[Federal Register Volume 59, Number 204 (Monday, October 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26211]


[[Page Unknown]]

[Federal Register: October 24, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 221 and 292

[Docket No. 49827; Notice No. 94-18]
RIN 2137-AC48

 

Exemption From Property Tariff-Filing Requirements

AGENCY: Office of the Secretary, DOT.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Department proposes to adopt a new Part 292 that would 
exempt U.S. and foreign air carriers from the statutory and regulatory 
duty to file international property (``cargo'') tariffs with DOT, 
subject to the reimposition of the duty in specific cases when 
consistent with the public interest. Commencing with the effective date 
of the final rule, currently effective cargo tariffs would be canceled 
as a matter of law, pending tariff applications would be dismissed, and 
new tariffs would not be accepted for filing. This action is taken on 
the Departments initiative.

DATES: Comments should be received no later than December 23, 1994.
    Proposed Effective Date: Since the proposal would eliminate a 
requirement and create no additional burden, the exemption provisions 
would be effective immediately upon issuance of a final rule.

ADDRESSES: Comments should be sent to the Docket Clerk, Docket No. 
49827, U.S. Department of Transportation, 400 7th Street, SW., Room 
4107, Washington DC 20590-0002, and should plainly refer to this 
docket. To facilitate consideration of the comments, we ask commenters 
to file twelve copies of each comment. We encourage commenters who wish 
to do so also to submit comments to the Department through the 
Internet; our Internet address is [email protected]. Note, 
however, that at this time the Department considers only the paper 
copies filed with the Docket Clerk to be the official comments. 
Comments will be available for inspection at this address from 9:00 
a.m. to 5:00 p.m., Monday through Friday. To receive an acknowledgment 
of receipt of comments, include a stamped, self-addressed postcard 
which the Docket Clerk will time and date-stamp, and return.

FOR FURTHER INFORMATION CONTACT:
Mr. Keith A. Shangraw or Mr. John H. Kiser, Office of the Secretary, 
Office of International Aviation, X-43, Department of Transportation, 
at the address above. Telephone: (202) 366-2435.

SUPPLEMENTARY INFORMATION:

Background

    Section 41504 of Title 49 of the United States Code, formerly 
section 403(a) of the Federal Aviation Act of 1958, as amended, 
requires every U.S. and foreign air carrier to file with the 
Department, and to keep open for public inspection, tariffs showing all 
prices for foreign air transportation between points served by that 
carrier, as well as all rules relating to that transportation to the 
extent required by the Department. This includes prices for carriage of 
cargo, known as cargo ``rates.'' Over the years, international cargo 
tariffs have provided U.S. regulatory authorities with a means to 
exercise close regulatory supervision over cargo pricing, either for 
public policy or consumer protection reasons, or in the context of 
bilateral aviation relations. Increasingly, however, we have come to 
see that the cargo tariff is a device that is no longer necessary for 
us to meet our public interest objectives, and that this tariff regime 
is costly and burdensome to everyone connected with it.
    Cargo rates fall into two broad categories: (1) General commodity 
rates (GCRs), and (2) special rates. Special rates include specific 
commodity rates (SCRs), contract rates, container rates and exception 
rates, all of which are based on the characteristics of particular 
types of traffic, as well as expedited, door-to-door rates for 
documents and small packages, which are based on a premium service.
    In the cargo area, only international scheduled service tariffs 
continue to be filed with the Department. Domestic scheduled service 
cargo tariffs were eliminated in 1978 by Regulation ER-1080, 43 FR 
53635, November 16, 1978. Similarly, both domestic and international 
cargo charter tariffs were eliminated in 1979 by ER-1125, 44 FR 33056, 
June 8, 1979. Domestic and international tariffs of air freight 
forwarders (part of a class of carriers called ``indirect cargo air 
carriers'' or ``foreign indirect air carriers'') were eliminated by ER-
1094, 44 FR 6634, February 1, 1979, and by ER-1159, 44 FR 69635, 
December 4, 1979, respectively.
    The Department's regulatory policy regarding international cargo 
rate tariffs appears at 14 CFR 399.41.\1\ Under this policy, 
independently-set carrier prices in most international cargo rate 
categories are effectively deregulated.\2\ Barring extreme 
circumstances, the only tariff rates over which the Department 
continues to exercise regulatory supervision are GCRs up to and 
including the 500 kilogram weight break, and certain exception 
rates.\3\ Even this oversight is not applicable to markets governed by 
a liberal entry and pricing regime.
---------------------------------------------------------------------------

