[Federal Register Volume 67, Number 161 (Tuesday, August 20, 2002)]
[Rules and Regulations]
[Pages 54058-54083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21226]



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Part III





Department of Transportation





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Office of the Secretary



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14 CFR Part 330



Procedures for Compensation of Air Carriers; Final Rule

  Federal Register / Vol. 67, No. 161 / Tuesday, August 20, 2002 / 
Rules and Regulations  

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 330

[Docket OST-2001-10885]
RIN 2105-AD06


Procedures for Compensation of Air Carriers

AGENCY: Office of the Secretary, DOT.

ACTION: Final rule.

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SUMMARY: On September 22, 2001, President Bush signed into law the Air 
Transportation Safety and System Stabilization Act (``the Act''). The 
Act makes available to the President funds to compensate air carriers, 
as defined in the Act, for direct losses suffered as a result of any 
Federal ground stop order and incremental losses beginning September 
11, 2001, and ending December 31, 2001, directly resulting from the 
September 11 terrorist attacks on the United States. On October 29, 
2001, the Department published a rule to carry out this Act, which it 
amended on January 2, 2002, and April 16, 2002. The Department 
requested comment on each of these issuances, and the comments received 
were addressed in the subsequent version of the rule. This document 
responds to the comments received on the April 2002 amendments.

DATES: This rule is effective August 20, 2002.

FOR FURTHER INFORMATION CONTACT: Steven Hatley, U.S. Department of 
Transportation, Office of International Aviation, 400 7th Street, SW., 
Room 6402, Washington, DC 20590. Telephone 202-366-1213.

SUPPLEMENTARY INFORMATION: As a consequence of the terrorist attacks on 
the United States on September 11, 2001, the U.S. commercial aviation 
industry suffered severe financial losses. These losses placed the 
financial survival of many air carriers at risk. Acting rapidly to 
preserve the continued viability of the U.S. air transportation system, 
President Bush sought and Congress enacted the Air Transportation 
Safety and System Stabilization Act (``the Act''), Pub. L. 107-42.
    Under section 101(a)(2)(A-B) of the Act, a total of $5 billion in 
compensation is provided for ``direct losses incurred beginning on 
September 11, 2001, by air carriers as a result of any Federal ground 
stop order issued by the Secretary of Transportation or any subsequent 
order which continues or renews such stoppage; and the incremental 
losses incurred beginning September 11, 2001 and ending December 31, 
2001, by air carriers as a direct result of such attacks.''
    On October 29, 2001 (66 FR 54616), the Department published in the 
Federal Register a final rule and request for comments to establish 
procedures for air carriers regarding compensation under the Act. The 
rule covered such subjects as eligibility, deadlines for application, 
information and forms required of applicants, and audit requirements. 
On January 2, 2002 (67 FR 250), the Department published an amendment 
to the final rule that responded to comments on the October 29 rule. On 
the same date (67 FR 263), the Department also requested comments 
concerning whether a set-aside of a portion of the funds authorized by 
the Act should be established to ensure adequate compensation for 
certain classes of air carriers. On April 16, 2002, the Department 
published further amendments to the final rule that, among other 
provisions, did establish such a set-aside (67 FR 18468). The 
Department requested comments on the rule, as amended. We received a 
number of comments, primarily from air carriers and their 
organizations, to which this document responds.
    With the amendments to the rule and responses to comments we are 
publishing in this document, the Department has completed the 
rulemaking process. Part 330, as published today, will govern the 
ultimate determinations of the amount of compensation for which air 
carriers are eligible.

Comments and Responses

Air Ambulance Issues

    The Association of Air Medical Services (AAMS) disagreed with the 
Department's decision, in the April 2002 amendments to Part 330, to 
base compensation for carriers eligible for the set-aside on a cents 
per available seat-mile (ASM) calculation. This, AAMS said, was 
contrary to the direction given by Congress in P.L. 107-42 authorizing 
the Department to establish a set-aside for carriers ``for whom 
application of a distribution formula containing available seat miles 
as a factor would inadequately reflect their share of direct and 
incremental losses.'' AAMS said that, as a result of this decision, air 
ambulances would still be compensated for a much smaller percentage of 
their losses than other small carriers flying similar aircraft. This is 
because air ambulances fly fewer ASMs than other types of carriers, 
though they incur greater expenses on a full-time basis while waiting 
for a call.
    AAMS also disagreed with the Department's determination that the 
costs of medical personnel should not be viewed as transportation 
expenses, saying that these personnel were essential to the specialized 
functions for which air ambulances are licensed. Ten individual air 
ambulance companies submitted very similar letters that essentially 
echoed the AAMS position, adding that they supported AAMS' previous 
proposal for basing set-aside compensation for air ambulances on the 
Medicare fee schedule.

DOT Response

    As part of the Aviation and Transportation Security Act, Pub. L. 
107-71, Congress granted the President the discretion to establish a 
set-aside to provide compensation for various classes of air carriers, 
including air ambulances and air tour operators, which would be 
inadequately compensated under the ASM formula. Section 124(d)(2) of 
the Security Act further required that any amount so set aside be 
distributed ``proportionately among such carriers based on an 
appropriate auditable measure.''
    The Department solicited comments through the Federal Register on 
whether such a set-side should be established, which types of carriers 
it might cover, and what method or methods might be used to allocate 
any funds so set aside. Many types of carriers offered comments, and 
although strong cases were made that smaller carriers had been 
disadvantaged by the ASM formula, the comments reflected a lack of 
consensus on any single approach that might be used to allocate set-
aside funds proportionately among them. Different types of carriers 
tended to advocate compensation formulas that would address their 
particular situations, but not be applicable to the situations of other 
carriers. 67 FR 18468 (April 16, 2002).
    Ultimately, the Department established the set-aside and, in its 
discretion, established eligibility standards that we believed were 
fair to all types of carriers in the affected classes. Those 
eligibility standards allowed carriers to participate if they operated 
fewer than 10 million ASMs in the benchmark month of August 2001. 
Rather than adopt a different allocation formula for each type of 
carrier, which would have been difficult to administer and would likely 
have perpetuated some of the originally perceived inequities, the 
Department chose to continue to rely on ASMs as the base auditable 
measure. At the same time,

[[Page 54059]]

however, it substantially increased the compensation that would be paid 
for each ASM flown by carriers in the affected classes. We also 
established a minimum recovery level of 25 percent of eligible 
transportation-related losses, as well as a higher ASM formula amount 
for the smallest air carriers (i.e., fewer than 310,000 ASMs for August 
2001). Typically, this approach will allow carriers in the set-aside 
class to receive significantly more than the amount of compensation 
that would have been paid under the ASM formula set forth in Pub. L. 
107-42.
    We understand that some carriers still feel disadvantaged under 
this approach. However, it largely brings smaller passenger carriers up 
to an equivalent level of compensation as received by the larger 
passenger carriers. In some instances, smaller carriers will be 
receiving up to 20 times more than they would have received under the 
old formula.
    As to arguments that medical costs should be included within the 
compensation formula as integral to aircraft operations, the Department 
has interpreted the Stabilization Act as intended to provide short-term 
assistance for the air transportation industry. Assistance was limited 
to air carriers, defined in the first instance as providers of ``air 
transportation'' (49 U.S.C. Sec. 40102(a)). Moreover, Congress 
established market share formulas based on ASMs and Revenue Ton-Miles 
(RTMs) as an alternative for establishing compensation. As these are 
measures of air transportation operations, not measures of ancillary 
activities, we have construed Congress' intent as limited to providing 
compensation for the air transportation activities of eligible 
carriers. Thus, when we have received applications from air carriers 
whose businesses contained non-air-transportation-related activities, 
we have sought to extract those activities from our compensation 
calculations (except if those activities were clearly de minimis).
    Typical of the non-air-transportation operations that have been 
excluded are airfield concessions and ``package tour'' operations. If 
entities that operate only airfield concessions and ``package tours'' 
are ineligible in their own right for direct compensation, it follows 
that air carriers who derive significant revenues from such activities 
should not be able to obtain significant additional compensation on 
account of those activities.
    This reasoning was extended to pertain as well to the non-air 
transportation aspects of air ambulance operations. A major portion of 
the revenues and expenses of air ambulances originate from the medical 
personnel, equipment, and supplies that are involved, elements that are 
not air-transportation in nature and which would not be eligible for 
compensation in their own right. We believe that the more expansive 
formula for assistance under the set-aside program, rather than 
broadening direct compensation to include losses attributable to these 
ancillary functions, constitutes the more appropriate way to provide an 
increased level of compensation for air ambulances, as well as for 
other small carriers.

