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[Federal Register Volume 89, Number 206 (Thursday, October 24, 2024)]
[Rules and Regulations]
[Pages 84815-84819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23588]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 250 and 254

RIN 2105-AF30

Periodic Revisions to Denied Boarding Compensation and Domestic 
Baggage Liability Limits

AGENCY: Office of the Secretary (OST), Department of Transportation 
(DOT).

ACTION: Final rule.

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[[Page 84816]]

SUMMARY: This final rule, in accordance with existing regulation, 
raises the liability limits for denied boarding compensation that U.S. 
and foreign air carriers may impose from the current figures of $775 
and $1,550 to $1,075 and $2,150. Also, in accordance with existing 
regulation, this final rule raises the liability limit U.S. carriers 
may impose for mishandled baggage in domestic air transportation from 
the current amount of $3,800 to $4,700.

DATES: This rule is effective on January 22, 2025.

FOR FURTHER INFORMATION CONTACT: Stuart Hindman, Senior Attorney, 
Office of the General Counsel, Department of Transportation, 1200 New 
Jersey Ave. SE, Washington, DC 20590; 202-366-9041, 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Revision of Carriers' Liability Limits for Denied Boarding 
Compensation

    The Department's oversales rule, 14 CFR part 250, requires that the 
DBC liability limit amounts be periodically adjusted to reflect changes 
in the Consumer Price Index for All Urban Consumers (CPI-U). 
Specifically, 14 CFR 250.5(e) provides for the review of denied 
boarding compensation every two years through a specific formula to 
calculate the revised DBC liability limit amounts. The formula is 
below:
    Current DBC limit in Sec.  250.5(a)(2) multiplied by (a/b) rounded 
to the nearest $25 where:

a = July CPI-U of year of current adjustment
b = the CPI-U figure in August 2011 when the inflation adjustment 
provision was added to part 250.

    Section 250.5(e) specifies that the DBC liability limit in Sec.  
250.5(a)(3) shall be twice the revised limit for Sec.  250.5(a)(2), the 
DBC liability limit in Sec.  250.5(b)(2) shall be the same as the 
revised limit for Sec.  250.5(a)(2), and the DBC liability limit in 
Sec.  250.5(b)(3) shall be twice the revised limit in Sec.  
250.5(a)(2).
    In a final rule issued on January 13, 2021, the Department reviewed 
the DBC liability limits and adjusted them to the current amounts of 
$775/$1,550, using the CPI-U for July 2020.\1\ For this review, we are 
using the CPI-U for July 2024, which was issued by the Bureau of Labor 
Statistics on August 14, 2024.\2\ In this review, we apply the formula 
using the CPI-U from August 2011 (the basis month required by the 
formula) and July 2024. The results of this calculation require that 
the DBC liability limit amounts be raised. Specifically, the 
appropriate inflation adjustment for the amount provided in Sec.  
250.5(a)(2) is $775 x 314.540/226.545 [$775 x 1.3884], which yields 
$1,076. The base amount of $775 in the formula was the denied boarding 
compensation liability limit amount in Sec.  250.5(a)(2),\3\ as 
adjusted by the 2020 final rule; 314.540 was the CPI-U for July 2024, 
and 226.545 was the CPI-U for August 2011. Section 250.5(e) requires us 
to round the adjustment to the nearest $25, which is $1,075 in this 
case. Section 250.5(a)(3) and (b)(3) provide that for passengers who 
are not rerouted to reach their destination within two hours of the 
planned arrival time of their original domestic flight (four hours for 
international transportation), the DBC liability limit amount is twice 
the amount provided by Sec.  250.5(a)(2) and (b)(2); therefore, under 
the formula adjustment, this amount is twice $1,075, or $2,150.
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    \1\ Final Rule, Implementing Certain Provisions of the TICKETS 
Act and Revisions to Denied Boarding Compensation and Domestic 
Baggage Liability Limits, 86 FR 2534, January 13, 2021.
    \2\ The CPI-U for all items in July 2024 was 314.540. See 
Consumer Price Index--July 2024, Table 1, USDL-24-1662, available at 
https://www.bls.gov/news.release/archives/cpi_08142024.htm (Issued 
Aug. 14, 2024).
    \3\ Section 250.5(a)(2) provides that the liability limit amount 
for DBC is $775 for passengers who are denied boarding involuntarily 
on a domestic flight by a carrier who offers alternate 
transportation that is planned to arrive at the passenger's first 
stopover or final destination more than one hour but less than two 
hours after the planned arrival time of the passenger's original 
flight. Section 250.5(a)(3) provides that the liability limit amount 
for DBC is $1,550 for passengers who are denied boarding 
involuntarily on a domestic flight by a carrier who offers alternate 
transportation that is planned to arrive at the passenger's first 
stopover or final destination more than two hours after the planned 
arrival time of the passenger's original flight.
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II. Revision of Domestic Baggage Liability Limit

