[Federal Register Volume 64, Number 74 (Monday, April 19, 1999)]
[Proposed Rules]
[Pages 19220-19240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9635]



[[Page 19219]]

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Part II





Department of Transportation





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Federal Aviation Administration



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14 CFR Part 108



Security of Checked Baggage on Flights Within the United States; 
Proposed Rule

  Federal Register / Vol. 64, No. 74 / Monday, April 19, 1999 / 
Proposed Rules  

[[Page 19220]]



DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 108

[Docket No. FAA-1999-5536; Notice No. 99-05]
RIN 2120-AG51


Security of Checked Baggage on Flights Within the United States

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: The FAA is proposing that each certificate holder required 
under Sec. 108.5 to adopt and implement an FAA-approved security 
program screen checked baggage or conduct passenger-to-bag matching for 
scheduled passenger operations within the United States when using an 
airplane having a passenger seating configuration of more than 60 
seats. The security of checked baggage on domestic flights may be 
accomplished by screening the checked baggage of every passenger with 
FAA-certified explosives detection system (EDS) equipment, by 100% 
positive passenger bag matching (PPBM), or by utilizing the FAA-
approved computer-assisted passenger screening (CAPS) system to select 
passengers whose checked baggage must be subjected to additional 
security measures. The checked baggage of CAPS selectees would be 
screened by EDS equipment, where available, or bag matching would be 
applied. These requirements for checked baggage on domestic flights are 
intended to prevent or deter the introduction of explosives or 
incendiary devices into the cargo holds of airplanes on flights within 
the United States. This proposal is necessary to provide a high level 
of security for domestic civil aviation.

DATES: Comments must be received on or before June 18, 1999.

ADDRESSES: Comments on this proposed rulemaking should be mailed or 
delivered, in duplicate, to: U.S. Department of Transportation Dockets, 
Docket No. FAA-1999-5336; 400 Seventh St., SW, Rm. Plaza 401, 
Washington, DC 20590. Comments may also be sent electronically to the 
following internet address: [email protected]. Comments may be filed 
and/or examined in Room Plaza 401 between 10 a.m. and 5 p.m. weekdays, 
except federal holidays.

FOR FURTHER INFORMATION CONTACT: Mr. Lon M. Siro, Aviation Security 
Specialist, Civil Aviation Security Office of Policy and Planning, ACP-
100, Federal Aviation Administration, 800 Independence Avenue, SW., 
Washington, DC 20591; telephone (202) 267-3414.

SUPPLEMENTARY INFORMATION:

Comments Invited

    Interested persons are invited to participate in the making of the 
proposed rule by submitting such written data, views, or arguments, as 
they may desire. Comments relating to the environmental, energy, 
federalism, or economic impact that might result from adopting the 
proposals in this notice are also invited. Substantive comments should 
be accompanied by cost estimates. Comments must identify the regulatory 
docket or notice number and be submitted in duplicate to the Rules 
Docket address specified above.
    All comments received, as well as a report summarizing each 
substantive public contact with FAA personnel on this rulemaking, will 
be filed in the docket. The docket is available for public inspection 
before and after the comment closing date.
    All comments received on or before the closing date will be 
considered by the Administrator before taking action on this proposed 
rulemaking. Late-filed comments will be considered to the extent 
practicable. The proposals contained in this notice may be changed in 
light of the comments received.
    Commenters wishing the FAA to acknowledge receipt of their comments 
submitted in response to this notice must include a pre-addressed, 
stamped postcard with those comments on which the following statement 
is made ``Comments to Docket No. FAA-1999-5336.'' The postcard will be 
dated, stamped, and mailed to the commenter.

Availability of NPRM's

    An electronic copy of this document may be downloaded using a modem 
and suitable communications software from the FAA regulations section 
of the Fedworld electronic bulletin board service (telephone: 703-321-
3339), the Federal Register's electronic bulletin board service 
(telephone: (202) 512-1661), or the FAA's Aviation Rulemaking Advisory 
Committee Bulletin Board service (telephone: (800) FAA-ARAC or (202) 
267-5948).
    Internet users may reach the FAA's web page at http://www.faa.gov/
avr/arm/nprm/nprm.htm or the Federal Register's webpage at http://
www.access.gpo.gov/su__docs/aces/aces140.html for access to recently 
published rulemaking documents.
    Any person may obtain a copy of this NPRM by submitting 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. Communications must identify the notice number or docket 
number of this NPRM.
    Persons interested in being placed on the mailing list for future 
NPRM's should request from the above office a copy of Advisory Circular 
No. 11-2A, Notice of Proposed Rulemaking Distribution System, that 
describes the application procedure.

Background

    Over the past several years, the Federal Aviation Administration 
(FAA) has recognized that the threat against civil aviation has changed 
and grown. In particular, recent terrorist activities within the United 
States have forced the FAA and other federal agencies to reevaluate 
their assessment of the threat against civil aviation. For example, 
investigations into the February 1993 attack on the World Trade Center 
uncovered a foreign terrorist threat in the United States more serious 
than previously known. In addition, in 1995 a conspiracy was discovered 
involving Ramzi Ahmed Yousef and co-conspirators who intended to bomb 
twelve American airliners over the Pacific Ocean. This conspiracy 
showed that: (1) foreign terrorists conducting future attacks in the 
United States may choose civil aviation as a target, despite the many 
more easily accessible targets equally symbolic of America; (2) foreign 
terrorists have the ability to operate in the United States; and (3) 
foreign terrorists are capable of building and artfully concealing 
improvised explosive devices that pose a serious challenge to aviation 
security. In addition to threats posed by foreign terrorists, criminals 
operating within the United States also pose a threat. For example, the 
partial detonation of a bomb aboard American Airlines flight 444 while 
en route from Chicago to Washington, DC, in 1979, has been attributed 
to Theodore Kaczynski (known as ``the Unabomber'').
    The serious consequences of an in-flight explosion were 
dramatically demonstrated on July 17, 1996, when Trans World Airlines 
(TWA) flight 800 crashed off the coast of Long Island, New York. While 
the Federal Bureau of Investigation (FBI) and the National 
Transportation Safety Board (NTSB) determined that this accident was 
not the result of a terrorist act, it did elevate concerns regarding 
the safety and security of civil aviation. This concern led to the 
formation of the White House

[[Page 19221]]

Commission on Aviation Safety and Security (the Commission).
    The Commission made several recommendations that were published on 
February 12, 1997, in its ``Final Report to President Clinton.'' In 
reviewing civil aviation security, the Commission stated that ``the 
threat of terrorism is changing * * * it is no longer just an overseas 
threat from foreign terrorists. People and places in the United States 
have joined the list of targets, and Americans have joined the ranks of 
terrorists.'' The Commission indicated that aviation security would be 
enhanced by the use of sophisticated technology for determining the 
presence of explosives in checked baggage, such as use of explosives 
detection system (EDS) equipment. The Commission recommended that, 
until those machines are widely available, the FAA should implement bag 
matching, initially based on passenger profiling, by December 31, 1997, 
and that the FAA should develop an automated system for passenger 
profiling. (For the purposes of the discussion of the CAPS system in 
this NPRM, the terms ``passenger profiling'' and ``passenger 
screening'' are used interchangeably.) Because of the FAA's high degree 
of confidence in CAPS' ability to evaluate information from passenger 
name records and other passenger records already maintained by air 
carriers, as well as its confidence in CAPS' ability to identify the 
large majority of passengers who are not associated with a threat to a 
flight, the FAA concurs with the Commission's recommendations. In 
addition, due to the limited availability of EDS equipment and the 
significant operational and economic impacts that immediate compliance 
with the Commission's recommendations would have on the air carriers, 
the FAA has determined that a phase-in period is necessary. Security 
requirements for implementation of the Commission's recommendations are 
discussed below.

White House Commission Recommendations

    Explosives Detection System (EDS) Equipment-The FAA defines an EDS 
machine as an automated device, or combination of devices, which has 
the ability to detect, in passengers' checked baggage, the amounts, 
types, and configurations of explosive materials likely to be used by 
terrorists to cause catastrophic damage to large aircraft. The term 
``automated'' means that the system is able to detect explosive 
materials and does not depend exclusively on human skill, vigilance, or 
judgment. Because EDS equipment is capable of detecting the explosive 
materials used in bombs with minimal human intervention, the FAA has 
determined that it is highly effective and agrees with the Commission's 
contention that use of EDS equipment is preferable to other security 
measures for clearing checked baggage, including PPBM. The FAA and the 
Commission also agree that full deployment of EDS is not something that 
is operationally feasible in the near future, due to the limited 
availability of certified EDS equipment. Accordingly, the FAA believes 
use of EDS equipment should be phased in to eventually replace PPBM and 
other checked baggage security measures. For a further discussion of 
this alternative and others, see discussion under ``Alternatives 
Considered by the FAA'' below.
    Bag Matching, Initially Based on Passenger Profiling--The 
Commission recommended that, until sophisticated technology for 
determining the presence of explosives in checked baggage is widely 
available, the FAA begin implementation of baggage matching, initially 
based on passenger profiling (discussed below), for domestic flights. 
The Commission stated, ``this approach is the most effective 
methodology available now.'' Positive passenger baggage matching 
involves matching the passengers who have boarded the airplane to the 
baggage that was checked for carriage in the airplane's baggage 
compartment so that a passenger's checked baggage is flown only if he 
or she is aboard that airplane. Although 100% PPBM is currently 
performed on all international flights, pursuant to the International 
Civil Aviation Organization (ICAO) requirements, the FAA has not 
required PPBM on domestic flights except in periodic emergency 
situations. While civil U.S. flag aircraft have long been an attractive 
target of terrorists overseas, bombings of airliners within the United 
States have been extremely rare, even though the U.S. civil aviation 
system is the largest and most complex in the world. Over 500 million 
passengers (40 percent of all passengers in the world) enplane at U.S. 
airports and check approximately 750 million bags. In addition, 14 of 
the world's 20 busiest airports are in the United States.
    As stated above, the FAA recognizes the changing threat to civil 
domestic aviation and believes that, in lieu of screening by EDS 
equipment, checked baggage must be properly matched to passengers on 
domestic flights. The FAA, however, also recognizes that, while ICAO 
standards may be appropriate for international flights, there are 
significant differences between domestic and international flights due 
to the varying levels of threat to them and the economic impact of 
additional security measures. These differences include: (1) the much 
greater number of domestic flights; (2) the use of an extensive and 
highly concentrated ``hub and spoke'' system, in which flights converge 
on a central connection point, and scheduled connection times may be 25 
minutes or less; (3) the significantly earlier check-in time for 
international flights, which allows PPBM reconciliation delays to be 
kept to a minimum; and (4) the higher rate of last-minute passenger no-
shows and cancellations on domestic flights, which could result in a 
greater number of passenger reconciliation and baggage-pull delays.
    Automated Passenger Profiling--The Commission's recommendation that 
bag matching be implemented was linked to another recommendation that 
it be initially based on profiling of passengers flying out of airports 
located in the United States. As with manual profiling, the purpose of 
automated profiling is to exclude from the additional security measures 
the great majority of passengers who are very unlikely to present any 
threat and, conversely, to identify passengers to whom heightened 
security measures should be applied. Unlike manual profiling, however, 
automated profiling offers numerous advantages, including elimination 
of the potential perception of personal biases, greater sophistication, 
speed, accuracy, flexibility, and protection against compromise of 
sensitive security information. The Commission discussed a computer-
assisted passenger screening (CAPS) system developed by the FAA and 
Northwest Airlines and recommended that the FAA implement an automated 
profiling system by December 31, 1997. On January 1, 1998, several air 
carriers voluntarily implemented CAPS, and most other carriers have 
since opted to implement it as well. The few carriers that have yet to 
complete the phase-in of CAPS are in the process of systemwide 
implementation.
    In April 1997, in accordance with provisions of an FAA grant, the 
FAA and Northwest Airlines completed final programming changes to a 
prototype CAPS system, which, as noted above, Northwest Airlines and 
most other carriers have since implemented. The CAPS system was 
developed as a more feasible alternative to 100% checked baggage 
matching and EDS screening of all passenger baggage by narrowing the 
pool of passengers on whom additional security measures should be 
focused, thus effectively utilizing the currently limited supply of 
highly technical

[[Page 19222]]

screening equipment (e.g. EDS), and minimizing the operational impact 
of applying other passenger and checked baggage security measures, such 
as PPBM.
    The CAPS system is based on the same concept as the manual 
screening system, which is designed to exclude from additional security 
measures the great majority of passengers who are unlikely to present 
any threat. There are many advantages to CAPS, however. One important 
advantage is that it does not rely on the judgment of individual 
airline employees to reduce the population of persons to whom 
heightened security measures should be applied. The automated system 
``scores'' passengers according to a set of weighted criteria to 
determine which should be subjected to additional security measures. 
Automated screening excludes from heightened security measures the 
great majority of passengers about whom enough is known to determine 
confidently that they present no threat.
    The use of a profile for the screening of passengers dates back to 
the mid-1970's when the FAA began using manual passenger screening to 
combat hijackings and to prevent explosives or incendiary devices from 
being placed aboard airplanes on international flights departing from 
the United States. Manual screening has also been used on domestic 
flights during periodic emergency situations. This screening relies on 
an employee of an air carrier to determine whether a passenger meets 
the profile that the employee has been trained to use. Because manual 
screening allows for more extensive human interaction between 
passengers and air carrier employees, it carries the potential that, 
even though the factors used in conducting manual screening are not 
biased, an employee's personal bias can be evident, regardless of 
whether a given passenger is a selectee or not. While manual screening 
has been a successful tool in combating hijackings and preventing the 
introduction of explosives or incendiary devices onto aircraft, it has 
been criticized by persons who perceived it as discriminating against 
citizens on the basis of race, color, national or ethnic origin, 
religion, and gender. It has also been criticized for causing 
embarrassment to selectees when fellow passengers became aware of his 
or her selectee status. Because a technological substitute for 
individual employee judgment has not been available until now, the FAA 
has continued to require, in emergency situations, manual passenger 
screening for determining the need to implement heightened security 
measures for checked baggage in order to combat the placing of 
explosives aboard aircraft.
    The CAPS system would, in addition to selecting persons pursuant to 
the profiling standards, randomly select a limited number of 
passengers, as specified in air carriers' FAA-approved security 
programs, for heightened security measures. The FAA has determined, and 
the Commission has recommended, that random selection, which ensures 
that each passenger has a chance of being a selectee, has a deterrent 
value that would increase airline passenger security. It means that, 
even if an individual with criminal intentions believed he or she had 
figured out how to circumvent the CAPS system, the individual still 
would have a chance of being designated as a selectee. In addition, 
random selection helps to ensure passengers' civil liberties by 
guaranteeing that no individual or group of individuals is excluded 
from the selection process.
    The CAPS system represents a significant improvement over the 
existing manual system. It uses a greater number of factors and permits 
combinations of sets of factors to determine passengers' status with 
greater confidence. In contrast, there are inherent limitations on the 
number and complexity of factors that an air carrier employee can 
apply. In addition, air carrier employees performing the manual process 
have a limited amount of time available to assess the factors and 
determine whether a passenger is a selectee. For these reasons, the 
number of factors in a manual process must be small and the rules for 
applying them must be simple. The CAPS system virtually eliminates the 
possibility of subjective selection and inadvertent or deliberate 
discrimination by airline employees, as they would not be asked to 
implement any selection process themselves. Finally, the CAPS system 
provides a more secure system, as only a few key airline employees 
(i.e., those who program the computers and implement computer program 
changes) are provided with selection criteria and their relative 
weights. Other air carrier employees need only be aware of the output 
generated by the computer programs, without being aware of the 
criteria. Manual screening, though controlled, may be more easily 
compromised, as details are contained in FAA Security Directives, which 
are available to many airline employees.
    The CAPS system is also intended to minimize the overt 
identification of passengers selected for additional security 
procedures. The CAPS system operates off the computer reservation 
systems utilized by the major U.S. air carriers as well as some smaller 
carriers. The CAPS system relies solely on information that passengers 
presently provide to air carriers for reasons unrelated to security. It 
does not depend on the gathering of any additional information from air 
travelers, nor is it connected to any law enforcement or intelligence 
database. Pursuant to a recommendation by the Department of Justice, as 
part of the proposed rule, the FAA would periodically review the CAPS 
system and its profiling factors to assure that they continue to be 
reasonable predictors of threat. For operations covered under this 
proposed rule, CAPS would replace the manual screening system as a 
baseline security measure.
    Funding for Implementation of White House Commission 
Recommendations--The FAA subsidized a substantial portion of the air 
carriers' cost for development of the core CAPS system. In addition to 
grants of approximately $3.1 million to Northwest Airlines for the 
development of the prototype CAPS system, consultation to the FAA, and 
technical support to other air carriers, the FAA spent an additional 
$7.4 million for the development of core CAPS for other air carriers. 
In total, the $10.5 million subsidy has benefited eight lead carriers 
(provided to six separate Computer Reservation Systems (CRS)), all 
carriers associated with the lead carriers (e.g., feeder carriers), 
plus 19 other regional and national carriers. In total, approximately 
95% of domestic airline passengers are served by the carriers receiving 
FAA subsidies. Also, by the end of fiscal year 1998, the FAA will have 
spent $129 million for the purchase, installation, initial training, 
and first-year maintenance of advanced security screening equipment 
designed to detect explosives in checked baggage. This equipment, which 
will be deployed at airports in the United States, includes EDS 
machines (54 new and 3 upgrades), advanced technology (AT) equipment 
(22 of which are assessed by the FAA as effective), and other high-
technology equipment such as explosives trace detection technologies 
used to assist in alarm resolution for EDS and AT equipment. The FAA 
intends, subject to Congressional approval, to purchase an additional 
20 EDS machines during fiscal year 1998 for $25.1 million, and has 
requested additional funding of $100 million in fiscal year 1999 to 
continue purchases of advanced security equipment to be installed at 
U.S. airports. The FAA intends to

