[Federal Register Volume 60, Number 37 (Friday, February 24, 1995)]
[Rules and Regulations]
[Pages 10310-10312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4328]



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DEPARTMENT OF TRANSPORTATION
Office of the Secretary

14 CFR Parts 300 and 385

[Docket No. 48582]
RIN 2105-AB89


Rules of Conduct in DOT Proceedings

AGENCY: Department of Transportation, Office of the Secretary.

ACTION: Final rule.

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SUMMARY: The Department of Transportation is amending its procedural 
regulations to permit Department staff to communicate informally with 
applicants and any objectors or other commenters in the investigation 
stage of docketed air carrier initial certificate application and 
continuing fitness cases (collectively referred to as ``fitness 
cases'') where the issues are limited solely to fitness and/or U.S. 
citizenship. Such communications may be initiated only by Department 
career staff for the purpose of clarifying information filed, or by an 
applicant or other interested party upon grant of a limited waiver of 
the regulations in order to engage in substantive communication with 
Department staff. In other respects, the Department's current ex parte 
restrictions will continue to govern substantive communications both 
before and after a show-cause order or an order instituting a formal 
proceeding has been issued. The amendment being promulgated differs 
from that proposed in the Notice of Proposed Rulemaking (NPRM) in that 
the latter did not restrict the permitted ex parte communications to 
those initiated by Department staff or by other interested persons only 
pursuant to a waiver. The amendment will give the Department an added 
degree of flexibility in seeking information from all interested 
parties and will decrease the burden on applicants as well as objectors 
and other commenters. However, it will still provide those parties a 
fair and complete opportunity to be heard and ensure an adequate record 
for the proceeding.

EFFECTIVE DATE: The rule shall become effective on March 27, 1995.

FOR FURTHER INFORMATION CONTACT: Carol A. Woods, Air Carrier Fitness 
Division, X-56, Department of Transportation, 400 Seventh Street, SW., 
Washington, DC 20590, (202) 366-9721.

SUPPLEMENTARY INFORMATION:

Background

    On December 30, 1992, the Department issued an NPRM (58 FR 516, 
January 6, 1993) to amend its procedural regulations (14 CFR Part 300) 
to permit Department staff to communicate informally with applicants 
and any objectors or other commenters in docketed cases involving 
determinations of air carrier fitness and/or U.S. citizenship only, 
during the initial investigation stages before the issuance of a show-
cause order or an order instituting a formal proceeding. After the 
issuance of either of those orders, the Department's current ex parte 
restrictions would apply.
    The amendment was designed to eliminate unnecessary delays and 
complications in processing initial certificate applications and 
docketed continuing fitness cases that arise because, under the current 
rule (14 CFR 300.2), the Department may not discuss informally, either 
orally or in writing, substantive aspects of the cases with the 
applicants or objecting parties once a written objection is filed. 
Instead, the Department's staff routinely goes through the burdensome 
task of putting all of its questions in writing, filing them in the 
docket, and serving them on all parties. The applicant must likewise 
respond in writing through the docket, with copies to all parties. 
Often responses to staff questions need clarification or spawn further 
inquiries. Moreover, questions asked of the applicant by the 
Department's staff may themselves require clarification before a proper 
response can be made. As a result, often matters that could be cleared 
up in minutes by telephone or in a meeting can drag on for days or 
weeks solely due to the procedures of the on-the-record communications 
required under the current rules. Overall, the process is often 
cumbersome and time-consuming.
    Carrier applicants are not the only persons who suffer as a result. 
For example, the Department's staff may not under present ex parte 
rules ask simple questions of an objector in an effort to verify the 
facts contained in the filing objecting to the application without 
similar written procedures. The amendment would allow the Department 
the flexibility to seek clarifications and additional information from 
interested persons in an informal manner, thereby relieving all parties 
of the burden of having to file such communications in the docket and 
serve them on all interested persons. Since the current ex parte 
communication rules would continue to apply after the issuance of a 
show-cause order or an order instituting formal procedures, the 
amendment would ensure that all parties would have a fair and complete 
opportunity to be heard and that an adequate record would be assembled 
for the proceeding.
    Comments on the NPRM were received from American Airlines, Inc. 
(American), Delta Air Lines, Inc. (Delta), United Air Lines, Inc. 
(United), and the Regional Airline Association.