    The baggage liability limit that air carriers may apply to domestic 
air service is established by 14 CFR part 254. This limit applies to a 
carrier's liabilities towards any provable direct or consequential 
damages resulting from the disappearance of, damage to, or delay in 
delivery of a passenger's baggage that was in a carrier's custody 
during domestic air transportation. Like the requirements regarding the 
provision of DBC to passengers in appropriate circumstances, this 
requirement has never limited the maximum amount of compensation a 
carrier may provide a passenger in connection with mishandled baggage. 
It merely provides a regulatory minimum liability limit that carriers 
may set. Section 254.6 requires review every two years of the limit of 
liability prescribed in part 254 and revision of the limit of 
liability, if necessary, to reflect changes in the CPI-U as of July of 
each review year through a specific formula. The formula is below:

$2,500 x (a/b) rounded to the nearest $100
where:

a = July CPI-U of year of current adjustment
b = the CPI-U figure in December 1999 when the inflation adjustment 
provision was added to part 254.

    The application of the formula during the 2020 review of the 
domestic baggage liability limit required that the amount be raised 
from $3,500 to the current amount of $3,800.\4\ The current review 
requires another inflation adjustment. Applying the formula using the 
consumer price index for December 1999 (the basis month required by the 
formula) and July 2024, the appropriate inflation adjustment is $2,500 
x 314.540/168.30 [$2,500 x 1.8689], which yields $4,672.25. The base 
amount of $2,500 in the formula was the minimum liability limit in part 
254 at the time that this biennial indexing provision was added to the 
rule in 1999, 314.540 was the CPI-U for July 2024, and 168.30 was the 
CPI-U for December 1999. Section 254.6 requires rounding the adjustment 
to the nearest $100, which is $4,700.
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    \4\ 86 FR 2534, January 13, 2021.
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III. Regulatory Analyses and Notices

Good Cause for Issuing Rule Without Prior Notice and Comment

    The Administrative Procedure Act (APA) provides that when an 
agency, for good cause, finds that notice of a proposed rule and public 
procedure thereon are impractical, unnecessary, or contrary to the 
public interest, the agency may issue a final rule without providing 
notice and an opportunity for public comment (5 U.S.C. 553(b)(B)). The 
Department has determined that there is good cause to issue this final 
rule without notice and an opportunity for public comment because such 
notice and comment would be unnecessary.
    Under 5 U.S.C. 553(b)(B), good cause exists for dispensing with a 
notice of proposed rulemaking and public comment for the inflation 
adjustments herein as the application of this rule does not involve any 
agency discretion. These adjustments are a ministerial inflation update 
of applicable amounts based on the terms and formulas set by 14 CFR 
250.5 and 14 CFR 254.6. Those formulas were subject to notice and 
comment in the rulemaking proceedings during which they were added to 
the baggage liability and oversales rules. Accordingly, because this 
update is purely an application of the formula, we

[[Page 84817]]

find that there is good cause to publish a final rule without first 
providing notice and an opportunity for comment.

Effective Date

    This final rule will become effective with respect to 
transportation taking place on or after January 22, 2025. For any 
carrier that imposes liability limits on its denied boarding 
compensation and mishandled domestic baggage compensation, the limits 
must be updated to these new amounts for transportation taking place on 
or after the effective date (as opposed to tickets sold on or after the 
effective date). All notices to passengers required by part 250 and 
part 254 as they pertain to the new DBC liability limits and domestic 
baggage liability limit must be updated by the effective date of this 
final rule.