Other Set-Aside Issues

    Four carriers asserted that they should be included among the 
classes of carriers eligible for the set-aside. Sky Quest Charters said 
that it should be included as an indirect public charter carrier. Sky 
Quest also complained that using the August ASM-based formula is unfair 
in its circumstance, since its busiest months are in the fall and 
winter (e.g., student charter business for spring break). Vacation 
Travel International, another carrier that focuses on student charter 
trips, contended that student travel providers should be recognized as 
a separate class eligible for the set-aside, since there are several 
carriers in this category and their Spring 2002 losses are now known. 
Vacation Travel also complained that it is arbitrary to exclude 
indirect air carriers that cannot provide August 2001 ASM data because 
August is not when they conduct most of their operations.
    Eagle Canyon Airlines/Eagle Jet Charter said that small 
certificated air carriers in the commuter air carrier classification 
should be included, suggesting that their omission from the April 2002 
amendments to Part 330 was an inadvertent quirk in definition of 
commuter air carriers used in the rule. GWV International said that 
public charter indirect air carriers who do not report ASMs should be 
included. GWV also asked for clarification of how ASMs flown for an 
indirect air carrier by a foreign, as opposed to domestic, direct air 
carrier are counted.
    Senator Charles Schumer of New York asked the Department to find a 
way of adjusting the floor for set-aside compensation above 25 percent 
to accommodate the situation of New York City area carriers (e.g., 
Liberty Helicopter) whose operations were shut down for a prolonged 
period after September 11.
    The Sierra Club renewed its request that Grand Canyon air tour 
operators not be eligible for set-aside funds, or compensation 
generally. These operators, in the Sierra Club's view, are responsible 
for preventing compliance with the noise reduction provisions of 
National Park Overflights Act of 1987. The Sierra Club maintains that 
FAA's rulemaking on the subject of Grand Canyon air tours is very 
inadequate, and environmental groups are currently in litigation with 
the FAA. The Sierra Club says that it is inappropriate and 
counterproductive to compensate the tour operators, which will just 
result in continued or additional aircraft noise and further 
noncompliance with the Overflights Act.

DOT Response

    The eligibility of each of the four air carriers who commented on 
this point to receive funds under the set-aside program can only be 
determined by reviewing the situation of each carrier on a case-by-case 
basis. The rule provides that certain air carriers (air taxi operators, 
commuters, and regionals) qualify for set-aside funds if they reported 
(or performed) fewer than 10 million ASMs for the month of August 2001. 
Indirect air carriers are also eligible for set-aside funds if they 
fall within the 10 million ASM limit.
    In developing the set-aside program, the Department faced the 
difficult task of identifying classes of air carriers that would be 
inadequately compensated by the original statutory formula on the one 
hand, while on the other hand developing an alternative compensation 
formula that would more adequately compensate these carriers using an 
appropriate auditable measure. In addition to considering comments to 
the docket, the Department also reviewed data gathered by the 
Department through the application process used during the first two 
rounds of compensation payments. Here, the Department considered loss 
claim and ASM data to assist in determining which classes of carriers 
were inadequately compensated (as a percentage of their claimed losses) 
under the existing statutory formula.
    With respect to Sky Quest's concern about the use of August ASMs, 
we note that August 2001 ASMs were specified by Congress in the Act as 
the benchmark for determining market shares. Further, we found that, in 
general, the use of August 2001 ASMs did not, by itself, result in 
serious inequities. Rather, we found that the use of a single ASM rate 
to compensate vastly different sized air carrier operations created 
inadequacies. In fact, the number of August 2001 ASMs reported by 
applicants provided the Department with both a method of determining 
which classes of carriers should receive set-aside funds and an

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appropriate auditable measure for distributing those funds. By relying 
upon the August 2001 ASM data, the Department was able to identify two 
classes of carriers based on the size of their operations and develop a 
compensation formula to more adequately address their circumstances. +
    As noted above in the response to AAMS comments, we understand that 
some individual carriers may still feel disadvantaged by this approach. 
However, it largely brings smaller passenger carriers up to an 
equivalent level of compensation as received by the larger passenger 
carriers. In any event, we created a safety net that guarantees that 
all set-aside carriers will be compensated for no less than 25 percent 
of their eligible transportation-related losses, regardless of how many 
ASMs they report for the month of August 2001.
    With respect to the comments that student travel providers should 
be treated as separate class of air carriers for set-aside purposes, we 
again make the point that the statute indicates that the Department 
should identify broad classes of carriers rather than try to adopt a 
different allocation formula for each type or subtype of carrier. Doing 
the latter would have made the program difficult to administer and 
would likely have perpetuated some of the originally perceived 
inequities. As discussed with respect to the air ambulance issues, the 
Department believes that its set-aside formula greatly increases 
compensation for a wide array of types of carrier and most individual 
carriers compared to the original statutory formula and makes the 
compensation system much more equitable.
    Small certificated air carriers in the commuter classification are 
eligible for the set-aside provided they meet all other criteria. 
Public charter indirect air carriers are likewise eligible if they meet 
other set-aside criteria. We would point out, in response to GWV's 
comment, that air carriers that do not report ASMs to the Department on 
a regular basis are still eligible for set-aside funds. In our final 
rule published on October 29, 2001 and amended on January 2, 2002, the 
Department established the process that an air carrier must follow to 
report ASMs for the purpose of receiving compensation under the Act. 
These procedures are found at 14 CFR 330.31. A carrier that does not 
regularly report ASMs to the Department may submit a calculation of 
August 2001 ASMs to the Department with its application, meeting the 
requirements of Sec. 330.31(d) (see 67 FR 250, January 2, 2002).
    With respect to Senator Schumer's comment concerning the situation 
of New York City-based carriers such as Liberty Helicopters, we note 
the discussion of the rationale for the establishment of the set-side 
formula in the section of this document concerning air ambulance 
issues. The same rationale applies to a carrier like Liberty 
Helicopters. We note further that Liberty Helicopters is one of the 
carriers that would receive, under the set-aside, about 20 times the 
compensation that it would have received under the statutory formula in 
the Stabilization Act .
    The Department does not have the ability under the statutes 
involved to tailor compensation to the individual needs or situation of 
every carrier. In accordance with the statute, the distribution 
approach is intended to address ``classes of air carriers'' and involve 
a ``proportional'' allocation based on an ``appropriate auditable 
measure.'' Moreover, the Department is required to distribute a finite 
compensation fund to an applicant pool of up to 600 carriers, pursuant 
to a Congressional mandate to provide compensation on an expeditious 
basis to ensure the survival of the airline industry--tasks that, taken 
together, make tailoring compensation decisions to individual applicant 
situations almost impossible.
    We continue to believe that the Sierra Club's comment is an effort 
to use the airline compensation program rulemaking as a means further 
advocating its position concerning Grand Canyon air tour operators and 
the FAA's rulemaking concerning air tours over the Canyon. We 
understand fully that the Sierra Club and other environmental 
organizations strongly oppose Grand Canyon air tours, believe that 
current operations in the Canyon area are inconsistent with the 
National Parks Overflights Act, and disagree with the FAA's rulemaking 
on the subject. Those issues are being addressed in other forums. In 
enacting the Stabilization Act, Congress gave no hint that the 
resolution of these issues was to have any impact on the provision of 
compensation to air carriers who suffered losses as the result of the 
September 11 attacks.

Cargo Carrier Issues

    The Cargo Airline Association (CAA) argued that by deleting 
330.31(d)((i)(iv) and (d)(2) of the January 2002 version of the rule, 
the Department eliminated the requirement that indirect air carriers 
submit documentation that the direct air carrier providing the 
transportation is either ineligible for compensation or will not claim 
compensation. This deletion, CAA said, would permit indirect air 
carriers to count the same RTMs as their direct air carrier partners. 
This decision was inadequately justified and contrary to statute, in 
CAA's view. CAA also cited the statements in the Department's January 
2002 preamble justifying the deleted provisions. CAA said the 
Department must better explain the rationale for this change and ensure 
that the total pool of RTMs, which acts as the denominator of the 
compensation equation, does not include RTMs not reported to the 
Secretary in April--June of 2001.
    Emery Air Freight, while a member of CAA, disassociated itself from 
CAA's comment with respect to the ``double counting'' issue described 
above, saying that under the April 2002 amendments to Part 330, both 
the direct and indirect air carrier could appropriately claim their 
separate compensable losses from the same operation. In this 
connection, Emery suggested that the Department amend 
Sec. 330.31(c)(3), which prohibits a carrier from including ASMs or 
RTMs that are ``reported by or are attributable to flights by another 
carrier.'' This, Emery said, was inconsistent with the deletion of 
Secs. 330.31(d)(i)(iv) and (d)(2).
    Emery also suggested that the methodology for calculating relative 
market share should be modified to equalize the situation of carriers 
that do both the indirect and direct carriage functions in-house and 
those that partner with a separate company. Under Emery's suggestion, 
an integrated carrier would add RTM equivalents representing their 
indirect carrier function to the numerator of their compensation cap 
formula and add the same number, here representing their direct carrier 
functions, to both the numerator and denominator. This would place the 
integrated carrier in roughly the same position as a pair of separate 
companies that together provided a comparable service.
    Emery agrees that indirect air carriers should be able to claim 
RTMs flown by foreign direct air carriers, but only in the case where 
the foreign carrier is an all-cargo carrier (because of a reference in 
section 103(b)(2)(B) of the Act to all-cargo carriers). Foreign 
combined passenger-cargo carriers would not be entitled to the same 
treatment, Emery said. BAX Global disagreed with Emery on this point, 
saying that indirect air carriers like BAX should be able to count RTMs 
flown by foreign combination passenger-cargo carriers, lest the 
indirect carrier lose some compensation for which it was otherwise 
entitled. The indirect carrier's role is the same regardless of the 
type

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of carrier on which the cargo is transported, BAX said.

