Update of August 2001 Overflight Fees, 43112-43119 [2011-18285]

Agencies

• Federal Aviation Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Rules and Regulations]
[Pages 43112-43119]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18285]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 187

[Docket No.: FAA-2010-0326; Amendment No. 187-35]
RIN 2120-AJ68


Update of August 2001 Overflight Fees

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: This final rule updates existing Overflight Fees using more 
current FAA cost accounting data and air traffic activity data. 
Overflight Fees are charges for aircraft flights that transit U.S.-
controlled airspace, but neither land in nor depart from the United 
States. These fees have not been updated in nearly a decade and are 
based upon 1999 cost accounting and activity data. This action is 
necessary because operational costs have increased steadily since the 
fees were last updated. This adjustment of Overflight Fees will result 
in an increased level of cost recovery for the services being provided.

DATES: Effective October 1, 2011.

FOR FURTHER INFORMATION CONTACT: For technical questions concerning 
this final rule, contact David Rickard, Office of Financial Controls, 
Financial Analysis Division (AFC 300), Federal Aviation Administration, 
800 Independence Avenue, SW., Washington, DC 20591; telephone (202) 
493-5480; e-mail to david.rickard@FAA.gov.
    For legal questions concerning this final rule contact Michael 
Chase, AGC-240, Office of Chief Counsel, Regulations Division, Federal 
Aviation Administration, 800 Independence Avenue, SW., Washington, DC 
20591; telephone: (202) 267-3110; e-mail to michael.chase@faa.gov.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to establish these fees is found in Title 49 of 
the United States Code. This rulemaking has been conducted under the 
authority described in Chapter 453, Section 45301 et seq. Under that 
Chapter, the FAA is charged with prescribing regulations for the 
collection of fees for air traffic control and related services 
provided to aircraft, other than military and civilian aircraft of the 
United States Government or a foreign government, that transit U.S.-
controlled airspace, but neither take off from nor land in the United 
States (``Overflights''). This final rule is within the scope of that 
authority.

Background

    The FAA's Overflight Fees were initially authorized in the Federal 
Aviation Reauthorization Act of 1996 (Pub. L. 104-264, enacted October 
9, 1996). Following enactment of the initial fee authority, and as 
mandated by that authority, the FAA issued an Interim Final Rule (IFR), 
``Fees for Air Traffic Services for Certain Flights through U.S.-
Controlled Airspace'' (62 FR 13496), on March 20, 1997. Under the terms 
of the IFR, the FAA sought public comment on the IFR while concurrently 
beginning to assess Overflight Fees 60 days after its publication, on 
May 19, 1997.
    On July 17, 1997, petitions for judicial review of the IFR were 
filed in the U.S. Court of Appeals for the District of Columbia (the 
Court) by the Air Transport Association of Canada (ATAC) and seven 
foreign air carriers. Those petitions were consolidated into a single 
case (Asiana Airlines v. FAA, 134 F.3d 393 (DC Cir. 1998)). The 
litigation proceeded throughout the remainder of 1997 while the FAA 
continued to collect fees pursuant to the statute.
    On January 30, 1998, the Court issued a decision, upholding the FAA 
on three process and procedure issues, but vacating the Rule because 
the Court

[[Page 43113]]

