Congestion Management Rule for LaGuardia Airport, 20846-20868 [E8-8308]

Agencies

• Federal Aviation Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 75 (Thursday, April 17, 2008)]
[Proposed Rules]
[Pages 20846-20868]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-8308]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 93

[Docket No. FAA-2006-25709; Notice No. 08-04]
RIN 2120-AI70


Congestion Management Rule for LaGuardia Airport

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Supplemental notice of proposed rulemaking (SNPRM).

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SUMMARY: On August 29, 2006, the Federal Aviation Administration 
published a notice of proposed rulemaking to address congestion at New 
York's LaGuardia Airport (LaGuardia), which included a proposal to 
administratively incentivize carriers to use larger planes. The FAA 
prefers to use measures that allow carriers to respond to market forces 
to drive the most efficient airline behavior and is amending its 
original proposal. To minimize disruption, the FAA proposes to 
grandfather the majority of operations at the airport and develop a 
robust secondary market by annually auctioning off a limited number of 
slots. The FAA is proposing two different, mutually exclusive options. 
Under the first option, the FAA would auction off and retire a portion 
of the slots and would use the proceeds to mitigate congestion and 
delay in the New York City area. Under the second option, the FAA would 
conduct an auction as it would under the first option, but the proceeds 
would go to the carrier holding the slot rather than the FAA and no 
portion of existing slots would be retired. This proposal also contains 
provisions for use-or-lose, unscheduled operations, and withdrawal for 
operational need. The FAA proposes to sunset the rule in ten years.

DATES: Send your comments on or before June 16, 2008.

ADDRESSES: You may send comments identified by Docket Number FAA-2006-
25709 using any of the following methods:
     Federal eRulemaking Portal: Go to https://
www.regulations.gov and follow the online instructions for sending your 
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S. 
Department of Transportation, 1200 New Jersey Avenue, SE., Room W12-
140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Bring comments to Docket 
Operations in Room W12-140 of the West Building Ground Floor at 1200 
New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at 202-493-2251.
For more information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to 
https://www.regulations.gov, including any personal information you 
provide. Using the search function of our docket Web site, anyone can 
find and read the electronic form of all comments received into any of 
our dockets, including the name of the individual sending the comment 
(or signing the comment for an association, business, labor union, 
etc.). You may review Department of Transportation's complete Privacy 
Act Statement in the Federal Register published on April 11, 2000 (65 
FR 19477-78) or you may visit https://DocketsInfo.dot.gov.
    Docket: To read background documents or comments received, go to 
https://www.regulations.gov at any time and follow the online 
instructions for accessing the docket. Or, go to the Docket Operations 
in Room W12-140 of the West Building Ground Floor at 1200 New Jersey 
Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For technical questions regarding this 
rulemaking, contact: Molly W. Smith, Office of Aviation Policy and 
Plans, APO-001, Federal Aviation Administration, 800 Independence 
Avenue, SW., Washington, DC 20591; telephone (202) 267-3275; e-mail 
molly.w.smith@faa.gov. For legal questions concerning this rulemaking, 
contact: Rebecca MacPherson, FAA Office of the Chief Counsel, 800 
Independence Ave., SW., Washington, DC 20591; telephone (202) 267-3073; 
e-mail rebecca.macpherson@faa.gov.

SUPPLEMENTARY INFORMATION: Later in this preamble under the Additional 
Information section, we discuss how you can comment on this proposal 
and how we will handle your comments. Included in this discussion is 
related information about the docket, privacy, and the handling of 
proprietary or confidential business information. We also discuss how 
you can get a copy of this proposal and related rulemaking documents.

Authority for This Rulemaking

    The FAA has broad authority under 49 U.S.C. 40103 to regulate the 
use of the navigable airspace of the United States. This section 
authorizes the FAA to develop plans and policy for the use of navigable 
airspace and to assign the use that the FAA deems necessary for its 
safe and efficient utilization. It further directs the FAA to prescribe 
air traffic rules and regulations governing the efficient utilization 
of the navigable airspace.

Table of Contents

I. Background
    A. History of Congestion Management Initiatives at LaGuardia
    B. Summary of the SNPRM
II. Discussion of the NPRM
    A. Withdrawal of Upgauging Proposal
    B. Perimeter Rule
    C. Finite Operating Lives
III. Proposal To Allocate Limited Capacity at LaGuardia Efficiently
    A. Need for a Cap on Operations
    B. Sunset Provision
    C. Need for More Efficient Allocation
    D. Authority To Allocate Slots at LaGuardia
    1. Authority To Determine the Best Use of the Airspace
    2. Authority To Enter Into Leases and Cooperative Agreements
    3. The FAA's Proposed Actions Do Not Constitute a Taking in 
Violation of the Fifth Amendment
    E. Allocation of Slots
    1. Categories of Slots
    2. Initial Allocation of Capacity
    3. Market-Based Reallocation of Capacity
    4. New and Returned Capacity
    F. Auction Procedures
    G. Secondary Trading
IV. Unscheduled Operations
V. Other Issues
    A. 30-Minute Allocations
    B. Limit on Arrivals and Departures
    C. Use-or-Lose
VI. Regulatory Notices and Analyses
VII. Draft Regulatory Text

I. Background

A. History of Congestion Management Initiatives at LaGuardia

    The FAA managed congestion at LaGuardia under the High Density Rule 
(HDR) from 1969 through 2006. 14 CFR part 93 subparts K and S. The FAA 
first established allocation procedures for slots under the HDR in 
1985. 50 FR 52195, December 20, 1985. These procedures included use-or-
lose provisions and, while explicitly stating