Executive Order 12866

    This final rule has been evaluated following existing policies and 
procedures and is considered not significant under Executive Order 
12866, as amended by Executive Order 14094 (``Modernizing Regulatory 
Review''), and DOT's Regulatory Policies and Procedures. Therefore, the 
rule has not been reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866. This regulation conforms with the policies 
and procedures of DOT's administrative rule on rulemakings. 49 CFR part 
5.
Denied Boarding Compensation Liability Limits
    The rule provides for an inflation adjustment to the DBC liability 
limit amounts that air carriers and foreign air carriers must pay 
passengers who are involuntarily denied boarding. The inflation 
adjustment is required by regulation and does not involve any exercise 
of discretion or interpretation. Because the Department does not have 
the flexibility to alter the inflation adjustment, it did not consider 
regulatory alternatives. The rule increases transfers from carriers to 
passengers to the extent that it increases compensation; any increase, 
however, would be minimal. In 2023, 24,756 passengers--29 passengers 
per 1,000,000 enplaned passengers--were involuntarily denied boarding 
on scheduled domestic and outbound international flights.\5\ Many of 
those passengers qualified for compensation amounts below the DBC 
liability limit, and their compensation would not have been affected by 
the increase in the limits.
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    \5\ Source: Air Travel Consumer Report, February 2024 edition, 
page 52. https://www.transportation.gov/sites/dot.gov/files/2024-03/February%202024%20ATCR.pdf.
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Domestic Baggage Liability

    The rule provides for an inflation adjustment to the amount of the 
minimum limit on baggage liability that air carriers may assert in 
cases of mishandled baggage. The adjustment is required by current 
regulation, with no opportunity for interpretation. The rule increases 
transfers from carriers to passengers to the extent that it increases 
mishandled baggage compensation. This increase would be limited, 
however, because the majority of mishandled baggage cases do not result 
in claims that meet the liability limit. Based on information provided 
by carriers during an inflation adjustment review to the domestic 
baggage limit in 2013, slightly more than half of one percent of 
mishandled bags qualify for the current limit.\6\
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    \6\ The information provided to the Department by carriers in 
2013 was based on the number of mishandled baggage reports (MBRs) 
filed with carriers by passengers, which was consistent with the 
reporting requirement in effect then pursuant to 14 CFR part 234. 
The number of MBRs in general is equal to the number of passengers 
who experienced mishandled bags. In 2016, the Department revised 
part 234 by requiring reporting carriers to report the number of 
mishandled bags instead of MBRs. See, Final Rule, Reporting of Data 
for Mishandled Baggage and Wheelchairs and Scooters Transported in 
Aircraft Cargo Compartments, 81 FR 76300, Nov. 2, 2016. The new 
reporting requirement became effective in 2019. As one MBR may 
contain multiple mishandled bags, the number of mishandled bags is 
in general slightly larger than the number of MBRs.
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Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) requires 
an assessment of the impact of proposed and final rules on small 
entities unless the agency certifies that the proposed regulation will 
not have a significant economic impact on a substantial number of small 
entities. An air carrier or a foreign air carrier is a small business 
if it provides air transportation only with small aircraft (i.e., 
aircraft with up to 60 seats/18,000-pound payload capacity). See 14 CFR 
399.73. The revisions of the baggage liability amounts affect flight 
segments operated with large aircraft, i.e., more than 60 seats. 
Therefore, this provision of the rule does not impact small air 
carriers or foreign air carriers. The revisions of the DBC amounts 
affect flight segments operated with aircraft designed to have 
passenger capacity of 30 or more. As a result, many operations of small 
entities, such as air taxis and many commuter air carriers, are not 
covered by this provision of the rule. Moreover, any additional costs 
for small entities associated with this provision will be minimal and, 
in the case of baggage liability, may be covered by insurance. 
Accordingly, I hereby certify that this action will not have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

    This final rule imposes no new reporting or record keeping 
requirements necessitating clearance by OMB.

National Environmental Policy Act

    The Department has analyzed the environmental impacts of this 
proposed action pursuant to the National Environmental Policy Act of 
1969 (42 U.S.C. 4321, et seq.), and has determined that it is 
categorically excluded pursuant to DOT Order 5610.1C, Procedures for 
Considering Environmental Impacts (44 FR 56420, Oct. 1, 1979) available 
at https://www.transportation.gov/office-policy/transportation-policy/procedures-considering-environmental-impacts-dot-order-56101c. 
Categorical exclusions are actions identified in an agency's NEPA 
implementing procedures that do not normally have a significant impact 
on the environment, and therefore do not require either an 
environmental assessment (EA) or environmental impact statement (EIS). 
See 40 CFR 1508.1(d). In analyzing the applicability of a categorical 
exclusion, the agency must also consider whether extraordinary 
circumstances are present that would warrant the preparation of an EA 
or EIS. Id. Paragraph 4.c.6.i of DOT Order 5610.1C provides that 
``[a]ctions relating to consumer protection, including regulations'' 
are categorically excluded. The purpose of this rulemaking is to adjust 
the amounts for denied boarding compensation and the minimum domestic 
baggage liability limit. The Department does not anticipate any 
environmental impacts, and there are no extraordinary circumstances 
present in connection with this rulemaking.

