[Federal Register Volume 65, Number 104 (Tuesday, May 30, 2000)]
[Rules and Regulations]
[Pages 34536-34543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13348]



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Part II





Department of Transportation





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Federal Aviation Administration



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14 CFR Part 158



Passenger Facility Charges; Final Rule

  Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / Rules 
and Regulations  

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 158

[Docket No. FAA-2000-7402; Amendment No. 158-2]
RIN 2120-AH05


Passenger Facility Charges

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: This action amends regulations pertaining to passenger 
facility charges (PFC's) to incorporate administrative and statutory 
changes in the procedures to establish PFC's based on recent enactments 
by Congress and records of decision by the FAA. This action is issued 
as a final rule without prior notice and comment because the changes 
are administrative and/or required by statute. Also the immediate 
adoption of these regulations is in the public interest and is 
necessary for public safety.

DATES: Effective June 29, 2000.

FOR FURTHER INFORMATION CONTACT: Eric Gabler, Office of Airport 
Planning and Programming, Federal Aviation Administration, 800 
Independence Avenue, SW, Washington, DC 20591; Telephone: (202) 267-
3845.

SUPPLEMENTARY INFORMATION:

Final Rule Procedure

    This final rule amends 14 CFR part 158 to incorporate 
administrative and statutory changes to the PFC program. The FAA has 
determined that this action can be issued as a final rule without prior 
public notice and comment because the amendments are rules of agency 
procedure required by statute. Further, the FAA has found prior public 
notice and comment on this action is contrary to the public interest. 
The PFC's approved pursuant to this action are needed without delay to 
provide funds for public safety projects, security projects, and other 
projects of public benefit.
    While this rule is effective 30 days after publication, 
applications for PFC authority may be submitted immediately. Also, the 
FAA anticipates issuing guidance to assist public agencies applying for 
authority to impose PFC's.

Availability of Final Rules

    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), and/or the Government Printing Office's electronic bulletin 
board service (telephone (202) 512-1661).
    Internet users may access recently published rulemaking documents 
through the FAA's web page at http://www.faa.gov/avr/arm/nprm/nprm.htm 
or the Government Printing Office's web page at http://www.access.gpo.gov/nara.
    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) 267-9680. Communications must identify the docket number of this 
final rule.
    Persons interested in being placed on the mailing list for future 
rulemaking documents should request from the above office a copy of 
Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution 
System, which describes the application procedure.

Background

    The PFC program was established by the Aviation Safety and Capacity 
Expansion Act of 1990. The Act was enacted on November 5, 1990 and is 
codified at 49 U.S.C. 40117. On May 29, 1991, the Department of 
Transportation adopted new regulations to establish the PFC program, 
under which the FAA Administrator, under authority delegated by the 
Secretary of Transportation, could authorize a public agency to impose 
a PFC of $1, $2, or $3 per enplaned passenger at a commercial service 
airport the public agency controls. The proceeds from such PFC's are to 
be used to finance FAA-approved eligible airport-related projects that 
preserve or enhance safety, security, or capacity of the national 
airport system; reduce noise from an airport that is part of such 
system; or furnish opportunities for enhanced competition between or 
among air carriers. The rule, which added a new part 158, became 
effective on June 28, 1991. As of March 1, 2000, 825 PFC applications 
had been approved or partially approved for 314 airport locations, with 
all but one airport location collecting at the $3 PFC level.
    On April 5, 2000, President Clinton signed into law the ``Wendell 
H. Ford Aviation Investment and Reform Act for the 21st Century'' (AIR 
21). This law made several modifications to the PFC program, including 
allowing a public agency to apply to the FAA to increase the PFC level 
that it may charge to $4 or $4.50.
    These changes, as well as those administrative and statutory 
changes required by the Federal Aviation Administration Authorization 
Act of 1994 (1994 Act), the Federal Aviation Reauthorization Act of 
1996 (1996 Act), and the recodification of the Federal Aviation Act of 
1958 are adopted in part 158 by this action.

Section-by-Section Analysis

Subpart A--General

Section 158.3  Definitions

    The following definitions are added or revised:
    Allowable cost. Prior to April 5, 2000, allowable cost was defined 
to include only those costs incurred on or after November 5, 1990. AIR 
21 expands this definition to include costs of terminal development 
referred to in Sec. 158.15(b)(3) but incurred after August 1, 1986, 
provided the development is at an airport smaller than a medium hub 
airport and the total passenger boardings at that airport declined by 
at least 16 percent between calendar year 1989 and calendar year 1997.
    Commercial service airport. This section is amended by removing the 
citation ``49 U.S.C. app. 2202(17).''
    Covered airport. Before PFC's are approved for collection, AIR 21 
requires a ``covered airport'' to file a competition plan. AIR 21 
defines ``covered airport'' as a medium or large hub airport at which 
one or two air carriers control more than 50 percent of the passenger 
boardings.
    Frequent flier award coupon. The 1994 Act prohibits collection of a 
PFC from a passenger who obtained the ticket for air transportation 
with a frequent flier award coupon. Frequent flier award coupon means a 
zero-fare award of air transportation provided by an air carrier to a 
passenger in exchange for accumulated travel mileage credits in a 
customer loyalty program, but does not include the redemption of 
accumulated credits for additional or upgraded service on trips for 
which the passenger has paid a published fare. ``Two-for-the-price-of-
one'' and similar marketing programs, and air transportation purchased 
for the passenger by other parties are not included in the definition. 
Since 1994, the FAA has incorporated the definition of frequent flier 
award coupon in its individual PFC records of decision.
    Medium or large hub airport. Since the enactment of the PFC 
program, there have been additional conditions on approval of PFC's at 
commercial service airports if the airports have more than 0.25 percent 
of the total number of passenger boardings at all such airports