DOT Response

    The Department notes that, with respect to the inclusion of certain 
ASMs and RTMs claimed by indirect air carriers as eligible in Round 2, 
there was a body of such air transportation units (ASMs and RTMs) for 
which indirect carriers likely sustained losses resulting from the 
events of September 11 that were, nonetheless, deemed ineligible. 
Eligible ASMs and RTMs for indirect carriers had been considered those 
in which the carriers providing the direct flights had not, and would 
not, file as their own for compensation under this program. Ineligible 
ASMs and RTMs for indirect carriers were those operated on direct 
carriers that had filed, or would file, for compensation related to the 
applicable air transportation units. This distinction was established, 
even though both indirect and direct carriers might have sustained 
post-September 11 losses for those same, shared ASMs and RTMs. 
Furthermore, those September 11-related losses were sustained by 
indirect air carriers that were otherwise deemed fully eligible by the 
Department to file for compensation under the Act.
    The Act has established a specific mechanism for determining the 
payment ceiling for eligible air carriers based upon their market 
shares, with the numerator representing a given carrier's respective 
ASMs or RTMs and the denominator representing the total number of these 
air transportation units. This resulting fraction is then multiplied by 
the level of the appropriation that is applicable based on the nature 
of the carrier's business, $0.5 billion for all-cargo operations (with 
market share measured by RTMs for the second quarter of 2001), and $4.5 
billion for passenger and mixed passenger/cargo operations (with market 
share measured by ASMs for the month of August 2001), to determine 
ceiling payments by carrier. It is anticipated that these amounts are 
to be paid to eligible carriers unless their demonstrated September 11 
related losses were less than that amount.
    By regulation, 67 FR 18468, April 16, 2002, the Department has 
sought to remedy the distinction that prevented some indirect carriers 
from seeking compensation for their losses associated with the 
provision of these shared ASMs and RTMs. At the same time, the 
Department concluded that it was fair and appropriate to maintain the 
levels of compensation to both direct air carriers and indirect 
carriers that reported ASMs and RTMs that were not shared between 
eligible carriers.
    The formula for payment of compensation established by the Congress 
in the Act provides an opportunity for the Department to meet this 
goal, since a number of air carriers are being compensated for 
demonstrated September 11-related losses that were less than the 
amounts they would receive based upon their market share of air 
transportation units. Given that fact, the authorized $4.5 billion for 
passenger and combination operations, and $0.5 billion for cargo-only 
operations, would not, in fact, be fully utilized. The Department 
believes that the Congressional direction to compensate air carriers--
without distinction as to whether they were direct or indirect 
carriers--can be accomplished within the authorized amounts by allowing 
compensation for indirect air carriers based upon their shared ASMs and 
RTMs. However, in order to avoid double-counting those that were 
actually operated, we will not add those ASMs and RTMs to the 
denominator of the formula. The result will be to allow full 
consideration for the ASMs and RTMs of indirect carriers, without 
diluting the compensation that would be afforded direct carriers for 
unshared operations. We project that funds will be sufficient to fully 
compensate all carriers in this manner.
    Finally, we agree with Emery that inclusion of section 330.31(c)(3) 
in the rule is inconsistent with our intent to allow shared ASMs and 
RTMs to be eligible for compensation-by inclusion in the numerator-and 
it should be deleted. Further, we concur with Emery that the clear 
language of the Act precludes us from compensating cargo operations 
that are performed on mixed passenger/cargo flights. Cargo tonnage 
associated with such services will not be eligible for inclusion in the 
RTM pool or in a carrier's computation of market-share payment based 
upon second quarter 2001 air transportation units.

Time Extensions and Agreed-Upon Procedures (AUP) Issues

    Six carriers, the Air Transport Association (ATA), and the National 
Air Transportation Association (NATA) requested extensions of varying 
length in the deadline for reporting to the Department on the basis of 
full AUPs or simplified procedures. NATA also said that some small 
businesses may have difficulty in generating the data required by the 
April 2002 amendments to Part 330. NATA suggested that carriers who had 
filed applications in the previous two rounds, but who were unable to 
create and submit the newly required data in a timely fashion, could 
forego additional compensation in the third round without having to pay 
back compensation provided under the first two rounds. A certification 
and submission of tax returns would suffice in these cases.
    Capital Cargo International Airlines suggested that the 
determination of whether a carrier would have to submit a full AUP 
report or comply with simplified procedures should be based on the 
relative reimbursement requested by carriers, rather than on the 
carrier's ASMs or RTMs. This would ease administrative burdens on 
carriers who were requesting relatively little compensation, the 
carrier said. GWV International asked for a waiver process to allow it 
to comply with the simplified procedures, rather than full AUPs. GWV 
said that it was modestly over the 10 million ASM ``breakpoint'' and 
that the cost of doing a full AUP engagement would exceed the increment 
in compensation it would get for having 13 million rather than 10 
million ASMs.

DOT Response

    Former Sec. 330.21 (which has now been removed; see discussion of 
application deadlines below) provided procedures for granting time 
extensions to applicants that could demonstrate good cause. We granted 
time extension requests on an individual basis where appropriate. In 
some cases, we granted time extensions to groups. For example, we 
granted the 30-day time extension sought by NATA to NATA air carrier 
members who may be eligible for the set-aside program. Given the need 
to complete the compensation process as soon as possible and the 
prejudice to the program and other carriers that could come from 
extending deadlines, we did not make any across-the-board change in the 
application deadline, however.
    We are not relaxing our requirement for a third-round application 
because the second round application lacked actual results for the 
September 11-December 31, 2001 period, but contained only estimates. 
Because the Act authorizes the Department to provide compensation only 
after a determination of air carrier losses, we need to have an 
accurate calculation of those losses, not merely estimates. Most NATA 
air carrier members are eligible to use simplified procedures in 
completing the third round application.
    With respect to Capital Cargo's comment, for most carriers the ASM 
or RTM amount will track the amount that the applicant may receive. The 
Department required the full agreed-upon procedure report from larger 
carriers because their finances and loss statements typically involve 
larger

[[Page 54062]]

dollar amounts and greater complexity than the counterpart submissions 
from smaller carriers.
    With respect to GWV's comment, the Department already has a process 
for applying for an exemption from a regulatory requirement (49 CFR 
5.11-5.13). Thus there is no need to establish a separate waiver 
process for the air carrier compensation program. It should be noted 
that the Department ordinarily will not grant an exemption where the 
applicant is really seeking a change in a regulation, e.g., that the 
cut-off be 13 million ASMs rather than 10 million ASMs, as opposed to 
presenting a relatively unique situation and rationale for different 
treatment that is not generally applicable and was not considered in 
the rulemaking.

Direct and Incremental Losses

    Kitty Hawk Aircargo objected to the Department's conclusion that 
any incremental gains by a carrier after the end of the FAA ground stop 
through December 31, 2001, offset losses that occurred during the 
ground stop. Kitty Hawk argues that the Department's position is 
inconsistent with the Act, which allegedly created two separate 
categories of losses eligible for compensation: direct and incremental 
losses. The Department's approach, in Kitty Hawk's view, collapses the 
two separate categories into one generic category, contrary to the 
language of the statute. Kitty Hawk also says that this approach is 
inconsistent with the Department's actions in compensating other 
carriers based on the conclusion that they were less profitable than 
they forecast before September 11, since Kitty Hawk's ground stop 
losses reduced the overall profitability of the company over the entire 
post-September 11 period.
    ATA essentially agreed with Kitty Hawk's position, saying that 
carriers who suffered direct losses as the result of the ground stop 
resulting from September 11 attacks should be compensated for those 
losses, even if they did not suffer incremental losses after the ground 
stop. ATA views the Act as compensating carriers for these direct 
losses, plus any additional incremental losses. It does not believe 
there is a basis in the statute to reduce or offset compensation 
relating to direct losses on the basis of the carrier's financial 
performance during the post-ground stop period. This is true, ATA says, 
even if it is difficult as an accounting matter to separate the two.

DOT Response

    The Department has carefully reviewed the language and legislative 
history of the Act, and we remain convinced that the interpretation 
underlying the April 2002 amendments to part 330 is consistent with the 
statute. Title I of the Act directs the President to ``compensate air 
carriers for losses incurred by the air carriers as a result of the 
terrorist attacks on the United States that occurred on September 11, 
2001.'' Specifically, section 101(a)(2) directs the President to 
compensate air carriers for:

    (A) direct losses incurred beginning on September 11, 2001, by 
air carriers as a result of any Federal ground stop order issued by 
the Secretary of Transportation or any subsequent order which 
continues or renews such a stoppage; and
    (B) the incremental losses incurred beginning September 11, 
2001, and ending December 31, 2001, by air carriers as a direct 
result of [the terrorist] attacks.