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request appropriations at similar levels in fiscal years 2000 and 
later.

Alternatives Considered by the FAA

    In developing this proposed rule, the FAA considered the relative 
merits and disadvantages of the following alternatives:
    (1) Maintaining the current policy for security of checked baggage 
on domestic flights. To date, the FAA has required domestic checked 
baggage screening and PPBM only when a heightened threat exists. 
Domestic baseline security measures under normal conditions, though not 
requiring checked baggage screening and PPBM, have thus far been 
adequate to counter the domestic threat. However, as evidenced by 
events such as the World Trade Center bombing, the FAA believes that 
the threat to civil aviation within the United States has increased and 
further rulemaking is vital. Though maintaining current baseline 
security measures would be the least costly course of action, the FAA 
does not believe this option is prudent given the current domestic 
threat.
    (2) Phasing in mandatory use of EDS (without requirement for CAPS). 
The FAA considered requiring carriers to use EDS as it becomes 
available to them for screening 100% of checked baggage, and not 
requiring CAPS for those that would be using EDS. EDS offers the 
highest level of security because it is an automated system. To be 
certified, the system must have the ability to detect in passengers' 
checked baggage, the amounts, types, and configurations of explosive 
materials likely to cause catastrophic damage to an aircraft. The term 
``automated'' means that the ability of an EDS to detect explosive 
materials does not depend on human skill, vigilance, or judgment. 
Baggage that clears through EDS screening does not require additional 
security measures on subsequent flight segments. In keeping with the 
White House Commission's recommendations, it is the FAA's goal to phase 
in EDS for all flights that would be subject to this proposed rule, 
which would make continued use of the CAPS system unnecessary in the 
future; however, because of the limited availability of EDS equipment, 
this goal of all carriers using EDS for 100% of its flights cannot be 
implemented in the near future. Under the alternative scenario of 
requiring carriers that have EDS to use it and not use CAPS, carriers 
that do not have EDS would not be required to do anything beyond what 
they are currently required to do (manual profiling or PPBM during 
heightened threats) until they are provided with EDS equipment. While 
the FAA recognizes that this would be a less costly approach for the 
carriers waiting to acquire EDS equipment, it could provide an unfair 
competitive advantage to those carriers that have not been provided EDS 
because of the additional costs associated with maintaining and 
staffing the equipment. Also, there would be little improvement in the 
level of security during the early phase-in period when few terminal 
gates have any EDS equipment. Moreover, overall aviation security may 
be reduced during the early phase-in period because a terrorist could 
more easily figure out which carriers were using EDS and which were 
not.
    (3) Requiring 100% PPBM of each carrier while phasing in mandatory 
use of EDS. Although 100% PPBM is required for international flights, 
the FAA has determined that this approach is not feasible for domestic 
flights, even though it may be an effective alternative while EDS is 
being phased in, because it would be too costly. Domestic flights 
differ from international flights from the United States in the 
following respects: (1) There are a greater number of domestic flights; 
(2) they are coordinated around a hub and spoke system; (3) passengers 
can check in as late as 10 minutes prior to a flight; and (4) there is 
a significant rate of last-minute passenger cancellations and no-shows. 
The FAA believes that the passenger would ultimately feel the negative 
impact of 100% PPBM because the availability and affordability of air 
transportation would be affected. The FAA's studies show that air 
carriers would lose on average one rotation per aircraft in service per 
day. The loss of flights would be due to longer time needed to load the 
baggage for each flight and cumulative delays when problems loading one 
flight impact on connecting flights. These operational burdens on air 
carriers would result in passengers paying more for tickets and getting 
fewer discount offers. While the FAA recognizes that this approach 
would also provide a high level of security, it does not believe that 
the significant operational and economic costs associated with 100% 
PPBM are justified. The FAA also does not consider performing 100% PPBM 
a good allocation of air carrier resources, as the vast majority of 
passengers who would be subjected to it would not pose a threat. In 
addition, since it is the FAA's goal to require the use of EDS 
equipment for all flights in the next 10 years, conducting 100% PPBM, 
which is not as effective as screening by EDS, would ultimately be 
phased out.
    (4) Bag matching on randomly selected passengers while phasing in 
EDS. While this alternative could be more effective than continuing to 
rely on manual profiling, which still has value as a security measure 
even though its effectiveness has eroded, the FAA does not believe it 
would be practical. Deciding how small or large a percentage to require 
would be difficult. Screening too small a percentage of passengers 
would not provide an adequate level of security, and screening too 
large a percentage would result in the same kinds of inconveniences and 
delays described above under ``Requiring 100% PPBM of each carrier 
while phasing in mandatory use of EDS.'' Even though the proposed rule 
would require that air carriers use an approved CAPS system that would 
be programmed to select some passengers at random, both as a deterrent 
and to ensure the nondiscriminatory application of CAPS, the use of an 
exclusively random selection process, even if it were done by computer 
and not manually, would not be a satisfactory security measure. The FAA 
therefore does not believe that it would be a good allocation of an air 
carrier's resources to conduct bag matching or EDS screening on the 
checked baggage of selectees chosen purely at random, as the vast 
majority of those selectees would not have posed any risk.
    (5) Bag matching on passengers selected by CAPS with use of EDS, 
where available (the proposed rule). Until it is possible for air 
carriers to acquire and use EDS equipment for screening checked baggage 
on all scheduled operations subject to this rule, at which time the use 
of CAPS and PPBM would be replaced, the FAA believes that using CAPS to 
identify those passengers who possibly are a threat to the security of 
a flight and requiring bag matching or screening by EDS, when 
available, is the most practical and cost-efficient alternative 
currently available to increase the level of security on domestic 
flights. Using CAPS would enable air carriers to use already-existing 
data from reservations systems, eliminate the civil liberties concerns 
associated with manual passenger screening methods, and eliminate from 
consideration the majority of passengers who do not pose a threat to 
civil aviation. By limiting the pool of selectees to those who meet 
certain risk criteria, as opposed to those who are chosen randomly and 
most likely would not pose a threat, and subjecting only the checked 
baggage belonging to those selectees to bag matching, the air carriers 
would realize greater cost benefits than using the random method to 
identify selectees. While identifying selectees randomly or

[[Page 19224]]

by using CAPS would result in approximately the same cost to an air 
carrier, using the CAPS criteria would allow the carrier to concentrate 
its resources on clearing the baggage of passengers about whom there is 
insufficient information to confidently conclude that they pose no 
threat. For these reasons, the FAA has chosen this alternative as the 
basis for today's proposed rule.
    (6) Performing bag matching on a limited number of CAPS selectees. 
This would be a modification of the proposed rule in that air carriers 
would use the CAPS system to determine a pool of selectees, but perform 
bag matching on only a portion of them. This would reduce the cost of 
implementing the regulations by keeping the pool of selectees as small 
as possible. However, this approach would offer a lower level of 
security and would essentially amount to reducing the value of the CAPS 
criteria.
    For more detailed cost analyses of these alternatives, see the 
``Regulatory Evaluation Summary'' below.

Discussion of the Proposed Rule

    This proposal, if adopted, would amend part 108 (14 CFR part 108) 
to require each certificate holder required under Sec. 108.5 to adopt 
and implement an FAA-approved security program to employ one of the 
following options--(1) use an FAA-approved CAPS system for each 
originating passenger checking baggage, then either use FAA-certified 
EDS equipment, where available, to screen the checked baggage of the 
CAPS selectee or conduct bag matching to ensure that the checked 
baggage of the CAPS selectee is not transported aboard an airplane 
unless that selectee is aboard the same airplane and flight; or (2) 
where CAPS is not used, conduct 100% EDS screening on checked baggage 
or 100% PPBM. This requirement would only be imposed on certificate 
holders that engage in operations with airplanes having a passenger 
seating configuration of more than 60 seats. Certificate holders that 
are engaged in operations with an airplane having a passenger seating 
configuration of 60 or fewer seats may choose to comply with this 
requirement, but they must adopt and implement an FAA-approved security 
program to do so.
    Under the FAA-approved CAPS system, the checked baggage of the 
small percentage of passengers whom the CAPS system has identified as 
selectees would be subjected to screening by EDS or bag matching 
procedures would be applied. To further enhance the deterrence value of 
the system, the CAPS system would be required to also randomly select a 
small percentage of other passengers (the percentages to be specified 
in each air carrier's standard security program) whose checked baggage 
would be subjected to the same types of additional security measures as 
that of the other CAPS selectees. These additional security measures 
would include EDS, where available, or bag matching. The Department of 
Justice has reviewed the FAA's proposed CAPS system and found there to 
be no infringements on civil liberties (see discussion of ``Civil 
Liberties Issues'' below). For a more in-depth analysis of proposed 
rule, see discussion under ``Section-by-Section Analysis'' below.

Civil Liberties Issues

    The Commission, while endorsing CAPS, recognized that care must be 
taken in implementing automated passenger profiling to ensure that 
there would be no infringements on the civil liberties of American 
citizens. Accordingly, the Commission convened a panel of civil 
liberties experts from outside the government to provide guidance. 
Based on the proposals made by this panel, the Commission made several 
recommendations, including that the Department of Justice (in 
consultation with other experts) review the FAA's proposed CAPS system 
prior to implementation ``to ensure that selection is not impermissibly 
based on national origin, racial, ethnic, religious, or gender 
characteristics.''
    On October 1, 1997, following its review, the Department of Justice 
issued the ``Report by the Department of Justice to the Department of 
Transportation on the Department's Civil Rights Review Conducted of the 
Federal Aviation Administration's Proposed Automated Passenger 
Screening System.'' In its report, the Department of Justice stated 
that its principal finding is that the FAA's proposed CAPS system will 
not discriminate on the basis of race, color, national or ethnic 
origin, religion, or gender. The Department of Justice went on to state 
the following:

     CAPS fully complies with the equal protection guarantee 
incorporated in the Fifth Amendment to the Constitution. CAPS will 
not impermissibly select passengers for heightened security measures 
on the basis of race, color, national or ethnic origin, religion, or 
gender.
     CAPS does not violate the Fourth Amendment prohibition 
on unreasonable searches and seizures. CAPS itself involves no 
``search'' or ``seizure;'' nor does bag matching, pursuant to CAPS, 
occasion any ``search'' or ``seizure.'' A search of a selectee's 
luggage pursuant to CAPS, such as by an EDS screening, is a 
permissible extension of the constitutional administrative search 
procedures that operate at U.S. airports today.
     CAPS does not involve any invasion of passengers' 
personal privacy. CAPS does not create any new database on 
passengers and is not linked to any database other than the existing 
airline computer reservation systems. CAPS selectee results will not 
be retained on a personally identifiable basis and the information 
used to calculate each CAPS result will not be retained on computer 
by the airline reservation systems.

    In its report, the Department of Justice recommended that the 
Department of Transportation, with the Department of Justice, take five 
steps to further assure that airline passenger screening is implemented 
in a non-discriminatory and appropriate manner. The five 
recommendations are as follows:
    1. The FAA should undertake regular, periodic reviews of CAPS (and 
any residual manual screening system) to ensure that the screening 
factors continue to be reasonable predictors of risk or the absence of 
risk;
    2. The Department of Justice, with the assistance of the Office of 
the Secretary of Transportation and the FAA, should undertake a post-
implementation review of CAPS (and any residual manual system), 
approximately one year after implementation begins, to ensure that 
selection in fact is not impermissibly being based on race, color, 
national or ethnic origin, religion, or gender, and should undertake 
additional reviews thereafter as appropriate;
    3. The Office of the Secretary of Transportation and the FAA should 
expand their public education and outreach efforts to inform the 
American public about the purpose of airline passenger screening, as 
well as the right of passengers to file a complaint * * * if they 
believe they were the victim of discriminatory airline security 
procedures;
    4. The FAA should require that domestic air carriers that implement 
CAPS (or any residual manual system) obtain pre-approval from the FAA 
before implementing any passenger screening system in addition to the 
screening procedures prescribed by the FAA, and the FAA should consult 
with the Department of Justice before approving any supplemental 
screening procedure; and
    5. The FAA should require that air carriers implementing CAPS (or 
any residual manual system) establish procedures to ensure appropriate 
interactions between air carrier employees responsible for implementing 
passenger screening and airline passengers, and should provide 
appropriate training to these employees.
    In conclusion, the Department of Justice report stated that the 
FAA's

[[Page 19225]]

proposed automated airline passenger screening system, as designed, 
would not infringe the civil rights or civil liberties of American 
citizens. In addition, the Department of Justice stated that the FAA 
has taken great care in designing CAPS so as to respect Americans' 
civil rights and civil liberties.
    Finally, the Department of Justice stated that it would closely 
monitor the FAA's passenger screening procedures to ensure that they 
remain non-discriminatory.

