[Federal Register Volume 67, Number 84 (Wednesday, May 1, 2002)]
[Rules and Regulations]
[Pages 21582-21585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10930]


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DEPARTMENT OF TRANSPORTATION

Transportation Security Administration

49 CFR Part 1511

[Docket No. TSA-2002-11334]
RIN 2110-AA02


Aviation Security Infrastructure Fees

AGENCY: Transportation Security Administration, DOT.

ACTION: Guidance for the Aviation Security Infrastructure Fee: 
Completing and submitting Appendix A on costs related to passenger and 
property screening for calendar year 2000

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SUMMARY: The Transportation Security Administration issues this 
additional guidance for completing Appendix A of the Interim Final Rule 
regarding the Aviation Security Infrastructure Fee. That rule requires 
carriers to provide information on their costs related to passenger and 
property screening for 2000. This guidance does not impose any 
additional requirements.

DATES: This guidance does not alter the due date for Appendix A, which 
remains on or before May 18, 2002.

FOR FURTHER INFORMATION CONTACT: For further guidance involving 
technical matters you may contact Randall Fiertz, Department of 
Transportation, Office of the Assistant Secretary for Budget and 
Programs, 400 Seventh St., SW., Room 10101, Washington, DC 20590; 
telephone (202) 366-9192. For further guidance on other matters you may 
contact Steven Cohen, Department of Transportation, Transportation 
Security Administration, Office of the Chief Counsel (TSA-5), 400 
Seventh Street, SW., Washington, DC, 20590; telephone (202) 493-1231. 
Office hours are from 9 a.m. to 5:30 p.m., e.t. Monday through Friday, 
except Federal holidays.

SUPPLEMENTARY INFORMATION:

Availability of the Guidance

    An electronic copy of this document may be downloaded using a modem 
and suitable communications software from the Government Printing 
Office's

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Electronic Bulletin Boards Service at (202) 512-1661. Internet users 
may reach the Federal Register's home page at: http://www.nara.gov/fedreg and the Government Printing Office's database at: http://www.access.gpo.gov.
    Internet users can access this document and all comments received 
by DOT through the Department's docket management system web site, 
http://dms.dot.gov. It is available 24 hours each day, 365 days each 
year. Please follow the instructions online for more information and 
help.

Guidance for the Aviation Security Infrastructure Fee: Completing 
and Submitting Appendix A on Costs Related to Passenger and 
Property Screening for Calendar Year 2000

    The following guidance material is intended to assist air carriers 
and foreign air carriers (carriers) in submitting the information 
required by Appendix A of the Interim Final Rule on the Aviation 
Security Infrastructure Fee (IFR), as published on February 20, 2002 on 
page 7926 of volume 67 of the Federal Register. The information 
provided here is only intended as guidance. Carriers should not infer 
that it represents the only acceptable means of completing Appendix A. 
Please note that any comments related to the IFR that were received by 
the Transportation Security Administration (TSA) will be addressed 
separately and are not specifically addressed in this guidance. If TSA 
determines, either based on comments received or on its own analysis of 
the Appendix A forms received from carriers, that the applicable 
regulations or the guidance provided herein have been misunderstood or 
misapplied, TSA will contact the affected carriers individually and, if 
necessary, will issue further clarification in the future.

1. What To Do if a Cost Category Identified in Appendix A Is Intermixed 
With Costs Not Related to Passenger and Property Screening in Your 
Accounting System

    The instructions in Appendix A of the IFR address this issue. The 
instructions state: ``Where actual costs of screening passengers and 
property cannot be directly identified through an air carrier's 
accounting system, the air carrier shall use appropriate alternate cost 
assignment methodology.'' This broad flexibility is qualified by the 
requirement that ``[a]ll costs reported in Appendix A must be 
consistent with the air carrier's financial accounting information 
reported in accordance with generally accepted accounting principles.'' 
Further, carriers must provide to TSA, upon request, ``[d]ocumentation 
that explains and supports the assignment methodology used, the 
applicable pool, and the allocation basis.''
    In other words, where the costs of goods, services, etc., related 
to passenger and property screening were accounted for in calendar year 
2000 (CY 2000) in a manner that commingled them with costs not related 
to passenger and property screening, then the carrier completing 
Appendix A may allocate a percentage of those total costs to passenger 
and property screening, as long as the allocation method is based on 
reasonable business practices. When assigning costs related to 
passenger and property screening, a carrier should use the best 
available information and must document, explain, and support its basis 
for using and applying that cost assignment methodology.
    Example for assigning labor costs: One possible method is to apply 
the ratio of total time (hours) that an employee spent on 
responsibilities related to passenger and property screening versus the 
time spent on all responsibilities (screening time/total time) to the 
annual cost of the employee (salary, benefits, etc.). For example, if 
an employee spent 30 hours on screening related activities out of a 40-
hour work week, then 75 percent of the cost of that employee would be 
allocated to the labor costs reported in Appendix A. If an employee had 
responsibilities solely related to screening passengers or property 
during CY 2000, then 100 percent of the annual cost of that employee 
must be included in Appendix A.
    Example for assigning equipment costs (expensed or depreciated): 
One possible method is to apply the ratio of the total time (hours) the 
equipment was used for functions related to passenger and property 
screening versus the time spent on all functions (screening time/total 
time) to the total cost of the equipment. For example, if a computer 
was used for 6 hours for screening related functions and for 2 hours on 
other functions in an 8-hour workday, 75 percent of the cost of the 
equipment would be allocated in Appendix A. However, under this 
allocations system, if a computer was used solely for screening related 
functions, then 100 percent of the cost of the equipment would be 
allocated in Appendix A, even if it was used for less than a whole work 
day.
    Example for assigning property and facility costs: One possible 
method is to apply the ratio of square footage used for functions 
related to passenger and property screening versus the total square 
footage of the property or facility (screening space/total space) to 
the annual costs of the property of facility. For example, if 4,000 
square feet of a 16,000 square-foot building is used for screening, 
then 25 percent of the annual costs of that building should be captured 
in Appendix A. Such a cost allocation could only be made if the 
building was also being used for other activities. If the building was 
used solely for functions related to screening passenger or property 
during CY 2000, 100 percent of the costs must be included in Appendix 
A.

