[Senate Report 106-162]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 282
_______________________________________________________________________
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-162
_______________________________________________________________________




                       AIRLINE CUSTOMER SERVICE


                            COMMITMENT ACT

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 383



                                     

               September 22, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-010                     WASHINGTON : 1999


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred sixth congress
                             first session

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine                 JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                       Mark Buse, Staff Director
                  Martha P. Allbright, General Counsel
     Ivan A. Schlager, Democratic Chief Counsel and Staff Director
               Kevin D. Kayes, Democratic General Counsel

                                  (ii)
                                                       Calendar No. 282
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-162

======================================================================



 
                AIRLINE CUSTOMER SERVICE COMMITMENT ACT

                                _______
                                

               September 22, 1999.--Ordered to be printed

_______________________________________________________________________


Mr. Lott (for Mr. McCain), from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 383]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 383) ``to establish a national 
policy of basic consumer fair treatment for airline 
passengers'', having considered the same, report favorably 
thereon with an amendment (in the nature of a substitute) and 
recommends that the bill (as amended) do pass.

                          Purpose of the Bill

  The purpose of the Airline Customer Service Commitment Act is 
to ensure that the major airlines live up to their voluntary 
customer service commitments, as outlined in the June 17, 1999, 
Airline Customer Service Commitment.

                          Background and Needs

  Statistics kept by the Department of Transportation (DOT) 
show that complaints about commercial air travel are on the 
rise in comparison to complaint levels in recent years. The 
Department estimates that for every complaint it receives 
against an airline, the airlines themselves receive anywhere 
from 100 to 400 complaints. The airlines are faced with the 
public perception and increasing anecdotal evidence that their 
service levels are on the decline.
  Many factors potentially contribute to the increase in 
consumer dissatisfaction with the airlines. For instance, air 
carriers appear to struggle continually to lower their costs 
and maintain their profitability. Many steps that the airlines 
have taken to control costs directly impact a traveler's 
experience. These steps include installing more seats on a 
given aircraft, thereby reducing the passenger's legroom, and 
reducing or eliminating the in-flight meal service. Inaddition, 
demand for air travel has increased tremendously over the last several 
years--planes are more crowded, with increasing load factors--placing 
strains on the carriers' ability to provide adequate services. The 
Committee also is aware that air travel delays and ground holds are on 
the rise due to inadequacies in airport and air traffic control 
infrastructure, thereby adding to the passengers' air travel 
experiences. Whatever the underlying causes, there has been a recent 
groundswell of passenger discontent with airline travel and service.
  In many other industries, a company risks losing all of its 
customers due to its poor service. This principle does not 
always apply in the airline industry, however. Travelers who 
are dependent on a hub airport that is dominated by one carrier 
do not necessarily have the option of flying on another carrier 
that offers better service. Likewise, the barriers to entry in 
the airline industry are relatively high. Freedom of entry is 
usually another disciplining factor when it comes to poor 
service. The overall state of air travel and service has lead 
to calls from the public for governmental intervention.
  In response to the introduction of S. 383 and similar bills 
introduced in this Congress, the major airlines began to 
develop an industry-wide response in an attempt to address 
consumer dissatisfaction and forestall a legislative mandate in 
this area. On June 17, 1999, the Air Transport Association 
(ATA), which represents the major domestic airlines, unveiled a 
voluntary plan to improve customer service throughout the 
airline industry. [Insert 1.] Although many proponents of so-
called passenger rights legislation felt that the airlines' 
plan was a step in the right direction, most believed that 
independent oversight was needed to ensure that the commitment 
was fulfilled. This is especially true because much of the ATA 
plan is perceived as something that the airlines should have 
been doing all along. The air carriers were given a short time 
frame to improve their services. After oversight of the 
changes, and if no improvement is made, the Committee will 
reconsider the need for legislation.

                      Summary of Major Provisions

  As reported, S. 383 would direct the DOT Inspector General to 
report to Congress on the effectiveness of the airlines in 
living up to their Customer Service Commitment; direct the DOT 
to increase the airlines' financial responsibility to 
passengers for lost bags; significantly increase the civil 
penalties against airlines that violate aviation consumer 
protection laws; and direct the U.S. General Accounting Office 
to study the so-called hidden cities and back-to-back ticketing 
issue.