    The Act does not expressly address the situation in which an air 
carrier experiences short-term losses due to the Federal ground stop 
order but subsequently experiences better-than-forecasted profits for 
the balance of the year. Similarly, the Act does not expressly address 
the issue of whether an air carrier may exclude consideration of any 
incremental gains during the period of September 11 to December 31, 
2001 or whether these gains must be used to offset order-related 
losses.
    We note, first, that Congress wrote subparagraphs (A) and (B) in 
the conjunctive, linked by the word ``and.'' By using the term ``and,'' 
it appears that Congress intended the two categories of losses to be 
added or taken together, rather then allowing a choice between the two 
categories, or even the choice of ``either or both.'' This reading of 
section 101(a)(2) of the Act is buttressed by section 103(a), which 
provides that ``the amount of compensation payable to an air carrier 
under section 101(a)(2) may not exceed the amount of losses described 
in section 101(a)(2) * * * that the air carrier incurred'' (emphasis 
added). In this section, Congress did not separately identify order- 
and attack-related losses, as Kitty Hawk and ATA suggest, but instead 
combined the two while establishing a limit on carrier compensation. We 
interpret the language in Section 103 as indicating that subparagraphs 
(A) and (B) in Section 101(a)(2) must be taken together when 
determining the amount of losses that a carrier has incurred.
    We also note that the terms ``losses'' and ``incurred'' are not 
expressly defined in the Act. In common usage the term ``loss'' 
generally refers to something that is gone and cannot be recovered. The 
term ``incur'' is generally defined as meaning to become liable or 
subject to, as in to incur debt. Thus, the common usage of these terms 
would appear to indicate that Congress intended the Act to compensate 
carriers for those permanent, un-recovered economic losses that the 
carrier actually experienced or became liable for during the entire 
applicable time period.
    Further, we observe that the Act does not qualify the terms 
``incur'' or ``loss'' by indicating that an air carrier may claim 
temporary losses, nor does it indicate that a carrier may claim losses 
incurred in a partial period (i.e., September 11 to September 30, 
2001). Instead, the Act establishes two specific and overlapping time 
periods during which losses must be incurred: (1) The period covered by 
the Federal ground stop order, and (2) the period from September 11 to 
December 31, 2001. These specific time periods serve both to limit the 
government's obligation to compensate carriers for their September 11-
related losses and to establish a finite period during which 
incremental losses will change a carrier's calculation of direct order-
related losses. Any losses not recovered as of December 31, 2001, will 
be considered permanent for the purposes of compensation under the Act.
    In the Department's view, Kitty Hawk's approach could result in 
compensating carriers for losses that were not really incurred. For 
example, a loss might be claimed because a service could not be 
provided during the ground stop, yet that same service might have been 
provided at no loss two days later. Since the order-related losses are 
limited to only the period of time during which the order was in 
effect, any recovery of those losses by a carrier immediately after the 
order was lifted could only be identified by reviewing the carrier's 
revenues and expenses during the incremental loss period. Thus, the 
only way to ensure that a carrier is not compensated for temporary 
direct order-related losses that are later offset by increased gains, 
is to consider the carrier's incremental gains or losses through the 
end of 2001 along with its order-related direct losses.
    We view the legislative history of the Act as consistent with our 
interpretation of the meaning of its language. Congress enacted the 
statute at a time when its members, and many other observers, believed 
that the air carrier industry as a whole would suffer immediate and 
prolonged financial losses as a result of the terrorist attacks. 
Congress was concerned that the effect of both the order and the 
public's fear of flying would force individual carriers and the 
industry as a whole over the brink of

[[Page 54063]]

collapse, with devastating impacts on the rest of the United States 
economy.
    It is our view that Congress intended the compensation payments to 
serve as a stabilizing force for individual air carriers and for the 
industry. The purpose of the payments was to mitigate or prevent losses 
as a way of preventing bankruptcies, massive service disruptions and 
additional layoffs. In this context, we are not persuaded by claims 
that a carrier is entitled to be compensated for temporary losses 
suffered during the Federal ground stop order, when that same carrier 
returned to profitability and actually achieved better-than-forecasted 
profits during the remainder of 2001. Nor are we persuaded that a 
carrier's ground stop losses necessarily reduced the overall 
profitability of the company over the entire post-September 11 period; 
as noted, some and potentially all of those losses were only temporary 
in nature, and experience suggests that some carriers, especially cargo 
carriers, did better than expected after September 11 because of such 
September 11-related factors as increased shipments of military cargo, 
diversion of cargo to all-cargo aircraft from combi aircraft, etc. 
Again, we do not believe the Act requires, or Congress intended, to 
provide compensation to carriers in such situations.

Repayment Issues

    Federal Express (FedEx) objects to the provision that a carrier 
must immediately repay any excess amount of compensation that the 
Department determines the carrier has received. In FedEx's view, such a 
demand for immediate repayment is inconsistent with the Act, which 
would not contemplate such a demand until after the final audit process 
had been completed. It would be inconsistent with the Act for the 
Department to make any final conclusions about the propriety of 
distributions to a carrier in advance of such an audit, in FedEx's 
opinion.
    FedEx adds that if the Department is to attempt to recoup funds it 
asserts a carrier was overpaid, it must use the procedures of the 
Federal Claims Collection Act of 1966, which apply to, among other 
things, overpayments. Therefore, FedEx says, the rule must be revised 
to conform to the procedures required by the statute.

DOT Response

    The Assistant Secretary for Aviation and International Affairs has 
been delegated the President's authority to determine whether an air 
carrier has incurred losses that are eligible for compensation under 
the Act. (See 66 FR 49507 (September 27, 2001); 49 CFR 1.56a(j); 66 FR 
55599 (Nov. 2, 2001)). Once she has made a final determination, DOT 
will either pay that amount or demand a repayment if prior overpayment 
is found to have occurred. Nothing in the Act requires the Assistant 
Secretary to wait for a review by the Office of Inspector General, the 
General Accounting Office, or a private auditor to determine the 
appropriate compensation amount for a carrier. The Act provides merely 
that the Secretary or the Comptroller General ``may'' audit a carrier's 
statements and request any information they deem necessary for such an 
audit. If we or the Comptroller General choose later to conduct an 
audit, and that subsequent audit shows that the Assistant Secretary's 
determination should be modified, the Department retains the ability to 
make an appropriate adjustment at that time.
    If the Assistant Secretary finds that a carrier has been paid an 
amount in excess of the compensation for which it is eligible, the 
excess amount becomes an overpayment as that term is defined in the 
Federal Claims Collection Act and its implementing regulations. The 
Department will comply with Collection Act requirements in pursuing 
recovery of overpayments made under the Stabilization Act. We have 
revised section 330.9(b) to make this point expressly.

Distinguishing Between Attack-Related and Other Items

    FedEx disagrees with the substance of the April 2002 amendments to 
Part 330 with respect to some aspects of the computation of losses. 
FedEx says that neither economic gains or losses unrelated to the 
September 11 attacks should be factored into the compensation 
calculation. It argues that the April 2002 amendments to Part 330 
impermissibly permits savings that would have occurred in the absence 
of the attacks to offset losses that resulted from the attacks. FedEx 
also says the Department should use certain accounting principles to 
distinguish between attack-related and unrelated items, so as not to 
arbitrarily exclude, for example, all cost savings, regardless of 
source. Generally, FedEx argues for a case-by-case approach that does 
not make assumptions about the relationship of an item to the September 
11 attacks.
    ATA expressed concern that DOT would exclude some non-recurring 
charges that resulted from the September 11 attacks while forcing the 
inclusion of certain non-recurring credits that do not result from the 
attacks. Negative variances between forecast and actual that meet the 
statutory test for compensability should not be automatically excluded; 
nor should positive variances that do not meet this test be 
automatically included. In addition, ATA views DOT's approach as too 
closely tied to profits and losses, rather than to liquidity.

DOT Response

    Section 101(a)(2) of the Act provides that the President shall 
compensate air carriers for direct losses incurred beginning September 
11, 2001, as the result of any Federal ground stop orders, and their 
incremental losses incurred between September 11 and December 31, 2001, 
``as a direct result of the terrorist attacks.'' Section 103(a) directs 
that compensation may not exceed the amount ``that the air carrier 
demonstrates to the satisfaction of the President, using sworn 
financial statements or other appropriate data, that the air carrier 
incurred.'' Section 107(3) of the Stabilization Act further specifies 
that the term ``incremental loss'' does not include any loss that the 
President determines would have been incurred if the September 11 
terrorist attacks on the United States had not occurred.
    In the preamble to DOT's April 2002 amendments to Part 330, we 
expressed our continued belief that ``in most cases, the comparison 
between pre-September 11, 2001 forecasts and actual results provides an 
approximation of the incremental losses that are a direct result of the 
[terrorist] attacks, and that approximation, without more, gives effect 
to the language of the statute.'' 67 FR at 18472. However, we have also 
noted that additional review of the components of an air carrier's loss 
may reveal that certain items were clearly not the direct or indirect 
result of the terrorist attacks and should therefore not be included in 
the basis for compensation.
    To facilitate the DOT's review of an applicant's claim, and to 
assist applicants in preparing their claims, we published guidelines at 
14 CFR 330.39, which identify the types of losses for which the DOT 
would not normally provide compensation. The preamble to our April 2002 
amendments also provided a more detailed explanation of these items and 
how the DOT would treat them. Specifically, we identified ``aircraft 
impairment charges, charges or expenses attributable to lease buyouts, 
or other losses that are not actually or fully realized'' during the 
compensation period to be the types of losses that would not be 
eligible for compensation under the Act. 14 CFR 330.39(a)(1).

[[Page 54064]]

Further, we stated that the DOT ``will consider requests to accept 
adjustments for extraordinary or non-recurring expenses or revenues on 
a case-by-case basis.'' 14 CFR 330.39(a)(2).
    In our guidance for air carriers identifying the types of losses 
for which we would not normally provide compensation, we stated that 
the DOT ``generally does not accept claims by air carriers that cost 
savings should be excluded from the calculation of incurred losses.'' 
14 CFR 330.39(b). The DOT provided a detailed explanation of this 
provision in the preamble to the April 2002 amendments:

    The Department expects that many applicants have experienced, by 
their own initiatives, a reduction in actual versus forecast 
expenses, giving rise to a question of whether any such reductions 
may be excluded from the calculations of losses on the ground that 
they are unrelated to the terrorist attacks. As a general rule, for 
the reasons stated below, the Department will treat such variances 
for all categories of expenses as being attributable to the 
terrorist attacks. First, we would expect that cost reduction plans 
not related to the terrorist attacks would have been reflected in an 
applicant's pre-September 11 forecasted financials. Second, we 
believe it highly likely that expense reduction efforts undertaken 
after September 11 were attributable, implicitly if not explicitly, 
to changed expectations regarding revenues after the attacks. Third, 
we note that Congress provided that we compensate air carriers for 
`losses incurred.' Cost savings that are achieved in fact reduce an 
air carrier's losses, and the calculations required under our 
regulations may not be manipulated to exclude actual reductions in 
expenses, thereby generating a basis for increased compensation. 
Moreover, we interpret Congress' language here as indicating an 
intent that carriers not receive increased compensation for 
achieving savings in costs, which they have an independent 
obligation to their managements and shareholders to achieve, and 
which it is reasonable to expect them to undertake to mitigate the 
need for compensation under the Act. (67 FR 18473.)