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in the U.S. for the prior calendar year. The FAA consistently has 
referred to such an airport with more than 0.25 percent and up to 1 
percent of the total number of passenger boardings to be a ``medium 
hub'' airport, and an airport with more than 1 percent of the total 
number of passenger boardings to be a ``large hub'' airport. The FAA is 
replacing references to an airport with more than 0.25 percent of 
commercial service enplanements in the regulation with the term 
``medium or large hub.''
    Nonrevenue passenger. The 1994 Act prohibits collection of a PFC 
from a nonrevenue passenger. Nonrevenue passenger means a passenger 
receiving air transportation from an air carrier for which remuneration 
is not received by the air carrier. Air carrier employees or others 
receiving air transportation, for which token service charges are 
levied are considered nonrevenue passengers. Infants for whom a token 
fare is charged also are considered nonrevenue passengers. Since 1994, 
the FAA has incorporated the definition of nonrevenue passenger in its 
individual PFC records of decision.
    Public agency. This definition has been expanded to allow a private 
sponsor of an airport participating in the Pilot Program for Private 
Airport Ownership to apply for PFC authority under the terms and 
conditions that apply to a public agency. The Pilot Program on Private 
Ownership of Airports was established by Congress in 1996 and directs 
the FAA to allow program participants to apply for PFC authority.

Section 158.5  Authority To Impose PFC's

    The FAA is amending this section to include PFC levels of $4 and 
$4.50, as authorized by AIR 21, in addition to the pre-existing levels 
of $1, $2, and $3.

Section 158.7  Exclusivity of Authority

    AIR 21 clarifies and strengthens the independent status of a public 
agency's PFC authority relative to State or other political 
subdivisions. This section is amended in accordance with the specific 
terms of AIR 21.

Section 158.9  Limitations

    The following statutory limitations are added to the previously-
listed prohibitions: (1) Collection of a PFC from nonrevenue 
passengers; (2) collection of a PFC from a passenger who obtained the 
ticket for air transportation with a frequent flier award coupon; (3) 
imposition of a fee on passengers on flights, including flight 
segments, between 2 or more points in Hawaii; or (4) imposition of a 
fee on passengers on an aircraft having a seating capacity of less than 
60 passengers in Alaska.

Section 158.11  Public Agency Request Not To Require Collection of 
PFC's by a Class of Air Carriers or Foreign Air Carriers or for Service 
to Isolated Communities

    This section is amended to include new provisions of AIR 21 that 
allow a public agency to request that certain classes or categories of 
air transportation not collect the PFC. These provisions include 
passengers enplaned on a flight to an airport receiving scheduled 
passenger service and having fewer than 2,500 passenger boardings each 
year; and to an airport in a community that has a population of less 
than 10,000 and is not connected by a land highway or vehicular way to 
the land-connected National Highway System within a State. The public 
agency may request any or all of these exclusions.

Section 158.15  Project Eligibility at PFC Levels of $1, $2, or $3

    This section is revised to explicitly include the 1994 statutory 
requirement that all proposed projects be adequately justified to 
receive PFC funding--a standard the FAA has been applying since the 
implementation of part 158 in 1991 in PFC records of decision. Also, 
AIR 21 makes other revisions necessary in this section. AIR 21 creates 
a special category of project eligibility for terminal development work 
associated with construction of gates and related areas if the project 
will enable additional air service by an air carrier with less than 50 
percent of annual passenger boardings at an airport.

Section 158.17  Project Eligibility at PFC Levels of $4 or $4.50

    Section 158.17 is added to provide eligibility requirements for 
PFC's at the $4 or $4.50 level. Applicants requesting authority to 
impose PFC's at the $4 or $4.50 level must meet these eligibility 
requirements in addition to those in section Sec. 158.15.
    AIR 21 allows a project to be funded at a $4 or $4.50 PFC level if 
the project cannot be paid for from funds reasonably expected to be 
available through programs referred to in 49 U.S.C. 48103 (the Airport 
Improvement Program (AIP)).
    Section 158.17 also incorporates the statutory provision that 
conditions funding of a surface transportation or terminal project at 
the $4 or $4.50 level on a finding that the public agency has made 
adequate provision for financing the airside needs of the airport, 
including runways, taxiways, aprons, and aircraft gates. The FAA will 
use financial and planning data, information in the PFC application, 
and information on funding availability under AIP, to determine 
eligibility.
    Also, AIR 21 establishes an additional requirement for projects at 
medium and large hub airports. In particular, a project for a medium or 
large airport is eligible for PFC funding at levels of $4 or $4.50, 
only if the project will make a significant contribution to: improving 
air safety and security; increasing competition among air carriers; 
reducing current or anticipated congestion; or reducing the impact of 
aviation noise on people living near the airport.
    The FAA will develop specific criteria for the ``significant 
contribution'' requirement through individual PFC records of decision. 
As with prior records of decision, the FAA will consider all relevant 
factors, including but not limited to the following in assessing 
whether the significant contribution requirement has been met:
    Safety and security--Does the project advance airport security and/
or safety? Projects that address security and safety requirements of 14 
CFR part 107 and part 139, respectively, are usually given highest 
priority for AIP discretionary funds.
    Capacity--Does the project support or is it part of a capacity 
project to which the FAA has allocated Federal resources or that would 
qualify for such resources? For example, is the project included in an 
AIP letter of intent or does it satisfy the FAA's benefit-cost criteria 
for large AIP discretionary investments? Has the project been 
identified in an FAA Airport Capacity Enhancement Plan? Does the 
project alleviate a constraint on airport growth or service?
    Noise--Does the project affect the noise-impacted areas around the 
airport? Historically, projects addressing noisier areas than projects 
that would address less noisy areas, all other factors being equal, 
have been given higher priority for AIP discretionary grants.
    Competition--Does the project mitigate or remove barriers to 
increased airline competition at the airport (e.g., cause an increase 
in common use gates at a gate-constrained airport)? Has the project 
been identified as an essential component in the airport's competition 
plan or other similar documents submitted to the FAA?

