Fees for Air Traffic Services for Certain Flights Through U.S.- Controlled Airspace

SUMMARY: This document establishes fees for FAA air traffic and related

services for certain aircraft that transit U.S.-controlled airspace but

neither take off from, nor land in, the United States. This document

allows the FAA to reasonably recover the costs it incurs in performing

these services. The document also requests comments concerning the fee

schedule and the fee collection process. In addition, the FAA is

announcing a public meeting on the interim final rule to provide an

additional opportunity for public to comment.

DATES: Effective date May 19, 1997. Comments must be received by July

18, 1997.

The public meeting will be held on May 1, 1997; Registration: 8:30

a.m.; Meeting: 9:00 a.m.-5:00 p.m.

ADDRESSES: The public meeting will be held at the Federal Aviation

Administration, 800 Independence Ave., SW., Washington, DC, in the main

auditorium on the 3rd Floor. Comments on this interim final rule should

be mailed or delivered in triplicate to: Federal Aviation

Administration, Office of the Chief Counsel, Attention: Rules Docket

(AGC-200), Docket No. 28860, 800 Independence Avenue, SW., Washington,

DC 20591. Comments may also be submitted to the Rules Docket by using

the following Internet address: [email protected] Comments must

be marked Docket No. 28860. Comments may be examined in the Rules

Docket, Room 915-G on weekdays between 8:30 a.m. and 5:00 p.m., except

on Federal holidays. Written comments to the docket will receive the

same consideration as statements made at the public meeting.

FOR FURTHER INFORMATION CONTACT: Jeffrey Wharff, Office of Aviation

Policy and Plans, Federal Aviation Administration, 800 Independence

Avenue, SW., Washington, DC 20591; telephone (202) 267-7035.

Requests to present a statement at the public meeting on the Fees

for Air Traffic Services for Certain Flights Through U.S.-Controlled

Airspace interim final rule and questions regarding the logistics of

the meeting should be directed to Regina L. Jones, Federal Aviation

Administration, Office of Rulemaking (ARM-104), 800 Independence

Avenue, SW., Washington, DC 20591, telephone (202) 267-9822; fax (202)

267-5075.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested persons are invited to participate in this rulemaking by

submitting written data, views, or arguments, and by commenting on the

possible environmental, economic, and federalism-or energy-related

impact of the adoption of this interim final rule. Comments concerning

the implementation and effective date of the rule are also specifically

requested.

Comments should identify the regulatory docket and should be

submitted in triplicate to the Rules Docket address specified above.

All comments received and a report summarizing any substantive public

contact with FAA personnel on this rulemaking will be filed in the

docket. The docket is available for public inspection both before and

after the closing date for receiving comments.

The closing date for comments on the proposal [Insert date 120

after the date of publication]. This 120 day comment period is intended

to allow the international commenters sufficient time to submit

comments. In order to give the public an additional opportunity to

comment on the interim final rule, the FAA is planning a public

meeting. Because of this additional opportunity to comment on the

interim final rule, the FAA will not intend to extend the closing date

for comments.

Requests from persons who wish to present oral statements at the

public meeting on the Fees for Air Traffic Services for Certain Flight

Through U.S.-Controlled Airspace interim final rule should be received

by the FAA no later than April 25, 1997. Such requests should be

submitted to Regina L. Jones as listed in the section titled FOR

FURTHER INFORMATION CONTACT. Requests received after April 25 will be

scheduled if time is available during the meeting; however, the name of

those individuals may not appear on the written agenda. The FAA will

prepare an agenda of speakers that will be available at the meeting. To

accommodate as many speakers as possible, the amount of time allocated

to each speaker may be less than the amount of time requested. Those

persons desiring to have available audiovisual equipment should notify

the FAA when requesting to be placed on the agenda.

Before taking any final action on this interim final rule, the

Administrator will consider the comments made on or before the closing

date for comments, and the interim final rule may be changed in light

of the comments received.

The FAA will acknowledge receipt of a comment if the commenter

includes a self-addressed, stamped postcard with the comment. The

postcard should be marked ``Comments to Docket No. 28860.'' When the

comment is received by the FAA, the postcard will be dated, time

stamped, and returned to the commenter.

Public Meeting Procedures

The public meeting will be held on May 1, 1997, at the Federal

Aviation Administration, 800 Independence, Ave. S.W., Washington, D.C.,

in the main auditorium on the 3rd Floor; Registration: 8:30 a.m.;

Meeting: 9:00 a.m.--5:00 p.m.

The following procedures are established to facilitate the public

meeting on the interim final rule:

1. There will be no admission fee or other charge to attend or to

participate in the public meeting. The meeting will be open to all

persons who have requested in advance to present statements or who

register on the day of the meeting (between 8:30 a.m. and 9:00 a.m.)

subject to availability of space in the meeting room.

2. The public meeting may adjourn early if scheduled speakers

complete their statements in less time than currently is scheduled for

the meeting.

3. The FAA will try to accommodate all speakers; therefore, it may

be necessary to limit the time available for an individual or group.

4. Participants should address their comments to the panel. No

individual will be subject to cross-examination by any other

participant.

5. Sign and oral interpretation can be made available at the

meeting, as well as an assistive listening device, if requested 10

calendar days before the meeting.

6. Representatives of the FAA will conduct the public meeting. A

panel of FAA personnel involved in this issue will be present.

7. The meeting will be recorded by a court reporter. A transcript

of the meeting and any material accepted by the panel during the

meeting will be included in the public docket (Docket

[[Page 13497]]

No. 28860). Any person who is interested in purchasing a copy of the

transcript should contact the court reporter directly. This information

will be available at the meeting.

