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International Air Leases, Inc., of Miami, Florida, is engaged in the business of leasing air transport-type aircraft to air carriers.

That company opposes the enactment of HR 7488 and
also urges the adoption of an amendment to the Federal
Aviation Act of 1958 to relieve lessors of liens on their
aircraft when the lessor is not privy to violations com-
mitted by lessees.

We have discussed these views with your staff and submit the enclosed memorandum for the record.

Yours truly,

/s/ Preiber

Paul Reiber
Attorney for International

Air Leases, Inc.

Enclosure

MEMORANDUM

The harsh penalties that can be imposed on lessors of aircraft should be removed from the Federal Aviation Act

The existing Federal Aviation Act is harsh on lessors of

aircraft, and the FAA has asked Congress to increase that harsh

ness.

We are calling this to your attention to ask your help

in getting Congress to remove the unfair imposition on lessors

in the present statute and to resist the effort of the FAA to

make the law even worse.

I.

A lessor can have his aircraft seized
and subjected to a lien even if he is
totally innocent of the violation of
a Federal Aviation Regulation.

1/ If a lessee violates an F.A.R. so long as the violation

is made by the person in command of the aircraft, the aircraft

1/ "Sec. 901 (49 U.S. Code 1471). (a) (1) Any person who violates TA) any provision of title III, IV, V, VI, VII or XII, or of section 1114, of this Act, or any rule, regulation, or order issued thereunder,...shall be subject to a civil penalty of not to exceed $1,000 for each such violation....

"Sec. 901 (b) Liens- In case an aircraft is involved in such violation and the violation is by the owner or person in command of the aircraft, such aircraft shall be subject to lien for the penalty:..

"Sec, 904 [49 U.S. Code 1474)...In case the violation is by the owner or person in command of the aircraft, the penalty shall be a lien against the aircraft...."

is subject to a lien--no matter how innocent the owner of the

aircraft may be--or how limited his control of the aircraft may

be.

Thus, if the aircraft is under a lease-purchase agreement

that runs for several years and which gives the lessee total

control of the aircraft, the lessor's property is still subject

to a lien by the FAA.

In fact, under the Federal Aviation Act,

there is no statutory avoidance of the lien if the aircraft is

stolen; the lessor's aircraft remains subject to a lien if the

violation is by the person in command.

In other words, the

innocent lessor of aircraft is not even given the benefit of

avoidance of the lien which is granted to innocent owners of

vehicles under other statutes.

For example, the statute pro

viding for seizure of a vehicle for transport of contraband

the lessor/owner articles exempts/from forfeiture when the vehicle is operated by a thief or one unauthorized by law to operate the vehicle. 1

1/

The FAA Act authorizes the FAA to punish A, the lessor,

2/ for an offense committed by B, the lessee. This, of course,

is totally contrary to our moral sense of justice and contrary

to most of our laws.

As the Supreme Court said, this type of

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...intended to impose a penalty only on those who

are significantly involved in a criminal enterprise.

U.S.

V.

U.S. Coin and Currency, 401 U.S. 715, 721-22 (1971).

The courts

are moving enforcement of the forfeiture statutes in this direc

tion.

A strong indication of this was the language of the Supreme

Court when it decided that forfeiture statutes can be constitu

(footnotes on page 2-A)

tional (Calero-Toledo v.

Pearson Yacht Leasing Co., 416 U.S. 663

(1974)).

There, the Court stated that the owner could claim

exception to forfeiture if he proved "not only that he was un

involved in and unaware of the wrongful activity but also that

he had done all that reasonably could be expected to prevent the

proscribed use of his property."

(footnotes to p. 2)

1/"Chapter 11. Section 782--Seizure and forfeiture of vessel,

vehicle, or aircraft used--Innocent owners.-"Any vessel, vehicle, or aircraft which has been or is being used in violation of any provision of section 1 (8781 of this title), or in, upon, or by means of which any violation of section 1 (8781 of this title] has taken or is taking place, shall be seized and forfeited: Provided, That no vessel, vehicle, or aircraft used by any person as a common carrier in the transaction of business as such common carrier shall be forfeited under the provisions of this Act (S$781-788 of this title] unless it shall appear that (1) in the case of a railway car or engine, the owner, or (2) in the case of any other such vessel, vehicle, or aircraft, the owner or the master of such vessel or the owner or conductor, driver, pilot, or other person in charge of such vehicle or aircraft was at the time of the alleged illegal act a consenting party or privy thereto: Provided further, That no vessel, vehicle, or aircraft shall be forfeited under the provisions of this Act (S$781-788 of this title) by reason of any act or omission established by the owner thereof to have been committed or omitted by any person other than such owner while such vessel, vehicle, or aircraft was unlawfully in the possession of a person who acquired possession thereof in violation of the criminal laws of the United States, or of any State. (Aug. 9, 1939, c. 618, 52, 53 Stat. 1291.)." 49 U.S.C. 782. A comparable provision is found in 21 U.S.C. 881.

2/ We know of no instance when the FAA enforced a lien against an aircraft operated by a thief. Nevertheless, there is no provision in the statute to bar such a lien.

Further support for that view is that since the 1974 Supreme

Court decision, the Federal courts have interpreted the exception

to be applicable if the owner

"...was uninvolved in and unaware

of any wrongful activity, and... that he acted as a reasonably pru

dent person under all the circumstances, doing all that could be expected of him to prevent illegal use of his property, (then) forfeiture... would be improper under the standard established by

the Cupreme Court."

U.S. v. One 1976 Lincoln Mark IV, 462 F.

Supp. 1383, 1387 (1979).

This fair standard is also in the more recent forfeiture

statutes dealing with narcotics violations.

Section 334 (d) (3)

provides:

"... the court shall allow the claim of any claimant,
to the extent of such claimant's interest, for re-
mission or mitigation of such forfeiture if such claim-
ant proves to the satisfaction of the court (i) that
he has not committed or caused to be committed any
prohibited act referred to in such paragraph (2) and
has no interest in any drug referred to therein,
(ii) that he has an interest in such equipment or
other thing as owner or lienor or otherwise, acquired
by him in good faith, and (iii) that he at no time
had any knowledge or reason to believe that such equip-
ment or other thing was being or would be used in, or
to facilitate, the violation of laws of the United
States relating to counterfeit drugs." 21 U.S.C. 334 (a) (3).

Another means by which other lien and forfeiture statutes

try to be fair to innocent owners is a provision directing the

agency to remit a fine to avoid clear injustice.

Such provision

is in the statute imposing fines and forfeiture for violating

wherein customs laws/the Secretary of the Treasury is authorized to remit

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