House T&I Approves Latest Iteration of “Flags of Convenience” Aviation Bill

Yesterday, the House Transportation and Infrastructure Committee approved a bill (H.R. 3632) sponsored by full committee chairman Peter DeFazio (D-OR) and Aviation Subcommittee chairman Rick Larsen (D-WA) designed to prevent future admission of foreign airlines into U.S. service if they are “flag of convenience” carriers.

DeFazio said “This bipartisan bill ensures fair competition and seeks to prevent a race to the bottom in international civil aviation. Going one step further than the bill I introduced last Congress on this issue, this bill states that preventing a foreign airline from undermining labor standards is, in fact, in the public interest. We have the largest, most complex, airspace in the world and we must continue to ensure it runs safely, efficiently, and fairly.”

The bill has three substantive sections:

  • Sec. 2 prevents USDOT from issuing new permits to authorize air carriers to provide service to the U.S. under the U.S.-EU aviation agreement unless the Secretary finds it would be consistent with Article 17 bis of the agreement (dealing with the “social dimension” of the agreement and declaring that the agreement is not intended to undermine labor standards and principles).
  • Sec. 3 adds language to 49 U.S.C. §41302 to change “or” to “and” which makes the public interest requirement in (2)(B) controlling, and adding a requirement that the public interest requirement be considered in the totality of the circumstances.
  • Sec. 4 adds two new items to the list of policies in 49 U.S.C. §40101(a) which the Secretary must follow when carrying out economic regulation: “(17) preventing entry into United States markets by flag of convenience carriers,” and “(18) preventing the undermining of labor standards.”

Similar legislation was introduced by DeFazio and others in April 2017 as the “Flags of Convenience Don’t Fly Here Act” (H.R. 2150, 115th Congress). Section 2 of those bills is descended from H.R. 5090 (114th Congress) which Mr. DeFazio introduced in April 2016. And that latter bill was introduced two weeks after the Justice Department Office of Legal Counsel issued a legal opinion saying that “that if an air carrier of a Party to the Agreement is otherwise qualified to receive a permit, Article 17 bis does not provide an independent basis upon which the United States may deny the carrier’s application for a permit.”

A recent Congressional Research Service summarizing this issue calls H.R. 3632 “the latest salvo in a prolonged battle over issuance of a foreign air carrier permit that allows Norwegian Air Shuttle, which owns a group of discount carriers, to operate transatlantic flights to U.S. destinations.”

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