Section-by-Section Analysis

Section 108.5 Security Program: Adoption and Implementation

    This proposal would amend Sec. 108.5 by requiring all holders of 
air carrier operating certificates, or holders of operating 
certificates for scheduled passenger operations, that engage in 
operations with an airplane having a passenger seating configuration of 
more than 60 seats, to comply with the provisions of proposed paragraph 
(a) of Sec. 108.12 Security of checked baggage for operations within 
the United States. The proposal also allows other operators, where they 
operate under an FAA-approved security program, to comply with the 
provisions of Sec. 108.12. Section 108.12, as more fully discussed 
below, would require the implementation of security measures for 
checked baggage on domestic flights by screening the checked baggage of 
every passenger with an FAA-certified EDS machine, by conducting 100% 
PPBM, or by utilizing an FAA-approved CAPS system for screening airline 
passengers and subjecting the selectees' checked baggage to screening 
by EDS equipment, where available, or bag matching.
    While FAA-approved air carrier security programs, which implement 
Sec. 108.9, require checkpoint security measures for the screening of 
passengers and their carry-on baggage to prevent or deter the 
introduction of deadly or dangerous weapons or incendiary devices 
carried aboard an aircraft by a passenger, the security programs 
prescribe limited measures to prevent the introduction of improvised 
explosive devices in checked baggage on flights within the United 
States, except in emergency situations. The FAA recognizes the 
potential danger associated with an increase in terrorism in the United 
States and the limited baseline domestic checked baggage security 
requirements to prevent or deter the introduction of explosives in 
checked baggage. This proposal addresses security measures for checked 
baggage.
    Under this proposal, the FAA would require compliance with 
Sec. 108.12 for all air carrier operations using aircraft with more 
than 60 passenger seats because the FAA has concluded that larger 
aircraft are at a significantly higher risk to terrorist attacks. Since 
air carriers with operations using aircraft with passenger seating 
configurations of 60 or fewer seats may also wish to comply with the 
provisions of Sec. 108.12, the FAA has provided that as an option under 
this proposal. These operators would be required to adopt and implement 
a security program that includes provisions effecting compliance with 
Sec. 108.12. Compliance with an FAA-approved security program would be 
required because the FAA believes that any carrier, regardless of the 
size of operation, that accepts the responsibility for conducting the 
important security measures for checked baggage on operations within 
the United States should also be accountable for other aspects of a 
security program related to the acceptance and control of checked 
baggage. For example, smaller operators with large interline partners, 
which use the same passenger reservation services, may decide to comply 
with Sec. 108.12. This would include, but would not be limited to, 
ensuring that no unauthorized person has access to checked baggage once 
it has been subjected to security measures.

Section 108.7 Security Program: Form, Content, and Availability

    This proposal would amend
Sec. 108.7 (b) to require that each air carrier's FAA-approved security 
program include a description of the procedures used to perform the 
checked baggage security functions specified in Sec. 108.12 for 
scheduled passenger operations. This amendment is needed to ensure that 
each air carrier that adopts and implements an FAA-approved security 
program in accordance with Sec. 108.5 would include the provisions for 
the security of checked baggage on flights within the United States.

Section 108.12 Security of Checked Baggage for Operations Within the 
United States

    The FAA is proposing to amend part 108 by introducing a new section 
to address the security of checked baggage on flights within the United 
States. Under proposed Sec. 108.12 (a), each air carrier required to 
adopt and implement a security program under Sec. 108.5, would be 
required to apply the checked baggage security requirements of this 
section for scheduled passenger operations, in accordance with its 
security program, for flights within the United States. For each flight 
the air carrier would be required--(1) to apply a CAPS system approved 
by the Administrator for each originating passenger checking baggage; 
(2) to determine that the passenger associated with each originating 
checked bag is aboard the flight; or (3) that each originating bag not 
matched to a passenger aboard the flight has been screened by an FAA-
certified EDS machine. To receive approval from the FAA, an air 
carrier's CAPS system would have to be capable of selecting passengers 
according to specific criteria (which had been assigned relative 
weights by the FAA) and at random, as provided in the air carrier's 
FAA-approved security program.
    When compared to the screening of all checked baggage on flights 
within the United States by FAA-certified EDS equipment, or conducting 
100% PPBM, the proposed rule would result in a much smaller percentage 
of passengers being subjected to additional security measures; however, 
the FAA believes at this time that performing 100% PPBM for operations 
within the United States is not an efficient use of air carrier 
resources because the majority of passengers who would be subjected to 
it would not pose a threat. In addition, implementation of 100% 
domestic PPBM would be impractical given the operational impact it 
would have. The FAA recognizes that 100% screening of all checked 
baggage on domestic flights by an FAA-certified EDS machine is not 
feasible in the near term, due to the limited availability of EDS 
equipment. The FAA views 100% screening or matching of checked bags on 
domestic flights as a reasonable long-term goal, but has determined 
that screening or matching based on CAPS will greatly strengthen the 
security of checked bags on domestic flights in the near term. Further, 
CAPS-based measures can be implemented without the time air carriers 
would need to attempt the 100% EDS screening or bag matching measures. 
Accordingly, this proposed rule would permit options for an air carrier 
to either subject all passengers to the FAA-approved CAPS system (with 
EDS screening of selectees' checked baggage or matching of selectees 
and their checked baggage), employ 100% checked baggage screening by 
EDS, or conduct 100% PPBM of passengers and their checked baggage for 
operations within the United States. The FAA has concluded, as did the 
Commission, that this proposal would provide the most effective 
methodology currently available for ensuring the security of checked 
baggage on domestic flights.

[[Page 19226]]

    Proposed Sec. 108.12 (b) would require that for each operation 
subject to proposed Sec. 108.12 (a), the air carrier may not transport 
the checked baggage of a non-originating passenger, on-line or inter-
line, unless: (1) the passenger is transported on the same airplane and 
flight; (2) the passenger associated with the checked baggage was 
screened by an FAA-approved CAPS system prior to an earlier flight or 
leg and information is available to the air carrier that the passenger 
was not selected for additional security measures; (3) information is 
available to the air carrier that the baggage was screened by an FAA-
certified EDS machine prior to an earlier flight or leg; (4) the 
baggage is screened by an EDS machine prior to the current flight; or 
(5) the passenger is screened by an FAA-approved CAPS system for the 
current flight and, if selected, subjected to additional security 
measures (checked baggage screening by EDS or bag matching). The 
intended purpose of this proposed paragraph is to ensure that checked 
baggage on domestic flights would be adequately screened or matched 
regardless of where the baggage originated. For example, an air carrier 
may receive a non-originating inter-line transfer passenger whose 
checked baggage may not have been subjected to any screening 
requirements. This proposal would ensure that the non-originating 
inter-line transfer passenger's checked baggage would undergo checked 
baggage security requirements before being placed in the cargo 
compartment of the airplane. The FAA has determined that this proposed 
requirement is necessary to prevent explosive devices concealed in 
checked baggage transferred from earlier flights from being introduced 
into the holds of airplanes.
    Proposed Sec. 108.12 (c) would require that the checked baggage of 
a passenger selected by the CAPS system not be transported aboard the 
flight unless it had been screened by an FAA-certified EDS machine, 
where available, or had been matched to the selectee. The FAA is 
proposing under this paragraph to require the use of available EDS 
equipment for the screening of selectee checked baggage because EDS is 
highly effective in detecting explosives. To ensure that there is a 
consistent and realistic interpretation of when EDS is ``available,'' 
proposed Sec. 108.12 (d) provides a description of what constitutes EDS 
availability. The FAA recognizes that, because of the various factors 
that play a role in baggage make-up operations (e.g., the physical lay-
out of an airport's facilities), a definition of ``available'' might be 
difficult to apply uniformly in this context. For this reason, the FAA 
seeks specific comments on whether the proposed definition of the term 
is a reasonable one. The proposed section provides that EDS is 
considered to be available to an air carrier for screening checked 
baggage when the equipment is--
    (1) Under the operational control of the air carrier. The carrier 
that has operational control of EDS equipment is generally the air 
carrier to which the FAA has provided the equipment. This carrier is 
usually responsible for the testing, maintenance, and staffing of the 
machine; however, it may be possible for one carrier to share or accept 
operational control under a contractual agreement with another air 
carrier.
    (2) Functioning properly. Carriers with operational control of EDS 
equipment are required by their FAA-approved security programs to 
conduct daily testing to ensure that the equipment is functioning 
properly. Once it is determined, either by carrier testing or by 
periodic FAA testing, that the EDS equipment is not performing in 
accordance with minimum EDS certification standards, it cannot be used 
for the screening of checked baggage until it is repaired or replaced.
    (3) Located proximate to where the baggage is tendered by the 
passenger or along the route the baggage normally travels during the 
process of being loaded onto the aircraft. This is intended to avoid a 
situation where an air carrier would be required to use EDS equipment 
that is not easily and readily accessible to it, and where using it 
would result in significant operational delays. For example, for its 
current flight, an air carrier may be authorized to use EDS equipment 
which has been installed at a location at the airport that is not at or 
near the point of checked baggage acceptance, or in the baggage make-up 
area.
    (4) Staffed by appropriately trained personnel. Staffing and 
training requirements for EDS screeners are described in the air 
carrier's FAA-approved security program.
    (5) Not in use to screen other identified baggage such that a 
significant delay in a flight might result from having to wait to use 
the EDS to screen the bag. This description is intended to avoid a 
situation where EDS equipment meets all other descriptions for 
availability and is performing in accordance with minimum throughput 
requirements, but baggage cannot be processed quickly enough to avoid a 
significant flight delay. This might occur, for example, when several 
flights serviced by the same EDS are leaving at the same time, 
resulting in a severe backup of bags waiting to be processed through 
the same EDS.
    In proposed Sec. 108.12(e), the FAA would require that each air 
carrier establish procedures for implementing the screening of checked 
baggage under proposed Sec. 108.12. The proposal would also require the 
air carrier to ensure nondiscriminatory application, and to reduce to 
the extent practicable the overt identification of passengers selected 
for additional security procedures.
    In proposed Sec. 108.12(f), the FAA would require that each person 
used by an air carrier to implement its CAPS system whose job function 
will be likely to involve interactions with passengers shall be trained 
on the CAPS system. The proposed training would include--(1) an 
overview of the purpose of screening, including an explanation that 
selection does not imply that a passenger is suspected of any illegal 
activity; (2) a general description of the CAPS system and how it is 
designed to select passengers on a non-discriminatory basis; (3) an 
advisory that the CAPS system selects some passengers at random; (4) an 
explanation that the CAPS system is not connected to any law 
enforcement or intelligence data base; and (5) instruction on treating 
passengers selected by the CAPS system in a respectful and non-
stigmatizing manner. These proposed paragraphs are based on 
recommendations from the Department of Justice, as discussed previously 
in the ``Civil Liberties Issues'' section. The FAA has determined that 
these proposed measures are necessary to implement the Justice 
Department's recommendations and to assure that CAPS is implemented in 
a non-discriminatory and appropriate manner.
    In proposed Sec. 108.12(g), the FAA would require that an air 
carrier may not modify the criteria of the CAPS system, or their 
weighting, without the written approval of the Administrator. This 
proposed paragraph would also provide that an air carrier may not apply 
any supplemental system of passenger screening to select passengers for 
additional security measures without the approval of the Administrator. 
The FAA has determined that this proposal is necessary to ensure that 
no impermissible factors are used to select passengers for additional 
security measures. This proposal also ensures that there is 
standardization among air carriers utilizing an FAA-approved CAPS 
system for screening checked baggage (i.e., the same factors are used 
in profiling passengers).

[[Page 19227]]

    In proposed Sec. 108.12(h), the FAA would require that each air 
carrier make available to the Administrator the information specified 
in its security program on the operation of its CAPS system; however, 
the FAA anticipates that this information would not be routinely 
requested. In overseeing compliance with proposed Sec. 108.12, the FAA 
would need to know which individuals were actually being selected by 
the CAPS system in order to ensure that members of specific ethnic 
groups were not being unfairly targeted and that selectee rates did not 
vary, for example, between carriers or regions. The FAA believes that 
this requirement would be necessary to protect the civil rights and 
liberties of individuals selected by the CAPS system. The proposal 
would further require that an air carrier dispose of any information 
linking a passenger's name or other personal identifying data to 
whether that passenger was selected by the CAPS system no sooner than 
24 hours, but no later than 72 hours, after a flight's departure. By 
specifying data retention for a minimum of 24 hours after a flight 
departure, the FAA intends to ensure that it can, when necessary, 
obtain information in the course of investigating accidents or security 
incidents, overseeing air carrier security programs (i.e., that the 
CAPS system has been properly applied and implemented throughout each 
step of processing checked baggage), or monitoring the 
nondiscriminatory application of the CAPS system. The data retention 
limit of 72 hours after a flight departure is intended to ensure that 
no long-term database of personally identifiable information is kept.
    While the FAA has set forth an all-selectee data retention limit of 
72 hours after flight departure as its proposed rule under 
Sec. 108.12(h), the Department of Transportation's Office of the 
Assistant General Counsel for Aviation Enforcement and Proceedings has 
requested that the FAA seek comments on whether information relating to 
random selectees should be retained for a more extended period (eg., 18 
months) than information on non-random CAPS selectees. The Office of 
Aviation Enforcement and Proceedings is the office that investigates 
airline security-related discrimination complaints filed with the 
Department of Transportation. That office has advised the FAA that, 
while it could effectively investigate the application of the non-
random CAPS selection process, it is concerned that there would be no 
basis upon which to make determinations regarding the appropriate 
application of the random CAPS selection process. The Office of 
Aviation Enforcement and Proceedings notes that typically a complaint 
is received, and the investigation takes place, three to nine months 
after a passenger's flight, and it is not reasonable to expect that the 
air carrier employee involved in a particular selection (even if that 
employee's identity could be established) would have recollection of 
the specific incident being investigated. To determine whether or not 
an air carrier employee or the CAPS system made a particular selection, 
a record of any random selection would be needed. The Office of 
Aviation Enforcement and Proceedings believes that, as long as the only 
CAPS selection data retained for an extended period of time concerned 
the purely random selections, there would be no infringement on 
passengers' privacy rights, while their civil rights would be better 
protected. The FAA therefore requests comments (including 
implementation and maintenance cost estimates) on the recommendations 
of Office of Aviation Enforcement and Proceedings.
    Finally, in proposed Sec. 108.12(i), the FAA would require that an 
air carrier receive approval from the Associate Administrator for Civil 
Aviation Security before it may apply alternate procedures from its 
security program for the security of checked baggage in special 
situations. As provided under this proposal, these special situations 
would include: (1) baggage acceptance at off-airport locations; (2) the 
transportation of bags separated from a passenger for reasons outside 
the control of the passenger (e.g., lost bags); (3) CAPS system 
failures; (4) extraordinary operational circumstances (e.g., natural 
disasters or extreme weather conditions); (5) the use of technologies 
or equipment other than EDS to screen checked baggage; and (6) any 
other situation specified by the Associate Administrator for Civil 
Aviation Security in the air carrier's security program. The FAA has 
determined that this proposed paragraph is needed to provide relief to 
an air carrier for special circumstances and during those extraordinary 
and emergency situations where the passenger and air carrier do not 
have control over the circumstances.

