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Passenger Facility Charge Program, Debt Service, Air Carrier Bankruptcy, and Miscellaneous Changes
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: February 1, 2006 (Volume 71, Number 21)]
[Proposed Rules]
[Page 5188-5200]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01fe06-15]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 158
[Docket No. FAA-2006-23730; Notice No. 06-01]
RIN 2120-AI68
Passenger Facility Charge Program, Debt Service, Air Carrier
Bankruptcy, and Miscellaneous Changes
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: This action proposes to change the passenger facility charge
program to add more eligible uses for revenue, protect such revenue in
bankruptcy proceedings, and eliminate charges to passengers on military
charters. These proposed actions respond to the Vision 100--Century of
Aviation Reauthorization Act. In addition, the proposed action would
revise current reporting requirements to reflect technological
improvements; incorporate some existing practices and policies into
current regulations; and clarify and update existing references and
regulations. This proposal would further streamline the existing
policies of the passenger facility charge program.
DATES: Send your comments on or before April 3, 2006.
ADDRESSES: You may send comments [identified by Docket Number FAA-2006-
23730]
using any of the following methods:
? DOT Docket Web site: Go to http://dms.dot.gov 
and follow the instructions for sending your comments electronically.
? Government-wide rulemaking Web site: Go to http://www.regulations.gov
and follow the instructions for sending your comments
electronically.
? Mail: Docket Management Facility; U.S. Department of
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401,
Washington, DC 20590-0001.
? Fax: 1-202-493-2251.
? Hand Delivery: Room PL-401 on the plaza level of the
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
For more information on the rulemaking process, see the
SUPPLEMENTARY INFORMATION section of this document.
Privacy: We will post all comments we receive, without change, to
http://dms.dot.gov, including any personal information you provide.
For more information, see the Privacy Act discussion in the SUPPLEMENTARY
INFORMATION section of this document.
Docket: To read background documents or comments received, go to
http://dms.dot.gov at any time or to Room PL-401 on the plaza level
of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Sheryl Scarborough, Airports Financial
Analysis & Passenger Facility Charge Branch, APP-510, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591;
telephone: (202) 267-8825; facsimile: (202) 267-5302; e-mail:
sheryl.scarborough@faa.gov; or Beth Weir, Airports Law Branch, AGC-610,
Federal Aviation Administration, 800 Independence Avenue, SW.,
Washington, DC 20591, telephone (202) 267-5880; facsimile: (202) 267-5769.
SUPPLEMENTARY INFORMATION:
Comments Invited
The FAA invites interested persons to join in this rulemaking by
filing written comments, data, or views. We also invite comments about
the economic, environmental, energy, or federalism impacts that might
result from adopting the proposals in this document. The most helpful
comments reference a specific portion of the proposal, explain the
reason for any recommended change, and include supporting data. We ask
that you send us two copies of written comments.
[[Page 5189]]
We will file in the docket all comments we receive, as well as a
report summarizing each substantive public contact with FAA personnel
about this proposed rulemaking. The docket is available for public
inspection before and after the comment closing date. If you wish to
review the docket in person, go to the address in the ADDRESSES section
of this preamble between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. You may also review the docket using the
Internet at the Web address in the ADDRESSES section.
Privacy Act: Using the search function of our docket Web site,
anyone can find and read the comments received into any of our dockets.
This includes the name of the individual sending the comment (or
signing the comment for an association, business, labor union). You may
review DOT's complete Privacy Act Statement in the Federal Register
published on April 11, 2000 (65 FR 19477-78) or you may visit
http://dms.dot.gov.
Before acting on this proposal, we will consider all comments we
receive on or before the closing date for comments. We will consider
comments filed late if it is possible to do so without incurring
expense or delay. We may change this proposal because of the comments
we receive.
If you want the FAA to acknowledge receipt of your comments on this
proposal, include with your comments a preaddressed, stamped postcard
on which the docket number appears. We will stamp the date on the
postcard and mail it to you.
Proprietary or Confidential Business Information
Do not file in the docket information that you consider to be
proprietary or confidential business information. Send or deliver this
information directly to the person identified in the FOR FURTHER
INFORMATION CONTACT section of this document. You must mark the
information that you consider proprietary or confidential. If you send
the information on a disk or CD ROM, mark the outside of the disk or CD
ROM and also identify electronically within the disk or CD ROM the
specific information that is proprietary or confidential.
Under 14 CFR 11.35(b), when we are aware of proprietary information
filed with a comment, we do not place it in the docket. We hold it in a
separate file to which the public does not have access, and place a
note in the docket that we have received it. If we receive a request to
examine or copy this information, we treat it as any other request
under the Freedom of Information Act (5 U.S.C. 552). We process such a
request under the DOT procedures found in 49 CFR part 7.
Availability of Rulemaking Documents
You can get an electronic copy using the Internet by:
(1) Searching the Department of Transportation's electronic Docket
Management System (DMS) Web page (http://dms.dot.gov/search);
(2) Visiting the FAA's Regulations and Policies Web page at
http://www.faa.gov/regulations_policies; or
(3) Accessing the Government Printing Office's Web page at
http://www.access.gpo.gov/su_docs/aces/aces140.html.
You can also get a copy by sending a request to the Federal
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make
sure to identify the docket number, notice number, or amendment number
of this rulemaking.
Authority for This Rulemaking
The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority.
This rulemaking is promulgated under the authority described in
subtitle VII, part A, subpart I, section 40117. Under that section, the
FAA, by delegation, is charged with prescribing regulations to impose a
passenger facility fee to finance an eligible airport-related project.
This regulation is within the scope of that authority because Vision
100 requires the FAA to change the PFC program. Many proposals in this
document are taken from Vision 100.
Background
On March 23, 2005, the FAA published a final rule (2005 final rule)
to create a 3-year pilot program for non-hub airports to test new
application and application approval procedures for the passenger
facility charge (PFC) program (70 FR 14928). The final rule contains
several changes designed to streamline the PFC application and
amendment procedures for all PFC applications and amendments to improve
the entire PFC program.
The FAA published the 2005 final rule to address Congressional
mandates in the Vision 100--Century of Aviation Reauthorization Act
(Vision 100). The non-hub pilot program, with the PFC application
streamlining procedures, however, was only one of six mandates
specified in Vision 100. The FAA separated the non-hub program and
related changes from the other mandates because Congress had required
the FAA to publish proposed rules on the pilot program within 180 days
of enactment of Vision 100.
This rulemaking addresses the remaining mandates in Vision 100.
These mandates include:
(1) Making low-emission airport vehicles and ground support
equipment eligible for PFC funding,
(2) Using PFCs to pay debt service on projects that are ``not an
eligible airport-related project'' when there is a financial need at an
airport,
(3) Clarifying the PFC status of military charters,
(4) Structuring PFC account requirements for carriers in
bankruptcy, and
(5) Making eligible the use of PFC revenue as local share for
projects under the air traffic modernization cost-sharing program.
In addition, the FAA is proposing other changes, two of which would
streamline benefits beyond those contained in the 2005 final rule.
These proposed changes would:
(1) Provide for the electronic filing of notices and reports;
(2) Provide a process for periodic review and change of the carrier
compensation level; and
(3) Modify the content and due date for some public agency reports
and notices.
Discussion of the Proposals
The NPRM is divided into three parts:
(1) Changes mandated by Vision 100;
(2) Changes associated with technological improvements; and
(3) Changes to streamline PFC procedures, codify PFC policies, or
address issues or questions about the PFC program.
Changes Mandated by Vision 100
Low-Emission Airport Vehicles and Ground Support Equipment
Section 121 of Vision 100 establishes a voluntary program to reduce
airport ground emissions at commercial service airports in air quality
nonattainment and maintenance areas (49 U.S.C. 40117(a)(3) and (b)(5)).
This program makes the cost of new or converted equipment or vehicles
eligible for PFC funding. The intent of the program is not to cause the
premature retirement of existing equipment or vehicles, but to provide
incentives to buy replacements
[[Page 5190]]
or to convert existing equipment to meet lower emissions standards. The
program helps airports meet their obligations under the Clean Air Act
(42 U.S.C. 7501(2)) and helps regional efforts to meet health-based
National Ambient Air Quality Standards. The program goal is to reduce
the amount of regulated pollutants and other harmful air emissions
produced by ground transportation sources at airports. The program also
supports efforts to increase U.S. energy independence by emphasizing
domestically produced alternative fuels that are substantially
nonpetroleum based. The program provides public agencies with financial
and regulatory incentives to increase their investment in proven low-
emission technology. Use of alternative fuel vehicles and other low-
emission technologies that are particularly suited to the airport
environment are highly encouraged.
