Why stand in line to board an airplane?

Good question, actually it all happened a few days before I even got to the airport, so I was aware which flight I was supposed to take. I don't think that really technically counts as "denied boarding" but it seems like they probably did it because my original flight was very oversold.

Yes, it is in the US. It's in the federal aviation regulations: 14 CFR part 250. There is a link to the regulation at the bottom of this article from the DOT:

https://www.transportation.gov/individuals/aviation-consumer-protection/bumping-oversales

Just going to make it very clear though, there's big differences between being denied boarding (bumped due to overselling), a flight being delayed, and a flight being canceled. Each is its own situation.

There is no legal requirement for compensation if a flight is delayed. If the flight is canceled entirely then you are owed a refund of what you paid. There's no law requiring the airline to rebook you or pay for accommodations or alternate transportation in any situation. What the airline will do in situations outside of "bumping" mostly follows the contract of carriage and their customer service policies / discretion (in my experience customer service agents can have a lot of discretion especially if they're not busy and you ask nicely).

Since you said your friends' flights were canceled, not that they were bumped (denied boarding), basically only the contract of carriage applies (and any relevant tort law). Also, just in general, Frontier is a low cost carrier, and when you fly with them you have to understand that they do not provide the same level of service as other carriers. In exchange, you get a lower price. For example, their contract of carriage says nothing about ground accommodation due to unforseen circumstances, while other airlines have clauses about paying for hotels and other forms of transportation.

That being said, Frontier does agree to rebook you on a Frontier flight in the following circumstances:

(i) a passenger's flight is canceled, (ii) a passenger is denied boarding because an aircraft with lesser capacity is substituted, (iii) a passenger misses a connecting Frontier flight due to a delay or cancellation of a Frontier flight (but not flights of other carriers), (iv) a passenger is delivered to a different destination because of the omission of a scheduled stop to which the passenger held a ticket, Frontier will provide transportation on its own flights at no additional charge to the passenger’s original destination or equivalent destination as provided herein. Frontier will have no obligation to provide transportation on another carrier. If Frontier cannot provide the foregoing transportation, Frontier shall, if requested, provide a refund for the unused portion of the passenger's ticket in lieu of the transportation under the foregoing.

IANAL, but it sounds like your friends could probably still request a refund of the premium that they paid, since Frontier was contractually bound to transport them at no additional charge. If Frontier refuses, then it sounds like it could be a good fit for small claims court.

It's always worth knowing your rights and the legal background when you're dealing with companies, especially when they are as profit-driven and operate at as low a margin as the airline industry does. Note that even in Frontier's contract, the burden is on you to request a refund. Airlines will basically do anything possible to not pay money if they can help it, even if it means sometimes "forgetting" about federal law when it comes to bumping.

On the other hand, you can also benefit by being able to recognize when an airline is not required to do something, but does it anyways out of goodwill. For example, when I got bumped onto the earlier flight, they called me up offering me something like 25k points for the inconvenience. I tried to negotiate higher, but they refused, so I accepted the 25k points understanding that I had no leverage because they weren't actually obligated to offer me anything.