[Federal Register Volume 64, Number 190 (Friday, October 1, 1999)]
[Rules and Regulations]
[Pages 53558-53565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25453]



[[Page 53557]]

_______________________________________________________________________

Part IV

Department of Transportation

Federal Aviation Administration



14 CFR Part 93



High Density Airports; Allocation of Slots; Final Rule

  Federal Register / Vol. 64, No. 190 / Friday, October 1, 1999 / Rules 
and Regulations  

[[Page 53558]]



DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 93

[Docket No. FAA-1999-4971, Amendment No. 93-78]
RIN 2120-AG50


High Density Airports; Allocation of Slots

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: This action amends the regulations governing takeoff and 
landing slots and slot allocation procedures at certain High Density 
Traffic Airports. As a result of the ``Open Transborder'' Agreement 
between the Government of the United States and Government of Canada, 
this rule codifies the provisions of the bilateral agreement and 
ensures consistency between FAA regulations governing slots and the 
bilateral agreement.

DATES: Effective on October 31, 1999.

FOR FURTHER INFORMATION CONTACT: Lorelei D. Peter, Airspace and Air 
Traffic Law Branch, Regulations Division, Office of the Chief Counsel, 
Federal Aviation Administration, 800 Independence Avenue, SW., 
Washington, DC 20591; telephone: (202) 267-3073.

SUPPLEMENTARY INFORMATION:

Availability of Final Rule

    An electronic copy of this document may be downloaded using a modem 
and suitable communications software from the FAA regulations section 
of the FedWorld electronic bulletin board service (telephone: (703) 
321-3339), the Government Printing Office's (GPO) electronic bulletin 
board service (telephone: (202) 512-1661), or, if applicable, the FAA's 
Aviation Rulemaking Advisory Committee bulletin board service 
(telephone: (800) 322-2722 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 GPO's web page at http://
www.access.gpo.gov/nara for access to recently published rulemaking 
documents.
    Any person may obtain a copy of this document 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) 267-9677. Communications must identify the amendment 
number or docket number of this final rule.
    Persons interested in being placed on a mailing list for future FAA 
rulemaking documents should request from the above office a copy of 
Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution 
System, which describes application procedures.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996, requires the FAA to comply with small entity requests for 
information or advice about compliance with statutes and regulations 
within its jurisdiction. Therefore, any small entity that has a 
question regarding this document may contact their local FAA official. 
Internet users can find additional information on SBREFA in the ``Quick 
Jump'' section of the FAA's web page at http://www.faa.gov and may send 
electronic inquiries to the following Internet address: 9-AWA-
[email protected].

Background

    The FAA has broad authority under Title 49 of the United States 
Code (U.S.C.), Subtitle VII, to regulate and control the use of 
navigable airspace of the United States. Under 49 U.S.C. 40103, the 
agency is authorized to develop plans for and to formulate policy with 
respect to the use of navigable airspace and to assign by rule, 
regulation, or order the use of navigable airspace under such terms, 
conditions, and limitations as may be deemed necessary in order to 
ensure the safety of aircraft and the efficient utilization of the 
navigable airspace. Also, under section 40103, the agency is further 
authorized and directed to prescribe air traffic rules and regulations 
governing the efficient utilization of the navigable airspace.
    The High Density Traffic Airports Rule, or ``High Density Rule,'' 
14 CFR part 93, subpart K, was promulgated in 1968 to reduce delays at 
five congested airports: JFK International Airport, LaGuardia Airport, 
O'Hare International Airport, Ronald Reagan National Airport, and 
Newark International Airport (33 FR 17896; December 3, 1968). The 
regulation limits the number of instrument flight rule (IFR) operations 
at each airport, by hour or half hour, during certain hours of the day. 
It provides for the allocation to carriers of operational authority, in 
the form of a ``slot'' for each IFR landing or takeoff during a 
specific 30- or 60-minute period. The restrictions were lifted at 
Newark in the early 1970's.
    On December 16, 1985, the Department of Transportation (Department) 
promulgated the ``buy/sell'' rule, a comprehensive set of regulations 
that provide for the allocation and transfer of air carrier and 
commuter slots (50 FR 52180; December 20, 1985). The two primary 
features of this rule were, first, that initial allocation would be 
accomplished by ``grandfathering'' existing slots to the carriers that 
currently held them, and second, that a relatively unrestricted 
aftermarket in slots would be permitted. As a result, effective April 
1, 1986, slots used for domestic operations could be bought and sold by 
any party.
    The FAA allocates slots designated for international use by U.S. 
and foreign-flag carriers under procedures different from those that 
apply to the allocation of slots designated as domestic. Under 14 CFR 
section 93.217, international slots are allocated at Kennedy and O'Hare 
twice a year for the summer and winter scheduling seasons.
    In promulgating the ``buy/sell'' rule, the Department determined 
that, as a matter of international aviation policy, the allocation of 
new slots to international carriers at Kennedy and O'Hare Airports 
would be made by the FAA based on requests from foreign and U.S. 
operators conducting international operations (50 FR 52187; December 
20, 1985).
    O'Hare is unique in that domestic slots are withdrawn to 
accommodate requests for international operations during each summer 
and winter season. 14 CFR section 93.217(a)(6) specifically provides 
that the FAA must allocate a slot for an international operation at 
O'Hare upon request. If there is not an available slot within 60 
minutes of the requested time, a slot would be withdrawn from a 
domestic carrier to fill that request. At LaGuardia, section 
93.217(a)(7) provides that additional slots will be allocated for 
international operation if required by bilateral agreement. At Kennedy, 
section 93.217(a)(8) provides that domestic slots will be withdrawn for 
international operations only if required by international obligations.
    At the time of the ``buy/sell'' rule, the Department concluded that 
since certain slots used for international operations are specially 
treated within Subpart S, it is important that the Department be aware 
of which slots are being used for those operations. Therefore, U.S. 
carriers were required to submit to the FAA in writing, the slots that 
were used for international operations as of December 16, 1985. These 
slots were then designated by the FAA as international slots.
    International slots may not be bought, sold, leased, or otherwise 
transferred, except such slots may be traded to