Paperwork Reduction Act

    This NPRM, Security of Checked Baggage on Flights Within the United 
States, contains information collection requirements. As required by 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has 
submitted a copy of these proposed sections to the Office of Management 
and Budget (OMB) for its review.
    The FAA expects that this proposed rule would affect 32 air 
carriers, and that the proposed rules under Sec. 108.12 would impose 
additional reporting and recordkeeping requirements on those operators. 
This reporting and recordkeeping would be needed, when requested by the 
Administrator, as part of monitoring for the nondiscriminatory 
implementation of CAPS, accident and security incident investigations, 
oversight of air carrier SSP compliance, or evaluating personnel 
training records. Accordingly, it is estimated that all 32 affected air 
carriers would spend a total of 64 hours, in the first year, to provide 
compliance information, and 4,981 hours in all years to generate 
training information. Hence, there would be a total burden of 5,045 
hours in the first year and 4,981 hours in all subsequent years. Over a 
ten-year period (2000-2009), the average estimated annual cost would be 
$827,678 per affected air carrier (a total of $26,485,695 for all 32 
affected carriers). These cost figures are based on estimates provided 
in the FAA's ``Regulatory Impact Analysis.''
    The FAA does not expect that there would be any additional record 
keeping burden on part 108 aircraft operators which either conduct 100% 
PPBM or use FAA-certified EDS equipment to screen checked baggage.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should do so by June 18, 1999. 
Comments should be directed to the Department of Transportation's rules 
docket (see ADDRESSES above). These comments should reflect whether the 
proposed collection is necessary; whether the agency's estimate of the 
burden is accurate; how the quality, utility, and clarity of the 
information to be collected can be enhanced; and, how the burden of the 
collection can be minimized.

International Compatibility

    The FAA has determined that a review of the Convention on 
International Civil Aviation Standards and Recommended Practices is not 
warranted because the proposed rule would apply to domestic operations 
only.

Economic Evaluation Summary

    This proposed rule is considered a significant regulatory action 
under section 3(f) of Executive Order 12866 and, therefore, is subject 
to review by the Office of Management and Budget. This proposed rule is 
considered significant under the regulatory policies

[[Page 19228]]

and procedures of the Department of Transportation (44 FR 11034; 
February 26, 1979).
    Proposed and final rule changes to Federal regulations must undergo 
several economic analyses. First, Executive Order 12866 directs that 
each Federal agency shall propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs. Second, the Regulatory Flexibility Act of 1980, as 
amended May 1996, requires agencies to analyze the economic effect of 
regulatory changes on small entities. Third, the Office of Management 
and Budget directs agencies to assess the effect of regulatory changes 
on international trade. In conducting these analyses, the FAA has 
determined that the proposed rule would generate benefits that justify 
its costs and is ``a significant regulatory action'' as defined in the 
Executive Order and the Department of Transportation Regulatory 
Policies and Procedures. The proposed rule will have a significant 
impact on a substantial number of small entities and will not 
constitute a barrier to international trade. In addition, this proposed 
rule does contain Federal intergovernmental or private sector mandates. 
Therefore, the requirements of Title II of the Unfunded Mandates Reform 
Act of 1995 do apply. These analyses, available in the docket, are 
summarized below.

A. Costs

    Although the proposed rule requires the use of EDS, where 
available, for screening the checked baggage of CAPS selectees, the FAA 
was unable to develop a cost of compliance due to the lack of 
information on how many EDS machines each air carrier would need at 
each airport. Since interpretation of ``where available'' may differ 
among air carrier operators, it becomes very difficult to estimate the 
potential cost of using EDS. As a result of this situation, the FAA 
estimated the cost of this proposed rule on the premise that all air 
carriers adopting CAPS would use baggage matching as the security 
measure. Baggage matching represents a worst case scenario in terms of 
costs.
    This analysis has estimated the costs of the proposed rule by 
examining the incremental changes from the existing air carrier 
security regulations rather than from procedures required by emergency, 
temporary regulations. On occasion the FAA establishes security 
measures on an emergency basis, typically through limited duration 
Security Directives, to respond to specific or assessed threats. For 
the past several years, air carriers have been applying a manual 
passenger screening system, in most cases conducting bag matching on 
the checked baggage of passengers who were selected. At the time it was 
instituted, immediate implementation was deemed necessary to counter 
the then-prevailing security threat. These contingency measures are not 
permanent rules; accordingly, the FAA's analysis reflects the costs of 
instituting security measures beyond those required by permanent rules.
    Costs for the bag matching implementation, operating, and delay 
portions of the proposed rule were based on estimates by SABRE Decision 
Technologies Group, South Lake, Texas (SABRE). SABRE based their costs 
on interpolation of data from a live study of the operational 
feasibility and cost impact of requiring 100% PPBM for part 108 
aircraft operators. The proposed rule anticipates that only 5% of 
checked baggage would be subject to bag matching. In addition to SABRE, 
the National Center of Excellence in Aviation Operations Research (COE) 
assisted in the assessment of costs for this proposed rule. The FAA 
used cost data developed by SABRE as the potential maximum as the costs 
of the proposed rule. Cost estimates used in this analysis were based 
on SABRE's analysis of the aforementioned bag matching study. The data 
from the bag matching study included a wide diversion of cost 
experience by individual air carriers using procedures to accommodate 
all checked baggage. Substantially different and less expensive 
procedures with fewer delays and system-wide impacts may be applicable 
where bag matching is done for a pre-selected group of travelers. 
Descriptions of the potentially less costly implementation of the 
proposed rule are discussed in the FAA's forthcoming ``Report to 
Congress: Domestic Bag Match Pilot Program.''
1. Baggage Matching Costs
    The proposed rule would impose an estimated cost of $2.8 billion 
($2.0 billion, discounted) over the next 10 years in 1998 dollars, for 
baggage matching. This cost estimate is composed of two primary cost 
components: (1) Baggage Matching Startup and Operating Costs and (2) 
Baggage Matching Delay Costs. The manner by which costs for each of 
these two components were derived will be discussed in the following 
sections.
    a. Baggage Matching Startup Costs. Based on cost information 
received from the SABRE Technologies Group (henceforth, referred to as 
``SABRE''), baggage matching startup costs for all impacted air 
carriers would amount to an estimated $217 million ($203 million, 
discounted) over the next 10 years. Startup costs consist of several 
components. First, there is initial training for gate agents, ramp 
personnel, and skycap personnel. Air carriers would be expected to 
train their airport personnel in order to ensure compliance with the 
proposed rule. This training would familiarize airport terminal 
personnel with the new requirements of baggage matching procedures for 
5% passenger screening. At some airports, skycap personnel currently 
load passenger baggage on a conveyer belt in the curbside area. Under 
the proposed rule, air carriers would have to either train skycap 
personnel or use trained ticket agents to handle the checked baggage of 
those passengers selected by CAPS, in order to prevent this and other 
potential problems. Second, additional hardware would be needed. 
Hardware would primarily consist of additional boarding pass readers, 
communications equipment, barcode scanners, and magnetic strip readers. 
Third, equipment such as radios and carts would be needed. Fourth, some 
airport facilities would be changed. The ticket counter, curbside, and 
gate areas may be expanded as a means of accommodating the 
implementation of baggage matching requirements. Additional staffing 
would be needed, as would additional gate agents and ramp personnel to 
minimize the number of lost or mishandled baggage.
    SABRE obtained aggregated startup costs of $141 million (in 1997 
dollars; this estimate was subsequently updated to 1998 dollars using 
the GDP Implicit Price Deflator) from seven major air carriers. To 
estimate startup costs for the two major air carriers that did not 
report cost data, SABRE projected cost based on annual departures. 
SABRE believed this procedure would take into account the size of the 
air carriers' operations on startup cost. A simple average of the seven 
air carriers' costs would have significantly overstated or understated 
the startup costs for the two air carriers that did not report cost 
data. The startup cost rate for ``majors'' was $36.24 per departure. 
This estimate and all other cost estimates were updated to 1998 
dollars. Moreover, this estimate was derived by dividing the startup 
costs of $141 million by the number of 1997 domestic departures for 
those seven major air carriers that participated in SABRE's survey.
    For national and regional jet air carriers, the same startup rate 
of $36.24 per departure was used to estimate their startup costs. 
National and regional operators operate on a much smaller scale than 
the majors do. While the

[[Page 19229]]

assumed startup rate for national and regional jet operators may be 
higher than what they may actually incur, it is believed to provide a 
reasonable first approximation of startup costs for this group of 
operators.
    For national and regional turboprop air carriers, a startup cost 
estimate of $2.82 per departure is used, as estimated by SABRE, based 
on an earlier report (March 1996) for 100 % PPBM for national and 
regional turboprop air carriers. This estimate of $2.82 was 
extrapolated by SABRE in a manner similar to that of the aforementioned 
startup cost estimate of $36.24, to reflect an estimate of baggage 
matching with a 5% selectee rate. Turboprop airplane operators conduct 
significantly smaller scale operations than the jet air carriers. In 
addition, turboprop airplane operators have fewer employees, lower wage 
rates, smaller airplanes, etc.
    b. Baggage Matching Operating Costs (Excluding Delays). Baggage 
matching operating costs would impose an estimated $2.0 billion ($1.4 
billion, discounted) over the next 10 years. This estimate is comprised 
of equipment and hardware costs ($360 million), staffing costs ($1.6 
billion) and training costs ($9 million). It is based on cost 
information received from SABRE. Annual costs were derived by 
multiplying the cost for each component times the number of projected 
domestic departures for part 108 air carriers over the next 10 years 
and summing to an annual total.
    The cost per departure for the major air carriers has been 
estimated to be $30.30. The national and regional jet air carriers 
would incur an estimated cost of $21.19 per departure. The turboprop 
air carriers within the ``nationals and regionals'' category would 
incur an estimated operating cost of $5.88 per departure for baggage 
matching. All per-departure rates are based on cost information 
received from SABRE. These estimates represent costs for recurring 
maintenance, staffing, and staff training for baggage matching 
requirements of the proposed rule for CAPS.
    c. Baggage Matching Delay Costs. Baggage matching delay costs would 
impose an estimated $467 million ($323 million, discounted) over the 
next 10 years (this cost is equal to 0.1% of the delay costs incurred 
by the entire air carrier system on an annual basis). These costs 
consist of local air carrier delays ($298 million), downstream delays 
($135 million), passenger missed connections ($19 million), and 
extended operating days ($16 million). These costs, which are based on 
information received from SABRE, were derived by multiplying the cost 
per departure for each delay component times the number of projected 
annual domestic departures over the next 10 years and summed. The total 
delay cost per departure for the major, national and regional jet air 
carriers would be an estimated $6.85. For the national and regional 
turboprop air carriers, it would be an estimated cost of $1.18 per 
departure.
    The baggage matching delay cost estimates are from the SABRE 
Decision Technologies Group's Dependability Predictor Model (DPM). The 
DPM is a proprietary simulation model that was developed for use by a 
major airline. The DPM analyzes schedule performance for a typical day 
by focusing on delays that could affect the scheduled operations. The 
model uses historical data distributions for gate delays (ramp service, 
passenger service, mechanical delays, air traffic control (ATC) gate 
holds, etc.) and block time delays to simulate the movement of each 
flight within the schedule.
    While cost information has been received from SABRE, which was 
extrapolated from a sample of air carriers, the FAA believes there is 
still uncertainty associated with the estimates for startup, 
operations, and delay costs for major, national and regional air 
carriers. As the result of this uncertainty, the FAA solicits comments 
from the aviation industry on startup, operating, and delay costs for 
compliance with the baggage matching procedures portion of this 
proposed rule.
2. CAPS Program Costs
    Part 108 air carriers expected to install CAPS on their computer 
reservation systems (CRS's) as the result of this proposed rule, would 
incur an estimated compliance cost of $70 million ($51 million, 
discounted) over the next 10 years, in 1998 dollars, $8 million from 
the federal government. This cost estimate can be further subdivided 
between those costs that air carriers would incur in their first year 
(2000), at approximately $18 million ($16 million, discounted). The 
cost of compliance for subsequent years (2001-2009) would amount to an 
estimated $52 million ($35 million, discounted).
    The individual cost components for the first year include software 
design and construction, system testing, system implementation, 
additional capacity for Department of Justice inquiries into how the 
air carriers are complying with Department of Justice recommendations, 
and check-in personnel training costs. Subsequent year cost components 
include hardware and software maintenance, additional capacity for 
responding to Department of Justice inquiries, and recurrent check-in 
personnel training. The FAA has estimated these component costs for 
each impacted air carrier for 1997. In the discussion below, these 
components are expressed in terms of per-departure costs to be 
consistent for all the other costs discussed in this analysis are 
expressed in terms of per-departure costs. The agency has also 
determined that the best way to project future costs would be to 
calculate the per-departure costs. These per-departure costs are then 
multiplied by total departures to calculate costs for the years covered 
by this analysis.
    The entire CAPS program is made up of three components. These three 
components include the computer program, the individualized screens 
that would be unique to each air carrier, and the data gatherer. All 
air carriers could obtain the necessary licenses from the FAA to use 
the computer program free of charge; however, all air carriers would 
incur costs modifying both the interface between CAPS and the rest of 
the system and the individualized screens for their specific needs.
    To establish CAPS on their CRS's, air carriers have three viable 
options. These options include joining other air carriers' CRS's, 
building their own CAPS systems, and using part of the existing CAPS 
and revising other portions. The first option would be the least 
costly, while the middle option would be the most costly. Air carriers 
that would adopt this costly option would be those whose computers 
would not accept the original source code developed for CAPS or would 
want more privacy due to proprietary data.
    The U.S. Congress has appropriated $8.0 million to the FAA to pay 
for the necessary software, hardware, and other costs needed to get the 
CAPS program up and running (this does not include the $2.5 million 
that the FAA had awarded to Northwest Airlines to develop CAPS). The 
FAA has established an Integrated Product Team (IPT) to work with the 
air carriers to determine their individual needs. The cost estimates 
gathered by the IPT were used by the FAA in this analysis to help 
determine first-year implementation costs for the following components: 
software design, system testing, and system implementation. For this 
analysis, the FAA divided the total costs among these components for 
all air carriers by the total number of departures to obtain the per-
departure costs at $1.81, $0.13, and $0.10, respectively. Due to the 
need to keep records for Department of Justice inquiries, each air 
carrier would need to add additional computer capacity; the

[[Page 19230]]

per-departure cost for this added capacity is estimated to be $0.34. In 
addition, all check-in personnel would need training; the per departure 
cost for this training is estimated to be $0.33.
    Each air carrier would have hardware and software maintenance costs 
in the subsequent years, and the software costs would depend on which 
of the aforementioned CAPS options the air carrier had chosen. The cost 
per departure for hardware and software maintenance is estimated to be 
$0.39. Meanwhile, the per-departure costs for the Department of Justice 
inquiries and training are $0.05 and $0.33, respectively. Hence, first 
year costs sum to $2.71 per departure, while subsequent year costs sum 
to $0.77 per departure.
    For both the CAPS and baggage matching, the proposed rule would 
impose total compliance costs of $2.8 billion ($2.0 billion, 
discounted), over 10 years. This estimate is composed of the following 
components:

 Baggage Matching Startup Costs:
    $217 million ($203 million, discounted)
 Baggage Matching Implementation and Operating Costs:
    $2.0 billion ($1.4 billion, discounted)
 Baggage Matching Delay Costs:
    $467 million ($323 million, discounted)
 CAPS Program Implementation and Operating Costs:
    $70 million ($51 million, discounted)

    The FAA expects that the total cost of compliance of $2.8 billion 
may represent a potential maximum cost estimate. Estimating the 
economic cost that this proposed rule would impose on airlines and 
passengers was a difficult undertaking, as suggested by the wide range 
of estimates that different airlines provided. As mentioned above, in 
addition to SABRE, COE assisted in the assessment of costs for this 
proposed rule. Because implementation of domestic baggage matching 
based on a passenger screening process such as CAPS was not the subject 
of any live tests, COE believes that substantial economies may be 
achieved by airlines beyond the experience of a live bag matching test 
that was conducted in the spring of 1997 and ``a priori'' estimates 
supplied by individual airlines. COE projected that the proposed rule 
would cost between $500 million (based on 7 cents per passenger 
enplanement) and $2.5 billion (based on 36 cents per passenger 
enplanement) over the next decade. In addition, according to COE, as 
part of a follow-up to the live test conducted for passenger baggage 
matching, air carriers stated that the costs they provided were 
overstated by at least 33%. This assessment is based on the fact that 
air carriers now have a much better idea how they would implement 100% 
PPBM if they were required to do so by regulation. Based on this 
information, coupled with the fact that there is some uncertainty as 
the result of the interpolation technique used by SABRE and COE to 
estimate costs, the FAA solicits comments from the aviation community 
as to the accuracy of this assessment of costs.