8. The FAA will review and consider all material presented by

participants at the public meeting. Position papers or material

presenting views or information related to the interim final rule may

be accepted at the discretion of the presiding officer and subsequently

placed in the public docket. The FAA requests that persons

participating in the meeting provide 10 copies of all materials to be

presented for distribution to the panel members; other copies may be

provided to the audience at the discretion of the participant.

9. Statements made by members of the public meeting panel are

intended to facilitate discussion of the issues or to clarify issues.

Because the meeting concerning the Fees for Air Traffic Services for

Certain Flights Through U.S.-Controlled Airspace is being held during

the comment period, final decisions concerning issues that the public

may raise cannot be made at the meeting. The FAA may, however, ask

questions to clarify statements made by the public and to ensure a

complete and accurate record. Comments made at this public meeting will

be considered by the FAA.

10. The meeting is designed to solicit public views on the interim

final rule. Therefore, the meeting will be conducted in an informal and

nonadversarial manner.

Availability of the Interim Final Rule

An electronic copy of this document may be downloaded using a modem

and suitable communications software from the FAA regulations section

of the Fedworld electronic bulletin board service (telephone: 703-321-

3339) or the Federal Register's electronic bulletin board service

(telephone: 202-512-1661).

Internet users may reach the FAA's webpage at http://www.faa.gov or

the Federal Register's webpage at http://www.access.gpo.gov/su__docs

for access to recently published rulemaking documents.

Any person may obtain a copy of this document by mail by submitting

a request to the Federal Aviation Administration, Office of Rulemaking,

800 Independence Avenue, SW., Washington, DC 20591, or by calling (202)

267-9677. Communications must identify the docket number of the

document.

Background

Authority to Establish Fees

The Federal Aviation Authorization Act of 1996 (the Act) directs

the Federal Aviation Administration to establish by interim final rule

a fee schedule and collection process for air traffic control and

related services provided to aircraft other than military and civilian

aircraft to the United States government or of a foreign government

that neither take off from, nor land in, the United States (49 U.S.C.

45301, as amended by Pub. L. 104-264), The Act states that the FAA may

recover up to $100,000,000 in FY 1997. Also, the Act directs the FAA to

ensure that the fees allowed by the Act are directly related to the

FAA's costs of providing the service rendered. Services for which costs

may be recovered include the costs of air traffic control, navigation,

weather services, training and emergency services that are available to

facilitate safe transportation over the United States, and other

services provided by the Administrator or by programs financed by the

Administrator to flights that neither take off nor land in the United

States.

In addition, under Title V of the Independent Offices Appropriation

Act of 1952 (31 U.S.C. 9701), the FAA has the authority to establish a

fair and equitable system for recovering full costs expended for any

service that provides a special benefit to an individual beyond those

that accrue to the general public. The Independent Offices

Appropriation Act (IOAA) provides, in pertinent part:

(a) It is the sense of Congress that each service or thing of value

provided by an agency * * * to a person * * * is to be self sustaining

to the extent possible.

(b) The head of each agency * * * may prescribe regulations

establishing the charge for a service or thing of value provided by the

agency. * * * Each charge shall be--

(1) fair; and

(2) based on--

(A) the costs to the Government;

(B) the value of the service or thing to the recipient;

(C) public policy or interest served; and

(D) other relevant facts.

This statute has been reviewed several times by the Supreme Court

and what is permissible under it is well defined. This statute must be

followed in establishing fees unless another statute specifically

authorizes fees in lieu of what is generally authorized under 31 U.S.C.

9701. The fees in this interim final rule are established under 49

U.S.C. 45301 in conjunction with 31 U.S.C. 9701.

Office of Management and Budget (OMB) Guidance

Office of Management and Budget (OMB) Circular No. A-25, User

Charges, revised July 8, 1993, establishes guidelines for Federal

agencies to establish fees for Government services. The Circular covers

all Federal activities that convey special benefits to recipients

beyond those accruing to the general public. The objectives of OMB

Circular A-25 are to ensure that the Government provision of special

goods or services to specific recipients be self-sustaining. The FAA

has followed the OMB guidelines in developing this interim final rule

as it applies to these fees.

The Interim Final Rule

Beginning sixty days after the publication of the interim final

rule, the FAA will assess a fee for air traffic and related services

provided to users of aircraft (both commercial and general aviation)

that transit U.S.-controlled airspace but do not take off or land in

the United States. The rule does not apply to military and civil

aircraft operated by the United States government or by a foreign

government.

For the purpose of this rulemaking the U.S.-controlled airspace

includes both U.S. sovereign airspace (hereafter ``domestic airspace'')

and airspace allocated to the United States by the International Civil

Aviation Organization (hereafter ``oceanic airspace''). Canada-to-

Canada overflight operations are defined (hereafter ``Canada-to-

Canada'') as flights, conducted by aircraft, that take off and land in

Canada without intermediate stops outside Canada that operate in U.S.-

controlled airspace. Commercial users are defined as those operators

whose primary purpose is to provide passenger and/or cargo air

transportation for compensation or hire. General aviation users are

defined as those operators who do not provide passenger and/or cargo

transportation for compensation or hire. Furthermore, in this rule

general aviation users are divided into two groups: General aviation

users operating piston-powered aircraft and general aviation users

operating turbine-powered aircraft. General aviation turbine-powered

aircraft include both turboprop and turbojet aircraft.

Operators of aircraft that transit U.S.-controlled airspace but do

not land in or depart from the United States currently contribute

nothing financially to the provision of air traffic services (ATS).

This is despite the fact that they use ATS and other services that

impose

[[Page 13498]]

costs on the U.S. air traffic control (ATC) system. Congress has

determined that these users should bear a portion of the cost of those

services.

The air transportation environment has changed over the past

decades with the advent of increasing numbers of long range aircraft

that fly at high altitudes far above areas of high density air traffic.

