As a part of that effort, we periodically review existing 
regulations to ensure that they continue to meet the needs for which 
they originally were designed, remain cost-effective and cost-
justified. As such, and in response to A4A's comment, we undertake this 
rulemaking to explore the subject of eliminating the requirement for 
paper-based notice and allowing carriers to provide the notice 
electronically.

Notice of Proposed Rulemaking

1. Methods of DBC Payment

    As stated by CAB in 1984, one goal of the oversales rule is to 
ensure that carriers provide ``prompt, effective, and adequate'' 
compensation to bumped passengers. In light of the technological 
advancements that have taken place in money transfer, we ask the public 
to comment on whether expanding the scope of ``cash equivalent'' beyond 
an immediately negotiable check would still result in ``prompt, 
effective, and adequate'' compensations to bumped passengers. Is there 
a significant number of passengers who do not have access to electronic 
funds and can only access DBC payments by cash or check? If so, how can 
the Department ensure that all passengers affected by involuntary 
denied boarding, including those passengers who do not have access to 
electronic funds, receive ``prompt and effective'' DBC payments? In the 
event the Department finalizes a rule to allow carriers to provide DBC 
payments in electronic formats in lieu of cash or check payments, 
should the rule take effect right away or is there a need for a sunset 
period for the cash and check payments mandate to be eliminated? How 
long should the sunset period be?
    Since the issuance of the 2011 final rule in which the Department 
declined to address the issue of allowing alternative DBC payment 
methods, the Department has engaged in discussions with the airline 
industry on this matter. These discussions with stakeholders have 
provided valuable information for the Department to preliminarily 
assess the benefits and limitations of electronic funds. With respect 
to benefits, we recognize that for security and administrative reasons, 
most, if not all, carriers may prefer to tender DBC in the form of 
checks instead of cash. We acknowledge that there are situations in 
which there is no time for the passenger to wait for a check or the 
carrier is unable to issue the check immediately following the denied 
boarding. In these situations, carriers are required to mail a check 
within 24 hours, but as a

[[Page 11661]]

practical matter, consumers oftentimes would not have access to the 
money for many days because of the time needed for the checks to arrive 
at their designated addresses by mail, the likelihood that the bumped 
passengers may be traveling and not at their residences to receive the 
checks, and the time necessary for depositing the checks into their 
bank accounts. In contrast to checks, electronic funds oftentimes are 
much easier ways for consumers to access the money. For example, 
prepaid cards provide consumers a convenient way to immediately 
withdraw cash from an automated teller machine (ATM) or allow them to 
use the cards for purchases at retail stores and in online 
transactions. Similarly, electronic fund transfers via a banking system 
or through an intermediary platform, such as PayPal, provides consumers 
access to the money in a much faster and convenient manner. These funds 
are also available for online transactions. From the carriers' 
perspective, issuing DBC in electronic formats can facilitate a 
computerized and centralized DBC management system, eliminate the need 
to manually issue and mail checks, increase efficiency, and decrease 
the chance of fund mismanagement. For purpose of this rulemaking, we 
invite the public as well as experts in the banking industry to comment 
on any other benefits of using these electronic forms of payment to 
issue DBC. Are there any specific distinctions among prepaid cards, and 
various electronic fund transfer platforms (including directly 
transferring funds to the passengers' bank accounts and to accounts 
with intermediary transfer services such as PayPal) that are pertinent 
in making a form or forms of DBC payment more preferable than others? 
What type or types of payment are most likely accessible to the 
majority of consumers? Should the carriers be required to provide 
payments in cash or check if the offer of electronic payments are 
rejected by a passenger for the reason that it is inaccessible to that 
individual? What are the estimated administrative costs to carriers for 
managing these electronic payment systems, including administration 
fees and services fees paid to financial institutions or intermediary 
fund transfer entities, if any? How are these costs compared to the 
cost of managing cash or check DBC payments at both headquarters and 
station levels?
    With respect to limitations of electronic DBC payments, we found 
that, compared to cash or check payments, many prepaid cards have 
shorter validity periods than a typical check instrument; some cards 
impose various fees on users; and when withdrawing cash with the cards 
at ATMs, there are often withdrawal limits, usage fees, and other 
conditions attached. For commonly known electronic fund transfer 
methods, we are not aware of any fees imposed on the recipients of the 
funds. With respect to fees imposed on the providers of the funds (the 
airlines), we lack information on whether they exist and, if so, in 
what format. We welcome public comments on this issue. As our goal is 
to find means of payment that are equivalent to cash or check and, at 
the same time, increases efficiency and convenience, in this NPRM, we 
propose certain conditions that carriers must meet if they choose to 
offer electronically stored or transferred funds in lieu of cash or 
check DBC payments. These conditions are intended to eliminate 
characteristics or fees associated with electronically stored or 
transferred funds that may render the payment less than its value in 
U.S. dollars. We seek comments on whether these proposed conditions are 
necessary to ensure passengers' rights to adequate and prompt DBC 
payments, and whether instead of imposing these conditions, a 
performance-based standard that merely requires the DBC payment to be 
``cash equivalent'' would be sufficient to achieve our goal. Would a 
performance-based standard without specific conditions as the ones 
proposed here be more appropriate to adapt to the ever-changing 
technology in fund payment and transfer? Would a performance-based 
standard without conditions more likely cause confusion and uncertainty 
regarding compliance among carriers?
(1) Validity Period and Residual Value
    The current rule does not have a specific minimum validity period 
requirement for DBC payments in the form of checks. According to 
Article 4 of the Uniform Commercial Code, a bank receiving the check 
may, but is not obligated to, pay a check that is more than six months 
old. See U.C.C. Sec.  4-404 (2002). As many prepaid cards have an 
expiration date, in the NPRM, we propose that to be considered cash 
equivalent, an electronic fund's validity period must be no less than 
90 days from the date the passenger receives the fund, or from the date 
the fund is activated, if activation is required, whichever gives the 
longer validity period. We seek information on what the common validity 
period of widely available electronic funds, such as prepaid cards, 
are, if any. If it is shorter than the typical check's validity period 
(no longer than six months), should the carriers be required to extend 
the validity period of the cards to match that of a check? Are there 
any technical issues with extending a card's validity period to six 
months or more? Are there any validity periods imposed on funds 
transferred via platforms owned and operated by other intermediary 
entities such as PayPal? In relation to the validity period of the 
funds, if there is any value left at the end of the validity period, 
should the carriers be required to provide the fund to consumers upon 
request?
(2) Amount of DBC Issued by Electronic Methods
    14 CFR 250.5 specifies the amount of DBC a carrier must provide to 
an eligible passenger following an involuntary denied boarding 
incident. The amount of DBC varies depending on whether the flight from 
which the passenger was bumped was a domestic or international flight, 
the expected delay caused by the denied boarding, and the amount of 
fare paid by the passenger. In addition to the prescribed calculation 
formula, section 250.5 specifies that carriers are not required to pay 
above a certain amount though carriers can always choose to do so. In 
this NPRM, we are not proposing any changes to the methods of 
calculating the amount of DBC or the amount above which carriers are 
not required to pay (currently at $675 and $1,350). However, 
considering that some prepaid funds and/or electronically transferred 
funds may incur usage fees for consumers when they attempt to access 
cash via ATMs, we are proposing to require carriers to take into 
account these usage fees when determining the amount that must be 
available from the electronic funds. For example, withdrawing cash from 
an ATM with a prepaid card may incur usage charges. Some bank-owned 
ATMs charge usage fees solely to users who are not customers of the 
bank where the ATM is installed; some ATM usage fees are charged to all 
users. Further, many ATMs impose a limitation on the amount of cash one 
can withdraw at a time or daily, and as a result, a consumer may have 
to make several withdrawals to access the full amount of DBC and 
therefore, paying multiple usage fees. As such, if a passenger is 
entitled to a DBC payment of $1,350 that is provided in a prepaid card, 
and the card provided to the passenger has a $300 limit on the amount 
that can be withdrawn at one time and a $5 fee for each withdrawal, 
then the carrier would need to increase the amount of DBC payment on 
the card by $25. The example of $25 or ATM usage fees

