Adjustment of Passenger Civil Aviation Security Service Fee, 35461-35473 [2014-14488]
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[Federal Register Volume 79, Number 119 (Friday, June 20, 2014)] [Rules and Regulations] [Pages 35461-35473] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: 2014-14488] [[Page 35461]] Vol. 79 Friday, No. 119 June 20, 2014 Part III Department of Homeland Security ----------------------------------------------------------------------- Transportation Security Administration ----------------------------------------------------------------------- 49 CFR Part 1510 Adjustment of Passenger Civil Aviation Security Service Fee; Interim Final Rule Federal Register / Vol. 79 , No. 119 / Friday, June 20, 2014 / Rules and Regulations [[Page 35462]] ----------------------------------------------------------------------- DEPARTMENT OF HOMELAND SECURITY Transportation Security Administration 49 CFR Part 1510 [Docket No. TSA-2001-11120; Amendment No. 1510-4] RIN 1652-AA68 Adjustment of Passenger Civil Aviation Security Service Fee AGENCY: Transportation Security Administration, DHS. ACTION: Interim final rule; request for comments. ----------------------------------------------------------------------- SUMMARY: The Transportation Security Administration (TSA) is issuing an interim final rule (IFR) to implement the passenger civil aviation security service fee (security service fee) increase mandated by the Bipartisan Budget Act of 2013. DATES: Effective Date: This IFR is effective at 12:00 a.m. (Eastern Daylight Time) on July 21, 2014. Comment Date: Comments must be received by August 19, 2014. ADDRESSES: You may submit comments, identified by the TSA docket number to this rulemaking, to the Federal Docket Management System (FDMS), a government-wide, electronic docket management system, using any one of the following methods: Electronically: You may submit comments through the Federal eRulemaking portal at https://www.regulations.gov. Follow the online instructions for submitting comments. Mail, In Person, or Fax: Address, hand-deliver, or fax your written comments to the Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC 20590-0001; fax (202) 493-2251. The Department of Transportation (DOT), which maintains and processes TSA's official regulatory dockets, will scan the submission and post it to FDMS. See SUPPLEMENTARY INFORMATION for format and other information about comment submissions. FOR FURTHER INFORMATION CONTACT: Michael Gambone, Office of Revenue, TSA-14, Transportation Security Administration, 601 South 12th Street, Arlington, VA 20598-6014; telephone (571) 227-2323; email: tsa-fees@dhs.gov. SUPPLEMENTARY INFORMATION: Comments Invited TSA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from this rulemaking action. See ADDRESSES above for information on where to submit comments. With each comment, please identify the docket number at the beginning of your comments. TSA encourages commenters to provide their names and addresses. The most helpful comments reference a specific portion of the rulemaking, explain the reason for any recommended change, and include supporting data. You may submit comments and material electronically, in person, by mail, or fax as provided under ADDRESSES, but please submit your comments and material by only one means. If you submit comments by mail or delivery, submit them in an unbound format, no larger than 8.5 by 11 inches, suitable for copying and electronic filing. If you would like TSA to acknowledge receipt of comments submitted by mail, include with your comments a self-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you. TSA will file all comments to our docket address, as well as items sent to the address or email under FOR FURTHER INFORMATION CONTACT, in the public docket, except for comments containing confidential information and sensitive security information (SSI). Should you wish your personally identifiable information redacted prior to filing in the docket, please so state. TSA will consider all comments that are in the docket on or before the closing date for comments and will consider comments filed late to the extent practicable. The docket is available for public inspection before and after the comment closing date. Handling of Confidential or Proprietary Information and Sensitive Security Information (SSI) Submitted in Public Comments Do not submit comments that include trade secrets, confidential commercial or financial information, or SSI to the public regulatory docket. Please submit such comments separately from other comments on the rulemaking. Comments containing this type of information should be appropriately marked as containing such information and submitted by mail to the address listed in FOR FURTHER INFORMATION CONTACT section. TSA will not place comments containing SSI in the public docket and will handle them in accordance with applicable safeguards and restrictions on access. TSA will hold documents containing SSI, confidential business information, or trade secrets in a separate file to which the public does not have access, and place a note in the public docket explaining that commenters have submitted such documents. TSA may include a redacted version of the comment in the public docket. If an individual requests to examine or copy information that is not in the public docket, TSA will treat it as any other request under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Department of Homeland Security's (DHS') FOIA regulation found in 6 CFR part 5. Reviewing Comments in the Docket Please be aware that anyone is able to search the electronic form of all comments in any of our dockets by the name of the individual who submitted the comment (or signed the comment, if an association, business, labor union, etc., submitted the comment). You may review the applicable Privacy Act Statement published in the Federal Register on April 11, 2000 (65 FR 19477) and modified on January 17, 2008 (73 FR 3316). You may review TSA's electronic public docket on the Internet at https://www.regulations.gov. In addition, DOT's Docket Management Facility provides a physical facility, staff, equipment, and assistance to the public. To obtain assistance or to review comments in TSA's public docket, you may visit this facility between 9:00 a.m. and 5:00 p.m., Monday through Friday, excluding legal holidays, or call (202) 366-9826. This docket operations facility is located in the West Building Ground Floor, Room W12-140 at 1200 New Jersey Avenue SE., Washington, DC 20590. Availability of Rulemaking Document You may obtain an electronic copy of this document using the Internet by-- (1) Searching the electronic Federal Docket Management System (FDMS) Web page at https://www.regulations.gov; (2) Accessing the Government Printing Office's Web page at https://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR to view the daily published Federal Register edition; or accessing the ``Search the Federal Register by Citation'' in the ``Related Resources'' column on the left, if you need to do a Simple or Advanced search for [[Page 35463]] information, such as a type of document that crosses multiple agencies or dates; or (3) Visiting TSA's Security Regulations Web page at https://www.tsa.gov and accessing the link for ``Stakeholders'' at the top of the page, then the link ``Research Center'' in the left column. In addition, copies are available by writing or calling the individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to identify the docket number of this rulemaking. Small Entity Inquiries The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires TSA to comply with small entity requests for information and advice about compliance with statutes and regulations within TSA's jurisdiction. Any small entity that has a question regarding this document may contact the person listed in FOR FURTHER INFORMATION CONTACT. Persons can obtain further information regarding SBREFA on the Small Business Administration's Web page at https://www.sba.gov/advo/laws/law_lib.html. Background This IFR implements amendments to 49 U.S.C. 44940, which authorizes TSA to impose fees to defray the government's costs for providing civil aviation security services, such as those related to screening personnel, screening equipment, and other specified security services.\1\ --------------------------------------------------------------------------- \1\ See 49 U.S.C. 44940(a)(1) (enumerating specific aviation security services intended to be funded at least in part by the fee referenced herein). --------------------------------------------------------------------------- The Aviation and Transportation Security Act. Section 44940 of title 49 U.S.C. was originally enacted in 2001 as part of the Aviation and Transportation Security Act (ATSA).\2\ Under the authorizing language of section 44940(a), the security service fee applies to passengers of air carriers and foreign air carriers, traveling in air transportation \3\ or intrastate air transportation originating at airports in the United States.\4\ --------------------------------------------------------------------------- \2\ Pub. L. 107-71 (115 Stat. 597; Nov. 19, 2001) (codified in relevant portions at 49 U.S.C. 44940). See also 49 U.S.C. 114(a). TSA was initially established within the Department of Transportation. The agency was subsequently transferred to the Department of Homeland Security. Homeland Security Act of 2002, Pub. L. 107-296 (116 Stat. 2135; Nov. 25, 202), sec. 403(2), 6 U.S.C. 203(2). \3\ Consistent with 49 U.S.C. 40102(a)(5), ``air transportation'' means ``foreign air transportation, intrastate air transportation, or the transportation of mail by aircraft.'' \4\ 49 U.S.C. 44940(a). ATSA included two fees to defray TSA's costs for providing civil aviation security services: ``Passenger fees'' (sec. 44940(a)(1)) and ``Air carrier fees'' (sec. 44940(a)(2)). Regulations implementing the passenger fees, 49 CFR part 1510, refer to the ``September 11th Security Fee'' and ``security service fees.'' The air carrier fees are referred to in applicable regulations, 49 CFR part 1511, as the ``Aviation Security Infrastructure Fee'' (ASIF). The Budget Act repeals the air carrier fees provision effective October 1, 2014. Any adjustments to TSA's regulations related to the ASIF will be addressed in a separate rulemaking. --------------------------------------------------------------------------- As originally enacted and currently implemented, section 44940(c) imposes a ceiling on the amount of the fee.