B. Benefits

    The primary benefits of the proposed rule would be in significantly 
increased protection from terrorism for U.S. citizens and others 
traveling on U.S. domestic air carrier flights. Specifically, the 
proposed rule is aimed at deterring terrorism by preventing explosives 
from being placed on board commercial flights in checked baggage.
    Terrorism can occur within the United States. Members of foreign 
state-sponsored terrorist groups and radical fundamentalist elements 
from many nations are present in the United States. In addition, 
Americans are joining terrorist groups. The activities of some of these 
individuals and groups go beyond fund-raising to recruiting other 
persons (both foreign and American) for activities that include 
training with weapons and making bombs. These extremists operate in 
small groups and can act without guidance or support from state 
sponsors. This makes it difficult to identify them or to anticipate and 
counter their activities. The following discussion outlines some of the 
concrete evidence of the increasing terrorist threat within the United 
States and to domestic aviation.
    Investigation into the February 1993 attack on the World Trade 
Center uncovered a foreign terrorist threat in the United States that 
is more serious than previously known. The World Trade Center 
investigation disclosed that Ramzi Yousef arrived in the United States 
in September 1992 and presented himself to immigration officials as an 
Iraqi dissident seeking asylum. Yousef and a group of Islamic radicals 
in the United States then spent the next five months planning the 
bombing of the World Trade Center building and other acts of terrorism 
in the United States. Yousef returned to Pakistan on the evening of 
February 26, 1993, the same day that the World Trade Center bombing 
took place. Yousef traveled to the Philippines in early 1994, and by 
August of the same year had conceived a plan to bomb as many as twelve 
U.S. air carriers flying between East Asian cities and the United 
States.
    Yousef and co-conspirators Abdul Murad and Wali Khan tested the 
type of explosive devices to be used in the aircraft bombings, and in 
December 1994 they demonstrated the group's ability to assemble such a 
device in a public place by bombing a Manila theater. Later in the same 
month, the capability to get an explosive device past airport screening 
procedures and detonate it aboard an aircraft also was successfully 
tested when a bomb was placed by Yousef aboard the first leg of 
Philippine Airlines Flight 424 from Manila to Tokyo. The device 
detonated during the second leg of the flight, after Yousef had 
deplaned at an intermediate stop in the Philippine City of Cebu.
    Preparations for executing the plan were progressing rapidly; 
however, the airliner bombing plot was discovered in January 1995 only 
by chance after a fire led Philippine police to the Manila apartment 
where the explosive devices were being assembled. Homemade explosives, 
batteries, timers, electronic components, and a notebook full of 
instructions for building bombs were discovered. Subsequent 
investigation of computer files taken from the apartment revealed the 
plan in which five terrorists were to have placed explosive devices 
aboard United, Northwest, and Delta airline flights. In each case, a 
similar technique was to be used. A terrorist would fly the first leg 
of a flight out of a city in East Asia, plant the device aboard the 
aircraft and then get off at an intermediate stop. The explosive device 
would then destroy the aircraft as it continued on the subsequent leg 
of the flight to the United States. It is likely that thousands of 
passengers would have been killed if the plot had been successfully 
carried out.
    Yousef, Murad and Khan were arrested and convicted in the bombing 
of Philippine Airlines Flight 424 and in the conspiracy to bomb U.S. 
airliners. Yousef was sentenced to life imprisonment for his role in 
the Manila plot, while the two other co-conspirators have been 
convicted. Yousef also was convicted and sentenced to 240 years for the 
World Trade Center bombing. However, there are continuing concerns 
about the possibility that other conspirators remain at large. The 
airliner bombing plot, as described in the files of Yousef's laptop 
computer, would have had five participants. This suggests that, while 
Yousef, Murad and Khan are in custody, there may be others at large 
with the knowledge and skills necessary to carry out a similar plot 
against civil aviation.
    The fact that Ramzi Yousef was responsible for both the World Trade 
Center bombing and the plot to bomb as many as twelve U.S. air carrier 
aircraft

[[Page 19231]]

shows that: (1) foreign terrorists are able to operate in the United 
States, and (2) foreign terrorists are capable of building and artfully 
concealing improvised explosive devices that pose a serious challenge 
to aviation security. This, in turn, suggests that foreign terrorists 
conducting future attacks in the United States may choose civil 
aviation as a target. Civil aviation's prominence as a prospective 
target is clearly illustrated by the circumstances of the 1995 Yousef 
conspiracy. The bombing of a federal office building in Oklahoma City 
shows the potential for terrorism from domestic groups. While the 
specific motivation that led to the Oklahoma City bombing would not 
translate into a threat to civil aviation, the fact that domestic 
elements have shown a willingness to carry out attacks resulting in 
indiscriminate destruction is worrisome. At a minimum, the possibility 
that a future plot hatched by domestic elements could include civil 
aircraft among possible targets must be taken into consideration. Thus, 
an increased threat to civil aviation exists and needs to be prevented 
and/or countered from both foreign sources and potential domestic ones.
    That both the international and domestic threats have increased is 
undeniable. While it is extremely difficult to quantify this increase 
in threat, the overall threat can be roughly estimated by recognizing 
the following:

     U.S. aircraft and American passengers are good 
representatives of the United States, and therefore are appealing 
targets;
     Up to 12 airplanes could have been destroyed in the 
actual plot described above, and thousands of passengers killed 
(while the proposed rule would not have prevented the plot described 
above, this plot is representative of the type and seriousness of 
the threat that this proposed rule is trying to prevent);
     These plots came close to being carried out; it was 
only through a fortunate discovery and tighter security after the 
discovery of the plot that these incidents were thwarted;
     It is just as easy for international terrorists to 
operate within the United States as domestic terrorists, as 
evidenced by the World Trade Center bombing; therefore
     Based on these facts, the increased threat to domestic 
aviation could be seen as equivalent to some portion of 12 Class I 
Explosions on U.S. airplanes. (The FAA defines a Class I Explosion 
as an incident that involves the loss of an entire aircraft and 
incurs a large number of fatalities.)

    In 1996, both Congress and the White House Commission on Aviation 
Safety and Security recommended further specific actions to increase 
aviation security. The White House Commission stated that it believes 
that the threat against civil aviation is changing and growing, and 
recommended that the federal government commit greater resources to 
improving civil aviation security. President Clinton, in July 1996, 
declared that the threat to aviation of both foreign and domestic 
terrorism is a national threat. The U.S. Congress recognized this 
growing threat in the Federal Aviation Reauthorization Act of 1996 by: 
(1) authorizing money for the purchase of specific anti-terrorist 
equipment and the hiring of extra civil aviation security personnel; 
and (2) requiring the FAA to promulgate additional security-related 
regulations.
    The cost of a catastrophic terrorist act can be estimated in terms 
of lives lost, property damage, decreased public utilization of air 
transportation, etc. Terrorists acts can result in the complete 
destruction of an aircraft with the loss of all on board.
    In the absence of increased protection for the U.S. domestic 
passenger air transportation system, it is conceivable that the system 
would be targeted for future acts of terrorism. If even one such act 
were successful, the traveling public would demand immediate increased 
security. Providing immediate protection on an ad hoc emergency basis 
would result in major inconveniences, costs, and delays to air 
travelers that may substantially exceed those imposed by the planned 
and measured steps contained in this proposal.
    Based on the above statement, and after evaluating feasible 
alternative measures, the FAA concludes that this proposed rule sets 
forth the best method to provide increased security at the present 
time. Notwithstanding the above, it is helpful to consider, to the 
limited extent possible, the benefits of this proposal in reducing the 
costs associated with terrorist acts to the threat level and other 
factors. The following analysis describes alternative assumptions 
regarding the number of terrorist acts prevented and potential market 
disruptions averted that result in the proposed rule benefits at least 
equal to the proposed rule costs. This is intended to allow the reader 
to judge the likelihood of benefits of the proposed rule equaling or 
exceeding its cost.
    The FAA considers a Boeing 737 as representative of a typical 
airplane flown domestically. It flies with an average load factor of 
64.7%, which translates into 73 passengers per flight; the airplane 
would also have two pilots and three flight attendants.
    A terrorist catastrophic incident could also result in fatalities 
on the ground. There were 11 such fatalities in the Pan Am 103 
explosion and 15 fatalities in a collision of an AeroMexico airplane 
with a Piper PA-28 airplane over Cerritos, California in 1986. However, 
looking at the number of accidents including aircraft covered by this 
proposed rule and the number of fatalities on the ground over the last 
ten years, the average fatality was less than 0.5 persons per accident. 
Therefore, the FAA will not assume any ground fatalities in this 
analysis.
    In order to provide a benchmark comparison of the expected safety 
benefits of rulemaking actions with estimated costs in dollars, the FAA 
currently uses a value of $2.7 million to statistically represent a 
human fatality avoided. Applying this value, the total fatality loss of 
a single Boeing 737 is represented by a cost of $210.6 million (78 x 
$2.7 million).
    Quantified undiscounted estimated costs of a single domestic Class 
I Explosion on civil aviation are summarized on Table 1.

                                 Table 1.--Costs of a Domestic Class I Explosion
                                                 [1998 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                                      Number           Value        Total cost
----------------------------------------------------------------------------------------------------------------
Fatalities......................................................              78      $2,700,000    $210,600,000
Aircraft........................................................               1      16,500,000      16,500,000
Property........................................................               1      12,508,028      12,508,028
Investigation...................................................               1      28,640,637      28,640,637
Legal Fees......................................................  ..............       3,569,383       3,569,383
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............     271,818,048
                                                                 -----------------------------------------------

[[Page 19232]]

 
    Total, discounted...........................................  ..............  ..............    190,908,689
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOT, FAA, APO-310, March 1999.

    Certainly the primary concern of the FAA is preventing loss of 
life, but there are other considerations as well. Another large 
economic impact is related to decreased airline travel following a 
terrorist event. A study performed for the FAA by Pailen-Johnson 
Associates, Inc., An Econometric Model of the Impact of Terrorism on 
U.S. Air Carrier North Atlantic Operations, indicated that it takes 
about 9 to 10 months for passenger traffic to return to the pre-
incident level after a single event. Such a reduction occurred 
immediately following the destruction of Pan Am Flight 103 over 
Lockerbie, Scotland in December 1988. In general, 1988 enplanements 
were above 1987's. There was a dramatic fall-off in enplanement in the 
first 3 months of 1989 immediately following the Pan Am 103 tragedy, 
and it took until November 1989 for enplanements to approximate their 
1987 and 1988 levels.
    Trans-Atlantic enplanements increased, from 1985 to 1988, at an 
annual rate of 10.7 percent. Projecting this rate to 1989 would have 
yielded 1989 enplanements of 8.1 million, or 1.6 million more than Pan 
Am actually experienced. This represents almost a 20 percent reduction 
in expected enplanements caused by the destruction of Pan Am 103 by 
terrorists.
    The estimated effect of a successful terrorist act on the domestic 
market has not been studied. Although there are important differences 
between international and domestic travel (such as the availability of 
alternative destinations and means of travel), the FAA believes that 
the traffic loss associated with international terrorist acts is 
representative of the potential domestic disruption.
    There is a social cost associated with travel disruptions and 
cancellations caused by terrorist events. The cost is composed of 
several elements. First is the loss associated with passengers opting 
not to fly--the value of the flight to the passenger (consumer surplus) 
in the absence of increased security risk and the profit that would be 
earned by the airline (producer surplus). Even if a passenger opts to 
travel by air, the additional risk may reduce the associated consumer 
surplus. Second, passengers who cancel plane trips would not purchase 
other goods and services normally associated with the trip, such as 
meals, lodging, and car rental, which would also result in losses of 
related consumer and producer surplus. Finally, although spending on 
air travel would decrease, pleasure and business travelers may 
substitute spending on other goods and services (which produces some 
value) for the foregone air trips. Economic theory suggests that the 
sum of the several societal value impacts associated with canceled 
flights would be a net loss. As a corollary, prevention of market 
disruption (preservation of consumer and producer welfare) through 
increased security created by the proposed rule is a benefit.
    The FAA is not able to estimate the actual net societal cost of 
travel disruptions and the corollary benefit gained by preventing the 
disruptions. However, there is a basis for judging the likelihood of 
attaining benefits by averting market disruption sufficient, in 
combination with safety benefits, to justify the proposed rule. The 
discounted cost of this proposed rule is $2.0 billion, while the 
discounted benefits for each Class I Explosion averted (from Table 7) 
comes to $190 million. Hence, if only 1 Class I Explosion is averted, 
the present value of losses due to market disruption must at least 
equal $1.8 billion ($2.0 billion less $190 million--one Class I 
Explosion). If two Class I Explosions are averted, the value of the 
market losses must at least equal $1.6 billion ($2.0 billion less 2 
times $190 million).
    The value of market loss averted is the product of the number of 
foregone trips and the average market loss per trip (combination of all 
impacts on consumer and producer surplus). If one uses an average 
ticket price of $160 as a surrogate of the combined loss, preservation 
of 11.2 million lost trips would be suffered, in combination with the 
safety benefits of 1 averted Class I Explosion, for the benefits of 
proposed rule to equal costs. This represents 3 percent of annual 
domestic trips (the traffic loss caused by Pan Am 103 on trans-Atlantic 
routes was 20 percent). Calculations can be made on the number of 
averted lost trips needed if the net value loss was only 75 percent of 
the ticket price or exceeded the ticket price by 25 percent. If total 
market disruption cost was $130 or $200 per trip, retention of 13.8 and 
9.0 million lost trips, respectively, would need to occur for the 
proposed rule benefits to equal the proposed rule costs, assuming 1 
Class I Explosion would be prevented. The FAA requests comments on the 
potential size of market loss per trip and number of lost trips 
averted.
    Table 2 presents combinations of the total number of trips not 
taken as a result of one to four Class I Explosions at alternative 
values per lost trip that would be sufficient to generate monetized 
benefits in excess of the estimated proposed rule costs.

 Table 2.--Number of Trips Not Taken as a Result of One to Four Class I
                           Explosions Avoided
                      [For Benefits to Equal Costs]
------------------------------------------------------------------------
                                           Assumed net market loss per
                                             trip  (in 1998 dollars)
  Number of class I explosions avoided  --------------------------------
                                            $130       $160       $200
                                         (million)  (million)  (million)
------------------------------------------------------------------------
1......................................       13.8       11.2        9.0
2......................................       12.2       10.0        8.0
3......................................       10.9        8.8        7.1
4......................................        9.4        7.6        6.1
------------------------------------------------------------------------
 Source: FAA, APO-310, March 1999.