To address Vision 100, the proposed rule would add the definition
of ``ground support equipment'' to Sec. 158.3. Ground support
equipment includes vehicles used for operations and maintenance of
aeronautical activities, but does not include vehicles used to meet
safety, security, and snow removal requirements. Baggage tugs, belt
loaders, cargo loaders, forklifts, fuel trucks, lavatory trucks, and
pushback tractors are among the types of vehicles that fit the
definition of ground support equipment. In addition, battery recharging
and alternate fueling stations are eligible under this program.
The low-emission vehicle program provides a funding mechanism to
acquire low-emission technology, which often is more costly than
conventional technology. The proposed rule would modify Sec. 158.13 by
setting the maximum allowable cost for certain low-emission technology
projects. For new vehicle purchases, public agencies may only use PFC
revenue for the added cost of the low emission technology above the
cost of a conventional emission vehicle. For vehicles being converted
to low-emission technology, public agencies may only use PFC revenue
for the reasonable cost of the conversion.
The proposal would add paragraph (b)(8) to Sec. 158.15 to provide
the eligibility requirements for low-emission vehicle projects. To be
eligible, the airport must be located in an FAA and Environmental
Protection Agency designated air quality nonattainment or maintenance
area. In addition, the airport must receive emission credits for
completing the project from the appropriate State air quality agency.
Eligible projects must either (1) convert existing vehicles powered
by diesel or gasoline engines to low-emission technology or the use of
cleaner burning fuels, or (2) buy new vehicles that include low-
emission technology or use cleaner burning fuels.
Interested parties are directed to the following Web site to obtain
guidance on determining the eligibility of projects and how benefits to
air quality must be demonstrated:
http://www.faa.gov/arp/environmental/VALE/Index.cfm.
Use of Fees To Pay Debt Service
Section 122 of Vision 100 amended the statute to permit an
exception to use PFC revenue to pay the debt service costs of airport-
related projects that otherwise are not PFC-eligible if the public
agency can show a financial need (49 U.S.C. 40117(b)(6)). The FAA
expects that a public agency seeking relief under this provision wants
to restore its financial stability and health. A proposed new
definition, ``Financial need,'' would be added to Sec. 158.3. This
definition would tie the financial need of a public agency to its
ability to meet operational and debt obligations and maintain at least
a 2-month reserve fund. Such financial need typically results from a
series of events that cumulatively weaken the financial condition of
the public agency. The FAA defines ``financial need'' based on
information collected from several airports regarding their capital
reserve funds and broadly accepted principles of airport financial fitness.
Proposed paragraph (e) to Sec. 158.13 would provide an exception
permitting the use of PFC revenue to pay debt service costs for a
noneligible project.
Proposed new Sec. 158.18 would provide for the use of PFC revenue
to pay debt service cost for noneligible projects. Financial need is
based on severe financial constraints suffered by the airport or public
agency. This adverse financial position usually results from one or
more events beyond the reasonable control of the public agency,
resulting in a financial crisis for the airport. These events may include:
(1) The bankruptcy of an air carrier serving the airport that
results in rejecting leases for a significant portion of all air
carrier gates at that airport;
(2) Significantly reduced service by one or more air carriers that
accounts for a major portion of the enplaned passenger traffic at the
airport; or
(3) Other dramatic changes in air carrier service patterns that
undermine the ability of the public agency to pay for airport
development already constructed.
Other events, such as natural disasters, may also create a
financial need for the public agency.
A public agency should show that its financial recovery plan makes
use of all available resources. The FAA would authorize an airport or
public agency to impose a PFC under this paragraph only for the period
necessary to cure the airport's or agency's financial need.
Furthermore, the FAA expects the public agency to use any revenue saved
by this PFC to return the airport to a state of financial fitness in as
quick a period as possible. For example, use of the saved revenue to
incur additional non-aeronautical debt or development costs would not
return the airport to a state of financial fitness.
A public agency applying for PFC revenue under this provision must
use the application procedures in Sec. 158.25 and document its
financial position by providing information regarding:
(1) A change in passenger enplanements for a carrier;
(2) Negative actions taken on the public agency's bond rating;
(3) The inability of the public agency to meet bond payments and
associated requirements;
(4) Alternative sources of revenue available to the public agency,
such as grant funds, state funds, concession revenue, vehicle parking
fees, aircraft parking fees, other non-aviation fees, fuel taxes, and
revenue from any other operators using the airport. (The submitted
information must address whether these fees can be raised to create
more revenue for the airport);
(5) The impact of any necessary increases to the rate base or
landing fees for concession and carrier revenue because of the loss of
revenue from a change in economic circumstances (e.g., the bankruptcy
or financial troubles of a carrier);
(6) Actions taken by the public agency to reduce cost, such as
operational changes, personnel actions, or capital project postponement;
(7) The source(s) of revenue currently used to pay bond cost;
(8) The current airport fee structure and methodology used to
calculate rates and charges;
(9) The affect of the loss of an air carrier or adding a new
carrier on the current fee structure;
(10) The planned use of revenue saved by using PFCs to pay the debt
service and how this use will aid the return to financial fitness; and
(11) Any other information the public agency believes will document
the financial need of the airport.
The FAA will use the procedures in Sec. 158.27 to analyze the
information
[[Page 5191]]
submitted by the public agency, and then issue its decision on a case-
by-case basis under Sec. 158.29.
Clarification of Applicability of PFCs to Military Charters
Section 123(c) of Vision 100 amended the PFC statute to prohibit
collecting PFCs from passengers on military charter flights (49 U.S.C.
400117(e)(2)). Proposed paragraph (a) (6) to Sec. 158.9 would clarify
that passengers who do not pay directly for the air transportation due
to Department of Defense charter arrangements or payments will not pay
PFCs.
Financial Management of Passenger Facility Fees
Section 124 of Vision 100 added specific requirements to protect
PFC revenue from creditors when air carriers file for bankruptcy
protection after the date of enactment of Vision 100 (49 U.S.C. 40117
(m) (1-7)). Through this provision, Congress has specifically
recognized and protected the trust fund status of PFC revenue and
prohibited air carriers from using PFCs as security with third parties.
Air carriers historically have commingled PFC revenue in accounts
with other revenue until it was time to remit the PFC revenue to the
various public agencies. Before Vision 100, in situations where an air
carrier filed for bankruptcy protection and owed PFC remittances,
public agencies had difficulties recovering past due PFCs. In part,
these difficulties arose because the PFC revenue was commingled and,
thus, difficult for bankruptcy courts to identify and public agencies
to recover. Section 124 prohibits the commingling of PFC revenue with
other revenue for air carriers in bankruptcy. In addition, section 124
requires that air carriers in bankruptcy set up separate PFC accounts
to handle PFC transactions--receipt of revenue from passengers and
issuance of remittance to public agencies. This provision should enable
bankruptcy courts to more easily identify PFC revenue for remittance to
public agencies.
The proposed rule would add a definition of ``covered air carrier''
to Sec. 158.3. The new definition states that a covered air carrier is
an air carrier that has filed for bankruptcy protection or has had an
involuntary proceeding started against it after December 12, 2003.
In addition, the proposed rule would modify paragraph (b) of Sec.
158.49, which allows air carriers to commingle PFC revenue with an air
carrier's other sources of revenue, so that this paragraph does not
apply to covered air carriers.
A new paragraph (c) would be added to Sec. 158.49 requiring a
covered air carrier segregate the PFC revenue into a designated PFC
account when it enters bankruptcy protection. A covered air carrier
would be required to set up the PFC account dedicated solely to PFCs,
with a deposit equal to the average month's balance, based on the air
carrier's past 12 months of PFC collections net of any credits or
handling fees allowed by law. A covered air carrier would be required
to ensure the account balance never falls below this initial fixed
deposit amount (``PFC Reserve''). Besides the method proposed in this
rulemaking, the FAA considered requiring the covered air carrier to
keep a rolling balance in the designated PFC account. This rolling
balance was based on an average of the previous 12 month's collections
recalculated monthly as a method to calculate an amount that would be a
fair account balance. The monthly recalculation would have captured
situations where an airport served by the air carrier started PFC
collections or increased its level of PFC collections after the PFC
account was established. However, the FAA eventually concluded that
recalculation on a rolling basis would be too burdensome on the covered
air carrier and difficult for the FAA and the public agencies to monitor.