The use of these aircraft and the routes they are able to fly have

greatly increased the efficiency of air transportation. Although these

overflight operations do not generally enter areas of high density air

traffic, they do use FAA air traffic and related services.

Operators of overflight aircraft benefit from the FAA's provision

of ATS in several ways. First, and most importantly, FAA's ATS enhance

safety through air traffic control, navigation, and communications

services. Second, flight through U.S.-controlled airspace provides

optimized routing for long distance aircraft that is of great value to

the users of these aircraft.

The level of ATS and other services that is actually provided to

operators of overflights depends, in part, on the portions of U.S.-

controlled airspace such flights transit. These services can include

communications, navigation, radar surveillance, emergency services, and

flight information services (flight plan filing, weather briefing, and

others). For aircraft transiting U.S.-domestic airspace, Air Route

Traffic Control Centers (ARTCCs) provide separation by means of radar

surveillance (if they are operating under instrument flight rules or in

airspace above 18,000 feet). Also, these flights generally use

navigational aids and radio communication with ARTCCs.

For aircraft transiting oceanic airspace, where radar surveillance

and navigational aids are not available, navigation is generally

conducted by on-board systems. Aircraft separation, however, is

provided under procedural control, under which flights report their

position to an air traffic controller each time they fly over a

specified reporting point.

The FAA estimates that approximately 213,000 non-public flights

transit U.S.-controlled airspace without landing or taking off annually

(See the Analysis of Overflights Costs and Pricing that has been placed

in the public docket). Air carriers comprise over 210,000 of these

flights and general aviation about 3,000.

The total cost to the FAA associated with all overflights is

projected to be approximately $97 million for FY 1997, including the

cost of collecting the fees. This amount represents the sum of the

separate costs for providing air traffic control services to aircraft

flying through domestic and oceanic airspace.

Charging overflights for ATS is accepted in the international

arena. The International Civil Aviation Organization (ICAO) states that

``where air navigation services are provided for international use, the

providers may require the users to pay their share of the costs. * * *

(Statements by the Council to Contracting States on Charges for

Airports and Air Navigation Services, Paragraph 32 (Doc. 9082/4)).

Further, paragraph 42 of Doc. 9082/4 notes that ``providers * * * may

require all users to pay their share of the costs regardless of whether

or not utilization takes place over the territory of the provider

state.'' (Document 9082/4 has been placed in the docket.)

An important factor to consider when constructing an overflight fee

is the extent that it will alter user behavior. The FAA believes an

inappropriately constructed fee could encourage some users to reroute

or otherwise avoid ATS. Excessive avoidance of air traffic control

services could potentially reduce air traffic safety. ATS reduces

hazards associated with adverse weather conditions and mid-air

collisions and enhances the ability to rapidly provide search and

rescue services. The FAA believes that some users are more likely to

change their behavior in a manner that diminishes safety. Commercial

users arguably are less likely to cease use of ATS and other services

than general aviation users. Most commercial aircraft are designed to

operate more efficiently at altitudes in excess of 18,000 feet. All

operations at altitudes at or above 18,000 feet within the United

States and its territories must be under air traffic control. Also, to

some extent, commercial users are able to pass the overflight fee on to

their passengers or cargo customers. Many general aviation users, on

the other hands usually operate at altitudes less than 18,000 feet and

bear the entire burden of the fee. Consequently, general aviation users

are more likely to avoid ATS and other related services if the cost of

these services are high relative to the aircraft's operating costs.

This may be particularly true for general aviation aircraft users that

transit domestic airspace or are involved in inter-island flights in

the Caribbean or Pacific airspace. These user may elect to avoid using

ATS.

In fact, using U.S. estimates of hourly variable operating costs

for general aviation piston-powered and turbine-powered aircraft and

assuming average cruising speeds of 130 kts and 300 kts, a fee

consistent with full-cost recovery (as derived below) could represent a

significant cost to these users. (Estimates of U.S. variable operating

costs were derived from the ``all other category'' reported in Tables

23 and 25-B of the ``Economic Values for Evaluation of Federal Aviation

Administration Investment and Regulatory Program'', which can be found

in the docket. Cost figures were adjusted to reflect 1997 dollars.) On

a per-mile base, the full-cost overflight fee is approximately 144% of

the variable operating cost for piston-powered aircraft and

approximately 48% of the variable operating cost for turbine-powered

aircraft.

In addition, an examination of the cost elasticity estimates for

air traffic services suggests that general aviation users are much more

responsive than commercial users to a change in the cost of receiving

ATS. The ATS cost elasticities are discussed as part of the Analysis of

Overflights Costs and Pricing, which can be found in the docket. These

elasticity estimates measure the demand responsiveness (i.e., the

propensity to change the amount consumed of ATS) of the user to a

change in the cost of receiving ATS. In particular, the general

aviation piston-powered aircraft cost elasticity is approximately 18

times larger than the cost elasticity estimate for commercial aircraft.

Similarly, the general aviation turbine-powered aircraft cost

elasticity is approximately 5 times larger than the cost elasticity

estimate for commercial aircraft.

Because of the concern that users may change their behavior in a

manner inconsistent with safety, the FAA has established fees for

certain users of ATS services based on the statutory requirements of

cost recovery balanced against its primary responsibility of promoting

air traffic safety.

Defer Charging Canada-to-Canada Overflight Operations

Currently, it is cost effective for many Canada-to-Canada

operations to transit U.S.-controlled airspace. Routing through U.S.-

controlled airspace occurs because it is either the shortest route or

it offers the most favorable flight conditions; both reduce operator

costs. Canada currently has an overflight charge for aircraft that

transit Canadian-controlled airspace. With the exception by flights of

aircraft that weigh more than 200 tons and that land or take off in

Alaska, domestic U.S. aircraft operations have been temporarily

exempted from this charge in order to allow time for U.S. and Canadian

consultation. NAV CANADA, a non-share capital corporation which owns,

[[Page 13499]]

manages, and operates Canada's civil air navigation system, is expected

to implement a Canadian enroute charge by November 1, 1997.

