On May 29 more than 600 passengers were cooped up for over three hours on 15 flights arriving at Chicago's O'Hare Airport.
The airline must pay $650,000 of the fine within 30 days. But up to $250,000 can be credited for refunds, vouchers, and frequent flyer mile awards provided to the passengers on the 15 flights, as well as to passengers on future flights that violate the three-hour rule, the Department of Transportation said.
"We put the tarmac rule in place to protect passengers, and we take any violation very seriously," Transportation Secretary Ray LaHood said in a statement. "We will work to ensure that airlines and airports coordinate their resources and plans to avoid keeping passengers delayed on the tarmac."
American Eagle blamed the delays on airport congestion caused by a slow-moving weather system, and said they provided passengers with either travel vouchers or frequent flyer program mileage credit.
This is the first excessive tarmac delay fine to be handed down from the Department of Transportation, and serves as a warning for airlines ahead of the busy holiday travel season.
In April 2010, the agency imposed a three-hour limit for occupied planes to sit on the tarmac. After that, airlines must either return to a gate or provide passengers who wish to leave planes with some other means of safely getting off.
The airline is the first to be fined for violating the three-hour rule since it took effect 20 months ago.
The Associated Press contributed to this story.