[[Page 20847]]

that the slots were not the carriers' property, allowed carriers to 
buy, sell or lease the slots on the secondary market. On April 5, 2000, 
Congress enacted the Wendell H. Ford Aviation and Investment Reform Act 
of the 21st Century (AIR-21 or the Act). The Act phased out the HDR at 
LaGuardia effective January 1, 2007. In addition to phasing out the 
HDR, AIR-21 directed the Secretary of Transportation to grant 
exemptions from the HDR's flight restrictions for flights operated by 
new entrant carriers or flights serving Small-Hub and Non-Hub airports 
as long as the aircraft had less than 71 seats. The Act also preserved 
the FAA's authority to impose flight restrictions by stating that 
``[n]othing in this section * * * shall be construed * * * as affecting 
the Federal Aviation Administration's authority for safety and the 
movement of air traffic.'' 49 U.S.C. 41715(b).
    The slot exemptions mandated by Congress under AIR-21 resulted in 
gridlock at the airport as the number of exempted operations soared 
throughout 2000. Using its authority in 49 U.S.C. 40103, the FAA capped 
AIR-21 slot exemptions and hourly operations at LaGuardia. On December 
4, 2000, the agency conducted a lottery that allocated the limited 
number of exemptions. While hourly operations were limited at the 
airport, the new cap at LaGuardia was significantly higher than it had 
been under the HDR prior to enactment of AIR-21.
    Slots allocated under the HDR were scheduled to expire on January 
1, 2007. Based on its experience in 2000, the FAA determined that 
simply lifting the HDR at LaGuardia would have a significantly adverse 
impact on the airspace around New York City and potentially on the 
National Airspace System (NAS) as a whole. Accordingly, on August 29, 
2006, the FAA published a notice of proposed rulemaking (NPRM) 
proposing continuation of the cap on hourly operations at the airport 
as well as a new method of allocating capacity (71 FR 51360). 
Specifically, the FAA proposed to cap scheduled operations at 75 per 
hour; cap unscheduled operations at six per hour; impose an average 
minimum aircraft size requirement for much of the fleet serving the 
airport; and implement a limit on the duration of operating lives, 
known as Operating Authorizations, that would assure ten percent of the 
capacity at the airport would be available annually for reallocation 
based on an undetermined market mechanism. The average minimum aircraft 
size proposal was known as the aircraft upgauging proposal. This 
proposal was designed to maximize airport throughput consistent with 
the airport's physical constraints. The comment period closed December 
29, 2006.
    The FAA recognized that it would be unable to complete its 
rulemaking by January 1, 2007, when the HDR was scheduled to expire. On 
December 27, 2006 the agency published an FAA Order Operating 
Limitations at New York LaGuardia Airport (LaGuardia Order) (71FR 
77854).\1\ The LaGuardia Order retained the existing cap at the airport 
of 75 scheduled operations and imposed a reservation system for 
unscheduled operations that permitted six unscheduled operations per 
hour. The LaGuardia Order did not retain the conditions imposed by 
Congress on the AIR-21 exemptions; rather, flights conducted pursuant 
to the exemptions were rolled into the hourly cap without restriction.
    The industry response to the new allocation method proposed in the 
NPRM was universally negative, although very few commenters argued that 
a cap on operations at the airport was unnecessary. The FAA received 
comments from 61 different commenters, with some commenters making 
multiple submissions. The largest group of commenters consisted of 
Federal, state and local government representatives and community 
groups who were concerned the FAA's proposal, if adopted, would result 
in specific communities losing direct service to and from LaGuardia. 
Fifteen carriers and four of their associations commented on the 
proposal, as did two airport associations, three other associations, 
the airport's proprietor the Port Authority of New York and New Jersey 
(Port Authority), the Canadian Embassy and nine individuals speaking in 
their private capacity.
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    \1\ The LaGuardia Order was amended on November 8, 2007 (72 FR 
63224).
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    In general, the carriers and their associations criticized any 
attempt by the FAA to regulate beyond the simple imposition of a cap on 
operations, arguing the proposal was too complicated, would not meet 
the agency's stated objectives, and would prove disruptive to the 
airport as a whole. Other commenters questioned the FAA's attempt to 
impose a market-based solution to fair allocation--not because they 
deemed the measures unduly oppressive, but because they believed 
market-based measures could not be implemented in a manner that 
adequately protected the interests of all affected parties. The 
American Association of Airport Executives (AAAE) expressed this 
sentiment most succinctly when it stated that while market-based 
solutions are generally preferable (since they are more predictable 
than administrative solutions), they are not preferable when their 
outcomes are likely to conflict with public policy goals or when 
artificial constraints are imposed.
    While operations at LaGuardia remained capped throughout 2007, caps 
were lifted on afternoon operations at John F. Kennedy International 
Airport (JFK) on January 1, 2007, when the HDR expired at that airport. 
Operations at JFK had already begun to increase during the morning 
hours, but the increase in operations in the afternoon hours soon led 
to system overload. Nationally, the summer of 2007 was the second worst 
on record for flight delays. On September 27, 2007, the Secretary of 
Transportation announced the formation of the New York Aviation 
Rulemaking Committee (ARC) to help the Department of Transportation 
(Department) and the FAA explore available options for congestion 
management and how changes to current policy at all three major 
commercial New York City airports would affect the airlines and the 
airports.
    By design, the ARC provided ample opportunity for extensive input 
by all stakeholders, having members from every major air carrier in the 
United States as well as foreign carriers and the Port Authority. 
Through the ARC process, these stakeholders played a key role in 
exploring ideas to address congestion and ensuring that any actions 
contemplated by the Department and the FAA would be fully informed. The 
ARC worked throughout the fall and submitted a report to the Secretary, 
dated December 13, 2007, discussing its findings. A copy of the ARC 
Report may be found at https://www.dot.gov/affairs/FinalARCReport.pdf.

B. Summary of the SNPRM

    Today's proposal considers not only the concerns raised by 
commenters in response to the NPRM, but also takes into account the 
extensive discussions and issues raised by the members of the ARC. In 
response to the concerns and issues raised, the FAA has decided to 
withdraw both its upgauging proposal and its proposal to have Operating 
Authorizations that would have expired on a rolling ten-year cycle. In 
deference to the universal use of the term ``slots,'' the FAA has also 
decided to return to the use of that term rather than calling the 
operational authority to conduct scheduled operations at LaGuardia

[[Page 20848]]

Operating Authorizations.\2\ Accordingly, for purposes of this 
rulemaking, a slot is defined as the operational authority assigned by 
the FAA to a carrier to conduct one scheduled arrival or departure 
operation at LaGuardia on a particular day of the week during a 
specific 30-minute period.
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    \2\ When discussing comments to the NPRM, the FAA will use the 
term ``Operating Authorization'' since that was the term used in the 
NPRM. In discussing today's proposal, the agency will use the term 
``slots''.
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    Rather than pursue its earlier proposal for allocating capacity, 
the FAA today proposes to lease the majority of operations at the 
airport to the historic operators for non-monetary consideration under 
its cooperative agreement authority. The agency also proposes to 
develop a robust market by annually auctioning off leases for a limited 
number of slots during the first five years of the rule. The FAA plans 
to evaluate the effects of the slot program proposed today on the 
distribution of slots and entry into LaGuardia on an ongoing basis. The 
agency intends to take this experience into account in all congestion 
management activities.
    The FAA is proposing two different, mutually exclusive options. 
Under the first option, the FAA would auction off or retire a portion 
of the slots and would use the proceeds to mitigate congestion and 
delay in the New York City area. Under the second option, the FAA would 
conduct an auction as it would under the first option, but no slots 
would be retired and the proceeds would go to the carrier holding the 
slot after the FAA recoups the cost of the auction, rather than the 
FAA. In order to facilitate understanding of how each option would work 
within the entire regulatory scheme, the complete regulatory text for 
each option is set out in the ``Draft Regulatory Text'' section of this 
document.
    Today's proposal also contains provisions for use-or-lose, 
unscheduled operations, and withdrawal for operational need. The FAA 
proposes to sunset the rule in ten years.
    The following table briefly summarizes today's proposal and 
identifies differences between the two options.

