[Federal Register Volume 71, Number 163 (Wednesday, August 23, 2006)]
[Rules and Regulations]
[Pages 49344-49347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13664]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 294

[OST Docket No. 2006-25691]
RIN 2105-AD58


Canadian Charter Air Taxi Operators

AGENCY: Department of Transportation (DOT); Office of the Secretary 
(OST).

ACTION: Final rule.

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SUMMARY: DOT is updating its rule concerning Canadian charter air taxis 
to make the rule consistent with the 1995 U.S.-Canada bilateral 
aviation agreement. When promulgated in 1981, the rule comported with 
the 1974 U.S.-Canada bilateral aviation agreement governing non-
scheduled air services. However, the rule has not been updated to 
reflect the more liberal 1995 bilateral. Consequently, the rule, in its 
current form, contains certain restrictions on Canadian charter air 
taxis that are contrary to the 1995 bilateral. This final rule 
eliminates or amends those provisions. It also makes several other

[[Page 49345]]

technical changes to the rule and adds a provision making it clear that 
Canadian charter air taxis are exempt from the statutory requirement of 
foreign air carriers to file family assistance plans.

DATES: Effective Date: This rule is effective on September 22, 2006.

FOR FURTHER INFORMATION CONTACT: Jonathan Dols, Supervisory Trial 
Attorney, Office of the Assistant General Counsel for Aviation 
Enforcement and Proceedings, Office of the General Counsel, U.S. 
Department of Transportation, 400 7th Street, SW., Room 4116, 
Washington, DC 20590; (202) 366-9342 (Voice) or (202) 366-7152 (Fax).

SUPPLEMENTARY INFORMATION: 

