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Mr. Fary. Please proceed. TESTIMONY OF JOHN H. WINANT, PRESIDENT, NATIONAL BUSI
NESS AIRCRAFT ASSOCIATION, ACCOMPANIED BY ROBERT D. POWELL, MARK McDERMOTT, AND FREDERIC B. McINTOSH
Mr. WINANT. I will this morning give a very brief synoptic statement, if I may, summarizing the high points in that extensive and rather heavyweight document.
Mr. Fary. Very good. You may proceed.
Mr. WINANT. With me at the table this morning, sir, are Mr. Robert D. Powell on your left who is partner in Sanders, Schnabel, Joseph & Powell in Washington, D.C. On his right is Mr. Mark McDermott, attorney in the same firm. They represent NBAA's legal affairs. On my left is Mr. Frederic B. McIntosh, director of operational services for NBAA. I thought it would be advisable that we all be here this morning. I am not an attorney, and some of the questions you may wish to ask I think merit response from competent legal counsel or from operational counsel.
Mr. Fary. Very well, without objection it is so ordered.
Mr. WINANT. While the promotion of aviation safety is a laudable goal, this bill does nothing to promote that goal. The bill is illconceived and poorly drafted and would have a chilling effect on aviation. The FAA would be granted the authority to impose penalties far in excess of those required. If the alleged violator contests such imposition, the FAA would be able to appeal an adverse decision all the way to the U.S. Supreme Court. The increased and prolonged litigation would pit the funds of the Government against those of the individual or company involved. Oftentimes, the individual or company would be without an operator's or operating certification during the pendency of the litigation.
Under the circumstances, the discretionary authority which would be vested in the FAA is too broad, the potential costs would be too great, and the benefit to the public would be too little. NBAA has carefully analyzed the bill, and it is NBAA's considered opinion that four aspects of the bill are the most objectionable. Those aspects are as follows:
(1) The proposal to increase the maximum civil penalty from $1,000 to $25,000 per violation.
(2) The proposal to grant authority for the FAA to assess an the NTSB to review civil penalties involving less than $10,000.
(3) The proposal to make criminal penalties applicable to violations of the safety regulations and to greatly increase the criminal penalties which were previously available.
(4) The proposal to grant standing to the FAA to petition the Federal courts for review of NTSB decisions. Each of these objectionable aspects of the bill will be addressed separately in this statement.
A. INCREASE IN CIVIL PENALTY MAXIMUM.
Under the present act's provision for a maximum penalty of $1,000 per violation, the FAA routinely imposes penalties of several thousands of dollars. This is possible because one prohibited act may constitute a violation of several different related regulations or even a violation of different regulations which are actually duplicative of one another. In the case of a continuing violation, each day or each separate flight is considered to be a separate violation. The recent $500,000 civil penalty against American Airlines in connection with the DC-10 problem serves as an example of this compounding.
In addition, the FAA presently has statutory enforcement tools other than civil penalties. These include certificate actions, injunctions, aircraft seizures, and cease-and-desist orders. There can be no argument that these are powerful tools. The suspension or revocation of a pilot or operator certificate is a particularly powerful tool.
The FAA also has enforcement tools which are not set out in the act. Reputable businesses which engage in aviation exercise their best efforts to adhere to the regulations and operate safely. The opprobrium of even being charged with a safety violation has an adverse effect on the business' public image. The FAA has shown itself to be increasingly prone to releasing the details of proposed enforcement actions to the media even before the alleged violator has been given an opportunity to be heard. The FAA's present Administrator has stated publicly that he considers publicity to be one of the enforcement tools at his disposal.
The impact of the proposed increase in the civil penalty maximum would fall most heavily on the businesses which operate aircraft as an aid to their regular nonaviation activities. For the most part, these businesses do not hold a certificate issued by the FAA.
The greatly increased civil penalty authority which the FAA would bring to bear against these businesses can be ill-afforded in the current economy, especially by small to medium size businesses.