found that the methodology the FAA used to allocate costs did not 
conform to the statute. The FAA immediately suspended billing 
operations, and eventually refunded nearly $40 million in fees that had 
been collected.
    Although the 1997 IFR (62 FR 13496) had been set aside by the 
Court, the statutory requirement that the FAA establish Overflight Fees 
through an IFR remained in effect. One of the principal criticisms the 
FAA had received in the public comments on its 1997 IFR concerned the 
quality of the cost information upon which the Overflight Fees were 
based. The FAA had already begun developing a new Cost Accounting 
System (CAS) in 1996. Early data from the new CAS was becoming 
available in 1998. Thus, when the FAA decided, following the initial 
litigation, to issue a new IFR, a key element of that decision was that 
the fees would be derived from cost data from the new CAS.
    A new IFR was published in the Federal Register on June 6, 2000 (65 
FR 36002), with fees scheduled to go into effect on August 1, 2000. 
This new IFR was challenged in court by the ATAC and a slightly 
different group of seven foreign air carriers. The FAA began assessing 
and collecting the new Overflight Fees as scheduled on August 1, 2000, 
while public comments were still being received by the FAA on its 
second IFR. The litigation proceeded concurrently, with oral arguments 
held on May 14, 2001.
    On July 13, 2001, the Court again vacated the FAA's IFR, this time 
because the Court believed the FAA had failed to explain a key 
assumption in its costing methodology. (Air Transport Association of 
Canada vs. FAA; 00-1344, July 13, 2001). Under the Court's order, there 
were 45 days before the IFR was to be vacated. As noted above, the FAA 
had solicited public comment on the IFR at the time it was published. 
The FAA had received many comments on the several issues raised in the 
litigation. At the time the Court's decision was issued, the FAA was 
nearing completion of a Final Rule that would address these issues in 
the disposition of public comments section of the Rule.
    The FAA therefore proceeded on two fronts. It successfully 
petitioned the Court not to vacate the IFR while it proceeded 
concurrently with issuance of the Final Rule (``Fees for FAA Services 
for Certain Flights,'' 66 FR 43680) on August 20, 2001, with revised 
fees effective immediately. In addition to addressing the public 
comments received on the IFR, the Final Rule reduced fees by about 15 
percent due to adjustments in the original cost data. A new challenge 
to the revised fees was brought after the issuance of the Final Rule by 
ATAC and the same group of air carriers. The two cases, one challenging 
the IFR (65 FR 36002) issued in 2000 and the other challenging the 
Final Rule (66 FR 43680) issued in 2001, were combined by the Court 
into a single case.
    While the litigation was still pending, on November 19, 2001, 
Congress enacted the Aviation and Transportation Security Act (ATSA), 
which included a provision that amended the Overflight Fee 
authorization: (1) To require that the fees be ``reasonably'' (rather 
than ``directly'') related to costs; (2) to clarify that the 
Administrator has sole authority to determine the costs upon which the 
fees are based; and (3) to state explicitly that such cost 
determinations by the Administrator are not subject to judicial review. 
Meanwhile, the litigation proceeded into 2003, with the FAA continuing 
to collect the fees as required by statute.
    On April 8, 2003, the Court issued a decision setting aside the 
Final Rule and remanding it back to the FAA, finding that the agency 
had not adequately explained its handling of controller labor costs in 
deriving the fees. (Air Transport Association of Canada v. FAA, 323 
F.3d 1093 (DC Cir. 2003)). The Court also found that the Overflight 
Fees amendments in the ATSA statute were inapplicable because of a 
generic ``savings'' provision in the ATSA legislation that stated that 
nothing enacted in ATSA was applicable to any litigation ongoing prior 
to the date of enactment of ATSA. Fee collections were immediately 
suspended.
    On December 12, 2003, Congress enacted VISION 100--CENTURY OF 
AVIATION REAUTHORIZATION ACT, (Vision 100). Section 229 of that Act 
explicitly ``adopted, legalized, and confirmed'' both the IFR published 
in 2000 and the Final Rule published in 2001. In addition, the FAA was 
directed to hold a consultation meeting with users (those who pay the 
Overflight Fees to the FAA) and to submit a report to Congress 
addressing the issues that had been in dispute in the litigation before 
resuming the billing and collection of the Overflight Fees.
    Because there were ambiguous and potentially conflicting provisions 
in Vision 100 concerning Overflight Fees, the Administrator issued an 
Order on July 21, 2004, that set forth her interpretation of the 
language of the statute and, based on that interpretation, made 
determinations as to the ultimate disposition of Overflight Fees 
collected by the FAA under both the 2000 IFR and the 2001 Final Rule. 
The FAA retained a portion of the funds collected under the Final Rule, 
while either refunding or providing credits to the airlines for all of 
the fees collected under the IFR and a portion of the fees collected 
under the Final Rule. A copy of that Order, ``Order Directing the 
Disposition of Certain Fees Collected by the Federal Aviation 
Administration Pursuant to 49 USC Section 45301,'' was published in the 
Federal Register on August 4, 2004 (69 FR 47201).
    The FAA met with users in September 2004 and submitted a report to 
Congress at the same time, as mandated by the Vision 100 statute. This 
cleared the way for the FAA to resume the billing and collection of 
Overflight Fees. In most cases, amounts previously collected by the FAA 
under the IFR and under the Final Rule up until the date of the ATSA 
enactment were provided as credits to frequent payers. These amounts 
were, in most cases, roughly offset by amounts owed by the carriers and 
other users for the 1-year period from March 2003 through February 
2004. The carriers had not been billed for this period while the 
litigation was ongoing, but were ultimately determined by the 
Administrator to be liable for those fees.
    Since that time, the FAA has followed the normal process of issuing 
monthly bills for the services provided to Overflights. The fees 
currently being charged were derived from cost and activity data for FY 
1999. This Final Rule updates the existing fees by using cost and 
activity data for FY 2008 to derive the fees. The cost methodology 
applied in this Final Rule is applied in the same manner as in 2001, 
except that overhead has been included in the cost base for the fees 
this time as a direct result of the ATSA amendment that changed the 
previous statutory requirement that fees be ``directly'' related to 
costs to a less stringent requirement that the fees be ``reasonably'' 
related to costs.
    The FAA's CAS has been evolving and improving over time. The CAS 
has always relied on the best available data, and as new systems and 
techniques have evolved, the quality and accuracy of the data has 
improved. There are areas, such as the reporting of labor costs, where 
costs were allocated or assigned in the past based on estimates, but 
today are determined by actual data. This is not a difference in how 
the data are gathered, but rather an improvement in the quality and 
accuracy of the basic data. A detailed explanation of how the CAS data 
were assembled can be found in the ``Costing Methodology Report, FY

