Section 901, the civil penalty provision of the Act, now limits the Board to assessing civil penalties of no more than $1,000 for each violation or for each day of a continuing violation of the Act or regulations adopted under it. The current $1,000 figure originated more than 40 years ago in the Civil Aeronautics Act of 1938 and has not been increased since then.

The Board has realized for some time that the present maximum penalty often is not adequate to promote full compliance with the law, remove the possible financial incentives for violations, and eliminate unjust enrichment. In our view it would be desirable to have a civil penalty ceiling sufficiently high to provide for significant economic sanctions where necessary. The $25,000 maximum penalty contained in H. R. 7488 would accomplish this objective.

A few examples of the kinds of enforcement problems that come before the Board will illustrate the desirability of substantially increasing the maximum civil penalty. The first is unauthorized air transportation by a carrier that has not sought or has been denied legal authority from the Board for a particular operation. A denial of operating authority usually results from a finding by the Board or the staff that operation of the flight may create an undue financial or physical risk to consumers. Our concern from an enforcement perspective

is that the prospect of a $1,000 penalty for operating a flight without authority may be overwhelmed by the potential profit the carrier

could obtain from the operation.

If the penalty could be as much as

$25,000 per violation, this could remove much if not all of the possible financial incentive to operate without Board authority.

Similarly, where a carrier suspends service at a community in violation of a Board order or sections 401(j) or 419 of the Act, the notice and essential air transportation provisions that were added by the Deregulation Act, a $1,000 penalty for each day of unauthorized suspension is unlikely to be an important economic deterrent for a major airline; in fact, paying a $1,000 fine may often be cheaper than operating uneconomic service for another day. A larger potential penalty would provide greater incentive for the airline to maintain service at the community as long as it is legally required to do so. As you know, the chief beneficiaries of that kind of incentive are smaller and medium-sized communities.

Another situation in which a higher civil penalty ceiling would

be useful is where an airline violates the Board's consumer protection rules, such as those governing oversold flights. If a carrier bumps numerous passengers from a flight without complying with the rules, we may have to treat each denial of boarding as a separate offense to yield a meaningful civil penalty. By the time an enforcement proceeding can go to trial, some, or perhaps many, of the passengers may not be available as witnesses, and therefore we may not be able to establish enough violations for a significant penalty. A $25,000 maximum penalty would enable the Board to vindicate the public interest in such cases without having to prove multiple instances of violations.

An increased civil penalty would also enable us to deal more

satisfactorily with violations of our rules of conduct and procedure. As matters now stand, persons involved in such a violation can only be subjected to a $1,000 penalty. The proposed $25,000 maximum provides a much more effective sanction and would improve our ability to safeguard the integrity of the Board's

processes.

The Board is highly sensitive to the fact that additional civil penalty authority, if exercised indiscriminately, could have a disproportionate impact on smaller companies, such as commuter operators or small certificated carriers. As we do even now, the Board would of course take into account the size and financial resources of the respondent in determining what amount of penalty is appropriate in a given case. Moreover, nothing in H.R. 7488 would diminish the procedural rights to which any respondent is entitled in a CAB enforcement proceeding or the mitigating factors that may be considered in fixing the amount of a penalty.

The Board also favors increasing the criminal penalties for knowing and willful violations of Title IV of the Act or orders issued under its authority. This provision, which increases the maximum penalty for each offense to a fine of $25,000 and imprisonment for up to one year, should significantly improve the deterrent effect of section 902. It is sensible and logical, in our view, that the maximum fine for criminal convictions under section 902 be at least equal to the civil penalty authorized by section 901.

Accordingly,

we believe that the criminal provisions should be modified as

proposed in sections 3 and 4 of H. R. 7488. We also note that section 4 of the bill would extend the sanctions for knowingly and willfully failing to file required reports or falsifying records to "any person". This change would strengthen our ability to enforce the new power given to the Board in the International Air Transportation Competition Act, which was signed into law early this year, to require reports from foreign air carriers.

Section 6(b) of the bill would also clarify that ultimate findings of liability and the amount of penalties imposed by the Board are not subject to relitigation before the district courts in any action to collect a penalty that has been assessed. Section 1006 of the Federal Aviation Act provides that the Board's orders are subject to review exclusively in the Federal circuit courts of appeal, and its factual determinations, if supported by substantial evidence, are conclusive. The new section 903(b)(1) that would be added by H.R. 7488 provides a useful clarification that this procedure applies to orders in which the Board has assessed civil penalties for violations of the Act or its regulations or orders.

Finally, as a technical point, I note that the bill proposes to add "a new fifth sentence", concerning notice and an opportunity to be heard in DOT proceedings, to section 901(a)(1) of the Act. We understand, of course, that this addition is to be part of the first paragraph of the subsection and is not intended to repeal or replace the next sentence, beginning the second paragraph, which contains the Board's civil penalty authority. Although we believe the intent is

clear, it may be useful to insert the words "in the first paragraph" in line 8, page 2 of the bill to eliminate any possible question. Thank you for your attention.

Mr. FARY. Please proceed.

TESTIMONY OF REUBEN B. ROBERTSON, DIRECTOR, BUREAU OF CONSUMER PROTECTION, CIVIL AERONAUTICS BOARD Mr. ROBERTSON. Thank you.

I appreciate having the opportunity to offer you the Civil Aeronautics Board's views on H.R. 7488. The Board supports this legislation, which would increase the potential civil and criminal liability for violations of the Federal Aviation Act and would for the first time subject knowing and willful violations of aviation safety rules under title VI of the act to criminal sanctions.

The primary objective of the bill, of course, is to strengthen the enforcement program of the Federal Aviation Administration. The Board is acutely aware of the relationship between the FAA's enforcement efforts and the level of safety of our air transportation system. This is particularly important now, because the Airline Deregulation Act of 1978, which has opened the air transportation industry to far more intense competitive pressures, requires increased vigilance concerning air carrier safety. Consequently, the Board endorses the proposed amendments that would enhance the FAA's ability to enforce compliance with its safety requirements. In addition, H.R. 7488 would increase the civil penalties that the Civil Aeronautics Board can assess for violations that arise under its jurisdiction. We believe this change would be very useful.

Section 901, the civil penalty provision of the act, now limits the Board to assessing civil penalties of no more than $1,000 for each violation or for each day of a continuing violation of the act or regulations adopted under it. The current $1,000 figure originated more than 40 years ago in the Civil Aeronautics Act of 1938 and has not been increased since then.

The Board has realized for some time that the present maximum penalty often is not adequate to promote full compliance with the law, remove the possible financial incentives for violations, and eliminate unjust enrichment. In our view it would be desirable to have a civil penalty ceiling sufficiently high to provide for significant economic sanctions where necessary. The $25,000 maximum penalty contained in H.R. 7488 would accomplish this objective. A few examples of the kinds of enforcement problems that come before the Board will illustrate the desirability of substantially increasing the maximum civil penalty. The first is unauthorized air transportation by a carrier that has not sought-or has been denied-legal authority from the Board for a particular operation. A denial of operating authority usually results from a finding by the Board or the staff that operation of the flight may create an undue financial or physical risk to consumers. Our concern from an enforcement perspective is that the prospect of a $1,000 penalty for operating a flight without authority may be overwhelmed by the potential profit the carrier could obtain from the operation. If the penalty could be as much as $25,000 per violation, this could remove much, if not all, of the possible financial incentive to operate without Board authority.

Similarly, where a carrier suspends service at a community in violation of a Board order or sections 401(j) or 419 of the act, the notice and essential air transportation provisions that were added