    Nonetheless, we also acknowledged that there may be some 
circumstances in which cost savings could be proven, to our 
satisfaction, to be unrelated, directly or indirectly, to the terrorist 
attacks. We directed any air carrier claiming such adjustments to 
provide pre-existing documentary support for its claims.
    We have reviewed the comments of FedEx and ATA on this issue and 
find no basis to believe that our approach to the issue of cost savings 
was misguided or incorrect. However, consistent with their comments, 
the Department intends to review all claimed adjustments on a case-by-
case basis. In this regard, carriers are reminded that they have the 
burden of proving to the Department's satisfaction that the losses they 
claim are the direct or indirect result of the terrorist attacks, 
supplying sufficient documentation to demonstrate to the Department 
that the claimed losses should be compensated under the Act.

ASMs or RTMs Flown by Foreign Direct Carriers

    FedEx renews an argument made in ATA comments to the January 2002 
rule that in the case of an indirect air carrier applicant, both the 
indirect and direct carrier involved must be U.S. citizens. FedEx 
believes that direct air carriers should receive compensation before 
indirect air carriers are paid. FedEx further asserts that allowing 
U.S. indirect air carriers to claim compensation for RTMs or ASMs flown 
by foreign direct air carriers expands the program to compensate 
foreign air carriers, which it views as beyond the authority of the 
Act. FedEx also refers to audit problems that could be created by 
reliance on ASMs or RTMs flown by a foreign direct air carrier.
    Unlike FedEx, ATA does not renew its argument that ASMs or RTMs 
involving U.S. indirect air carriers and foreign direct air carriers be 
excluded. However, ATA urges the Department to ensure that payments do 
not end up compensating foreign carriers or dilute the amount of 
compensation of other eligible carriers. DOT should also ensure that 
the total RTM universe does not exceed the RTMs reported to the 
Secretary for April--June 2001.

DOT Response

    The process for calculating an indirect air carrier's ASMs or RTMs 
was established in the Department's final rule on January 2, 2002, and 
was amended on April 16, 2002. An eligible indirect air carrier (and 
only U.S. citizens may be eligible indirect air carriers) may count 
ASMs or RTMs flown by a foreign direct air carrier, even though that 
direct air carrier is not itself eligible for compensation under the 
Act. The Department sees nothing in the legislation that would preclude 
such eligibility for these indirect carriers and discerns little or no 
difference in the service provided, whether the passengers or cargo 
were carried on foreign or domestic flights.
    We do not agree with the assertion that this approach results in 
compensation being paid to a foreign air carrier. The losses incurred 
by a U.S. indirect air carrier do not differ based on the citizenship 
of its direct air carrier partner. The Department properly implements 
the Act by compensating the U.S. indirect air carrier's losses. It is 
clear that the Department is not making any payments to a foreign air 
carrier based on its participation in an arrangement with a U.S. 
indirect air carrier, and we have every expectation that the 
Department's approach will not diminish the compensation available for 
eligible U.S. air carriers. It is equally clear that a U.S. air carrier 
like FedEx is not disadvantaged by the Department's decision to 
compensate indirect air carriers, regardless of the nationality of 
their direct air carrier partners.

Administrative Law Issues

    CAA objected to the Department's decision to issue the April 2002 
amendments to part 330 as a final rule with a request for comments, 
rather than as a notice of proposed rulemaking (NPRM). CAA asserted 
that the April 2002 amendments to part 330 made significant changes 
without adequate analysis.
    FedEx disagreed with the Department's characterization of the April 
2002 amendments to Part 330 as an emergency rule, saying that there was 
no longer an emergency seven months after September 11. In FedEx's 
view, the promulgation of the rule as an emergency rule was 
inconsistent with Administrative Procedure Act (APA) requirements. In 
addition, FedEx alleges, the rule makes substantive changes in DOT 
requirements (e.g., with respect to repayment rules) without adequate 
explanation. FedEx asks the Department to withdraw the April 2002 and 
issue an NPRM for a new rule that would comport with FedEx's notion of 
proper implementation of the Act.

DOT Response

    Under the APA, agencies are authorized to issue rules without prior 
opportunity for notice and comment if such an opportunity is 
unnecessary, impracticable, or contrary to the public interest. 
Agencies may make final rules effective immediately if there is good 
cause for doing so. The Department believes that the April 2002 
amendments to Part 330 clearly met these criteria. As noted above, the 
statute directs the Department to compensate carriers as expeditiously 
as possible. While many large carriers had already been paid 
significant compensation in the first several months of this program, 
many smaller carriers had not. These smaller carriers were still 
suffering the financial impacts of the September 11 attacks without the 
assistance of compensation, because application procedures covering 
them and the set-aside provision had not been put into place.
    To delay further compensation to these carriers by issuing only a

[[Page 54065]]

proposed rule in April would have ignored the dire situation in which 
many of these carriers may find themselves. It was necessary to put the 
appropriate provisions in place immediately to address the situation of 
smaller carriers, rather than to wait for the resolution of 
disagreements with larger carriers. Doing so is consistent with 
Congressional direction to provide compensation on an expeditious basis 
to ensure the survival of the airline industry, a task we view as 
applying to all the segments of the industry. We also believe that 
clarifying for all parties the Department's views on compensation 
issues that had been raised by earlier comments and communications to 
the Department was a valuable service to the industry.
    Even for carriers who commented specifically on this issue, the APA 
argument is now effectively moot. All carriers have now had the 
opportunity to comment, and the final version of Part 330 the 
Department is promulgating today, after considering all comments, 
establishes the provisions that will govern the final determination of 
compensation for the commenters and other carriers. All payments under 
previous versions of the rule were estimated and subject to adjustment. 
There have been no final payments or final determinations of the amount 
of compensation for which a carrier is eligible until now, after all 
the comments have been considered. Between the April 2002 amendments to 
Part 330 and this final rule, the commenting carriers and others have 
not lost any of the compensation for which they will be ultimately be 
eligible.
    Finally, we would note that the emergency designation in the 
discussion on Executive Order 12866 in the preamble to the April 2002 
amendments to Part 330 pertains to the timing and nature of Office of 
Management and Budget (OMB) review of the document, not to the APA 
justifications for publishing an immediately effective final rule 
without having previously issued a notice of proposed rulemaking. In 
light of the continuing threats to the United States from terrorism, 
and this nation's continuing efforts to recover from the effects of the 
September 11 attacks and rebuild a secure and financially sound air 
transportation industry, we cannot agree with assertions that there is 
no longer an emergency situation justifying expeditious processing of 
this rule by OMB.

Application Deadlines

    Over the course of the Department's implementation of the Act, the 
Department has set, and on some occasions extended, deadlines for 
submission of applications for compensation and supporting materials. 
Initially, applications for carriers other than air taxis had to reach 
the Department by November 13, 2001. Air taxis were required to apply 
by November 26, 2001.
    Subsequently, the Department permitted certain classes of carriers 
that had not previously filed an application or wanted to amend their 
applications to do so by February 8, 2002. Following the adoption of 
the set-aside for small carriers, we permitted carriers eligible for 
the set-aside to send in an initial or amended application by May 16, 
2002. We applied this same deadline to carriers that did not previously 
submit an application for compensation because of the provisions of 
former Sec. 330.31(d)(1)(iv) or (d)(2)(iv) or a carrier that wished to 
amend its application because of the removal of these provisions. The 
Department extended the May 16 deadlines for both these groups of 
carriers to July 29, 2002 for good cause, but no time extensions have 
been granted beyond July 29, 2002.
    In addition, carriers that had already received compensation or 
submitted an application for compensation before April 16, 2002, were 
required to submit a ``third round'' application, including the report 
of the agreed-upon procedures engagement required by Sec. 330.37(c) or 
the simplified procedures report required by Sec. 330.37(d), as 
applicable. These carriers were also required to submit copies of 
monthly profit and loss statements for the months July 2001 through 
January 2002, each of which must have included the imputed price per 
gallon average of the fuel used for all aircraft during that month. 
These statements were required to be certified true and accurate (see 
Sec. 330.33). These carriers were required to submit this application 
and all required supporting materials by May 16, 2002. The Department 
extended this deadline to July 29, 2002 for good cause, but no time 
extensions have been granted beyond July 29, 2002.
    Because all these deadlines have previously been established and 
have passed, and the Department has not granted any further extensions, 
we believe that retaining an ``applications deadlines'' section in the 
regulatory text is unnecessary, since it would have no prospective 
effect. Consequently, we have removed and reserved Sec. 330.21.