          Options 1 and 2 of Proposed Regulation for LaGuardia
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            Feature                    Option 1             Option 2
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Base Schedule.................  Week 2 January 2007...  Same.
Slot..........................  Defined as right to     Same.
                                 land or depart (not
                                 both) in a 30-minute
                                 time window.
Number of Slots...............  75/hour + 3             75/hour + 3
                                 unscheduled less 2%     unscheduled.
                                 retired and not
                                 redistributed.
Slot Definitions..............  Common Slots: The       Common Slots:
                                 Baseline (up to 20      The Baseline
                                 slots per carrier)      (up to 20 slots
                                 plus 90% of slots       per carrier)
                                 above 20 have 10 year   plus 80% of
                                 leases; Limited         slots above 20
                                 Slots: 8% above the     would have 10
                                 Baseline would have     year leases;
                                 shorter leases and be   Limited Slots
                                 auctioned over five     20% would have
                                 years (1.6% each)       shorter leases
                                 (after which they       and then be
                                 convert to              reallocated via
                                 Unrestricted Slots);    auction over
                                 and 2% would have       five years (4%/
                                 shorter leases & then   yr).
                                 be retired over 5
                                 years (0.4%/yr).
Slot Time of Day..............  6 a.m. through 9:59     Same.
                                 p.m., Monday through
                                 Friday and Sunday
                                 from 12 noon through
                                 9:59 p.m.; no more
                                 than 75 in any one
                                 hour or 38 in any
                                 half-hour.
Mechanics.....................  ``Fair'' initial        Same.
                                 distribution with
                                 half of slots with
                                 less than 10 years
                                 life selected by
                                 carriers; the other
                                 half selected by FAA
                                 according to
                                 specified rules.
Auction.......................  For slots returned to   Same.
                                 FAA because life has
                                 expired, an ascending
                                 clock auction among
                                 air carriers.
Auction Proceeds..............  Auction funds to FAA    Auction funds
                                 to defray costs of      (net of auction
                                 auction, then to NY     costs) to
                                 capacity/projects.      incumbent
                                                         holder;
                                                         incumbent
                                                         cannot bid on
                                                         own slots.
Use/Lose......................  Only on grandfathered   Same.
                                 slots as
                                 consideration for
                                 slots.
Term..........................  Program is through      Same.
                                 March 2019; slot
                                 lives are whatever
                                 proportion of 10
                                 years remain upon
                                 reallocation.
Bidders.......................  Airlines..............  Same.
Holders.......................  Holders of record (not  Same.
                                 marketing carrier).
New or returned capacity......  Auctioned.............  Same.
Secondary market..............  Transparent not blind:  Same.
                                 carrier notifies FAA
                                 of intent to sell;
                                 FAA makes slot
                                 availability known;
                                 bilateral
                                 negotiations; final
                                 terms disclosed to
                                 OST for monitoring.
Logistical swaps of slots.....  Permitted.............  Same.
------------------------------------------------------------------------

II. Discussion of the NPRM

A.Withdrawal of Upgauging Proposal

     In the NPRM, the FAA proposed a requirement that incentivized 
carriers to upgauge the size of their aircraft based on an average 
number of seats. The FAA maintained that increasing the overall number 
of passengers using the airport would constitute a more efficient use 
of the NAS. In particular, the proposal was based on the FAA's belief 
that some of the inefficiencies at LaGuardia are related to the use of 
smaller aircraft in arguably saturated markets.
    Under the NPRM's proposal, if a carrier failed to meet the 
airport's average aircraft size requirement, it would lose its least 
productive Operating Authorizations. Each carrier would have been 
allowed to maintain a baseline of operations of 10 daily operations 
without consideration of aircraft size, so as to minimize disruption. 
Recognizing the importance of service to LaGuardia to and from 
relatively small communities, the proposal also included special 
treatment for small communities, which would have permitted carriers 
serving those communities to continue service on smaller aircraft 
without the risk of losing an Operating Authorization. The

[[Page 20849]]