[[Page 11662]]

would cover up to five withdrawals at $5 per withdrawal. Are carriers 
able to provide prepaid cards that can be used at most ATMs without 
usage charges (e.g., carriers prepay for the anticipated charge)? If 
not, is there a reasonable amount to cover withdrawal service fees for 
most instances, or would a determination need to be made on a case by 
case basis?
    In addition to the amount specific to cover ATM usage fees, our 
proposal also prohibits carriers from imposing on consumers any other 
usage-related or any maintenance-related charges for the prepaid 
cards.\4\ Our proposal does not intend to require carriers to cover all 
the fees that can be charged to a prepaid card, such as cash reload 
fee, or card-to-card transfer fee, but we intend to require carriers to 
cover any fees that a consumer must pay in order to maintain the 
validity of the cards.\5\ Examples of these fees are weekly or monthly 
maintenance fees, non-activity fees, balance inquiry fees, and customer 
service call surcharges. Our goal is to ensure that passengers receive 
the same amount of DBC payment through electronic format as if they are 
paid by cash or check. We seek public comment on commonly charged fees 
that carriers should be responsible for in order to achieve that goal.
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    \4\ Examples of common fees for prepaid cards can be found on a 
web page posted on the Consumer Financial Protection Bureau's 
website lists. See, https://www.consumerfinance.gov/consumer-tools/prepaid-cards/understand-fees/.
    \5\ Because we are proposing that an electronic cash equivalent 
payment should be valid for at least 90 days, carriers would be 
responsible for 90 days of maintenance fees for a card to the extent 
there is such a fee.
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    Further, because DBC payments often occur in the context of 
international travel, we specifically note that our proposed additional 
amount for DBC payment by electronic format to cover usage fees such as 
ATM fees does not intend to cover any foreign exchange fees that 
usually occur when a card issued by a U.S. entity is used at an ATM 
overseas for cash withdrawal or for purchase in foreign currency. This 
is consistent with the current rule that requires cash or cash 
equivalent to be provided in U.S. dollars and does not require the DBC 
amount to cover any foreign exchange fees should the consumers wish to 
exchange the U.S. dollars into another currency.
    Under the proposal, DBC payments that are transferred 
electronically to a passenger's bank account would presumably become 
accessible for cash withdrawal with the passenger's own bank debit 
card. For electronic fund transfers to intermediary accounts, such as 
PayPal, are there any convenient ways to get cash from the account? If 
not, is the lack of easy and immediate access to cash a big concern for 
consumers? Are there fees charged to the recipients for the most 
commonly used means of electronic fund transfer? Should the Department 
prescribe the specific means of electronic fund transfer that carriers 
may use to pay DBC, or, is a performance-based standard within which 
carriers are free to choose the preferred means of electronic fund 
transfer a better option?
(3) Timeliness of Issuing DBC by Electronic Means
    To ensure that passengers who are denied boarding involuntarily 
receive the DBC payments that they are entitled to in a timely manner, 
the current rule, in section 250.8 requires that the DBC payment must 
be tendered to passengers on the day and at the place where the denied 
boarding occurred, or, in the event that carriers arrange alternate 
transportation that departs before the DBC payment can be prepared and 
tendered, carriers must tender the payment by mail or other means 
within 24 hours of the denied boarding. In this NPRM, we are proposing 
to maintain this requirement with respect to DBC payments made by cash, 
check, and cash equivalent provided electronically. We are proposing 
that tendering payment within 24 hours of the denied boarding may 
include but is not limited to mailing a check or prepaid card to a 
passenger within 24 hours of the denied boarding or initiating a fund 
transfer to the passenger's account within 24 hours of the denied 
boarding. Is this 24-hour requirement reasonable and adequate for the 
purpose of tendering electronic cash equivalent?
(4) Type of Electronic Funds and Their Usage in Commerce
    In this NPRM, we are proposing to allow any type of electronic 
payment that is considered ``cash equivalent.'' To be equivalent to 
cash, we consider that the payment must be widely accepted in commerce 
for purchases. For example, a prepaid card can be an open-loop or 
closed-loop card. An open-loop prepaid card is a card with a credit 
card network logo on it that can be used for purchase at any location 
that accepts that brand. Examples of the most commonly accepted credit 
card networks are Visa, MasterCard, American Express, and Discover. All 
prepaid cards that bear one of the major networks' logos can also be 
used at most ATMs for cash withdrawal. In contrast, a closed-loop card 
is a card that can only be used for purchase at a specific merchant or 
a group of merchants and they usually cannot be used to withdraw cash 
at an ATM. A typical example of closed-loop card is a gift card for a 
particular store brand. In the NPRM, we propose that the prepaid card 
provided to consumers as DBC payment must be an open-loop card so 
consumers are not restricted with a particular merchant when using the 
fund for purchase and consumers are able to access cash with the card 
if so preferred. Furthermore, we note that most ATMs are connected to 
interbank networks, enabling consumers to withdraw and deposit money 
from machines not belonging to the bank where they have their accounts 
or not in the country where their accounts are held (enabling cash 
withdrawals in local currency). As such, we are also including in our 
proposal prepaid card payments that allow consumers to withdraw cash 
from any major interbank network that is widely available, such as 
NYCE, PULSE, PLUS, and Cirrus, as a permissible type of payments for 
DBC. We ask for comments on whether our proposal is sufficient to 
ensure that the electronic payments are cash equivalent and can easily 
be used to withdraw cash at airports and other locations.
(5) Disclosure and Compliance With Regulation E
    The Consumer Financial Protection Bureau (CFPB) rule implementing 
the Electronic Fund Transfer Act, 12 CFR part 1005 (Regulation E),\6\ 
along with its appendixes (Model Disclosure Clauses and Forms and CFPB 
Official Interpretations), prescribes various disclosure requirements 
for, among other things, ``electronic fund transfers'' \7\ and 
``general-use prepaid card.'' \8\ To the extent that a carrier