If the FAA were to impose the overflight charge on these Canada-to-

Canada operations, it is likely that a significant number of Canada

overflights would divert to movement through Canadian-controlled

airspace. NAV CANADA through informal, high-level, correspondence and

meetings with the FAA regarding general principles of overflight

charges and cross-border ATC operational issues, has expressed concern

that charging Canada-to-Canada overflights prior to the implementation

of the Canadian enroute charge would temporarily increase the workload

at Canadian air control centers and could adversely impact existing

bilateral agreements regarding U.S. air traffic control of certain

Canadian airspace. Meeting records and correspondence have been placed

in the docket.

Contined maintenance of U.S. control of this airspace is important

for the optimized routing for a significant number of U.S. domestic

aircraft operations. To allow time for U.S. Canadian consultation, the

FAA has chosen to offer charging Canada-to-Canada overflights until

October 1, 1997.

The Overflight Fee

As noted above, the Federal Aviation Authorization Act of 1996

directs the Federal Aviation Administration to establish a fee schedule

and collection process for air traffic control and related services

provided to aircraft other than military and civil aircraft operated by

the United States government or by a foreign government that neither

take off from, nor land in, the United States. The Act further directs

the FAA to issue the initial fee schedule and associated collection

process as an interim final rule, to ask for public comment, and to

issue a subsequent final rule.

The Act requires that fees be directly related to the FAA's cost of

providing the services rendered. Furthermore, the Conference Report for

the Act states ``* * * assuming similar costs of serving different

carrier and aircraft types, the fee may not vary based on factors such

as aircraft seating capacity or revenue derived from passenger fares''

(Congressional Record, September 26, 1996, H11316). Consistent with

statutory direction, the sense of Congress as documented in the

Conference Report, and FAA's aviation safety mission, the FAA has

adopted a tiered charging system.

Commercial users will be charged fees consistent with the principle

of full cost recovery; general aviation users will be charged fees less

than the recovery of full cost in order to minimize any potential

safety risks. This method of charging will not result in the cross-

subsidization of one user group by another. This charging system is

also consistent with ICAO principles. ICAO notes that in determining

the costs to be recovered from users ``Governments may choose to

recover less than full costs in recognition of local, regional, or

national benefits'' (Doc. 9082/4, paragraph 35). The FAA believes that

the fees for general aviation should be set so that general aviation

users will continue to use air traffic control services when such

services enhance safe and efficient travel. Consequently, the fee for

general aviation piston-powered aircraft users is 1/18th that of the

full cost of service; and the fee for general aviation turbine-powered

aircraft is 1/5th that of the full cost of service.

The overflight fee is computed based on distance flown through

U.S.-controlled airspace. Separate computations are made for services

provided in domestic airspace and in oceanic airspace in order to

reflect the different costs of providing services in each of these

environments. For any city-pair route, the distance within domestic

airspace and within oceanic airspace is used, based on calculation of

the great circle route (GCR) between the actual point of entry and the

actual point of exit from each category of airspace. The use of this

procedure for computing distance protects users within U.S.-controlled

airspace from routing patterns created by unusual events, such as

traffic congestion, weather situations, and other circumstances. Total

fees assessed for using each type of airspace (domestic and oceanic) do

not exceed the costs of providing services within that type of

airspace.

To calculate the fee in a manner consistent with full-cost recovery

two factors are taken into account: (1) the cost of providing air

traffic control services for overflights in oceanic and domestic

airspace, and (2) the distances flown in U.S.- controlled airspace.

Cost pools were estimated for oceanic and domestic airspace as

described and documented in the Analysis of Overflights Costs and

Pricing, which has been placed in the docket. Each cost pool consists

of incremental ATS and allocated fixed and common costs associated with

providing air traffic control services in each airspace.

Incremental ATS costs, which include, but are not limited to,

controller staffing requirements and training, were determined by

multiplying the number of aircraft flying through a particular airspace

by the incremental rate. The allocated fixed and common costs were

assigned to each cost pool based on the pool's proportion of

incremental cost. The allocated fixed and common costs associated with

ATS and applied to overflights represent the ``Ramsey allocation'' of

FAA's total fixed and common costs to the ATS line of business. Radio

navigation is an example of a fixed cost. Program support,

administration, and capital costs are examples of common costs. A

detailed discussion of the cost allocation procedure is outlined in the

Analysis of Overflights Costs and Pricing. For FY 1995 the estimated

cost pools for overflights of U.S.-controlled oceanic and domestic

airspace were $42.2 million and $47.5 million, respectively.

A charge is assessed for each 100 nautical miles flown in oceanic

and domestic airspace. The oceanic and domestic charges per one hundred

nautical miles are $69.50 and $78.90, respectively (expressed in 1997

dollars). These figures were derived in two steps. First, each FY 1995

cost pool was divided by the total number of overflight miles

associated with the pool as calculated according to the origination/

destination great circle route (OD-GCR). Currently, the OD-GCR mileage

represents the best available flight data associated with these cost

pools. Reliable GCR entry and exit data will become available; at which

time, the unit charges will be adjusted to reflect historical GCR entry

and exit data. OD-GCR and GCR entry and exit mileage are not expected

to differ significantly in total for the year. Second, each fee was

adjusted to capture the cost of collection and to reflect projected

cost increases between 1995 and 1997. Unit charges derived in this

manner are free from cross-subsidization. The collection assumes a one-

time development cost of $2.1 million amortized over a two year period

and an annual operating cost of $1.0 million. Projected cost increases

are based on the ``all other'' deflation estimates published in the

1997 Budget of the United States Government (page 160, Table 10.1).

The fee for users of a commercial aircraft overflight is calculated

as follows:

Rij=$69.50*DOij+$78.90*DDij,

where

Rij=the fee charged to commercial aircraft flying between city i

and city j,

[[Page 13500]]

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in domestic U.S. airspace expressed in

hundreds of nautical miles for aircraft flying between city i and city

j.