[[Page 43114]]

2008,'' which has been placed in the docket for this rulemaking.
    The evolution and improvement of the FAA's financial management 
practices over time, including its cost accounting, is worth noting. 
Following several years in the early days of the CAS, in which the 
FAA's auditors reported material weaknesses in areas including cost 
accounting information and accounting for property, plant, and 
equipment, the FAA received unqualified audit opinions on its financial 
statements in 9 of the last 10 years (FYs 2001-2010). The auditor's 
opinion for FY 2006 was initially qualified due to untimely processing 
of transactions and accounting for construction in progress, but was 
revised the following year to an unqualified audit opinion after the 
FAA corrected and restated its FY 2006 financial statements. Thus, 
following the restatement and revised auditor's opinion, the FAA's 
financial statements have been unqualified for 10 years. It is also 
significant that, in 5 of those 10 years, including the last 3, those 
unqualified opinions were ``with no material weaknesses.''
    This continuing improvement in the quality and transparency of the 
FAA's financial statements is a significant contributing factor to the 
fact that the Association of Government Accountants has awarded the 
Certificate of Excellence in Accountability Reporting (CEAR) to the FAA 
for its Performance and Accountability Reports in 7 of the last 8 years 
(FYs 2003-2010). The CEAR is considered the highest form of recognition 
for Federal Government financial management reporting.

Overflight Fees Aviation Rulemaking Committees (ARC)

    In 2004, the FAA established an Overflight Fees ARC. That Committee 
held two meetings in early 2005, but never issued a report or made a 
recommendation to the FAA before its Charter expired. Subsequently, on 
December 17, 2008, the FAA issued a new Charter for an Overflight Fees 
ARC to advise and make recommendations to the FAA on the updating of 
its Overflight Fees. At the same time, the FAA initiated a rulemaking 
project to update the Overflight Fees, with the expectation that the 
activities and the end product(s) of the ARC deliberations would likely 
become an integral part of this rulemaking. The Overflight Fees ARC met 
several times in 2009 and issued its report and recommendations to the 
FAA on August 26, 2009. A copy of this report has been placed in the 
docket. The report contains three principal recommendations: (1) That 
the FAA pursue the updating of its Overflight Fees through the normal 
notice and comment type of rulemaking, rather than through the interim 
final rule process previously mandated by Congress; (2) that, in 
updating the fees, the FAA abide by the policies of the International 
Civil Aviation Organization (ICAO), whereby the principle of gradualism 
is applied so that any substantial fee increase (as in this case where 
a 9-year update is involved) is spread over several years; and (3) 
that, in this instance, the specific increases be accomplished over 4 
increments, on October 1st of each year from 2011 through 2014, with 
annual increases of 14% for Enroute and 8% for Oceanic.
    After a careful and thorough review by the FAA of the ARC report 
and recommendations, the FAA concluded that the ARC recommendations 
provide a reasonable and workable framework for moving forward on a 
consensus basis to update the Overflight Fees. Thus, the FAA proceeded 
to draft a notice of proposed rulemaking (NPRM) to update the fees by 
implementing the three recommendations of the ARC.