[[Page 53559]]

another slot holder on a one-for-one basis at the same airport. 
Furthermore, if a carrier does not use an international slot for more 
than a two-week period, the slot must be returned to the FAA. 
International slots may only be used for international service.
    However, FAA regulations permit the use of domestic slots for 
either international or domestic service. Regardless of the type of 
service, i.e., domestic or international, the minimum slot usage 
requirement and withdrawal procedures apply to a slot designated as 
domestic. FAA regulations governing slots provide for lotteries of 
domestic slots in certain circumstances. These regulations also permit 
only U.S. carriers to participate in lotteries for domestic slots. 
International slots are not allocated by the lottery mechanism.

U.S.-Canada Bilateral Agreement

    On February 24, 1995, the Government of the United States and the 
Government of Canada entered into a bilateral agreement (Agreement) 
phasing in an ``Open Transborder'' regime between the two countries. 
Annex II of the Agreement specifically addresses slots and access to 
O'Hare, LaGuardia and Ronald Reagan National Airports. The Agreement 
provides that: (1) the Canadian carriers will be able to obtain slots 
at the High Density Traffic Airports under the same prevailing 
allocation system as U.S. carriers; (2) the base level of slots 
established for Canada will consist of 42 slots at LaGuardia, and 36 
slots for the summer season at O'Hare and 32 slots for the Winter 
season at O'Hare; (3) Canadian carriers' slot base at LaGuardia and 
O'Hare (which currently is comprised of international slots), 
effectively will ``convert'' to domestic slots; (4) all slots acquired 
by the Canadian carriers, including the determined slot base, as 
described in (2) above, at LaGuardia and O'Hare, will be subject to the 
minimum slot usage requirement set forth in section 93.227 and may be 
withdrawn for failure to meet that requirement; (5) the provisions of 
bilateral agreement do not permit the determined slot base at LaGuardia 
and O'Hare to be withdrawn for the purpose of providing a U.S. or 
foreign air carrier with slots for international operations or to 
provide slots for new entrant operators; (6) any slots acquired after 
the transition date that do not form part of the determined slot base 
may be withdrawn at any time to fulfill operational needs; (7) neither 
the Government of Canada nor any Canadian carrier may modify the 
determined slot base at LaGuardia or O'Hare and then have claim to any 
other time slot to restore the base; and (8) slots that are acquired 
above the determined slot base level and then subsequently disposed of 
shall not modify the base.

Discussion of Comments

    The comment period closed on February 11, 1999, with 8 comments 
filed. Two additional reply comments were subsequently received and 
considered. Seven comments were submitted by airlines and one comment 
was submitted by an association. American Airlines and Northwest 
Airlines generally supported the proposal, with Air Canada and United 
Airlines supporting the proposal with certain modifications and 
clarifications. Filing in opposition, the Air Carrier Association of 
America commented that the rulemaking should be suspended until such 
time as the Department makes additional slots available to new entrant 
carriers. Canadian Airlines commented that the proposed rules are 
insufficient to accomplish the goals of the Agreement and, if adopted, 
should be accompanied by proposals to increase access at the high 
density airports. Certain comments, discussed more fully below, raised 
issues that are beyond the scope of this rulemaking and beyond the 
scope of the ``Open Transborder'' Agreement between the Government of 
the United States and the Government of Canada. Additionally, changes 
to or interpretation of existing statutory language concerning slot 
exemption authority given to the Secretary of Transportation under 49 
U.S.C. 41714 are also beyond the scope of this rulemaking.
    The comments are divided into the following categories: (1) 
conversion of certain international slots to domestic slots; (2) 
establishment of regulatory base of slots for the Canadian carriers; 
(3) international slot allocation; (4) domestic slot allocation; and 
(5) slot withdrawal provision.

Conversion of International Slots of Domestic Slots

    Notice No. 99-1 proposed reclassifying to domestic slots 35 
international slots at Chicago O'Hare and 17 international slots at 
LaGuardia Airport held by U.S. carriers. In addition, the Canadian slot 
base of 36 slots in the summer season, 32 slots in the winter season at 
Chicago O'Hare, and 42 slots as LaGuardia Airport would also be 
classified as domestic. As discussed in the proposal, the 
reclassification only applies to the international slots that were held 
by U.S. carriers on December 16, 1985, provided that an equivalent 
number of international slots were held as of February 24, 1998, (the 
phase-in of the Agreement). The slots comprising the Canadian carrier 
base effectively were granted domestic slot attributes by the terms of 
the Agreement. These attributes include the ability of Canadian 
carriers to ``monetize'' slot holdings, which permits the transfer of 
slots for any consideration. Since FAA regulations do not permit the 
sale of international slots, this reclassification of international 
slots to domestic slots is in accordance with the terms of the 
Agreement.
    The proposal was generally supported by Air Canada, American 
Airlines, Northwest Airlines, and United Airlines. The Air Carrier 
Association of America commented that the proposal would enable large 
carriers to increase their slot holdings while new entrant airlines are 
``frozen out of the airports.'' Canadian Airlines commented that 
reclassifying certain international slots [of U.S. carriers] would 
disadvantage Canadian carriers because Canadian carrier slots could be 
used only transborder service between the U.S. and Canada. Canadian 
Airlines argued that since U.S. carriers could use the slots for 
transborder service, for domestic U.S. service, or for other 
international service, the net effect would make the slots more 
valuable to U.S. carriers, and therefore, more expensive for Canadian 
carriers to acquire.
    FAA Response. After reviewing the comments, the FAA is adopting the 
rule as proposed. FAA recognizes that designating the slots as domestic 
is expected to provide additional economic benefits and increased 
flexibility for use of the slots. These economic benefits were 
contemplated for Canadian carriers as part of the negotiated Agreement, 
and the rule, as adopted, provides similar treatment for U.S. carriers 
with long-term use of these international slots. Approximately 90% of 
the reclassified slots were used in transborder U.S./Canada service and 
were operated by the carriers for many years both before and after the 
Department's slot allocation rules were issued on December 16, 1985. 
Reclassifying these international slots as domestic does not increase 
the number of slots that may be operated by the carriers. Furthermore, 
maintaining an international designation on these slots used by U.S. 
carriers would not result in additional slot availability for new 
entrant airlines. If certain international slots held by U.S. carriers 
were not reclassified as domestic, the FAA would be required to 
allocated international slots for transborder services to U.S. carriers 
while treating identical services