[[Page 11663]]

provides DBC payment by a method within the meaning of ``electronic 
fund transfer'' as defined in Regulation E, we expect that carriers 
(which are under the Department's jurisdiction) and/or the financial 
institutions or other entities they use to provide or facilitate the 
DBC payments (which may fall under the jurisdiction of CFPB) comply 
with the requirements of Regulation E. Consistent with the goal of 
Regulation E and our authority under 49 U.S.C. 41712 against unfair and 
deceptive practices, in this NPRM, we propose to require that carriers 
provide conspicuous written disclosure of all material restrictions and 
conditions associated with using and maintaining the card at the time 
the card is tendered to the passenger. Examples of such conditions 
would be expiration date, activation requirement, pin requirement, ATM 
withdrawal fees, daily withdrawal amount limit, and network limit, etc. 
We encourage individuals and entities having pertinent familiarity with 
Regulation E to provide input on its applicability towards any DBC 
payment methods proposed in this notice, and whether there are any 
difficulties for carriers and others to comply with both Regulation E 
and our proposals. At this time, we are not proposing to prescribe the 
manner of written disclosure carriers must use to notify passengers of 
the limits and restrictions associated with the cards, nor are we 
proposing the specific language of the disclosure. Consistent with our 
proposal to allow carriers to provide written notice of denied boarding 
compensation and boarding priority by electronic means, which will be 
discussed below, we also propose to allow carriers to provide 
disclosures of the limits and restrictions on electronic DBC payment by 
electronic means upon consumers' consent. We ask public input on 
whether we should require this disclosure to be incorporated into the 
written notice that carriers are required to provide under section 
250.9, when applicable, or whether it is better to provide a standalone 
disclosure document.
---------------------------------------------------------------------------

    \6\ The Electronic Fund Transfer Act establishes the basic 
rights, liabilities, and responsibilities of consumers who use 
electronic fund transfer and remittance transfer services and of 
financial institutions or other persons that offer these services. 
The primary objective of the Act and 12 CFR part 1005 is the 
protection of individual consumers engaging in electronic fund 
transfers and remittance transfers. See 12 CFR 1005.1.
    \7\ For Regulation E's definition for ``electronic fund 
transfer,'' see FN 2.
    \8\ 12 CFR part 1005 defines ``general-use prepaid card'' as a 
card, code, or other device that is issued on a prepaid basis 
primarily for personal, family, or household purposes to a consumer 
in a specified amount, whether or not that amount may be increased 
or reloaded, in exchange for payment; and redeemable upon 
presentation at multiple, unaffiliated merchants for goods or 
services, or usable at automated teller machines. See 12 CFR 
1005.20(a)(3). Further, the rule specifically states that its 
requirements covering ``general-use prepaid cards'' exclude any 
cads, code, or device that is not marketed to the general public. As 
such, it is our preliminary understanding that carrier-issued DBC 
payment in the form of prepaid card may not be covered by 12 CFR 
1005.20 if it is not marketed to the general public. It may still 
have to comply with other sections of Regulation E.
---------------------------------------------------------------------------

    As a final matter for this subject, we emphasize that our proposal 
would allow carriers to choose from cash, check or cash equivalent 
electronic payments as a form of mandatory denied boarding compensation 
payments. Further, this proposal would not impact the ability of 
carriers to offer consumers a choice between flight vouchers or credits 
and the mandatory denied boarding compensation payments. For 
clarification purpose, we propose to revise the rule text in section 
250.5(c) to make it clear that airlines may offer consumers the option 
of choosing either free or reduced rate air transportation or the 
required DBC payment.