Summary of the Notice of Proposed Rulemaking (NPRM)

    The NPRM laid out an explicit plan to update the Overflight Fees by 
implementing the three ARC recommendations. This would be accomplished 
by increasing the fees in four annual increments to the amounts that 
would have produced full cost recovery in FY 2008. The fee levels that 
would eventually be achieved reflect increases above current levels of 
69% in the Enroute environment and 36% in Oceanic. This would be 
accomplished by increasing the fees on October 1 in each of the years 
2011 through 2014 at annual compounded rates of 14% for Enroute and 8% 
for Oceanic. The actual dollar amounts of each fee as of each of the 
four October 1st fee revision dates would be as follows:

------------------------------------------------------------------------
                                      Enroute (per 100  Oceanic (per 100
          Fee revision date            nautical miles)   nautical miles)
------------------------------------------------------------------------
October 1, 2011.....................            $38.44            $17.22
October 1, 2012.....................             43.82             18.60
October 1, 2013.....................             49.95             20.09
October 1, 2014.....................             56.86             21.63
------------------------------------------------------------------------

    The NPRM was published in the Federal Register on September 28, 
2010, with public comments due in 90 days, on December 27, 2010 (75 FR 
59661). A more detailed discussion of the specifics of the fee update 
proposal can be found in that document.

Disposition of Comments

    The FAA received only one letter of comment on the NPRM. That 
letter was from Lufthansa German Airlines, and was signed by the 
individual who had served as the Lufthansa representative on the 
aforementioned ARC on Overflight Fees. While the letter stated clearly 
that Lufthansa supports the ARC process and the recommendations of the 
ARC, it nevertheless went on to identify four topics that it believed 
should be further examined by the FAA before proceeding with any 
increase of the existing Overflight Fees. Those four topics are listed 
below, followed in each case by the FAA's response to the comment.

1. Enroute Costs for Air Traffic Control (ATC) Services in Lower 
Airspace

    Noting that there are low activity airports and airfields that are 
not served by a terminal radar approach control (TRACON) or an air 
traffic control tower and that, in these instances, ATC services are 
provided by Enroute controllers, Lufthansa asserts that the costs of 
these Enroute controllers should be removed from the Enroute (and thus 
the Overflight Fee) cost base.
    The FAA does not agree with Lufthansa's assertion. The FAA notes 
that while there are low activity airports and airfields where traffic 
is controlled by Enroute controllers, the level of such activity is low 
enough that it does not require increased staffing and thus the costs 
of such services are de minimis. This issue was addressed by the FAA's 
cost accounting team at the time the Cost Accounting System was being 
developed. This information was

[[Page 43115]]

derived from conversations between the cost accounting team and the Air 
Route Traffic Control Center (ARTCC) managers. The team determined that 
there was not a significant amount of Enroute controller time spent on 
aircraft in lower airspace.
    The FAA's Air Traffic Organization (ATO) costs do not vary with the 
altitude of an aircraft. The infrastructure costs are mostly fixed 
(e.g., the building is there, the radars are operational, the 
communication lines are open, the automation system processes the radar 
targets, and the environmental systems are operational). The costs of 
controllers in the short term are also fixed. They are paid based on 
the volume and complexity of the work at the facility to which they are 
assigned, whether they work a single aircraft or numerous aircraft in a 
given period of time, and whether those aircraft are in straight and 
level flight or are in transition. The fact that the job may be more 
complex at the moment because of crossing traffic or transitioning 
traffic does not drive their costs. The workload is very dynamic in the 
radar environment, but a controller costs the same to the ATO whether 
he or she is working a complex sector at a busy time of day or a less 
busy sector after the push of traffic is over.