Section 158.19  Requirement for Competition Plans

    A new section has been added to implement a requirement to develop 
a competition plan. Under AIR 21, no

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public agency controlling a covered airport, defined as a medium or 
large hub airport at which one or two air carriers account for more 
than 50 percent of the passenger boardings, may impose a PFC unless the 
public agency has submitted a competition plan to the FAA. AIR 21 
requires that each plan meet statutory requirements and that the plan 
must be reviewed periodically to ensure successful implementation. The 
requirement to develop a plan does not apply to PFC authority in effect 
before April 5, 2000.
    Covered airports are required to submit competition plans to 
receive new AIP grants in FY 2001 and thereafter. Because there are 
more covered airports under the AIP than there are participating in the 
PFC program, and because AIP grants are issued on an annual basis, 
instructions for such plans are provided under the AIP. Such plans 
prepared for AIP may be used for PFC projects.

Subpart B--Application and Approval

Section 158.23  Consultation With Air Carriers and Foreign Air Carriers

    The requirement under Sec. 158.23(a)(2) that a public agency 
consult with its air carriers and foreign air carriers on ``the PFC 
level'' is amended to read ``the PFC level for each project. * * * '' 
The FAA anticipates that PFC applications may include several projects 
qualifying at different PFC levels, depending on the contribution of 
each project.

Section 158.25  Applications

    This section is amended to allow for processing competition plans 
required by Sec. 158.19 and determination of the PFC level for each 
project required in revised Sec. 158.23.

Section 158.29  The Administrator's Decision

     Section 158.29 is amended to require all projects approved for 
collection of PFC's to meet the requirements of Sec. 158.15. In 
addition, projects approved for collection of a PFC at a level of more 
than $3 must meet the requirements of Sec. 158.17. Previously, 
paragraphs (a)(1)(ii), (a)(1)(iii), (b)(1)(ii) and (b)(1)(iii) 
referenced separate components of Sec. 158.15.
    Under the 1994 Act, the FAA is prohibited from approving a PFC 
application if an airport is not in compliance with 49 U.S.C. 47107(b) 
governing the use of airport revenues. The FAA includes a determination 
that the public agency has not been found in violation of 49 U.S.C. 
47107(b) in its PFC records of decision. Section 158.29 is amended to 
reflect this requirement.
    A new paragraph is added to Sec. 158.29 to acknowledge that, if 
applicable, the public agency must submit a competition plan.
    Section 158.29 also is amended to require the Administrator to 
specify a PFC level ``for the application,'' and total approved PFC 
revenue ``including the amounts approved at $3 and less, $4, and/or 
$4.50.'' The FAA anticipates that PFC applications may include various 
projects, some qualifying at a level of $3 or less, and others at $4 or 
$4.50. The public has the opportunity to comment on the PFC levels for 
these projects in the notice and comment process provided in 
Sec. 158.27(e)

Section 158.31  Duration of Authority To Impose a PFC After Project 
Implementation

    Section 158.31 is amended to remove the words ``section of 9304(c) 
or 9703 of the Airport Noise and Capacity Act of 1990 (Pub. L. 101-508, 
Title IX, subtitle D.''

Section 158.37  Amendment of Approved PFC

    Section 158.37(b) is amended to reflect the new requirements of 
Secs. 158.17 and 158.19 to obtain authority to increase a previously 
approved PFC level to $4 or $4.50.

Subpart C--Collection, Handling, and Remittance of PFC's

Section 158.45  Collection of PFC's on Tickets Issued in the U.S.

    AIR 21 adds several new classes of passengers from whom a PFC may 
not be collected and this section is revised accordingly.

Section 158.49  Handling of PFC's

    The 1996 Act included a provision clarifying that PFC's held by air 
carriers after collection constitute a trust fund held for the 
beneficial interest of public agencies. Section 158.49 is amended in 
accordance with the specific terms of this provision.

Subpart D--Reporting, Recordkeeping and Audits

Section 158.63  Reporting Requirements: Public Agency

    Section 158.63 is amended to require the public agency to indicate 
the PFC level the FAA approved for each project as authorized by AIR 
21. In addition, the phrase ``medium or large hub airports'' replaces 
the phrase ``airports enplaning 0.25 percent or more of the total 
annual enplanements in the U.S. for the prior calendar year as 
determined by the Administrator'' (see discussion pertaining to new 
definitions in Sec. 158.3).