[[Page 53560]]

by Canadian carriers as domestic under the terms of the Agreement. FAA 
believes the reclassification for slots for U.S. carriers is not only 
equitable but, combined with adopted changes in allocation procedures 
for transborder operations herein, provides equivalent treatment for 
U.S. and Canadian carriers.
    Contrary to comments by the Air Carrier Association of America, the 
FAA does not find that adoption of the proposal would preclude, or 
affect in any way, the Department's use of the exemption authority 
codified at 49 U.S.C. 41714 to increase access to the high density 
airports.
    This final rule also adopts the proposal to reduce the 
international base allocation for carriers subject to the provisions of 
14 CFR section 93.217(a)(10). Canadian Airlines commented that the 
reclassification would provide the largest U.S. carriers with an 
opportunity to increase their international allocation since the 
reclassification of slots would bring them below their international 
slot allocation limit.
    The allocation of international slots to carriers with 100 or more 
permanent slots at Chicago O'Hare is limited, by regulation, to 
international slots held as of February 23, 1990. Carriers with 100 or 
more permanent slots at Chicago O'Hare may add additional international 
flights as long as they may be accommodated without withdrawal of 
domestic slots. This rule as adopted provides for a permanent reduction 
to the February 23, 1999, international slot base for affected carriers 
that corresponds to the number of slots reclassified as domestic under 
the adopted provisions of new section 92.218. American Airlines and 
United Airlines are the only carriers subject to this provision and 
both currently operate international flights in excess of the number of 
international slots allocated to them by using slots from their 
domestic slot base. As stated in the proposal, after the permanent 
reduction for the number of slots reclassified under section 93.218, 
American Airlines' international slot base under section 93.217(a)(10) 
is reduced from 35 to 17 international slots and United Airlines' 
international slot base is reduced from 17 to 2. Therefore, contrary to 
Canadian's comment, American and United's international slot allocation 
will continue to be capped, but at a lower number, which compensates 
for the conversion of international slots to domestic.

Establishment of Regulatory Base of Slots for Canadian Carriers

    The Agreement provides for a base level of slots for Canadian 
carriers at Chicago O'Hare and LaGuardia Airport that includes an 
increase over the number of slots operated by Canadian carriers at the 
time the Agreement was signed. Since summer 1995, the Canadian carriers 
have operated 10 additional slots at Chicago O'Hare and 14 slots at 
LaGuardia Airport per the Agreement. The Canadian carriers base at 
Chicago O'Hare includes the growth of operations by Canadian carriers 
since the international slot allocation rules were adopted in December 
1985. At O'Hare, this growth has resulted in 14 slots in the summer 
season and 10 slots in the winter. These slots are not allocated 
permanently to the Canadian carriers but are international slots that 
are allocated seasonally in time periods for which domestic slots 
generally have been withdrawn from U.S. carriers. Under the terms of 
the Agreement, these international slots are included as part of the 
base level of slots for Canadian carriers. FAA regulations governing 
slot allocation do not provide for the permanent withdrawal of domestic 
slots at Chicago O'Hare for the Canadian slot base. Air Canada 
commented that the slots constituting the base level should be within 
the slot-controlled hours at the high density traffic airports. Both 
Air Canada and Canadian Airlines commented that their slot base was 
significantly less than the major U.S. carriers at the high density 
airports, which makes it more difficult for them to make competitive 
schedule changes within their own slot base. Furthermore, Air Canada 
cited difficulties with trading of slots. Thus, Air Canada commented 
that slots constituting the base should be ``grandfathered at the times 
required for competitively viable operations.''
    FAA Response: The FAA is adopting, as proposed, an amendment to 
increase the quota under 14 CFR section 93.123 by adding a footnote 
that specifically allocates to the Canadian carriers 24 slots at 
Chicago O'Hare International Airport and 14 slots at LaGuardia Airport.
    The FAA will consider historical records of slot holdings to the 
extent practical and recognizes that Canadian carriers previously have 
been allocated international slots under the provisions of 14 CFR 
section 93.217. The allocation of international slots under this 
section has provided the Canadian carriers the opportunity to request 
and receive slot timing adjustments for several scheduling seasons 
since the Agreement was signed in 1995. It is unclear from the 
comments, therefore, what Air Canada would identify as its requested 
``grandfathered'' slot times.
    The FAA will consult with the affected individual affected carriers 
to determine the exact timing of the slots comprising the Canadian slot 
base. All the slots included in the Canadian slot base will be with the 
slot controlled hours. FAA records indicate that the summer base of 36 
slots at Chicago O'Hare has already been allocated for summer 1999 
within the slot controlled hours of 6:45 a.m. through 9:14 p.m. FAA 
records also indicate that the Canadian carriers are allocated the base 
level of 42 slots at LaGuardia Airport during the peak slot-controlled 
hours of 7:00 a.m. through 9:59 p.m. The FAA will use historic records, 
to the extent practical, when determining the times of the slots 
comprising the base established under the new section 93.218. The Chief 
Counsel of the FAA will be the final decisionmaker for these 
determinations. Canadian carriers may subsequently transfer and trade 
slots under the current slot regulations that apply to U.S. carriers 
and domestic slots.

