"The removal of a seated passenger from a full United Airlines flight on April 9, 2017, has spurred discussions about federal regulation of airline overbooking. Overbooking is a carrier's intentional acceptance of more reservations for a specific flight than the number of seats available on the aircraft. It is not illegal for airlines to overbook, and the practice occurs frequently. In many cases passengers are unaware that a flight is overbooked, because 'no shows' or last-minute cancellations leave sufficient room for all ticketed passengers. The U.S. Department of Transportation (DOT) does not regulate overbooking, aside from requiring airlines to tell passengers that a flight may be overbooked. Rather, federal regulations address oversale-an airline's failure to accommodate passengers holding confirmed reserved tickets on a flight because seats are not available. The aforementioned United flight may not have been overbooked; media reports indicated that all ticketed passengers had been seated, suggesting that there was no problem arising from overbooking. However, once the carrier decided that certain passengers with confirmed reservations needed to give up their seats to make room for airline employees, the flight became oversold. This obligated the carrier to comply with the DOT oversales rule (14 C.F.R. Part 250, known as Part 250)."
CRS Insight, IN10693
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html