    \1\This policy was originally established by the Department's 
predecessor agency in this area, the Civil Aeronautics Board (CAB), 
in 1983. The Department assumed jurisdiction over international 
cargo tariffs and cargo rate regulation upon CAB sunset, January 1, 
1985.
    \2\Agreements containing international cargo rates, which 
carriers coordinate through the tariff conferences and procedures of 
the International Air Transport Association (IATA), must be filed 
with and approved by the Department before tariffs can be filed or 
other steps taken for their implementation. These agreements are 
subject to economic justification requirements and Department 
analysis which are independent of its tariff policy and procedures. 
The proposed rule will not affect the review of IATA agreements in 
any way.
    \3\Section 399.41 sets zones of pricing flexibility for GCRs up 
to 500 kilograms, and establishes a Standard Foreign Rate Level 
(SFRL) for each market as the basis for these zones of flexibility. 
The SFRL is calculated periodically to reflect changes in the cost 
experiences of the carriers. The SFRL zones also govern exception 
rates, priced at levels higher than comparable GCRs, for shipments 
of live animals, perishable goods and other kinds of specialized 
cargo. However, the other special rate categories are not subject to 
any zone constraints.
---------------------------------------------------------------------------

    Since its adoption in 1983, section 399.41 has proved adequate. 
Virtually no complaints have been received against filed cargo tariffs, 
whether against rates or against rules stating conditions of 
service.\4\ In many markets, carriers have not used the upward 
flexibility available to them to raise rates to the SFRL ceilings. The 
international cargo market has continued to evolve to the point where 
today the Department tentatively believes that it no longer needs to 
rely on the routine government supervision of cargo tariffs to protect 
the public.
---------------------------------------------------------------------------

    \4\The basic conditions of service for the international air 
transportation of cargo are also stated in the carriers' air 
waybills, and most areas of potential shipper concern are governed 
directly by provisions of the Warsaw Convention.
---------------------------------------------------------------------------

    Many shippers who now tender shipments directly to carriers are 
large volume forwarders or ``consolidators.'' These shippers have a 
sufficient position in the market to shop around and negotiate the best 
service/price options. Many small volume or irregular shippers are now 
generally served either by consolidators or, increasingly, by small 
package specialists offering premium services. The filing of 
consolidator tariffs was discontinued in 1979 with no apparent adverse 
effect on the public. Nor has the Department received any complaints 
about small package rates, which have not been regulated in keeping 
with its liberal pricing policy on all optional premium services.
    The U.S. Government has also actively pursued the liberalization of 
international cargo prices with other countries. It has concluded 
aviation agreements which effectively deregulate cargo prices in a 
number of major markets, including the United Kingdom, Belgium, 
Germany, and the Netherlands. We have had no bilateral pricing disputes 
involving cargo rates in recent years, and the Department expects that 
deregulation of international cargo prices will continue to be a 
routine objective in future bilateral or multilateral discussions. 
Indeed, a few foreign countries are considering, or have already 
decided, not to require carriers to file international cargo rate 
tariffs with their aviation authorities.
    Carriers are thus filing, and the Department is processing, 
thousands of pages of cargo tariff material each year with little, if 
any, meaningful regulatory consequence.\5\ Requiring the continued 
routine carrier filing of cargo tariffs would burden the industry 
unnecessarily, and continuing the physical processing and storage of 
such tariffs would needlessly burden the Department in an era of scarce 
and diminishing governmental resources without consequent benefits. In 
these circumstances, the Department tentatively has determined to end 
the routine filing and review of detailed price and other tariff 
information relating to the carriage of cargo by air.\6\
---------------------------------------------------------------------------