International Slot Allocation

    The Notice proposed amending 14 CFR section 93.217 to exclude 
transborder service solely between a high density traffic airport and 
Canada. Canadian Airlines commented that non-Canadian foreign carriers 
will gain an unfair advantage since they would continue to have access 
to international slots for transborder service while U.S. and Canadian 
carriers would not be eligible to receive international slots.
    FAA Response. The FAA is adopting the rule as proposed. The 
Agreement clearly states that Canadian carriers are to be subject to 
the same slot allocation system as U.S. airlines for domestic services. 
In order to ensure that Canadian and U.S. carriers are allocated slots 
for transborder services in the same fashion, this rule treats 
transborder flights between high density traffic airports and Canada as 
domestic flights for slot allocation purposes. Flights by non-Canadian 
foreign carriers were not addressed in the slot provisions of the U.S./
Canada bilateral aviation agreement and are not affected by this 
change.
    As proposed, the final rule amends the submission deadline for 
slots allocated under 14 CFR section 93.217 by establishing a seasonal 
deadline through notice in the Federal Register. The current submission 
deadline is articulated in the regulations as May 15 for the following 
winter scheduling

[[Page 53561]]

season and October 15 for the following summer season. The deadline 
typically is within a few days of the submission deadline established 
for the International Air Transport Association Schedule Coordination 
Conferences. Coordination of the FAA submission deadline with the 
standard international deadline will reduce administrative workload for 
the airlines requesting slots since they will no longer need to track 
two separate submission deadlines. No comments were filed opposing this 
provision.

Domestic Slot Allocation

    The Notice also proposed to include eligible foreign air carriers 
in slot lotteries under 14 CFR section 93.225(e), were provided for by 
bilateral agreement. Canadian Airlines commented that the proposed 
amendment does not guarantee access to lotteries since the U.S./
Canadian Bilateral Agreement does not specifically address lotteries. 
Both Air Canada and Canadian Airlines commented on statutory and other 
legislative proposals related to access by air carriers to the high 
density traffic airports that may limit eligibility for non-U.S. 
carriers. The Air Carrier Association of America indicated the 
rulemaking should be suspended since the Department has not increased 
permanent slots for new entrant airlines.
    FAA Response: The FAA does not agree with these comments. The 
Agreement explicitly states that any slot needs of Canadian carriers 
above the base levels shall be acquired through the prevailing system 
for slot allocation applicable to U.S. domestic operations. As stated 
in the Notice, slot lotteries are one of the regulatory methods by 
which available domestic slots are allocated to U.S. carriers. 
Consequently, it is necessary to amend the regulations so that Canadian 
carriers are eligible to participate in any slot lotteries. Thus, in 
accordance with the terms of the Agreement, the rule as adopted permits 
eligible Canadian carriers to participate in slot lotteries. Canadian 
carriers will also be subject to the same provisions governing lottery 
slots as U.S. carriers, such as use-or-lose and limitations on 
transfers, as are U.S. carriers.
    In addition, the FAA reiterates that the primary purpose of this 
rulemaking is to amend the FAA slot regulations so that they are not in 
conflict with the Agreement. Other issues related to slot allocation 
procedures or slot exemption policies are beyond the scope of this 
rulemaking.

Slot Withdrawal Provisions

    The FAA is adopting the proposal to amend section 93.223 by adding 
a new paragraph that would prevent the withdrawal of slots comprising 
the established Canadian slot base, as specified in the Agreement and 
defined in the new section 93.218, to fulfill requests for 
international operations or for new entrants.
    United Airlines requested that the FAA amend the proposed rules to 
extend the slot withdrawal protection, provided to the Canadian 
carriers under the Agreement, to the domestic slot of U.S. carriers now 
reclassified under the new section 93.218(a). United Airlines also 
proposed that FAA confirm, by rule, that for the purposes of 
determining the total number of domestic slots withdrawn for 
international slot allocation under section 93.217, the FAA exclude 
slots that were withdrawn as of October 31, 1993, specifically used for 
transborder services. In addition, United Airlines contends that the 
FAA is limited to withdrawing domestic slots for international service 
only to the extent that the requesting carrier provided international 
service as of October 31, 1993.
    FAA Response: The FAA is not adopting United's request to exclude 
the reclassified slots from the pool of domestic slots that are 
eligible for withdrawal under the regulations. Adopting this requested 
modification would provide greater protection to these ``reclassified'' 
slots held by U.S. carriers that is beyond the limits that apply to all 
other designated domestic slots. In addition, this modification would 
have given the slots greater protection than they would have had in 
1985 had these slots been used for domestic service and not used for 
international service and thus designated as international slots. The 
Agreement is silent on treatment of U.S. carriers while it is specific 
on the limitations on slot withdrawal for the Canadian slot base. The 
FAA is reclassifying certain international slots of U.S. carriers as 
domestic primarily to treat U.S. and Canadian carriers in a similar 
fashion for slot allocation purposes. The FAA does not believe that 
identical treatment is required in all cases.
    The rule as adopted increases the quota under section 93.123 to 
accommodate a growth of 14 operations by Canadian carriers since 1985 
at Chicago O'Hare, which were largely accommodated by the withdrawal of 
domestic slots. United Airlines commented that the FAA no longer needs 
to withdraw domestic slots to fund Canadian carrier operations and 
furthermore, that any carrier wishing to increase international 
operations at the airport should apply to the Secretary of 
Transportation for an exemption to provide the service. United argued 
that the FAA should, as a matter of policy, administratively reduce the 
legislative cap on the number of slots that it withdraws for 
international allocation.
    The FAA does not agree with and finds no basis for United Airlines' 
interpretation of 49 U.S.C. 41714(b). This provision specifically 
prohibits the withdrawal of slots to exceed the total number of slots 
withdrawn from an air carrier as of October 31, 1993. The FAA is 
limited, by statute, to allocating an international slot only if the 
allocation can be accommodated by available slots combined with the 
number of slots available through the withdrawal of domestic slots. 
Neither the statutory language nor the legislative history indicate any 
Congressional intent to further limit the withdrawal process to apply 
to carriers conducting service as of October 31, 1993.
    Lastly, the FAA and the Department decline to issue any policy 
determination on further limiting the number of domestic slots 
withdrawn beyond the legislative cap set forth in 49 U.S.C. 
Sec. 41714(b) as this issue is outside the scope of this rulemaking. 
Any action of this nature would be addressed in a separate forum.
    The FAA has inserted language in the regulatory text of 
Sec. 93.225, Lottery of available slots, to further clarify that the 
lottery procedures apply not only to U.S. carriers but also to foreign 
air carriers where provided for by bilateral agreement.