2. Denied Boarding Notice in Electronic Format

    The requirement for carriers to provide a written notice regarding 
denied boarding rights was included in the original oversales final 
rule in 1978. The stated goal is to ensure that passengers affected by 
oversales understand what they are entitled to and are able to make an 
informed choice between accepting DBC or any other compensation offers 
carriers may present. In this NPRM, we propose to allow carriers to 
provide this notice electronically, such as by display on an airline 
tablet, or by email or text message with a link to the actual notice on 
the internet if the passenger has a device with him or her on which to 
access this information. However, in our proposal, if a passenger does 
not consent to receive this notice in electronic format and instead, 
requests a print copy, carriers must produce the print copy. Our 
concern with eliminating the requirement of providing printed notice 
upon request is that the passenger may want not only to read the notice 
and understand his or her rights in a timely manner before making a 
decision about denied boarding compensation, but also to retain a copy 
for further review at a later time. We assume that most if not all 
carriers are able to produce a print copy using computer terminals at 
the gates or counters, as many of them already do currently. We solicit 
comment regarding the benefit and costs of proposing to require 
carriers to provide printed notice to the passenger upon request. We 
also request information regarding the availability of email or text 
messages to passengers when they travel.
    With respect to the format of the electronic notice, we ask whether 
carriers may provide emails or text messages that include a link to the 
actual notice on a webpage that is a part of the carriers' websites, or 
whether carriers should be required to provide the text of the notice 
via emails. Is there any substantial difference between these two 
formats that affects passengers' access to the content of the notice? 
For carriers that have mobile applications available for consumers to 
download on their mobile devices, is including the notice in the mobile 
applications sufficient for the purpose of oversales disclosure? 
Passengers with disabilities are normally not subject to involuntary 
denied boarding as airlines boarding priority rules often take into 
account a passenger's disability, and the current rule does not require 
carriers to provide the written notice in an accessible format for 
these passengers. However, we note that the Department's rule 
implementing the Air Carrier Access Act, 14 CFR part 382, requires that 
carriers' primary websites must conform to certain accessibility 
standards \9\ by December 12, 2016, and that requirement would cover 
the denied boarding notice published on carriers' websites. We view 
this as an additional benefit of allowing carriers to provide denied 
boarding notice electronically--by providing the notice in accessible 
electronic format, passengers with disabilities who under the current 
rule may not have access to the content of the notice would gain access 
without assistance.
---------------------------------------------------------------------------

    \9\ 14 CFR 382.43(b) requires carriers' primary websites to 
conform to all Success Criteria and all Conformance Requirements 
from the World Wide Web Consortium (W3C) Recommendation 11 December 
2008, website Content Accessibility Guidelines (WCAG) 2.0 for Level 
AA.
---------------------------------------------------------------------------

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    This proposed rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 (58 FR 51735, October 4, 1993), Regulatory 
Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January 
21, 2011), Improving Regulation and Regulatory Review. Accordingly, the 
Office of Management and Budget (OMB) has not reviewed it under that 
Order. It is also not significant within the meaning of DOT regulatory 
policies and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR 
11034 (February 26, 1979)).
    This proposed rule is expected to provide regulatory relief to 
airlines, while at the same time maintaining aviation consumer 
protections for passengers. The proposed rule would amend the denied 
boarding compensation requirements of sections 250.5 and 250.8 to allow 
carriers to use cash equivalent electronic payment in lieu of cash or 
check to provide compensation to passengers that are denied boarding 
involuntarily and are eligible for denied boarding compensation. The 
proposed rule would also amend the requirements of section 250.9 to 
allow carriers to provide the mandatory written explanation of denied 
boarding compensation by electronic means in lieu of a paper copy

[[Page 11664]]

with the consent of the passenger. The proposed rule would not impact 
the existing requirements regarding denied boarding compensation 
eligibility for passengers that are denied boarding involuntarily, or 
the existing requirements regarding the methods of calculating the 
amount of compensation for passengers that are denied boarding 
involuntarily.
    The primary entities that would be affected by this proposed rule 
are U.S. and foreign carriers to which the requirements of 14 CFR part 
250 apply, and passengers with confirmed reserved space on scheduled 
flight segments operated by those carriers and that are denied boarding 
involuntarily and are eligible for denied boarding compensation. The 
requirements of 14 CFR part 250 apply to carriers that operate 
scheduled flight segments using an aircraft that has a designed 
passenger capacity of 30 or more passenger seats, operating in 
interstate air transportation or providing foreign air transportation 
on flight segments originating in the United States. It is currently 
estimated that there are approximately 45 U.S. carriers and 65 foreign 
carriers to which the requirements of 14 CFR part 250 apply.
    Airlines are required to pay compensation to certain passengers who 
are involuntarily denied boarding from flights on which they hold 
confirmed reservations. The amount of the compensation depends on the 
length of delay to their destination. The practice, known as 
``bumping'' or ``denied boarding,'' happens occasionally when there are 
more passengers scheduled to fly on an airplane than available seats. 
In rare circumstances, this practice may be needed to accommodate a 
Federal Air Marshall on the plane. When such an oversales situation 
occurs, airlines are first required to ask if there are passengers 
willing to give up their seats voluntarily in exchange for 
compensation, which could include a variety of incentives including 
money or flight vouchers, for example. Passengers who choose to give up 
their seat are considered to have been ``voluntarily denied boarding.'' 
If there are not enough volunteers available, any other additional 
passenger denied boarding is considered to have been ``involuntarily 
denied boarding.''
    Currently, airlines are required to offer cash or check for 
compensation to passengers who are involuntarily denied boarding and 
are eligible for compensation, in the amount of 200 percent of the 
passenger's one-way fare to their destination or first stopover, up to 
$675, if the delay is 1 to 2 hours (1 to 4 hours in foreign air 
transportation where involuntary denied boarding takes place at a U.S. 
airport), and 400 percent of the fare, up to $1,350, if the delay is 
over 2 hours (over 4 hours in foreign air transportation where 
involuntary denied boarding takes place at a U.S. airport). Airlines 
may offer consumers a choice between the required denied boarding 
compensation and free or reduced fare air transportation compensation 
at equal to or greater value (in addition to finding alternate 
transportation for the denied flight). However, the passenger 
involuntarily denied boarding may decline this transportation benefit 
in favor of cash or check. Airlines often do not hold cash at boarding 
locations and handle the compensation by mailing a check within 24 
hours of the time of denied boarding.
    Table 1 below provides a summary of the annual reported number of 
involuntarily denied boardings for the most recent five year period for 
which data was available (calendar years 2013 through 2017).