\5\ As enacted by ATSA, the statute authorizes TSA to impose a fee of up to $2.50 per enplanement, as long as the total fee per one-way trip does not exceed $5.00. To the extent the security service fee imposed on passengers is insufficient to cover TSA's cost for providing civil aviation security services, section 44940 as enacted by ATSA also authorized TSA to impose an additional fee on air carriers and foreign air carriers, known as the Aviation Security Infrastructure Fee (ASIF), which was subsequently capped at a per-industry aggregate limit of $420 million per year.\6\ --------------------------------------------------------------------------- \5\ 49 U.S.C. 44940(c). \6\ See 49 U.S.C. 44940(a)(2). The determination of the aggregate cap for the ASIF was upheld by the courts in Southwest Airlines co. v. Transportation Security Administration, 650 F.3d 752 (D.C. Cir. 2011). A copy of the opinion is available at https://www.tsa.gov/stakeholders/aviation-security-infrastructure-fee-air-carrier-fee. --------------------------------------------------------------------------- TSA's Implementing Regulations. TSA implemented the passenger fee authority through an IFR published in December 2001 (2001 IFR),\7\ codified at 49 CFR part 1510.\8\ Under TSA's current regulations, the security service fee is $2.50 per passenger enplanement and imposed only on passengers of direct air carriers and foreign air carriers described in Sec. 1510.9(a). Passengers may not be charged for more than two enplanements per one-way trip or four enplanements per round trip.\9\ --------------------------------------------------------------------------- \7\ Any reference to ``current regulation(s)'' in this preamble is a reference to current 49 CFR part 1510--i.e., the rule as originally published in 2001. As noted above, this IFR, which amends current regulations, will take effect 30 days after its publication. \8\ 66 FR 67698 (Dec. 31, 2001) (codified at 49 CFR part 1510). This rulemaking does not finalize the 2001 IFR. Comments received on the 2001 IFR will be addressed in a separate rulemaking, as they pertain to areas not amended by this IFR. \9\ See 49 CFR 1510.5(a). --------------------------------------------------------------------------- Section 1510.3 defines ``passenger enplanement'' as a person boarding in the United States in scheduled or nonscheduled service on aircraft in intrastate, interstate, or foreign air transportation; a ``one-way trip'' as any trip that is not a round trip; and ``round trip'' as a trip on an air travel itinerary that terminates at the origin point.\10\ --------------------------------------------------------------------------- \10\ See 49 CFR 1510.3. --------------------------------------------------------------------------- At the request of the commercial aviation industry, which is required to collect the fee in the course of selling air transportation to passengers, TSA subsequently adopted the following interpretation of ``one-way trip.'' One-way trip means continuous travel from a point to another point during which a stopover does not occur. A ``stopover'' is a break in travel of more than 4 hours between two domestic flights or 12 hours between a domestic flight and an international flight or two international flights.'' \11\ \11\ See Letter from Air Transport Association to Docket TSA- 2001-11120 (dated March 1, 2002) (ATA 2002 Letter). See also U.S. DHS/TSA Letter re: Rule-Fees-ATA Docket Response and Clarification Letter TSA 06-11-07 (dated October 24, 2006) (TSA 2006 Letter), confirming use of these definitions. Both documents are available at www.regulations.gov, the former under Docket No. TSA-2001-11120-0032 and the later as TSA-2001-11120-0075. --------------------------------------------------------------------------- Since 2002, TSA has interpreted its fee authorities and regulations consistent with these definitions. As noted above, under ATSA, the revenue collected as a result of the fees authorized in 44940(a) is deposited in the general fund of the Treasury as a partial offset for TSA's appropriations dedicated to providing civil aviation security services. As TSA explains further below, the revenue from the fees has never neared the full appropriation to TSA for these costs. TSA anticipates that this will continue to be the case under the restructured fee discussed below. Restructuring the Security Service Fee. The Bipartisan Budget Act of 2013 (Budget Act), signed into law on December 26, 2013,\12\ made significant amendments to sec. 44940, including eliminating the ASIF (the separate fee on air carriers),\13\ restructuring the security service fee imposed on passengers by amending sec. 44940(c),\14\ and stipulating specific amounts of the revenue collected from passengers to be credited as offsetting receipts and deposited in the general fund of the Treasury.\15\ There are no changes to TSA's authorities in section 44940(a) regarding imposition of this security service fee.\16\ While TSA describes each of these changes further in this preamble, this IFR solely addresses the amendments to sec. 44940(c) related to restructuring the security service fee.\17\ --------------------------------------------------------------------------- \12\ Public Law 113-67 (127 Stat. 1165; Dec. 26, 2013). \13\ See id. at sec. 601(a). \14\ See id. at sec. 601(b). \15\ See id. at sec. 601(c). \16\ See 49 U.S.C. 44940(a). \17\ TSA addresses fiscal implications of eliminating the fee on air carriers in the economic analysis. Due to the different effective dates, TSA will address elimination of the fee imposed on air carriers and foreign air carriers (known as the Aviation Security Infrastructure Fee (ASIF) and implemented through 49 CFR part 1511) in a separate rulemaking. --------------------------------------------------------------------------- [[Page 35464]] The ``fee increase'' appears at section 601(b) of the Budget Act under the heading ``Restructuring of Passenger Fee.'' The Budget Act amends 44940(c) as follows:Before the Budget Act, the statute mandated that the fee ``may not exceed $2.50 per enplanement in air transportation or intrastate air transportation that originates at an airport in the United States, except that the total amount of such fees may not exceed $5.00 per one-way trip.'' Following the Budget Act, the statute mandates the fee ``shall be $5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States.'' As noted above, the Budget Act simplifies the structure by (1) requiring that the fee be imposed on a one-way trip basis rather than a per-enplanement basis and (2) eliminating language that provided a cap on the amount of the fee as it relates to one-way trips. Where the original amount of the fee was calculated in terms of the number of enplanements in air transportation or intrastate air transportation originating at airports in the United States, under the Budget Act amendments, the restructured fee is based on each one-way trip. The Budget Act stipulates a July 1, 2014 effective date.\18\ --------------------------------------------------------------------------- \18\ See Public Law 113-67, sec. 601(d). --------------------------------------------------------------------------- The statute is very specific about the use of the revenue generated. Since its initial enactment in 2001, 49 U.S.C. 44940 has required that the revenue from the security service fee is to be a partial offset for the portion of TSA's appropriation dedicated to providing civil aviation security services of the type identified in section 44940(a)(1). The Budget Act amended section 44940 to require that a portion of the fee revenue, $12.63 billion generated over 10 years, is deposited in the general fund as offsetting receipts for the Federal budget.\19\ As previously noted, the amount of revenue from the passenger fee used to offset TSA's appropriation for providing civil aviation security services is significantly less than the appropriated amount. Thus, of the total revenue collected, the law requires (1) stipulated amounts to be deposited in the general fund of the Treasury and (2) the remainder to be deposited in the general fund as a partial offset for the appropriation to TSA for providing civil aviation security services. While the amount of the fee increase and policy decisions regarding how it is used are congressional determinations beyond the scope of this rulemaking, the fiscal impact of the Budget Act's amendments to section 44940 is addressed in the Regulatory Impact Analysis, below. --------------------------------------------------------------------------- \19\ See sec. 601(c) of the Budget Act, codified at 49 U.S.C. 44940(i). --------------------------------------------------------------------------- Good Cause for Adoption Without Prior Notice and Comment TSA is taking this action without providing prior public notice and comment. Section 601(d) of the Budget Act provides for implementation of the fee increase by July 1, 2014, through publication of notice of the fee in the Federal Register, ``notwithstanding [31 U.S.C. 9701] and the procedural requirements of [5 U.S.C. 553].'' \20\ Thus, the user fee requirements of 31 U.S.C. 9701 and the procedural rulemaking requirements of 5 U.S.C. 553 do not apply to this action.\21\ In order to afford industry the opportunity to make the necessary changes to reservations systems as necessary to collect the restructured fee, this IFR will take effect at 12:00 a.m. (Eastern Daylight Time) on July 21, 2014. The current regulations remain in effect until the effective date for this IFR. --------------------------------------------------------------------------- \20\ Sec. 601(d) of the Budget Act states: (d) Imposition of Fee Increase.