[Federal Register Volume 67, Number 239 (Thursday, December 12, 2002)]
[Proposed Rules]
[Pages 76327-76329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31338]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 23

[Docket No. OST-2002-13977; Notice No. 1]
RIN 2105-AD21


Participation by Disadvantaged Business Enterprises in Airport 
Concessions

AGENCY: Office of the Secretary, DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: Currently, the size standard for most types of businesses 
seeking to participate as disadvantaged business enterprises (DBEs) in 
airport concessions is $30 million in annual gross receipts. This NPRM 
seeks comment on a suggestion that the Department has received to 
adjust this size standard to take into account the varying amounts of 
concession fees that different types of businesses typically pay to 
airports.

DATES: Comments should be received by January 27, 2003. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: Comments should be sent to Docket Clerk, Attn: Docket No. 
OST-2002-13977, Department of Transportation, 400 7th Street, SW., Room 
PL401, Washington DC, 20590. Persons wishing their comments to be 
acknowledged should enclose a stamped, self-addressed postcard with 
their comments. The docket clerk will date stamp the postcard and 
return it to the sender. Comments may be reviewed at the above address 
from 9 a.m. through 5:30 p.m. Monday through Friday. Commenters may 
also submit their comments electronically. Instructions for electronic 
submission may be found at the following web address: http://dms.dot.gov/submit/. The public may also review docketed comments 
electronically. The following web address provides instructions and 
access to the DOT electronic docket: http://dms.dot.gov/search/.

FOR FURTHER INFORMATION CONTACT: Robert C. Ashby, Deputy Assistant 
General Counsel for Regulation and Enforcement, Department of 
Transportation, 400 7th Street, SW., Room 10424, Washington, DC 20590, 
phone numbers (202) 366-9310 (voice), (202) 366-9313 (fax), (202) 755-
7687 (TDD), [email protected] (e-mail).

SUPPLEMENTARY INFORMATION: The small business size standard for 
businesses seeking to participate as DBE airport concessionaires is 
generally $30 million in annual gross receipts, averaged over three 
years ($40 million for car rental companies).\1\ The Department has 
received correspondence from an airport advertising firm and its legal 
representative requesting a change in this size standard. The 
Department is treating this correspondence as a petition for rulemaking 
under 49 CFR Sec.  5.11. We are granting the petition by presenting for 
public comment a proposal based on the petitioners' submissions.
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    \1\ There are also two size standards that are not based on 
gross receipts at all: banks ($100 million in total assets), and pay 
telephone providers (1500 employees). This NPRM does not propose or 
seek comments on these two size standards.
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    The case petitioners make for adjusting the size standard is 
essentially that different types of concession businesses typically pay 
widely different concession fees to airports. For example, according to 
data selected from a 2000-2001 survey by the American Association of 
Airport Executives (AAAE) of charges made by large U.S. airports, food 
and beverage concessionaires paid an average of 15.2 percent of their 
gross revenues in fees, compared to 20.4 percent for retail stores, 10 
percent for on-airport car rental companies, 7.6 percent for off-
airport car rental companies, and 56.3 percent for airport advertising 
companies.
    As a result, the submission suggests, airport advertisers are 
hampered in their ability to grow, or to retain DBE status, compared to 
other types of businesses. That is, applying the $30 million size 
standard across the board results in an airport advertiser that wants 
to retain DBE status being confined to considerably lower revenues, net 
of airport concession fees, than a restaurant or retail store. This 
disparity raises some concerns about the equity of an across-the-board 
gross receipts-based standard.
    Another way of stating the issue is that the submission from the 
advertising firm and its legal representative raises the question about 
whether a gross receipts-based size standard is a fair approach to 
determining a size standard for concessionaires at all. Arguably, it 
might be fairer to base all size standards in the concessions area on 
receipts net of airport concession fees paid to airports.
    The Department has authority to set its own DBE size standards in 
the airport concessions area. In this respect, the concessions DBE 
program differs from the DBE program for Federally-assisted 
contracting, which by statute is tied to the Small Business 
Administration's gross receipts-based standards. All airport 
concessionaires pay some variety of lease or concession fee to 
airports, which suggests that it could be reasonable to establish a 
size standard that takes the variation in these fees into account.
    Consequently, the Department is seeking comment on a proposal to 
change the basis for its concessionaire size standards. Under this 
proposal, the Department would establish a baseline that would be the 
same for all types of concession businesses. The size standard would 
then be set at a level of gross receipts that would permit each type of 
concession to retain that baseline amount, after lease or concession 
fees typical for its type of business had been deducted.
    For example, suppose the baseline amount were $30 million ($40 
million in the case of car rental companies), paralleling the current 
gross receipts size standards. To retain $30 million or $40 million, as 
applicable, after deducting average concession fees, certain types of 
concession businesses would have to have the following gross receipt 
size standards:

[[Page 76328]]



------------------------------------------------------------------------
                                           Average % of
                Option 1                   receipts in    Gross receipts
                                               fees       size  standard
------------------------------------------------------------------------
Food and Beverage......................             15.2     $35,377,358
Retail Stores..........................             20.4      37,688,442
Car Rental (on-airport)................             10        44,444,444
Car rental (off-airport)...............              7.6      43,290,043
Advertising............................             56.3      68,649,885
------------------------------------------------------------------------