The FAA recognizes that a covered air carrier may change its route
structure during its bankruptcy and this change in route structure may,
in turn, effect the average PFCs collected. Therefore, under the
proposal a covered air carrier would be permitted to recalculate and
reset the PFC Reserve and daily PFC amount on each successive
anniversary date of its bankruptcy petition.
Proposed paragraph (c) to Sec. 158.49 would allow a covered air
carrier to deposit ticket sales revenue to its general operating
account before separating the types of revenue. The proposal requires
the covered air carrier to sweep its general operating account at least
once a business day to take the PFC revenue initially deposited in this
account and redeposit it in the PFC account. Through recent experience,
the FAA has discovered that not all covered air carriers can judge the
PFC collections on a daily basis. Accordingly, under the proposal, a
covered air carrier that cannot accurately move the PFC revenue daily
may elect to deposit into the PFC account daily, an estimated amount
based on 1/30th of the PFC Reserve balance. A covered air carrier that
sweeps with the estimated amount will be required to reconcile the PFC
account for accuracy no later than the 20th of each month. This
provision allows the covered air carrier to have an accurate PFC
balance in place at the time of required PFC remittances.
The proposed paragraph reiterates Congress' mandate to protect the
trust fund status of PFC revenue. Even if the covered air carrier fails
to follow the procedures in this paragraph, this trust fund status
shall not be defeated by an inability of any party to identify and
trace precise amounts of PFC revenue in the air carrier's accounts. The
proposed paragraph also prohibits a covered air carrier and its agents
from granting a security or other interest in the PFC revenue to a
third party.
Proposed paragraph (c) also provides that, if a public agency is
forced to incur costs to recover PFC revenue because the covered air
carrier failed to comply with these new PFC revenue-handling
procedures, the covered air carrier is required to compensate the
public agency for its costs. This provision applies to costs incurred
by a public agency in pursuit of PFCs owed if a covered air carrier
fails to make its PFC payments under the statute or rule (49 U.S.C.
40117(m)(4).
Proposed paragraph (b) to Sec. 158.53 would state that a covered
air carrier is entitled to keep the interest portion of the
compensation only as long as the air carrier follows the procedures in
Sec. 158.49.
Proposed paragraph (b) to Sec. 158.65 would require that, besides
reporting to the public agencies, covered air carriers must send a copy
of their quarterly report to the FAA. Covered air carriers also will be
required to send a PFC account statement to the FAA on the fifth day of
the month. The account statement will include the balance of their PFC
account, the balance of their PFC reserve amount, total PFC funds
deposited, and total PFC funds dispersed. This monthly report allows
the FAA to monitor the covered air carrier's compliance with the
requirements of Sec. 158.49. The monthly report must continue while a
covered air carrier remains in a bankruptcy proceeding.
Cost Sharing of Air Traffic Modernization Projects
Section 183 of Vision 100 set up a program to allow cost sharing of
air traffic modernization projects (49 U.S.C. 44517(a)). This program
is intended to improve aviation safety and the mobility of the Nation's
air transportation system by encouraging non-Federal investment in
critical air traffic control equipment and software. Under this program the
[[Page 5192]]
FAA may make grants to eligible sponsors to pay a portion of the cost
of FAA-approved projects to procure and install air traffic facilities
and equipment. The program is intended to allow sponsors to achieve
accelerated deployment of eligible facilities and equipment and to help
expand aviation infrastructure. The sponsor may fund the non-Federal
portion of the project costs through various methods including the use
of PFC revenue.
If a public agency wishes to use PFC revenue to pay for all or a
portion of the non-Federal share of the project, the public agency must
first obtain authority to impose a PFC and use PFC revenue under the
procedures in Sec. Sec. 158.25 or .30.
Currently, paragraph (d) of Sec. 158.13 allows the use of PFC
revenue to pay for the non-Federal share of costs for a project funded
under the Federal airport grant program. This paragraph will be
renumbered as paragraph (g) and expanded to include the FAA's ``program
to permit cost-sharing of air traffic modernization projects.''
A new proposed paragraph (8) to Sec. 158.15(b) would list a
project approved under the FAA's program to allow cost sharing of air
traffic modernization projects as PFC-eligible.
Changes Because of Technological Improvements
Major examples of technological improvements since the PFC program
inception in 1990 are the use of electronic or paperless airline
ticketing, the use of electronic mail to send documents, and web sites
to post information.
The existing procedures for collection of PFCs from passengers were
developed based on the assumption that ticket issuance would require a
physical transaction, including the issuance of a paper airline ticket
and a physical ticket issuance. Today, passengers can buy airline
tickets using many methods, including the internet, and many air
carriers no longer issue paper tickets. Furthermore, airline code-
sharing and global alliances that have expanded ticketing options were
not widely in place in 1990.
Currently, carriers have several options for PFC collection if the
ticket is issued outside the U.S., including non-collection of any PFCs
if the carrier does not serve a point in the U.S. Furthermore, airline
code-sharing and global alliances, which were not common in 1990, have
grown and created the potential for mistakenly administered and
mishandled PFCs. A person living in the United States may buy airline
tickets for domestic travel over the internet from a foreign carrier.
Such transactions may confuse foreign carriers, especially those who do
not have significant operations in the U.S., when determining the
proper procedures to follow. To address these issues, the FAA is
proposing several changes to part 158.
The proposal would define the ``point of issuance of airline
tickets'' in Sec. 158.3 to include electronic and other ticketing
mediums. The definition of ``air travel ticket'' would be expanded to
bring the definition in line with the varying methods of ticketing,
including electronic records, boarding passes, and any other ticketing
medium. In reference to a passenger's itinerary, the word ``complete''
would be removed since today's passengers may obtain documents,
including a receipt showing the PFCs paid on each leg of their itinerary.
Proposed paragraph (a) of Sec. 158.47 would clarify that U.S. and
foreign air carriers must follow the requirements of Sec. 158.45 when
the itinerary is for travel within the U.S. regardless of the location
of the ticket issuance.
The second technological improvement addressed by this proposal is
the submission of information. Current air carrier quarterly reporting
requirements in part 158 provide public agencies with information about
PFC revenue remitted to the public agency, refunded to passengers, and
retained by the air carrier. Air carrier quarterly reports allow public
agencies to monitor their collections and identify any discrepancies in
a timely manner.
The FAA has developed a national PFC database that stores
information on PFC application and project approvals. Before issuing a
final rule, the FAA expects to develop modules to collect the same
types of information directly from the public agencies and air carriers
for quarterly reports.
A comment submitted to the NPRM that was the basis of the 2005
final rule suggested the FAA eliminate the monthly and quarterly
reports filed by air carriers to public agencies and, instead, create
an air carrier annual report with currently required information. Since
this comment was outside the scope of that notice, the FAA stated that
it would consider the comment for inclusion in a future rulemaking.
Part 158 includes an air carrier reporting requirement to provide
public agencies with information about the amount of PFC revenue
remitted to the public agency, refunded to passengers, and retained by
the carrier. The FAA determined that a quarterly report allows public
agencies to monitor their collections and identify any discrepancies in
a timely manner.
Paragraph (a) of proposed Sec. 158.20 would permit public agencies
and air carriers to send required documents such as letters, reports,
and certifications of agreement/disagreement by e-mail, facsimile,
courier, or regular mail. Paragraph (b) provides that public agencies
and air carriers may use the PFC national database to post their
quarterly reports. Thus, the FAA will not require public agencies and
air carriers using this database to use U.S. Postal Services to send
their quarterly reports to interested parties.
To accommodate the interests of as many public agencies as
possible, the FAA will maintain the requirement in Sec. 158.65 that
the air carriers provide quarterly reports or input into the national
PFC database. A public agency will be able to view these reports any time.
Changes To Streamline PFC Procedures, Codify PFC Policies, or Address
Issues or Questions About the PFC Program
As the PFC program has developed, the FAA has recognized the need
to streamline its existing policies. The discussions below identify
certain areas where we are proposing changes to the current rule.
Section 158.3 would redefine or add several definitions for terms
currently in use. The first two definition changes result from new
terms introduced with the nonhub program. The third new definition
claries existing FAA policy.