Summary of Comments

    The Regional Airline Association stated that it supported the 
Department's proposed amendment to Part 300. American declared that it 
had no objection to the proposed change if limited to docketed initial 
fitness proceedings. Delta objected to ex parte communications in any 
``controversial cases involving significant issues of law and/or public 
policy.'' United stated that it did not object to a change allowing ex 
parte communications for the purpose of clarifying factual issues in 
routine fitness cases, such as financial documents, personnel 
backgrounds, or safety violations, but maintained that ex parte 
communications were not appropriate in any type of fitness proceeding 
that involved citizenship issues.
    Delta declared that the proposed change would allow ``secret'' 
communications between the Department and the subjects of fitness 
reviews in contested, controversial cases where prohibitions on such 
communications are particularly needed to protect the rights of all 
parties and the integrity of the Department's 
[[Page 10311]] procedures. Delta suggested that the Department add a 
provision to Sec. 300.2 allowing an applicant or respondent in a 
docketed case in which an objection has been received to request a 
limited waiver of Sec. 300.2(a) to permit ex parte communications with 
Department staff prior to the issuance of a show-cause order or an 
order instituting further procedures. Such a request would be filed in 
the docket, with a copy to each party, so that interested persons could 
comment on the appropriateness and scope of the proposed waiver.
    American, Delta, and United also provided comments and suggestions 
concerning the use of ex parte communications in undocketed continuing 
fitness reviews, particularly those involving citizenship issues.1 
Those remarks, however, are beyond the scope of this rulemaking, which 
is confined to docketed initial and continuing fitness cases.

    \1\The three carriers all asserted that ex parte communications 
were not appropriate in continuing fitness reviews of major carriers 
where their citizenship was at issue, even if the case was 
undocketed. Delta recommended that the Department amend Part 302 of 
its procedural regulations to require the issuance of a public 
notice by the Department upon receiving continuing fitness 
information concerning, or a request for a disclaimer of 
jurisdiction or approval of a proposed transaction involving, the 
acquisition of potential control over a U.S. carrier by a foreign 
air carrier (e.g., by acquiring more than 15 percent of a U.S. 
carrier's voting interest and/or more than 25 percent of its total 
equity). If, in response to the public notice, any interested person 
were to file an answer requesting the establishment of a public 
proceeding to consider issues of fact, law or policy with respect to 
the proposed transaction, the Department would publish an order 
instituting the public proceeding.
    United urged the Department to establish standards for 
determining when a continuing fitness proceeding will be docketed 
and, when not docketed, what ex parte rules will apply. United 
further recommended that the Department establish either a written 
or an oral public proceeding in any fitness review that involves 
some type of adjudication, although, in cases not involving 
citizenship issues, the Department may conduct fact-finding on an ex 
parte basis, but should institute a public proceeding, and issue a 
reviewable order, if any ``substantive issue'' relative to a 
carrier's fitness is discovered.
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Discussion

    After re-examining the need to ensure full appearance of fairness 
in our proceedings and the comments received on the NPRM, we now 
consider that the relaxation proposed in the NPRM was overly broad, 
going beyond the relief from the restrictions that we were seeking. As 
a remedy, we have decided to add two limitations to the change we 
proposed.
    First, we will limit the exemption for ex parte communications 
allowed before the issuance of a show-cause order or order instituting 
a formal proceeding to those initiated by Department career staff for 
the purpose of investigating or clarifying information filed by the 
applicant or other interested person, and responses thereto. Such an 
exception corresponds to that granted to Department staff in 
Sec. 300.2(c)(3) in connection with the investigation phase of 
enforcement proceedings.
    Second, we believe that there is merit in Delta's suggestion that 
if an applicant or other interested person needs to discuss a 
substantive matter with Department staff involving a docketed 
proceeding in which an objection has been received, but before the 
issuance of a show-cause order or an order instituting further 
procedures, that person should be able to file in the docket and serve 
on all parties, using the guidelines set forth in Rule 18 (14 CFR 
302.18), a request for a waiver from Sec. 300.2(a), setting forth the 
scope of the proposed waiver and the reasons for the request. Any 
interested person could then file an answer to the waiver request, 
commenting on its merits or scope, which comments the Department would 
consider in ruling on the request. The responsibility for ruling on 
such waiver requests would be delegated to the Director of the Office 
of Aviation Analysis, Office of the Assistant Secretary for Aviation 
and International Affairs.
    By thus limiting the instigation of ex parte communications, we 
intend to forestall even the appearance of improper influence on the 
Department's decision-making process. However, this limitation by no 
means precludes any interested person from providing unsolicited 
written comments containing relevant information concerning the initial 
or continuing fitness or citizenship of an applicant or air carrier at 
any time, including in response to either an application or to any 
show-cause order that may be issued, whether or not a public proceeding 
is in progress. If any such information is provided, it will be placed 
in any open docket and may be discussed in a show-cause or other order.

