State Attorneys General Fly into Previously Federal Airspace

The Department of Transportation and 18 states on April 16 agreed to a Memorandum of Understanding (MOU) that delegates more authority to and streamlines the process for state attorneys general to investigate consumer complaints against airlines.

In 1978, when President Jimmy Carter signed the Airline Deregulation Act into law, the new statute preempted state consumer protection authority, leaving it as the sole province of the US Department of Transportation (DOT) to investigate and penalize unfair or deceptive acts or practices (UDAP) in commercial passenger aviation.

As California’s attorney general and then as a US senator, Kamala Harris argued that states should not be preempted—that they should be able to exercise their authority under state law. Now, as vice president and with the assistance of the secretary of the DOT, her request has partially been granted.

Now that the MOU is in effect, we anticipate that signatory attorneys general will move expeditiously to identify complaints and initiate investigations leading to inquiries for carriers. To start, this will likely mean letter inquiries, which could result in misrouting for businesses that have not historically interacted with the attorneys general.

The MOU contains four key features:

1. Signatory state attorneys general have the delegated authority to investigate alleged UDAP violations for which they were previously preempted.
2. DOT will use its enforcement regime to assure that carriers cooperate with investigations—that they produce data and make witnesses available for interview.
3. Creation of a “fast-track” channel for state attorneys general to report violations to DOT and for DOT consideration and action.
4. Access for states to DOT’s nonpublic consumer complaint database.

All US passenger commercial air carriers and non-US passenger commercial air carriers that transport passengers to or from the United States now largely face the same dual enforcement scheme that most businesses in the United States do—a primary federal agency and numerous state enforcement officials. While only DOT has direct enforcement authority, differing approaches to consumer protection by attorneys general and the resources they gain will mean more investigations and possibly more prosecutions. Moreover, if an attorney general recommends action and none is taken, it will put “soft” pressure on the federal agency to act.

Carriers should:

• Consider their compliance and consumer protection policies relating to front-line issues (such as care for passengers during delays, refunds, unclear contract language, and fees for ancillary services such as checked bags) to make certain that they are following through on their policies and that those policies are clear and concise to the reasonable person
• Have a mechanism, including outreach, to attorneys general that can work to blunt enforcement by addressing concerns before they rise to an adversarial level
• Review their internal complaint processing to assure that customer complaints are addressed and, when not favorably resolved, properly documented in a timely manner
• Establish a means for responding promptly and accurately to inquiries from state attorneys general—these will likely arrive in letter form, which increases the risk of erroneous processing

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