FAA has decided against moving forward with a proposal requiring 
upgauging at this time.
    Several carriers and their associations alleged the FAA's upgauging 
proposal would be overly disruptive. Among the concerns cited were that 
the withdrawal of any one Operating Authorization would effectively 
mean the loss of a second one as well; the proposed one year effective 
date to upgauge was unduly restrictive and did not give carriers 
sufficient opportunity to change their fleet mix; and the proposal 
failed to acknowledge existing lease agreements with the Port 
Authority. United Airlines (United) and the Republic Group questioned 
how increasing aircraft size would actually lead to greater throughput, 
since carriers are presumably already using aircraft suitable for the 
markets they serve. Along with American Airlines (American), these 
commenters stated that the upgauging proposal was predicated on the 
premise that ground facilities are inadequately utilized, and that the 
inadequate utilization is a function of small and medium aircraft being 
overused. Not only did the FAA provide no data to support its position, 
they asserted, but in fact the relatively low load factors at LaGuardia 
indicate that the proper size aircraft are being used.
    In addition, the Port Authority and The City of New York noted that 
gates at LaGuardia are not interchangeable and that many gates (and 
taxiways) at the airport cannot accommodate larger aircraft. Thus, the 
proposal would not work because of a fundamental mismatch between the 
proposal and the management of landside infrastructure. US Airways 
suggested that if the FAA was committed to upgauging, it could require 
an increase in the number of available seats, but in a gradual, phased-
in manner that is economically sustainable.
    Some carriers also opined that the proposal was overly disruptive 
in that the proposed baseline of operations that would be exempt from 
the upgauging requirements was too small. While carriers with a smaller 
presence at the airport like JetBlue Airways (JetBlue) favored an 
increase in the number of protected operations (e.g., 20 daily 
operations), US Airways favored a carrier being able to protect at 
least 11 percent of its fleet, with smaller carriers being able to 
protect 10 operations.
    Notwithstanding the contemplated carve-out for small community 
service, United, and to some extent the Regional Airline Association 
(RAA), argued that requiring upgauging may force a carrier to 
discontinue service from smaller communities because the market in that 
community may only support a smaller aircraft. US Airways noted that 
these operations can be profitable and are unlikely to be discontinued 
completely; the carrier also asserted that the proposal would likely 
have the most adverse impact on medium-sized airports that benefit from 
multiple daily frequencies on smaller aircraft. Concern over the 
potential loss of small community service was echoed by the Federal, 
state and local representatives who wrote to the FAA expressing concern 
that service to specific communities could be lost.
    Finally, United argued that the upgauging proposal was not 
rationally related to Congressional authorization in 49 U.S.C. 
40103(b), because increasing passenger throughput has nothing to do 
with assigning the use of the airspace or prescribing air traffic 
regulations. Rather, according to United, the proposal would have 
mandated which equipment a carrier may use to access the runway at 
LaGuardia, and was accordingly beyond the FAA's authority. The Port 
Authority was likewise concerned that the proposal impermissibly 
infringed on its rights as the airport proprietor.
    Based on careful review of the public comments, the FAA has 
determined that there are simpler, less prescriptive ways to permit 
airlines to respond more directly to market forces. Given carriers' 
long-term leasing and purchasing arrangements, the timeframes for 
implementing the proposal may have been too short; and if adopted, the 
proposal potentially could have inadvertently disrupted operations at 
the airport. The FAA recognizes the long-term contractual relationships 
that exist at LaGuardia. At the same time, the agency prefers that the 
limited asset that makes up an Operating Authorization be allocated 
using market principles rather than regulatory or administrative 
principles. Today's proposal meets that objective without unduly 
burdening either the airport or the carriers.
    At this point in time, the FAA does not believe there is a need to 
dictate a minimum aircraft size to achieve the overall objective that 
service to and from LaGuardia be reasonably available to the maximum 
number of people who wish to use it without undue delay. Accordingly, 
the FAA is withdrawing its proposal for upgauging.
    Nevertheless, the agency believes that the concept behind its 
upgauging proposal remains valid: capacity cannot be considered merely 
in terms of the number of aircraft being handled by the FAA's Air 
Traffic Control system (ATC). The FAA believes United's interpretation 
of the FAA's statutory authority to manage the efficient use of the 
airspace as being limited to the movement of aircraft generically is 
overly narrow. The characterization of operations in terms of aircraft 
makes sense to the air traffic controllers, whose job it is to control 
all aircraft flying under instrument flight rules (IFR) within their 
sector. United's characterization does not make sense as a matter of 
policy or statutory interpretation because it ignores the reality that 
aircraft operations are designed to move people and cargo.
    The FAA does not believe the relatively low load factors at 
LaGuardia support the premise that the market dictates the use of 
smaller aircraft to many of the markets with service to the airport. It 
is true that some smaller communities may not be able to support daily 
operations on larger aircraft. The FAA asserts, however, that certain 
market patterns, where multiple daily flights on small aircraft are not 
related to the size of the communities served, indicate an inefficient 
use of the slot, or behavior that stifles competition. The relatively 
low load factors in these routes indicate that many of these flights 
could be combined, resulting in a more efficient use of the system.
    The FAA also acknowledges that the use of small aircraft to densely 
populated communities on a frequent basis is not purely a function of 
the market. As noted by the Port Authority, excessive use of smaller 
aircraft is to some degree a combination of customer preference for 
frequent access, but it is also a function of political concerns and a 
long-standing regulatory regime that created incentives favoring the 
use of small aircraft. The expiration of the HDR and AIR-21 exemptions 
should naturally encourage more efficient use of aircraft because there 
is no longer a perverse incentive to use smaller aircraft, regardless 
of the market being served. As to consumer preference for more regular 
flights, the decision to offer numerous daily flights in any particular 
market will inevitably be driven by market considerations. The FAA 
believes that the options being proposed today should reduce delay and 
permit airlines to respond more freely to market forces, favoring 
efficiency and aircraft upgauging without the government dictating any 
particular method of increasing overall passenger throughput and 
without sacrificing service to small communities.

B. Perimeter Rule

    As an alternative to the upgauging proposal, US Airways suggested 
the

[[Page 20850]]

FAA preempt the Port Authority's Perimeter Rule.\3\ It argued the 
Perimeter Rule drives the use of smaller aircraft because carriers 
cannot engage in the long-range operations that support the use of 
larger aircraft. Alaska Airlines also supported lifting the Perimeter 
Rule.
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    \3\ The Perimeter Rule prohibits non-stop flights of more than 
1,500 miles into and out of LaGuardia, except for flights in and out 
of Denver. The Perimeter Rule was first established in the late 
1950s under an informal arrangement between the Port Authority and 
the airlines. It was formalized in 1984 and unsuccessfully 
challenged in Western Airlines v. Port Authority of New York and New 
Jersey, 658 F. Supp. 952 (SDNY 1986), aff'd 817 F2d. 222 (2nd Cir., 
1987), cert. denied, 485 U.S. 1006 (1988).
---------------------------------------------------------------------------

    US Airways maintained there is no justification for retention of 
the Perimeter Rule. Not only is LaGuardia no longer primarily an 
airport for business travelers, but JFK no longer needs development, 
and the introduction of Stage-3 aircraft has sufficiently reduced the 
airport's overall noise footprint from when the Port Authority 
established the Perimeter Rule. Thus, according to US Airways, the 
rationale that the Port Authority provided to the court in Western Air 
Lines v. Port Authority of New York and New Jersey is no longer 
applicable.
    The FAA has decided against addressing the Perimeter Rule in this 
rulemaking because of the need to explore more fully several 
operational and policy issues that may be impacted by changes in the 
Rule, including potential impacts on airport capacity and air services. 
The FAA intends to monitor the impact of today's proposal, if adopted, 
as well as the implications of changes to or elimination of the Rule. 
Should the agency deem that Federal action on the rule is in the public 
interest, it may choose to preempt.