The fee for users of a general aviation turbine-powered aircraft

overflight is calculated as

GATRij=($69.50/5)*DOij+($78.90/5)*DDij

or

GATRij=$13.90*DOij+$15.78*DDij,

where

GATRij=the fee charged to general aviation turbine-powered

aircraft flying between city i and city j,

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in domestic U.S. airspace expressed in

hundreds of nautical miles for aircraft flying between city i and city

j.

The fee for users of a general aviation piston-powered aircraft

overflight is calculated as

GAPRij = ($69.50/18) *DOij + ($78.90/18)*DDij

or

GAPRij=$3.86*DOij+$4.38*DDij,

where

GAPRij=the fee charged to general aviation piston-powered aircraft

flying between city i and city j,

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in domestic U.S. airspace expressed in

hundreds of nautical miles for aircraft flying between city i and city

j.

These formulas assume that actual entry and exit data are available for

individual flights in U.S.-controlled airspace. If not, best available

flight data will be used.

All fees are designed to charge both direct and indirect costs to

users in a logical and fair manner as required by IOAA. Because users

of general aviation piston-powered aircraft are likely to be extremely

price sensitive with potential impacts on the consumption of safety

related services, and because their use of ATS appears minimal, general

aviation users are charged a discounted fee (less than full-cost

recovery). Also, general aviation piston-powered aircraft users

transiting less than 250 nautical miles of U.S.-controlled airspace

will not be charged a fee. The distance based exemption reflects a

concern for administrative efficiency. The cost of collecting from this

user group for distances less than 250 miles is likely to exceed any

fee incurred.

The fees in this interim final rule will be reviewed at least once

every 2 years, in accordance with OMB Circular A-25, and adjusted to

reflect changes in costs. The first review is scheduled one year after

the date of publication of the interim final rule. Fees will be

adjusted to reflect historical GCR entry and exit mileage within U.S.-

controlled airspace.

Based on the OD-GCR, the following table illustrates the tiered fee

schedule.

Representative Fee Schedule for International Overflights

--------------------------------------------------------------------------------------------------------------------------------------------------------

Domestic airspace Oceanic airspace

Origination Destination Aircraft type ------------------------------------------------------------ Total Total

Rate Miles Charge Rate Miles Charge miles fee \3\

-----------------------------------------------------------------------------\1\-------\2\-------\3\-------\1\-------\2\-------\3\--------\2\-----------

Canada: Canada:

YUL Dorval Int'l. Airport, YHZ Halifax, Commercial......... $78.90 149 $118 $69.50 ........ ......... 149 $118

Montreal. Nova Scotia.

YYZ Pearson Airport, YYC Calgary, Commercial......... 78.90 644 508 69.50 ........ ......... 644 508

Toronto, Ontario. Alberta.

Canada: Canada:

YUL Dorval Int'l. Airport, YHZ Halifax, GA Piston.......... 4.38 149 7 3.86 ........ ......... 149 None

Montreal. Nova Scotia.

YYZ Pearson Airport Toronto, YYC Calgary, GA Piston.......... 4.38 644 28 3.86 ........ ......... 644 28

Ontario. Alberta.

Canada: Canada:

YUL Dorval Int'l. Airport, YHZ Halifax, GA Turbine......... 15.78 149 24 13.90 ........ ......... 149 24

Montreal. Nova Scotia.

YYZ Pearson Airport Toronto, YYC Calgary, GA Turbine......... 15.78 644 102 13.90 ........ ......... 644 102

Ontario. Alberta.

Canada: Mexico:

YVR International Airport, SJD San Jose Commercial......... 78.90 1,084 855 69.50 ........ ......... 1,084 855

Vancouver. Del Cabo.

Asia: Canada:

NRT Narita Airport, Tokyo, YYC Calgary, Commercial......... 78.90 1,938 1,590 69.50 470 $327 2,408 1,917

Japan. Alberta.

Europe: Caribbean:

AMS Amsterdam, Netherlands.. MBJ Montego Commercial......... 78.90 ........ ......... 69.50 2,118 1,472 2,118 1,472

Bay, Jamaica.

Europe: Mexico:

LHR Heathrow Airport London, Mexico City.... Commercial......... 78.90 1,515 1,195 69.50 256 178 1,771 1,373

Eng.

Asia: Pacific:

SEL Seoul, South Korea...... Sydney, Commercial......... 78.90 ........ ......... 69.50 1,111 772 1,111 772

Australia.

--------------------------------------------------------------------------------------------------------------------------------------------------------

\1\ Rates are expressed per 100 nautical miles.

\2\ Miles are nautical miles.

\3\ Charges and total fee are rounded to the nearest dollar.

Fee Collection Process

The FAA has established and maintains data from several sources,

including but not limited to, flight plans and radar/radio data, that

identifies the point of entry and exit, aircraft registration number

and the type of aircraft for all aircraft entering U.S.-controlled

airspace. Information will be extracted from the database and used,

along with the fee formula, to compute each fee.

The FAA will bill users by sending a monthly invoice. Affected air

carrier users are requested to designate and submit to the FAA the name

and address of a U.S. agent for billing. All other users are requested

to submit a billing address to the FAA. Users not providing a billing

address will be billed at the address of record of the aircraft owner

as maintained in the country where the aircraft is registered.