? ``Approved project'' would be revised to ensure that
projects acknowledged under the non-hub program are included in the
definition. Under the non-hub program, the FAA ``acknowledges'' the
notice of intent and the projects contained therein. However, there are
many sections of part 158 that are applicable to projects being
financed with PFC revenue and, thus, are applicable to both approved
and acknowledged projects.
? ``Notice of intent (to impose a PFC or use PFC revenue)''
is a term used in the non-hub PFC authorization procedures. Public
agencies receiving PFC authorization under the non-hub procedures must
comply with all rules of the PFC program outside the authorization
procedures in Sec. 158.25. PFC authorizations for these other
applications are identified as PFC applications and part 158 makes many
references to ``PFC application'' or just ``application.'' Rather than
adding the term ``notice of intent'' at every location where the term
``application'' is used,
[[Page 5193]]
the FAA is proposing to add a definition of ``notice of intent.'' The
proposed definition would include a statement to clarify that, except
for those sections of part 158 that deal with specific authorization
procedures, the terms ``notice of intent'' and ``application'' should
be used interchangeably.
? The FAA has been approving collection of PFC revenue to
pay for a public agency's cost of administering its PFC program based
on the existing definition of the allowable costs in part 158. However,
part 158 does not include a definition of the types of costs covered
under PFC administrative support costs. Adding a definition for ``PFC
administrative support costs'' would clarify the types of costs that
public agencies should identify as PFC administrative support costs.
About 10 years ago, the FAA adopted a policy of advising public
agencies to apply for PFC administrative support costs as a separate
project. This policy has allowed the FAA to monitor more closely the
public agency's costs and review the scope of work. However, not all
public agencies have complied with this policy. Some public agencies
include their administrative support costs within their development
projects, resulting in inaccurate cost estimates for both the
development projects and the administrative costs. The proposed rule
would add paragraph (b) to Sec. 158.13 providing that public agencies
may use PFC revenue to pay for allowable PFC administrative support
costs. The new paragraph would direct that public agencies treat PFC
administrative support costs as a separate and distinct PFC project in
a PFC application or notice of intent.
The PFC program is available to States, territories, Commonwealths,
and possessions of the United States. Initially, the Trust Territory of
the Pacific Islands was a territory of the U.S. and, thus, was eligible
to participate in the PFC program. The Compact of Free Association
between the U.S., Marshall Islands, and Federated States of Micronesia
provided that newly independent States would be eligible to participate
in Federal programs, such as the PFC program, for 15 years after
adopting the Compact. The 15-year period ended in 2001, and the
Marshall Islands and Federated States of Micronesia are no longer
eligible to participate in the PFC program. Therefore, the definition
for ``State'' would be redefined to remove the Trust Territory of the
Pacific Islands.
This proposal changes the current title of Sec. 158.30 to ``PFC
Authorization at Non-Hub Airports.'' This proposed change clarifies
that PFC authorizations at non-hub airports relate to size of airport
and not to aircraft pilots at non-hub airports. The sunset provision in
paragraph (h) remains in effect (49 U.S.C. 40117(l)(7)).
The proposed editorial changes in Sec. 158.31 clarify the intent
of the original language.
Proposed paragraphs (a)(2), (c)(1), and (c)(2) of Sec. 158.33
would clarify the term ``charge effective date.'' A public agency may
only collect on one PFC decision at a time meaning the charge effective
date for a subsequent application must be on or after the charge
expiration date for the current application.
The FAA wrote Sec. 158.33 to require public agencies to take
certain actions within a prescribed period of time after the charge
effective date of an application. However, a literal reading of the
current regulation could lead to the belief that, for example, a
project approved for collection in 2005 in an application with a charge
effective date of 2016 need not be implemented for 11 years. The FAA
interprets the timelines in Sec. 158.33 with regard to the start of
collections for an application as being either the charge effective
date or the date the application was approved.
Section 158.37 requires a public agency to consult with air
carriers and provide notice and the opportunity for public comment if
the public agency is seeking to increase the PFC amount of a project by
more than 25 percent of the originally approved amount. While the FAA
believes the 25 percent threshold is reasonable, an excess of
amendments could overburden the consultation and comment processes,
requiring consultation for insignificant amounts. For example, the FAA
has approved several projects for amounts of $1,000 or less. Under the
current rules, an increase of $250 to a $1,000 project would trigger
the need for consultation and public comment.
The FAA examined the existing universe of PFC projects and
concluded that over 75 percent of these projects have a PFC cost below
$1 million. Generally, these projects have well-established costs.
Increases are often sought because of changes in quantities or
differences in estimated or actual costs. Furthermore, the FAA rarely
receives substantive comments from air carriers or the public on
projects with PFC costs below $1 million. This proposed rule would
modify Sec. 158.37 to provide a minimum dollar threshold. For projects
with originally approved amounts at or above this threshold, an
increase of more than 25 percent would trigger the need for
consultation and public comment. For projects with originally approved
amounts below this threshold, public agencies will not need to consult
with air carriers and provide the opportunity for public comment,
regardless of the percentage increase in costs proposed. Paragraphs
(b)(1)(i)(A), (b)(1)(ii)(C), (b)(1)(ii)(D), and (b)(5) would be
modified to address this proposed threshold.
This proposed rule would clarify the language in paragraph (a) of
Sec. 158.39 by adding ``earned thereon'' after `` * * * plus
interest.'' A public agency must include the PFC principal and the
interest earned thereon in determining whether it has collected the
total amount of PFC revenue authorized.
Proposed paragraph (d) of Sec. 158.39 would delete ``under Sec.
158.25(c)'' from the second sentence. As discussed earlier in the
notice of intent definition, ``notice of intent'' may be used
interchangeably with ``PFC application.''
Currently, paragraph (b)(3) of Sec. 158.43 requires a public
agency to set its charge effective date as the first day of a month at
least 60 days from the date the notice was sent to air carriers. Since
its beginning, however, air carriers have developed procedures for
programming new PFC collections at airports and are able to perform
this programming in 30 days. This proposal would change the requirement
to 30 days in paragraph (b)(3) of Sec. 158.43.
Current FAA policy requires at least 30 days notice to allow air
carriers enough time to reprogram their systems. However, public
agencies continue to make changes with less than 30 days notice.
Occasionally, this results in the FAA not processing the change and the
public agency's collection is either prematurely stopped or extended a
month beyond the intended expiration date. The proposed rule would
modify paragraph (c) of Sec. 158.43 to require that public agencies
notify air carriers and the FAA at least 30 days before changing the
charge expiration date.
The proposed rule would modify paragraphs (a)(3) of Sec. 158.45
and (c)(4) of Sec. 158.47 to clarify that failure to travel on a
nonrefundable or expired airline ticket is not a change in itinerary.
Ticket purchasers holding nonrefundable or expired tickets are not
entitled to a refund of any associated PFCs if the ticket purchaser is
not entitled to any fare refund.
The PFC statute requires the FAA set up a uniform collection
compensation amount reflecting the ``average reasonable and necessary
expenses'' of the air carriers' collection and handling of the PFC (49
U.S.C. 40117 (i)(2)(C)). A periodic review of the collection compensation
rate is fair and reasonable because of changing air carrier PFC
[[Page 5194]]
handling costs. The costs may include handling, reporting, escrow,
collecting, and remittance fees. The proposed rule would provide for
periodic review outside the formal rulemaking process.
In the future, the FAA plans periodically to publish a notice in
the Federal Register asking that air carriers voluntarily provide data
on their costs associated with the PFC program. Proposed paragraph (c)
of Sec. 158.53 would include a list of the 11 categories of cost data
the FAA tentatively has determined represent the incremental costs
directly associated with PFC collection, handling, remittance,
reporting, recording keeping, and auditing by air carriers. If the FAA
determines a new level is warranted, we would publish a second Federal
Register notice seeking public comment. We would publish a third notice
in the Federal Register providing a final determination.
The FAA has developed its national PFC database and identified the
need for national consistency in the information reported. This
database allows public agencies to input the revenue received on either
a monthly or quarterly basis. The FAA chose the actual revenue received
method rather than accrual basis method because actual basis is more
closely tied to when PFC collections are completed. This proposal would
modify paragraph (a) of Sec. 158.63 to clarify that public agencies
must report revenue actually received from the air carriers rather than
on an accrual basis.