Effective Date

    This rule is effective October 31, 1999, which coincides with the 
beginning of the Winter 1999 scheduling season. International slots for 
the upcoming winter season at O'Hare were allocated and confirmed 
during the June 1999 IATA meeting held in Miami, Florida. This rule 
does not affect any carrier's allocation of international slots at 
O'Hare, nor the slots withdrawn for the Winter 1999 scheduling season.

The Rule

    As a result of the U.S.-Canada bilateral agreement, which phased in 
an ``Open Transborder'' regime between the two countries, the FAA 
amends Subparts K and S to: (1) codify, in a footnote to the hourly 
slot totals in subpart K, the 14 slots at LaGuardia and 24 slots at 
O'Hare that were allocated to

[[Page 53562]]

the Canadian carriers in June 1995; (2) exclude from the allocation of 
international slots at HDR airports transborder service operations 
solely between the airport and Canada; (3) set forth the provisions 
that apply to slots used for transborder service between the U.S. and 
Canada and codify the established base level of slots allocated to 
Canadian carriers; (4) reclassify certain international slots as 
domestic slots; (5) reduce the international allocation for air 
carriers that hold and operate more than 100 permanent slots at O'Hare 
by the number of international slots reclassified as domestic slots; 
(6) permit Canadian carriers to participate in any lotteries of 
domestic slots; and (7) amend the regulatory deadline for submitting 
requests for international allocation to coincide with the published 
IATA deadline.

Environmental Review

    The primary purpose of the regulation is to amend the slot rule to 
conform to the U.S.-Canadian Bilateral Agreement. FAA has concluded 
that the provisions of the regulation that implement the Agreement do 
not involve proposed federal agency action within the meaning of the 
National Environmental Policy Act (NEPA), 42 U.S.C. 4321, or other 
environmental laws. As explained below, that Agreement specifically 
mandates the reclassification of Canadian international slots as 
domestic slots and the allocation of base level slots for Canadian 
carriers at LaGuardia and O'Hare. These base level allocations reflect 
current slot holdings by Canadian carriers except at O'Hare, where 
additional allocation was required. The FAA had no discretion in this 
regard. In allocating the additional slots required at O'Hare, the FAA 
could not maintain the same total number of slots. There is a 
legislative cap on the number of domestic slots withdrawn for 
international operations and the FAA lacks a regulatory mechanism to 
permanently withdraw slots from one carrier to redirect them to another 
for purposes of maintaining international obligations.
    To assure fairness to the U.S. domestic carriers, the regulation 
will also reclassify certain international slots held by U.S. carriers 
as domestic slots. To reflect the reclassification, it will also reduce 
the international base allocation for carriers subject to 14 CFR 
93.217(a)(10). FAA's exercise of discretion to exceed the requirements 
of the Agreement in this manner would not increase the overall number 
of slots or operations. This portion of the rule accordingly qualifies 
for categorical exclusion under the National Environmental Policy Act 
as administrative and operating actions pursuant to FAA Order 1050.1D, 
Policies and Procedures for Considering Environmental Impacts, 
paragraph 31(a)(1). As these provisions are procedural in nature and 
lack the potential to impact the environment, similarly no further 
analysis is required under other environmental laws or regulations.