                          Legislative History

  On February 6, 1999, Senators Wyden, McCain, Snowe, and Bryan 
introduced S. 383, the Airline Passenger Fairness Act, which 
was referred to the Committee.
  One other bill related to airline passenger protection has 
been introduced and referred to the Committee during the 106th 
Congress. That bill is S. 603, which was introduced by Senator 
Shelby.
  The full Committee held a hearing on S. 383 on March 11, 
1999. Witnesses at the hearing included the General Counsel of 
the Department of Transportation, two individuals who had 
negative air travel experiences, and representatives of the 
major airlines, travel agents and academia.
  On June 23, 1999, the Committee met in open executive session 
to consider S. 383. Chairman McCain and Senators Hollings, 
Gorton, and Rockefeller offered an amendment in the nature of a 
substitute that would ensure that the airlines live up to their 
customer service commitments. The amendment was adopted by 
voice vote.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 9, 1999.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 383, the Airline 
Customer Service Commitment Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Victoria Heid 
Hall (for federal spending) and Hester Grippando (for federal 
revenues).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 383--Airline Customer Service Commitment Act

            Summary
    CBO estimates that implementing S. 383 would cost the 
federal government less than $500,000 annually in fiscal years 
2000 and 2001, assuming appropriation of the estimated amounts. 
In addition, CBO estimates that the bill would increase 
revenues by about $500,000 annually, beginning in fiscal year 
2000. Because enacting S. 383 would affect receipts, pay-as-
you-go procedures would apply.
    S. 383 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments. S. 383 would 
impose new private-sector mandates on air carriers that provide 
scheduled passenger air transportation and are members of the 
Air Transport Association (ATA). CBO estimates that the cost of 
the mandates would be well below the statutory threshold 
established in UMRA ($100 million in 1996, adjusted annually 
for inflation).
            Estimated cost to the Federal Government
    Spending Subject to Appropriation.--S. 383 would require 
that each air carrier that has entered into the voluntary 
customer service agreement established by the ATA provide a 
copy of its customer service plan to the Secretary of 
Transportation. The bill would direct the Inspector General of 
the Department of Transportation (DOT) to monitor 
implementation of each air carrier's customer service plan and 
to make interim and final reports to the Congress on that 
implementation. For the final report, the bill would require 
the Inspector General to evaluate each carrier's plan and to 
analyze the carrier's performance in implementing the plan. 
Based on information from DOT, CBO estimates that implementing 
this bill would cost the Inspector General's office a total of 
$500,000 over the fiscal years 2000 and 2001.
    The bill also would direct the Secretary of Transportation 
to revise regulations to increase the liability limit on 
domestic baggage. According to DOT, other revisions to the 
rules on domestic baggage are already underway; therefore, 
implementing this provision would have no significant impact on 
DOT's expenditures. Finally, S. 383 would require the General 
Accounting Office (GAO) to study and report on the potential 
effects on aviation consumers of a requirement that air 
carriers allow a ticketed passenger to use, without penalty, 
any portion of a multi-stop or round-trip ticket, regardless of 
whether any other portion is used. Based on information from 
GAO, CBO estimates that completing the study would cost less 
than $200,000 over the next few years.
    Revenues.--S. 383 would increase the civil penalty for 
violators of laws and regulations intended to protect 
commercial air transportation consumers from $1,000 to $2,500. 
Based on information from the Federal Aviation Administration, 
CBO estimates that this provision would increase revenues by 
about $500,000 a year.
            Pay-as-you-go considerations
    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. The net changes in governmental receipts 
that are subject to pay-as-you-go procedures are shown in the 
following table. For the purposes of enforcing pay-as-you-go 
procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................                                 Not applicable
Changes in receipts................      0      1      1      1      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------