Background

    Part 294 of the Department's aviation economic regulations (14 CFR 
part 294) exempts foreign air carriers that have registered with the 
Department as ``Canadian charter air taxis'' from various provisions in 
Title 49 of the United States Code, including the requirement in 
sections 41301 and 41302 to obtain a foreign air carrier permit before 
engaging in foreign air transportation. In 1981, when the Civil 
Aeronautics Board \1\ (CAB) promulgated part 294, it intended to 
provide Canadian charter air taxis with a simplified and expedited 
economic licensing process. Central to the CAB's reasoning in 
establishing this special licensing status for Canadian charter air 
taxis was its opinion that ``we [the United States] have good aviation 
relations with our Canadian neighbors''--a description that is even 
more apt today.\2\
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    \1\ The Department assumed the CAB's jurisdiction over aviation 
economic matters when the CAB ``sunsetted'' on December 31, 1984. 
Civil Aeronautics Board Sunset Act of 1984, Public Law 98-443, 
October 4, 1984, and Airline Deregulation Act of 1978, Public Law 
95-504, October 24, 1978.
    \2\ Proposed Rule to Classify and Exempt Canadian Air Taxi 
Operators, 45 FR 80117, December 3, 1980.
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    On February 24, 1995, the United States and Canada greatly 
liberalized their commercial aviation relationship by signing the Air 
Transport Agreement Between the Government of the United States of 
America and the Government of Canada (hereinafter the ``Agreement'' or 
the ``1995 Bilateral''). Among other things, the Agreement granted 
American and Canadian air carriers, including Canadian charter air 
taxis, rights to conduct a wide array of operations not permitted under 
the countries' previous bilateral agreement governing non-scheduled air 
services, which had been in force since 1974 (hereinafter the ``1974 
Bilateral'').\3\ On November 10, 2005, Delegations from the United 
States and Canada initialed an ad referendum protocol to the Agreement 
that would further expand the traffic rights of the air carriers of 
both nations (hereinafter the ``Protocol'').\4\
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    \3\ Non-Scheduled Air Service Agreement Between the Government 
of the United States of America and the Government of Canada, signed 
at Ottawa on May 8, 1974; entered into force May 8, 1974, with 
exchange of notes.
    \4\ Protocol to the Air Transport Agreement Between the 
Governments of the United States of America and the Government of 
Canada, initialed ad referendum at Washington on November 10, 2005. 
The Protocol has not yet been signed by the two Governments. By its 
terms, it will not come into effect before September 1, 2006.
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    In 1981, at the time part 294 was promulgated, it comported with 
the 1974 Bilateral. However, part 294 has not been updated since then 
to reflect the more liberal aviation relationship between the U.S. and 
Canada that is set forth in the 1995 Bilateral. Consequently, although 
intended to facilitate the trans-border operations of Canadian charter 
air taxis, part 294 has ironically become, in some respects, an 
impediment to them. For example, the plain language of the following 
provisions of part 294 contradicts either the spirit or the language of 
the Agreement or the language as proposed by the Protocol:
    (1) Sections 294.81(b) and (b)(1) permit stopovers at points within 
the United States only on round-trip flights originating in Canada. The 
Agreement permits stopovers on one-way and round-trip flights 
originating in either country.\5\ Section 294.81(b)(2) requires that 
the same aircraft stay with its passengers throughout their journey. 
The Agreement contains no such restriction.
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    \5\ Annex III of the Agreement.
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    (2) Section 294.82 prohibits registrants from transporting persons 
or property whose journey includes a prior, intervening, or subsequent 
movement by air to or from a point not in the United States or Canada. 
However, the Agreement allows the transportation of persons and 
property by airlines designated by each party to carry international 
charter traffic of passengers and cargo between any point or points in 
the territory of the other party and any point or points in a third 
country or countries, provided such traffic is carried via the 
territory of the party that has designated the airline and makes a 
stopover in that territory for at least two consecutive nights.\6\ 
Moreover, the Protocol would further expand third-country traffic 
rights by removing the two-night stopover requirement, and, instead, 
merely require that the flight in question make a traffic stop in the 
airline's homeland.\7\ Accordingly, we are removing section 294.82, as 
described below, in order to make clear that the third-country traffic 
rights applicable to Canadian charter air taxis are coextensive with 
the rights of all Canadian airlines under the Agreement, or, when the 
Protocol becomes effective, the new rights under that Protocol.
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    \6\ Id.
    \7\ Annex III of the Agreement, as proposed to be amended by 
Article 7 of the Protocol initialed at Washington, November 10, 
2005.
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    (3) Section 294.88 prohibits certain trans-border operations to or 
from points west of Blind River, Ontario, and east of the Ontario-
Manitoba provincial line (the ``Northwest Ontario restriction''). The 
Agreement grants traffic rights to the carriers of both nations between 
any points or points in the United States and any point or points in 
Canada.\8\ The CAB included the Northwest Ontario restriction in part 
294 because the Canadian Air Transport Committee had imposed a similar 
restriction on the operations of U.S. air taxis.\9\ We are aware of no 
such restriction today on U.S. air taxis and, therefore, see no basis 
for the Northwest Ontario restriction to remain in part 294.
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    \8\ Annex III.
    \9\ Order 78-11-87, In the Matter of Charter Authority of 
Canadian Foreign Air Carriers, (CAB Docket 34051) (November 16, 
1978).
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    (4) Section 294.89 imposes an uplift ratio. The Agreement 
explicitly prohibits uplift ratios.\10\
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    \10\ Article 4 of the Agreement.
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    These differences between part 294 and the Agreement have created 
confusion in the aviation industry and imposed unnecessary costs on 
Canadian charter air taxis.\11\ Moreover, they undermine the original 
intent of part 294, which was to expedite the licensing process for 
Canadian charter air taxis. Under present circumstances, there is a 
strong incentive for Canadian charter air taxis to eschew the 
``expedited'' registration process of part 294 in favor of undertaking 
to meet the very requirements from which the CAB sought to relieve 
them, i.e., from having to obtain a foreign air carrier permit. In 
recognition of these issues, and because, as a general matter, the 
Department seeks to remove unnecessary regulatory burdens and to 
advance the United States-Canada air transport relationship,