--The Secretary of Homeland Security shall implement the fee increase authorized by the amendment made by subsection (b)--(1) beginning on July 1, 2014; and (2) through the publication of notice of such fee in the Federal Register, notwithstanding section 9701 of title 31, United States Code, and the procedural requirements of section 553 of title 5, United States Code. \21\ Id. See also 49 U.S.C. 44940(d)(1) for the same exemptions in ATSA. --------------------------------------------------------------------------- Apart from the statutory exemption discussed above, in light of the deadline and potential budgetary impacts, it would be impracticable and contrary to the public interest to provide for notice and comment before issuing this IFR. Section 553(b) of the Administrative Procedure Act \22\ (APA) authorizes agencies to issue final rules without affording the public a prior opportunity to comment if it is ``impracticable, unnecessary, or contrary to the public interest.'' --------------------------------------------------------------------------- \22\ 5 U.S.C. 551 et seq. --------------------------------------------------------------------------- While the statute exempts TSA from notice and comment requirements, TSA has chosen to issue this rulemaking as an IFR to provide an opportunity for comments before the rule is finalized. The amendments to 49 CFR part 1510 under this IFR take effect at 12:00 a.m. (Eastern Daylight Time) on July 21, 2014. TSA will accept comments on this rule until August 19, 2014. See DATES and SUPPLEMENTARY INFORMATION for guidance on the schedule and method for submitting comments. TSA will address the comments received on this IFR in a final rule. Summary of the Interim Final Rule TSA is required by 49 U.S.C. 44940(c), as amended, to increase the security service fee to $5.60 per one-way trip. This rulemaking amends current 49 CFR part 1510 to implement the mandated security service fee increase.\23\ --------------------------------------------------------------------------- \23\ Individuals with questions regarding aspects of 49 CFR part 1510 not affected by this rulemaking should refer to the 2001 IFR, as well as information in the docket that provides further clarity to implementation of the 2001 IFR. Links for this information are available on TSA's Web site at https://www.tsa.gov/stakeholders/september-11-security-fee-passenger-fee. Note that the comment period for the 2001 IFR has closed. --------------------------------------------------------------------------- Definitions (Sec. 1510.3). As amendments to section 44940 revise the structure for the imposition of the fee to base it on one-way trips rather than enplanements, the definition of ``passenger enplanement'' is being removed as it is no longer relevant to imposition of the fee. As previously discussed, in 2002, representatives of the U.S. aviation industry asked TSA to implement the passenger fee provisions of the 2001 IFR using a definition of one-way trip that was more consistent with how the term was understood within the industry. The industry proposed that one-way trip should mean continuous travel from a point to another point during which a stopover does not occur, and that ``stopover'' should mean a break in travel of more than 4 hours between two domestic flights or 12 hours between a domestic flight and an international flight or two international flights.\24\ The industry stated that these definitions were consistent with common usage within the industry and already incorporated into computer and ticket sales systems. --------------------------------------------------------------------------- \24\ See ATA 2002 Letter. --------------------------------------------------------------------------- TSA accepted this proposal and has used these definitions for purposes of imposing the fee since 2002. For example, in 2006, TSA posted additional guidance to the docket for this rulemaking, reiterating treatment of multiple one-way and round trips, non-revenue to revenue air transportation, and involuntary re-routes, as well as use of the definitions of ``one-way trip'' and ``stopover'' proposed by the industry in March 2002.\25\ This IFR amends Sec. 1510.3 to incorporate these definitions, with modifications, as described below. --------------------------------------------------------------------------- \25\ See TSA 2006 Letter. --------------------------------------------------------------------------- TSA is continuing to use the definition of ``one-way trip'' proposed by industry, with one minor change. One-way trip means continuous air [[Page 35465]] transportation, during which a stopover does not occur; there may be multiple one-way trips on the same air travel itinerary. This change is necessary to make the terminology consistent with the rest of the regulation. TSA is continuing to employ the framework for the definition of ``stopover'' proposed by the industry, with modifications necessary to provide a distinction between continental and non-continental air transportation. Consistent with the definition provided by industry, a break in travel of more than four hours will be required before a stopover would occur (thus triggering a new one-way trip) for continental interstate or intrastate air transportation. A break in travel of more than 12 hours will be required before a stopover would occur (thus triggering a new one-way trip) for foreign air transportation. For purposes of this IFR, the continental United States includes the 48 contiguous States and the District of Columbia. This term excludes the non-contiguous States (Hawaii and Alaska), territories, and possessions of the United States. In addition, a break in travel of more than 12 hours will be required before a stopover would occur (thus triggering a new one-way trip) for non-continental interstate or intrastate air transportation. Non-continental United States is not defined in the regulation because it logically includes those parts of the United States not considered ``continental.'' \26\ For example, currently a fee of $10.00 (4 one-way trips, with 1 chargeable enplanement per trip x $2.50) would apply to the following itinerary: --------------------------------------------------------------------------- \26\ TSA regulations define the United States in a geographical sense, [to mean] the States of the United States, the District of Columbia, and territories and possessions of the United States, including the territorial sea and the overlying airspace. See 49 CFR 1500.3. Therefore, non-continental includes the states of Alaska and Hawaii as well as the territories and possessions of the United States. Juneau to Anchorage (10 hour break in travel = stopover) Anchorage to Seattle (10 hour break in travel = stopover) Seattle to Chicago (10 hour break in travel = stopover) Chicago to New York Under the definition of ``stopover'' in this IFR, a fee of $11.20 would apply for the same itinerary because the itinerary would only involve two one-way trips: Juneau to Anchorage (10 hour break in travel [ne] stopover) Anchorage to Seattle (10 hour break in travel [ne] stopover) Seattle to Chicago (10 hour break in travel = stopover) Chicago to New York If a stopover was still defined as a four hour break in travel for this itinerary under the restructured fee, a charge of $22.40 would apply (4 one-way trips x $5.60). TSA took several factors into consideration in determining to apply a 12-hour break for non-continental interstate and non-continental intrastate air transportation. Non-continental air transportation is more similar to foreign air transportation, often involving long breaks in connecting air transportation. In addition, including the 12-hour break in travel for non-continental intrastate air transportation recognizes the unique geographic situations that often make air transportation the only practical method of travel. TSA also notes that there are other provisions of law that distinguish between air transportation based on locations, such as federal excise taxes for air transportation \27\ and the passenger facility charge imposed under 49 U.S.C. 40117. To implement these modifications, TSA is also amending and adding definitions to distinguish between continental and non- continental air transportation. TSA requests comment on the appropriateness of this change. TSA also requests comment on whether similar modifications to the stopover definition--such as a 12-hour break in travel--might be necessary or appropriate in light of considerations regarding other categories of air transportation, such as air transportation involving airports located in rural communities (or certain types of rural communities). --------------------------------------------------------------------------- \27\ See, e.g., ATA 2002 Letter (citing 26 U.S.C. 4262(c)(3) to support a definition of stopover that applies a 12-hour break in travel for air transportation between an international location and a U.S. location or two international locations); IRS Publication 510, Excise Taxes (describing how the tax treatment of domestic flight segments beginning or ending in Alaska or Hawaii differs from the tax treatment of other flights). --------------------------------------------------------------------------- Finally, TSA is removing the definition of ``round trip'' as it is no longer relevant to either the definition of ``one-way trip'' or imposition of the fee, as discussed below. The definition of ``origin point'' is being removed as it is only relevant to the deleted definition of ``round trip.'' Imposition of security service fees (Sec. 1510.5). This section is amended to include the new security service fee and remove references to enplanements, as required under section 601 of the Budget Act. For example, if a passenger purchases air transportation that includes changing planes three times (but none of the breaks in travel are greater than four hours), a security service fee of $5.60 will be imposed for a single one-way trip. As with the current regulations, imposition of the fee is applicable to air