List of Subjects

14 CFR Part 250

    Air carriers, Consumer protection, Reporting and recordkeeping 
requirements.

14 CFR Part 254

    Administrative practice and procedure, Air carriers, Consumer 
protection, Reporting and recordkeeping requirements.

[[Page 84818]]

    Accordingly, the Department of Transportation amends 14 CFR parts 
250 and 254 as follows:

PART 250--OVERSALES

0
1. The authority citation for 14 CFR part 250 continues to read as 
follows:

    Authority:  49 U.S.C. 329 and chapters 41102, 41301, 41708, 
41709, and 41712.

Sec.  250.5  [Amended]

0
2. Section 250.5 is amended as follows:
0
a. In paragraphs (a)(2) and (b)(2) by removing ``$775'' and adding 
``$1,075'' in its place, and
0
b. In paragraphs (a)(3) and (b)(3) by removing ``$1,550'' and inserting 
``$2,150'' in its place.

0
3. Section 250.9 is amended by revising paragraph (b) to read as 
follows:

Sec.  250.9  Written explanation of denied boarding compensation and 
boarding priorities, and verbal notification of denied boarding 
compensation.

* * * * *
    (b) The statement shall read as follows:

Compensation for Denied Boarding

    If you have been denied a reserved seat on (name of air carrier), 
you are probably entitled to monetary compensation. This notice 
explains the airline's obligation and the passenger's rights in the 
case of an oversold flight, in accordance with regulations of the U.S. 
Department of Transportation.

Volunteers and Boarding Priorities

    If a flight is oversold (more passengers hold confirmed 
reservations than there are seats available), no one may be denied 
boarding against his or her will until airline personnel first ask for 
volunteers who will give up their reservation willingly, in exchange 
for compensation of the airline's choosing. If there are not enough 
volunteers, other passengers may be denied boarding involuntarily in 
accordance with the following boarding priority of (name of air 
carrier): (In this space the carrier inserts its boarding priority 
rules or a summary thereof, in a manner to be understandable to the 
average passenger.)

Compensation for Involuntary Denied Boarding

    If you are denied boarding involuntarily, you are entitled to a 
payment of ``denied boarding compensation'' from the airline unless:
    (1) you have not fully complied with the airline's ticketing, 
check-in and reconfirmation requirements, or you are not acceptable for 
transportation under the airline's usual rules and practices; or
    (2) you are denied boarding because the flight is canceled; or
    (3) you are denied boarding because a smaller capacity aircraft was 
substituted for safety or operational reasons; or
    (4) on a flight operated with an aircraft having 60 or fewer seats, 
you are denied boarding due to safety-related weight/balance 
restrictions that limit payload; or
    (5) you are offered accommodations in a section of the aircraft 
other than specified in your ticket, at no extra charge (a passenger 
seated in a section for which a lower fare is charged must be given an 
appropriate refund); or
    (6) the airline is able to place you on another flight or flights 
that are planned to reach your next stopover or final destination 
within one hour of the planned arrival time of your original flight.