Subpart F--Reduction in Airport Improvement Program Apportionment

Section 158.93  Public Agencies Subject to Reduction

    Section 158.93 is amended to substitute the phrase ``medium or 
large hub'' in place of ``enplanes 0.25 percent or more of the total 
annual enplanements in the U.S.'' (see discussion pertaining to new 
definitions in Sec. 158.3).

Section 158.95  Implementation of Reduction

    This section is amended to reflect AIR 21 requirement that the 
effective date of AIP apportionment reduction is changed to ``the first 
fiscal year following the year in which the collection of the fee 
imposed under Sec. 40117 is begun.'' Also, AIR 21 establishes separate 
reduction levels for airports depending on the level of PFC imposed. 
Specifically, in the case of a PFC level of $3 or less, the reduction 
is maintained at the previous level of 50 percent of the projected 
revenues from the PFC in the fiscal year but not more than 50 percent 
of the amount of AIP formula monies that otherwise would be 
apportioned. However, in the case of a PFC level of more than $3, the 
reduction is set at 75 percent of the projected revenues from the PFC 
in the fiscal year but not more than 75 percent of the amount of AIP 
formula monies that otherwise would be apportioned. Section 158.95 is 
amended to reflect these statutory provisions. This means, in the case 
of an airport raising its PFC level from $3 to more than $3, the higher 
reduction of apportionments would take place in the first fiscal year 
following the year in which the collection of the PFC level of more 
than $3 is begun.

Section 158.97  Special Rule for Transitioning Airports

    AIR 21 provides that certain small hub airports transitioning to 
medium hub airport status are protected through FY 2003 against a loss 
in combined year-to-year AIP apportionment and PFC revenues caused by 
entitlement reductions under 49 U.S.C. 47114(f) (the amended 
Sec. 158.95). Accordingly, a new section Sec. 158.97 is added in 
accordance with this statutory requirement. This provision applies to 
FY 2000 through FY 2003.

Regulatory Evaluation Summary

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that

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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, the Trade Agreement Act of 1979 directs 
agencies to assess the effect of regulatory changes on international 
trade. Fourth, Public Law 104-4 requires federal agencies to assess the 
impact of any federal mandates on state, local, tribal governments, and 
the private sector. In conducting these analyses, the FAA has 
determined this final rule is not a ``significant regulatory action'' 
under section 3(f) of Executive Order 12866 and, therefore, is not 
subject to review by the Office of Management and Budget. This final 
rule is not considered significant under the regulatory policies and 
procedures of the Department of Transportation (44 FR 11034, February 
26, 1979). This final rule would not have a significant impact on a 
substantial number of small entities. In addition, this rule would not 
constitute a barrier to international trade. Finally, the FAA has 
determined that the proposal would not impose a federal mandate on 
state, local, or tribal governments, or the private sector of $100 
million per year.

Benefit-Cost Analysis

    This final rule amends part 158 to be consistent with current 
statutes governing the PFC program. These new statutory provisions will 
enable airport authorities to increase the PFC in order to collect more 
funds for enhancing the safety, security and capacity of their 
facilities; reducing noise in nearby communities; and enhancing airline 
competition to the benefit of air travelers. The FAA estimates that up 
to $750 million annually in PFC funds will be made available to 
airports to make these improvements. As a result of the higher 
percentage of returned AIP apportioned funds attributable to these 
higher PFC collections, an additional $72 million in AIP funding could 
be available to small airports by FY 2002. Under the provisions of the 
statute, this amount would be almost doubled through FY 2003 if AIP 
funds are appropriated at $3.2 billion or more. Some air travelers will 
incur a small increase (1-2 percent) in the cost of their ticket to 
obtain these benefits although over the long run these passengers will 
receive compensating benefits from improved infrastructure financed 
with the higher PFC funds. These costs reflect the voluntary action of 
airports and are not required either by statute or the current 
amendment to the rule. The costs of implementing the mandated changes 
in the PFC program application and administrative procedures are costs 
attributable to the statute and are not costs of this rule.

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 on the FAA's 
web page at http://www.faa.gov/avr/arm/sbrefa.htm and may send 
electronic inquiries to the following Internet address: [email protected].

Paperwork Reduction Act

    Information collection requirements in the amendment to part 158 
previously have been approved by the Office of Management and Budget 
(OMB) under the provisions of the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), and have been assigned OMB Control Number 2120-0557. 
Some relatively minor requirements for information collections are 
associated with this amendment, and these are required by AIR 21. The 
additional paperwork submission requirements will not become mandatory 
until FAA provides for notice and comment, and the changes are 
submitted to OMB for review and approval.

International Compatibility

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

Regulatory Flexibility Act

    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 principle, the Act requires agencies to solicit and 
consider flexible regulatory proposals and to explain the rationale 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.
    All costs are fully recoverable through the PFC, if approved. 
Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 
605(b), the Federal Aviation Administration certifies that this rule 
will not have a significant impact on a substantial number of small 
entities.