                                                    Table 1--Passengers Involuntarily Denied Boarding
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Passengers involuntarily denied boarding
                                                                       ---------------------------------------------------------------------------------
                                                                         Not eligible for        Eligible for compensation                Total
                                               Number of      Total        compensation    -------------------------------------------------------------
                Calendar year                  reporting     enplaned  --------------------                        Rate per                  Rate per
                                                carriers    passengers                                 Percent      10,000                    10,000
                                                                         Number    Percent   Number   of total     passenger     Number      passenger
                                                                                  of total                       enplanements              enplanements
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013........................................           16  620,515,005    14,642        26    42,354        74            0.68    56,996            0.92
2014........................................           14  601,733,197    14,330        28    35,957        72            0.60    50,287            0.84
2015........................................           14  645,055,901    17,801        36    31,767        64            0.49    49,563            0.77
2016........................................           12  660,618,265    16,724        41    24,402        59            0.37    41,126            0.62
2017........................................           12  680,889,723     8,680        37    14,543        63            0.21    23,223            0.34
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Average........................................................    14,435        33    29,805        67            0.46    44,239            0.69
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: U.S. Department of Transportation. Bureau of Transportation Statistics. Data from Form 251 ``Report of Passengers Denied Confirmed Space.'' Data
  available at: https://www.bts.gov/denied-confirmed-space (accessed May 4, 2018).

    As presented in Table 1, over the most recent five year period, 
those U.S. carriers meeting the reporting requirement threshold \10\ 
for oversales data recorded an average of approximately 45,000 
involuntarily denied boardings annually, with the number steadily 
decreasing throughout this period from a high of 57,000 in 2013 to a 
low of 23,000 in 2017. Over the same time period, total passenger 
enplanements for these reporting carriers (excluding inbound 
international service, to which the oversales regulations are not 
applicable) have increased from 621 million in 2013 to 681 million in 
2017, resulting in an even greater decrease in the rate of 
involuntarily denied boardings per 10,000 passenger enplanements, from 
0.92 in 2013 to only 0.34 in 2017.\11\
---------------------------------------------------------------------------

    \10\ For the five years presented in the table, the reporting 
requirement threshold was U.S. airlines with at least 1.0% of total 
domestic scheduled-service passenger revenues. As of 2018, the 
reporting requirement threshold is U.S. airlines with at least 0.5% 
of total domestic scheduled-service passenger revenues, resulting in 
a somewhat higher number of reporting carriers (17 reporting 
carriers as of April 2018).
    \11\ U.S. Department of Transportation. Bureau of Transportation 
Statistics. Data from Form 251 ``Report of Passengers Denied 
Confirmed Space.'' Data available at: https://www.bts.gov/denied-confirmed-space (accessed May 4, 2018).
---------------------------------------------------------------------------

    As also presented in Table 1, only about two-thirds of total 
involuntarily denied boardings are eligible for compensation and 
therefore would potentially be affected by the proposed rule. The 
remaining one-third of involuntarily denied boardings are not eligible 
for compensation, and therefore would not be affected by the proposed 
rule.\12\ Over the most recent five year

[[Page 11665]]

period, there were an average of 30,000 involuntarily denied boardings 
eligible for compensation annually, again with the number steadily 
decreasing throughout this period from a high of 42,000 in 2013 to a 
low of 15,000 in 2017. Early indications from data available for the 
first 6 months of 2018 show a continued decline in the number of 
involuntarily denied boardings.\13\
---------------------------------------------------------------------------

    \12\ The reasons for which a passenger who is involuntarily 
denied boarding would not be eligible for compensation are 
enumerated in section 250.6, which remains unchanged in the proposed 
rule. These reasons include: receiving comparable transportation 
that is scheduled to arrive within one hour of the original flight; 
receiving seating at no extra charge in a class or section of the 
aircraft different than that specified on the ticket, and receiving 
an appropriate refund if the fare charged in the new class or 
section is lower than that for the original ticket; failing to 
comply with ticketing, check-in, or reconfirmation procedures; an 
aircraft of smaller capacity is substituted for the original 
aircraft for operational or safety reasons; or an aircraft of 60 of 
fewer seats has weight/balance restrictions for operational or 
safety reasons.
    \13\ U.S. Department of Transportation. Office of Aviation 
Enforcement and Proceedings. ``Air Travel Consumer Report.'' October 
2018. Page 41. Available at: https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/aviation-consumer-protection/323346/october2018atcr.pdf (accessed on November 13, 
2018). For the 6 months of January through June of 2018, 17 
reporting airlines recorded a total of only 4,685 involuntarily 
denied boardings. During the same 6-month period in 2017, 12 
reporting airlines recorded 17,757 involuntarily denied boardings, 
nearly four times as many, despite the smaller number of 12 airlines 
meeting the reporting requirement threshold for 2017 (U.S. airlines 
with at least 1.0% of total domestic scheduled-service passenger 
revenues), as compared to larger number of 17 airlines meeting the 
reporting threshold for 2018 (U.S. airlines with at least 0.5% of 
total domestic scheduled-service passenger revenues).
---------------------------------------------------------------------------