    The FAA stresses that the range of trips not taken in Table 2 is 
shown for illustrative purposes and does not represent an explicit 
endorsement that these would be the exact number of trips that would 
actually be lost. As noted above, it is important to compare, to the 
limited extent possible, the cost of this proposal to some estimate of 
the benefit of increased security it would provide as that level of 
security relates to the threat level.
    Based on the White House Commission recommendation, recent 
Congressional mandates and the known reaction of Americans to any air 
carrier disaster, the FAA determines that pro-active regulation is 
warranted to prevent terrorist acts (such as Class I Explosions) before 
they occur.

C. Analysis of Alternatives to the NPRM

    The proposed rule is a ``significant regulatory action'' as defined 
by Executive Order 12866 (Regulatory Planning and Review) because it 
would impose costs exceeding $100 million annually. The Executive Order 
requires that agencies proposing significant rules

[[Page 19233]]

provide an assessment of feasible alternatives to their respective 
rulemaking actions. In addition, the Executive Order requires that an 
explanation of why the proposed rule, which is significant, is 
preferable to the identified potential alternatives. In the following 
discussion, FAA provides an assessment of six alternatives, with 
Alternative Number Five being chosen as the proposed rule:
1. The Status Quo
    This alternative would maintain the status quo. Currently, the FAA 
mandates manual passenger screening or baggage matching based on this 
screening only in situations where the FAA has determined that a 
heightened security threat exists. Manual passenger screening is 
performed on a contingency basis when the FAA issues Security 
Directives (SD's). Security Directives are temporary conditions, which 
are considered part of the status quo. While costs are incurred to 
implement manual passenger screening whenever a threat exists, they are 
not considered permanent costs because they are associated with 
procedures required by emergency, temporary rules. The FAA believes 
that the threat to civil aviation within the United States has 
increased and further rulemaking is necessary.
2. Phasing In the Mandatory Use of Explosives Detection System (EDS) 
(Without Requirement for CAPS)
    Alternative Two would phase in the mandatory use of EDS over a 10-
year period of time, at a rate of 10% per year. By the end of the first 
year, approximately 10% of all passengers and baggage would be covered, 
by the end of the second year, 20% of all passengers and baggage would 
be covered, etc. Under Alternative Two, air carriers without EDS would 
be required to continue performing their status quo security procedures 
until they are provided with EDS equipment. Over 10 years, total EDS 
costs sum to $2.1 billion ($1.4 billion, discounted).
    In terms of benefits, EDS equipment offers the highest level of 
security against explosives being stored in the cargo compartments of 
airplanes. Explosives detection system equipment is able to examine all 
baggage as it passes through on a conveyor belt. Baggage that clears on 
the first leg of travel does not require re-examination with subsequent 
transfers to other flights or other air carriers.
    Alternative Two would, over the initial 10-year period, probably 
provide, on average, less benefits than the proposal. In the first 
year, only 10% of the passengers and baggage would be covered, so only 
10% of the potential increase in overall security (and hence, benefits) 
associated with EDS would be attained. Only during the tenth year would 
there be full augmentation of EDS, and attainment of the full increase 
in security (and hence, benefits) associated with EDS. Averaging these 
increases over 10 years yields only 55% of the full EDS benefit. This 
contrasts with the proposed rule where each year there would be the 
full attainment of benefits.
    The FAA believes that where it is applied, EDS would be more 
effective than the proposal; however, the benefits of complete EDS 
implementation would need to be roughly twice that of the proposal for 
Alternative Two to be superior.
    A goal of all carriers using EDS for 100% of its flights cannot be 
realized immediately due, among other reasons, to the lack of 
production capability. This lack of full EDS coverage would lead to a 
window of vulnerability as only some flights would be covered. Under 
Alternative Two, the step-by-step annual improvements in the level of 
security would lead to a bifurcated security program. The public would 
realize that some flights would be safer than others. Terrorists may be 
able to determine which flights were cleared by EDS and act 
accordingly, potentially resulting in an airplane explosion. The FAA 
rejects Alternative Two on the basis that it would provide an 
unacceptable level of risk higher than the proposed rule.
3. Requiring 100% PPBM of Each Carrier While Phasing In Mandatory Use 
of EDS
    Alternative Three would supplement the EDS required in Alternative 
Two by requiring 100% PPBM for those flights until EDS becomes 
available. Hence, the first year would have 10% of the passengers and 
baggage covered by EDS and 90% by baggage matching, etc., until the 
tenth year which would have 100% of the passengers and baggage covered 
by EDS.
    This alternative would combine the costs of EDS with the costs of 
those flights on which full baggage matching is used. Over 10 years, 
total EDS costs sum to $2.1 billion ($1.4 billion, discounted). The 
costs of baggage matching portion of this alternative would be $4.6 
billion ($3.7 billion, discounted), with total 10-year costs for 
Alternative Three at $6.7 billion ($5.0 billion, discounted).
    Alternative Three would yield the highest level of security of any 
of the alternatives considered; however, this alternative could produce 
major operational obstacles. Large numbers of domestic flights are 
scheduled around a hub and spoke system. Under this alternative, a 100% 
PPBM alternative would probably result in substantial flight delays due 
to the unloading of unmatched baggage. These initial delays would 
impact and delay some connecting flights. This action would result in a 
daily ripple effect, which would get worse as the day wore on. These 
operational burdens on air carriers would result both in fewer flights 
and passengers paying more for tickets. Facility requirements for each 
passenger on each flight of a combined passenger bag match/EDS system 
could overload the existing system; the space and time required for 
screening all checked baggage by EDS could cause severe congestion at 
existing airport facilities.
    The FAA has very high confidence in the effectiveness of the 
proposed rule in terms of countering the current threat. It believes 
that most of the current threat could be successfully countered through 
the implementation of CAPS. Alternative Three would be more effective 
in countering the threat, but the FAA does not believe that the 
incremental increase in security provided by Alternative Three is worth 
the additional cost of this alternative, which is about $4 billion more 
than the proposed rule.
4. Baggage Matching on Randomly Selected Passengers While Phasing In 
EDS
    Like Alternatives Two and Three, Alternative Four would move 
towards a security system based on EDS screening. Random selection, 
rather than CAPS, would determine which passengers would be subjected 
to baggage matching.
    The FAA believes, for analyzing this alternative, that a 10% 
screening rate would be a believable and effective random rate to 
provide deterrence to terrorists. Explosives detection systems would be 
phased in, such that, for the first year, 10% of the passengers and 
baggage would be subject to the full use of EDS and 90% to this reduced 
(10%) screening rate of baggage matching, etc. Ten-year costs for the 
partial baggage matching portion of this scenario would be $1.4 billion 
(net present value, $1.1 billion). With total EDS costs at $2.1 billion 
($1.4 billion, discounted), total 10-year costs for this alternative 
sum to $3.5 billion ($2.5 billion, discounted).
    As above, the FAA believes that where it is applied, EDS would be 
more effective than the proposal, so total benefits from 100% EDS 
screening would be higher than the proposal;

[[Page 19234]]

however, even with the greater effectiveness of EDS, the major problem 
with Alternative Four is the window of vulnerability that would still 
exist. In the first year, 90% of flights would depend on a randomly 
selected baggage matching alternative that would be much less effective 
than CAPS. As discussed above, the FAA assumes that CAPS would be very 
effective in countering the threat. Selecting 10% of the passengers at 
random would, on these flights, yield benefits only 10% of those that 
would be derived from the proposal. Until the tenth year, where full 
EDS implementation would be expected, there would be a major shortfall 
in benefits.
    A goal of using EDS for 100% of flights cannot be implemented 
immediately due, among other reasons, to the lack of production 
capability. Even when partial EDS screening is combined with random 
baggage matching, only some flights would be covered, so many flights 
would remain vulnerable. Given that this alternative is more expensive 
than the proposal, yet does not close the window of vulnerability, the 
FAA rejects this alternative.
5. Baggage Matching on Passengers Selected by CAPS With Use of EDS, 
Where Available
    This is the proposed rule, which was costed out in the discussion 
above.
6. Performing Baggage Matching on a Limited Number of CAPS Selectees
    Alternative Six would modify the proposed rule in that the air 
carriers would use CAPS to form the pool of selectees, but only subject 
a random number of these selectees to baggage matching. For analysis 
purposes, the FAA is assuming that 50% of the pool of selectees would 
be subjected to baggage matching. This yields ten-year costs of $1.6 
billion ($1.1 billion, discounted).
    The proposed rule provides benefits by performing baggage matching 
on 100% of selectees. Reducing this pool would reduce the protection 
afforded by CAPS and baggage matching and would increase the likelihood 
that someone who would have been a CAPS selectee but who was excluded 
from heightened security measures under this alternative would be able 
to cause an explosion on an airplane. The FAA is calculating benefits 
by assuming that a 50% reduction in the pool of CAPS selectees would 
bring about a nearly 50% reduction in benefits from current levels.
    The major problem with this alternative is that it would offer a 
lower level of security and would amount to reducing the effectiveness 
of the CAPS criteria. As discussed above, the FAA assumes that CAPS 
would be very effective in countering the threat. Reducing the selectee 
pool by 50% at random would yield benefits equal to roughly half of 
those that would be derived from the proposal. This creates a window of 
vulnerability on every flight, as only some passengers' baggage would 
be screened, and would not mitigate the threat as effectively as the 
proposed rule. It is not prudent to establish a computerized automated 
profiling system to select passengers and then ignore some of these 
selectees, hoping that the deterrence value of the possibility of being 
selected would equal or outweigh the benefits of performing baggage 
matching. This alternative could allow a selectee whose checked baggage 
was not subject to baggage matching to cause an explosion on an 
airplane.

Initial Regulatory Flexibility Determination and Analysis

A. Initial Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (RFA) was enacted by 
Congress to ensure that small entities (small business and small not-
for-profit government jurisdictions) are not unnecessarily and 
disproportionately burdened by Federal regulations. The RFA, which was 
amended May 1996, requires regulatory agencies to review rules that may 
have ``a significant economic impact on a substantial number of small 
entities.'' The Small Business Administration suggests that ``small'' 
represents the impacted entities with 1,500 or fewer employees. For 
this proposed rule, the small entity group is considered to be part 108 
scheduled operators with airplanes having 61 or more passenger seats 
(Standard Industrial Classification Code 4512) and 1,500 or fewer 
employees. The FAA has identified a total of 12 operators that meet 
this definition.
    To determine the impact of the proposed rule on small part 108 
operators, the FAA has estimated the annualized cost impact on each of 
those small entities potentially impacted by the proposed rule. The 
proposed rule is expected to impose an estimated $122 million on the 12 
small entities over the next 10 years. For purposes of this rulemaking, 
one percent of the annual median revenue ($823,000, in 1998 dollars) is 
considered economically significant in that it may entail either an 
increase in airline ticket fares or a requirement to create operating 
cost efficiencies to preserve the economic stability of impacted 
airlines. Ten of the 12 part 108 small entities would incur a 
substantial economic impact in the form of higher costs in excess of 
$823,000, as the result of the proposed rule. Furthermore, the cost 
burden is not strictly proportionate to the size of the airline as 
inferred by the number of employees. For these reasons, a regulatory 
flexibility analysis is presented below.

B. Initial Regulatory Flexibility Analysis

    Under Section 603(b) of the RFA (amended May 1996), each initial 
regulatory flexibility analysis is required to address these points: 
(1) reasons why the FAA is considering the proposed rule, (2) the 
objectives and legal basis for the proposed rule, (3) the kind and 
number of small entities to which the proposed rule would apply, (4) 
the projected reporting, recordkeeping, and other compliance 
requirements of the proposed rule, and (5) all Federal rules that may 
duplicate, overlap, or conflict with the proposed rule.
    Reasons why the FAA is considering the proposed rule: Over the past 
several years, the FAA has recognized that the threat against civil 
aviation is changing and growing. See either the discussion under 
``Background'' above, or the background section of the Regulatory 
Impact Analysis (RIA) for a more detailed discussion of this threat. 
Terrorist and criminal activities within the United States have forced 
the FAA and other federal agencies to reevaluate the domestic threat 
against civil aviation. The proposed rule is intended to counter this 
increased threat to U.S. civil aviation security.
    The objectives and legal basis for the proposed rule: The objective 
of the proposed rule is to significantly increase protection to 
Americans and others traveling on U.S. domestic air carrier flights 
from acts of terrorism. Specifically, the proposed rule is aimed at 
preventing explosives from being placed on board commercial flights in 
checked baggage.
    The legal basis for the proposed rule is found in 49 U.S.C. 44901 
et seq. As a matter of policy, the FAA must consider, among other 
concerns, maintaining and enhancing safety and security in air commerce 
as its highest priorities (49 U.S.C. 40101(d)).
    The kind and number of small entities to which the proposed rule 
would apply: The proposed rule applies to 32 operators of part 108 
aircraft, of which 12 are small scheduled operators (with 1,500 or 
fewer employees) that use aircraft with more than 60 passenger seats 
(SIC Code 4512). A brief financial

[[Page 19235]]

profile of these small entities is provided in the full Regulatory 
Impact Analysis (which includes net income, assets, liabilities, and 
financial strength ratios) by category: Nationals, Large Regionals, and 
Medium Regionals.

----------------------------------------------------------------------------------------------------------------
                                                                                   Total No. of    No. of small
                  Category                       Annual revenues by category         entities        carriers
                                                                                     impacted        impacted
----------------------------------------------------------------------------------------------------------------
Majors.....................................  More than $ 1.0b...................               9               0
Nationals..................................  $100.0m-$ 1.0b.....................              14               3
Large
Regionals..................................  $ 20.0m-$99.9m.....................               6               6
Medium
Regionals..................................  $ 0.0m-$19.9m......................               3               3
                                                                                 -------------------------------
    Total..................................  ...................................              32              12
----------------------------------------------------------------------------------------------------------------

    The projected reporting, recordkeeping, and other compliance 
requirements of the proposed rule: As required by the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has submitted a copy 
of these proposed sections to the Office of Management and Budget (OMB) 
for its review.
    All air carriers using either CAPS, 100% PPBM screening or checked 
baggage screening via FAA-certified EDS system, would need to provide 
compliance with the approved security program. The FAA estimates this 
compliance effort would take place on a one-time basis and impose an 
additional 24 hours of clerical labor for each of the small entities 
during the first year of compliance (2000 only). However, the 
employment of CAPS as a security procedure for screening passengers, 
requires air carriers to make available, where appropriate, certain 
information that the CAPS system has been programmed to generate to 
facilitate DOJ and OST reviews to ensure that selection is not 
impermissibly being based on race, color, gender, national or ethnic 
origin or religion. To comply with the recordkeeping requirements for 
DOJ inquiries, each small part 108 aircraft operator employing CAPS 
will have an estimated annual recordkeeping burden of 100 hours of 
clerical labor per year for a period of 10 years (based on having 
compliance information available for the DOJ inquiries, and records for 
personnel requiring CAPS training). Therefore, the additional 
recordkeeping burden, which would apply to each of the small entities, 
imposed by the proposed rule would be 124 hours in 2000 and 100 hours 
for each year during 2001--2009. The cost for this time would be $2,600 
or an average of $218 per respondent for 2000. For the subsequent years 
(2001-2009), the additional cost for this time for small entities would 
be $2,100 or $176 per air carrier per year.
    There are additional annual costs resulting from the collection of 
information. The first year (2000 only) estimated cost for the small 
entity respondents is estimated to be $523,200 or an average of $43,600 
per respondent. For years 2000--2009, the additional recordkeeping 
costs for all of the small entities would be $96,500 or $8,000 per air 
carrier per year.
    All federal rules that may duplicate, overlap, or conflict with the 
proposed rule: The FAA is unaware of any federal rules that either 
duplicate, overlap, or conflict with the proposed rule.