International Trade

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activities that create unnecessary 
obstacles to the foreign commerce of the United States. Legitimate 
domestic objectives, such as safety, are not considered unnecessary 
obstacles. The statute also requires consideration of international 
standards and where appropriate, that they be the basis for U.S. 
standards. In addition, consistent with the Administration's belief in 
the general superiority and desirability of free trade, it is the 
policy of the Administration to remove or diminish, to the extent 
feasible, barriers to international trade, including both barriers 
affecting the export of American goods and services to foreign 
countries and barriers affecting the import of foreign goods and 
services into the United States.
    In accordance with the above statute and policy, the FAA has 
assessed the potential affect of this final rule and has determined 
that it will impose the same costs on domestic and international 
entities for comparable services and thus has a neutral trade impact.

Executive Order 13132, Federalism

    The FAA has analyzed this action under the principles and criteria 
of Executive Order 13132, Federalism. We

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determined that this action would not have a substantial direct effect 
on the States, on the relationship between the national Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. Therefore, we determined that this 
action does not have federalism implications.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (the Act) 
codified in 2 U.S.C. 1501-1571, 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 final rule does not contain a Federal intergovernmental or 
private sector mandate that exceeds $100 million a year. While PFC 
collections are likely to increase by at least $100 million per year, 
the cause of that impact is not the rule but the statute that permits 
the increase in the maximum PFC level. The increase will be triggered 
by the decisions of individual public agencies to seek the increase and 
not by any action of the federal government. If a project meets the 
statutory criteria for approval, the FAA must approve the project. 
Moreover, any increase costs associated with obtaining approval to 
impose the higher fee are fully recoverable through PFC funding.

Environmental Analysis

    The FAA concludes that issuance of this final rule is not a major 
Federal action significantly affecting the quality of the human 
environment within the meaning of the National Environmental Policy Act 
of 1969. The potential environmental effects of any project funded with 
PFC revenues are already addressed under Sec. 158.29(b)(1)(iv), which 
requires all applicable requirements pertaining to the National 
Environmental Policy Act of 1969 (NEPA) to be satisfied before the 
Administrator may approve the project to use PFC funds. A copy of this 
assessment has been placed in the docket.

Energy Impact

    The energy impact of the notice has been assessed in accordance 
with the Energy Policy and Conservation Act (EPCA) Pub. L. 94-163, as 
amended (43 U.S.C. 6362) and FAA Order 1053.1. It has been determined 
that the rule is not a major regulatory action under the provisions of 
the EPCA.

List of Subjects in 14 CFR Part 158

    Air carriers, Airports, Passenger facility charge, Public agencies, 
Reporting and recordkeeping requirements.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends part 158 of Title 14 of the Code of Federal 
Regulations as follows:

PART 158--PASSENGER FACILITY CHARGES (PFC'S)

    1. The authority citation for part 158 is revised to read as 
follows:

    Authority: 49 U.S.C. 106(g), 40116-40117, 47106, 47111, 47114-
47116, 47524, 47526.


    2. Revise Sec. 158.1 to read as follows:


Sec. 158.1  Applicability.

    This part applies to passenger facility charges (PFC's) as may be 
approved by the Administrator of the Federal Aviation Administration 
(FAA) and imposed by a public agency that controls a commercial service 
airport. This part also describes the procedures for reducing funds to 
a large or medium hub airport that imposes a PFC.

    3. Amend Sec. 158.3 as follows:
    a. Amend the definition of Allowable cost by adding a new sentence 
at the end of the definition.
    b. Revise the definitions of Commercial service airport and Public 
agency;
    c. Add definitions of Covered airport, Frequent flyer award coupon, 
Medium or large hub airport, and Nonrevenue passenger, in alphabetical 
order. The revisions and additions read as follows:


Sec. 158.3  Definitions.

* * * * *
    Allowable cost * * * Costs of terminal development incurred after 
August 1, 1986, at an airport that did not have more than .25 percent 
of the total annual passenger boardings in the U.S. in the most recent 
calendar year for which data is available and at which total passenger 
boardings declined by at least 16 percent between calendar year 1989 
and calendar year 1997 are allowable.
* * * * *
    Commercial service airport means a public airport that annually 
enplanes 2,500 or more passengers and receives scheduled passenger 
service of aircraft.
    Covered airport means a medium or large hub airport at which one or 
two air carriers control more than 50 percent of passenger boardings.
* * * * *
    Frequent flier award coupon means a zero-fare award of air 
transportation that an air carrier or foreign air carrier provides to a 
passenger in exchange for accumulated travel mileage credits in a 
customer loyalty program, whether or not the term ``frequent flier'' is 
used in the definition of that program. The definition of ``frequent 
flier award coupon'' does not extend to redemption of accumulated 
credits for awards of additional or upgraded service on trips for which 
the passenger has paid a published fare, ``two-for-the-price-of-one'' 
and similar marketing programs, or to air transportation purchased for 
a passenger by other parties.
* * * * *
    Medium or large hub airport means a commercial service airport that 
has more than 0.25 percent of the total number of passenger boardings 
at all such airports in the U.S. for the prior calendar year, as 
determined by the Administrator.
    Nonrevenue passenger means a passenger receiving air transportation 
from an air carrier or foreign air carrier for which remuneration is 
not received by the air carrier or foreign air carrier as defined under 
Department of Transportation Regulations or as otherwise determined by 
the Administrator. Air carrier employees or others receiving air 
transportation against whom token service charges are levied are 
considered nonrevenue passengers. Infants for whom a token fare is 
charged are also considered nonrevenue passengers.
* * * * *

[[Page 34541]]

    Public agency means a State or any agency of one or more States; a 
municipality or other political subdivision of a State; an authority 
created by Federal, State or local law; a tax-supported organization; 
an Indian tribe or pueblo that controls a commercial service airport; 
or for the purposes of this part, a private sponsor of an airport 
approved to participate in the Pilot Program on Private Ownership of 
Airports.
* * * * *
    4. Amend Sec. 158.5 by revising the first sentence to read as 
follows:


Sec. 158.5  Authority to impose PFC's.