2. What To Do if Two or More Cost Categories From Appendix A Are 
Combined in Your Accounting System

    TSA recognizes that carrier accounting systems are likely to record 
two or more cost categories from Appendix A in a single category. For 
instance, the labor costs for ``Checkpoint Screening Personnel'' and 
``Exit Lane Monitors'' may be recorded in a single account. Similarly, 
carriers that engaged in security partnerships or entered into security 
contracts with other carriers, airports, or private screening companies 
may have a single accounting category that encompasses two or more of 
the cost categories set forth in Appendix A.
    The instructions for Appendix A address this issue. The 
instructions state that ``[t]o the extent necessary, the reporting air 
carrier may aggregate those specific costs that have been incurred but 
cannot be stated in the detailed cost categories requested by the form. 
However, all of the costs identified by this form must be included in 
the total calculations. In addition, explanations regarding costs that 
have been aggregated need to be provided.''
    The option to aggregate is only available ``to the extent 
necessary,'' and where ``specific costs * * * cannot be stated.'' 
Therefore, carriers should consult with appropriate parties, such as 
partner carriers, airports, and contractors to get information 
regarding individual costs before aggregating any cost categories in 
Appendix A. If the carrier is still unable to separate out individual 
costs, as set forth by Appendix A, the carrier may report those costs 
to TSA in an aggregated form. However, the carrier must specify in 
supporting documentation which costs have been aggregated and where the 
costs appear in the submitted Appendix A. For each cost category that 
is included in an aggregated amount, carriers should indicate where it 
is accounted for in the submitted Appendix A. In such a case, carriers 
should not leave the category blank or indicate that there were no 
costs.

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3. What To Do if Your Screening Costs for CY 2000 Involve Contracting 
With a Partner Carrier, an Airport, or a Private Screening Company

    It is not sufficient to submit an Appendix A that includes only the 
cost paid by a carrier to partner carriers, airports, or private 
screening companies under a screening services contract or other 
agreement. Even if a carrier outsourced all of its screening functions, 
its Appendix A submission must still identify, for example, the 
administrative costs and other related costs incurred by the carrier in 
entering into and maintaining such contracts and agreements, including 
any amendments, modifications, claims settlements, and costs incurred 
for overseeing the contracts or agreements. It must also identify costs 
related to screening passengers and property incurred by the carrier 
but not covered by the terms of the contract or agreement.
    The fact that a carrier outsourced its screening functions does not 
relieve it of the duty to assign costs to specific categories in 
Appendix A before aggregating these costs. This can be done by 
examining the relevant contracts and agreements and by seeking input 
from contractors and partners. In the case of contracts and 
partnerships involving multiple carriers, be careful to ensure that all 
screening costs are reported to TSA, but that each dollar of the cost 
is only reported to TSA once.

4. What To Do if You Did Not Incur any Costs for a Cost Category in 
Appendix A

    The instructions to Appendix A in the IFR specify that carriers 
must indicate those cost categories in which the carrier did not have 
any costs for CY 2000. This is to be indicated on Appendix A by the use 
of an appropriately placed zero. Cost categories that are rolled into 
an aggregated total should be so identified, not listed as zero. For 
instance, for Item 34 in Appendix A, ``Management Fees for Oversight of 
Consortium Contracts'' is defined as ``[a]ny costs incurred for fees 
charged by other organizations for the management of contracts for the 
screening of persons and property.'' If a carrier paid any other entity 
a fee for the management of security contracts, the amount paid should 
be included on this cost line. If an air carrier did not incur such 
costs, then the reporting carrier should so indicate with a zero in the 
appropriate cost category. If a carrier paid such a contract, but 
management fees were not segregated out, then this cost category may be 
aggregated in Appendix A, as described in Item 2.

5. What To Do if the Fiscal Year Recorded in Your Accounting System Is 
Not the Same as the Calendar Year

    All cost information in Appendix A must be submitted to reflect 
calendar year 2000, not a carrier's fiscal year 2000. Therefore, if a 
carrier used a fiscal year different from the calendar year for 2000, 
it may be necessary to allocate costs over time and among functions.