Other Considerations

    Description of lower impact alternatives: A discussion of those 
alternatives that would impose less costs on the small entities subject 
to this proposed rule is provided below. In addition to the proposed 
rule and status quo, the analysis of alternatives reviewed three 
alternatives that had a range of compliance costs between $10 million 
and $122 million in a 10-year period.
    Affordability analysis: For the purpose of this RIA, the degree to 
which small entities can ``afford'' the cost of compliance is 
predicated on the availability of financial resources. Initial 
implementation costs may be obtained from either existing company 
assets such as cash, by borrowing, or through the provision of 
additional equity capital. Continuing annual costs of compliance may be 
accommodated either by accepting reduced profits, by raising ticket 
prices, or by finding other offsetting costs.
    In this analysis, the assessment of the availability of financial 
resources is based on the ability of each of the small entities to meet 
their short-term obligations. According to financial literature, a 
company's short-term financial strength is substantially influenced, 
among other things, by its working capital position and ability to pay 
short-term liabilities. Net working capital is the amount by which 
current assets exceed current liabilities. It represents the margin of 
short-term debt paying ability over existing short-term debt.
    In addition to the amount of net working capital, two analytical 
indexes of current position are often computed: (1) current ratio and 
(2) quick ratio. The current ratio (current assets divided current 
liabilities) helps put the amount of net working capital into 
perspective by showing the relationship between current resources and 
short term debt. And the quick ratio (sometimes called the acid test 
ratio) focuses on immediate liquidity (cash, marketable securities, 
accounts receivable, etc., divided by current liabilities). A decline 
in net working capital, the current and quick ratios over a period of 
years (say, 3 years, 4 years, etc.) may indicate that a company is 
losing financial solvency. Negative net working capital is a clear 
indication of financial difficulty. If a company is experiencing such 
financial difficulty, it is less likely to be able to afford additional 
costs.
    The following conclusions are based on the subject financial 
information:

     Based on current liquidity, at least three small 
entities would probably be able to afford the cost of compliance 
associated with this proposed rule. These entities have experienced 
increases in their net working capital as well as their current and 
quick ratios over the past three or four years, as shown in Table 
11B. They are also generally profitable and may, therefore, have 
financial resources available to meet the requirements of this 
proposed rule.
     For one currently profitable small entity, its ability 
to afford the cost of compliance is less certain. This uncertainty 
stems from the fact that there is no financial performance history 
for the small entity from 1994 to 1996 because it has only been 
operating as a large passenger air carrier since second quarter of 
1997. In 1997, this small entity had a net working capital in excess 
of $40 million and its current and quick ratios are at least 1.8, 
respectively. While this information is very positive, it does not 
necessarily serve as an indicator of future performance, especially 
in light of the proposed rule.

[[Page 19236]]

     For another air carrier, there is greater uncertainty 
than that for the aforementioned air carrier. Uncertainty for this 
entity is due to the fact that it has no financial performance 
history from 1994 to 1997. This lack of financial information is due 
to the fact that this air carrier did not receive its effective 
operating authority until mid 1997. Its ability to comply with the 
proposed rule and remain in business is unknown due to the lack of 
financial information on its performance history.
     The current liquidity of the remaining seven small 
entities will require action to finance the expected cost of 
compliance imposed by this NPRM. Over the past two or three years, 
each of these small entities has had negative net working capital. 
In addition, their respective current and quick ratios have 
generally been on a decline. They have frequently experienced 
financial losses.

Relative Cost Impact

     The other alternative of assessing affordability, 
annualized cost of compliance relative to the total operating 
revenues, for each of the 12 small entities impacted by this NPRM 
shows relatively small impacts for most of the small entities. The 
annualized cost of compliance relative to total operating revenues 
would be between 0.2 percent and 7.2 percent; in most cases, the 
impact would be less than 1.0 percent.
     For seven of the air carriers the ratio of annualized 
proposed rule costs to revenues would be less than 1.0 percent, on 
average, for the three-year period 1995 through 1997. For these air 
carriers, there appears to be a prospect of absorbing the cost of 
the proposed rule through some combination of fare increases and 
cost efficiencies. Even though the ratio of costs to revenues exceed 
1.0 percent, on average, for the seven other air carriers, there is 
a prospect that two of these air carriers may have sufficient 
working capital to incur initial cost increases.

    Disproportionality analysis: The FAA does not believe any of the 12 
small entities would be disadvantaged relative to large air carriers, 
due solely to disproportionate cost impacts. All of the air carriers 
operating airplanes with 61 or more seats have to comply with the 
proposed rule for CAPS.
    Many small air carriers are expecting to incur relatively smaller 
costs proportionate to the size of their operations because most of 
them have code-share arrangements with large air carriers within the 
majors category. These airlines would probably be able to employ the 
CAPS systems of their code-sharing partners and thereby avoid system 
development costs. Thus, because of code-share arrangements with larger 
air carriers, at least 8 of these 12 small air carriers may incur costs 
lower than they otherwise would. In the operating cost of compliance 
section of this RIA for passenger baggage matching, major jet air 
carriers are expected to incur an estimated departure cost of $30, 
national and regional jet air carriers estimated departure cost of 
$20.98. Some of the smallest air carriers that fall within the national 
and regional turboprop category would incur a departure cost of $5.82. 
Hence, on a per operation basis, lower operating costs are anticipated 
for carriers which operate smaller aircraft. In general, small entities 
are more likely to operate small aircraft than large aircraft.
    Competitiveness analysis: The proposed rule, while it may impose 
financial burdens on small entities (see affordability and business 
closure analyses), is not anticipated to significantly change the 
competitiveness of small entity airlines relative to larger carriers on 
their domestic routes.
    As discussed in the disproportionality analysis, the proposed rule 
is not expected to impose a greater relative financial burden on small 
compared to large airlines. Furthermore, small entities impacted by 
this proposed rule are more likely to either face no competition on 
individual route segments or compete among themselves rather than with 
large airlines. Medium and large regional airlines (annual revenues 
less than $100 million) do not compete directly with major carriers 
(annual revenues exceeding $1 billion). Instead, at least two of the 
impacted small entities are regional carriers code-share with major 
airlines--UFS Inc. with United and Alaska Airlines with US Airways and 
Northwest. Code-sharing is a device whereby regional carriers feed 
traffic to majors rather than compete for traffic. Thus, for nine of 
the small entities, which are classified as medium or large regionals, 
to the extent there is competition on routes, competition is generally 
limited to carriers within the same revenue categories. Three of the 
impacted small entities are classified as nationals (annual revenues 
between $100 million and $1 billion). Air Wisconsin, one of the small 
entities classified as a national is also affiliated with United 
Airlines--a major. Because of this affiliation, it seems unlikely that 
the cost impact of the proposed rule per se would significantly change 
the relative competitiveness of Air Wisconsin. The remaining two small 
entity carriers classified as nationals do compete both with major 
airlines, with other nationals, and some smaller revenue carriers 
(namely, large regionals). While the financial impact on these small 
entities may not be proportionally greater than that imposed on the 
majors, the nationals may have greater difficulty in recovering the 
costs of compliance with the proposed rule through ticket price 
increases. This is because they are engaged in competition with the 
majors for price sensitive travelers. Lower ticket prices are vital to 
maintaining a competitive edge. There is also another competition 
factor important for nationals--the cost of compliance would probably 
be less for carriers if they link to an existing computer reservation 
system (CRS) which has been modified for CAPS rather than building a 
new stand alone CAPS system. Thus, the proposed rule may tend to 
increase national carrier reliance on CRS systems controlled by major 
airlines. Again, this may exacerbate the competitive advantage of 
majors vis a vis national carriers because the terms and cost of CRS 
use are determined by the majors.
    Business closure analysis: The FAA is unable to determine with 
certainty the extent to which those small entities that would be 
significantly impacted by the proposed rule for CAPS would have to 
close their operations. However, the profitability information (net 
income gains and losses) and the affordability analysis can be a factor 
in business closures.
    In determining whether or not any of the 12 small entities would 
close business as the result of compliance with this proposed rule, one 
question must be answered: ``Would the cost of compliance be so great 
as to impair an entity's ability to remain in business?'' A number of 
these small entities are already in serious financial difficulty. For 
example, one small entity has already filed for bankruptcy under 
chapter 11. To what extent the proposed rule makes the difference in an 
entity remaining in business is difficult to answer. The FAA believes 
that if the potential cost of compliance materializes as expected, 
several small operators could go out business due at least in part to 
the proposed rule.

Alternatives Considered

    As part of section 603(c) of the RFA, the following is an analysis 
of pros and cons of the alternatives to the proposed rule:
1. Status Quo
    Under this alternative, the practice of maintaining the current 
policy for security of checked baggage on domestic flights would 
continue. Currently, the FAA mandates manual passenger screening or 
baggage matching only in situations where the FAA has determined that a 
heightened threat exists. Continuing with this policy would be the 
least costly course of action but less safe. The FAA believes that the 
threat to civil aviation within the United States has increased and 
further rulemaking is necessary. Thus,

[[Page 19237]]

this alternative is not considered to be acceptable because it permits 
continuation of an unacceptable level of risk to U.S. airline 
passengers. Conclusion: Under this alternative, there is a likelihood 
of one or more terrorist acts resulting in Class I Explosions involving 
large commercial airplanes that operate within the United States 
(discussed previously in the benefits portion of this Regulatory 
Evaluation Summary).
2. Current Proposal Would Apply to Small Entities Only When a Specific 
Threat Exists (Standby CAPS Program)
    Under this alternative, all small entities (part 108 aircraft 
operators) would be required to implement requirements identical to 
those of the proposed rule only when the Assistant Administrator for 
Civil Aviation Security notified the certificate holder in writing that 
a security threat existed with respect to a particular operation. Under 
the proposed rule, all small entity operations with 61 or more seats 
would be required to implement CAPS for selectees for 5% of all 
passengers (originating only) and either 100% PPBM or EDS (where 
available). Under this alternative, however, small entity operators 
with airplanes having 61 or more passenger seats and 1,500 or fewer 
employees would only be required to have a ``standby security 
provision'' to implement CAPS and baggage matching for selectees.
    This alternative may reduce the potential cost impact to the small 
entities. For example, such airlines might incur the initial 
implementation cost estimated for the proposed rule but avoid annual 
operating costs; however, the proposed rule is based upon the premise 
that a terrorist or criminal is not likely to ignore a larger aircraft 
(determined by FAA to be those with seating configurations of 61 or 
greater seats) merely because it is operated by a small entity.
    Accordingly, this alternative is not considered feasible because it 
is unlikely to counter the existing terrorist threat. The potential 
cost of compliance associated with this alternative is estimated to be 
$10 million ($9 million, discounted) over 10 years, 1998 dollars, for 
all 12 small entities potentially impacted by this proposed rule. This 
cost estimate assumes that potentially impacted small entities would 
only incur startup costs for 1998, to be prepared in the event the 
Assistant Administrator for Civil Aviation Security requests that they 
implement and operate a CAPS program identical to that of the proposed 
rule. Further, this analysis assumes that air carriers could respond 
immediately to a CAPS program request, using existing personnel in the 
short run. Conclusion: This alternative would impose the smallest cost 
of compliance on part 108 small entities, and it would not impose a 
significant economic impact (less than one percent of the median annual 
revenues of the small entities or $823,000) on a substantial number of 
such small entities. This alternative would provide minimal improvement 
in protection against terrorism because it would be implemented only 
after an airline was known to be a target. This alternative is rejected 
on the basis that it would permit an unacceptable level of risk to 
continue and would jeopardize FAA's intent to address current security 
concerns related to U.S. civil aviation.
3. Small Entities Do Nothing When Receiving Passengers From a Large 
Entity Air Carrier That Has Applied Proposed Rule
    The proposed rule could be revised to require small entities 
(having operations using aircraft of 61 or greater seats) to apply the 
proposed rule only for originating passengers. For this alternative, 
when a passenger transfers from a large entity to a small entity (on 
which the flight is to the passenger's final destination), that small 
entity would not be required to perform additional security measures. 
The small entity would still be required to implement the proposed rule 
for originating passengers (including those transferring to a large 
entity). The checked baggage of some passengers previously identified 
as posing a threat, would be allowed to continue on the small entity if 
they had been subjected to heightened security measures by a major air 
carrier. The potential cost of compliance associated with this 
alternative is estimated to be $61 million ($43 million, discounted) 
over 10 years, 1998 dollars, for all 12 small entities potentially 
impacted by this proposed rule. This cost estimate was derived on the 
premise that the proposed rule would only apply to those passengers 
that start their trips on flights provided by the small entities. Since 
at least half of the passengers carried by small entities are received 
from larger air carriers, the cost of this alternative would be half of 
that cost imposed by the proposed rule. Conclusion: This alternative 
would impose the third highest cost of compliance impact on part 108 
small entities. It would impose a significant economic impact on 6 of 
12 small entities. This alternative would achieve only 50% of the 
potential safety of the proposed rule. This alternative is rejected on 
the basis that it would offer an unacceptably high level of threat to 
U.S. civil aviation security. While the potential safety level of this 
alternative is higher than that of Alternative Two, it is significantly 
lower than that of the proposed rule.
4. Small Entities Apply Proposed Rule on a Smaller Scale
    The proposed rule could be revised to allow small entities to apply 
baggage matching for a smaller number of selectees. Under this 
alternative, the rate for selectees would be 1% (as opposed to 5% for 
the proposed rule). The cost savings to small entities would depend on 
the magnitude of the reduction in the number of selectees; however, 
this would involve reducing the number of selectees arbitrarily and not 
based on a prudent rationale. Under this alternative, 80% of the 
checked baggage of passengers who would have been identified as CAPS 
selectees under the proposed rule would be allowed to go through the 
system without undergoing additional security measures. Thus, under 
this alternative a high level of risk would still remain that would be 
mitigated by the proposed rule. The potential cost of compliance 
associated with this alternative is estimated to be $99 million ($71 
million, discounted) over 10 years, 1998 dollars, for all 12 small 
entities potentially impacted by this proposed rule. This cost estimate 
is based on the premise that small entities would primarily experience 
a reduction in delay costs of about 80% of that to be incurred under 
the proposed rule. The 1% selectee rate of this alternative represents 
a reduction of 80% when compared to the proposed rule's selectee rate 
of 5%. With 80% fewer passengers as potential selectees, problems with 
reconciliation of checked baggage would be significantly reduced. This 
impact is assumed to be linear, for lack of more accurate information. 
According to technical personnel with SABRE, small changes in the 
selectee rate (between 1% and 20%, for example) would only have a 
linear affect on delay costs. That is, a 10% selectee rate would have 
twice the delay costs than a 5% selectee rate, etc. There may also be 
reductions in startup and operating costs, though to what extent is 
unknown. This alternative would only generate potential security 
benefits of about 20% (\1/5\ = 20%) of that of the proposed rule. 
Conclusion: This alternative would impose a lower cost of compliance on 
part 108 small entities than the proposed rule; however, this 
alternative (when compared to the proposed rule) would provide a less 
secure flight environment to small part

[[Page 19238]]

108 operators and passengers. It would also impose a significant 
economic impact on a substantial number of such small entities (more 
than 1% of the median annual revenues of the small entities, or 
$823,000). This alternative is rejected on the basis that it would not 
sufficiently reduce the risk of explosions due to terrorism.
5. The CAPS NPRM (Preferred)
    This alternative represents the proposed rule for CAPS. Under this 
alternative, small entities (in addition to any other part 108 aircraft 
operators with airplanes having 61 or more seats) would be required to 
implement CAPS (estimated at selectee rate of 5% of all passengers 
(originating only) whose checked baggage would be subjected to 
additional security measures), or either conduct 100% PPBM or screen 
checked baggage by EDS (where available). The cost of compliance 
expected to be incurred by the 12 small entities subject to the 
requirements of the proposed rule is estimated to be $122 million ($85 
million, discounted) over the next 10 years.
    This alternative is preferred to the aforementioned alternatives 
because it would impose costs and generate benefits in a manner that 
would create the best balance between the cost of doing business for 
all affected part 108 operators and enhanced aviation security (in the 
form of threat reduction) for the traveling public (including 
operators).