Reclassification and Allocation of Slots for Canadian Carriers

    In accordance with the Agreement, part one of this regulation 
reclassifies slots held by Canadian carriers at LaGuardia and O'Hare 
airports. The Canadian carriers' slots will be converted from 
international to a modified form of domestic slots. Under the 
arrangement mandated by the Agreement and codified in this regulation, 
the slots held by the Canadian carriers would resemble domestic slots 
in that (1) they can be bought, sold, or traded on the open market, and 
(2) they are subject to the bi-monthly use or lose requirement. Unlike 
other domestic slots, however, the slots held by Canadian carriers are 
not subject to seasonal withdrawal for international use pursuant to 14 
C.F.R. section 93.217 or for new entrants.
    Part two of this regulation establishes base levels of permanent 
slots for the Canadian carriers at LaGuardia and O'Hare. The Agreement 
directs that the Canadian carriers receive 42 permanent slots at 
LaGuardia. Currently, the Canadian carriers are using 42 slots at 
LaGuardia so no additional allocation of slots is necessary. This 
Agreement also directs that the Canadian carriers receive 36 Summer 
slots and 32 Winter slots at O'Hare. Currently, the Canadian carriers 
hold 22 permanent slots at O'Hare. The Canadian carriers also are 
currently allocated 14 seasonal slots for the summer and 10 seasonal 
slots for the winter under 14 C.F.R. 93.217 in the time periods for 
which domestic slots are withdrawn. To complete the base level of slots 
at O'Hare, the regulation provides that an additional 14 new slots in 
the summer and 10 new slots in the winter be allocated permanently to 
the Canadian carriers. Because the Canadian carriers are receiving 
these allocations as permanent per the Agreement, the regulation also 
provides that they are no longer eligible to receive international 
slots under 14 C.F.R. 93.217.
    No NEPA or other environmental analysis is required because these 
portions of the regulation are ministerial in nature. The FAA has no 
choice about how to accomplish the international mandate, which 
reclassifies international slots held by Canadian carriers as domestic 
slots and provides additional slots at O'Hare. While the FAA retains 
complete authority to withdraw slots for operational needs in 
accordance with 14 C.F.R. 93.223, the existing allocating mechanisms do 
not provide a means for the FAA to allocate the slots to the Canadian 
carriers. Title 14 C.F.R. section 93.225 provides that if slots are 
available, the slots will be distributed by random lottery with new 
entrant and limited incumbent carriers receiving priority. In addition, 
fulfilling the Agreement obligation by allocating slots under 14 C.F.R. 
section 93.217 is not feasible since these slots are allocated 
seasonally. Furthermore, even if allocating slots under 14 C.F.R. 
93.217 were feasible, slot withdrawals by the FAA are legislatively 
capped at the level of slots withdrawn as of October 31, 1993. 49 
U.S.C. 41714(b)(2). As a practical matter, given the legislative cap, 
scheduling requirements, and regulations regarding priorities for 
reallocating slots, the withdrawal of slots will not provide for the 14 
additional slots needed at O'Hare pursuant to the Bilateral Agreement. 
Thus, lacking a mechanism for withdrawing the slots from the existing 
slot holders and re-directing them to the Canadian carriers, the FAA 
has no choice but to comply with the Bilateral Agreement by creating 14 
additional slots at O'Hare. NEPA requires agencies to take 
environmental concerns into consideration when making decisions where a 
range of alternatives is available. However, under these circumstances, 
where no choice is involved, an action is ministerial and no NEPA 
analysis is required.
    The FAA's position that this portion of the regulation is 
ministerial finds support in the NEPA-implementing regulations 
promulgating by the Department of State, 22 C.F.R. part 161. Among the 
actions which the State Department exempts from NEPA analysis are:
    Mandatory actions required under any treaty or international 
agreement to which the United States Government is a party, or required 
by the decisions of international organizations or authorities in which 
the United States is a member or participant, except when the United 
States has substantial discretion over implementation of such 
requirements.
    By comparison, the allocation of slots of the Canadian carriers is 
an example of an action that would likely be exempt under the State 
Department regulations. The FAA is required by the Agreement to allot 
permanent slots to the Canadian carriers, and the agency has no

[[Page 53563]]

discretion but to create additional slots. Given the international 
agreement, the FAA adopts the position espoused by the State Department 
and concludes that the allocation of slots and establishment of a base 
level for the Canadian carriers, as required by the Agreement, does not 
involve proposed federal action within the meaning of NEPA and other 
environmental laws.

Reclassification of Slots Held by U.S. Carriers and Reduction of 
International Base Allocation of Carriers Subject to Regulatory Cap

    To prevent disparate treatment between U.S. carriers and Canadian 
carriers, part one of the regulations also reclassifies certain 
identified international slots held by U.S. carriers as domestic slots. 
The FAA is also adopting the proposal to reduce the international slot 
base allocation for carriers subject to 14 C.F.R. 93.217(a)(10). While 
FAA is exercising discretional authority in these areas, none of these 
aspects of the regulation have the potential to increase total slots or 
operations. Accordingly, they qualify for categorical exclusion under 
the National Environmental Policy Act as administrative and operating 
actions pursuant to FAA Order 1050.1D, Policies and Procedures for 
Considering Environmental Impacts, paragraph 31(a)(1). No extraordinary 
circumstances exist that would warrant preparation of an environmental 
assessment, such as likelihood of controversy on environmental grounds. 
Similarly, as there are no potential environmental impacts, analysis is 
not required under other environmental laws and regulations.

Compatibility with ICAO Standards

    In keeping with U.S. obligations under the convention on 
International Civil Aviation, it is FAA policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these proposed regulations.

Regulatory Evaluation Summary

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulation justify its costs. Second, 
the Regulatory Flexibility Act of 1980 requires agencies to analyze the 
economic effect of regulatory changes on small entities. Third, OMB 
directs agencies to assess the effect of regulatory changes on 
international trade. In conducting these analyses, the FAA has 
determined that this rule is ``a significant regulatory action'' under 
section 3(f) of Executive Order 12866 and is considered significant 
under the regulatory policies and procedures of the Department of 
Transportation (44 FR 11034, February 26, 1979). This rule will not 
have a significant impact on a substantial number of small entities and 
will not constitute a barrier to international trade.
    Although the total number of slots (international plus domestic) 
will not increase for any of the U.S. carriers, the number of domestic 
slots for affected carriers will increase. The rule will generate 
benefits for those air carriers holding slots historically identified 
for international use under 14 CFR 93.215(d) because those 
international slots will be converted to domestic slots. Operators 
benefit because of the enhanced flexibility they receive to manage 
their scheduling at High Density Requirement airports. The slots that 
have been converted from international slots to domestic slots can be 
scheduled in Canada--U.S. transborder service, they can be scheduled in 
other domestic service, or they can be scheduled for international 
service. Operators also receive an expanded economic value because the 
market has placed a value on domestic slots if the operator decides to 
buy, sell, lease, barter, or collateralize slots. Therefore, the FAA 
believes that the rule will benefit operators not only because domestic 
slots present a greater measure of potential earning power than do 
international slots, but also because domestic slots offer operators a 
better opportunity to manage their assets in such a way as not to lose 
them due to the minimum usage requirements; international slots do not 
provide this benefit.
    This rule only affects Canadian carriers conducting transborder 
service into and out of the HDR airports and U.S. carriers using 
certain designated international slots in 1985 and the equivalent 
number held as of February 24, 1998. The rule will not impose any 
additional equipment, training, administrative, or other cost to the 
carriers involved. Therefore, there is no compliance cost associated 
with the rule.
    Qualitative benefits from the rule will come from converting 
certain identified international slots to domestic slots, thereby 
affording operators greater flexibility because the converted slots can 
be used for transborder service, any other domestic service, or for 
international service. Also, domestic slots have greater economic value 
than international slots because domestic slots can be bought, sold, 
leased, bartered, or used as collateral. Due to the advantages domestic 
slots offer over international slots, operators have an enhanced 
opportunity to manage their assets in such a way as to maximize their 
income. Therefore, the FAA has determined that the rule is cost 
beneficial.