    \5\In 1993 alone, The Department received and processed 8,591 
pages of cargo tariffs.
    \6\International air transport agreements routinely permit, but 
do not obligate, each party to require tariffs to be filed with its 
aeronautical authorities.
---------------------------------------------------------------------------

    The proposed rule would exempt U.S. and foreign air carriers from 
their statutory and regulatory duty to file tariffs with DOT containing 
rates and any other rules or conditions of service for the carriage of 
cargo to/from U.S. points, and it would not permit them to do so. 
Existing tariffs would be cancelled, and pending tariff applications 
would be dismissed. The exemption would encompass all material 
currently filed in international cargo tariffs with DOT.
    However, existing regulations of the Department, set forth in 14 
CFR Part 249 and in section 221.177 of 14 CFR Part 221, would continue 
to require each carrier, individually and through its agents, to 
maintain pertinent information on its cargo prices and rules, and to 
make that information available to the public upon request.
    This rule will not materially lessen the Department's ability to 
intervene in cargo pricing and related matters should that be 
necessary. First, Departmental review of IATA cargo agreements will 
continue. Second, the Department has always had statutory authority to 
take action directly against unfiled cargo prices and rules under a 
variety of circumstances.\7\ And third, the Department will reserve the 
option under the proposed rule of revoking the exemption in whole or in 
part, thus reinstating the tariff-filing obligation, with regard to a 
particular carrier or carriers where consistent with the public 
interest. This would make available to the Department, in a timely 
manner, the full panoply of tariff-filing requirements and review 
procedures that are currently applicable, although the Department would 
not necessarily implement them all in any particular case.\8\
---------------------------------------------------------------------------

    \7\See, e.g., 49 U.S.C. sections 41712, 41507 and 41310.
    \8\For example, the Department could require filings, but grant 
a waiver from all or some of the format procedures set forth in Part 
221 of the Regulations; or it might require the filing of only a 
particular rate or group of rates of a particular carrier.
---------------------------------------------------------------------------

    To facilitate any cargo rate evaluation that may be required, the 
Department proposes to leave in place its current regulatory policies, 
embodied in the section 399.41 policy statement, and to continue to 
recalculate the SFRL cost index. This would continue to establish 
benchmark levels for GCRs and exception rates that would be, prima 
facie, reasonable, and that could be used to resolve any complaints 
against rates in categories regulated by the SFRL.
    In addition to rates, existing cargo tariffs also contain general 
material governing such subjects as notice of terms of contract of 
carriage, liability for loss, claims procedures, carriage of dangerous 
goods, acceptability of cargo, and other general matters of concern to 
shippers and other consumers of international cargo air transportation. 
The absence of cargo tariffs should have no impact in this regard. Most 
such material merely restates provisions contained in the standard air 
waybill or other contract of carriage, and it is not necessary for the 
protection of shippers to repeat the information in filed tariffs. To 
the extent that shippers have questions about the application or 
interpretation of certain contract provisions, it is likely that they 
consult the carrier directly rather than its tariffs. To the extent 
that tariffs might set forth certain provisions in greater detail, the 
Department already has an alternative framework in place to permit its 
incorporation into the contract of carriage. Under section 221.177, 
carriers may incorporate by reference material not actually printed on 
the air waybill, provided that they make the full text of all such 
incorporated terms readily available for public inspection, in either 
electronic or printed medium, at each airport or other sales office of 
the carrier. This procedure preempts any state laws on the same 
subjects, as did 14 CFR Part 253 in the case of domestic passenger air 
transportation.