2. Costs of Flow Control

    Lufthansa states that there are controllers in most, and possibly 
all, FAA Centers who are working ``flow control'' and that the work of 
these controllers does not benefit the overflight traffic and should 
therefore be removed from the Enroute (and thus the Overflight Fee) 
cost base.
    The FAA disagrees. As discussed at some length in the Introduction, 
Overview, and Background sections of the current Final Rule on 
Overflight Fees (66 FR 43680-43681), the FAA air traffic control system 
is a large, complex, integrated system with many components, all of 
which must work together for the benefit of all users, whether they be 
overflights or non-overflights. Flow control is a small but important 
and integral part of that system, and benefits all users, including 
overflights. For example, when weather conditions necessitate changes 
in the routing and management of air traffic, it is all traffic, 
overflights and non-overflights, that are affected. There is no 
rational reason for excluding flow control costs from the Enroute cost 
base. Moreover, the costs of air traffic flow management are an 
explicitly allowable item of cost for cost recovery purposes under the 
International Civil Aviation Organization's (ICAO) Policies on Charges 
for Airports and Air Navigation Services (See ICAO Document 9082).

3. Overhead Costs

    Lufthansa notes that the FAA is a large, multi-faceted 
organization, and suggests, for that reason, it is difficult to 
properly allocate the correct amount of overhead to the air navigation 
activity, and suggests that FAA the ``only allocate overhead using a 
marginal cost approach.''
    The FAA does not agree with Lufthansa's suggestion. The FAA 
believes the allocation of FAA overhead costs is in accordance with 
generally accepted accounting practices. The Lufthansa comments on this 
topic suggest a possible misunderstanding of how FAA overhead is 
allocated and assigned, although it was discussed in meetings of the 
ARC and was addressed in a set of questions given to the FAA by the ARC 
and answered by the FAA. For example, Lufthansa appears to believe that 
the presence of other aviation related activities, such as Airport 
Grants and Standards and Aviation Safety, results in the assignment of 
some of their costs to the air traffic control activity. That is not 
the case. Both Airports and Aviation Safety are separate FAA Lines of 
Business (LOB) that are themselves the recipient of their own shares of 
overhead, and their costs are kept separate and are not allocated or 
assigned to the air traffic cost pool. The specific details of how FAA 
overhead is allocated and assigned to the Air Traffic LOB are set forth 
in the next several paragraphs, and all of this is explained in greater 
detail in the Costing Methodology Report that has been placed in the 
docket for this rulemaking.
    The FAA overhead allocation can be described in two steps: (1) FAA 
Headquarters and Regional Overhead; and (2) ATO Overhead.
    (1) FAA Headquarters and Regional Overhead. A series of pro rata 
allocations are performed in the Cost Accounting System (CAS) to assign 
the FAA headquarters indirect costs to projects, service delivery 
points (SDPs), and services within each LOB and other Regional and 
Center Operations. Then, a series of pro rata allocations are made to 
assign the Aeronautical Center (AMC) indirect costs to projects, SDPs, 
and services within each LOB located at the Aeronautical Center. Note 
that not all LOBs track costs at a service and/or SDP level. In these 
cases, costs are assigned at the project level.
    The FAA Headquarters Overhead (excluding human resources) is 
assigned to projects, SDPs, and services within each LOB based on a 
percentage of total direct cost. Human resources services indirect 
costs are assigned to projects, SDPs, and services within each LOB 
based on the percentage of direct labor cost. The portion of the AMC 
cost assigned to each LOB is based on the percentage of total cost 
assigned to each LOB.
    FAA Regional Overhead costs represent the indirect cost of FAA 
general and administrative services provided to the lines of business 
by personnel residing at FAA regional headquarters offices. A series of 
pro rata allocations are performed in the CAS to assign the FAA 
regional overhead costs to projects, SDPs, and services based on a 
percentage of total direct cost within the regions.
    (2) ATO Overhead. The ATO overhead allocation can be described in 
three kinds of allocation steps: (i) Service Area Indirect, (ii) 
Service Unit Indirect and (iii) ATO Indirect.
    (i) Service Area Indirect. A pro rata allocation is performed in 
the CAS to assign each Service Area's indirect costs to the direct 
projects, SDPs, and services that they support. The portion of the cost 
that is assigned to each project, SDP, and service is determined based 
on the percentage of total direct cost that is assigned to each 
project, SDP, and service for that Service Area.
    (ii) Service Unit Indirect. A pro rata allocation is performed in 
the CAS to assign each Service Unit's Headquarters' indirect costs to 
the direct projects, SDPs, and services that they support. The portion 
of the cost that is assigned to each project, SDP, and service is 
determined based on the percentage of total direct cost that is 
assigned to each project, SDP, and service for that Service Unit.
    (iii) ATO Indirect. A pro rata allocation is performed in the CAS 
to assign each of ATO's staff offices' indirect costs to the projects, 
SDPs, and services of all Service Units. The portion of the cost that 
is assigned to each project, SDP, and service is determined based on 
the percentage of total direct cost that is assigned to each project, 
SDP, and service of each Service Unit.
    As a final point on the subject of inclusion of overhead in the 
cost base for Overflight Fees, it should be noted that all overhead 
costs were excluded from the cost base for the previous Final Rule 
because the applicable statutory standard at that time required that 
the fees be ``directly related'' to the costs of the ATC services 
provided or made available. Congress has since changed that statutory 
standard to ``reasonably related.'' In light of this change, the FAA 
believes it is reasonable to include