transportation \28\ originating at an airport in the United States, regardless of where the passenger began his or her travel. For example, under the current regulations, a fee of $5.00 is imposed for an Atlanta-New York-Chicago itinerary (two enplanements both departing from airports in the United States with no stopovers greater than 4 hours). A fee of $2.50 is imposed for a Paris-New York- Chicago itinerary (one enplanement in air transportation originating in the United States). Consistent with the Budget Act's restructuring of the fee, a fee of $5.60 will be imposed for both itineraries as they both have air transportation originating at an airport in the United States. --------------------------------------------------------------------------- \28\ ``Air transportation'' is currently defined in 49 CFR 1510.3. --------------------------------------------------------------------------- There is no indication that Congress intended to create any disparity between treatment of itineraries like these when it restructured the fee limitation. To the extent any underlying ambiguity exists in the limitation provision, it is clarified in the context of TSA's authority under 49 U.S.C. 44940(a)(1), which mandates TSA to impose a fee for passengers ``in air transportation and intrastate air transportation originating at airports in the United States'' with no distinction between segments and trips. Therefore, if there is covered air transportation at any point in the trip (in other words, any portion of the itinerary includes air transportation originating at an airport in the United States), TSA has authority to impose the fee and has done so consistently since the current regulations took effect in 2002. This better aligns the imposition of the fee with those who benefit from the security services provided for air transportation. Finally, TSA is removing language that effectively applied a cap to the amount of the fee that could be imposed per ``round trip.'' Under current Sec. 1510.5(a), passengers may not be charged for more than two enplanements per one-way trip or four enplanements per round trip. This provision effectively created a $10 cap on round-trip travel--in other words, it set a $10 cap on any itinerary that ended at its origin point, even if the itinerary included more than four $2.50 enplanements with lengthy stopovers. Thus, for instance, if a passenger purchased a round trip for an itinerary involving ten enplanements, each separated by a three-day stopover, but ultimately ending at the origin point, a [[Page 35466]] $10 fee would be imposed because the regulation caps a round trip at 4 enplanements. At the same time, a different passenger travelling on the same exact flights (same days, same planes, same stopovers and destinations) who does not purchase the travel as a single round trip itinerary could potentially be charged up to $25.00 ($2.50 x 10 enplanements). Thus, as a result of the distinction between round-trip and other itineraries, similarly situated passengers could be charged different fees.\29\ TSA received comments on the 2001 IFR questioning the round trip cap on the basis that it was not specifically stipulated in the statute and had the effect of decreasing revenue.\30\ --------------------------------------------------------------------------- \29\ In other words, under the current regulations, if Passenger A were to book such an itinerary beginning and ending at New York's John F. Kennedy International Airport (JFK), and Passenger B were to book the same exact itinerary, except that Passenger B planned to return to Boston, Passenger A would owe $10, and Passenger B would owe $25.00. Similarly, Passengers C and D could both fly on the same days, flights, stopovers, and destinations, but pay different fees based on how the air transportation was purchased (for example, Passenger C purchases air transportation as a single five-stopover round trip itinerary but Passenger D purchases the same air transportation in separate transactions, creating multiple itineraries). \30\ See, e.g., ATA 2002 Letter. --------------------------------------------------------------------------- As enacted by ATSA in 2001, section 44940(a) required imposition of a ``uniform fee'' on passengers, but specifically imposed a one-way cap on the fee amount in 44940(c). As discussed above, prior to the Budget Act amendments, section 44940(c) provided that the fee ``may not exceed $2.50 per enplanement in air transportation or intrastate air transportation that originates at an airport in the United States, except that the total amount of such fees may not exceed $5.00 per one- way trip.'' This language provided TSA with clear discretion to limit the amount of fee charged per enplanement and, therefore, to provide a cap on the amount charged per round trip. Amending section 44940(c) by mandating a fee of $5.60 per one-way trip, as well as eliminating the cap language that was in the statute as enacted in 2001, is consistent with the authorizing language of section 44940(a) and the requirement to impose a ``uniform fee.'' Accordingly, in the absence of statutory language authorizing such a cap, and in light of the fact that a round-trip cap under the revised fee structure would have the effect of the fee being far less for some passengers than the mandatory $5.60 per one-way trip, this IFR does not include a limit on the number of one-way trips that can be charged per itinerary. TSA notes that by eliminating the round-trip cap, the restructured fee mitigates the likelihood of disparate treatment for substantially similar travel--some booked as round trips on one itinerary, and some not. TSA seeks comment on removal of the round-trip cap, and specifically on whether TSA should consider reinstating a cap, and if so, what the cap should be in light of the statute's mandate that the fee be uniform (under 44940(a)). TSA also seeks comment on the definition of ``one-way trip'' and, in the Alternatives Discussion section below, on the definition of ``stopover.'' Table 1 provides examples of the impact of the Budget Act's restructuring of the fee and removal of the round trip cap. They are ordered according to the approximate likelihood (from the type of itinerary most frequently purchased to those most infrequently purchased). Table 1--Comparison of Current Fee Imposition and Fee Imposition Following Budget Act Amendments ---------------------------------------------------------------------------------------------------------------- Current regulation TSA's interpretation of Budget Act fee Itinerary examples structure restructure ---------------------------------------------------------------------------------------------------------------- Washington Dulles to Chicago $5.00; 1 round trip with 2 $11.20; 2 one-way trips. (stopover), Chicago to Washington chargeable enplanements. Dulles. Washington Dulles to Chicago, Chicago $10.00; 1 round trip with $11.20; 2 one-way trips. to Los Angeles (stopover), Los Angeles 4 chargeable enplanements. to Chicago, Chicago to Washington Dulles. Washington Dulles to Chicago, Chicago $10.00; 1 round trip with $11.20; 2 one-way trips. to Los Angeles, Los Angeles to Seattle 4 chargeable enplanements. (stopover), Seattle to Los Angeles, Los Angeles to Chicago, Chicago to Washington Dulles. Washington Dulles to Chicago........... $2.50; 1 one-way trip with $5.60; 1 one-way trip. 1 chargeable enplanement. Washington Dulles to Chicago, Chicago $7.50; 2 one-way trips $11.20; 2 one-way trips. to Los Angeles, Los Angeles to Seattle with 3 chargeable (stopover), Seattle to Los Angeles. enplanements. Paris to New York, New York to Chicago. $2.50; 1 one-way trip with $5.60; 1 one-way trip. 1 chargeable enplanement. Chicago to New York (stopover), New $7.50; 3 one-way trips $16.80; 3 one-way trips. York to Frankfurt (stopover), with 3 chargeable Frankfurt to Chicago, Chicago to enplanements. Minneapolis. Newark to Chicago (stopover), Chicago $12.50; 5 one-way trips $28.00; 5 one-way trips. to Denver (stopover), Denver to Las with 5 chargeable Vegas (stopover), Las Vegas to Chicago enplanements. (stopover), Chicago to San Francisco. Newark to Chicago (stopover), Chicago $10.00; 1 round trip with $28.00; 5 one-way trips. to Denver (stopover), Denver to Las 4 chargeable enplanements. Vegas (stopover), Las Vegas to Chicago (stopover), Chicago to Newark. Orlando to Pittsburgh (stopover), $15.00; 3 round trips with $33.60; 6 one-way trips. Pittsburgh to Orlando (stopover), 6 chargeable enplanements. Orlando to Pittsburgh (stopover), Pittsburgh to Orlando (stopover), Orlando to Pittsburgh (stopover), Pittsburgh to Orlando. ---------------------------------------------------------------------------------------------------------------- Collection of security service fees (Sec. 1510.9). TSA is amending Sec. 1510.9(a) regarding the direct air carriers and foreign air carriers that are required to impose the fee in order to remove references to enplanements and make conforming changes regarding departures from airports in the United States. In addition, Sec. 1510.9(b) is [[Page 35467]] amended to reflect the effective date of the revised fee, 12:00 a.m. (Eastern Daylight Time) on July 21, 2014. In general, sales of air transportation and changes to itineraries as a result of the Budget Act's fee increase are to be treated consistent with current practice. For example, the revised fee amount applies at the time air transportation is sold, not when the flight may occur. Air transportation purchased before July 21, 2014, but utilized after, is not subject to the adjusted fee. In other words, if a passenger purchases a ticket on June 15th for travel on September 7th, the revised fee would not apply even though the travel is to occur after the fee increase takes effect. Also consistent with current practice, if a passenger's scheduled itinerary at the time the air transportation is sold includes a stopover, a separate fee will be imposed for travel beyond that point as each stopover triggers a separate one-way trip. Under current Sec. 1510.9, if the passenger changes the itinerary to alter the number of