Regulatory Analyses and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

    The Department has determined that this proposed rule is not 
subject to review under Executive Order 12866. Moreover, the rule is 
not significant under the Department's Regulatory Policies and 
Procedures (44 CFR 11034; Feb. 26, 1979). A regulatory evaluation in 
this Docket shows that the benefits of the proposed rule exceed the 
costs to the industry and the Federal Government significantly, since 
it eliminates a current regulatory burden, without imposing other 
requirements.

Executive Order 12612

    This proposal has been analyzed in accordance with the principles 
and criteria contained in Executive Order 12612 (``Federalism''), and 
the Department has determined the rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

Regulatory Flexibility Act

    I certify that this rule, if adopted, will not have a significant 
economic impact on a substantial number of small entities. The tariff 
filing requirements apply to scheduled service air carriers. The vast 
majority of the air carriers filing international (``foreign'') air 
cargo tariffs are large operators with revenues in excess of several 
million dollars each year. Small air carriers operating aircraft with 
60 seats or less and 18,000 pounds payload or less that offer on-demand 
air-taxi service are not required to file such tariffs.

Paperwork Reduction Act

    With respect to the Paperwork Reduction Act, this proposed rule 
change eliminates information collection requirements that require the 
approval of the Office of Management and Budget pursuant to the Act. 
This proposal will reduce paperwork burden, as described in detail in 
the Regulatory Evaluation in this docket.
    If these proposed regulations are implemented, about 7,000 to 
10,000 tariff pages encompassing cargo rates, charges and rules, and 
about 500 Cargo Special Tariff Permission Applications (STPA's), would 
be eliminated each year, saving the air carriers a filing fee of $2 per 
cargo page and $12 per cargo STPA (which generally consists of about 
three double-sided pages for each STPA form).
    Such filing fees, now paid to DOT, total about $20,000 or less 
annually. Air carriers and their cargo filing agents also would avoid 
the burden of preparing and transmitting tariff filings, estimated to 
be about 5.34 hours for each of the 7,500 cargo tariff pages and STPA 
forms, or about 40,050 burden hours, which at an estimated industry 
salary rate of about $10.40 an hour would indicate a savings of 
approximately $416,520.
    In addition, other associated costs, such as those incurred by 
carriers to formulate and disseminate the cargo rate and rules pages to 
their customers, may be reduced. For example, the $48 charge per 
international cargo tariff page to cover 1994 publication/distribution 
costs, announced by the Airline Tariff Publishing Company (ATPCO) in 
Cargo Tariff Bulletin No. 19, dated November 18, 1993, might be 
favorably affected. The subscription rate for each cargo tariff ranges 
from $15 to $95, based upon speed of delivery (bulk/priority/or air). 
Currently the charge for the delivery of the complete international 
cargo tariff in the U.S., Canada or Mexico is $200, or $500 for 
delivery elsewhere. Whether these subscription rates would be reduced 
would be decided by the tariff agent and the air carriers.
    For further information contact: The Information Requirements 
Division, M-34, Office of the Secretary of Transportation, 400 Seventh 
Street, S.W., Washington, D.C. 20590, (202) 366-4735 or Transportation 
Desk Officer, Office of Management and Budget, New Executive Office 
Building, Room 3228, Washington, DC 20503.
    Any comments regarding the burden estimate or any aspect of these 
information requirements, including suggestions for reducing the 
burden, may be sent to: Director, Office of Airline Statistics, DAI-1, 
U.S. Department of Transportation, Research and Special Programs 
Administration, 400 Seventh Street, S.W., Room 4125, Washington, DC 
20590-0001 as well as the above contact at OMB.

Regulation Identifier Number

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN number contained in the heading 
of this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects

14 CFR Part 221

    Air carrier, Cargo rates, Tariffs, Reporting and recordkeeping 
requirements.

14 CFR Part 292

    International cargo transportation.