Currently, large and medium hub airports are required to file their
annual PFC revenue forecasts by August 1. The FAA set the August 1 date
based on when it usually received its first estimates on airport
enplanements and, thus, could make the first estimates on AIP
apportionments for the upcoming fiscal year. The FAA streamlined its
process for gathering enplanement data and now makes its AIP
apportionment estimates about July 1. The proposal would modify
paragraph (c) of Sec. 158.63 to specify July 1 as the date that large
and medium hub airports report their forecast PFC revenue for the
upcoming Federal fiscal year.
This proposal would delete Sec. 158.97, Special rule for transitioning
airports, which expired at the end of Federal fiscal year 2004.
Experience has shown that most PFC projects are physically
completed long before they are financially completed. This contrasts
with AIP grant projects where the financial completion of the project
follows quickly after the project's physical completion. This proposal
would modify assurance 10 of part B of Appendix A to part 158 to add
``physical and financial'' before ``completion'' in the first sentence
to clarify the time public agencies need to retain their records.
The proposal would also update several authorization citations.
------------------------------------------------------------------------
Reference
Location ---------------------------------------
From To
------------------------------------------------------------------------
Sec. 158.67(c)(2)............. Single Agency Office of
Audit Act of 1984 Management and
(31 U.S.C. 7501- Budget Circular A-
7). 133 (The Single
Audit Act of
1984, P.L. 98-
502, and the
Single Audit Act
Amendments of
1996, P.L. 104-
156).
Sec. 158.81................... Airport Noise and 49 U.S.C. 47523
Capacity Act of through 47528.
1990.
Assurance 12 of part B of Airport Noise and 49 U.S.C. 47523
Appendix A. Capacity Act of through 47528.
1990.
------------------------------------------------------------------------
Economic Assessment, Regulatory Flexibility Determination, Trade Impact
Assessment, and Unfunded Mandates Assessment Economic Assessment
Proposed changes to Federal regulations must undergo several
economic analyses. First, Executive Order 12866 directs each Federal
agency to propose or adopt a regulation only on a reasoned
determination the benefits of the intended regulation justify its
costs. Second, the Regulatory Flexibility Act of 1980 requires agencies
to analyze the economic impact of regulatory changes on small entities.
Third, the Trade Agreements Act prohibits agencies from setting
standards that create unnecessary obstacles to the foreign commerce of
the United States. In developing U.S. standards, the Trade Agreements
Act also requires agencies to consider international standards and,
where appropriate, use them as the basis of U.S. standards. Fourth, the
Unfunded Mandates Reform Act of 1995 requires agencies to prepare a
written assessment of the costs, benefits, and other effects of
proposed or final rules that include a Federal mandate likely to result
in the expenditure by State, local, or tribal governments, in the
aggregate, or by the private sector, of $100 million or more annually
(adjusted for inflation.)
In conducting these analyses, the FAA has determined this proposed
rule (1) has benefits that justify its costs, is not a ``significant
regulatory action'' as defined in section 3(f) of Executive Order 12866
and is not ``significant'' as defined in the DOT's Regulatory Policies
and Procedures; (2) would not have a significant economic impact on a
substantial number of small entities; (3) would not have an effect on
international trade; and (4) would not impose an unfunded mandate on
State, local, or tribal governments, or on the private sector. These
analyses, available in the preliminary regulatory evaluation supporting
today's rule, are summarized below.
Costs of This Rulemaking
Vision 100 mandates some changes to the PFC process that are not
subject to the FAA's discretion. Changes other than those prescribed by
Vision 100 are discretionary and the costs and cost savings are
estimated in the table below.
--------------------------------------------------------------------------
Net cost
Sector Costs Cost savings savings Present value
--------------------------------------------------------------------------
Airports.... $17,100 $1,638,600 $1,621,500 $1,138,300
Airlines.... 63,000 1,481,100 1,418,100 993,000
FAA......... 971,500 235,900 (735,600) (737,700)
-----------------
Total... 1,051,600 3,355,600 2,304,000 1,393,600
--------------------------------------------------------------------------
[[Page 5195]]
Regulatory Flexibility Assessment
The Regulatory Flexibility Act of 1980 (RFA) establishes ``as a
principle of regulatory issuance that agencies shall endeavor,
consistent with the objective of the rule and of applicable statutes,
to fit regulatory and informational requirements to the scale of the
business, organizations, and governmental jurisdictions subject to
regulation.'' To achieve that principle, the RFA requires agencies to
consider flexible regulatory proposals, to explain the rationale for
their actions, and to solicit comments. The RFA covers a wide-range of
small entities, including small businesses, not-for-profit
organizations and small governmental jurisdictions.
Agencies must perform a review to determine whether a rulemaking
action will have a significant economic impact on a substantial number
of small entities. If the agency determines that it will, the agency
must prepare a regulatory flexibility analysis as described in the Act.
However, if an agency determines that a rulemaking action is not
expected to have a significant economic impact on a substantial number
of small entities, section 605(b) of the 1980 RFA provides that the
head of the agency may so certify and a regulatory flexibility analysis
is not required. The certification must include a statement providing the
factual basis for this determination, and the reasoning should be clear.
The FAA believes that this proposal would not have a significant
impact on a substantial number of entities. An airport operator (North
American Industry Classification System (NAICS) 488119) is classified
as a small entity if it has annual revenues of $6 million or less. The
average revenue for these airports was $1.7 million, and the median
revenue was $1.1 million for 2003. The entire cost to all airports is
estimated to be $17,100. Thus, no small airport would experience a
significant economic impact. A scheduled or nonscheduled passenger air
carrier (NAICS 481111) is considered a small entity if it has 1,500 or
fewer employees. The FAA has identified 57 air carriers with
authorization to carry passengers that meet this classification. Small
carriers that collect PFCs would not be adversely affected since any
adjustments to modify ticketing or other administrative costs that
small air carriers may incur as a result of this proposed rule are
recoverable under the existing compensation provisions.
Therefore, the FAA Administrator certifies that this rule will not have
a significant economic impact on a substantial number of small entities.
International Trade Impact Assessment
The Trade Agreements Act of 1979 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, they
be the basis for U.S. standards. Foreign carriers would be required to
collect PFCs on wholly domestic U.S. travel that U.S. carriers are
already required to collect, and the foreign carriers would be entitled
to the same compensation provisions as U.S. carriers. The FAA has
assessed the potential effect of this proposed rule and determined that
it would impose the same costs on domestic and international entities
and, thus, have a neutral trade impact.
Unfunded Mandates Assessment
The Unfunded Mandates Reform Act of 1995 (the Act) is intended,
among other things to curb the practice of imposing unfunded Federal
mandates on State, local, and tribal governments. Title II of the Act
requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in an expenditure of $100 million or more (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.'' The FAA currently
uses an inflation-adjusted value of $120.7 million in lieu of $100
million. This proposed rule does not contain such a mandate. Therefore,
the requirements of Title II of the Unfunded Mandates Reform Act of
1995 do not apply.
Executive Order 13132, Federalism
The FAA has analyzed this proposed rule under the principles and
criteria of Executive Order 13132, Federalism. We determined that this
action would not have a substantial direct effect on the States, 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 would not have federalism implications.
Paperwork Reduction Act
This proposal contains the following new information collection
requirements: Covered Air Carrier Monthly Escrow Account Report. In
addition, the proposal contains changes in some existing public agency
and air carrier reporting requirements. As required by the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has submitted the
information requirements associated with this proposal to the Office of
Management and Budget for its review.
Title: Passenger Facility Charge Program, Debt Service, Air Carrier
Bankruptcy, and Miscellaneous Changes
International Compatibility
In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is FAA policy to comply with
International Civil Aviation Organization (ICAO) Standards and
Recommended Practices to the maximum extent practicable. The FAA has
determined there are no ICAO Standards and Recommended Practices that
match these proposed regulations.
Plain English
Executive Order 12866 (58 FR 51735, Oct. 4, 1993) requires each
agency to write regulations that are simple and easy to understand. We
invite your comments on how to make these proposed regulations easier
to understand, including answers to questions such as the following:
? Are the requirements in the proposed regulations clearly stated?
? Do the proposed regulations contain unnecessary technical
language or jargon that interferes with their clarity?
? Would the regulations be easier to understand if they were
divided into more (but shorter) sections?
? Is the description in the preamble helpful in
understanding the proposed regulations?
Please send your comments to the address specified in the ADDRESSES
section.