C. Finite Operating Lives

    The FAA proposed to initially allocate all Operating Authorizations 
previously allocated under the HDR, and then pull back ten percent of 
them every year to force an active market for this scarce resource. The 
Operating Authorizations would have had an initial operating life 
ranging from three to thirteen years and, once reallocated, would have 
had a ten-year operating life. While providing a general discussion of 
how the Operating Authorizations would be withdrawn, the FAA did not 
provide a discussion of how they would be reallocated, other than to 
say that the agency was seeking legislation that would provide 
additional flexibility in allowing the FAA to reallocate via a market-
based mechanism such as an auction or congestion pricing. The FAA has 
decided that a ten percent annual turnover at LaGuardia could be overly 
disruptive as a first step in applying market principles and has 
decided to propose a scaled back reallocation mechanism. This scaled 
back proposal is discussed in detail later in this document.
    In general, most commenters characterized the proposal to introduce 
expiring Operating Authorizations at LaGuardia as unnecessary, 
unworkable, and unlawful under the Administrative Procedure Act and the 
Takings Clause of the Fifth Amendment of the US Constitution. Others 
claimed that the proposal did not go far enough.
    American asked why the FAA thought it needed such an intrusive and 
complicated regulatory scheme to promote access to new entrants. It 
noted that the agency promoted access to new entrants at Chicago's 
O'Hare International Airport (O'Hare) by adopting a blind Buy/Sell 
secondary market. Midwest Airlines, Delta Air Lines (Delta) and the RAA 
argued that the underlying premise that limited operating lives were 
required to open up the airport to new entrants was based on a false 
assumption that the airport would otherwise be shut down to new 
entrants or carriers with a limited presence at the airport. They 
argued that slots were successfully purchased under the Buy/Sell rule, 
and that the secondary market only failed when exemptions to the HDR 
were given away for free under AIR-21.
    Consistent with their comments on the upgauging proposal, most 
carriers and their associations argued that randomly terminating and 
reallocating ten percent of Operating Authorizations each year would 
wreak havoc with the carriers' schedules. They asserted the impact on 
industry would be so severe and unreasonable as to render the proposal 
unworkable, creating perpetual instability that could disrupt airport 
services and traveler expectations. In particular, The City of New 
York, Delta and US Airways claimed the full operational impact of the 
rule could make it virtually impossible to operate short-haul shuttles. 
American, Delta, and AAAE argued the impact could be especially bad on 
small communities as transfer of Operating Authorizations from carrier 
to carrier would make consistent service to these communities 
difficult. As with the upgauging proposal, the Port Authority said it 
would be difficult to handle gate assignments and leases with an annual 
turnover of up to ten percent. American claimed the churning of 
Operating Authorizations would fragment real estate across the airport 
over time. The carrier argued this fragmentation would be extremely 
burdensome for the Port Authority and disruptive to airlines and 
consumers.
    Some carriers noted that the operating lives would actually serve 
as a damper on the free market, rather than the catalyst that the FAA 
envisioned. American said the proposal failed to recognize that 
investment in routes and infrastructure is largely dependent on the 
ability to continue serving that route. US Airways and Midwest Airlines 
echoed this sentiment, positing expiring lives would actually act as a 
disincentive to invest in the airport, because there will be no 
assurance that investment expectations can be met. The Air Transport 
Association of America (ATA) queried what impact expiration dates and 
other restrictions would have on the value of slots in the secondary 
market.
    While many commenters claimed they could not meaningfully comment 
on the proposal since the FAA did not explain how it intended to 
reallocate withdrawn capacity,\4\ others argued that the proposal would 
be unlawful even if the reallocation mechanism had been explained. 
United and Midwest Airlines claimed the proposal did not implicate 
safety or movement of air traffic and was accordingly beyond the FAA's 
authority. Assuming the FAA retained its authority to impose caps after 
AIR-21, the ATA and the Airports Council International--North America 
(ACI-NA) argued it did not necessarily follow that this authority 
encompasses ``management of the nationwide system of air commerce,'' as 
the FAA asserted in the NPRM. They claimed such an assertion connotes 
the business of air transportation, which exceeds the agency's 
authority to regulate the safety and movement of air traffic. United 
asserted that the FAA appeared to rely on the Department's authority in 
49 U.S.C. 40101(a), but noted that reliance on that authority was 
equally misguided since it is limited to the Department's exercise of 
economic regulation.
---------------------------------------------------------------------------

    \4\ The FAA stated that it did not provide the reallocation 
mechanism because it did not have the authority to reallocate other 
than through an administrative mechanism. The FAA's original 
analysis was overly simplistic. The FAA correctly stated that it did 
not have the authority to implement a congestion pricing scheme. 
However, we also said that we did not have the authority to conduct 
auctions; this statement was incorrect. As discussed more fully 
later in the document, the FAA has ample authority to lease or 
otherwise dispose of its property without running afoul of the 
restriction on user fees, the restriction that the FAA initially 
believed was problematic.
---------------------------------------------------------------------------

    While carriers generally claimed the proposed reallocation of 
Operating

[[Page 20851]]

Authorizations as a confiscation of their respective property rights, 
some argued the FAA's proposal was in violation of the Takings Clause 
of the U.S. Constitution because carriers would be deprived of all 
beneficial use of the property,\5\ and the FAA could not meet the 
standards set forth in Penn Central Transportation Co v. City of New 
York.\6\ In particular, United and US Airways argued that handicapping 
competitors through a forced transfer of operating rights does not 
advance a legitimate government interest, particularly when there is no 
showing that a forced transfer will actually enhance competition or 
consumer welfare.
---------------------------------------------------------------------------

    \5\ Cf., Lingle v. Chevron USA, Inc., 544 U.S. 528 (2005).
    \6\ 438 U.S. 104 (1978).
---------------------------------------------------------------------------

