CEI Submits Comments to DOT on Aviation Consumer Protection Authority Modernization

Today, I submitted comments on behalf of the Competitive Enterprise Institute (CEI) in response to the U.S. Department of Transportation’s (DOT) notice of proposed rulemaking in the matter of Defining Unfair or Deceptive Practices.

At issue is DOT’s Aviation Consumer Protection Authority (ACPA), which refers to DOT’s statutory powers to police against unfair or deceptive practices in the air travel and ticket agent industries (49 U.S.C. § 41712). For many years, ACPA basically mirrored the Federal Trade Commission’s (FTC) similar unfair or deceptive acts or practices authority. But in the 1990s, Congress amended the FTC’s authority to better account for consumer and competitive benefits in business practices. Unfortunately, Congress failed to do the same for DOT’s vague ACPA. This has led to backdoor re-regulatory activity at DOT that contradicts Congress’ intent under the bipartisan and successful Airline Deregulation Act of 1978 and perversely harms consumers under the banner of consumer protection.

Specifically, Congress’ 1994 FTC Act amendments codified longstanding FTC practices and precedent by exempting activities that provide countervailing benefits to consumers and/or competition from enforcement under the FTC’s unfair or deceptive acts or practices authority (15 U.S.C. § 45(n)). This was to prevent counterproductive enforcement and to offer regulated entities more opportunity to defend their activities from bureaucratic ignorance and overreach.

The change was enacted when Democrats controlled the White House and both chambers of Congress, so this isn’t a Republican giveaway to business or however some on the left might try to incorrectly frame it. Indeed, when Democrats again controlled the executive and legislative branches in 2010, they included the same “countervailing benefits to consumers or competition” exceptions in the highly partisan Dodd–Frank Wall Street Reform and Consumer Protection Act (only three House Republicans and three Senate Republicans voted in favor) for the Consumer Financial Protection Bureau’s similar consumer protection authorities (12 U.S.C. § 5531(c)(1)). It is safe to say that there has long been bipartisan recognition that this approach represents general best practice in federal consumer protection policy.

Meanwhile, DOT’s nebulous, forgotten-by-Congress ACPA powers were kicked into high gear during the Obama administration. Under Transportation Secretaries Ray LaHood and Anthony Foxx, DOT engaged in a series of expansive ACPA rulemakings that harmed consumers while flying under the flag of consumer protection. These actions included strict limitations on how information regarding government taxes and fees on air travel can be presented to consumers, outlawing true nonrefundable ticking and putting pressure on carriers in increase consumer airfares, and a tarmac delay rule that several independent analyses (including one commissioned by the Obama DOT itself) found to increase flight cancelations.

DOT even proposed unilaterally misclassifying non-seller websites that merely displayed airfare information as ticket agents subject to DOT regulation. It became very clear that DOT was abusing ACPA’s vague definition to expand its power over the marketplace and chip away at the pro-consumer reforms that followed the Airline Deregulation Act. Importantly, these were all abuses that a modernized ACPA with explicit exceptions for “countervailing benefits to consumers or competition” could have prevented.

Fortunately, the current DOT has signaled it does not want to engage in the abuses of its predecessors and has proposed adopting the FTC definitions for ACPA, as well as codifying procedures to allow regulated entities to present evidence that their practices at issue meet these exceptions.

CEI strongly supports these proposed changes and has been raising the alarm over ACPA abuse for years. While this is good news for consumers, Congress should take the lead and amend Section 41712 codifying these reforms in statute to prevent future regulators from abusing their ACPA powers.

For more detail, read our full comments to DOT and my 2014 blog post that summarizes some of the Obama-era ACPA abuses.