[[Page 49346]]

the Department amends 14 CFR 294.81 and removes 14 CFR 294.82; 294.88; 
and 294.89.
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    \11\ The Department has anecdotal evidence of Canadian charter 
air taxi operators turning down business otherwise permitted under 
the Agreement for fear of violating part 294. Some carriers have 
incurred the added legal costs of applying to the Department for 
exemptions from certain of the contradictory provisions in part 294 
as a means of avoiding possible enforcement action for violating 
those provisions.
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    In addition, the Foreign Air Carrier Family Support Act of 1997 
(Pub. L. 105-148) (hereinafter ``FACFSA''), added to Title 49 of the 
United States Code section 41313, ``Plans to address needs of families 
of passengers involved in foreign air carrier accidents.'' Section 
41313 requires all foreign air carriers with authority to operate to or 
from the United States to develop and submit plans to the Department 
and the National Transportation Safety Board (NTSB) that address the 
needs of families of passengers involved in certain aircraft accidents.
    In 1998, the Department interpreted section 41313 as not applying 
to small aircraft operations and issued an order that exempted all 
foreign air carriers holding Departmental authority to conduct foreign 
air transportation using only small aircraft from the requirements of 
section 41313.\12\ Although this order was served on those Canadian 
charter air taxis that, at the time, were registered with the 
Department, the exemption was, through an administrative oversight, not 
subsequently codified in 14 CFR part 294. Therefore, the Department 
takes this opportunity to amend 14 CFR 294.10 (Exemption authority) to 
codify this order and, thereby, make it clear that Canadian charter air 
taxis are not required to submit family assistance plans to the 
Department or the NTSB.
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    \12\ Order 98-1-31, In the Matter of the Foreign Air Carrier 
Family Support Act of 1997 Exemption Under 49 U.S.C. Sec.  40109, 
(DOT Docket 98-3304) (January 29, 1998).
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    As a final matter, the Department hereby makes the following 
additional, non-substantive administrative changes to part 294:
    (1) Amend section 294.2(a) to reflect the current U.S.-Canada 
bilateral aviation agreement signed in 1995.
    (2) Amend sections 294.20, 294.20(b), 294.21(b), 294.22, and 294.40 
to reflect the change in organizational structure that occurred when 
the Special Authorities Division, which is the Departmental program 
office that administers part 294, was transferred from the Office of 
Aviation Analysis to the Office of International Aviation.
    (3) Amend sections 294.3(e), 294.21(g), 294.50(d) to clarify that 
air carrier authority granted by the Government of Canada is a 
condition of receiving and maintaining an effective registration under 
part 294.
    (4) Amend sections 294.21(e)(1) to make clear that the onus rests 
on the carrier, not the Department, to provide the Federal Aviation 
Administration with a copy of the carrier's approved OST Form 4505.
    (5) Amend sections 294.22 to make clear that a refiling may be made 
using electronic mail, as well as by other means, so long as it is 
received by the Department within 30 days of a change in a carrier's 
name or operations.
    (6) Amend sections 294.32 to identify the correct section in 14 CFR 
part 212 that covers the bonding and escrow requirements applicable to 
foreign air carriers.