    In contrast, the Air Carrier Association of America (ACAA) argued 
that legacy carriers were given large numbers of slots through AIR-21, 
and did not need the market protection contained within the proposal. 
It noted that under the LaGuardia Order and the HDR, operating rights 
were never permanently allocated; nor were carriers offered assurances 
that they could do whatever they wanted with them. In fact, carriers 
have always been on notice that the Operating Authorizations and their 
predecessor slots could be recalled. Accordingly, ACAA urged the FAA to 
withdraw immediately ten percent of all Operating Authorizations held 
by carriers holding more than 75 Operating Authorizations and 
redistribute them to limited incumbents operating larger aircraft. It 
maintained whatever reallocation mechanism was used should kick in 
before the proposed three years since that extended timeframe 
unnecessarily restricts the market. AirTran Airways (AirTran) and 
WestJet supported the concept of the FAA increasing the number of 
Operating Authorizations provided to small carriers and immediate 
implementation of the rule.
    The FAA disagrees with American's claim that a staggered withdrawal 
and reallocation of Operating Authorizations is not needed to protect 
new entrants. This approach is one of several rational means of 
ensuring that carriers with modest service, or no access at all, have 
an opportunity to gain or increase access at one of the most sought-
after airports in the country. While a blind secondary market would 
also facilitate new entrant access, and the FAA uses this method to 
assist new entrants at O'Hare, the agency also made specific provisions 
in that rulemaking to make new and returned capacity preferentially 
available to new entrants and carriers with a limited presence at the 
airport. The FAA does not believe a blind secondary market alone is 
sufficient to provide opportunities for new or increased access.
    The FAA agrees that its original proposal could have caused 
disruption at the airport. The premise underlying the proposal to 
require a full ten percent turnover at the airport each year was not to 
force disruption, but rather to ensure the efficient use of a scarce 
resource and to provide access to new entrants and existing operators 
in a manner other than creating preferences or exemptions. It is 
exactly these preferences and exemptions that many commenters claim 
marginalized the secondary market under the HDR. As the FAA has stated 
several times over the past few years, its primary goal in addressing 
congestion is to increase capacity wherever possible. Limiting the 
number of operations at an airport is a last option because it 
restricts access to the airport. The FAA also believes the market 
should play an active role in the allocation of the limited resource 
whenever it becomes necessary to limit operations for more than a short 
period of time.
    The options being proposed today meet the same policy objective 
that drove the proposal in the NPRM to have operating lives expire, 
albeit in a less aggressive manner. The FAA believes this new approach 
will help foster a vibrant secondary market while maintaining stability 
at the airport. The legal concerns raised by commenters will be 
addressed later in this document.

III. Proposal To Allocate Limited Capacity at LaGuardia Efficiently

A. Need for a Cap on Operations

    The FAA believes that at least for the next several years, 
LaGuardia will likely be oversubscribed in terms of its physical 
ability to handle aircraft. Simply put, expansion of the airport by 
adding runways is not a viable option given its location. Accordingly, 
a cap on operations at the airport is necessary to provide for the 
efficient use of the NAS. In the NPRM, the FAA proposed to cap weekday 
and Sunday afternoon operations at 81 per hour (75 for scheduled 
operations and six for general aviation). The airport is already capped 
under the LaGuardia Order at 81 (75 for scheduled operations and six 
for general aviation). Today's proposal, if adopted, will replace that 
order. The FAA does not intend to raise the cap unless new capacity 
becomes available and has proposed reducing the number of operations 
available for general aviation to three per hour.
    The Port Authority claimed that 75 scheduled operations per hour 
was too high, since delays were increasing, and argued that the cap 
should start at 6 a.m. and cover Saturday mornings because these time 
periods have operations that exceed runway capacity.
    In response to the NPRM, the ATA claimed that the FAA had not 
presented any new data indicating that a cap is necessary, instead 
relying on delays during the summer of 2000. The ATA argued that the 
FAA merely assumed that demand exceeds capacity at LaGuardia, without 
discussing how the proposal would impact that demand.
    The impact of either the NPRM or today's proposal on demand at 
LaGuardia is difficult to judge because the LaGuardia Order has kept 
operations from growing since the expiration of the HDR. Accordingly, 
the comparison in terms of delay reduction should not be between the 
LaGuardia Order and any final rule, but rather between an unconstrained 
airport and a final rule. The last time the airport was close to 
unconstrained was in 2000, which is why the FAA relied on its 
experience in 2000 in the NPRM.
    The FAA believes the summer of 2007 served as a stark reminder that 
the demand for access to New York City is exceptional. New York City is 
served by three major airports; theoretically there should be more than 
enough capacity. However, while LaGuardia remained a constrained 
airport last summer, JFK and Newark were not constrained and carriers 
were allowed to add flights at will. As a result, the New York City 
area airports experienced nearly unprecedented delays last summer, and 
the level of flight delays were regularly reported in the local and 
national press. The delay numbers at JFK were so high that the FAA 
initiated a Scheduling Reduction Meeting in October 2007 and announced 
a cap at the airport in January of this year. Concerned that those 
carriers that could not obtain desired access at JFK would quickly 
oversubscribe Newark, the FAA proposed a cap there in March. Looking 
forward, all three major airports in the New York City area will be 
capped.
    The FAA is unwilling to lift the cap at LaGuardia simply because 
the last time there was significant growth at the airport was in 2000. 
Notwithstanding ATA's assertion that perhaps there is no need for a 
cap, its members appear to support reasonable limits on the number of 
operations at the airport. When the FAA imposed the cap on LaGuardia 
after the expiration of the HDR at the

[[Page 20852]]

end of 2006, no carrier argued that a cap was inappropriate.
    We agree with the Port Authority that operations at the airport 
should be limited as early as 6 a.m., and the LaGuardia Order limits 
operations beginning at that hour. Carriers have moved their morning 
schedules out sufficiently early that the FAA is encountering excess 
demand by 6 a.m. The agency has tentatively decided against capping 
operations on all day Saturday and Sunday morning because the level of 
congestion during these time periods is significantly less than during 
the workweek and on Sunday afternoons. The Port Authority has not 
provided data indicating that a cap is needed on Saturday mornings; it 
has merely asserted that there are runway constraints. Should the Port 
Authority continue to believe the cap should be expanded, the FAA 
welcomes an analysis of the capacity problems on Saturday mornings.

B. Sunset Provision

    The FAA's proposed rule, if adopted, will expire in ten years. To 
the extent new capacity became available, the FAA could increase the 
size of the cap and auction off that new capacity for the life of the 
rule. One of the criticisms of the HDR was that it was a temporary rule 
that has lasted almost 40 years. As such, it became difficult to 
manage, particularly as it was amended to address changes in business 
models. We believe the public interest is better served by directly 
providing the rule will sunset in ten years. This approach will allow 
for future determinations by the FAA as to whether a cap is still 
needed and, if so, whether changes are needed to more efficiently 
allocate and constrain the scarce resource. At present it is impossible 
to determine what changes in business models may occur over the next 
ten years. In addition, full implementation of the New York/New Jersey/
Philadelphia Metropolitan Area Airspace Redesign project and NextGen 
technologies are expected to mitigate and improve air traffic 
efficiency within the next ten years, and we should not prejudge the 
market response.