International Trade Impact Statement

    This proposed rule would not present a significant impediment to 
either U.S. firms doing business aboard, or foreign firms doing 
business in the United States. The proposed rule would only apply to 
and impact those part 108 scheduled air carriers (with 61 or more 
passenger seats) that conduct operations in the United States. Foreign 
air carriers do not compete with U.S. domestic air carriers in 
providing air transportation within the United States. Air carriers 
that conduct operations outside of the United States are required to 
conduct 100% PPBM, which is a more stringent requirement than contained 
in this proposal.

Initial Unfunded Mandates Assessment and Analysis

A. Applicability of the Unfunded Mandates Act

    Title II of the Unfunded Mandates Reform Act of 1995 (the Act), 
enacted as Pub. L. 104-4 on March 22, 1995, requires each Federal 
agency, to the extent permitted by law, to prepare a written assessment 
of the effects of any Federal mandate in a proposed or final agency 
rule that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year. 
Section 204(a) of the Act, 2 U.S.C. 1534(a), requires the Federal 
agency to develop an effective process to permit timely input by 
elected officers (or their designees) of State, local, and tribal 
governments on a proposed significant intergovernmental mandate. A 
``significant intergovernmental mandate'' under the Act is any 
provision in a Federal agency regulation that would impose an 
enforceable duty upon state, local, and tribal governments, in the 
aggregate, of $100 million (adjusted annually for inflation) in any one 
year. Section 203 of the Act, 2 U.S.C. 1533, which supplements section 
204(a), provides that before establishing any regulatory requirements 
that might significantly or uniquely affect small governments, the 
agency shall have developed a plan that, among other things, provides 
for notice to potentially affected small governments, if any, and for a 
meaningful and timely opportunity to provide input in the development 
of regulatory proposals or rules.
    Since this proposed rule contains a private sector mandate with a 
potential cost impact of more than $100 million annually, the 
requirements of Title II of the Unfunded Mandates Reform Act of 1995 do 
apply. For this reason, an assessment of the Unfunded Mandates Act on 
the impacted private sector is discussed below.

B. Unfunded Mandates Act Impact Assessment

    To assess the potential impact of the Unfunded Mandates Reform Act 
(Act) of 1995 from this proposed rule, the Act identifies six 
components that must be addressed in the assessment of this proposed 
rule. Each of those components is discussed below.
1. Provision of Federal Law Under Which the Proposed Rule is Being 
Promulgated
    The legal basis for the proposed rule is found in 49 U.S.C. 44901 
et seq. As a matter of policy, the FAA must consider, among other 
concerns, maintaining and enhancing safety and security in air commerce 
as its highest priorities (49 U.S.C. 40101(d)).
2. Assessment of the Anticipated Costs and Benefits of the Federal 
Mandate
    a. Estimate of Costs--The proposed rule would impose an estimated 
cost of $2.8 billion ($2.0 billion, discounted) over 10 years. This 
cost estimate is composed of three components: (1) checked baggage 
matching costs ($2.2 billion; $1.6 billion, discounted), (2) checked 
baggage matching flight delay costs ($473 million; $326 million, 
discounted), and (3) CAPS program costs ($70 million; $51 million, 
discounted). During the first year of the proposed rule (2000), which 
is also the most costly, part 108 air carriers are expected to incur 
costs of approximately $456 million ($426, discounted). This estimate 
includes fixed and recurring cost components.
    b. Estimate of Benefits--The primary benefit of the proposed rule 
would be significantly increased protection to Americans and others 
traveling on U.S. domestic air carrier flights from the increasing 
threat of acts of terrorism. Specifically, the proposed rule is aimed 
at preventing explosives from being placed on board commercial flights 
in checked baggage. In order for security benefits to offset compliance 
costs, a terrorist act (such as a Class I Explosion) resulting in 380 
aviation fatalities (including other types of casualty losses such as 
aircraft replacement, market loss, etc.) would have to be avoided over 
the 10 years.
    c. Estimates of Future Costs of Compliance of the Federal Mandate--
For the 32 aircraft operators that would potentially be impacted by the 
proposed rule, the total annual costs in each of the next 10 years 
would be greater than $100 million. The total cost of the proposed rule 
for the 10-year period (in 1998 dollars) would be approximately $2.8 
billion ($2.0 billion, discounted) and the annualized present value of 
the costs of compliance would be approximately $234 million per year. A 
more detailed discussion of costs is shown in the analysis of costs 
section of this regulatory impact analysis summary.
    d. Estimates of Disproportionate Budgetary Effects of the Federal 
Mandate--The 32 aircraft operators that would be impacted by the 
proposed rule are widely dispersed across the United States, as evident 
by their respective hub locations. For example, Delta Airlines has its 
main hub in Atlanta, GA; United Airlines has its main hub in Chicago, 
IL; American and Southwest Airlines have their main hubs in Dallas, TX. 
Smaller air carriers (namely regionals) also have their main hubs 
dispersed similarly to the majors and nationals since they primarily 
carry their passengers into small hub airports. It is for these reasons 
that the proposed rule would not impose any disproportionate budgetary 
effects on

[[Page 19239]]

any particular region of the country. The proposed rule would, however, 
impose costs on a particular segment of the private sector as noted 
previously in the estimate of costs section of this Unfunded Mandate 
Act Analysis.
    e. Estimates of the Effect of the Federal Mandate on the National 
Economy--As the result of the proposed rule, the impacted part 108 air 
carriers are expected to increase staffing and training of airport 
terminal personnel. There is insufficient information to be able to 
estimate the multiplier effect the additional jobs spurred by this 
proposed rule would have on the local economy in the form of a lower 
unemployment rate, added tax revenues, and increased sales for consumer 
goods on local communities and the national economy. The FAA is 
reasonably certain that the creation of additional jobs by the proposed 
rule would have a positive impact.
    f. Discussion of the Least Burdensome Regulatory Alternative--The 
FAA has identified four alternatives to the proposed rule in addition 
to maintaining the status quo: (1) require mandatory EDS (phased in) 
without CAPS; (2) require 100% PPBM during phase-in of EDS; (3) require 
random bag matching during EDS phase-in; or (4) require bag matching on 
only some CAPS selectees. Section V of the full Regulatory Impact 
Analysis (RIA) (contained in the docket) describes the four 
alternatives to the proposed rule as well as the costs to implement 
them. The FAA contends that using CAPS to identify those passengers who 
possibly are a threat to the security of a flight and requiring 
passenger baggage matching or screening by EDS, where EDS is available, 
is the most practical and cost-beneficial alternative currently 
available to increase the level of security on domestic flights. A more 
detailed discussion of alternatives is shown in the analysis of 
alternative section of the RIA.

C. Conclusion

    The FAA has determined that the cost of compliance of the proposed 
rule would be greater than $100 million in each of the 10 years, but 
the economic impact on State, local and tribal governments would not 
exceed the $100 million threshold. The proposed rule would impose a 
Federal mandate of greater than $100 million per year on the private 
sector. Of all of the alternatives examined in this assessment of the 
Act and the analysis of alternatives section of the RIA, the proposed 
rule provides the largest net benefit.

Federalism Implications

    The regulation proposed herein would not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among various levels of government. Therefore, in 
accordance with Executive Order 12612, it is determined that this 
proposal would not have sufficient federalism implications to warrant 
the preparation of a Federalism Assessment.

List of Subjects in 14 CFR Part 108

    Air carriers, Aircraft, Airmen, Airports, Arms and munitions, 
Explosives, Law enforcement officers, Reporting and recordkeeping 
requirements, Security measures, X-rays.

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration proposes to amend part 108 of Title 14, Code of Federal 
Regulations (14 CFR part 108) as follows:

PART 108--AIRCRAFT OPERATOR SECURITY

    1. The authority citation for part 108 continues to read as 
follows:

    Authority: 49 U.S.C. 106(g), 5103, 40113, 40119, 44701-44702, 
44705, 44901-44905, 44907, 44913-44914, 44932, 44935-44936, 46105.

    2. Amend Sec. 108.5 by revising paragraph (a) to read as follows:


Sec. 108.5  Security program: Adoption and implementation.

    (a) Each certificate holder shall adopt and carry out a security 
program that meets the requirements of Sec. 108.7 of this part for each 
of the following scheduled or public charter passenger operations:
    (1) Each operation with an airplane having a passenger seating 
configuration of more than 60 seats.
    (2) Each operation with an airplane having a passenger seating 
configuration of 60 or fewer seats that provides deplaned passengers 
access, that is not otherwise controlled by a certificate holder using 
an approved security program or a foreign air carrier using a security 
program required by Sec. 129.25 of this chapter, to a sterile area, 
except that where the certificate holder elects to not carry out the 
provisions of Sec. 108.12 of this part, that part of the program 
effecting compliance with the requirements listed in Sec. 108.7(b)(9) 
of this part need only be implemented when the Associate Administrator 
for Civil Aviation Security, or a designee, notifies the certificate 
holder in writing that a security threat exists with respect to the 
operation.
    (3) Each operation with an airplane having a passenger seating 
configuration of 60 or fewer seats where the certificate holder elects 
to carry out the provisions of Sec. 108.12 of this part, except that 
where the operation does not provide deplaned passengers access to a 
sterile area, the requirements of Sec. 108.7(b) (1) and (4) of this 
part need only be implemented when the Associate Administrator for 
Civil Aviation Security, or a designee, notifies the certificate holder 
in writing that a security threat exists with respect to the operation.
    (4) Each operation with an airplane having a passenger seating 
configuration of more than 30 but less than 61 seats, that is not 
subject to paragraph (a)(2) of this section, except that those parts of 
the program effecting compliance with the requirements of Sec. 108.7(b) 
(1), (2), (4) and (9) of this part need only be implemented when the 
Assistant Administrator for Civil Aviation Security notifies the 
certificate holder in writing that a security threat exists with 
respect to the operation.
* * * * *
    3. Amend Sec. 108.7 by adding paragraph (b)(9) to read as follows:


Sec. 108.7  Security program: Form, content, and availability.

* * * * *
    (b) * * *
    (9) The procedures used to perform the checked baggage security 
functions specified in Sec. 108.12 of this part for scheduled passenger 
operations.
* * * * *
    4. Add Sec. 108.12 to read as follows:


Sec. 108.12  Security of checked baggage for operations within the 
United States.

    (a) Each air carrier required to adopt and carry out a security 
program in accordance with Sec. 108.5 of this part shall apply the 
checked baggage security requirements of this section in accordance 
with its security program for scheduled passenger operations within the 
United States. For each operation the air carrier shall--
    (1) For each originating passenger checking baggage, use a 
computer-assisted passenger screening (CAPS) system, approved by the 
Administrator, capable of selecting passengers based on specific 
criteria and at random; or
    (2) Determine that the passenger associated with each originating 
checked bag is aboard the flight or that each originating bag not 
matched to a passenger aboard the flight has been screened by an 
explosives detection system (EDS).

[[Page 19240]]

    (b) For each operation subject to paragraph (a) of this section, 
the air carrier may not transport the baggage of a non-originating 
passenger unless--
    (1) The passenger is aboard the flight;
    (2) The passenger associated with the baggage was screened by a 
CAPS system approved by the Administrator prior to an earlier flight 
leg and information is available to the air carrier that the passenger 
was not selected;
    (3) Information is available to the air carrier that the baggage 
was screened by an EDS prior to an earlier flight leg;
    (4) The baggage is screened by an EDS prior to the current flight; 
or
    (5) The passenger is screened for the current flight as an 
originating passenger in accordance with paragraph (a) (1) of this 
section.
    (c) The checked baggage of a passenger selected by the CAPS system 
shall not be transported aboard the flight unless--
    (1) The baggage is screened by an EDS where an EDS is available; or
    (2) Where an EDS is not available, the passenger associated with 
the baggage is aboard the flight.
    (d) An EDS is considered to be available to an air carrier for 
screening a checked bag when it is--
    (1) Under the operational control of the air carrier;
    (2) Functioning properly;
    (3) Located proximate to where the baggage is tendered by the 
passenger or along the route the baggage normally travels during the 
process of being loaded onto the aircraft;
    (4) Staffed by appropriately trained personnel; and
    (5) Not in use to screen other identified baggage such that a 
significant delay in a flight might result from having to wait to use 
the EDS to screen the bag.
    (e) Each air carrier shall establish procedures for implementing 
security measures for checked baggage under this section that--
    (1) Ensures nondiscriminatory application; and
    (2) Minimizes the overt identification of passengers selected for 
additional security procedures.
    (f) Each person used by an air carrier to implement its CAPS system 
whose job function will be likely to involve interactions with 
passengers shall be trained on the CAPS system. The training shall 
include--
    (1) An overview of the purpose of screening, including an 
explanation that selection does not imply that a passenger is suspected 
of any illegal activity;
    (2) A general description of the CAPS system and how it is designed 
to select passengers on a nondiscriminatory basis;
    (3) An advisory that the CAPS system selects some passengers at 
random;
    (4) An advisory that the CAPS system is not connected to any law 
enforcement or intelligence data base; and
    (5) Instruction on treating passengers selected by the CAPS system 
in a respectful and non-stigmatizing manner.
    (g) An air carrier may not modify the selection criteria of the 
CAPS system without the written approval of the Administrator. Nor may 
an air carrier apply any supplemental system of passenger screening to 
select passengers for additional security measures without the approval 
of the Administrator.
    (h) (1) Each air carrier shall make available to the Administrator 
the information specified in its security program on the general 
operation of its CAPS system.
    (2) Each air carrier shall maintain, for at least 24 hours, but not 
longer than 72 hours, after flight departure, information linking a 
passenger's name or other identifying data to whether the passenger was 
selected by the CAPS system.
    (3) Each air carrier shall provide the Administrator with CAPS 
system data for any specific flight, including selectee status of 
individuals on the flight, when requested as part of--
    (i) An evaluation of the CAPS system to determine possible 
discriminatory impacts;
    (ii) An accident investigation;
    (iii) A security incident investigation; or
    (iv) Security compliance oversight.
    (i) An air carrier may apply alternate procedures that are 
established in its security program for screening checked bags to 
address special situations. These situations could include--
    (1) Baggage acceptance at off-airport locations;
    (2) The transportation of bags separated from a passenger for 
reasons outside the control of the passenger, e.g., lost bags;
    (3) CAPS system failure;
    (4) Extraordinary operational circumstances;
    (5) The use of technologies or equipment other than an EDS to 
screen checked baggage; and
    (6) Any other situation specified by the Associate Administrator 
for Civil Aviation Security in the air carrier's security program.

    Issued in Washington, DC, on April 13, 1999.
Anthony Fainberg,
Director, Office of Civil Aviation Security Policy and Planning.
[FR Doc. 99-9635 Filed 4-14-99; 10:07 am]
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