Regulatory Analysis and Notices

    The Administrative Procedure Act (APA) (5 U.S.C. 553) generally 
requires public notice and an opportunity for public comment before 
issuance of a final rule. It, however, provides an exception when an 
agency finds that there is good cause for dispensing with such 
procedures because they are impracticable, unnecessary, or contrary to 
the public interest. We have determined that, under 5 U.S.C. 
553(b)(3)(B), it is unnecessary and contrary to the public interest to 
utilize the notice of proposed rulemaking and public comment procedures 
for this rule because it is a corrective action required to make the 
regulation consistent with an international agreement. The Department 
notes that, as a temporary measure, it has in the past granted carrier-
specific exemptions obviating any problems for the recipient that would 
have been caused by the discrepancies between part 294 and the 
Agreement.\13\ In addition, the rule codifies an existing Departmental 
order exempting Canadian charter air taxis from the statutory 
requirement of foreign air carriers to file family assistance plans. 
Thus, in effect, the revised regulations merely codify current 
Departmental practice. All other changes are purely administrative in 
nature.
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    \13\ See, e.g., Notice of Action Taken, London Air Services 
Limited, Exemption from 49 U.S.C. Sec.  41301 (DOT Docket 2003-
15123) (August 22, 2003).
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Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The Department has determined that the amendments to 14 CFR part 
294 in the final rule are not a significant regulatory action under 
Executive Order 12866 or under the Department's Regulatory Policies and 
Procedures. It has not been reviewed by the Office of Management and 
Budget. The amendments will impose no additional costs on the affected 
carriers. Rather, they will minimally reduce regulatory compliance 
costs by eliminating any need for Canadian charter air taxis to apply 
for an exemption to the outdated provisions of 14 CFR part 294 that are 
not in consonance with the Agreement. Because these amendments will 
have minimal economic impact on the covered carriers, no further 
regulatory evaluation is necessary.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
agency to assess the impact of regulation on small entities unless the 
agency determines that a rule is not expected to have a significant 
economic impact on a substantial number of small entities. The 
Department certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities. The 
amendments to 14 CFR part 294 will not change U.S. law regarding the 
trans-border operations of Canadian charter air taxis or the rights 
available to Canadian charter air taxis under the 1995 U.S.-Canada 
bilateral aviation agreement, nor will they add any regulatory 
requirements.

Executive Order 13132 (Federalism)

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13132. The Department has 
determined that this proposal will not have a substantial direct effect 
on the States, on the relationship between the national government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government, and therefore has no federalism 
implications.

Executive Order 13084

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this final rule 
will not significantly or uniquely affect the Indian tribal 
communities, and will not impose substantial direct compliance costs, 
the funding and consultation requirements of the Executive Order do not 
apply.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (the Act), 
enacted as Public Law 104-4 on March 22, 1995, requires each Federal 
agency, to the extent permitted by law, to prepare a written assessment 
of the effects of any Federal mandate in a proposed or final agency 
rule that may result in the expenditure by State, local, and tribal

[[Page 49347]]

governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year. This 
final rule does not contain any Federal mandate that would result in 
such expenditures. Therefore, the requirements of Title II of the Act 
do not apply.

Paperwork Reduction Act

    This final rule does not contain information collection 
requirements that require approval by the Office of Management and 
Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 2507 et 
seq.).

List of Subjects in 14 CFR Part 294

    Air taxis, Canada, Charter flights, Reporting and recordkeeping 
requirements.

0
For the reasons set forth in the preamble, the DOT amends 14 CFR part 
294 as follows:
0
1.-2. The authority for 14 CFR part 294 continues to read as follows:

    Authority: 49 U.S.C. Chapters 401 and 417.


0
3. Revise paragraph (a) of Sec.  294.2 to read as follows:


Sec.  294.2  Definitions.

* * * * *
    (a) Agreement means the Air Transport Agreement Between the 
Government of the United States and the Government of Canada, signed at 
Ottawa, February 24, 1995, with Annexes and any amendments, 
supplements, reservations, or supersessions to it.
* * * * *

0
4. Revise paragraph (e) of Sec.  294.3 to read as follows:


Sec.  294.3  General requirements for Canadian charter air taxi 
operators.

* * * * *
    (e) Has effective authority from the Government of Canada to 
conduct charter air service between the United States and Canada.
* * * * *

0
5. Add paragraph (d) to Sec.  294.10 so that it reads as follows:


Sec.  294.10  Exemption authority.

* * * * *
    (d) Section 41313 (aviation disaster family assistance plans for 
foreign air carriers)


Sec.  294.20  [Amended]

0
6. Amend Sec.  294.20 introductory text and paragraph (b) by removing 
the words ``Office of Aviation Analysis'' and adding in their place the 
words ``Office of International Aviation.''