one-way trips, additional collection of fee or a refund of the security service fee is required, as appropriate. The imposition of the fee is based on the itinerary at the time the transportation is sold. Involuntary changes to the itinerary have no impact on the fee. For example, if two fees are imposed for an itinerary because of a stopover greater than four hours, but the plane departs earlier than scheduled and the break in travel becomes less than four hours, that is a change beyond the passenger's control and occurs after the air transportation is purchased. Therefore, no refund is to be provided. Similarly, if the passenger's itinerary has no breaks in travel greater than four hours, but due to weather or mechanical issues, the break is extended beyond the four hour point, it would be inappropriate for the direct air carrier or foreign air carrier to collect an additional fee for that itinerary. Finally, TSA notes that, under 49 CFR 1510.9, the requirement to collect the fee applies to passengers of direct air carriers and foreign air carriers on scheduled passenger or public charter passenger operation with an aircraft having passenger seating configuration of more than 60 seats or a scheduled passenger or public charter passenger operation with an aircraft having a passenger seating configuration of less than 61 seats when passengers are enplaned from or deplaned into a sterile area. As a result of this provision, the fee is not imposed on passengers travelling on smaller aircraft providing air transportation directly to or from rural communities (frequently served by non- Federalized airports). TSA requests comment regarding this aspect of air transportation directly to or from a rural community. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq.) requires that a Federal agency consider the impact of paperwork and other information collection burdens imposed on the public and, under the provisions of PRA section 3507(d), obtain approval from the Office of Management and Budget (OMB) for each collection of information it conducts, sponsors, or requires through regulations. Information collection requirements associated with the security service fee requirements of 49 CFR part 1510 have been approved by the OMB through August 31, 2015, under the PRA provisions, and assigned OMB Control Number 1652-0001. TSA has made available in the docket for this rulemaking, technical changes to its PRA documents as necessary based on the Budget Act's restructuring of the fee. The primary change is to eliminate outdated references to a per-enplanement fee. The changes will be effective beginning August 1, 2014. TSA welcomes comments on these changes and any other changes the public considers relevant to TSA's implementation of the Budget Act's amendments. TSA will consider and respond to such comments as appropriate. The current PRA approval covers the requirements for air carriers to submit quarterly reports to TSA which provide an accounting of the fees imposed, collected, refunded to passengers, and remitted to TSA, and to retain the source information. TSA notes that this IFR does not modify these requirements, which continue to be in force. As provided by the PRA, as amended, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Regulatory Impact Analysis Executive Orders 12866 (``Regulatory Planning and Review'') and 13563 (``Improving Regulation and Regulatory Review'') direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rulemaking is an ``economically significant regulatory action,'' under section 3(f)(1) of Executive Order 12866. As further required by this Executive Order, OMB has reviewed this IFR and TSA has prepared an analysis of its estimated costs and benefits, presented in the following paragraphs. Table 2 presents the OMB Circular A-4 Accounting Statement for this rule. This IFR implements an increase in the security service fee mandated by the Budget Act. As previously discussed, under this IFR direct air carriers and foreign air carriers will be required to impose a security service fee of $5.60 per one-way trip. Table 2--OMB A-4 Accounting Statement [Fiscal year 2014, quarter 4--fiscal year 2023] ------------------------------------------------------------------------ Category Estimate --------------------------------------------------------- Benefits ------------------------------------------------------------------------ Annualized monetized benefits. Annualized quantified, but unmonetized, benefits. Qualitative (un-quantified) Allow TSA to continue providing benefits. security functions made possible by the collection of fees. ------------------------------------------------------------------------ Costs ------------------------------------------------------------------------ Annualized monetized costs. Annualized quantified, but unmonetized, costs [[Page 35468]] Qualitative (un-quantified) costs. Direct air carriers and foreign air carriers are expected to incur costs to update their computer and ticket sales systems to reflect the new fee structure. ------------------------------------------------------------------------ Transfers ------------------------------------------------------------------------ Annualized monetized transfers *.. $1,630,931,041...... 7% $1,665,414,731...... 3% ����������������������������������� From whom to whom?................ From air passengers to the Government. ------------------------------------------------------------------------ * Note: Discount rate appears to the right of the estimates. As discussed in the Background section of this preamble, under current regulations, the amount of the security service fee is set at $2.50 per enplanement \31\ with a cap of $5.00 per one-way trip and $10.00 per round trip. The Budget Act's amendments to 49 U.S.C. 44940(c) eliminate fee differences based on the number of enplanements, changing the fee from $2.50 per enplanement to $5.60 per one-way trip, regardless of the number of enplanements. --------------------------------------------------------------------------- \31\ As noted earlier, ``passenger enplanement'' is defined in 49 CFR 1510.3. --------------------------------------------------------------------------- One-way trips have been consistently defined by TSA as any continuous travel during which a stopover does not occur (for further discussion on one-way trips and stopovers please see the section on Definitions (Sec. 1510.3), in this preamble). Thus, if an itinerary has a one-way trip with only one enplanement, under the current regulations, a security service fee of $2.50 is imposed. In addition, if an itinerary has a one-way trip with two or more enplanements, under the current regulations, a security service fee of $5.00 is imposed, regardless of the number of enplanements. In Fiscal Year 2013 (FY 13), 173 direct air carriers and foreign air carriers remitted the security service fee. In order to assess the change in the fee amounts required by the Budget Act, TSA estimated collections under both fee structures and projected the number of one- way trips for ten years (FY 14 through FY 23). As the Budget Act requires the new fee structure to be implemented starting with the fourth quarter (Q4) of FY 14, our analysis considers the impacts of this IFR starting at FY 14 (Q4). TSA uses historical data on fees collected to estimate the number of chargeable enplanements for FY 14 (Q4) through FY 23.\32\ TSA then converts the number of chargeable enplanements into one-way trips using Bureau of Transportation Statistics (BTS) data.\33\ TSA analyzed the number of fees collected based on enplanements under the current system and the number of fees collected based on one-way trips under the new system. Under the definition of a stopover in this IFR, non-continental interstate or intrastate air transportation would require a break in travel of more than 12 hours to trigger a new one-way trip. TSA is not aware of a data source that would provide the information necessary for this analysis to be sensitive to different stopover lengths for air transportation based on the itinerary. TSA sought this data on an expedited basis, but did not identify such a source. As such, for purposes of this analysis, TSA considers a break in travel greater than four hours to trigger a new one-way trip, regardless of whether continental or non-continental air transportation. As a result, our estimates of transfer payments from passengers to the government might be somewhat overstated. These numbers were used to analyze the change in total security service fee revenues from FY 14 (Q4) through FY 23.\34\ Under the current structure, the security service fee collection would be approximately $19.58 billion (undiscounted) from FY 14 (Q4) through FY 23. Table 3 shows the total in fee revenue based on the current fee structure. --------------------------------------------------------------------------- \32\ Based on actual collections, TSA assumes a 2 percent increase in enplanements each year from 2013-2023 to account for projected changes in the market. \33\ TSA uses the DB1B Market Survey showing the Number of Passengers by MktCoupons for 2012. BTS data shows that 66.4 percent of one-way trips have travel of one segment followed by a break in travel and 33.6 percent of one-way trips have travel of at least two segments followed by a break in travel. TSA used these percentages to determine the expected number of one-way trips by multiplying the number of chargeable enplanements by the above percentages and then dividing the result by the number of fees that would be imposed under the current fee structure for trips with one enplanement and for those with multiple enplanements. \34\ The Budget Act specifies the amount of funds to be collected for the general fund for the next 10 years. As such, we assess the impacts of this rule based on a period of analysis from FY 14 (Q4) through FY 23. Table 3--Estimated Security Service Fee Revenue Under Current Structure [Before Budget Act--based on enplanements] -------------------------------------------------------------------------------------------------------------------------------------------------------- One-way trips with Fiscal Year One-way trips with multiple Total fees Total fees Total fees one enplanement enplanements (discounted at 3%) (discounted at 7%) (a) (b) (c) = (a) x $2.50 .................. .................. + (b) x $5.00 -------------------------------------------------------------------------------------------------------------------------------------------------------- FY14 Q4............................................. 