    This rule is being issued under authority delegated in 49 CFR 
1.56(j)(2)(ii). For the reasons set forth in the preamble, it is 
proposed that 14 CFR Part 221 be amended and a new Part 292 be added, 
to read as follows:

PART 221--TARIFFS

    1. The authority citation for Part 221 continues to read as 
follows:

    Authority: 49 U.S.C. 40101, 40109, 40113, 46101, 46102, Chapter 
411, Chapter 413, Chapter 415, and Subchapter I of Chapter 417, 
unless otherwise noted.

Subpart A--[Amended]

    2. Section 221.3 is amended by adding paragraph (d)(9) to read as 
follows:


Sec. 221.3  Carrier's duty.

* * * * *
    (d) * * *
    (9) Part 292, International Cargo Transportation, except as 
provided in Part 292.
* * * * *
    3. A new Part 292 is added to read as follows:

PART 292--INTERNATIONAL CARGO TRANSPORTATION

Subpart A--General

Sec.
292.1  Applicability.
292.2  Definitions.

Subpart B--Exemption From Filing of Tariffs

292.10  Exemption.
292.11  Revocation of exemption.

Subpart C--Effect of Exemption

292.20  Rule of construction.
292.21  Termination of effectiveness.

    Authority: 49 U.S.C. 40101, 40105, 40109, 40113, 40114, 41504, 
41701, 41707, 41708, 41709, 41712, 46101; 14 CFR 1.56(j)(2)(ii).

Subpart A--General


Sec. 292.1  Applicability.

    This Part applies to direct air carriers providing scheduled 
transportation of cargo in foreign air transportation.


Sec. 292.2  Definitions.

    For purposes of this part:
    Direct air carrier means an air carrier or foreign air carrier that 
directly engages in foreign air transportation under a certificate, 
regulation, order or permit issued by the Department of Transportation 
or its predecessor.
    Cargo means property other than baggage accompanied or checked by 
passengers, or mail.
    Cargo tariff means a tariff containing rates, charges, or 
provisions governing the application of such rates or charges, or the 
conditions of service, applicable to the scheduled transportation of 
cargo in foreign air transportation.

Subpart B--Exemption From Filing of Tariffs


Sec. 292.10  Exemption.

    Direct air carriers are exempted from the duty to file cargo 
tariffs with the Department of Transportation, as required or provided 
by 49 U.S.C. 41504 and 14 CFR Part 221.


Sec. 292.11  Revocation of exemption.

    (a) The Department, upon complaint or upon its own initiative, may 
take action to revoke in whole or in part the exemption granted by this 
Part with respect to a carrier or carriers, when such action is in the 
public interest.
    (b) The decisionmaker will be the Assistant Secretary for Aviation 
and International Affairs.
    (c) Revocations under this section will have the effect of 
reinstating all applicable tariff requirements, and procedures 
specified in the Department's regulations for the tariff material to be 
filed, unless otherwise specified by Department order.

Subpart C--Effect of Exemption


Sec. 292.20  Rule of construction.

    Carriers holding an effective exemption from the duty to file cargo 
tariffs under this Part shall not, unless otherwise directed by order 
of the Department, be subject to tariff posting, notification or 
subscription requirements set forth in 49 U.S.C. 41504 of the Act or 14 
CFR Part 221, except the requirements set forth in section 221.177 and 
the requirements set forth in 14 CFR Part 249. References to 
``tariffs'' in section 221.177 shall be construed to mean terms, 
conditions or other provisions which are part of the contract of 
carriage as permitted by that section.


Sec. 292.21  Effect of exemption.

    As of [insert publication date], cargo tariffs on file with the 
Department will cease to be effective as tariffs under 49 U.S.C. 41504 
and 41510 and will be canceled by operation of law. Pending 
applications for filing and/or effectiveness will be dismissed by 
operation of law. No new filings or applications will be permitted 
except as provided under section 292.11, above.

    Issued in Washington, D.C. on October 18, 1994.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 94-26211 Filed 10-21-94; 8:45 am]
BILLING CODE 4910-62-P