Conclusion

    After carefully weighing the comments provided in response to the 
NPRM, and for the reasons discussed above, we have decided to finalize 
the proposed amendment with the changes described above. We are also 
amending 14 CFR Part 385 to add a new subparagraph (Sec. 385.14(p)) 
stating the authority of the Director of the Office of Aviation 
Analysis to approve or deny requests for waivers from Sec. 300.2(a) in 
docketed air carrier initial certificate application and continuing 
fitness cases.

Executive Order 12866 (Regulatory Planning and Review)

    The Department has analyzed the economic and other effects of this 
amendment and has determined that they are not ``significant'' within 
the meaning of Executive Order 12866. It will not have an annual effect 
on the economy of $100 million or more or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities. It will not create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency, and it will not materially alter the 
budgetary impact of entitlements, grants, user fees, or loan programs 
or the rights and obligations of recipients thereof. Nor does it raise 
any novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in Executive Order 
12866. Therefore, a regulatory impact analysis is not required.

DOT Regulatory Policies and Procedures

    The amendment is not significant under the Department's Regulatory 
Policies and Procedures, dated February 26, 1979, because it does not 
involve important Departmental policies; rather, it is being made 
solely for the purpose of facilitating communication between Department 
staff and the air carriers subject to its regulatory oversight. The 
Department has also determined that the economic effects of the 
amendment are so minimal that a full regulatory evaluation is not 
required. As a result of the adoption of this amendment, fitness 
application costs to carriers and costs to opposing parties should be 
slightly lower due to the less formal procedures that would replace the 
current procedures.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, the Department 
has evaluated the effects of this action on small entities. For 
purposes of its aviation economic regulations, Departmental policy 
categorizes air carriers operating small aircraft (60 seats or less or 
18,000 pounds maximum payload or less) in strictly domestic service as 
small entities for purposes of the Regulatory Flexibility Act. Based 
upon this evaluation, the Department certifies that the amendment would 
not have a significant economic impact on [[Page 10312]] a substantial 
number of small entities. As stated above, the Department believes that 
the amendment would create a slight economic benefit for parties in 
fitness cases.

Executive Order 12612 (Federalism)

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

National Environmental Policy Act

    The Department has also analyzed this rule for the purpose of the 
National Environmental Policy Act. The rule would not have any 
significant impact on the quality of the human environment.

Paperwork Reduction Act

    There are no reporting or recordkeeping requirements associated 
with this rule.

List of Subjects

14 CFR Part 300

    Administrative practice and procedure, Conflict of interests.

14 CFR Part 385

    Organization and functions (Government agencies).

    For the reasons set out in the Supplementary Information, title 14, 
chapter II of the Code of Federal Regulations is amended as follows:

PART 300--[AMENDED]

    1. The authority citation for part 300 is revised to read as 
follows:

    Authority: 49 U.S.C. subtitle I and chapters 401, 411, 413, 415, 
417, 419, 421, 449, 461, 463, and 465.

    2. Section 300.2 is amended by adding new paragraph (c)(10) to read 
as follows:


Sec. 300.2  Prohibited communications.

* * * * *
    (c) * * *
    (10) Information given at the request of a DOT career employee in 
the course of investigating or clarifying information filed, or 
pursuant to a waiver granted to an applicant or other interested 
person, in docketed proceedings involving determinations of fitness 
and/or U.S. citizenship only, for that portion of the proceeding that 
precedes the issuance of a show-cause order or an order instituting a 
formal proceeding. Motions for such waivers and any answers shall be 
filed in the applicable docket in accordance with Sec. 302.18 of the 
Department's Procedural Regulations (14 CFR 302.18) and served upon all 
parties to the proceeding.
* * * * *

PART 385--[AMENDED]

    3. The authority citation for part 385 is revised to read as 
follows:

    Authority: 49 U.S.C. chapters 401, 411, 413, 415, 417, and 419.

    4. Section 385.14 is amended by adding new paragraph (p) to read as 
follows:


Sec. 385.14  Authority of the Director, Office of Aviation Analysis.

* * * * *
    (p) Approve or deny requests for waivers from 14 CFR 300.2(a) in 
docketed air carrier initial certificate application and continuing 
fitness proceedings.
* * * * *
    Issued in Washington, DC, on February 16, 1995.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 95-4328 Filed 2-23-95; 8:45 am]
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