    The number of carriers that are required to report oversales data 
to the Department on Form 251 (17 U.S. carriers as of April 2018) 
represent only a portion of the estimated number of carriers to which 
the oversales requirements of 14 CFR part 250 apply (45 U.S. carriers, 
and 65 foreign carriers). However, because this smaller number of 
reporting carriers are the top-ranked U.S. carriers in terms of 
domestic scheduled-service passenger revenues, they are believed to 
represent a disproportionately large share of the total involuntarily 
denied boardings that occur among the full population of the estimated 
45 U.S. carriers and 65 foreign carriers to which the oversales 
requirements of 14 CFR part 250 apply. Therefore, the data presented 
above from the reporting carriers are still believed to be reasonably 
representative in describing the extent to which passengers that are 
involuntarily denied boarding and are eligible for compensation would 
potentially be affected by the proposed rule.
    Overall, the information presented above supports the conclusion 
that the maximum expected number of passengers traveling on U.S. 
carriers that would experience any potential impact from the proposed 
rule is very limited (only 0.0021% of enplanements in 2017), has been 
steadily decreasing over the past several years, and appears to be 
continuing that trend based on data thus far available for 2018. The 
Department does not require foreign air carriers to report the number 
of passengers who are involuntarily denied boarding on their outbound 
international flights from the U.S., and therefore such data are 
unavailable. However, anecdotal evidence suggests that among foreign 
carriers the rate of involuntarily denied boardings, and the percentage 
of involuntarily denied boardings that are eligible for compensation, 
are generally comparable to those of U.S. carriers.
    Passengers denied boarding voluntarily receive compensation in a 
variety of forms, including through electronic payment methods. Making 
cash equivalent electronic payment (with appropriate consumer 
protections) available to the airlines for involuntary denied boarding 
compensation will expand the flexibility that already exists in the 
market. While offering this flexibility and greater choice to the 
airlines, the proposed rule ensures passengers are protected by 
specifying cash equivalent electronic payment, and by limiting the 
extent to which certain fees sometimes associated with cash equivalent 
electronic payment can be imposed.
    Under the proposed amendments to the requirements of section 250.9 
that a written explanation of denied boarding compensation be furnished 
to passengers that are denied boarding involuntarily, carriers would be 
allowed to furnish this notice by electronic means with the consent of 
the passenger. It is anticipated that carriers would realize a cost 
savings from this proposed amendment. These cost savings are expected 
to result from reductions in the number of hardcopy printed written 
statements that would be furnished by carriers to passengers, and the 
associated cost savings from reductions in paper, printing, 
distribution, and storage. The magnitude of these potential costs 
savings to carriers cannot be estimated, in part because under the 
proposed rule the decision by a carrier to furnish the written 
statement by electronic means is discretionary, as is the decision by a 
passenger to choose an electronic version of the written statement when 
one is offered by a carrier rather than a hardcopy printed version.
    Both proposals are expected to provide modest cost savings to 
airlines from reductions in costs of handling and processing cash and 
checks, and reductions in costs of printing and distributing hardcopy 
printed statements. The decision by an airline to offer cash equivalent 
electronic payment, or an electronic version of written explanation of 
denied boarding, is discretionary. Therefore, it is expected that an 
airline would only adopt these options to the extent that they result 
in net cost savings. Because of the discretionary nature of these 
choices, the total potential cost savings of these proposals to 
airlines cannot be estimated. However, due to the relatively small 
number of passengers denied boarding involuntarily and eligible for 
compensation, the cost savings to airlines are expected to be modest. 
Nonetheless, recent comments provided by the airline industry indicate 
that carriers do believe that they would realize cost savings from 
being allowed the option to provide cash equivalent electronic payment 
for denied boarding compensation in lieu of cash or check, and from 
being allowed the option to furnish the written explanation of denied 
boarding by electronic means.\14\
---------------------------------------------------------------------------

    \14\ ``Comments of Airlines for America. Part Two: Proposals for 
Repeal or Amendment of Specific DOT Economic Regulations.'' December 
1, 2017. Docket ID number DOT-OST-2-17-0069-2751. Pages 64-65. 
December 4, 2017. Available at: https://www.regulations.gov/
contentStreamer ?documentId=DOT-OST-2017-0069-2751&attachmentNumber 
=1&contentType =pdf (accessed May 2, 2018).
---------------------------------------------------------------------------

B. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs)

    This proposed rule is expected to be an E.O. 13771 deregulatory 
action. Details on the estimated cost savings of this proposed rule can 
be found in the rule's economic analysis.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq.) 
requires Federal agencies to consider the effects of their regulatory 
actions on small businesses and other small entities, and to minimize 
any significant economic impact. When an agency issues a rulemaking 
proposal, the RFA requires the agency to ``prepare and make available 
for public comment an initial regulatory flexibility analysis'' which 
will ``describe the impact of the proposed rule on small entities'' (5 
U.S.C. 603(a)). Section 605 of the RFA allows an agency to certify a 
rule, in lieu of preparing an analysis, if the proposed rulemaking is 
not expected to have a significant economic impact on a substantial 
number of small entities.
    The primary entities that would be affected by this proposed rule 
are carriers to which the requirements of 14 CFR part 250 apply, and 
passengers

[[Page 11666]]

with confirmed reserved space on scheduled flight segments operated by 
those carriers and that are denied boarding involuntarily and are 
eligible for denied boarding compensation. Airline passengers are not 
considered small entities because they do not meet the definition of a 
small entity in Section 601 of the RFA. Under 14 CFR 399.73, for the 
purposes of the Department's implementation of the RFA, a carrier is a 
small business if it provides air transportation exclusively with small 
aircraft, defined as any aircraft originally designed to have a maximum 
passenger capacity of 60 seats or less or a maximum payload capacity of 
18,000 pounds or less.
    The requirements of 14 CFR part 250 apply to carriers that operate 
scheduled flight segments using an aircraft that has a designed 
passenger capacity of 30 or more passenger seats, operating in 
interstate air transportation or providing foreign air transportation 
on flight segments originating in the United States. It is currently 
estimated that there are approximately 45 U.S. carriers and 65 foreign 
carriers to which the requirements of 14 CFR part 250 apply. Of these, 
there may be some that qualify as a small business according to the 
Department's size standard under 14 CFR 399.73 (exclusively using 
aircraft of 60 seats or less). However, the Department believes that 
the number of such carriers is very small. For example, based April 
2018 aircraft registration data from the Federal Aviation 
Administration for manned-aircraft, less than one percent of registered 
aircraft (2,054 of 294,387 total aircraft) are aircraft designed with a 
capacity of 30 to 60 passengers seats. There are also very few foreign 
carriers that fly to and from the United States that provide air 
transportation only with small aircraft of 60 seats or less. Given the 
relatively small number of aircraft that fall within the size range of 
interest, and the small number of foreign carriers believed to operate 
only with aircraft of 60 seats or less, the Department believes that 
there would be very few carriers that are both subject to 14 CFR part 
250 and that are providing air transportation exclusively with small 
aircraft with a maximum passenger capacity of 60 seats or less or a 
maximum payload capacity of 18,000 pounds or less. Therefore, the 
Department believes that the proposed rule will not have an impact on a 
substantial number of small entities.
    As described earlier, due to the relatively small number of 
passengers that are denied boarding involuntarily and that therefore 
may be affected by the proposed rule, the potential cost savings to 
airlines of the proposed rule are expected to be modest, and relative 
to the gross revenues or profits of any affected airlines would not 
constitute a significant economic impact.
    Accordingly, the Department certifies that the proposed rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. The Department invites comment on 
this certification and on the analysis presented in support of it.

