Recently, the Department of Transportation issued a Notice of Proposed Rulemaking to slightly alter consumer protection rules regarding unfair and deceptive practices by airlines. The crux of DOT’s regulation would provide greater clarity in the interpretation of what constitutes such practices. It’s an important change that air travelers and free market advocates should proudly support.
The DOT’s proposed change will define DOT’s authority regarding unfair and deceptive practices in rulemakings and enforcement actions in a manner consistent with the Federal Trade Commission’s (FTC) approach. As Transportation Secretary Chao notes, “the proposal is intended to provide regulated entities and other interested parties greater clarity and certainty about the Department’s interpretation of unfair or deceptive practices in the context of aviation consumer protection rulemaking and enforcement actions.”
As NTU has noted in the past, the FTC is not necessarily a paragon of regulatory virtue. Nor has Congress always been helpful in providing legislative guardrails to the terms “unfair” and “deceptive” so that the economy is protected from overzealous regulators or litigators attempting to micromanage business practices. Nonetheless, in 1994 Congress did pass legislation curbing governmental abuse of unfair and deceptive practices authority at FTC including, among other things, consideration of whether a given case is “outweighed by countervailing benefits to consumers or to competition.” Though FTC and the courts have often tested these boundaries, they have helped to keep in check some of government’s worst regulatory impulses. DOT’s decision, while not statutory, helps to align its own consumer protection philosophy with congressional intent toward FTC and other federal agencies.
Specifically, the rule would codify definitions for unfair and deceptive, require DOT to explain the “basis” for finding that a practice is unfair or deceptive, and “adopt formal hearing procedures for discretionary aviation consumer protection rulemakings.” It would also include the practice of offering airlines and ticket agents the opportunity to be heard and to present relevant evidence before the Department makes a determination regarding a potential unfair or deceptive practice. Creating a forum such as this is entirely consistent with a recent trend toward greater regulatory accountability. For example, just a few months ago the Administration issued a pair of NTU-backed Executive Orders to not only catalog and clarify the nature of subregulatory guidance, but to also give citizens the right to petition for relief prior to a regulatory enforcement action.
DOT’s initiative is a reasonable adjustment to policy that will ensure all regulated entities are treated fairly and afforded due process. Naturally, some view this change as simply another giveaway to big airlines, with one individual claiming this rule will “hamstring another federal oversight agency.” Nothing could be further from the truth. In fact, with this proposal DOT is continuing to honor the highly successful approach embodied in the Airline Deregulation Act of 1978, which led to a wave of pro-consumer, pro-taxpayer reforms throughout the transportation sector.
It is quite possible to protect consumers from genuine harm and at the same time protect businesses from the destructive arm of onerous government regulation. Fortunately, the Department of Transportation has thread the needle skilfully, and for that Secretary Chao as well as her policy team deserve a round of applause from taxpayers.