Regulatory Flexibility Assessment

    The Regulatory Flexibility Act of 1980 establishes ``as a principle 
of regulatory issuance that agencies shall endeavor, consistent with 
the objective of the rule and of applicable statutes, to fit regulatory 
and informational requirements to the scale of the business, 
organizations, and governmental jurisdictions subject to regulation.'' 
To achieve that principal, the Act requires agencies to solicit and 
consider flexible regulatory proposals and to explain the rational for 
their actions. The Act covers a wide-range of small entities, including 
small businesses, not-for-profit organizations and small governmental 
jurisdictions.
    Agencies must perform a review to determine whether a proposed or 
final rule will have a significant economic impact on a substantial 
number of small entities. If the determination is that it will, the 
agency must prepare a regulatory flexibility analysis (RFA) as 
described in the Act.
    However, if an agency determines that a proposed or final rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the 1980 act provides that 
the head of the agency may so certify and an RFA is not required. The 
certification must include a statement providing the factual basis for 
this determination, and the reasoning should be clear.
    This rule will impact entities regulated by part 93. The FAA has 
determined that the amendments to part 93, Subparts K and S will affect 
only two Canadian carriers and four major U.S. carriers and the 
amendments will not have a significant impact on these major air 
carriers' costs. Therefore, the FAA certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities.

International Trade Impact Statement

    This rulemaking could positively effect the sale of Canadian 
aviation services in the United States, but it would also positively 
affect the sale of United States aviation services in Canada. However, 
this rule is not

[[Page 53564]]

expected to impose a competitive advantage or disadvantage to either 
U.S. air carriers doing business Canada or Canadian air carriers doing 
business in the United States. This assessment is based on the fact 
that this rule will not impose additional costs on either U.S. or 
Canadian air carriers.

Unfunded Mandates Reform Act Assessment

    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.
    This rule does not contain any Federal intergovernmental or private 
sector mandate. Therefore, the requirements of Title II of the Unfunded 
Mandates Reform Act of 1995 do not apply.

Paperwork Reduction Act

    Information collection requirements in this amendment previously 
have been approved by the Office of Management and Budget (OMB) under 
the provisions of the Paperwork Reduction Act of 1995 (49 U.S.C. 
3507(d)), and have been assigned OMB control number 2120-0639.
    This collection covers Canadian carriers or commuter operators 
needing to report to the FAA certain aspects of their operations at HDR 
airports. Specifically, FAA regulation requires notification of (1) 
requests for confirmation of transferred slots; (2) requests to be 
included in a lottery for available slots; (3) usage for slots on a bi-
monthly basis; and (4) requests for short-term use of off peak hour 
slots. The total reporting burden associated with this rule is 66 
hours. The requirement would be mandatory.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information, unless it displays a current 
valid OMB control number. The OMB control number associated with the 
collection of this information is 2120-0639.

Federalism Implications

    The regulations herein will 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 the 
various levels of government. Therefore, in accordance with Executive 
Order 12612, it is determined that this rule will not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

Energy Impact

    The energy impact of this final rule has been assessed in 
accordance with the Energy Policy and Conservation Act (EPCA) and 
Public Law 94-163, as amended (42 U.S.C. 6362). It has been determined 
that this proposed rule is not a major regulatory action under the 
provisions of the EPCA.

List of Subjects in 14 CFR Part 93

    Air traffic control, Airports, Alaska, Navigation (air), Reporting 
and recordkeeping.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends part 93 of Title 14, Code of Federal Regulations 
as follows:

PART 93--SPECIAL AIR TRAFFIC RULES AND AIRPORT TRAFFIC PATTERNS

    1. The authority citation for part 93 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40103, 40106, 40109, 40113, 44502, 
44514, 44701, 44719, 46301.

    2. Section 93.123 is amended in the first chart in paragraph (a) by 
adding a new footnote 5 in the headings in column 2 and 4 of the chart 
and by revising the heading of the fifth column to read as follows:


Sec. 93.123  High density traffic airports.

    (a) * * *

                                        IFR Operations per Hour--Airport
----------------------------------------------------------------------------------------------------------------
                                                                                                        Ronald
                       Class of user                           LaGuardia      Newark       O'Hare       Reagan
                                                                  4,5                      2,3,5      National 1
----------------------------------------------------------------------------------------------------------------
 
*                  *                  *                  *                  *                  *
                                                        *
----------------------------------------------------------------------------------------------------------------
\1\ Washington National Airport operations are subject to modifications per section 93.124.
\2\ The hour period in effect at O'Hare begins at 6:45 a.m. and continues in 30-minute increments until 9:15
  p.m.
\3\ Operations at O'Hare International Airport shall not--
(a) Except as provided in paragraph (c) of the note, exceed 62 for air carriers and 13 for commuters and 5 for
  ``other'' during any 30-minute period beginning at 6:45 a.m. and continuing every 30 minutes thereafter.
(b) Except as provided in paragraph (c) of the note, exceed more than 120 for air carriers, 25 for commuters,
  and 10 for ``other'' in any two consecutive 30-minute periods.
(c) For the hours beginning as 6:45 a.m., 7:45 a.m., 11:45 a.m., 7:45 p.m. and 8:45 p.m., the hourly limitations
  shall be 105 for air carriers, 40 for commuters and 10 for ``other,'' and the 30-minute limitations shall be
  55 for air carriers, 20 for commuters and 5 for ``other.'' For the hour beginning at 3:45 p.m., the hourly
  limitations shall be 115 for air carriers, 30 for commuters and 10 for ``others,'' and the 30-minute
  limitations shall be 60 for air carriers, 15 for commuters and 5 for ``other.''
\4\ Operations at LaGuardia Airport shall not--
(a) Exceed 26 for air carriers, 7 for commuters and 3 for ``other'' during any 30-minute period.
(b) Exceed 48 for air carriers, 14 for commuters, and 6 for ``other'' in any two consecutive 30-minute period.
\5\ Pursuant to bilateral agreement, 14 slots at LaGuardia and 24 slots at O'Hare are allocated to the Canadian
  carriers. These slots are excluded from the hourly quotas set forth in Sec.  93.123 above.