Miscellaneous Issues

    ATA asked the Department to clarify that, beyond Form 330 and 
associated data, no more information would be needed from carriers. ATA 
also would like timetables for the completion of the compensation 
process. In addition, ATA requested that the Department publish on its 
web site the total ASM and RTM denominators used by the Department to 
calculate the compensation cap for carriers (which ATA believes is 
likely to be closer to 90 rather than 94 million ASMs) as well as the 
ASMs and RTMs associated with an eligible carrier's payment. ATA also 
suggested some minor edits to Form 330 (Final).
    In addition, while the Department did not receive any comments 
specifically on the point, an issue has arisen during the review of 
carrier applications that merits discussion. This issue relates to the 
appropriate forecast to be utilized in determining a carrier's losses 
due to the events of September 11. In some cases, several forecasts 
might have been prepared, refined, or adjusted at different times, 
requiring the Department to choose among them for the one that best 
satisfies the need for an objective and timely forecast of financial 
expectations for the September 11 to December 31 period.

DOT Response

    The Department is interested in Form 330 (Final) and the 
information and records that bear on the numbers in that form. In 
reviewing applications, the Department requests additional supporting 
information and documents where needed for the Department to make a 
proper determination. With respect to timetable, we have paid out over 
$4.3 billion of the $5 billion that was appropriated, and we remain 
committed to making the remaining payments as soon as possible.
    With respect to publishing the final denominators, the Department 
has adjusted the denominators with each round to reflect the latest 
information and experience. At this time, the final numbers have still 
not been determined because of late filed data. Any air carrier paid 
under the formula can readily determine the denominator used in 
calculating its payment by using its own ASM or RTM total and $4.5 
billion and $500 million, respectively. We have not made the minor 
edits to Form 330 (Final) suggested by ATA because most carriers were 
able to complete the form without confusion, and where there were 
inconsistencies the Department was able to readily resolve them.
    As to forecast issues, we have required the submission of the most

[[Page 54066]]

recent pre-September 11 profit/loss forecast for September 11 to 
December 31, 2001. Expressions of this requirement appear in various 
wordings in the regulation, regulatory preambles, and the Model Agreed-
Upon Procedures and Simplified Procedures. Our intent has always been 
to obtain a reliable, objective, and up-to-date forecast that 
reasonably represented a pre-September 11 outlook as to expected 
financial results for the September 11 through December 31 period. In 
some cases, this may lead to difficult choices between timeliness and 
approval at the highest corporate levels. For example, the latest 
forecast adopted by the Chief Executive Officer of a company may rely 
on months-old analysis, which may be obsolete given events in the fast-
changing airline industry. Alternatively, a forecast completed in early 
September by staff personnel for a limited corporate purpose may be 
very timely, but lack the reliability that would come from more senior 
review. In situations in which such choices must be made, the 
Department will seek in all cases to use that forecast which, under the 
totality of circumstances, provides the best combination of 
reliability, objectivity, and proximity to September 11, but that in 
all situations excludes consideration of the September 11 attacks and 
subsequent events.

Editorial Amendments

    In this final rule, we are making a variety of editorial amendments 
to the final rule, to correct and update dates, citations, and 
references to Form 330 and remove some out-of-date references. For 
example, most of Sec. 330.27(e) and all of Sec. 330.27(f) are being 
removed as unnecessary and out of date, given changes to Form 330 and 
the existence of data on actual, rather than estimated, losses. Section 
330.31(c)(3) is being deleted as inconsistent with the Department's 
determination that indirect air carriers may, in appropriate 
circumstances, include ASMs or RTMs representing operations of direct 
air carriers. We intended to delete this provision in the April 2002 
publication, but through editorial error failed to do so. Because both 
passenger and all-cargo carriers are applying on the same form, we 
combined paragraphs (a) and (b) in Sec. 330.27 and made clear that both 
groups, not just all-cargo carriers, must exclude non-air 
transportation related expenses. Section 330.13 has been updated to 
indicate that, if an air carrier previously received compensation, it 
must submit a Form 330 (Final) and other required documents even if it 
is not seeking additional compensation. One key reason for this 
requirement is that ``second round'' applications lacked actual results 
for the September 11-December 31, 2001 period, but contained only 
estimates.

Regulatory Analyses and Notices

Executive Order 12866

    These amendments do not constitute an economically significant rule 
under Executive Order 12866, but they are significant under the 
Executive Order and the Department's Regulatory Policies and 
Procedures, because they affect important sectors of the air 
transportation industry and are of general policy interest. As part of 
a program to compensate air carriers for September 11-related losses, 
this rule will have a continuing favorable economic impact on the air 
transportation industry.
    The Department concludes, based on the continuing extraordinary 
situation confronting the nation in the wake of the September 11 
attacks and the Congressional imperative to ensure the expeditious 
completion of the compensation process, that this final rule merits 
expedited review by OMB, as provided in Section 6(a)(3)(D) of Executive 
Order 12866. In accordance with Section 6(a)(3)(D), this rule was 
submitted to the Office of Management and Budget for review. As noted 
above, treating this rulemaking as one in which the need for 
expeditious action precludes use of the normal OMB review process does 
not implicate APA issues with respect to prior opportunity for notice 
and comment and immediate effective date.

Regulatory Flexibility Act and Federalism

    Under 5 U.S.C. 604, we note that this rule may have a significant 
economic effect on a substantial number of small entities. In analyzing 
small entity impact of the amendments, we believe that, to the extent 
that the rule does impact small air carriers, the impact is a highly 
favorable one, since it will result in carriers subject to the set-
aside receiving more compensation than these carriers would have 
received otherwise. The Department has also concluded that this rule 
does not have sufficient federalism implications to warrant the 
consultation requirements of Executive Order 13132.

Paperwork Reduction Act

    The Department's analysis of the information collection burdens 
under the April 2002 amendments to Part 330 applies to this rule as 
well. Under the Paperwork Reduction Act, the Office of Management and 
Budget approved this information collection on an emergency basis, with 
Control Number 2105-0548.

Administrative Procedure Act Findings

    The public has had a prior opportunity to comment on the provisions 
of today's final rule, in the context of the opportunity for comment 
provided to the April 2002 amendments to part 330. While the Department 
believes that, because of the need to move quickly to provide 
compensation to air carriers for the purpose of maintaining a safe, 
efficient, and viable commercial aviation system in the wake of the 
events of September 11, 2001, this opportunity would not be mandated 
under under 5 U.S.C. 553, the Department provided it in the interest of 
allowing interested parties a fair opportunity to make their views 
known. The preamble of this rule has responded to the comments we 
received. For the same reasons cited above, a delay of the effective 
date under 5 U.S.C. 801, et seq., is not being provided. On the same 
basis, we have determined that there is good cause to make the rule 
effective immediately, rather than in 30 days.

List of Subjects in 14 CFR Part 330

    Air carriers, Grant programs--transportation, Reporting and 
recordkeeping requirements.

    Issued this 9th day of August 2002, at Washington, DC.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.

    For the reasons set forth in the preamble, the Department revises 
14 CFR part 330, to read as follows:

PART 330--PROCEDURES FOR COMPENSATION OF AIR CARRIERS

Subpart A--General Provisions
Sec.
330.1   What is the purpose of this part?
330.3   What do the terms used in this part mean?
330.5   What funds will the Department distribute under this part?
330.7   [Reserved]
330.9   What are the limits on compensation to air carriers?
330.11   Which air carriers are eligible to apply for compensation 
under this part?
330.13   If an air carrier received compensation under the Act 
previously, does it have to submit a third-round application?
330.15   [Reserved]
330.17   [Reserved]
Subpart B--Application Procedures
330.21   [Reserved]
330.23   To what address must air carriers send their applications?
330.25   What are the components of an air carrier's application for 
compensation?

[[Page 54067]]

330.27   What information must certificated and commuter air 
carriers submit?
330.29   What information must air taxi operators submit on Form 330 
(Final) and Form 330-C?
330.31   What data must air carriers submit concerning ASMs or RTMs?
330.33   Must carriers certify the truth and accuracy of data they 
submit?
330.35   What records must carriers retain?
330.37   Are carriers which participate in this program subject to 
audit?
330.39   What are examples of types of losses that the Department 
does not allow?
Subpart C--Set-Aside for Certain Carriers
3330.41   What funds is the Department setting aside for eligible 
classes of air carriers?
330.43   What classes of air carriers are eligible under the set-
aside?
330.45   What is the basis on which air carriers will be compensated 
under the set-aside?
Appendix A to Part 330--Forms for All Carriers
Appendix B to Part 330--[Reserved]
Appendix C to Part 330--Forms for Air Taxi Operators

    Authority: Pub. L. 107-42, 115 Stat. 230 (49 U.S.C. 40101 note); 
sec. 124(d), Pub. L. 107-71, 115 Stat. 631 (49 U.S.C. 40101 note).

Subpart A--General Provisions


Sec. 330.1  What is the purpose of this part?

    The purpose of this part is to establish procedures to implement 
section 101(a)(2) of the Air Transportation Safety and System 
Stabilization Act (``the Act''), Public Law 107-42, 115 Stat. 230 (49 
U.S.C. 40101 note). This statutory provision is intended to compensate 
air carriers for direct losses incurred as a result of the Federal 
ground stop order issued by the Secretary of Transportation, and any 
subsequent orders, following the terrorist attacks of September 11, 
2001, and incremental losses incurred from September 11 through 
December 31, 2001, as the result of those attacks.


Sec. 330.3  What do the terms used in this part mean?