            Estimated impact on State, local, and tribal governments
    S. 383 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
            Estimated impact on the private sector
    S. 383 would impose new private-sector mandates on air 
carriers that provide scheduled passenger air transportation 
and are members of the ATA. Those air carriers into a voluntary 
agreement on June 17, 1999, to improve customer service 
throughout the airline industry. The bill would require such 
air carriers to provide copies of the customer service plans 
created as a result of that agreement to the Secretary of 
Transportation. The bill also would require each air carrier to 
provide any information that the Inspector General may need to 
evaluate the implementation of its customer service plan. In 
addition, S. 383 would require the Secretary of Transportation 
to initiate a rulemaking proceeding to increase the liability 
limit on domestic baggage. Based on information from DOT and 
the ATA, CBO estimates that the total costs of those mandates 
would fall below the statutory threshold for private-sector 
mandates ($100 million in 1996, adjusted annually for 
inflation).
    Estimate prepared by: Federal costs: Victoria Heid Hall; 
Federal revenues: Hester Grippando; Impact on the private 
sector: Jean Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  The passenger air carriers that are members of the Air 
Transport Association would be subject to the modest 
requirement of submitting their customer service plans to the 
Department of Transportation.

                            economic impact

  Because airlines are already liable for lost or damaged 
baggage, the requirement for the Department of Transportation 
to increase the domestic baggage liability limit may result in 
a relatively modest additional economic impact upon airlines 
when they lose or damage their passengers' luggage. That impact 
would be equally balanced by the benefit to air travelers who 
would be able to recover more from airlines for losing or 
damaging checked baggage and the items contained therein. 
Furthermore, the increased liability limit may provide an 
incentive for airlines to take better care of their passengers' 
possessions and thereby have the effect of reducing the rate of 
lost or damaged baggage.
  Increasing civil penalties for violations of laws, rules, and 
regulations intended to afford consumer protection to airline 
passengers would have a negative financial impact upon airlines 
who engage in such conduct. The increased penalties, however, 
may act as an incentive not to engage in such behavior and 
result in a benefit to consumers and airlines alike, and 
thereby increase the number of people flying.

                                privacy

  This legislation would not have any adverse impact on the 
personal privacy of the individuals affected.

                               paperwork

  The requirement for the airlines to submit their customer 
service plans to the DOT, and the requirement for the DOT to 
submit those plans to the congressional authorizing committees, 
would create an insubstantial amount of paperwork for the 
entities affected. The requirements for the DOT Inspector 
General to prepare two reports, and for the General Accounting 
Office (GAO) to prepare one report, for the congressional 
authorizing committees would result in a modest amount of 
additional paperwork for those offices. The requirement for the 
DOT to initiate a rulemaking to increase the domestic baggage 
liability limit would result in a modest amount of increased 
paperwork for the Federal government.

                      Section-by-Section Analysis


Section 1. Short title

  Section 1 cites the title of the bill as the ``Airline 
Customer Service Commitment Act''.

Section 2. Airline customer service reports

  Section 2 would require the member airlines of the Air 
Transport Association to submit their individual customer 
service plans to the DOT by September 15, 1999, in accordance 
with the Airline Customer Service Commitment. The DOT would be 
required in turn to transmit those plans to the congressional 
authorizing committees, upon receipt.
  This section would also require the DOT Inspector General 
(IG) to monitor the activities of the Air Transport Association 
carriers and evaluate the extent to which they have fulfilled 
their commitments to the voluntary standards that they made on 
June 17, 1999. Specifically, the IG would evaluate whether the 
airlines' individual plans are consistent with the overall 
Airline Customer Service Commitment, evaluate whether and how 
each airline lived up to its individual plan, and provide an 
analysis and comparison of the effectiveness of the plans in 
terms of compliance and in terms of providing valuable 
information to consumers. This provision is not intended to 
codify into law the airlines' voluntary standards.
  The IG would submit an interim report to congressional 
authorizing committees by June 15, 2000. A final report would 
be due by December 31, 2000, and would include any 
recommendations the IG may have with respect to improving the 
consumer protections already in law. The airlines would be 
required to provide the IG with information necessary to 
prepare these reports.

Section 3. Increased financial responsibility for lost baggage

  Section 3 would require the DOT to initiate a rulemaking 
within 30 days of enactment of the bill to increase the 
domestic baggage liability limit above the current level of 
$1,250.

Section 4. Increased penalty for violation of aviation consumer 
        protection laws

  Section 4 would increase to $2,500 the maximum civil penalty 
that could be imposed on an air carrier for violation of laws, 
rules, or regulations that are intended to afford protection to 
airline consumers.