B. GRANT OF AUTHORITY FOR THE FAA TO ASSESS AND THE NTSB TO
REVIEW CIVIL PENALTIES
The proposal to grant authority for the FAA to assess the NTSB to review civil penalties involving less than $10,000 would restrict the rights presently afforded to an alleged violator. The presently existing right to a jury trial in Federal district courts would be eliminated and replaced by an administrative proceeding before the NTSB. Although judicial review of the administrative decision would be available, such review would be a quite limited form of review in which a court of appeals would apply the substantial evidence test, which means that the court would be bound to affirm the NTSB, if there is any evidence which could have supported the NTSB's decision.
The FAA presently has no authority to actually levy or assess civil penalties but can only compromise civil penalties. Under the current act, a U.S. attorney must file suit in district court and obtain a judgment before a civil penalty can be enforced. This bill would restrict the alleged violator's rights since the FAA would have the authority to actually levy or assess civil penalties which would become enforceable by way of property attachment or other postjudgment remedies.
The FAA's assessments would be appealable to the NTSB but, if not appealed in a timely fashion, they would become final and
enforceable. Even if the FAA's assessment is appealed in a timely fashion, the review before the NTSB would be of an entirely different nature and quality than that which is presently afforded in the courts.
Since the administrative law judges who presently serve the NTSB are fully utilized in connection with the review of the certificate actions, the transfer of further review responsibilities would require the employment of additional administrative law judges. Civil penalty cases are presently being handled by existing Federal judges. Since the bill would require the employment of additional Federal employees to handle cases presently being handled by existing Federal employees, it is inflationary.
C. PROVISIONS MAKING CRIMINAL PENALTIES APPLICABLE TO SAFETY
There is nothing in the Act, as the bill would amend it, to preclude the possibility of an administrative action as well as a criminal prosecution resulting from the same prohibited act. Consequently, all of the safeguards attendant to a criminal investigation and prosecution would apply to FAA investigations and enforcement actions. Miranda warnings, search and seizure protections, and the right to counsel will all be applicable. The applicability of such safeguards will hamper the processing of safety enforcement actions and have a chilling effect on a pilot's willingness to identify and give notice of unsafe conditions.
D. GRANT OF AUTHORITY TO FAA TO APPEAL NTSB DECISIONS
The legislative history shows that authority for the FAA to petition the Federal courts for review of NTSB decisions was consciously withheld from the FAA by the Congress during consideration of the 1958 act. Previous to that, the 1938 act also withheld such authority from the FAA. Thus, for 42 years, Congress has not wavered in its position on this point. In addition, the Administrative Procedure Act prohibits one agency from seeking judicial review of another agency's orders.
Among the reasons for Congress denial of appeal authority to the FAA is the fact that the FAA would have a tendency to appeal all adverse decisions since financial resources would not be a consideration. Appeals by the FAA would greatly prolong litigation and strain the financial resources of the alleged violator. Pitted against the alleged violator would be three separate Federal agencies, the FAA, the NTSB, and the Department of Justice. Such a situation would be particularly unfair since the alleged violator would have won on the lower level after a full administrative trial and an administrative appeal.
The waste of Government funds and the prejudice to the alleged violator inherent in the grant of appeal authority to the FAA becomes even more apparent when one realizes that appeal authority would be of little practical benefit to the FAA. The review to which the FAA would be entitled would involve application of the substantial evidence test. Litigations would be greatly prolonged and yet few NTSB decisions would be disturbed. There is simply no public benefit which would result from the FAA doing battle with
the NTSB in the Federal courts, especially since the statutory purposes of the two agencies are not diverse.
In summary, since the bill would greatly expand the authority of the FAA at the expense of the public and yet not achieve its announced purpose, it is ill-conceived and poorly drafted. It exposes the public to excessive fines, criminal prosecution, prolonged litigation, and overly broad agency discretion. Consequently, NBAA respectfully submits that the bill should not be passed. If the FAA can show a need for increased enforcement authority, the remedy is for the FAA to submit a properly drafted bill which would promote rather than hinder aviation safety.
Thank you, Mr. Fary, Mr. Snyder.
Mr. Fary. I have a series of questions here, Mr. Winant, and I will direct them to you and if you wish any of your panel to answer them you may do so.
