Attorney. The normal rights of appellate review exist for both parties. Under our proposal, a person alleged to have

committed a regulatory violation would be entitled to an informal conference with the FAA, after which the FAA could administratively assess a civil penalty if it continued to believe a regulatory violation had occurred. The assessment of a civil penalty could be appealed to the NTSB where a full hearing before an administrative law judge would be held. An adverse decision could then be appealed to the full NTSB, with further right of appeal to the courts of appeal.

The benefits are clear. A person believed by the FAA to have committed a regulatory violation would not be forced to go through a court trial. Instead, the less awesome proceedings of an administrative hearing would be available. Administrative hearings, as is the case with certification hearings before the NTSB, could be held at a location near the alleged violator's residence.

their validity into question but to permit the Subcommittee the opportunity to contrast our request with laws already on the

books.

Violation of a rule or regulation prescribed by the Comptroller of the Currency under 12 U.S.C. 212 carries with it a fine of not more than $5,000 or imprisonment for not more than one year, or both. (12 U.S.C. 212). Unlawfully possessing,

selling, or transporting bald or golden eagles subjects an offender to a fine of $5,000 or imprisonment for not more than one year; for a second conviction, an individual may be fined up to $10,000 and imprisoned for not more than two years, or both; civil penalties up to $5,000 are authorized for each violation. (16 U.S.C. 668). Violations of EPA standards for motor vehicle air pollutant emissions subject a person to a civil penalty of up to $10,000, with each motor vehicle or engine failing to meet the standards constituting a separate offense. (42 U.S.C. 1857).

Violation of any requirement of an

EPA implementation plan for air quality can be punished by a fine of not more than $25,000 per day or imprisonment not to exceed one year, or both; after the first conviction, the

possible penalty increases to $50,000 per day or imprisonment nor to exceed two years, or both. (42 U.S.C 1857).

The point I would like to make is that, considering the serious threat to the public welfare which can result from failure to

follow aviation safety requirements, the penalties we have proposed are reasonable.

Mr. Chairman, we all share the same goal of improving aviation safety. In recent times, the FAA has been frequently singled out as the organization that should be held accountable for doing just that. But, we can only work within the bounds of the authority given us by the Congress. We are now calling upon you and the Members of this Subcommittee to help us better attain the goal of safety by giving us the tools we need to reach that goal.

That completes my prepared statement.

We would be pleased to

respond to questions you may have at this time.

Mr. ANDERSON. Please proceed.

TESTIMONY OF LANGHORNE M. BOND, ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION, ACCOMPANIED BY CLARK ONSTAD, CHIEF COUNSEL, FAA; AND JONATHAN HOWE, DEPUTY CHIEF COUNSEL, FAA

Mr. BOND. Thank you, Mr. Chairman, members of the committee. I might add on my right is Jonathan Howe, who has been deputy chief counsel of the FAA. He is now director of our northwest region in Seattle. He is not only a lawyer, which is a strike against him, but he is an instrument-rated ATR pilot, which is to his credit and therefore he deserves a promotion.

Mr. Howe. Thank you, sir.

Mr. BOND. I will just go ahead without letting you respond to that.

Mr. SNYDER. He may want rebuttal.

Mr. BOND. It is not to rebut me. It is the other side.

I welcome the opportunity to appear before the subcommittee today to testify in behalf of the administration's legislative proposal to amend the Federal Aviation Act of 1958 to increase the FAA's civil penalty authority. That legislation, pending before the subcommittee, has been introduced as H.R. 7488.

Enactment of this legislation would be a major step by the Congress toward the promotion of aviation safety. We are particularly pleased that the subcommittee, despite its busy schedule, is holding these hearings at this time.

I would like to briefly summarize the major features of our proposal and then expand on our rationale for the legislation. The legislation has three major features.

First: It would raise the permissible civil penalty for a violation of the Federal Aviation Act or regulations issued thereunder from the present level of $1,000 to a maximum of $25,000.

Second: It proposes the establishment of a simplified administrative mechanism under which civil penalty cases would be heard before a National Transportation Safety Board administrative law judge rather than tried in U.S. district court. The third major feature of our proposal is the establishment of criminal penalties for violations of title VI of the Federal Aviation Act.

NEED FOR INCREASED CIVIL PENALTY AUTHORITY

We believe the increased civil penalty authority is the most important element of our legislative proposal. The current $1,000 level was enacted by the Congress in 1938 as part of the Civil Aeronautics Act of 1938. During the more than 40 years which have passed since that time, the deterrent effect of that $1,000 penalty has continued to erode.

What once was a stiff penalty is now little more than a nuisance to many operators who can assume such a penalty as a cost of doing business. It is important that the Congress act to reestablish an economic disincentive of sufficient magnitude that it will assist us in achieving greater regulatory compliance by the aviation community.

I asked my economists to tell me what a $1,000 fine in 1938 amounts to today. They tell me it is about $190.

What does the current $1,000 fine mean today? Let's consider a typical wide-body flight from Washington to Los Angeles. The basic seating configuration of a 747 allows for 385 passenger seats. With current one-way fares of $285, and an average load factor of 60 percent, gross receipts for one trip would be $65,835. Contrast that $65,835 with a possible fine of $1,000.

Add to that the possibility that a regulatory violation may not be discovered by the FAA. That is more likely than a possibility. It is hardly surprising then that we have found cases in which aircraft, carrying many passengers, have been dispatched with known defects.

In recent civil penalty cases that have attained substantial publicity because of the large civil penalties sought by the FAA, we found patterns of violations in which aircraft had repeatedly been dispatched without regard to defects.

Because of the repeated dispatch of these aircraft, the penalties accumulated to high levels. The amount of these penalties has now been raised as a basis not to pursue legislative action to raise civil penalty authority.

The argument is that these penalties show that existing remedies are clearly adequate. This argument is fallacious. The high civil penalties we proposed in those cases were for repeated regulatory violations.

Apparently the amount of a civil penalty which the FAA could assess per violation was too low to deter the repetition of known violations.

If the present penalties are adequate, how could these operators have permitted so many violations to occur? Even if you assume arguendo that top management did not know about the repeated violations, the question that naturally comes to mind is whether the potential $1,000 civil penalty is so low that it does not inspire management to put in place the systems that would alert management to these repeated safety violations.

Industry attempts to focus on the recent large penalties amount, in my estimation, to a smokescreen.

They obscure the fact that the likelihood of such multiple regulatory violations occurring in the future would be much diminished with an adequate economic deterrent. Potential civil penalties in the $25,000 range, combined with random enforcement, are the most effective way to achieve a high degree of compliance.

Focusing on the large civil penalties which accumulated because of repetitive violations also diverts attention away from the need to deter individual regulatory violations which can pose serious safety threats. In fact, most operators, as a matter of course, adhere to the regulations.

However, there may be times when they are tempted because of various pressures to let things slide one time, considering the lowlevel fine for only one violation and assuming that one violation would be tough to find.

In that kind of situation, however, with the knowledge that such an action could result in a substantial penalty, compliance with the regulations would be more likely.

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