    Subject to the provisions of this part, the Administrator may grant 
authority to a public agency that controls a commercial service airport 
to impose a PFC of $1, $2, $3, $4, or $4.50 on passengers enplaned at 
such an airport. * * *

    5. Amend Sec. 158.7 by revising paragraph (a) to read as follows:


Sec. 158.7  Exclusivity of authority.

    (a) A State, political subdivision of a State, or authority of a 
State or political subdivision that is not the eligible public agency 
may not tax, regulate, prohibit, or otherwise attempt to control in any 
manner the imposition or collection of a PFC or the use of PFC revenue.
* * * * *
    6. Amend Sec. 158.9 by revising paragraph (a) to read as follows:


Sec. 158.9  Limitations.

    (a) No public agency may impose a PFC on any passenger--
    (1) For more than 2 boardings on a one-way trip or in each 
direction of a round trip;
    (2) On any flight to an eligible point on an air carrier that 
receives essential air service compensation on that route. The 
Administrator makes available a list of carriers and eligible routes 
determined by the Department of Transportation for which PFC's may not 
be imposed under this section;
    (3) Who is a nonrevenue passenger or obtained the ticket for air 
transportation with a frequent flier award coupon;
    (4) On flights, including flight segments, between 2 or more points 
in Hawaii; or
    (5) In Alaska aboard an aircraft having a certificated seating 
capacity of less than 60 passengers.
* * * * *

    7. Revise Sec. 158.11 to read as follows:


Sec. 158.11  Public agency request not to require collection of PFC's 
by a class of air carriers or foreign air carriers or for service to 
isolated communities.

    (a) Subject to the requirements of this part, a public agency may 
request that collection of PFC's not be required for--
    (1) Passengers enplaned by any class of air carrier or foreign air 
carrier if the number of passengers enplaned by the carriers in the 
class constitutes not more than one percent of the total number of 
passengers enplaned annually at the airport at which the fee is 
imposed; or
    (2) Passengers enplaned on a flight to an airport--
    (i) That has fewer than 2,500 passenger boardings each year and 
receives scheduled passenger service; or
    (ii) In a community that has a population of less than 10,000 and 
is not connected by a land highway or vehicular way to the land-
connected National Highway System within a State.
    (b) The public agency may request this exclusion authority under 
paragraph (a)(1) or (a)(2) of this section or both.

    8. Amend Sec. 158.15 by revising the section heading, by revising 
paragraphs (b) introductory text and (b)(1) through (b)(5), by adding a 
new sentence to the end of paragraph (b)(6), and by adding new 
paragraph (c) to read as follows:


Sec. 158.15  Project eligibility at PFC levels of $1, $2, or $3.

* * * * *
    (b) Eligible projects are any of the following projects--
    (1) Airport development eligible under subchapter I of chapter 471 
of 49 U.S.C.;
    (2) Airport planning eligible under subchapter I of chapter 471 of 
49 U.S.C.;
    (3) Terminal development as described in 49 U.S.C. 47110(d);
    (4) Airport noise compatibility planning as described in 49 U.S.C. 
47505;
    (5) Noise compatibility measures eligible for Federal assistance 
under 49 U.S.C. 47504, without regard to whether the measures have been 
approved pursuant to 49 U.S.C. 47504; or
    (6) * * * In the case of a project required to enable additional 
air service by an air carrier with less than 50 percent of the annual 
passenger boardings at an airport, a project for constructing gates and 
related areas may include structural foundations and floor systems, 
exterior building walls and load-bearing interior columns or walls, 
windows, door, and roof systems, building utilities (including heating, 
air conditioning, ventilation, plumbing, and electrical service), and 
aircraft fueling facilities adjacent to the gate.
    (c) An eligible project must be adequately justified to qualify for 
PFC funding.

    9. Add Sec. 158.17 to subpart A to read as follows:


Sec. 158.17  Project eligibility at PFC levels of $4 or $4.50.

    (a) A project for any airport is eligible for PFC funding at levels 
of $4 or $4.50 if--
    (1) The project meets the eligibility requirements of Sec. 158.15;
    (2) The project costs requested for collection at $4 or $4.50 
cannot be paid for from funds reasonably expected to be available for 
the programs referred to in 49 U.S.C. 48103; and
    (3) In the case of a surface transportation or terminal project, 
the public agency has made adequate provision for financing the airside 
needs of the airport, including runways, taxiways, aprons, and aircraft 
gates.
    (b) In addition, a project for a medium or large airport is only 
eligible for PFC funding at levels of $4 or $4.50 if the project will 
make a significant contribution to improving air safety and security, 
increasing competition among air carriers, reducing current or 
anticipated congestion, or reducing the impact of aviation noise on 
people living near the airport.

    10. Add Sec. 158.19 to subpart A to read as follows:


Sec. 158.19  Requirement for competition plans.