Section 5. Comptroller General investigation

  Section 5 would require the GAO to study the potential 
effects on consumers of requiring air carriers to permit a 
ticketed passenger to use any portion of a ticket independent 
of any other portion of that ticket without penalty. In other 
words, the GAO study would examine the consequences of 
preventing the airlines from penalizing passengers who engage 
in the practices of back-to-back ticketing or hidden-city 
ticketing. The GAO should consult travel agents, consumer 
representatives, and other interested parties on this issue, in 
addition to the affected airlines. The study would be submitted 
to the congressional authorizing committees by June 15, 2000.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                        TITLE 49. TRANSPORTATION

                    SUBTITLE VII. AVIATION PROGRAMS

                    PART A. AIR COMMERCE AND SAFETY

                 SUBPART IV. ENFORCEMENT AND PENALTIES

                         CHAPTER 463. PENALTIES

Sec.  46301. Civil penalties

  (a) General Penalty.--
          (1) A person is liable to the United States 
        Government for a civil penalty of not more than $1,000 
        for violating--
                  (A) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40116, and 40117), chapter 411, 
                chapter 413 (except sections 41307 and 
                41310(b)-(f)), chapter 415 (except sections 
                41502, 41505, and 41507-41509), chapter 417 
                (except sections 41703, 41704, 41710, 41713, 
                and 41714), chapter 419, subchapter II of 
                chapter 421, chapter 441 (except section 
                44109), 44502(b) or (c), chapter 447 (except 
                sections 44717 and 44719-44723), chapter 449 
                (except sections 44902, 44903(d), 44904, 
                44907(a)-(d)(1)(A) and (d)(1)(C)-(f), and 
                44908), or section 46302, 46303, or 47107(b) 
                (including any assurance made under such 
                section) of this title;
                  (B) a regulation prescribed or order issued 
                under any provision to which clause (A) of this 
                paragraph applies;
                  (C) any term of a certificate or permit 
                issued under section 41102, 41103, or 41302 of 
                this title; or
                  (D) a regulation of the United States Postal 
                Service under this part.
          (2) A person operating an aircraft for the 
        transportation of passengers or property for 
        compensation (except an airman serving as an airman) is 
        liable to the Government for a civil penalty of not 
        more than $10,000 for violating--
                  (A) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40106(b), 40116, and 40117), 
                section 44502(b) or (c), chapter 447 (except 
                sections 44717-44723), or chapter 449 (except 
                sections 44902, 44903(d), 44904, and 44907-
                44909) of this title; or
                  (B) a regulation prescribed or order issued 
                under any provision to which clause (A) of this 
                paragraph applies.
          (3) A civil penalty of not more than $10,000 may be 
        imposed for each violation under paragraph (1) of this 
        subsection related to--
                  (A) the transportation of hazardous material; 
                or
                  (B) the registration or recordation under 
                chapter 441 of this title of an aircraft not 
                used to provide air transportation.
          (4) A separate violation occurs under this subsection 
        for each day the violation (other than a violation of 
        section 41715) continues or, if applicable, for each 
        flight involving the violation (other than a violation 
        of section 41715).
          (5) Penalty for diversion of aviation revenues.--The 
        amount of a civil penalty assessed under this section 
        for a violation of section 47107(b) of this title (or 
        any assurance made under such section) or section 47133 
        of this title may be increased above the otherwise 
        applicable maximum amount under this section to an 
        amount not to exceed 3 times the amount of revenues 
        that are used in violation of such section.
          (6) Notwithstanding paragraph (1), the maximum civil 
        penalty for violating section 41715 shall be $5,000 
        instead of $1,000.
          (7) Consumer protection.--For a violation of section 
        41310, 41712, any rule or regulation promulgated 
        thereunder, or other any rule or regulation promulgated 
        by the Secretary of Transportation that is intended to 
        afford protection to commercial air transportation 
        consumers, the maximum civil penalty prescribed by 
        subsection (a) may not exceed $2,500 for each 
        violation.
  (b) Smoke Alarm Device Penalty.--
          (1) A passenger may not tamper with, disable, or 
        destroy a smoke alarm device located in a lavatory on 
        an aircraft providing air transportation or intrastate 
        air transportation.