As provided in Sec. 187.15(d), monthly remittance of fees of $1,000

or more are to be paid by electronic funds transfer. Monthly

remittances below $1,000 may be paid by electronic funds transfer,

check, money order, credit card, or draft. All payments must be in U.S.

currency.

Invoices that become delinquent will be processed according to 49

CFR part 89.

Comments Requested

As noted above, the FAA seeks comments on the interim final rule,

specifically, the fee schedule, formulas used to determine the cost per

unit, the associated collection process, and the scope of services for

which costs will be recovered. Commenters should be aware, however,

that the FAA does not have discretion to make changes to some aspects

of the fee that were specifically mandated by Congress.

[[Page 13501]]

The FAA is aware of several different approaches used throughout

the world by civil aviation authorities in constructing overflight

fees. ICAO identifies several parameters that, in principle, can be

used to construct an ATS fee. These parameters include distance flown,

aircraft weight, and time-in-system. (Doc. 9161/2, paragraphs 73, 74,

and 78). A fee system can be designed to recover some or all of the

costs of providing air traffic control services. For practical reasons,

such as billing efficiency, managing traffic patterns, equity, or

issues related to safety, a civil aviation authority may prefer one

changing method over another. A civil aviation authority may also

decide to recover only a portion of the total cost of providing ATS

from particular user groups. Below are two different approaches to the

fee system that the FAA has adopted in this interim final rule.

Alternative Approaches

One approach that was not adopted by the FAA is to base the fee on

distance flown and aircraft weight, though the use of weight when

viewed as a measure of value of the service to the user is not

consistent with the FAA's current authority. In general, the following

formula could be used to establish an ATS charge under this approach:

R=T*D*P,

where

R=fee,

T=unit rate,

D=great circle distance flown expressed in hundreds of nautical miles,

P=a proportional measure of aircraft weight (e.g., the square root of

weight).

As with the fee structure adopted by the FAA, two separate unit

rates could be developed to reflect the cost of providing ATS and other

services in both domestic and oceanic airspace. Given the appropriate

choice of unit rates, this approach is also consistent with full-cost

recovery. This approach not only reflects the cost of providing ATS but

also incorporates users' ability/willingness to pay. That is, civil

aviation authorities are able to charge for ATS based on the value of

service received. Heavier (lighter) aircraft users pay more (less) for

the use of ATS. Proponents of this approach suggest that a distance-

and weight-based fee will encourage the additional use of ATS and other

safety related services while permitting full cost recovery by the

provider. Consequently, the air transportation community will benefit,

as a whole, from a safer and more efficient use of airspace without the

provider subsidizing any user (in contrast, the fee described in the

interim final rule results in subsidization of general aviation users

by the provider).

Internationally, this option has had some acceptance. Eurocontrol

(The European Organization for the Safety of Air Navigation) uses this

formula to charge civil aircraft flying either for a part of or for the

whole flight under Instrument Flight Rules and to military aircraft

flying as General Air Traffic. The weight component is taken to be the

square root of the maximum take-off weight of an aircraft expressed in

metric tons divided by 50. This approach could not be adopted by the

FAA unless Congress specifically authorized its use.

Another approach which was not adopted by the FAA is to base the

fee on an aircraft's time-in-system. In principle, a time-in-system

approach would provide a highly accurate measure of the amount of ATC

services used. Higher speeds mean less time spent in a given airspace

and therefore a reduction in the service provided. A charging mechanism

based on this approach could take the following form:

R=T*Z,

where

R=fee,

T=unit rate,

Z=time in system.

A time-in-system approach, however, favors faster aircraft and may

impose a heavier fee burden on slower users. Although this approach

could be used to recover the full cost of ATS, it appears to have

several shortcomings that must first be resolved. First, it requires

actual flight data for an aircraft transiting controlled airspace or

some estimated time based on an aircraft's speed and distance flown in

controlled airspace. Second, it can be argued that ATC systems were

primarily developed to serve the faster commercial users and not slower

general aviation users. Slower aircraft should therefore not be

required to pay proportionally more for ATS. Third, rerouting due to

weather conditions or excessive air traffic can significantly impact a

time-in-system fee. To date, there is no universally accepted standard

for measuring time-in-system.

Commenters are welcome to address any different approaches that

they believe would be consistent with the purposes and limitations of

the Act and the IOAA.

Comments Concerning Emergency Services

Under the current fee formula, the only emergency service costs

recovered are those costs associated with enroute center coordination

of these services. Costs associated with the provision of alternative

landing sites, search and rescue services, and crash fire rescue are

not recovered. Such costs are borne by the FAA through the AIP program,

by the U.S. Coast Guard, by other military services, and by the

airports themselves. At the finalization of the rule, commenters should

be advised that the FAA is considering an adjustment to the fee formula

to include such costs. Commenters are encouraged to submit comment on

this adjustment and to provide suggestions regarding the means by which

the fee should be adjusted.

Comments From U.S. Entities

Additionally, the FAA is requesting comment from any small U.S.

entity who believes that this rule will create a significant economic

impact on their operations. As detailed below, the FAA does not believe

there will be any such impact.

Regulatory Evaluation Summary

Changes to Federal regulations must undergo several economic

analyses. First, Executive Order 12866 directs 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 requires agencies to analyze the

economic effect of regulatory changes on small entities. Third, the

Office of Management and Budget directs agencies to assess the effect

of regulatory changes on international trade.

This section summarizes the FAA's economic and trade analyses,

findings, and determinations in response to these requirements. The

complete economic and trade analyses are contained in the docket.

Analysis of Benefits

The fees would reimburse the FAA for the actual cost of services

provided to commercial users and a portion of the cost of services

provided to general aviation users in the manner authorized by

Congress, so that the beneficiaries of this service, rather than the

taxpayer, would pay for the service provided by the FAA. Moreover, the

fees being imposed by the FAA cover no more than the costs of providing

these service. The FAA believes that the fees are equitable.