    The following terms apply to this part:
    Air carrier means any U.S. air carrier, as defined in 49 U.S.C. 
40102.
    Air taxi operator means an air carrier, other than a commuter air 
carrier, that holds authority issued under 14 CFR part 298 and 14 CFR 
part 121 or part 135.
    Available seat-miles (ASMs) means the aircraft miles flown on each 
flight stage by an air carrier multiplied by the number of seats 
available for revenue use on that stage.
    Certificated air carrier means an air carrier holding a certificate 
issued under 49 U.S.C. 41102 or 41103.
    Commuter air carrier means an air carrier as defined in 14 CFR 
298.2(e) that holds a commuter air carrier authorization issued under 
49 U.S.C. 41738.
    Incremental loss means a loss incurred by an air carrier in the 
period of September 11, 2001-December 31, 2001, as a result of the 
terrorist attacks on the United States of September 11, 2001. It does 
not include any loss that would have been incurred if the terrorist 
attacks on the United States of September 11, 2001, had not occurred.
    Regional air carrier means an air carrier that operates at least 
one large aircraft and has annual operating revenues of less than $100 
million.
    Revenue ton-miles (RTMs) means the aircraft miles flown on each 
flight stage by the air carrier multiplied by the number of tons of 
revenue cargo transported on that stage. For purposes of this part, 
RTMs include only those resulting from all-cargo flights.


Sec. 330.5  What funds will the Department distribute under this part?

    Under this part, the Department will distribute up to the full 
amount of the compensation it determines is payable to air carriers 
under section 103(b) of the Act, and up to the full amount of the set-
aside provided for in subpart C of this part to air carriers eligible 
for it. The Department may require additional information to support 
payments to individual carriers in connection with this final payment.


Sec. 330.7  [Reserved]


Sec. 330.9  What are the limits on compensation to air carriers?

    (a) You are eligible to receive compensation equaling the lesser of 
your direct and incremental losses or the amount calculated by the 
formula set forth in section 103(b)(2) of the Act.
    (b) If at any time we determine that a carrier has been compensated 
in an amount that exceeds the amount to which it is entitled under 
section 103(b) of the Act or the subpart C set-aside program, the 
Department will notify the carrier of the basis for the determination, 
the amount that must be repaid, and the procedures to follow for making 
a repayment. We will follow collection procedures under the Federal 
Claims Collection Act of 1966 (31 U.S.C. 3701 et seq,) to the extent 
required by law, in recovering such overpayments. This process will 
also apply to collection of overpayments by the Department as a result 
of an audit by representatives of the Department, including the Office 
of the Inspector General, or the Comptroller General under section 103 
of the Act, which may be the subject of a separate collection action.


Sec. 330.11  Which carriers are eligible to apply for compensation 
under this part?

    (a) If you are a certificated air carrier, a commuter air carrier, 
an air taxi, or an indirect air carrier, you are eligible to apply for 
compensation under Subpart B of this part.
    (b) [Reserved]
    (c) If you are a foreign air carrier, commercial operator, flying 
club, fractional owner, general aviation operator, fixed base operator, 
flight school, or ticket agent, you are not eligible to apply for 
compensation under this part.


Sec. 330.13  If an air carrier received compensation under the Act 
previously, does it have to submit a third-round application?

    Yes, if, as an air carrier, you previously received compensation 
under section 101(a)(2) of the Act, you must, in all cases, submit a 
complete Form 330 (Final) and other documents required under this part. 
You must do so even if you are not seeking additional compensation.


Sec. 330.15  [Reserved]


Sec. 330.17  [Reserved]

Subpart B--Application Procedures


Sec. 330.21  [Reserved]


Sec. 330.23  To what address must air carriers send their applications?

    (a) You must submit your application, and all required supporting 
information, in hard copy (not by fax or electronic means) to the 
following address:

U.S. Department of Transportation, Aviation Relief Desk (X-50), 400 
7th Street, SW., Room 6401, Washington, DC 20590.

    (b) If your complete application is not sent to the address in 
paragraph (a) of this section as required in this section, the 
Department will not accept it.


Sec. 330.25  What are the components of an air carrier's application 
for compensation?

    As an air carrier applying for compensation under this part, you 
must provide to the Department all materials described in Secs. 330.27-
330.33. The Department will not accept your application if it does not 
comply fully with the requirements of this subpart.


Sec. 330.27  What information must certificated and commuter air 
carriers submit?

    (a) You must submit Form 330 (Final), found in Appendix A to this 
part. Data supplied on Form 330 (Final) in Appendix A to this part must 
be tied

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only to the airline portion of their businesses and must exclude non-
air transportation related expenses.
    (b) [Reserved]
    (c) Air carriers that operate both passenger/combination aircraft 
and all-cargo aircraft and routinely report to the Department ASMs and 
RTMs separately for both types of flights must submit two versions of 
Form 330 (Final) in Appendix A to this part to seek compensation on 
both an ASM and RTM basis. Financial and operational data (both actual 
and forecasted) must be disaggregated and correlate exclusively to one 
or the other type of operation.
    (d) You must include the following financial information on Form 
330 (Final) for the period September 11, 2001 through December 31, 
2001:
    (1) Your pre-September 11, 2001, profit/loss forecast for the 
period beginning September 11, 2001, and ending December 31, 2001. This 
forecast must reflect seasonal reductions in capacity and the cost 
savings associated with such reductions. Documentation verifying that 
the pre-September 11, 2001, forecast was, in fact, completed before 
that date must also be submitted with your application.
    (2) Your actual results for that same period reflecting any losses 
that were a direct result of the terrorist attacks of September 11, 
2001. These actual results must incorporate all cost reductions 
associated with capacity reductions and furloughs you made due to the 
reduced demand for air service after the September 11th attacks (e.g., 
employee pay adjustments and furloughs, changes in aircraft fleet in 
service, schedule and capacity changes, etc.).
    (3) The difference between your forecast profits/losses and actual 
results for that period (i.e., the difference between the figures in 
paragraphs (d) (1) and (2) of this section).
    (4) The actual losses you report must be net losses, before taxes, 
taking into account savings from such items as reductions in passenger 
and cargo handling costs, fuel consumption, landing fees, revenue/
traffic-related expenses (e.g., commissions, food and beverage, booking 
fees, credit card fees), and savings of other costs due to the ground 
stop and subsequent schedule/capacity/staff reductions (including 
savings from layoffs of employees, adjusted for severance payments), as 
well as proceeds from business recovery insurance or other insurance 
payments. You must not report as losses insurance premium increases 
that have been or will be compensated by the Government under the Act, 
or other losses that have been or will be compensated by other 
subsidies or assistance provided by Federal, state, or local 
governments.


Sec. 330.29  What information must air taxi operators submit on Form 
330 (Final) and Form 330-C?

    As an air taxi operator, you must complete Form 330 (Final) in 
accordance with the requirements in Sec. 330.27. You must also complete 
pages 2, 5, and 6 (certifying pages 2 and 5) of Form 330-C as shown in 
Appendix C to this part. Explanatory notes are included on that Form.


Sec. 330.31  What data must air carriers submit concerning ASMs or 
RTMs?

    (a) Except as provided in paragraph (d) of this section, if you are 
applying for compensation as a passenger or combination passenger/cargo 
carrier, you must have submitted your August 2001 total completed ASM 
report to the Department for your system-wide air service (e.g., 
scheduled, non-scheduled, foreign, and domestic).
    (b) Except as provided in paragraph (d) of this section, if you are 
applying for compensation as an all-cargo carrier, you must have 
submitted your RTM reports to the Department for the second calendar 
quarter of 2001.
    (c) In calculating and submitting ASMs and RTMs under paragraphs 
(a) and (b) of this section, there are certain things you must not do:
    (1) Except at the direction of the Department, or to correct an 
error that you document to the Department, you must not alter the ASM 
or RTM reports you earlier submitted to the Department. Your ASMs or 
RTMs for purposes of this part are as you have reported them to the 
Department according to existing standards, requirements, and 
methodologies established by the Office of Airline Information (Bureau 
of Transportation Statistics).
    (2) You must not include ASMs or RTMs resulting from operations by 
your code-sharing or alliance partners.
    (d) If you have not previously reported ASMs or RTMs as provided in 
paragraphs (a) and (b) of this section for a given operation or 
operations, you may submit your calculation of ASMs or RTMs to the 
Department with your application. You must certify the accuracy of this 
calculation and submit with your application the data and assumptions 
on which the calculation is based. After reviewing your submission, the 
Department may modify or reject your calculation.
    (1) If you are a direct air carrier that has operated your aircraft 
for a lessee (i.e., a wet lease, or aircraft, crew, maintenance, and 
insurance (ACMI) operation), you may submit your calculation of ASMs or 
RTMs for these flights. Your submission must include the following 
elements:
    (i) Documentation that you otherwise qualify as an air carrier;
    (ii) Documentation that you are a wet lessor, and an explanation of 
why you did not previously report ASMs or RTMs for the operations in 
question;
    (iii) Documentation of the identify of the wet lessees involved in 
these operations; and
    (iv) Accurate and auditable records of ASMs or RTMs actually flown 
during the relevant time period for these operations.
    (2) If you are an indirect air carrier, you may submit your 
calculation of ASMs or RTMs for flights that direct air carriers have 
operated for you under contract or other arrangement. Your submission 
must include the following elements:
    (i) Documentation that you otherwise qualify as an air carrier;
    (ii) Documentation that you are an indirect air carrier, and an 
explanation of why you did not previously report ASMs or RTMs for the 
operations in question;
    (iii) Documentation of the identify of the direct air carriers 
involved in these operations; and
    (iv) Accurate and auditable records of ASMs or RTMs actually flown 
during the relevant time period for these operations.


Sec. 330.33  Must carriers certify the truth and accuracy of data they 
submit?