0
7. In Sec.  294.21, revise paragraph (b), paragraph (e)(1), and 
paragraph (g) to read as follows:


Sec.  294.21  Procedure on receipt of registration form.

* * * * *
    (b) Any person objecting to the registration of a Canadian charter 
air taxi operator shall file an objection with the Office of 
International Aviation, Special Authorities Division, and serve a copy 
on the applicant within 28 days after the Department receives the 
properly completed registration application. Objections shall include 
any facts and arguments upon which they are based.
* * * * *
    (e) * * *
    (1) Issue the registration by stamping its effective date on OST 
Form 4505 and sending a copy of it to the carrier.
* * * * *
    (g) A registration shall not be issued until the Department 
receives evidence that the applicant has effective authority issued by 
the Government of Canada. The applicant must provide copies of its Air 
Carrier Operating certificate and non-scheduled international license 
issued by the Government of Canada.
* * * * *

0
8. In Sec.  294.22, revise the introductory text and paragraph (a)(1) 
to read as follows:


Sec.  294.22  Notification to the Department of change in operations or 
identifying information.

    Registrants shall refile a copy of OST Form 4505 with the 
Department's Office of International Aviation, Special Authorities 
Division, upon any of the following events. The refiling shall be sent 
by electronic mail, or other means, so as to be received by the 
Department not later than 30 days after the reported event has 
occurred.
    (a) * * *
    (1) A registration ceases to be in effect unless the Government of 
Canada amends the registrant's Air Carrier Operating Certificate to 
reflect the registrant's new name within 60 days of the name change and 
the registrant submits to the Department a copy of its amended Canadian 
authority.
* * * * *

0
9. Revise paragraph (a) of Sec.  294.32 to read as follows:


Sec.  294.32  Security arrangements for operating Public Charters.

* * * * *
    (a) The Canadian charter air taxi operator shall meet the bonding 
or escrow requirements applicable to foreign air carriers as set forth 
in Sec.  212.8 of this chapter.
* * * * *


Sec.  294.40  [Amended]

0
10. Remove the words ``Office of Aviation Analysis'' in Sec.  294.40 
and add in their place the words ``Office of International Aviation.''

0
11. Revise paragraph (d) of Sec.  294.50 to read as follows:


Sec.  294.50  Cancellation, revocation, or suspension of registration.

* * * * *
    (d) The Government of Canada terminates or suspends authority it 
granted to the registrant to conduct charter air service between the 
United States and Canada.
* * * * *
0
12. Revise paragraph (a) of Sec.  294.60 to read as follows:


Sec.  294.60  Applications for authorization to conduct individual 
operations or programs not otherwise permitted by this part.

    (a) Where the terms, conditions, or limitations of this part, 
particularly Sec.  294.81, require prior approval of individual flights 
or charter programs, the registrant shall apply for such approval by 
filing three copies of OST Form 4540 with the Office of International 
Aviation, Foreign Air Carrier Licensing Division. OST Form 4540 may be 
obtained from the Foreign Air Carrier Licensing Division.
* * * * *


Sec.  294.81  [Amended]

0
13. Amend Sec.  294.81 by revising paragraph (b) to read as follows:


Sec.  294.81  Local traffic prohibited.

* * * * *
    (b) A registrant may grant stopover privileges at any point or 
points in the United States to passengers and their accompanied baggage 
as part of a single continuous operation to or from Canada.


Sec.  294.82  [Remove]

0
14. Remove section 294.82.


Sec.  294.88  [Remove]

0
15. Remove section 294.88.


Sec.  294.89  [Remove]

0
16. Remove section 294.89.

    Issued this 14th day of August, 2006, at Washington, DC, under 
authority delegated in 49 CFR 1.56a.
Susan McDermott,
Deputy Assistant Secretary of Transportation for Aviation and 
International Affairs.
 [FR Doc. E6-13664 Filed 8-22-06; 8:45 am]
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