C. Need for More Efficient Allocation

    As noted by American in its comments to the NPRM, Congress has 
directed the Department to place ``maximum reliance on competitive 
market forces and on actual and potential competition'' (49 U.S.C. 
40101(a)(6)). This maximum reliance means the FAA is obliged not to 
simply walk away from an airport once it has imposed caps, but rather 
to take steps to ensure that there are, in fact, competitive market 
forces and actual and potential competition. Competition at an airport 
benefits the flying public by providing price competition and expanded 
service. The ability of carriers to initiate or expand service at the 
airport is hindered, in large part, by the imposition of the cap. 
Accordingly, the FAA believes it must strike a balance between (1) 
promoting competition and permitting access to new entrants and (2) 
recognizing historical investments in the airport and the need to 
provide continuity. It is not the role of the Government either to 
dictate particular business models or to constrain a market and provide 
no means for others to enter that limited market.
    Not only is the FAA required to assure the efficient use of the 
NAS, but it must do so in a manner that does not penalize all potential 
operators at the airport by effectively shutting them out of the 
market. Accordingly, the FAA believes that it is well within the 
agency's authority in 49 U.S.C. 40103 to provide some mechanism for 
reallocation. Today's proposal attempts to strike the appropriate 
balance by actively developing a robust secondary market that properly 
values the limited asset that the FAA created.

D. Authority To Allocate Slots at LaGuardia

    The FAA intends to allocate some portion of the available slots at 
LaGuardia via an auction process. The FAA would initially allocate the 
vast majority of slots to incumbents at the airport by entering into a 
cooperative agreement that would lease the slots for a period of ten 
years. The remaining slots would revert to the FAA over a five year 
period for retirement or reallocation via an FAA-sponsored auction. As 
a result of the auction, the acquiring carrier would enter into a lease 
agreement with the FAA that would last the remainder of the rule. 
Leases awarded under the cooperative agreements or awarded pursuant to 
an auction would be subject to lease terms, and the failure to abide by 
those lease terms would constitute a default of the lease. Carriers 
would be allowed to sublease their slots subject to the same terms and 
conditions imposed by the FAA in the original lease, although new terms 
and conditions unrelated to the carrier's obligations to the FAA could 
be added.
    Under Option 1, the FAA would retain all auction proceeds and 
dedicate their use to congestion management in the New York City area. 
Under Option 2, the carrier that had held the slot would be allowed to 
keep the proceeds after the FAA had recouped its costs associated with 
running the auction.
    In the NPRM, the FAA stated that it did not have the authority to 
reallocate Operating Authorizations via a market-based mechanism. The 
FAA was concerned that it did not have this authority because of annual 
appropriations restrictions dating back to 1998 that prohibit the 
agency from expending funds to ``finalize or implement any regulation 
that would promulgate new aviation user fees not specifically 
authorized by law after the date of enactment of this Act.'' \7\ The 
FAA continues to believe that it cannot rely on a market-based 
allocation method under a purely regulatory approach, which is why it 
explicitly sought legislation on this matter.
---------------------------------------------------------------------------

    \7\ In 2006 this provision could be found in Public Law 109-115. 
For 2008, the same provision may be found in Public Law 110-161.
---------------------------------------------------------------------------

    However, the FAA's authority is not limited to regulatory action. 
The agency has independent authority to dispose of property,\8\ and 
regulatory action is not required prior to the lease of property. The 
FAA implemented its general authority to dispose of property in its 
Acquisition Management System, which went into effect on April 1, 1996.
---------------------------------------------------------------------------

    \8\ The FAA has had express authority to lease property to 
others since 1996, Pub. L. 104-264, and general authority to dispose 
of an interest in property for adequate compensation for long before 
that in 49 U.S.C. 40110(a)(2).
---------------------------------------------------------------------------

    Because of the congressional mandate in 49 U.S.C. 40101(a)(6) to 
rely to the maximum extent possible on competitive market forces, the 
FAA has determined that it is appropriate to take a bifurcated 
approach. Today the agency is requesting comment on an approach whereby 
the FAA would establish a cap on operations and address which slots 
would revert to the FAA for reallocation through a regulation, but 
would use its transaction authority to allow for reallocation of slots 
via a market-based mechanism.
    As discussed below, this approach has the added benefit of 
clarifying the unsettled issue of the extent to which a slot holding 
should be imbued with property rights.
1. Authority To Determine the Best Use of the Airspace
    The United States Government claimed exclusive sovereignty over 
United States airspace in 49 U.S.C. 40103. Citizens of the United 
States have a public right of transit through navigable airspace, but 
the FAA is authorized to assign the use of the airspace necessary to 
ensure the safety of aircraft and the efficient use of airspace. To the 
extent these needs can

[[Page 20853]]

be met without specifying which citizen may transit or reserve a 
particular segment of airspace at a particular time, there was no need 
for the FAA to place constraints such as slots on the use of the 
airspace--this remains the case for the vast majority of the NAS.
    As described above, however, at LaGuardia and a few other airports, 
in order to ensure the efficient use of airspace, the FAA has had to 
impose constraints by assigning to carriers operational authority to 
conduct a scheduled IFR arrival or departure operation on a particular 
day of the week during a specified 30-minute period. These reservations 
of airspace were called slots under the HDR. After the FAA issued the 
Buy/Sell rule, these slots were treated not only as property of the 
United States Government, but also as if the carriers had a property 
interest, albeit an interest that was heavily encumbered by the 
restrictions imposed by the FAA. The nature of this proprietary 
interest, however, has always been somewhat unclear. To encourage the 
most efficient use of constrained airspace the FAA is clarifying the 
property interest that the FAA is willing to transfer to airlines for a 
limited period of time. However, the FAA has determined that in order 
to assure the efficient use of airspace, it cannot simply permit those 
to whom it grants authority to use the airspace to treat that authority 
as their own. Such an approach would not only ignore the inherently 
valuable nature of the airspace usage assignment, but allows a select 
few to profit from a governmental interest to the detriment of their 
competitors and the public as a whole. Ultimately, it is the FAA that 
has sovereignty over and controls the airspace.
2. Authority To Enter Into Leases and Cooperative Agreements
    The FAA has authority to lease real and personal property, 
including intangible property, to others. 49 U.S.C. 106(l)(6) and 
106(n). When disposing of an interest in property, however, the FAA 
must receive adequate compensation. 49 U.S.C. 40110(a)(2). The FAA 
also, however, has broad authority to enter into cooperative agreements 
on such terms and conditions as the agency may consider appropriate. 49 
U.S.C. 106(l)(6). Under the Federal Grants and Cooperative Agreements 
Act, a cooperative agreement is to be used when the principal purpose 
of the agreement is to transfer a thing of value to a recipient, either 
public or private, to carry out a public purpose of support or 
stimulation authorized by law, instead of acquiring (by purchase, lease 
or barter) property or services for the direct use or benefit of the 
agency, and there is substantial Federal involvement in the activity. 
The FAA believes this is the appropriate vehicle to use to transfer 
most of the slots as described in the following options, for a ten year 
period, to the carriers that currently have Operating Authorizations at 
LaGuardia. Doing so will recognize these carriers' historical 
investment in LaGuardia, and the public interest that has been served 
by that investment. In addition, doing so will prevent the disruption 
to the national air transportation system described in the comments to 
the NPRM that might otherwise occur, allowing the public to benefit 
from continued certainty of readily available air transportation to and 
from this airport. There will, however, be substantial ongoing Federal 
involvement with these slots, as the FAA will retain ATC 
responsibilities for assuring that the use of these segments of 
airspace for their specified times is done safely and with maximum 
possible efficiency. It is therefore appropriate to use cooperative 
agreements to transfer these property interests.\9\
---------------------------------------------------------------------------