    Yes, with respect to all information submitted or retained under 
Secs. 330.27-330.31 and 330.35, your Chief Executive Officer (CEO), 
Chief Financial Officer (CFO), or Chief Operating Officer (COO) or, if 
those titles are not used, the equivalent officer, must certify that 
the submitted information was prepared under his or her supervision and 
is true and accurate, under penalty of law.


Sec. 330.35  What records must carriers retain?

    As an air carrier that applies for compensation under this part, 
you must retain records as follows:
    (a) You must retain all books, records, and other source and 
summary documentation supporting your claims for compensation of direct 
and incremental losses pursuant to Sections 101, 103, and 106 of the 
Act. This requirement includes, but is not limited to, the following:
    (1) You must retain supporting evidence and documentation 
demonstrating the validity of the data you provide under Secs. 330.27-
330.31.

[[Page 54069]]

    (2) You must retain documentation verifying that your pre-September 
11, 2001, forecast was the most recent forecast available to that date.
    (3) You must also retain documentation outlining the assumptions 
made for all forecasts and the source of the data and other inputs used 
in making the forecasts.
    (4) You must agree to have your independent public accountant 
retain all reports, working papers, and supporting documentation 
pertaining to the agreed-upon procedures engagement conducted by your 
independent public accountant under the requirements of this part for a 
period of five years. The accountant must make this information 
available for audit and examination by representatives of the 
Department of Transportation (including the Office of the Inspector 
General), the Comptroller General of the United States, or other 
Federal agencies.
    (b) You must preserve and maintain this documentation in a manner 
that readily permits its audit and examination by representatives of 
the Department of Transportation (including the Office of the Inspector 
General), the Comptroller General of the United States, or other 
Federal agencies.
    (c) You must retain this documentation for five years.
    (d) You must make all requested data available within one week from 
a request by the Department of Transportation (including the Office of 
the Inspector General), the Comptroller General of the United States, 
or other Federal agencies.


Sec. 330.37  Are carriers which participate in this program subject to 
audit?

    (a) All payments you receive from the Department of Transportation 
under this program are subject to audit. All information you submit 
with your applications and all records and documentation that you 
retain are also subject to audit.
    (b) Except as provided in paragraph (d) of this section, before you 
are eligible to receive payment from the final installment of 
compensation under the Act, there must be an independent public 
accountant's report based on the performance of procedures agreed upon 
by the Department of Transportation with respect to the carrier's 
forecasts and actual results. The independent public accountant's 
engagement must be performed in accordance with generally accepted 
professional standards applicable to agreed-upon procedures 
engagements. You must submit the results of the agreed-upon procedures 
engagement to the Department with your application for payment of the 
final installment.
    (c) The following are the core requirements for the independent 
public accountant's review:
    (1) Determine that the earnings forecast presented to the 
Department was inclusive of the entity's full operations as an air 
carrier and was the most current forecast prepared prior to September 
11, 2001;
    (2) Determine that, if forecasts presented to the Department for 
prior periods had material variances from actual results, the carrier 
provided explanations to account for such variances;
    (3) Determine that the methodology for allocating revenue and 
expenses to the periods September 1-10 and September 11-30, from the 
forecasted and actual September results, was in accordance with air 
carrier records and analyses;
    (4) Determine that the actual expenses and revenues presented to 
the Department are in accordance with the official accounting records 
of the carrier or the financial statements included in the carrier's 
Securities and Exchange Commission Form 10-Q (for availability, see 17 
CFR 249.0-1(b)), and consistent with Generally Accepted Accounting 
Principles (GAAP), except to the extent that GAAP would require or 
allow treatment that would be inconsistent with the Act or this part;
    (5) Verify that the carrier provided explanations supporting the 
allocation methodology used if the forecasted and/or actual results for 
the September 11--30 period was different from allocating 66.7 percent 
of the total amounts for September;
    (6) Determine that the carrier provided full explanations for all 
material differences between forecast and actual results for the 
September 11--30, 2001 period and the October 1--December 31, 2001 
period;
    (7) Determine that the amounts included in management's 
explanations for such material differences were in accordance with the 
carrier's analysis of such fluctuations, and the amounts and 
explanations were traceable to supporting general ledger accounting 
records or analyses prepared by the carrier;
    (8) Determine that the amounts presented to the Department in Form 
330 (Final), pages 2-3, in appendix A to this part that the carrier 
identified as adjustments to the difference between the pre-September 
11 forecast and actual results for the period September 11 through 
December 31, 2001, were in accordance with the official accounting 
records of the carrier or the financial statements included in the 
carrier's Securities and Exchange Commission Form 10-Q, and consistent 
with GAAP, except to the extent that GAAP would require or allow 
treatment that would be inconsistent with the Act or this part;
    (9) Determine that the insurance recoveries and government payments 
reported by the air carrier and offsetting income were in accordance 
with the air carrier's general ledger accounting records;
    (10) Determine that the information presented in the air carrier's 
Supplemental Certification were in accordance with the air carrier's 
general ledger accounting records;
    (11) Include in the auditor's report full documentation for each 
exception taken by the auditor; and
    (12) Identify air carrier reports and records utilized in 
performing the procedures in paragraphs (c)(1) through (11) of this 
section.
    (d) If you are a carrier that reported fewer than 10 million ASMs 
for the month of August 2001 or fewer than two million RTMs for the 
quarter ending June 30, 2001, you are not required to report to the 
Department on the basis of an agreed-upon procedures engagement by an 
independent public accountant. Instead, you may report on the basis of 
simplified procedures approved by the Department.


Sec. 330.39  What are examples of types of losses that the Department 
does not allow?

    (a)(1) The Department generally does not allow air carriers to 
include in their calculations aircraft impairment charges, charges or 
expenses attributable to lease buyouts, or other losses that are not 
actually and fully realized in the period between September 11, 2001 
and December 31, 2001.
    (2) The Department will consider requests to accept adjustments for 
extraordinary or non-recurring expenses or revenues on a case-by-case 
basis. If, as a carrier, you make such a request, you must demonstrate 
the following to the satisfaction of the Department:
    (i) That the expense or revenue was (or was not, as appropriate) 
the direct result of the terrorist attacks of September 11, 2001;
    (ii) That the revenue or expense was reported in accordance with 
Generally Accepted Accounting Principles (GAAP), except to the extent 
that the GAAP would require or allow treatment that would be 
inconsistent with the Act or this part;
    (iii) That an expense was fully borne within the September 11--
December 31, 2001, period and is permanent; and

[[Page 54070]]

    (iv) That the resulting additional compensation would not be 
duplicative of other allowances for compensation.
    (b) The Department generally does not accept claims by air carriers 
that cost savings should be excluded from the calculation of incurred 
losses. Consequently, the Department will generally not allow such 
claims to be used in a way that has the effect of increasing the 
compensation for which an air carrier is eligible.

Subpart C--Set-Aside for Certain Carriers


Sec. 330.41  What funds is the Department setting aside for eligible 
classes of air carriers?

    The Department is setting aside a sum of up to $35 million to 
compensate eligible classes of air carriers, for which application of a 
distribution formula containing ASMs as a factor, as set forth in 
section 103(b)(2) of the Act, would inadequately reflect their share of 
direct and incremental losses.


Sec. 330.43  What classes of air carriers are eligible under the set-
aside?

    There are two classes of eligible air carriers:
    (a) You are a Class I air carrier if you are an air taxi, regional, 
commuter, or indirect air carrier and you reported 310,000 or fewer 
ASMs to the Department for the month of August 2001 (10,000 ASMs per 
day).
    (b) You are a Class II air carrier if you are an air taxi, 
regional, commuter, or indirect air carrier and you reported between 
310,001 and 10 million ASMs to the Department for the month of August 
2001.


Sec. 330.45  What is the basis on which air carriers will be 
compensated under the set-aside?

    (a) Except as provided in paragraph (c) of this section, as an air 
carrier eligible for compensation through the set-aside, you will be 
compensated for an amount calculated as provided in paragraph (b) of 
this section.
    (b)(1) As a Class I carrier, your compensation will be calculated 
using a fixed ASM rate equivalent to the mean losses per ASM for all 
Class I carriers applying for compensation.
    (2) As a Class II carrier, your compensation will be calculated 
using a graduated ASM rate equivalent to--
    (i) The mean loss per ASM for all Class I carriers applying for 
compensation, for each of the first 310,000 ASMs reported; and
    (ii) The mean remaining loss per ASM for all Class II carriers 
applying for compensation for each ASM in excess of 310,000.
    (3) For purposes of this paragraph (b), ASMs are those verified by 
the Department for August 2001.
    (4) Any compensation payments previously made to air carriers 
eligible for the set-aside will be deducted from the amount calculated 
as the carrier's total compensation under the set-aside formula.
    (c) If you are an air carrier whose compensation is calculated 
using an ASM rate as provided in paragraph (b) of this section, your 
compensation will not be less than an amount equivalent to 25 percent 
of the direct and incremental transportation-related losses you have 
demonstrated to the satisfaction of the Department were incurred as a 
direct result of the terrorist attacks of September 11, 2001. Your 
compensation will not be more than an amount equivalent to the mean 
percentage of compensation for losses received by passenger and 
combination air carriers that are not eligible for the set-aside funds, 
unless you would have been compensated for more than that percentage of 
losses under the formula set forth in section 103(b)(2) of the Act, in 
which case you will be compensated under that formula.

Appendix A to Part 330--Forms for All Carriers

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Appendix B to Part 330--[Reserved]

      

Appendix C to Part 330--Forms for Air Taxi Operators
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[FR Doc. 02-21226 Filed 8-16-02; 10:47 am]
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