          (2) An individual violating this subsection is liable 
        to the Government for a civil penalty of not more than 
        $2,000.
  (c) Procedural Requirements.--
          (1) The Secretary of Transportation may impose a 
        civil penalty for the following violations only after 
        notice and an opportunity for a hearing:
                  (A) a violation of subsection (b) of this 
                section or chapter 411, chapter 413 (except 
                sections 41307 and 41310(b)-(f)), chapter 415 
                (except sections 41502, 41505, and 41507-
                41509), chapter 417 (except sections 41703, 
                41704, 41710, 41713, and 41714), chapter 419, 
                subchapter II of chapter 421, or section 44909 
                of this title.
                  (B) a violation of a regulation prescribed or 
                order issued under any provision to which 
                clause (A) of this paragraph applies.
                  (C) a violation of any term of a certificate 
                or permit issued under section 41102, 41103, or 
                41302 of this title.
                  (D) a violation under subsection (a)(1) of 
                this section related to the transportation of 
                hazardous material.
          (2) The Secretary shall give written notice of the 
        finding of a violation and the civil penalty under 
        paragraph (1) of this subsection.
  (d) Administrative Imposition of Penalties.--
          (1) In this subsection--
                  (A) ``flight engineer'' means an individual 
                who holds a flight engineer certificate issued 
                under part 63 of title 14, Code of Federal 
                Regulations.
                  (B) ``mechanic'' means an individual who 
                holds a mechanic certificate issued under part 
                65 of title 14, Code of Federal Regulations.
                  (C) ``pilot'' means an individual who holds a 
                pilot certificate issued under part 61 of title 
                14, Code of Federal Regulations.
                  (D) ``repairman'' means an individual who 
                holds a repairman certificate issued under part 
                65 of title 14, Code of Federal Regulations.
          (2) The Administrator of the Federal Aviation 
        Administration may impose a civil penalty for a 
        violation of chapter 401 (except sections 40103(a) and 
        (d), 40105, 40106(b), 40116, and 40117), chapter 441 
        (except section 44109), section 44502(b) or (c), 
        chapter 447 (except sections 44717 and 44719-44723), 
        chapter 449 (except sections 44902, 44903(d), 44904, 
        44907(a)-(d)(1)(A) and (d)(1)(C)-(f), 44908, and 
        44909), or section 46302, 46303, or 47107(b) (as 
        further defined by the Secretary under section 47107(l) 
        and including any assurance made under section 
        47107(b)) of this title or a regulation prescribed or 
        order issued under any of those provisions. The 
        Administrator shall give written notice of the finding 
        of a violation and the penalty.
          (3) In a civil action to collect a civil penalty 
        imposed by the Administrator under this subsection, the 
        issues of liability and the amount of the penalty may 
        not be reexamined.
          (4) Notwithstanding paragraph (2) of this subsection, 
        the district courts of the United States have exclusive 
        jurisdiction of a civil action involving a penalty the 
        Administrator initiates if--
                  (A) the amount in controversy is more than 
                $50,000;
                  (B) the action is in rem or another action in 
                rem based on the same violation has been 
                brought;
                  (C) the action involves an aircraft subject 
                to a lien that has been seized by the 
                Government; or
                  (D) another action has been brought for an 
                injunction based on the same violation.
          (5)(A) The Administrator may issue an order imposing 
        a penalty under this subsection against an individual 
        acting as a pilot, flight engineer, mechanic, or 
        repairman only after advising the individual of the 
        charges or any reason the Administrator relied on for 
        the proposed penalty and providing the individual an 
        opportunity to answer the charges and be heard about 
        why the order shall not be issued.
          (B) An individual acting as a pilot, flight engineer, 
        mechanic, or repairman may appeal an order imposing a 
        penalty under this subsection to the National 
        Transportation Safety Board. After notice and an 
        opportunity for a hearing on the record, the Board 
        shall affirm, modify, or reverse the order. The Board 
        may modify a civil penalty imposed to a suspension or 
        revocation of a certificate.
          (C) When conducting a hearing under this paragraph, 
        the Board is not bound by findings of fact of the 
        Administrator but is bound by all validly adopted 
        interpretations of laws and regulations the 
        Administrator carries out and of written agency policy 