[[Page 53565]]

* * * * *
    3. Section 93.217 is amended by revising paragraphs (a) 
introductory text, (a)(5), (a)(6), (a)(8) and (a)(10)(i) to read as 
follows:


Sec. 93.217  Allocation of slots for international operations and 
applicable limitations.

    (a) Any air carrier of commuter operator having the authority to 
conduct international operations shall be provided slots for those 
operations, excluding transborder service solely between HDR airports 
and Canada, subject to the following conditions and the other 
provisions of this section:
* * * * *
    (5) Except as provided in paragraph (a)(10) of this section, at 
Kennedy and O'Hare Airports, a slot shall be allocated, upon request, 
for seasonal international operations, including charter operations, if 
the Chief Counsel of the FAA determines that the slot had been 
permanently allocated to and used by the requesting carrier in the same 
hour and for the same time period during the corresponding season of 
the preceding year. Requests for such slots must be submitted to the 
office specified in Sec. 93.221(a)(1), by the deadline published in a 
Federal Register notice for each season. For operations during the 1986 
summer season, requests under this paragraph must have been submitted 
to the FAA on or before February 1, 1986. Each carrier requesting a 
slot under this paragraph must submit its entire international schedule 
at the relevant airport for the particular season, noting which 
requests are in addition to or changes from the previous year.
    (6) Except as provided in paragraph (a)(10) of this section, 
additional slots shall be allocated at O'Hare Airport for international 
scheduled air carrier and commuter operations (beyond those slots 
allocated under Secs. 93.215 and 93.217(a)(5) if a request is submitted 
to the office specified in Sec. 93.221(a)(1) and filed by the deadline 
published in a Federal Register notice for each season. These slots 
will be allocated at the time requested unless a slot is available 
within one hour of the requested time, in which case the unallocated 
slots will be used to satisfy the request.
* * * * *
    (8) To the extent vacant slots are available, additional slots 
during the high density hours shall be allocated at Kennedy Airport for 
new international scheduled air carrier and commuter operations (beyond 
those operations for which slots have been allocated under Secs. 93.215 
and 93.217(a)(5)), if a request is submitted to the office specified in 
Sec. 93.221(a)(1) by the deadline published in a Federal Register 
notice for each season. In addition, slots may be withdrawn from 
domestic operations for operations at Kennedy Airport under this 
paragraph if required by international obligations.
* * * * *
    (10) * * *
    (i) Allocation of the slot does not result in a total allocation to 
that carrier under this section that exceeds the number of slots 
allocated to and scheduled by that carrier under this section on 
February 23, 1990, and as reduced by the number of slots reclassified 
under Sec. 93.218, and does not exceed by more than 2 the number of 
slots allocated to and scheduled by that carrier during any half hour 
of that day, or
* * * * *
    3. A new Sec. 93.218 is added to read as follows:


Sec. 93.218  Slots for transborder service to and from Canada.

    (a) Except as otherwise provided in this subpart, international 
slots identified by U.S. carriers for international operations in 
December 1985 and the equivalent number of international slots held as 
of February 24, 1998, will be domestic slots. The Chief Counsel of the 
FAA shall be the final decisionmaker for these determinations.
    (b) Canadian carriers shall have a guaranteed base level of slots 
of 42 slots at LaGuardia, 36 slots at O'Hare for the Sumner season, and 
32 slots at O'Hare in the Winter season.
    (c) Any modification to the slot base by the Government of Canada 
or the Canadian carriers that results in a decrease of the guaranteed 
base in paragraph (b) of this section shall permanently modify the base 
number of slots.
    4. Section 93.223 is amended by adding a new paragraph (c)(4) to 
read as follows:


Sec. 93.223  Slot withdrawal.

* * * * *
    (c) * * *
    (4) No slot comprising the guaranteed base of slots, as defined in 
section 93.318(b), shall be withdrawn for use for international 
operations or for new entrants.
* * * * *
    5. Section 93.225 is amended by revising paragraph (e) to read a 
follows:


Sec. 93.225  Lottery of available slots.

* * * * *
    (e) Participation in a lottery is open to each U.S. air carrier or 
commuter operator operating at the airport and providing scheduled 
passenger service at the airport, as well as where provided for by 
bilateral agreement. Any U.S. carrier, or foreign air carrier where 
provided for by bilateral agreement, that is not operating scheduled 
service at the airport and has not failed to operate slots obtained in 
the previous lottery, or slots traded for those obtained by lottery, 
but wishes to initiate scheduled passenger service at the airport, 
shall be included in the lottery if that operator notifies, in writing, 
the Slot Administration Office, AGC-230, Office of the Chief Counsel, 
Federal Aviation Administration, 800 Independence Avenue, SW., 
Washington, DC 20591. The notification must be received 15 days prior 
to the lottery date and state whether there is any common ownership or 
control of, by, or with any other air carrier or commuter operator as 
defined in Sec. 93.213(c). New entrant and limited incumbent carriers 
will be permitted to complete their selections before participation by 
other incumbent carriers is initiated.
* * * * *

    Issued in Washington, DC, on September 27, 1999.
Jane F. Garvey,
Administrator.
[FR Doc. 99-25453 Filed 9-30-99; 8:45 am]
BILLING CODE 4910-13-M