135,398,036 34,257,334 $509,781,761 $494,933,748 $476,431,552 FY15................................................ 519,195,475 131,362,711 1,954,802,240 1,842,588,595 1,707,399,983 FY16................................................ 529,579,384 133,989,965 1,993,898,285 1,824,699,385 1,627,614,937 FY17................................................ 540,170,972 136,669,764 2,033,776,251 1,806,983,857 1,551,558,164 FY18................................................ 550,974,392 139,403,159 2,074,451,776 1,789,440,324 1,479,055,446 FY19................................................ 561,993,879 142,191,223 2,115,940,811 1,772,067,117 1,409,940,706 [[Page 35469]] FY20................................................ 573,233,757 145,035,047 2,158,259,627 1,754,862,582 1,344,055,626 FY21................................................ 584,698,432 147,935,748 2,201,424,820 1,737,825,082 1,281,249,288 FY22................................................ 596,392,401 150,894,463 2,245,453,316 1,720,952,993 1,221,377,826 FY23................................................ 608,320,249 153,912,352 2,290,362,383 1,704,244,712 1,164,304,096 --------------------------------------------------------------------------------------------------- Total........................................... 5,199,956,977 1,315,651,765 19,578,151,270 16,448,598,396 13,262,987,623 -------------------------------------------------------------------------------------------------------------------------------------------------------- The security service fee, as amended by the Budget Act, is expected to result in a collection of approximately $36.49 billion (undiscounted) from FY 14 (Q4) through FY 23. Table 4 shows the total in fee revenue reflecting the statutory fee increase (estimated number of one-way trips x $5.60). The estimated number of one-way trips is the sum of (a) and (b) in Table 3. For the purposes of this analysis, TSA assumes that all one-way trips will incur a fee of $5.60 under the new fee structure. The number of one-way trips was derived using the most accurate information available. This analysis is the first instance of estimating a passenger fee imposed on one-way air transportation. As TSA has not previously collected fees on a per one-way trip basis, it is possible that the estimated number of one-way trips may differ from the actual number of fees imposed. The implementation of this IFR would provide further insight into the exact nature of travel itineraries, such as occurrence of stopovers, and will help improve revenue estimation. The analysis of actual revenue patterns under the revised fee structure will help to further improve prospective revenue estimates. Table 4--Estimated Security Service Fee Revenue [After Budget Act--based on one-way trips] ---------------------------------------------------------------------------------------------------------------- Total fees Total fees Total fees Fiscal year Estimated number collected: $5.60 collected collected of one-way trips per one-way trip (discounted at 3%) (discounted at 7%) ---------------------------------------------------------------------------------------------------------------- FY14 Q4......................... 169,655,370 $950,070,072 $922,398,128 $887,915,955 FY15............................ 650,558,186 3,643,125,839 3,433,995,512 3,182,047,200 FY16............................ 663,569,349 3,715,988,356 3,400,655,750 3,033,353,405 FY17............................ 676,840,736 3,790,308,123 3,367,639,675 2,891,607,919 FY18............................ 690,377,551 3,866,114,285 3,334,944,144 2,756,486,054 FY19............................ 704,185,102 3,943,436,571 3,302,566,045 2,627,678,294 FY20............................ 718,268,804 4,022,305,302 3,270,502,297 2,504,889,589 FY21............................ 732,634,180 4,102,751,408 3,238,749,848 2,387,838,673 FY22............................ 747,286,864 4,184,806,437 3,207,305,675 2,276,257,427 FY23............................ 762,232,601 4,268,502,565 3,176,166,785 2,169,890,258 ------------------------------------------------------------------------------- Total....................... 6,515,608,743 36,487,408,958 30,654,923,859 24,717,964,774 ---------------------------------------------------------------------------------------------------------------- Note: Numbers may not total due to rounding. TSA estimated the change in security service fees collected by comparing estimated fees based on enplanements under the statute prior to the Budget Act (Table 3) and estimated fees based on one-way trips under the statute after the Budget Act (Table 4). The fee change will result in increased revenue of approximately $16.91 billion (undiscounted) from FY 14 (Q4) through FY 23. Table 5 compares the current fee with the fee increase mandated by the Budget Act. This fee increase will result in a transfer payment from air passengers to the Government in the form of increased fees. This transfer will increase the cost to air passengers while reducing the burden on the Government. Table 5--Comparison of Security Service Fee Revenue [Prior to Budget Act vs. after Budget Act] \35\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Statutory fee Difference in fees Difference in fees Fiscal year Current: $2.50 per increase: $5.60 Difference in fees collected collected enplanement per one-way trip collected (discounted at 3%) (discounted at 7%) (a) (b) (c = b-a) -------------------------------------------------------------------------------------------------------------------------------------------------------- FY14 Q4............................................. $509,781,761 $950,070,072 $440,288,311 $427,464,380 $411,484,403 FY15................................................ 1,954,802,240 3,643,125,838.95 1,688,323,599 1,591,406,918 1,474,647,217 [[Page 35470]] FY16................................................ 1,993,898,285 3,715,988,355.73 1,722,090,071 1,575,956,365 1,405,738,469 FY17................................................ 2,033,776,251 3,790,308,122.84 1,756,531,872 1,560,655,817 1,340,049,755 FY18................................................ 2,074,451,776 3,866,114,285.30 1,791,662,509 1,545,503,819 1,277,430,607 FY19................................................ 2,115,940,811 3,943,436,571.01 1,827,495,760 1,530,498,928 1,217,737,589 FY20................................................ 2,158,259,627 4,022,305,302.43 1,864,045,675 1,515,639,715 1,160,833,963 FY21................................................ 2,201,424,820 4,102,751,408.47 1,901,326,588 1,500,924,766 1,106,589,385 FY22................................................ 2,245,453,316 4,184,806,436.64 1,939,353,121 1,486,352,682 1,054,879,601 FY23................................................ 2,290,362,383 4,268,502,565.38 1,978,140,182 1,471,922,073 1,005,586,161 --------------------------------------------------------------------------------------------------- Total........................................... 19,578,151,270 36,487,408,958 16,909,257,689 14,206,325,463 11,454,977,151 --------------------------------------------------------------------------------------------------- Annualized (reported in Table 2)................ .................. .................. .................. 1,665,414,731 1,630,931,041 -------------------------------------------------------------------------------------------------------------------------------------------------------- From the total estimated collection of approximately $36.49 billion, the Budget Act requires stipulated amounts to be credited as offsetting receipts to the Federal budget and deposited in the general funds of the Treasury for FY 14 (Q4) through FY 23,\36\ totaling $12.63 billion for the period; resulting in a total net fee collected for security services of $23.86 billion (undiscounted) from FY 14 (Q4) through FY 23. The funds collected for security services are then used to offset appropriations provided to TSA to conduct security services. The amount collected for security services under this fee is significantly less than TSA's total cost for security services. --------------------------------------------------------------------------- \35\ The estimated fees collected under the statutory fee increase may be somewhat overestimated due to the inclusion of non- continental interstate or intrastate air transportation with breaks in travel greater than four hours being considered additional one- way trips. \36\ Budget Act sec. 601(c), amending 49 U.S.C. 44940(i). --------------------------------------------------------------------------- As previously discussed, section 44940 as enacted in 2001 authorized TSA to impose two fees. In addition to the fee imposed on passengers under 44940(a)(1), TSA was authorized to impose a second fee on air carriers to the extent the passenger fee was insufficient to cover TSA's costs for providing civil aviation security.\37\ Historically, the revenue from both of these fees has been significantly less than TSA's costs for providing aviation security. --------------------------------------------------------------------------- \37\ See 49 U.S.C. 44940(a)(2) as enacted in 2001. --------------------------------------------------------------------------- Section 601 of the Budget Act includes a July 1, 2014 implementation date for implementation of the restructured passenger fee and an October 1, 2014 implementation date for discontinuing imposition of the ASIF. As the timing of the effective date of these two requirements is separated by several months, TSA has decided to treat them as two separate rulemakings.