[[Page 43116]]

overhead in the cost base. That is in accordance with generally 
accepted accounting practices as well as with guidance on fee setting 
issued by ICAO (Policies on Charges for Airports and Air Navigation 
Services, Document 9082).

4. Overflight Fees and the ``Fairness'' of the International Aviation 
Tax

    Lufthansa asserts that, based on its own analysis of its 
international trans-Atlantic flights to and from the United States 
(non-overflights), the passengers on those flights are ``overpaying'' 
taxes into the Airport & Airway Trust Fund by at least a factor of 
four. For that reason, they argue that charging an ``increased 
overflight fee renders the system even more unfair.''
    The FAA believes this comment is beyond the scope of this 
rulemaking. The ``fairness'' of the international aviation taxes has 
nothing to do with the validity of, or justification for, an increase 
in Overflight Fees. The two are unrelated. Aviation tax levels are set 
by the U.S. Congress and are beyond the control of the FAA. Similarly, 
Congress has directed the FAA to establish cost-based Overflight Fees. 
Therefore, to retain the cost-based relationship, the FAA must 
periodically review and revise its Overflight Fees. Fairness of the 
aviation taxes notwithstanding, the FAA is obliged to update its 
Overflight Fees.
    In conclusion, the FAA does not believe any of the four points 
raised by Lufthansa and discussed in this section require any change in 
the process and specificity of the Overflight Fee update proposed in 
the NPRM. Accordingly, the FAA is adopting the amendment to Appendix B 
to Part 187--Fees for FAA Services for Certain Flights as proposed in 
the NPRM without change.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that the FAA consider the impact of paperwork and other information 
collection burdens imposed on the public. The FAA has determined that 
there is no new requirement for information collection associated with 
this final rule. The information used to track overflights (including 
the information collection necessary to implement this final rule) can 
be accessed from the flight plans filed with the FAA. The collection of 
information from the Domestic and International Flight Plans is 
approved under OMB Collection Control 2120-0026.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to conform to 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
reviewed the corresponding ICAO Standards and Recommended Practices and 
has identified no differences with these regulations.

Regulatory Evaluation, Regulatory Flexibility Determination, 
International Trade Impact Assessment, and Unfunded Mandates Assessment

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 and Executive Order 13563 direct 
that each Federal agency shall propose or adopt a regulation only upon 
a reasoned determination that the benefits of the intended regulation 
justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. 
L. 96-354) requires agencies to analyze the economic impact of 
regulatory changes on small entities. Third, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a 
written assessment of the costs, benefits, and other effects of 
proposed or final rules that include a Federal mandate likely to result 
in the expenditure by State, local, or Tribal governments, in the 
aggregate, or by the private sector, of $100 million or more annually 
(adjusted for inflation with base year of 1995). This portion of the 
preamble summarizes the FAA's analysis of the economic impacts of this 
proposed rule.
    Department of Transportation Order DOT 2100.5 prescribes policies 
and procedures for simplification, analysis, and review of regulations. 
If the expected cost impact is so minimal that a proposed or final rule 
does not warrant a full evaluation, this order permits a statement to 
that effect and the basis for it to be included in the preamble if a 
full regulatory evaluation of the cost and benefits is not prepared. 
Such a determination has been made for this final rule. The reasoning 
for this determination follows:

Benefit

    The benefit of this final rule will be that the overflight fees 
will be more closely related to the actual costs of providing FAA's 
services for these flights.