    \9\ Under the cooperative agreements the FAA will be 
transferring a leasehold interest in the slots, but it will not 
entirely dispose of its property. Receiving monetary compensation 
from these transfers is antithetical to the definition of a 
cooperative agreement. Nonetheless, to the degree that adequate 
compensation might be considered required under 49 U.S.C. 
40110(a)(2), the compensation will be the carriers' agreement to be 
bound by the terms in the cooperative agreement as well as FAA's 
recognition of the public value received by the carriers' historical 
investment at LaGuardia.
---------------------------------------------------------------------------

3. The FAA's Proposed Actions Do Not Constitute a Taking in Violation 
of the Fifth Amendment
    United's and US Airways' assertion that the imposition of a cap on 
operations at LaGuardia and any reallocation mechanism that does not 
give incumbent carriers an unrestricted right to the slots created by 
the cap constitutes a taking in violation of the Fifth Amendment is 
simply incorrect. Carriers possess no absolute property interest in 
slots unless the FAA gives it to them. The FAA has consistently refused 
to do that under both the HDR and the LaGuardia Order. Indeed, upon the 
expiration of the HDR, any putative interest in those slots expired on 
December 31, 2006, and the LaGuardia Order specifically states that 
carriers have no right to Operating Authorizations after the expiration 
of the order. If the FAA proceeds with today's proposal, carriers will 
have some property rights in the resulting slots, but those rights will 
be limited by the terms of any final rule and any lease terms that the 
FAA specifies. Ultimately, it is the FAA that controls the airspace and 
controls the rights of carriers to use it.
    United's reliance on Lingle and Penn Central in arguing that the 
annual reversion of Operating Authorizations for reallocation by the 
FAA would constitute a taking was misplaced, and remains inapplicable 
to today's proposal.\10\ Neither case stands for the proposition that 
the federal government cannot implement a regulatory scheme like the 
one proposed here. In Penn Central the Supreme Court set forth a 
general test for determining whether a government regulatory action 
resulted in a taking of property without just compensation. While 
noting that such determinations are necessarily fact-specific, the 
Court set forth three basic criteria to evaluate: (1) The economic 
impact of the regulatory action on the claimant, (2) the level of 
interference with reasonable investment-backed expectations, and (3) 
the character of the governmental action.\11\ These standards do not 
suggest a Takings Clause claim in this instance.
---------------------------------------------------------------------------

    \10\ The FAA is puzzled by United's reliance on Lingle. The 
holding in Lingle was unrelated to any determination by the Court 
that there was a ``permanent physical invasion of her property.'' 
544 U.S. 528, citing Lucas v. South Carolina Coastal Council, 505 
U.S. 1003, 1019 (1992). United has not alleged that the imposition 
of a slot regime results in its inability to use its property. 
Rather, it asserts that its flight schedule is an intangible asset, 
the use of which is critical for utilizing its tangible assets, 
i.e., its terminal facilities, gates, servicing facilities, and 
aircraft (United comments at p. 29). The correct analysis is 
conducted under Penn Central and Connelly v. Pension Benefit 
Guarantee Corp., 475 U.S. 211 (1986).
    \11\ Connelly at 224-225.
---------------------------------------------------------------------------

    Given the fact that LaGuardia has operated under some type of cap 
for the past 40 years, no carrier could realistically have investment 
expectations either that the airport will be unconstrained before 
sufficient capacity is realized or that it would be granted absolute 
rights in its historical operating schedule. Indeed, the HDR imposed 
much more stringent constraints on how carriers could conduct 
operations at the airport than the FAA is proposing here.
    Likewise, there is no evidence that the proposed rule, if adopted, 
will have an unduly harmful impact on any air carrier. At most, less 
than 20 percent of any carrier's current operations at LaGuardia will 
be affected. As stated by the Court in Penn Central, `` `[t]aking' 
jurisprudence does not divide a single parcel into discrete segments 
and attempt to determine whether rights in a particular segment have 
been entirely

[[Page 20854]]

abrogated.'' \12\ When viewed as a whole, the impact of today's 
proposal on even the most negatively affected carrier is not sufficient 
to trigger a plausible takings claim. The vast majority of operations 
will continue under slots grandfathered to the carriers at no charge. 
Each carrier will be assured that up to 20 of their operations will be 
protected from any reversion if it meets the minimum usage 
requirements, and only ten to twenty percent of its operations above 
twenty will be subject to reversion to the FAA for retirement or 
reallocation. In addition, carriers will be allowed to sublease their 
slots subject to the terms and conditions set forth in the lease 
agreement, thus potentially avoiding the loss of a slot for inadequate 
usage.
---------------------------------------------------------------------------

    \12\ Penn Central at 130.
---------------------------------------------------------------------------

    Nor does the proposed action have the character of a taking as 
interpreted in well-settled jurisprudence. This rulemaking proposes to 
minimally adjust the benefits and burdens of the economic life of 
carriers at LaGuardia in order to promote the common good. The 
rulemaking proposes to limit flights at LaGuardia in order to relieve 
congestion that impacts the NAS as a whole and LaGuardia in particular. 
As such, it will benefit the airline industry, businesses relying on 
aviation to timely meet their delivery schedules, and the travelling 
public. The proposed rule anticipates only a modest reduction, under 
one of two proposed options, in the number of flights currently allowed 
at LaGuardia under the LaGuardia Order, which has been in place, 
unchallenged, since January 1, 2007. Unlike the governmental action in 
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), the proposed 
rulemaking does not single out an air carrier based on conduct far in 
the past and unrelated to any future commitments or injury it caused.

E. Allocation of Slots

    The FAA is proposing two