    (a) Beginning in fiscal year 2001, no public agency may impose a 
PFC with respect to a covered airport unless the public agency has 
submitted a written competition plan. This requirement does not apply 
to PFC authority approved prior to April 5, 2000.
    (b) The Administrator will review any plan submitted under 
paragraph (a) of this section to ensure that it meets the requirements 
of 49 U.S.C. 47106(f) and periodically will review its implementation 
to ensure that each covered airport successfully implements its plan.

    11. Amend Sec. 158.23 by revising paragraph (a)(2) to read as 
follows:


Sec. 158.23  Consultation with air carriers and foreign air carriers.

    (a) * * *
    (2) The PFC level for each project, the proposed charge effective 
date, the estimated charge expiration date, and the estimated total PFC 
revenue;
* * * * *
    12. Amend Sec. 158.25 by revising paragraphs (b)(7) and (b)(8) to 
read as follows:

[[Page 34542]]

Sec. 158.25  Applications.

* * * * *
    (b) * * *
    (7) The project justification, including the extent to which the 
project achieves one or more of the objectives set forth in 
Sec. 158.15(a) and (if a PFC level above $3 is requested) the 
requirements of Sec. 158.17. In addition--
    (i) For any project for terminal development, including gates and 
related areas, the public agency shall discuss any existing conditions 
that limit competition between and among air carriers and foreign air 
carriers at the airport, any initiatives it proposes to foster 
opportunities for enhanced competition between and among such carriers, 
and the expected results of such initiatives; or
    (ii) For any terminal development project at a covered airport, the 
public agency shall submit a competition plan in accordance with 
Sec. 158.19.
    (8) The charge to be imposed for each project.
* * * * *
    13. Amend Sec. 158.29 by revising paragraphs (a)(1)(ii), 
(a)(1)(iii), (a)(1)(v), (a)(1)(vi), (a)(2), (b)(1)(ii), (b)(1)(iii), 
(b)(1)(iv) and (b)(2) and by adding paragraphs (a)(1)(vii) and 
(a)(1)(viii) to read as follows:


Sec. 158.29  The Administrator's decision.

    (a) * * *
    (1) * * *
    (ii) The project will achieve the objectives and criteria set forth 
in Sec. 158.15;
    (iii) If a PFC level above $3 is being approved, the project meets 
the criteria set forth in Sec. 158.17;
* * * * *
    (v) The public agency has not been found to be in violation of 49 
U.S.C. 47524 and 47526;
    (vi) The public agency has not been found to be in violation of 49 
U.S.C. 47107(b) governing the use of airport revenue;
    (vii) If the public agency has not applied for authority to use PFC 
revenue, a finding that there are alternative uses of the PFC revenue 
to ensure that such revenue will be used on approved projects; and
    (viii) If applicable, the public agency has submitted a competition 
plan in accordance with Sec. 158.19.
    (2) The Administrator notifies the public agency in writing of the 
decision on the application. The notification will list the projects 
and alternative uses that may qualify for PFC financing under 
Sec. 158.15, and (if a PFC level above $3 is being approved) 
Sec. 158.17, PFC level, total approved PFC revenue including the 
amounts approved at $3 and less, $4, and/or $4.50, duration of 
authority to impose and earliest permissible charge effective date.
    (b) * * *
    (1) * * *
    (ii) The project will achieve the objectives and criteria set forth 
in Sec. 158.15;
    (iii) If a PFC level above $3 is being approved, the project meets 
the criteria set forth in Sec. 158.17; and
    (iv) All applicable requirements pertaining to the ALP for the 
airport, airspace studies for the project, and the National 
Environmental Policy Act of 1969 (NEPA), have been satisfied.
    (2) The Administrator notifies the public agency in writing of the 
decision on the application. The notification will list the approved 
projects, PFC level, total approved PFC revenue, total approved for 
collection, including the amounts approved at $3 and less, $4, and/or 
$4.50, and any limit on the duration of authority to impose a PFC as 
prescribed under Sec. 158.33.
* * * * *


Sec. 158.31  [Amended]

    14. In Sec. 158.31(d), remove the words ``section 9304(e) or 9703 
of the Airport Noise and Capacity Act of 1990 (Pub. L. 101-508, Title 
IX, subtitle D)'' and add, in their place, the words ``49 U.S.C. 47524 
and 47526''.

    15. Amend Sec. 158.37 by revising paragraph (b)(1) and adding three 
sentences at the end of paragraph (b)(2) to read as follows:


Sec. 158.37  Amendment of approved PFC.

* * * * *
    (b) * * *
    (1) With the exception of a change in PFC level to more than $3 or 
an amendment of a PFC that is subject to a competition plan under 
Sec. 158.19, in the event of no carrier disagreement with a change 
proposed under this paragraph (b), the public agency may institute the 
proposed amendment unless, within 30 days after providing the 
notification required under this paragraph (b), it is notified 
otherwise by the Administrator.
    (i) If a PFC level of more than $3 is requested, the Administrator 
notifies the public agency that the conditions of Sec. 158.17 have been 
met before the higher level can be instituted.
    (ii) If a PFC amendment that is subject to the competition plan 
requirement is submitted, the Administrator notifies the public agency 
that the plan satisfies the requirements of Sec. 158.19.
    (iii) The public agency shall notify the carriers of the effective 
date of any change to the approved PFC resulting from the amendment, 
subject to the limitation that the effective date of any new charge 
shall be no earlier than the first day of a month which is at least 60 
days from the time the public agency notifies the carriers.
    (2) * * * If a PFC level of more than $3 is requested, the 
Administrator must find that the conditions of Sec. 158.17, and 
Sec. 158.19 if applicable, have been met before that PFC level can be 
instituted. If the amendment is approved, the Administrator advises the 
public agency and notification to the carriers will be as provided 
under paragraph (b)(1) of this section. The notification to the carrier 
includes any findings required by Sec. 158.17 or Sec. 158.19.