Costs

    Taxes and government fees are transfer payments, and, by OMB 
directive, transfers are not considered a societal cost. Therefore, 
this rule imposes no costs. We do provide an estimate of the transfers. 
There will be a 4-year phase-in of fees with yearly increases (14% 
Enroute and 8% Oceanic). Increases would begin in 2011 and end in 2014. 
We have determined that approximately 80% of Overflight Fees for 
domestic operators will be Enroute and 20% will be Oceanic (see Table 
1).
    Most of the transfers from this final rule will be borne by foreign 
operators. The estimated transfers from this final rule from foreign 
operators to the FAA are about $73 million ($52 million, present 
value). See Table 2.
    The FAA estimates that the total transfers resulting from this 
final rule from U.S. entities to the FAA over 5 years will be about 
$1.1 million ($0.8 million, present value). Again, government fees and 
taxes are considered transfers and not societal costs, so this final 
rule does not increase society's costs.

[[Page 43117]]

[GRAPHIC] [TIFF OMITTED] TR20JY11.013

    The FAA has, therefore, determined that this final rule is not an 
economically ``significant regulatory action'' as defined in section 
3(f) of Executive Order 12866 and is not ``significant'' as defined in 
DOT's Regulatory Policies and Procedures.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (RFA) establishes ``as a 
principle of regulatory issuance that agencies shall endeavor, 
consistent with the objective of the rule and of applicable statutes, 
to fit regulatory and informational requirements to the scale of the 
business, organizations, and governmental jurisdictions subject to 
regulation.'' To achieve that principle, the RFA requires agencies to 
solicit and consider flexible regulatory proposals and to explain the 
rationale for their actions. The RFA covers a wide-range of small 
entities, including small businesses, not-for-profit organizations and 
small governmental jurisdictions.
    Agencies must perform a review to determine whether a proposed or 
final rule will have a significant economic impact on a substantial 
number of small entities. If the agency determines that it will, the 
agency must prepare a regulatory flexibility analysis as described in 
the Act.
    The FAA ranked in descending order all domestic entities based on 
their Overflight Fees. Then we identified 5 small entities having 
publicly-available financial information (using a size standard of 
1,500 or fewer employees) in the top 20 percent of the ranking. We 
retrieved their annual revenue from World Aviation Directory and 
compared it to their annualized compliance costs. Of these 5 entities, 
all of them have annualized compliance costs as a percentage of annual 
revenues lower than 0.1 percent. We believe this economic impact is not 
significant. Furthermore, we received no comments from small entities 
in response to the NPRM. Consequently, as the FAA Administrator, I 
certify that the final rule will not have a significant economic impact 
on a substantial number of small entities.

International Trade Impact Analysis

    The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the 
Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal 
agencies from establishing standards or engaging in related activities 
that create unnecessary obstacles to the foreign commerce of the United 
States. Pursuant to these Acts, the establishment of standards is not 
considered an unnecessary obstacle to the foreign commerce of the 
United States, so long as the standard has a legitimate domestic 
objective, such as the protection of safety, and does not operate in a 
manner that excludes imports that meet this objective. The statute also 
requires consideration of international standards and, where 
appropriate, that they be the basis for U.S. standards. The FAA has 
assessed the potential effect of this final rule and determined that it 
will primarily affect foreign users, generally commercial operators. 
Foreign operators are charged a fee only if they overfly (do not land 
in) the United States. The FAA believes it is highly unlikely that 
foreign commercial users will alter their behavior to avoid paying the 
fees. We believe that the final rule could enhance the competitiveness 
of domestic commercial operators relative to international carriers.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement 
assessing the effects of any Federal mandate in a proposed or final 
agency rule that may result in an expenditure of $100 million or more 
(in 1995 dollars) in any one year by State,

[[Page 43118]]

local, and Tribal governments, in the aggregate, or by the private 
sector; such a mandate is deemed to be a ``significant regulatory 
action.'' The FAA currently uses an inflation-adjusted value of $140.8 
million in lieu of $100 million. This final rule does not contain such 
a mandate; therefore, the requirements of Title II of the Act do not 
apply.