\38\ For purposes of this analysis, however, TSA estimates $23.86 billion in revenue from the security service fee, as amended by the Budget Act, is approximately equivalent to the amount of forecasted collections for FY 14 (Q4) through FY 23 for both fees authorized under sec. 44940 as enacted in 2001 (the fee imposed on passengers + the ASIF). Under the requirements of sec. 44940(a)(2)(B)(i), the ASIF is capped at $420 million per year. The total revenue from these two fees, without the amendments made by the Budget Act, is estimated at $23.47 billion ($19.58 billion from the passenger security service fees at $2.50 per enplanement + $3.89 billion from ASIF) over the 10-year period of analysis. Table 6 shows the breakdown of the new fee that will be allocated to offset TSA's provision of security services and Federal costs pursuant to the Budget Act's amendments to 49 U.S.C. 44940(i). --------------------------------------------------------------------------- \38\ TSA intends to make necessary conforming changes to its regulations regarding the ASIF in a separate rulemaking, targeted for publication before the October 1, 2014 effective date. Table 6--Fee Allocation ---------------------------------------------------------------------------------------------------------------- Total fees Fiscal year Fees allocated for Fees allocated for collected--$5.60 security services the General Fund per one-way trip ---------------------------------------------------------------------------------------------------------------- FY14 Q4............................................. $560,070,072 $390,000,000 $950,070,072 FY15................................................ 2,453,125,839 1,190,000,000 3,643,125,839 FY16................................................ 2,465,988,356 1,250,000,000 3,715,988,356 FY17................................................ 2,510,308,123 1,280,000,000 3,790,308,123 FY18................................................ 2,546,114,285 1,320,000,000 3,866,114,285 FY19................................................ 2,583,436,571 1,360,000,000 3,943,436,571 FY20................................................ 2,622,305,302 1,400,000,000 4,022,305,302 FY21................................................ 2,662,751,408 1,440,000,000 4,102,751,408 FY22................................................ 2,704,806,437 1,480,000,000 4,184,806,437 FY23................................................ 2,748,502,565 1,520,000,000 4,268,502,565 ----------------------------------------------------------- Total........................................... 23,857,408,958 12,630,000,000 36,487,408,958 ---------------------------------------------------------------------------------------------------------------- [[Page 35471]] TSA anticipates that there might be costs associated with each direct and foreign air carrier updating their current computer and ticket sales systems to reflect the new fee structure. TSA welcomes comments containing information on the implementation costs to industry, particularly in the following areas. Would the burden of implementing the security service fee be a one-time cost or would there be an incremental increase in annual operating and maintenance costs as well? Would there be any other costs, besides labor costs, associated with the implementation? How many hours of labor would be needed and what category of labor (and wage) would be required to implement the changes in the system? Would there be multiple laborers working on the project? Would industry rely on their internal workforce or would they outsource this work to contractors? Would industries other than carriers be impacted? If so, would these impacts be short-term, or would they have lasting effects on these indirect industries? Responses to these questions would better inform TSA on the impacts of this IFR. Alternatives Discussion For purposes of this regulatory impact analysis, TSA analyzed several alternatives when considering the impacts of this IFR. The Budget Act's amendments to the security service fee remove discretion from TSA regarding the amount of the fee to be imposed. As amended, 49 U.S.C. 44940(c) states that the fee ``shall be $5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States.'' The alternatives that TSA considered for purposes of this economic analysis are based on how the fee will be imposed. TSA was able to quantify the preferred and no action alternatives. TSA also presents a qualitative discussion and requests public comment, particularly with respect to issues related to a cap and the definition of ``stopover.'' Table 7 below summarizes the following regulatory alternatives: Alternative 1 (Preferred): Alternative 1, the preferred alternative, most closely follows the statutory mandate pursuant to the Budget Act and allows TSA to collect revenue used to offset a portion of the costs of providing aviation security services and the additional amount specified for deposit to the general fund for other purposes. The estimated revenue associated with this alternative is fully discussed in the Regulatory Impact Analysis section of this preamble (see table 4 for revenue estimates). The total undiscounted 10-year estimated fee collected is $36.49 billion. Alternative 2 (No Action): Alternative 2 involves no action; the fee structure and amounts are unchanged. As the change in fee is statutorily mandated by the Budget Act, TSA rejects the no action alternative because it would not meet the statutory mandate. Under 49 U.S.C. 44940, as amended by the Budget Act, TSA is required to collect fees as necessary to offset a portion of the appropriations to TSA for providing aviation security services (sec. 44940(a)(1)) and sufficient to deposit the specified amounts in the general fund of the Treasury (sec. 44940(i) as amended by the Budget Act). In light of the cessation of the ASIF, previously discussed, TSA would not be able to collect sufficient amounts if no action was taken. Table 7--Comparison of Alternatives ---------------------------------------------------------------------------------------------------------------- Total number of Total fee collected Alternatives Description chargeable fees (FY14 (FY14 Q4 to FY23, Q4 to FY23) undiscounted) ---------------------------------------------------------------------------------------------------------------- Alternative 1 (Preferred Statutory fee increase of 6,515,608,743......... $36,487,408,958. Alternative). $5.60 to all one-way trips (Table 4)............. (Table 4). (as established by the Budget Act). Alternative 2 (No Action).......... Maintain current fee See Table 3 for $19,578,151,270. structure of $2.50 per information on (Table 3). enplanement with a cap of chargeable $5.00. enplanements and respective fee. ---------------------------------------------------------------------------------------------------------------- TSA also assessed the possibility of using a break in travel greater or less than four hours for continental interstate and continental intrastate air transportation. The occurrence of a stopover triggers the beginning of a new ``one-way trip,'' resulting in imposition of an additional $5.60 fee on the passenger. As such, a stopover for continental interstate or continental intrastate air transportation defined as a break in travel of less than four hours could potentially lead to a larger number of fees being collected, while a stopover based on a break in travel greater than four hours (such as six or eight hours) could result in fewer fees collected, as compared to the preferred alternative. As TSA is not aware of data on the duration of breaks in travel, TSA was unable to estimate the number of one-way trips that would be affected by changes to the definition of stopovers as it affects continental interstate and intrastate air transportation, nor how this would affect fee collection. As previously noted, TSA welcomes comments on appropriate alternatives to the definition of a stopover and how any changes in this definition may impact the imposition of this fee. For example, under the definitions in this IFR, a passenger purchasing air transportation from New York to Boston, returning to New York with less than a four hour break in travel would be subject to a fee of $5.60 because the itinerary consists of a single one-way trip. If the stopover definition for continental interstate or continental intrastate air transportation is changed to require a break in travel greater than four hours, the likelihood of this occurring would increase, resulting in less revenue for the purposes intended by 49 U.S.C. 44940. As discussed above, TSA will consider and respond to comments in the final rule, as appropriate. Under the current fee structure, a fee cannot be imposed for more than two enplanements per one-way trip or four enplanements per round trip, regardless of the number of enplanements. Because the Budget Act requires TSA to impose fees based on one-way trips rather than enplanements, the cap provided for under the current fee structure is no longer valid. Under the definition of one-way trip in the IFR, the new structure is already capped at one fee per one-way trip. Furthermore, the statute does not specify a cap or direct TSA to implement a cap. As discussed, data on the duration of stopovers is unavailable, which makes estimating [[Page 35472]] possible impacts of a cap on fees difficult. TSA welcomes comment on whether or not a cap should be placed on the imposition of fees, and if so, what that cap should be. Regulatory Flexibility Act Assessment The Regulatory Flexibility Act (RFA) of 1980 \39\ requires agencies to consider the impact of their regulatory proposals on small entities, to analyze effective alternatives that minimize small entity impacts, and to make their analyses available for public comment. Small entities include small businesses, not-for-profit organizations, and small governmental jurisdictions. Individuals and States are not included in the definition of a small entity. When no notice of proposed rulemaking has first been published, no such assessment is required. Furthermore, 5 U.S.C. 553(b)(B) exempts rules from the requirements