Late Civil Penalty Payments Could Halt Your Business

The FAA issues civil penalties.  Sometimes the amount is low and the company agrees to pay the civil penalty even in cases where the penalty is undeserved.  But what happens if you are late paying a civil penalty?  In the past, the U.S. government would become a creditor like any other (albeit one with a lot of lawyers on staff); but after September 7, 2014, the regulations will prevent you from engaging in certain activities if you fail to pay your civil penalty in a timely fashion:

49 C.F.R. Sec. 109.101
* * *
(b) Failure to pay civil penalty in full. A respondent that fails to pay a hazardous material civil penalty in full within 90 days after the date specified for payment by an order of the … Federal Aviation Administration … is prohibited from conducting hazardous materials operations and shall immediately cease all hazardous materials operations beginning on the next day (i.e., the 91st). The prohibition shall continue until payment of the penalty has been made in full or at the discretion of the agency issuing the order an acceptable payment plan has been arranged.

This means that if you are late paying a civil penalty, shipping a hazmat aircraft part would become a violation that warrants a separate civil penalty (even if the shipment is otherwise proper)!

How broad is this limit?  For some aircraft parts distributors, this could be very broad indeed because many aircraft parts are regulated as hazmats.  The preamble to the new rule clarifies that this is intended to halt any activity regulated under the hazardous materials regulations.  This would include shipping of aircraft parts that are regulated as hazmats (also known as dangerous goods).  This includes obvious hazmats like explosive squibs and chemical oxygen generators  but it also includes less obvious articles like:

  • compressed gas cylinders
  • engine and fuel system parts with fuel residue
  • passenger service units with installed oxygen generators
  • avionics or data recorders with back-up batteries
  • batteries
  • self-inflating articles like slides, rafts and life preservers
  • many first aid kits

This highlights the importance of (1) mounting an effective defense to proposed hazmat civil penalties, and also (2) paying civil penalties that have become final in a timely fashion.  Note that appealing the ruling DOES NOT stay the execution of this provision, so if you appeal the ruling, then you will have to ask the appellate court to grant a stay.

49 C.F.R. Sec. 109.101
* * *
(d) Appeals to Federal Court. If the respondent appeals an agency order issued pursuant to Sec. 109.103 to a Federal Circuit Court of Appeals, the terms and payment due date of the order are not stayed unless the Court so specifies.

The new provisions are published in today’s Federal Register at http://www.gpo.gov/fdsys/pkg/FR-2014-08-07/html/2014-18617.htm

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About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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