Executive Order 13132, Federalism

    The FAA has analyzed this final rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action will not have a substantial direct effect on the States, or the 
relationship between the Federal Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and, therefore, does not have federalism implications.

Environmental Analysis

    FAA Order 1050.1E identifies FAA actions that are categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act in the absence of extraordinary circumstances. The FAA has 
determined this rulemaking action qualifies for the categorical 
exclusion identified in paragraph 312d and involves no extraordinary 
circumstances.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA analyzed this final rule under Executive Order 13211, 
Actions Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). We have determined that it is not 
a ``significant energy action'' under the executive order and it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

Availability of Rulemaking Documents

    You can get an electronic copy of rulemaking documents using the 
Internet by--
    1. Searching the Federal eRulemaking Portal (https://www.regulations.gov);
    2. Visiting the FAA's Regulations and Policies Web page at https://www.faa.gov/regulations_policies/ or
    3. Accessing the Government Printing Office's Web page at https://www.gpoaccess.gov/fr/.
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the notice, amendment, or docket number of this 
rulemaking.
    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
https://DocketsInfo.dot.gov.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires FAA to comply with small entity requests for information 
or advice about compliance with statutes and regulations within its 
jurisdiction. If you are a small entity and you have a question 
regarding this document, you may contact your local FAA official, or 
the person listed under the FOR FURTHER INFORMATION CONTACT heading at 
the beginning of the preamble. You can find out more about SBREFA on 
the Internet at https://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

List of Subjects in 14 CFR Part 187

    Administrative practice and procedure, and Air transportation.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends Chapter I of Title 14, Code of Federal 
Regulations, as follows:

PART 187--FEES

0
1. The authority citation for part 187 continues to read as follows:

    Authority: 31 U.S.C. 9701, 49 U.S.C. 106(g), 49 U.S.C. 
106(l)(6), 40104-401-5, 40109, 40113-40114, 44702.


0
2. In part 187, Appendix B is amended by revising paragraph (e)(2) to 
read as follows:

Appendix B to Part 187--Fees for FAA Services for Certain Flights

* * * * *
    (e) * * *
    (2) A User (operator of an Overflight) is assessed a fee for 
each 100 nautical miles (or portion thereof) flown in each segment 
and type of U.S.-controlled airspace. Separate calculations are made 
for transiting Enroute and Oceanic airspace. The total fee charged 
for an Overflight between any entry and exit point is equal to the 
sum of these two charges. This relationship is summarized as:

Rij = X*DEij + Y*DOij,

Where:

Rij = the fee charged to aircraft flying between entry 
point i and exit point j,
DEij = total great circle distance traveled in each 
segment of U.S.-controlled Enroute airspace expressed in hundreds of 
nautical miles for aircraft flying between entry point i and exit 
point j for each segment of Enroute airspace.
DOij = total great circle distance traveled in each 
segment of U.S.-controlled Oceanic airspace expressed in hundreds of 
nautical miles for aircraft flying between entry point i and exit 
point j for each segment of Oceanic airspace.
    X and Y = the values respectively set forth in the following 
schedule:


 
------------------------------------------------------------------------
             Time period                X  (enroute)      Y  (oceanic)
------------------------------------------------------------------------
Through September 30, 2011..........            $33.72            $15.94
October 1, 2011 through September                38.44             17.22
 30, 2012...........................
October 1, 2012 through September                43.82             18.60
 30, 2013...........................
October 1, 2013 through September                49.95             20.09
 30, 2014...........................
October 1, 2014 and beyond..........             56.86             21.63
------------------------------------------------------------------------


[[Page 43119]]

* * * * *

    Issued in Washington, DC, on July 13, 2011.
J. Randolph Babbitt,
Administrator.
[FR Doc. 2011-18285 Filed 7-19-11; 8:45 am]
BILLING CODE 4910-13-P