of the RFA when an agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. As discussed in the preamble, this IFR is exempt from the procedural rulemaking requirements of 5 U.S.C. 553. --------------------------------------------------------------------------- \39\ Public Law 96-354 (94 Stat. 1164; Sept. 19, 1980). --------------------------------------------------------------------------- International Trade Impact Assessment The Trade Agreement Act of 1979 \40\ prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. TSA has assessed the potential effect of this rulemaking and as TSA has determined that it does not impose significant barriers to international trade. --------------------------------------------------------------------------- \40\ Public Law 96-39 (93 Stat. 144; July 26, 1979). --------------------------------------------------------------------------- Unfunded Mandates Assessment The Unfunded Mandates Reform Act of 1995 \41\ (UMRA), is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of UMRA requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final rule that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a ``significant regulatory action.'' Before TSA promulgates a rule for which a written statement is needed, sec. 205 of UMRA generally requires TSA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of sec. 205 do not apply when they are inconsistent with applicable law. In addition, the requirements of Title II of UMRA do not apply when rulemaking actions are taken without the issuance of a notice of proposed rulemaking. For reasons discussed above, no notice of proposed rulemaking is required for this regulatory action. Accordingly, TSA has not prepared a written statement. --------------------------------------------------------------------------- \41\ Public Law 104-4 (109 Stat. 66; March 22, 1995). --------------------------------------------------------------------------- TSA has, however, analyzed the UMRA requirements as if the requirement applied and determined that this IFR does not contain a Federal mandate that may reach the threshold of expenditures for State, local, and tribal governments in the aggregate. To the extent the increased fee affects the overall economy, resulting in an unfunded mandate on the private sector, this is a result of the Budget Act's revisions to 49 U.S.C. 44940, not a result of this rulemaking. The preceding discussion provides an analysis of the associated costs. Finally, TSA has not considered any alternatives as the purpose of this rulemaking is to implement the statutorily mandated fee change from $2.50 per enplanement to $5.60 per one-way trip. International Compatibility In keeping with U.S. obligations under the Convention on International Civil Aviation, it is TSA policy to comply with International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. TSA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these regulations. The ICAO guidance document on aviation fees and charges, ICAO Document 9082 (Ninth Edition--2012), ICAO's Policies on Charges for Airports and Air Navigation Services, recommends consultations before fees are imposed on carriers. In addition, Article 12 of the Air Transport Agreement between the United States of America and the European Community and its Member States, signed on 25 and 30 April 2007, encourages consultation between the charging authority and affected carriers. As the change to the security service fee has been set by Congress and there are no additional changes to how the program is implemented by TSA, no additional consultations are required. Executive Order 13132, Federalism TSA has analyzed this IFR under the principles and criteria of E.O. 13132, Federalism. We determined that this action will not have a substantial direct effect on the States, or on the relationship between the National 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 TSA has reviewed this action for purposes of the National Environmental Policy Act of 1969 \42\ (NEPA) and has determined that this action will not have a significant effect on the human environment. This action is covered by categorical exclusion (CATEX) number A3(b) in DHS Management Directive 023-01 (formerly Management Directive 5100.1), Environmental Planning Program, which guides TSA compliance with NEPA. --------------------------------------------------------------------------- \42\ 42 U.S.C. 4321 et seq. --------------------------------------------------------------------------- Energy Impact Analysis The energy impact of the action has been assessed in accordance with the Energy Policy and Conservation Act \43\ (EPCA). We have determined that this rulemaking is not a major regulatory action under the provisions of the EPCA. --------------------------------------------------------------------------- \43\ Public Law 94-163 (89 Stat. 871; Dec. 22, 1975), as amended (42 U.S.C. 6362). --------------------------------------------------------------------------- List of Subjects in 49 CFR Part 1510 Accounting, Auditing, Air carriers, Air transportation, Enforcement, Federal oversight, Foreign air carriers, Reporting and recordkeeping requirements, Security measures. The Amendments For the reasons set forth in the preamble, the Transportation Security Administration amends part 1510 of Chapter XII of Title 49, Code of Federal Regulations to read as follows: PART 1510--PASSENGER CIVIL AVIATION SECURITY SERVICE FEES 0 1. The authority citation for part 1510 continues to read as follows: Authority: 49 U.S.C. 114, 40113, and 44940. 0 2. Revise Sec. 1510.1 to read as follows: [[Page 35473]] Sec. 1510.1 Applicability and purpose. This part prescribes a uniform fee to be paid by passengers of direct air carriers and foreign air carriers in air transportation, foreign air transportation, and intrastate air transportation originating at airports in the United States. 0 3. In Sec. 1510.3 revise the introductory text; remove the definitions of ``Administrator,'' ``Interstate air transportation,'' ``Intrastate air transportation,'' ``Origin point,'' ``Passenger enplanement,'' and ``Round trip;'' revise the definition of ``Air transportation'' and ``One-way trip;'' and, add definitions for ``Continental United States,'' ``Continental interstate air transportation,'' ``Continental intrastate air transportation,'' ``Non-continental interstate air transportation,'' ``Non-continental intrastate air transportation,'' and ``Stopover'' in alphabetical order to read as follows: Sec. 1510.3 Definitions. In addition to the definitions in Sec. Sec. 1500.3, 1503.103, and 1540.5 of this chapter, the following terms are used in this part: * * * * * Air transportation means continental interstate air transportation, continental intrastate air transportation, foreign air transportation, non-continental interstate air transportation, or non-continental intrastate air transportation. * * * * * Continental United States means the District of Columbia and the States other than Alaska and Hawaii. Continental interstate air transportation means the carriage by aircraft of persons for compensation or hire within the continental United States. Continental intrastate air transportation means the carriage by aircraft of persons for compensation or hire wholly within the same state of the continental United States. * * * * * Non-continental interstate air transportation means the carriage by aircraft of persons for compensation or hire within the United States, but outside the continental United States. Non-continental intrastate air transportation means the carriage by aircraft of persons for compensation or hire wholly within the same state, territory or possession of the United States, but outside the continental United States. * * * * * One-way trip means continuous air transportation, during which a stopover does not occur; there may be multiple one-way trips on the same air travel itinerary. * * * * * Stopover means a break in travel of more than: (1) Four (4) hours for continental interstate air transportation or continental intrastate air transportation, and (2) Twelve (12) hours for non-continental interstate air transportation, non-continental intrastate air transportation, or foreign air transportation. 0 4. Revise Sec. 1510.5 to read as follows: Sec. 1510.5 Imposition of security service fees. (a) Each direct air carrier and foreign air carrier described in Sec. 1510.9(a) shall impose a security service fee of $5.60 per one- way trip for air transportation originating at an airport in the United States. Passengers may not be charged more than $5.60 per one-way trip. (b) The security service fee must be imposed on passengers who obtained the ticket for air transportation with a frequent flyer award, but may not be imposed on any other nonrevenue passengers. 0 5. Amend Sec. 1510.9 by revising paragraphs (a) and (b) to read as follows: Sec. 1510.9 Collection of security service fees. (a) The following direct air carriers and foreign air carriers must collect security service fees from passengers on-- (1) A scheduled passenger or public charter passenger operation with an aircraft having passenger seating configuration of more than 60 seats. (2) A scheduled passenger or public charter passenger operation with an aircraft having a passenger seating configuration of less than 61 seats when passengers are enplaned from or deplaned into a sterile area. (b) Direct air carriers and foreign air carriers must collect from each passenger, to the extent provided in Sec. 1510.5, a security service fee on air transportation sold on or after 12:00 a.m. (Eastern Daylight Time) on July 21, 2014. The security service fee must be based on the air travel itinerary at the time the air transportation is sold. Any changes by the passenger to the itinerary are subject to additional collection or refund of the security service fee by the direct air carrier or foreign air carrier, as appropriate. * * * * * Dated: June 17, 2014. John W. Halinski, Deputy Administrator. [FR Doc. 2014-14488 Filed 6-17-14; 4:15 pm] BILLING CODE 9110-05-P
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