D. Executive Order 13132 (Federalism)

    This NPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism''). This 
notice does not propose 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.

E. Executive Order 13084

    This NPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). Because none of the 
options on which we are seeking comment would 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 13084 do not apply.

F. Paperwork Reduction Act

    This NPRM proposes a new collection of information that would 
require approval by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (Pub. L. 104-13, 49 U.S.C. 3501 et 
seq.). Under the Paperwork Reduction Act, before an agency submits a 
proposed collection of information to OMB for approval, it must publish 
a document in the Federal Register providing notice of the proposed 
collection of information and a 60-day comment period, and must 
otherwise consult with members of the public and affected agencies 
concerning the proposed collection.
    The collection of information proposed here is a requirement that 
carriers choosing to issue DBC by prepaid cards, electronic fund 
transfer, or other cash equivalent methods provide conspicuous written 
disclosure to passengers about any restrictions and limitation on the 
use and maintenance of the funds. The title, a description of the 
respondents, and an estimate of the annual recordkeeping burden are set 
forth below:
    REQUIREMENT FOR CARRIERS TO PROVIDE WRITTEN DISCLOSURE ON LIMITS 
AND RESTRICTIONS OF ELECTRONIC PAYMENTS THAT ARE CASH EQUIVALENT 
OFFERED AS DENIED BOARDING COMPENSATION.
    Respondents: U.S. carriers that operate scheduled passenger service 
using an aircraft that has a designed passenger capacity of 30 or more 
passenger seats, and foreign air carriers that operate scheduled 
passenger service to and from the United States using an aircraft that 
has a designed passenger capacity of 30 or more passenger seats.
    Number of Respondents: 110 (45 U.S. carriers and 65 foreign 
carriers; assuming all U.S. and foreign carriers covered under 14 CFR 
part 250 choose to provide DBC by electronic payments that are cash 
equivalent).
    Estimated Annual Burden on Respondents: 3,125 hours per year for 
all respondents. This estimate is based on an average of approximately 
45,000 passengers that were involuntarily denied boarding annually by 
reporting carriers \15\ in the last five years between 2013 and 2017, 
among which an average of 67 percent were legally eligible for 
compensation, averaging 30,000. According to data collected by the 
Department, these reporting carriers' combined annual U.S.-originating 
passenger enplanements counted for approximately 80 percent of the 
total annual enplanements for U.S.-originating passengers carried by 
all U.S. and foreign carriers. Based on this data, we estimate that the 
total number of passengers that were denied boarding annually by all 
carriers subject to Part 250 and are legally entitled to DBC to be 
37,500 (80 percent of which were denied boarding by reporting carriers 
and 20 percent by all other carriers) \16\. We estimate an average 
burden of 5

[[Page 11667]]

minutes for the disclosure required by this proposal per passenger 
denied boarding involuntarily. The total estimated annual burden on all 
respondents would be 37,500 x 5 minutes = 3,125 hours.
---------------------------------------------------------------------------

    \15\ For calendar years prior to 2018, reporting carriers for 
the purpose of submitting oversales data to the Department pursuant 
to 14 CFR 250.10 were U.S. carriers that accounted for at least 1 
percent of domestic scheduled passenger revenue. The list of 
reporting carriers were identified by BTS through the publication of 
reporting technical directives.
    \16\ The Department does not collect oversales data from smaller 
U.S. carriers that do not qualify as reporting carriers and foreign 
carriers, and we estimate that the actual percentage of passengers 
involuntarily denied boarding to be much smaller by the non-
reporting U.S. carriers and by foreign carriers at U.S. airports.
---------------------------------------------------------------------------

    Frequency: Disclosure is required each time a carrier provides DBC 
with an electronic DBC payment to a passenger who was denied boarding 
involuntarily.
    The Department invites interested persons to submit comments on any 
aspect of each of these two information collections, including the 
following: (1) The necessity and utility of the information collection, 
(2) the accuracy of the estimate of the burden, (3) ways to enhance the 
quality, utility, and clarity of the information to be collected, and 
(4) ways to minimize the burden of collection without reducing the 
quality of the collected information. Comments submitted in response to 
this notice will be summarized or included, or both, in the request for 
OMB approval of these information collections.

G. 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 notice.

H. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this 
proposed action 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 4.c.6.i of DOT Order 5610.1C categorically excludes 
``[a]ctions relating to consumer protection, including regulations.'' 
The purpose of this action is to explore additional means for U.S. and 
foreign air carriers to compensate passengers who are involuntarily 
denied boarding in an oversales situation and allow carriers to use 
electronic payment methods in lieu of cash or check DBC payments. The 
Department does not anticipate any environmental impacts, and there are 
no extraordinary circumstances present in connection with this 
rulemaking.

    Issued this 20th day of March, 2019, in Washington DC.
Elaine L. Chao,
Secretary of Transportation.

List of Subjects in 14 CFR Part 250

    Air carriers, Consumer protection, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Department proposes 
to amend title 14 CFR Chapter II as follows:

PART 250--OVERSALES [AMENDED]

0
1. The authority citation for 14 CFR part 250 continues to read as 
follows:

    Authority:  49 U.S.C. 329, and chapters 401102, 41301, 41708, 
and 41712.

0
2. Amend Sec.  250.5 by revising paragraph (c) to read as follows:


Sec.  250.5   Amount of denied boarding compensation for passengers 
denied boarding involuntarily.