In your testimony you appear to object to the proposal in H.R. 7488 that civil penalties of under $10,000 could be imposed by FAA with an opportunity for a hearing before NE
First, do you prefer the current procedure in which FAA has to go to the U.S. district court to get a penalty imposed?
Isn't the judicial procedure more burdensome to the accused than NTSB review and, second, do you object to the current procedure in which NTSB reviews FAA decisions revoking or suspending certificates?
Do you think that those cases should be heard by the U.S. district court rather than the NTSB?
Mr. WINANT. Very good; that is an excellent set of questions.
Mr. Powell has extensive experience in all of the areas touched on by those questions.
I would ask him to answer.
Mr. POWELL. With respect to your first question, are we satisfied with the current procedure involving civil penalty cases? In my experience, the procedure has been very workable.
I have experiences as a regional attorney with the FAA in the eastern region at J. F. K. International Airport, and as a member for a time of the General Counsel's Office, now Chief Counsel's Office, in the Enforcement Division of FAA, at which time I was responsible for monitoring enforcement actions around the country in regional counsels' offices.
My experience has been that with respect to the civil penalty actions; those which are meritorious are usually prosecuted by the U.S. attorney's office. The FAA has a set of tools available to them so that if the U.S. attorney's office is unwilling to take a civil penalty action, they can, where a violator is a certificate holder, elect in the alternative to proceed on a certificate basis.
My experience has been that either of these alternatives, as employed by the FAA, has been acceptable. With respect to the second question you have posed, the question I believe concerned the trial of matters in the district courts as opposed to a trial of matters at the NTSB.
The problem that I see with respect to the NTSB taking up the burden of handling civil penalty actions is one in which involves the deprivation of the individual of a jury trial to which he currently has the right and has consistently had the right to that trial for 42 years or more.
The current act and its predecessor provided that all civil matters which call for fines in excess of $20 be heard by trial by jury. If the act is amended to include this in the NTSB's jurisdiction, the trial of matters in the amount of $10,000 for civil penalties, that right will be lost, and I think that is a significant right.
With respect to the final question you posed-
Mr. SNYDER. Would you comment on how often a defendant avails himself of the jury trial in actual practice?
Mr. Powell. I know of at least 16 cases where this has occurred, Your Honor. I'm sorry. I am used to talking to judges, and I called you, Your Honor.
Mr. SNYDER. Out of how many?
Mr. Powell. I made a mistake once and called a trial court judge Your Excellency; but with respect to-
Mr. SNYDER. My understanding of this is they don't often avail themselves.
Mr. Powell. That is correct. That is really the point. Most of the civil penalty actions taken up by the FAA currently are settled. They never get into the court system.
In my experience and in representing hundreds of people before the FAA in civil penalty matters, once the civil penalty compromise offer is made by the FAA, they jump at it, because they are afraid of going into district court.
The FAA is able to compromise many of these cases just out of a fear of the individual going to district court. It is a very effective weapon, and I think that the FAA has it within its current authority to effectively deter violators with the current exercise of the civil penalty weapon.
If you make it easier to get review of FAA civil penalty action before the NTSB, you would have many, many more actions, and I think you would have less of a deterrent for the FAA in the utilization of the civil penalty.
That may sound contradictory to you, that a lawyer would not want to have the facts easily heard before an administrative body, but I have a gut reaction after many years of experience, most of the civil penalty actions taken by the FAA are inherently justified, and I think it is in their best interests to have this compromise authority rest just the way it is, because Federal district court is a powerfully prohibiting agent causing many of those who are in violation to compromise these civil penalties and shape up their act rather than face a district court action.
Mr. SNYDER. Or it is because they figure the lawyer's fee would be more than the penalty?
Mr. Powell. That is probably true, sir. With respect to the third element of your question, Mr. Fary, should the NTSB hear certificate actions or should these be referred to the district court?
Certificate actions are instituted by the FAA. They are in essence administrative in nature, and I think that the NTSB has been set up and its predecessor, the CAB has uniquely been set up to handle those things in a fair and impartial way.