Environmental Analysis
Environmental Analysis FAA Order 1050.1E identifies FAA actions
that are categorically excluded from preparation of an environmental
assessment or environmental impact statement under the National
Environmental Policy Act in the absence of extraordinary circumstances.
The FAA has determined this proposed rulemaking action qualifies for
the categorical exclusion identified in paragraph 3f and involves no
extraordinary circumstances.
[[Page 5196]]
Regulations That Significantly Affect Energy Supply, Distribution, or Use
The FAA has analyzed this proposed rulemaking under Executive Order
13211, Actions Concerning Regulations that Significantly Affect Energy
Supply, Distribution, or Use (May 18, 2001). We have determined that it
is not a ``significant energy action'' under the executive order
because it is not a ``significant regulatory action'' under Executive
Order 12866, and it is not likely to have a significant adverse effect
on the supply, distribution, or use of energy.
List of Subjects in 14 CFR Part 158
Air carriers, Airports, Passenger facility charge, Public agencies,
Collection compensation.
The Proposed Amendment
Because of the above, the Federal Aviation Administration proposes
to amend part 158 of Title 14, Code of Federal Regulations, as follows:
PART 158--PASSENGER FACILITY CHARGES (PFCs)
Subpart A--General
1. The authority citation for part 158 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40116-40117, 47106, 47111, 47114-
47116, 47524, 47526.
2. Amend Sec. 158.3 as follows:
a. Revise the definitions for Air travel ticket, Approved Project,
and State to read as set forth below.
b. Add definitions for Covered air carrier, Financial need, Ground
support equipment, Notice of intent (to impose a PFC or use PFC
revenue), PFC administrative support costs, and Point of issuance for
electronic tickets or other ticketing medium in alphabetical order to
read as set forth below.
Sec. 158.3 Definitions.
* * * * *
Air travel ticket includes all documents, electronic records,
boarding passes, and any other ticketing medium about a passenger's
itinerary necessary to transport a passenger by air, including
passenger manifests.
* * * * *
Approved project means a project for which the FAA has approved
using PFC revenue under this part. The FAA may also approve specific
projects contained in a single or multi-phased project or development
described in an airport capital plan separately. This includes projects
acknowledged by the FAA under Sec. 158.30 of this part.
* * * * *
Covered air carrier means an air carrier that files for bankruptcy
protection, or has an involuntary bankruptcy proceeding started against
it after December 12, 2003.
* * * * *
Financial need means that a public agency cannot meet its
operational or debt service obligations and does not have at least a 2-
month reserve fund.
* * * * *
Ground support equipment means service and maintenance equipment
used at an airport to support aeronautical operations and related
activities. Baggage tugs, belt loaders, cargo loaders, forklifts, fuel
trucks, lavatory trucks, and pushback tractors are among the types of
vehicles that fit this definition.
* * * * *
Notice of intent (to impose a PFC or use PFC revenue) means a
notice under Sec. 158.30 from a public agency controlling a non-hub
airport that it intends to impose a PFC and or use PFC revenue. Except
for Sec. Sec. 158.25 through 30, ``notice of intent'' can be used
interchangeably with ``application.''
* * * * *
PFC administrative support costs means the reasonable and necessary
costs of developing a PFC application or amendment, issuing and
maintaining the required PFC records, and performing the required audit
of the public agency's PFC account. These costs may include reasonable
monthly financial account charges and transaction fees.
Point of issuance of airline tickets means the billing address of
the buyer's credit card or the physical location of a cash or check
transaction.
* * * * *
State means a State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa,
the Commonwealth of the Northern Mariana Islands, and Guam.
* * * * *
3. Amend Sec. 158.9 by revising paragraphs (a)(4) and (5) and by
adding paragraph (a)(6) to read as follows:
Sec. 158.9 Limitations.
(a) * * *
(4) On flights, including flight segments, between 2 or more points
in Hawaii;
(5) In Alaska aboard an aircraft having a certificated seating
capacity of fewer than 60 passengers; or
(6) Enplaning at an airport if the passenger did not pay for the
air transportation that resulted in the enplanement because of
Department of Defense charter arrangements and payments.
* * * * *
4. Amend Sec. 158.13 by revising paragraphs (b), (c), (d), and (e)
and adding paragraphs (f), (g), and (h) to read as follows:
Sec. 158.13 Use of PFC revenue.
* * * * *
(b) PFC administrative support costs. Public agencies may use PFC
revenue to pay for allowable administrative support costs. Public
agencies must submit these costs as a separate project in each PFC
application.
(c) Maximum cost for certain low-emission technology projects. If a
project involves a vehicle or ground support equipment using low
emission technology eligible under 158.15(b), the FAA will determine
the maximum cost that may be financed by PFC revenue. The maximum cost
for a new vehicle is the incremental amount between the purchase price
of a new low emission vehicle and the purchase price of a standard
emission vehicle, or the cost of converting a standard emission vehicle
to a low emission vehicle.
(d) Bond-associated debt service and financing costs.
(1) Public agencies may use PFC revenue to pay debt service and
financing costs incurred for a bond issued to carry out approved projects.
(2) If the public agency's bond documents require that PFC revenue
be commingled in the general revenue stream of the airport and pledged
for the benefit of holders of obligations, the FAA considers PFC
revenue to have paid the costs covered in Sec. 158.13(b)(1) if--
(i) An amount equal to the part of the proceeds of the bond issued
to carry out approved projects is used to pay allowable costs of such
projects; and
(ii) To the extent the PFC revenue collected in any year exceeds
the debt service and financing costs on such bonds during that year, an
amount equal to the excess is applied as required by Sec. 158.39.
(e) Exception providing for the use of PFC revenue to pay for debt
service for non-eligible projects. The FAA may authorize a public
agency under Sec. 158.18 to impose a PFC for payments for debt service
or indebtedness incurred to carry out an airport project that is not
eligible if the FAA determines that such use is necessary because of
the financial need of the public agency.
(f) Combination of PFC revenue and Federal grant funds. A public
agency may combine PFC revenue and airport grant funds to carry out an
approved
[[Page 5197]]
project. These projects are subject to the record keeping and auditing
requirements of this part, as well as the reporting, record keeping and
auditing requirements imposed by the Airport and Airway Improvement Act
of 1982 (AAIA).
(g) Non-Federal share. Public agencies may use PFC revenue to meet
the non-Federal share of the cost of projects funded under the Federal
Airport Improvement Program or the FAA ``Program to Permit Cost-Sharing
of Air Traffic Modernization Projects'' under 49 U.S.C. 44517.
(h) Approval of project following approval to impose a PFC. The
public agency may not use PFC revenue or interest earned thereon except
on an approved project.
5. Amend Sec. 158.15(b) by revising paragraphs (5) and (6) and
adding paragraphs (7) and (8) to read as follows:
Sec. 158.15 Project eligibility at PFC levels of $1, $2, or $3.
* * * * *
(b) * * *
(5) Noise compatibility measures eligible for Federal assistance
under 49 U.S.C. 47504, without regard to whether the measures are
approved under 49 U.S.C. 47504;
(6) Construction of gates and related areas at which passengers are
enplaned or deplaned and other areas directly related to the movement
of passengers and baggage in air commerce within the boundaries of the
airport. These areas do not include restaurants, car rental and
automobile parking facilities, or other concessions. Projects required
to enable added air service by an air carrier with less than 50 percent
of the annual passenger boardings at an airport have added eligibility.
Such projects may include structural foundations and floor systems,
exterior building walls and load-bearing interior columns or walls,
windows, door and roof systems, building utilities (including heating,
air conditioning, ventilation, plumbing, and electrical service), and
aircraft fueling facilities next to the gate; or
(7) A project approved under the FAA's ``Program to Permit Cost-
Sharing of Air Traffic Modernization Projects.'' under 49 U.S.C. 44517;
or
(8) If the airport is in an air quality nonattainment area (as
defined by section 171(2) of the Clean Air Act (42 U.S.C. 7501(2)) or a
maintenance area referred to in section 175A of such Act (42 U.S.C.
7505a), and the project will result in the airport receiving
appropriate emission credits as described in 14 CFR 47139, a project for:
(i) Converting vehicles and ground support equipment powered by a
diesel or gasoline engine used at a commercial service airport to low-
emission technology certified or verified by the Environmental
Protection Agency to reduce emissions or to use cleaner burning
conventional fuels; or
(ii) Acquiring for use at a commercial service airport vehicles and
ground support equipment that include low-emission technology or use
cleaner burning fuels.