* * * * *
    (c) Carriers may offer to consumers the option of choosing between 
free or reduced rate air transportation as a form of denied boarding 
compensation and the required cash, check, or cash equivalent 
electronic payments due under paragraphs (a) and (b) of this section, 
if--
    (1) The value of the transportation benefit offered, excluding any 
fees or other mandatory charges applicable for using the free or 
reduced rate air transportation, is equal to or greater than the cash/
check/cash equivalent electronic payment otherwise required;
    (2) The carrier fully informs the passenger of the amount of cash/
check/cash equivalent electronic compensation that would otherwise be 
due and that the passenger may decline the transportation benefit and 
receive the cash/check/cash equivalent electronic payment; and
    (3) The carrier fully discloses all material restrictions, 
including but not limited to, administrative fees, advance purchase or 
capacity restrictions, and blackout dates applicable to the offer, on 
the use of such free or reduced rate transportation before the 
passenger decides to give up the cash/check/cash equivalent electronic 
payment in exchange for such transportation. (See also Sec.  250.9(c)).
* * * * *
0
3. Amend Sec.  250.8 by revising paragraphs (a) and (b), and adding new 
paragraph (c) to read as follows:


Sec.  250.8   Denied boarding compensation.

    (a) Every carrier shall tender to a passenger eligible for denied 
boarding compensation, on the day and place the denied boarding occurs, 
except as provided in paragraphs (b) and (c), cash, an immediately 
negotiable check, or electronic payments that are equivalent to cash 
for the appropriate amount of compensation provided in section 250.5. 
Compensation paid by electronic payments that are cash equivalent shall 
be in the amounts described in sections 250.5(a) and 250.5(b), plus an 
additional amount, as appropriate, to cover potential usage charges 
described in paragraph (d).
    (b) Where a carrier arranges for the passenger's convenience, 
alternate means of transportation that departs before payment can be 
given to the passenger, tender shall be made within 24 hours after the 
time the denied boarding occurs. Tendering funds includes but is not 
limited to sending a check or prepaid card by mail, initiating an 
electronic transfer of funds to a passenger's account and sending an 
email or text message with link and instructions to access to funds.
    (c) Any electronic payments offered for denied boarding 
compensation as equivalent to cash must satisfy the following 
requirements:
    (1) The electronic fund must be valid for at least 90 days from the 
date the fund is tendered to the passenger who was involuntarily denied 
boarding, or from the date the fund is activated if activation is 
required, whichever is later;
    (2) Any electronic fund provided to consumers as cash equivalent 
for DBC payment must be a product that is widely accepted by major 
payment networks for purchases and must be available for cash 
withdrawal on major ATM networks;
    (3) The electronic fund must not impose on consumers maintenance-
related or other usage-related charges during the validity period as 
required by paragraph (c)(1) of this section, including but not limited 
to weekly or monthly maintenance fees, non-activity fees, balance 
inquiry fees, and customer service call surcharges. The electronic fund 
may impose other fees that are beyond the purpose of DBC payment, such 
as foreign transaction fees for purchases with or withdrawal of 
currency other than U.S. dollars.
    (4) Carriers must provide conspicuous written disclosure of all 
restrictions and conditions associated with using the electronic fund 
at the time the fund is tendered to the passenger, consistent with 
section 250.9(c).

[[Page 11668]]

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4. Amend Sec.  250.9 by revising paragraph (a), the ``Method of 
Payment'' section of paragraph (b), paragraph (c), and adding new 
paragraph (d) to read as follows:


Sec.  250.9   Written explanation of denied boarding compensation and 
boarding priorities, and verbal notification of denied boarding 
compensation.

    (a) Every carrier shall furnish passengers who are denied boarding 
involuntarily from flights on which they hold confirmed reserved space 
immediately after the denied boarding occurs, a written statement 
explaining the terms, conditions, and limitations of denied boarding 
compensation, and describing the carriers' boarding priority rules and 
criteria. The carrier shall also furnish the statement to any person 
upon request at all airport ticket selling positions which are in the 
charge of a person employed exclusively by the carrier, or by it 
jointly with another person or persons, and at all boarding locations 
being used by the carrier. Carriers may furnish this written statement 
by electronic means, unless the recipient specifically requests 
receiving it in a printed format. Statement furnished by electronic 
means shall be immediately accessible by commonly used electronic 
devices such as mobile phones or tablets.
    (b) * * *

Method of Payment

    Except as provided below, the airline must give each passenger 
who qualifies for involuntary denied boarding compensation a payment 
for the amount specified above, on the day and at the place the 
involuntary denied boarding occurs. The airline may choose to pay 
denied boarding compensation by cash, check, or electronic payments 
that are equivalent to cash payments. Denied boarding compensation 
paid by an electronic payment shall be in the amount specified above 
plus an additional amount, if appropriate, sufficient to cover any 
potential usage charges such as ATM withdrawal fees. The airline may 
not impose any other additional charges and fees for the use and 
maintenance of the electronic fund for at least 90 days from the 
date the fund becomes accessible to consumers. If the airline 
arranges alternate transportation for the passenger's convenience 
that departs before the payment can be made, the payment shall be 
sent to the passenger within 24 hours. The carrier may offer free or 
discounted transportation in place of the cash or cash equivalent 
payment. In that event, the carrier must disclose all material 
restrictions on the use of the free or discounted transportation 
before the passenger decides whether to accept the transportation in 
lieu of cash or cash equivalent payment. The passenger may insist on 
the required payment or refuse all compensation and bring private 
legal action.
* * * * *
    (c) In addition to furnishing passengers with the carrier's written 
statement as specified in paragraphs (a) and (b) of this section, if 
the carrier chooses to use cash equivalent electronic payments for 
denied boarding compensation payment, the carrier must disclose any 
material restrictions or conditions applicable to the payments to the 
involuntarily bumped passenger in writing at the time of tendering 
electronic funds. Carriers may provide this disclosure by electronic 
means, unless the recipient specifically requests receiving it in a 
printed format. Disclosure furnished by electronic means shall be 
immediately accessible by commonly used electronic devices such as 
mobile phones or tablets.
    (d) If the carrier orally advises involuntarily bumped passengers 
that they are entitled to receive free or discounted transportation as 
denied boarding compensation, the carrier must also orally advise the 
passengers of any material restrictions or conditions applicable to the 
free or discounted transportation and that they are entitled to choose 
cash, a check, or electronic cash equivalent payment instead.

[FR Doc. 2019-05858 Filed 3-27-19; 8:45 am]
 BILLING CODE P