        guidance available to the public related to sanctions 
        to be imposed under this section unless the Board finds 
        an interpretation is arbitrary, capricious, or 
        otherwise not according to law.
          (D) When an individual files an appeal with the Board 
        under this paragraph, the order of the Administrator is 
        stayed.
          (6) An individual substantially affected by an order 
        of the Board under paragraph (5) of this subsection, or 
        the Administrator when the Administrator decides that 
        an order of the Board under paragraph (5) will have a 
        significant adverse impact on carrying out this part, 
        may obtain judicial review of the order under section 
        46110 of this title. The Administrator shall be made a 
        party to the judicial review proceedings. Findings of 
        fact of the Board are conclusive if supported by 
        substantial evidence.
          (7)(A) The Administrator may impose a penalty on an 
        individual (except an individual acting as a pilot, 
        flight engineer, mechanic, or repairman) only after 
        notice and an opportunity for a hearing on the record.
          (B) In an appeal from a decision of an administrative 
        law judge as the result of a hearing under subparagraph 
        (A) of this paragraph, the Administrator shall consider 
        only whether--
                  (i) each finding of fact is supported by a 
                preponderance of reliable, probative, and 
                substantial evidence;
                  (ii) each conclusion of law is made according 
                to applicable law, precedent, and public 
                policy; and
                  (iii) the judge committed a prejudicial error 
                that supports the appeal.
          (C) Except for good cause, a civil action involving a 
        penalty under this paragraph may not be initiated later 
        than 2 years after the violation occurs.
          (D) In the case of a violation of section 47107(b) of 
        this title or any assurance made under such section--
                  (i) a civil penalty shall not be assessed 
                against an individual;
                  (ii) a civil penalty may be compromised as 
                provided under subsection (f); and
                  (iii) judicial review of any order assessing 
                a civil penalty may be obtained only pursuant 
                to section 46110 of this title.
          (8) The maximum civil penalty the Administrator or 
        Board may impose under this subsection is $50,000.
          (9) This subsection applies only to a violation 
        occurring after August 25, 1992.
  (e) Penalty Considerations.--In determining the amount of a 
civil penalty under subsection (a)(3) of this section related 
to transportation of hazardous material, the Secretary shall 
consider--
          (1) the nature, circumstances, extent, and gravity of 
        the violation;
          (2) with respect to the violator, the degree of 
        culpability, any history of prior violations, the 
        ability to pay, and any effect on the ability to 
        continue doing business; and
          (3) other matters that justice requires.
  (f) Compromise and Setoff.--
          (1) (A) The Secretary may compromise the amount of a 
        civil penalty imposed for violating--
                  (i) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40116, and 40117), chapter 441 
                (except section 44109), section 44502(b) or 
                (c), chapter 447 (except 44717 and 44719-
                44723), or chapter 449 (except sections 44902, 
                44903(d), 44904, 44907(a)-(d)(1)(A) and 
                (d)(1)(C)-(f), 44908, and 44909) of this title; 
                or
                  (ii) a regulation prescribed or order issued 
                under any provision to which clause (i) of this 
                subparagraph applies.
          (B) The Postal Service may compromise the amount of a 
        civil penalty imposed under subsection (a)(1)(D) of 
        this section.
          (2) The Government may deduct the amount of a civil 
        penalty imposed or compromised under this subsection 
        from amounts it owes the person liable for the penalty.
  (g) Judicial Review.--An order of the Secretary imposing a 
civil penalty may be reviewed judicially only under section 
46110 of this title.
  (h) Nonapplication.--
          (1) This section does not apply to the following when 
        performing official duties:
                  (A) a member of the armed forces of the 
                United States.
                  (B) a civilian employee of the Department of 
                Defense subject to the Uniform Code of Military 
                Justice.
          (2) The appropriate military authority is responsible 
        for taking necessary disciplinary action and submitting 
        to the Secretary (or the Administrator with respect to 
        aviation safety duties and powers designated to be 
        carried out by the Administrator) a timely report on 
        action taken.

                                  
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