* * * * *
6. Add Sec. 158.18 to read as follows:
Sec. 158.18 Use of PFC revenue to pay for debt service for non-
eligible projects.
(a) The FAA may authorize a public agency to impose a PFC on
payments for debt service or indebtedness incurred to carry out an
airport project that is not eligible if the FAA determines it is
necessary because of the financial need of the public agency. The FAA
defines financial need in Sec. 158.3.
(b) A public agency may request authority to impose a PFC and use
PFC revenue under this section using the PFC application procedures in
Sec. 158.25. The public agency must document its financial position
and explain its financial recovery plan that uses all available
resources.
(c) The FAA reviews the application using the procedures in Sec.
158.27. The FAA will issue its decision on the public agency's request
under Sec. 158.29.
7. Add Sec. 158.20 to read as follows:
Sec. 158.20 Submission of required documents.
(a) Letters and reports required by this part may be transmitted to
the appropriate recipient (the public agency, air carrier, and/or the
FAA) via e-mail, courier, facsimile, or U.S. Postal Service.
(1) Documents sent electronically to the FAA must be prepared in a
format readable to the FAA. Interested parties can obtain the format at
the local FAA Airports Office.
(2) Any transmission to FAA Headquarters, using regular U.S. Postal
Service, is subject to inspection that may result in delay and damage
due to the security process.
(b) Public agencies and air carriers may use the FAA's national PFC
database to post their required quarterly reports, and, in that case,
do not have to distribute the reports in any other way.
Subpart B--Application and Approval
8. Revise Sec. 158.29(a)(1)(ii) and (b)(1)(ii) to read as follows:
Sec. 159.29 The Administrator's Decision.
(a) * * *
(1) * * *
(ii) The project will achieve the objectives and criteria set forth
in Sec. 158.15 except for those projects approved under Sec. 158.18.
* * * * *
(b) * * *
(1) * * *
(ii) The project will achieve the objectives and criteria set forth
in Sec. 158.15 except for those projects approved under Sec. 158.18.
* * * * *
9. Amend Sec. 158.30 by revising the section heading to read as
follows:
Sec. 158.30 PFC Authorization at Non-Hub Airports.
* * * * *
10. Amend Sec. 158.31 by revising the introductory text and
paragraph (b) to read as follows:
Sec. 158.31 Duration of authority to impose a PFC after project
implementation.
A public agency that has begun implementing an approved project may
impose a PFC until--
* * * * *
(b) The total PFC revenue collected plus interest earned thereon
equals the allowable cost of the approved project;
* * * * *
11. Amend Sec. 158.33 by revising paragraphs (a)(2), (c)(1)
introductory text, and (c)(2) to read as follows:
Sec. 158.33 Duration of authority to impose a PFC before project
implementation.
(a) * * *
(2) 5 years after the charge effective date, or the date of the
FAA's decision on the application (if the charge effective date is more
than 60 days after the decision date) if an approved project is not
implemented.
* * * * *
(c) * * *
(1) 3 years after the charge effective date, or the date of the
FAA's decision on the application (if the charge effective date is more
than 60 days after the decision date) unless--
* * * * *
(2) 5 years after the charge effective date, or the date of the
FAA's decision on the application (if the charge effective date is more
than 60 days after the decision date) unless the public agency has
obtained project approval.
* * * * *
12. Amend Sec. 158.37 by revising the section heading, paragraphs
(b)(1)(i)(A), (b)(1)(ii)(C), and (b)(5) and redesignating (b)(1)(ii)(D)
and (b)(1)(ii)(E) as (b)(1)(ii)(E) and (b)(1)(ii)(F), respectively, and
adding a new (b)(1)(ii)(D) to read as follows:
[[Page 5198]]
Sec. 158.37 Amendment of approved PFC.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(A) Amend the approved PFC amount for a project by more than 25
percent of the original approved amount if the amount was $1,000,000 or
greater.
* * * * *
(ii) * * *
(C) To institute an increase of 25 percent or less of the original
approved amount if the amount was more than $1,000,000;
(D) To institute an increase of any amount if the original approved
amount of the project was less than $1,000,000.
* * * * *
(5) Justification, if the amendment involves a change in the PFC
amount for a project by more than 25 percent of the original approved
amount if that amount is $1,000,000 or greater, a change of the
approved project scope, or any increase in the approved PFC level to be
collected from each passenger;
* * * * *
13. Amend Sec. 158.39 by revising paragraphs (a) and (d) to read
as follows:
Sec. 158.39 Use of excess PFC revenue.
(a) If the PFC revenue remitted to the public agency, plus interest
earned thereon, exceeds allowable costs of the project, public agencies
must use excess funds for approved projects or to retire outstanding
PFC-financed bonds.
* * * * *
(d) Within 30 days after the authority to impose a PFC has expired
or been terminated, the public agency must present a plan to the
appropriate FAA Airports office to begin using accumulated PFC revenue.
The plan must include a timetable for submitting any necessary
application under this part. If the public agency fails to submit such
a plan, or if the plan is not acceptable to the Administrator, the
Administrator may reduce Federal airport grant program apportioned funds.
Subpart C--Collection, Handling and Remittance of PFCs
14. Amend Sec. 158.43 to revise paragraphs (b)(3) and (c) to read
as follows:
Sec. 158.43 Public agency notification to collect PFCs.
* * * * *
(b) * * *
(3) The charge effective date will always be the first day of the
month; however, it must be at least 30 days after the date the public
agency notified the air carriers of the FAA's approval to impose the PFC.
* * * * *
(c) The public agency must notify air carriers required to collect
PFCs at its airport and the FAA of changes in the charge expiration
date at least 30 days before the existing charge expiration date or new
charge expiration date, whichever comes first. Each notified air
carrier must notify its agents, including other issuing carriers, of
such changes.
* * * * *
15. Amend Sec. 158.45 by revising paragraph (a)(3) to read as follows:
Sec. 158.45 Collection of PFCs on tickets issued in the U.S.
(a) * * *
(3) Issuing carriers and their agents shall collect PFCs based on
the itinerary at the time of issuance.
(i) Any change in itinerary initiated by a passenger that requires
an adjustment to the amount paid by the passenger is subject to
collection or refund of the PFC as appropriate.
(ii) Failure to travel on a nonrefundable or expired ticket is not
a change in itinerary. If the ticket purchaser is not permitted any
fare refund on the unused ticket, the ticket purchaser is not permitted
a refund of any PFC associated with that ticket.
* * * * *
16. Amend Sec. 158.47 by revising paragraphs (a) and (c)(3) to
read as follows:
Sec. 158.47 Collection of PFCs on tickets issued outside the U.S.
(a) For tickets issued outside the U.S., an air carrier or foreign
air carrier may follow the requirements of either Sec. 158.45 or this
section, unless the itinerary is for travel wholly within the U.S. Air
carriers and foreign air carriers must comply with Sec. 158.45 where
the itinerary is for travel wholly within the U.S. regardless of where
the ticket is issued.
* * * * *
(c) * * *
(3) Issuing carriers and their agents shall collect PFCs based on
the itinerary at the time of issuance.
(i) Any change in itinerary initiated by a passenger that requires
an adjustment to the amount paid by the passenger is subject to
collection or refund of the PFC as appropriate.
(ii) Failure to travel on a nonrefundable or expired ticket is not
a change in itinerary. If the ticket purchaser is not permitted any
fare refund on the unused ticket, the ticket purchaser is not permitted
a refund of any PFC associated with that ticket.
* * * * *
17. Amend Sec. 158.49 by revising paragraphs (b) and (c) and
adding paragraph (d) to read as follows:
Sec. 158.49 Handling of PFCs.
* * * * *
(b) Collecting carriers must account for PFC revenue separately.
PFC revenue may be commingled with the air carrier's other sources of
revenue except for covered air carriers discussed in paragraph (c) of
this section. PFC revenues held by an air carrier or an agent of the
air carrier after collection are held in trust for the beneficial
interest of the public agency imposing the PFC. Such air carrier or
agent holds neither legal nor equitable interest in the PFC revenues
except for any handling fee or interest collected on unremitted
proceeds as authorized in Sec. 158.53.
(c)(1) A covered air carrier must segregate PFC revenue in a
designated separate PFC account. Regardless of the amount of PFC
revenue in the covered air carrier's account at the time the bankruptcy
petition is filed, the covered air carrier must deposit into the
separate PFC account an amount equal to the average monthly liability
for PFCs collected under this section by such air carrier or any of its
agents.