    16. Amend Sec. 158.45 by revising paragraph (d) to read as follows:


Sec. 158.45  Collection of PFC's on tickets issued in the U.S.

* * * * *
    (d) In addition to the restriction in paragraph (c) of this 
section, issuing carriers and their agents shall not collect PFC's from 
a passenger covered by any of the other limitations described in 
Sec. 158.9(a).
* * * * *

    17. Amend Sec. 158.49 by revising paragraph (b) to read as follows:


Sec. 158.49  Handling of PFC's.

* * * * *
    (b) PFC revenue must be accounted for separately by collecting 
carriers, but the revenue may be commingled with the carrier's other 
sources of revenue. The PFC revenues that are held by an air carrier or 
an agent of the carrier after collection of a PFC constitute a trust 
fund that is held by the air carrier or agent for the beneficial 
interest of the public agency imposing the PFC. Such carrier or agent 
holds neither legal nor equitable interest in the PFC revenues except 
for any handling fee or retention of interest collected on unremitted 
proceeds as authorized in Sec. 158.53.
* * * * *

    18. Amend Sec. 158.63 by revising paragraphs (a) and (c) to read as 
follows:


Sec. 158.63  Reporting requirements: Public agency.

    (a) The public agency shall provide quarterly reports to carriers 
collecting PFC's for the public agency with a copy to the appropriate 
FAA Airports office. The quarterly report shall include PFC revenue 
received from collecting carriers, interest earned, and expenditures 
for the quarter; cumulative PFC revenue received, interest earned, 
expenditures, and the amount

[[Page 34543]]

committed for use on currently approved projects, including the 
quarter; the PFC level for each project; and the current project 
schedule.
* * * * *
    (c) For medium or large hub airports, the public agency must 
provide the FAA, by August l of each year, an estimate of PFC revenue 
to be collected for each such airport in the ensuing fiscal year.


Secs. 158.71, 158.81, and 158.83  [Amended]

    19. Remove the words ``section 1113(e) of the Federal Aviation 
Act'' and add, in their place, the words ``49 U.S.C. 40117'' in the 
following places:
    a. Sec. 158.71(a) and (b);
    b. Sec. 158.81; and
    c. Sec. 158.83.


Sec. 158.87  [Amended]

    20. In Sec. 158.87, in paragraph (a) remove the words ``section 507 
of the AAIA of 1982, 49 U.S.C. App. 2206'' and add, in their place, the 
words ``49 U.S.C. 47114''; and, in paragraph (c) remove the words ``49 
U.S.C. App. 2218'' and add, in their place, the words ``49 U.S.C. 
47111(d)''.


Sec. 158.93  [Amended]

    21. In Sec. 158.93 introductory text, remove the words ``section 
507(a)(1) of the Airport and Airway Improvement Act of 1982'' and add, 
in their place, the words ``49 U.S.C. 47114''.

    22. Section 158.95 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 158.95  Implementation of reduction.

    (a) A reduction in apportioned funds will not take effect until the 
first fiscal year following the year in which the collection of the PFC 
is begun and will be applied in each succeeding fiscal year in which 
the public agency imposes the PFC.
    (b) The reduction in apportioned funds is calculated at the 
beginning of each fiscal year and shall be an amount equal to--
    (1) In the case of a fee of $3 or less, 50 percent of the projected 
revenues from the fee in the fiscal year but not by more than 50 
percent of the amount that otherwise would be apportioned under this 
section; and
    (2) In the case of a fee of more than $3, 75 percent of the 
projected revenues from the fee in the fiscal year but not by more than 
75 percent of the amount that otherwise would be apportioned under this 
section.
* * * * *

    23. Add Sec. 158.97 to subpart F to read as follows:


Sec. 158.97  Special rule for transitioning airports.

    (a) Beginning with the fiscal year following the first calendar 
year in which an airport has more than .25 percent of the total number 
of boardings in the U.S., the sum of the amount that would be 
apportioned under 49 U.S.C. 47114 to the public agency controlling that 
airport in a fiscal year, after application of Sec. 158.95, and the 
projected PFC revenues to be collected in such fiscal year, shall not 
be less than the sum of the apportionment to such airport for the 
preceding fiscal year and the PFC revenues collected in the preceding 
fiscal year.
    (b) Paragraph (a) of this section shall apply for fiscal years 2000 
through 2003.

Appendix A to Part 158 [Amended]

    24. In Appendix A to part 158, in paragraph A.2 remove the words 
``the Aviation Safety and Capacity Expansion Act of 1990'' and add, in 
their place, the words ``49 U.S.C. 40117''; and in paragraph B.12 
remove the words ``sections 9304 and 9307 of the Airport Noise and 
Capacity Act of 1990'' and add, in their place, the words ``49 U.S.C. 
47524 and 47526''.

    Issued in Washington, DC, May 23, 2000.
Jane F. Garvey,
Administrator.
[FR Doc. 00-13348 Filed 5-23-00; 4:23 pm]
BILLING CODE 4910-13-U