6. What To Do if You Are, or if You Represent, a Carrier That no Longer 
Provides Air Transportation or Intrastate Air Transportation Service, 
but Did do so in CY 2000

    Carriers no longer providing air transportation or intrastate air 
transportation in or from the United States do not need to remit the 
Aviation Security Infrastructure Fee. However, under the IFR, they are 
still required to complete and submit an Appendix A. TSA needs to know 
the costs related to screening passengers and property incurred by all 
carriers in CY 2000, not just by those carriers still providing air 
transportation or intrastate air transportation today. Beginning in 
fiscal year 2005, TSA is authorized to re-determine the per-carrier 
limit for the Aviation Security Infrastructure Fee, so long as the 
aggregate amount collected from carriers operating at that point does 
not exceed the aggregate screening costs of all carriers providing air 
transportation or intrastate air transportation in or from the United 
States in CY 2000.

7. How To Treat Acquired, Merged or Reorganized Carriers

    The IFR states that the successor entity must submit only one 
Appendix A with all amounts combined, but must specify the names of all 
carriers whose CY 2000 passenger and property screening costs are 
included in Appendix A. However, for ease of auditing, carriers may 
keep separate the internal working papers pertaining to predecessor 
carriers.

8. How Payments Are Determined

    For fiscal years 2002-2004, the IFR requires each carrier to pay 
8.333% of the total listed in its Appendix A on a monthly basis, except 
for the period of February 18 through April 30, 2002, for which payment 
of 19.939% is due by May 31, 2002.
    Payments for each month following April 2002 are due by the last 
calendar day of the following month. If, at any time, the Under 
Secretary determines, on his own or upon petition by a carrier, that it 
is necessary to adjust the total amount of the Aviation Security 
Infrastructure Fee that a carrier must pay and/or should have been 
paying, TSA will contact the carrier. In addition, after September 
2004, the Under Secretary may determine a different fee or schedule. 
However, unless the Under Secretary makes such a determination, 
carriers should continue paying 8.333% monthly.

9. When Payments Are Due

    If the last calendar day of the month falls on a day on which the 
carrier cannot make payments, such as a holiday or weekend, then the 
payment must be received by TSA in advance of the last day of the 
month. TSA will provide payment instructions for the Aviation Security 
Infrastructure Fee on its web site, www.tsa.dot.gov. TSA will not be 
sending bills to carriers for this fee.

10. When To Submit Appendix A

    As stated in the IFR, the deadline for submitting a completed 
Appendix A to TSA is by May 18, 2002. This means that TSA must receive 
the submission on or before that date.

11. How To Submit Appendix A

    Appendix A is available electronically at www.tsa.dot.gov. It must 
be sent by certified mail to: Chief Financial Officer, Transportation 
Security Administration, Department of Transportation, 400 Seventh 
Street SW., Washington, DC 20590. For electronic submissions, use a 
format readable by current versions of Microsoft Word and mail a 
computer disk to the above address or e-mail it to [email protected].

12. What the Audit Must Cover

    Each air carrier must provide for an audit of Appendix A performed 
by an independent certified public accountant. The auditor must plan 
and perform an audit to obtain reasonable assurance as to whether the 
costs reported in Appendix A are ``consistent with the air carrier's 
financial accounting information reported in accordance with generally 
accepted accounting principles.'' The auditor must provide a written 
letter of opinion on the accuracy of the costs and other information 
reported in Appendix A, based on the company's pre-existing financial 
statements and supporting documents, and in accordance with generally 
accepted auditing standards. This opinion should include a statement as 
to whether the audited Appendix A is free of material misstatements. 
However, carriers need not provide for

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an audit of the process of remitting the fee.
    TSA or other Federal entities may also audit Appendix A and the 
supporting information to ensure that the information provided in 
Appendix A is true and correct, as well as to ensure that the Appendix 
A submitted and fees paid are consistent with the requirements of the 
IFR. The decision to conduct a Federal audit does not relieve a carrier 
of its own audit burden.

13. When the Audit Is Due

    As provided for in the IFR, the audit is due to be received by TSA 
no later than July 1, 2002. TSA will not enforce this deadline against 
a carrier that submits a timely and proper Appendix A, makes timely and 
proper fee payments, and submits the audit to TSA no later than August 
1, 2002.

14. How To Submit the Audit

    As with Appendix A, submit the audit to: Chief Financial Officer, 
Transportation Security Administration, Department of Transportation, 
400 Seventh Street SW., Washington, DC 20590.

15. What To Do With the CPA's Working Papers for the Audit

    The IFR indicates that the ``accountant's working papers with 
respect to the audit must be included with this submission.'' This 
requirement may be satisfied by including in the audit submission the 
availability (location and time) of the accountant's working papers, so 
long as the working papers are retained and provided to TSA upon 
request.

    Issued in Washington, DC, on April 29, 2002.
Stephen J. McHale,
Deputy Under Secretary of Transportation for Security.
[FR Doc. 02-10930 Filed 4-29-02; 2:36 pm]
BILLING CODE 4910-62-P