(i) The covered air carrier is required to create one PFC account
to cover all PFC revenue it collects. The designated PFC account is
solely for PFC transactions and the covered air carrier must make all
PFC transactions from that PFC account. The covered air carrier is not
required to create separate PFC accounts for each airport where a PFC
is imposed.
(ii) The covered air carrier must transfer PFCs from its general
accounts into the separate PFC account in an amount equal to the
average monthly liability for PFCs as the ``PFC reserve.'' The PFC
reserve must equal a one-month average of the sum of the total PFCs
collected by the covered air carrier, net of any credits or handling
fees allowed by law, during the past 12-month period of PFC collections
immediately before entering bankruptcy.
(iii) The minimum PFC reserve balance must never fall below the
fixed amount defined in paragraph (c)(1)(ii) of this section.
(iv) A covered air carrier may continue to deposit its PFCs into
its general operating accounts combined with ticket sales revenue.
However, at least once every business day, the covered air carrier must
remove all PFC revenue (``Daily PFC amount'') from those accounts and
transfer it to the new PFC account. An estimate based on
[[Page 5199]]
\1/30\ of the PFC reserve balance is permitted in substitution of the
Daily PFC amount.
(v) If the covered air carrier uses an estimate rather than the
daily PFC amount, the covered air carrier shall reconcile the estimated
amount with the actual amount of PFCs collected for the prior month
(``Actual Monthly PFCs''). This reconciliation must take place no later
than the 20th day of the month (or the next business day if the date is
not a business day). In the event the actual monthly PFCs are greater
than the aggregate estimated PFC amount, the covered air carrier will,
within one business day of the reconciliation, deposit the difference
into the PFC account. If the actual monthly PFCs are less than the
aggregate estimated PFC amount, the covered air carrier will be
entitled to a credit in the amount of the difference to be applied to
the daily PFC amount due.
(vi) The covered air carrier is permitted to recalculate and reset
the PFC reserve and daily PFC amount on each successive anniversary
date of its bankruptcy petition using the methodology described above.
(2) If a covered air carrier or its agent fails to segregate PFC
revenue in violation of paragraph (c) of this section, the trust fund
status of such revenue shall not be defeated by an inability of any
party to identify and trace the precise funds in the accounts of the
air carrier.
(3) A covered air carrier and its agents may not grant to any third
party any security or other interest in PFC revenue.
(4) A covered air carrier that fails to comply with any requirement
of paragraph (c) of this section, or causes an eligible public agency
to spend funds unnecessarily to recover or retain payment of PFC
revenue, must compensate that public agency for those costs incurred to
recover the PFCs owed.
(5) The provisions of paragraph (b) of this section that allow the
commingling of PFCs with other air carrier revenue do not apply to a
covered air carrier.
(d) All collecting air carriers must disclose the existence and
amount of PFC funds regarded as trust funds in their financial statements.
18. Revise Sec. 158.53 to read as follows:
Sec. 158.53 Collection compensation.
(a) As compensation for collecting, handling, and remitting the PFC
revenue, the collecting air carrier is entitled to:
(1) $0.11 of each PFC collected.
(2) Any interest or other investment return earned on PFC revenue
between the time of collection and remittance to the public agency.
(b) A covered air carrier that fails to designate a separate PFC
account is prohibited from collecting interest on the account. Where a
covered air carrier maintains a separate PFC account in compliance with
Sec. 158.49(c), it will receive the interest on PFC accounts as
described in paragraph (a)(2) of this section.
(c)(1) Collecting air carriers may file collection cost data
periodically to the FAA after the agency issues a notice in the Federal
Register that specifies the information and deadline for filing the
information. Submission of the information is voluntary. The requested
information must include data on interest earned by the air carrier on
PFC revenue and audited air carrier collection, handling, and
remittance costs in the following categories:
(i) Credit card fees;
(ii) Audit fees;
(iii) PFC disclosure fees;
(iv) Reservations costs;
(v) Passenger service costs;
(vi) Revenue accounting, data entry, accounts payable, tax, and
legal fees;
(vii) Corporate property department costs;
(viii) Training for reservations agents, ticket agents, and other
departments;
(ix) Ongoing carrier information systems costs;
(x) Ongoing computer reservations systems costs; and
(xi) Airline Reporting Corporation fees.
(2) Any new compensation level determined by the FAA's analysis of
data filed under paragraph (b)(1) of this section will replace the
level identified in paragraph (a)(1) of this section.
Subpart D--Reporting, Recordkeeping and Audits
19. Amend Sec. 158.63 by revising paragraphs (a) and (c) to read
as follows:
Sec. 158.63 Reporting requirements: Public agency.
* * * * *
(a) The public agency must provide quarterly reports to air
carriers collecting PFCs for the public agency with a copy to the
appropriate FAA Airports Office. The quarterly report must include:
(1) Actual PFC revenue received from collecting air carriers,
interest earned, and project expenditures for the quarter;
(2) Cumulative actual PFC revenue received, interest earned,
project expenditures, and the amount committed for use on currently
approved projects, including the quarter;
(3) The PFC level for each project; and
(4) Each project's current schedule.
* * * * *
(c) For medium or large hub airports, the public agency must
provide to the FAA, by July 1 of each year, an estimate of PFC revenue
to be collected for each airport in the following fiscal year.
20. Revise Sec. 158.65 to read as follows:
Sec. 158.65 Reporting requirements: Collecting air carrier.
(a) Each air carrier collecting PFCs for a public agency must file
quarterly reports to the public agency unless otherwise agreed by the
collecting air carrier and public agency, providing an accounting of
funds collected and funds remitted.
(1) Unless otherwise agreed by the collecting air carrier and
public agency, reports must state:
(i) The collecting air carrier and airport involved,
(ii) The total PFC revenue collected,
(iii) The total PFC revenue refunded to passengers,
(iv) The collected revenue withheld for reimbursement of expenses
under Sec. 158.53, and
(v) The dates and amounts of each remittance for the quarter.
(2) The report must be filed by the last day of the month following
the calendar quarter or other period agreed by the collecting carrier
and public agency for which funds were collected.
(b) A covered air carrier must provide the FAA with:
(1) A copy of its quarterly report by the established schedule
under paragraph (a) of this section, and
(2) A monthly PFC account statement delivered not later than the
fifth day of the month. This monthly statement must include:
(i) The balance in the account on the first day of the month;
(ii) The total funds deposited during the month;
(iii) The total funds dispersed during the month; and
(iv) The closing balance in the account.
21. Amend Sec. 158.67 by revising paragraph (c)(2) to read as follows:
Sec. 158.67 Recordkeeping and auditing: Public agency.
* * * * *
(c) * * *
(2) Conducted as part of an audit under Office of Management and
Budget Circular A-133 (the Single Audit Act of 1984, Pub. L. 98-502,
and the Single Audit Act Amendments of 1996, Pub. L. 104-156) provided
the PFC is specifically addressed by the auditor.
* * * * *
[[Page 5200]]
Subpart E--Termination
22. Revise Sec. 158.81 to read as follows:
Sec. 158.81 General.
This subpart contains the procedures for terminating PFCs or loss
of Federal airport grant funds for violations of this part or 49 U.S.C.
40117. This subpart does not address the circumstances under which
authority to collect PFCs may be terminated for violations of 49 U.S.C.
47523 through 47528.
Sec. 158.97 [Removed]
23. Remove Sec. 158.97.
24. Amend appendix A by revising paragraphs 10 and 12 of section B
to read as follows:
Appendix A to Part 158--Assurances
* * * * *
B. * * *
* * * * *
10. Recordkeeping and Audit. It will maintain an accounting record
for audit purposes for 3 years after physical and financial completion
of the project. All records must satisfy the requirements of 14 CFR
part 158 and contain documentary evidence for all items of project costs.
* * * * *
12. Compliance with 49 U.S.C. 47523 through 47528. It understands
49 U.S.C. 47524 and 47526 require the authority to impose a PFC be
terminated if the Administrator determines the public agency has failed
to comply with those sections of the United States Code or with the
implementing regulations published under the Code.
Issued in Washington, DC, on January 26, 2006.
Dennis E. Roberts,
Director, Office of Airport Planning and Programming.
[FR Doc. 06-896 Filed 1-31-06; 8:45 am]
BILLING CODE 4910-13-P