    Using $30 or $40 million as the baseline amount has the effect of 
increasing the size standards in all categories. The Department seeks 
comment on whether doing so is advisable.
    A second way of establishing the baseline, based in part on ideas 
in the petitioners' submissions, would use the average percentage of 
receipts paid by all categories of concessions to reduce the baseline 
amount. The average percentage of gross receipts paid to airports as 
concession fees across the five business categories fees is 21.9 
percent. If we reduced the existing baselines by 21.9 percent, the 
baseline figure would be $232.43 million for most concessions and 
$31.24 million for car rental companies. An average type of concession 
business with gross receipts of $30 million or $40 million, 
respectively, would retain this amount after concession fees were 
deducted.
    We would then calculate the amount of gross receipts each type of 
business would need in order to retain $23.43 million or $31.24 million 
after paying the concession fees typical for its category. The 
following table displays the adjusted size standards that result from 
this calculation:

------------------------------------------------------------------------
                                           Average % of
                Option 2                   receipts  in   Gross receipts
                                               fees        size standard
------------------------------------------------------------------------
Food and Beverage......................             15.2     $27,629,716
Retail Stores..........................             20.4      29,434,673
Car Rental (on-airport)................             10        34,911,111
Car rental (off-airport)...............              7.6      41,105,263
Advertising............................             56.3      53,615,560
------------------------------------------------------------------------

    This approach, while equalizing the position of the five categories 
of businesses with respect to receipts net of concession fees, reduces 
the size standards in three of the five categories. The Department 
seeks comment on whether, if this approach is taken, there should be a 
``grandfather'' provision that would result in no reduction in the 
actual size standard for any business category (e.g., the standard for 
food and beverage and retail concessions would remain at $30 million).
    Of the types of concessions currently listed in Appendix A to Part 
23, four appear to fit in the food and beverage category and nine in 
the retail store category. Advertising and car rental companies each 
have their own category. Thirteen appear to fit into a category that 
might be called ``services'' (e.g., insurance, shoe shine and barber/
beauty shops, parking, hotels, vending machines). The data from the 
AAAE survey provided by the petitioner do not appear to include data on 
businesses of this type, and the Department seeks information, from 
AAAE or other sources, about the concession fees that these types of 
concessions typically pay. The Department also seeks information on the 
number of airports that have advertising concessions and the relative 
sizes of these concessionaires.
    While the Department is willing to consider changing its DBE 
concession size standards, the Department has not yet decided whether 
to proceed with a final rule along these lines. The Department seeks 
comment on whether we should alter the size standards and, if so, 
whether the data and reasoning underlying the proposal are sound. The 
Department also seeks comments suggesting other alternatives.
    We would also point out that the Department is working to finalize 
a pending Supplemental Notice of Proposed Rulemaking (SNPRM) to revise 
the entire DOT regulation (49 CFR part 23) concerning the airport 
concessions DBE program (65 FR 54454, September 8, 2000). In the 
context of considering this SNPRM and comments to it, the Department is 
reviewing the issue of whether a company in the business of placing 
advertising in an airport terminal on behalf of others, without offices 
on the airport, should be considered a concession for purposes of the 
DBE program. The decision on this issue will be made as part of the 
final rule resulting from the SNPRM. In seeking comments on the size 
standards issue in today's notice, the Department is not presupposing 
an answer to the question of whether advertising businesses of this 
kind ultimately will be included in the DBE concessions program. The 
Department anticipates responding to comments on today's NPRM in the 
final rule document for overall revision to part 23.

Regulatory Analyses and Notices

Executive Order 12866

    This rule is not a significant rule under Executive Order 12866. 
Nor is it significant under the Department's Rulemaking Policies and 
Procedures, because it proposes relatively modest adjustments to the 
size standards for firms participating in an existing program.

Regulatory Flexibility Act

    The DBE program is aimed at improving contracting opportunities for 
small businesses owned and controlled by socially and economically 
disadvantaged individuals in airport concessions. Virtually all the 
businesses it affects are small entities. There is no doubt that a DBE 
rule always affects a substantial number of small entities.
    Nevertheless, the Department certifies that, if adopted, this 
proposed rule would not have a significant economic effect on a 
substantial number of these entities. By making the size standards for 
concessionaires more equitable, from the perspective of receipts net of

[[Page 76329]]

concession fees, it is intended to make eligibility standards fairer. 
To the extent that it increases or decreases size standards for certain 
firms, it may affect the potential eligibility of certain individual 
firms. However, we do not believe that these changes will affect a 
large number of firms or overall DBE participation in airport 
concessions.

Paperwork Reduction Act

    This NPRM does not contain information collection requirements 
subject to the Paperwork Reduction Act.

Federalism

    The rule does not have sufficient Federalism impacts to warrant the 
preparation of a Federalism assessment. While the rule concerns the 
activities of state and local governments in DOT financial assistance 
programs, the rule does not significantly alter the role of state and 
local governments vis-a-vis DOT from the present part 23.

List of Subjects in 49 CFR Part 23

    Administrative practice and procedure, Airports, Civil rights, 
Concessions, Government Contracts, Grant programs--transportation, 
Minority business, Reporting and recordkeeping requirements.

    Issued this 26th day of November 2002, at Washington, DC.
Norman Y. Mineta,
Secretary of Transportation.
[FR Doc. 02-31338 Filed 12-11-02; 8:45 am]
BILLING CODE 4910-62-M