A fee will establish a mechanism through which those who use a

service provide the majority of resources necessary to fund the service

that is provided. This will result in a more efficient allocation of

scarce societal and FAA resources. The efficient allocation

[[Page 13502]]

of resources will benefit society at large, because more resources will

become available for other service demanded by the public.

On an annualized basis for 1997, the overflight fee is expected to

generate approximately $60 million in fee revenue.

Cost of Collection of User Fees to the FAA

The FAA estimates a one-time development cost of $2.1 million

amortized over a two-year period and an annual operating cost of $1.0

million.

The costs of collection of the fee is relatively small compared to

the revenue that can be generated. The cost of collection along with

the fee charges will be reviewed at least once every 2 years and

adjusted either upward or downward in order to reflect the current

costs of performing the services covered. The first review is scheduled

one year after the date of publication of the interim final rule. Fees

will be adjusted to reflect historical GCR entry and exit mileage

within U.S.-controlled airspace.

Regulatory Flexibility Determination

The Regulatory Flexibility Act of 1980 (RFA), as amended, was

enacted by Congress to ensure that small entities are not unnecessarily

and disproportionately burdened by Government regulations. The RFA

requires agencies to specifically review rules that may have a

``significant economic impact on a substantial number of small

entities.''

The FAA's criteria for ``a substantial number'' are a number which

is not less that 11 and which is more than one third of the small

entities subject to this rule. For all carriers, a small entity has

been defined as one which owns, but does not necessarily operate, nine

or fewer aircraft. The FAA's criteria for ``a significant impact'' are

as follows: At least $4,900 per year for an unscheduled air carrier,

$70,100 per year for a scheduled carrier having airplanes with only 60

or fewer seats, and $125,500 per year for a scheduled carrier having an

airplane with 61 or more seats.

Using these criteria and the data available at this time, the FAA

has determined that the interim final rule will not have a significant

economic impact on a substantial number of small U.S. entities.

However, since this is a rule issued without notice, the FAA is seeking

comment on this issue in the comment section of the preamble. If

comments are received that indicate a significant economic impact on a

substantial number of small U.S. entities, the final rule will be

revised.

International Trade Impact

The overflight provisions would primarily affect foreign airlines.

The rule may have a favorable competitive impact on U.S. air carriers.

Currently U.S. airlines are at a comparative disadvantage with foreign

airlines because all airlines (U.S. and foreign) must pay user fees to

transverse other countries' airspace while foreign airlines do not have

to pay a fee to transverse U.S. controlled airspace. The interim final

rule would enhance the competitiveness of domestic firms.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (the Reform

Act), enacted as Pub. L. 104-4 on March 22, 1995, requires each Federal

agency, to the extent permitted by law, to prepare a written assessment

of the effects of any Federal mandate in a proposed or final agency

rule that may result in the expenditure by State, local, and tribal

governments, in the aggregate, or by the private sector, of $100

million or more (adjusted annually for inflation) in any one year.

Section 204(a) of the Reform Act, 2 U.S.C. 1534(a), requires the

Federal agency to develop an effective process to permit timely input

by elected officers (or their designees) of State, local, and tribal

governments on a proposed ``significant intergovernmental mandate.'' A

``significant intergovernmental mandate'' under the Reform Act is any

provision in a Federal agency regulation that will impose an

enforceable duty upon State, local, and tribal governments, in the

aggregate, of $100 million (adjusted annually for inflation) in any one

year. Section 203 of the Reform Act, 2 U.S.C. 1533, which supplements

section 204(a), provides that before establishing any regulatory

requirements that might significantly or uniquely affect small

governments, the agency shall have developed a plan that, among other

things, provides for notice to potentially affected small governments,

if any, and for a meaningful and timely opportunity to provide input in

the development of regulatory proposals.

This rule does not contain any Federal intergovernmental mandates,

but does contain a private sector mandate. However, because

expenditures by the private sector will not exceed $100 million

annually, the requirements of Title II of the Unfunded Mandates Reform

Act of 1995 do not apply.

Federalism Implications

The regulations do not have substantial direct effects on the

states, on the relationship between national government and the states,

or on the distribution of power and responsibilities among various

levels of government. Thus, in accordance with Executive Order 12612,

it is determined that such a regulation does not have federalism

implications warranting the preparation of a Federalism Assessment.

International Civil Aviation Organization and Joint Aviation

Regulations

In keeping with U.S. obligations under the Convention on

International Civil Aviation, it is FAA policy to comply with ICAO

Standards and Recommended Practices (SARP) to the maximum extent

practicable. For this document, the FAA has reviewed the SARP of Annex

6, Parts I and II, applicable to foreign commercial air transportation

operations and foreign general aviation operations respectively. The

FAA has determined that this interim final rule will not present any

differences with ICAO guidance.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507(d)), there are no requirements for information collection

associated with this rule.

Justification For No Public Notice and Comment

The Administrative Procedure's Act, 5 U.S.C. 553 et. seq., requires

that prior to the issuance of a final rule, an agency will give notice

to the public and seek comment on a proposed rule. This interim final

rule is issued without public notice and comment pursuant to subsequent

and specific authority. This authority is found at 49 U.S.C.

45301(b)(2), which requires that this interim final rule be issued

before public comment is sought. A final rule will be issued subsequent

to this public comment.

Conclusion

The FAA has determined that this regulation: (1) is a significant

rule under Executive Order 12866; and (2) is a significant rule under

Department of Transportation Regulatory Policies and Procedures (44 FR

11034; February 26, 1979). Also, for the reasons stated under the

headings ``Trade Impact Statement'' and ``Regulatory Flexibility

Determination,'' the FAA certifies that the interim final rule will not

have a significant economic impact on a substantial number of small

entities. A

[[Page 13503]]

copy of the full regulatory evaluation is filed in the docket and may

also be obtained by contacting the person listed in FOR FURTHER

INFORMATION CONTACT.