Amount of Denied Boarding Compensation

Domestic Transportation

    Passengers traveling between points within the United States 
(including the territories and possessions) who are denied boarding 
involuntarily from an oversold flight are entitled to: (1) No 
compensation if the carrier offers alternate transportation that is 
planned to arrive at the passenger's destination or first stopover not 
later than one hour after the planned arrival time of the passenger's 
original flight; (2) at least 200 percent of the fare to the 
passenger's destination or first stopover, or $1,075, whichever is 
lower, if the carrier offers alternate transportation that is planned 
to arrive at the passenger's destination or first stopover more than 
one hour but less than two hours after the planned arrival time of the 
passenger's original flight; and (3) at least 400 percent of the fare 
to the passenger's destination or first stopover, or $2,150, whichever 
is lower, if the carrier does not offer alternate transportation that 
is planned to arrive at the airport of the passenger's destination or 
first stopover less than two hours after the planned arrival time of 
the passenger's original flight.
    0 to 1 hour arrival delay: No compensation.
    1 to 2 hour arrival delay: 200% of one-way fare (carriers may limit 
this amount to $1,075 if it is higher than $1,075).*
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    * Nothing in the Department of Transportation's regulation 
prohibits carriers from offering denied boarding compensations in an 
amount more than the amount calculated according to the chart above, 
or more than the denied boarding compensation liability limit 
amounts stated in the chart.
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    Over 2 hours arrival delay: 400% of one-way fare (carriers may 
limit this amount to $2,150 if it is higher than $2,150).*

International Transportation

    Passengers traveling from the United States to a foreign point who 
are denied boarding involuntarily from an oversold flight originating 
at a U.S. airport are entitled to: (1) No compensation if the carrier 
offers alternate transportation that is planned to arrive at the 
passenger's destination or first stopover not later than one hour after 
the planned arrival time of the passenger's original flight; (2) at 
least 200 percent of the fare to the passenger's destination or first 
stopover, or $1,075, whichever is lower, if the carrier offers 
alternate transportation that is planned to arrive at the passenger's 
destination or first stopover more than one hour but less than four 
hours after the planned arrival time of the passenger's original 
flight; and (3) at least 400 percent of the fare to the passenger's 
destination or first stopover, or $2,150, whichever is lower, if the 
carrier does not offer alternate transportation that is planned to 
arrive at the airport of the passenger's destination or first stopover 
less than four hours after the planned arrival time of the passenger's 
original flight.
    0 to 1 hour arrival delay: No compensation.
    1 to 4 hour arrival delay: 200% of one-way fare (carriers may limit 
this amount to $1,075 if it is higher than $1,075).**
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    ** Nothing in the Department of Transportation's regulation 
prohibits carriers from offering denied boarding compensations in an 
amount more than the amount calculated according to the chart above, 
or more than the denied boarding compensation liability limit 
amounts stated in the chart.
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    Over 4 hours arrival delay: 400% of one-way fare (carriers may 
limit this amount to $2,150 if it is higher than $2,150).**

Alternate Transportation

    ``Alternate transportation'' is air transportation with a confirmed 
reservation at no additional charge (by any scheduled airline licensed 
by DOT), or other transportation accepted and used by the passenger in 
the case of denied boarding.

Method of Payment

    Except as provided below, the airline must give each passenger who 
qualifies for involuntary denied boarding compensation a payment by 
cash or check for the amount specified above, on the day and at the 
place the involuntary denied boarding occurs. If the airline arranges 
alternate

[[Page 84819]]

transportation for the passenger's convenience that departs before the 
payment can be made, the payment shall be sent to the passenger within 
24 hours. The air carrier may offer free or discounted transportation 
in place of the cash payment. In that event, the carrier must disclose 
all material restrictions on the use of the free or discounted 
transportation before the passenger decides whether to accept the 
transportation in lieu of a cash or check payment. The passenger may 
insist on the cash/check payment or refuse all compensation and bring 
private legal action.

Passenger's Options

    Acceptance of the compensation may relieve (name of air carrier) 
from any further liability to the passenger caused by its failure to 
honor the confirmed reservation. However, the passenger may decline the 
payment and seek to recover damages in a court of law or in some other 
manner.
* * * * *

PART 254--DOMESTIC BAGGAGE LIABILITY

0
4. The authority citation for 14 CFR part 254 continues to read as 
follows:

    Authority:  49 U.S.C. 40113, 41501, 41504, 41510, 41702, and 
41707.

Sec.  254.4  [Amended]

0
5. Section 254.4 is amended by removing ``$3,800'' and adding 
``$4,700'' in its place.

Sec.  254.5  [Amended]

0
6. Section 254.5 is amended in paragraph (b) by removing ``$3,800'' and 
adding ``$4,700'' in its place.

    Issued in Washington, DC, pursuant to authority delegated in 49 
CFR 1.27(n).
Subash Iyer,
Acting General Counsel.
[FR Doc. 2024-23588 Filed 10-23-24; 8:45 am]
BILLING CODE 4910-9X-P
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