Restoring robust hearing practices will protect consumers from defective aviation consumer protection regulations

A version of the following public comment letter was submitted to the Office of the Secretary of Transportation on December 1, 2025.

On behalf of Reason Foundation, I respectfully submit these comments in response to the Office of the Secretary’s (OST) notice of proposed rulemaking (NPRM) on Procedures in Regulating and Enforcing Unfair or Deceptive Practices.

By way of background, I am a senior transportation policy analyst at Reason Foundation and focus on federal transportation policy, including aviation consumer protection regulation. Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation.

Reason Foundation previously submitted comments to OST recommending the initiation of this rulemaking proceeding. We write in support of the proposed changes to Subparts F and G contained in the NPRM.

Protecting consumers from defective regulations

The statutory authority (49 U.S.C. § 41712) wielded by the U.S. Department of Transportation to police unfair or deceptive practices in the aviation industry long predates the Department itself. The authority was created as Section 411 of the Civil Aeronautics Act of 1938 and modeled on the “unfair or deceptive acts or practices” language included months before in the Federal Trade Commission Act of 1938, which covered most other commercial contexts. In 1958, Congress expanded Section 411 to cover not only air transportation itself but the sale of air transportation by ticket agents.

When Congress passed the Airline Deregulation Act in 1978, it eliminated most economic regulation in the aviation sector and wound down the Civil Aeronautics Board (“CAB”). When the CAB was terminated in 1985, Section 411 consumer protection authority was transferred to the Department of Transportation’s Office of the Secretary (“OST”). In 1994, Congress reorganized the Title 49 Transportation Code, and Section 411 was recodified as Section 41712.

While reorganizing the Transportation Code, Congress was also working to modernize authorities held by the Federal Trade Commission (“FTC”). The FTC Act Amendments of 1994, among other things, codified longstanding internal FTC policy in dealing with claims of unfair or deceptive acts or practices that had in part been synthesized for Congress in the FTC’s December 1980 “Policy Statement on Unfairness.” The FTC’s approach, as affirmed by Congress, requires that specific elements be met to prove unfairness allegations, one of which necessitates careful benefit/cost analysis.

Specifically, the FTC Act amendments added three standards of proof to the FTC’s broad statutory prohibition on unfair business practices (15 U.S.C. § 45(n)). For conduct to qualify as legally unfair, it must be (1) “likely to cause substantial injury to consumers,” (2) not “reasonably avoidable by consumers themselves,” and (3) “not outweighed by countervailing benefits to consumers or to competition.” It is worth noting that these reforms earned bipartisan support. Similar language was also included in the Dodd-Frank Act of 2010, covering the enforcement responsibilities of the Consumer Financial Protection Bureau (12 U.S.C. § 5531(c)).

While bipartisan recognition of the problem of ill-defined “unfairness” exists in virtually every other federal consumer protection context, Congress has so far not moved to reform the Department of Transportation’s similar Section 41712 aviation consumer protection authority. This failure to act has enabled regulators in recent years to engage in a variety of re-regulatory activities, including new restrictions on airfare advertising that prohibit government taxes and fees from being “displayed prominently” (14 C.F.R. § 399.84(a)), outlawing true nonrefundable ticketing (14 C.F.R. § 259.5(b)(4)), which puts upward price pressure on airfares due to the forced risk transfer from consumers to air carriers, and an inflexible tarmac delay rule (14 C.F.R. § 259.4) suspected of increasing flight cancellations—particularly at smaller and more-rural airports.

Each of the aforementioned aviation consumer protection regulations has been criticized as harming consumers, some with stronger evidence than others. But without the FTC-style standards of proof and evidentiary hearing procedures, the scales were tipped in favor of regulators. These are fact-intensive matters that require careful review of the evidence to ensure potential regulatory actions will not perversely harm consumers.

Despite congressional inaction on modernizing Section 41712, the December 2020 final rule did much to bring the Department’s aviation consumer protection authority into alignment with similar federal authorities. This rule added FTC-style standards of proof to Section 41712 enforcement and rulemaking procedures while also codifying internal agency practices for allowing alleged violators to present evidence defending themselves against possible enforcement or rulemaking activity derived from the aviation consumer protection authority.

While this would have improved airline and ticket agents’ defensive positions, it also would have required the Department of Transportation to clearly explain itself along the way and give consumers better insight into how decisions that affect them are made. In this way, the FTC-style standards of proof in unfairness claims are best understood as promoting regulatory quality and consistency in enforcement.

Following the transition between administrations, the Biden administration quickly moved to reverse these reforms. In February 2022, the Department published a rule modifying the hearing procedures for discretionary aviation consumer protection rulemakings in several ways that would reduce regulatory quality. In August 2022, OST published a guidance document further suggesting it will again take an expansive view of how its Section 41712 powers are defined and limited.

These policy changes reopened the door for future discretionary rulemaking guided more by political whims than careful empirical analysis. The recent history of Section 41712 discretionary rulemaking suggests that regulatory analysis has not been sufficiently robust to avoid harm to consumers. As such, we support the proposed restoration of the 2020 hearing procedures, as modified. While outside the scope of this proceeding, we also support the rescission of the August 2022 Guidance Regarding Interpretation of Unfair or Deceptive Practices, as the Department indicated it will pursue in the future.

Conclusion

Thank you for the opportunity to provide comments in response to this NPRM. We urge the Department to act swiftly to implement these needed reforms to protect consumers from defective regulations derived from the aviation consumer protection authority.

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Source: https://reason.org/testimony/restoring-robust-hearing-practices-will-protect-consumers-from-defective-aviation-consumer-protection-regulations/