List of Subjects in 14 CFR Part 187

Administrative practice and procedure and Air transportation.

The Amendment

The Federal Aviation Administration amends part 187 of the Federal

Aviation Regulations [14 CFR part 187] as follows:

PART 187--FEES

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

follows:

Authority: 31 U.S.C. 9701; 49 U.S.C. 106(g), 40104-40105, 40109,

40113-40114, 44702, 45301-45303.

2. Section 187.1 is amended by adding the following sentences to

the end of the section to read as follows:

Sec. 187.1 Scope.

* * * Appendix A to this part prescribes the methodology for

computation of fees for certification services performed outside the

United States. Appendix B to this part prescribes the fees for certain

aircraft flights that transit U.S.-controlled airspace.

3. Section 187.15 is amended by adding new paragraph (d) to read as

follows:

Sec. 187.15 Payment of fees.

* * * * *

(d) The fees described in appendix B of this party are payable to

the Federal Aviation Administration in U.S. currency. Remittance of

fees of $1,000 or more are to be paid by electronic funds transfer.

Remittances below $1,000 may be paid by electronic funds transfer,

check, money order, credit card, or draft.

4. Part 187 is amended by adding new appendix B to read as follows:

Appendix B to Part 187--Fees for Air Traffic Services for Certain

Flights Through U.S-Controlled Airspace

(a) Applicability. Except as provided in paragraph (b) and (c)

of this appendix, this appendix applies to any person who conducts a

flight through U.S.-controlled airspace that does not include a

landing or takeoff in the United States. U.S.-controlled airspace

includes both U.S. sovereign airspace (hereafter ``domestic

airspace'') and airspace allocated to the United States by the

International Civil Aviation Organization (hereafter ``oceanic

airspace'').

(b) Government flights. This appendix does not apply to any

military or civil aircraft operated by the United States government

or by any foreign government.

(c) Deferral of Overflight Charges. This appendix will not apply

to aircraft that take off and land in Canada without intermediate

stops outside Canada that operate in U.S.-controlled airspace prior

to October 1, 1997.

(d) Services. Persons covered by paragraph (a) of this appendix

shall pay a fee for the use of air traffic control services and

associated services including but not limited to the following:

(1) Air traffic management.

(2) Communications.

(3) Navigation.

(4) Radar surveillance, including separation services.

(5) Flight information services, such as flight plan filing, and

weather briefings.

(6) Procedural control.

(7) Emergency services and training.

(e) Methodology for the Computation of fees.

(1) For the use of any of the services listed in paragraph (d)

of this appendix, the fee is computed based on user type and

distance flown. Distance flown is based on the great circle route

(GCR) for the actual point of entry and the actual point of exit of

U.S.-controlled airspace. Fees are assessed using the methodology

presented in paragraph (d) (2), (3), and (4) of this appendix. Where

actual entry and exit points are not available, the best available

flight data will be used.

(2) For commercial users a fee is assessed for each 100 nautical

miles flown in U.S-controlled airspace. Commercial users are defined

as those operators whose primary purpose is to provide passenger

and/or cargo air transportation for compensation or hire. Separate

calculations are made for transiting domestic and oceanic airspace.

The total fee charged for an overflight between any two cities is

equal to the sum of these two charges. Expressed in 1997 dollars,

this relationship is summarized as

Rij=$69.50*DOij+$78.90*DDij,

where

Rij=the fee charged to commercial aircraft flying between city

i and city j,

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in domestic U.S. airspace expressed in

hundreds of nautical miles for aircraft flying between city i and

city j.

(3) for a general aviation user of turbine-powered aircraft, the

total fee charged between any two cities (expressed in 1997 dollars)

is calculated as

GATRij=$13.90*DOij+$15.78*DDij,

where

GATRij=the fee charged to general aviation turbine-powered

aircraft flying between city i and city j,

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in U.S.-controlled domestic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j.

A general aviation user of turbine-powered aircraft is defined

as those operators who do not provide passenger and/or cargo

transportation for compensation or hire.

(4) For a general aviation user of piston-powered aircraft, the

total fee charged between any two cities (expressed in 1997 dollars)

is calculated as

GAPRij=$3.86*DOij+$4.38*DDij

where

GATRij=the fee charged to general aviation piston-powered

aircraft flying between city i and city j,

DOij=distance traveled in U.S.-controlled oceanic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j,

DDij=distance traveled in U.S.-controlled domestic airspace

expressed in hundreds of nautical miles for aircraft flying between

city i and city j.

A general aviation user of piston-powered aircraft is defined as

those operators who do not provide passenger and/or cargo

transportation for compensation or hire.

(5) General aviation users of piston-powered aircraft traversing

less than 250 nautical miles of U.S.-controlled airspace will not be

charged a fee under this appendix.

(f) Billing and payment procedures.

(1) Billing. The FAA will send an invoice to each user that is

covered by this appendix. Users will be billed at the address of

record in the country where the aircraft its registered, unless a

billing address is otherwise provided.

(2) Payment. Payment shall be made by one of the methods

described in Sec. 187.15.

(g) Review of fees. The fees prescribed in this appendix will be

reviewed at least once every 2 years, at the beginning of the fiscal

year, and adjusted either upward or downward in order to reflect the

current costs of performing the services covered by this appendix.

Issued in Washington, DC, on March 14, 1997.

Barry L. Valentine,

Acting Administrator.

[FR Doc. 97-6980 Filed 3-17-97; 11:23 am]

BILLING CODE 4910-13-M