[Federal Register Volume 73, Number 75 (Thursday, April 17, 2008)]
[Proposed Rules]
[Pages 20846-20868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-8308]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 93

[Docket No. FAA-2006-25709; Notice No. 08-04]
RIN 2120-AI70


Congestion Management Rule for LaGuardia Airport

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Supplemental notice of proposed rulemaking (SNPRM).

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SUMMARY: On August 29, 2006, the Federal Aviation Administration 
published a notice of proposed rulemaking to address congestion at New 
York's LaGuardia Airport (LaGuardia), which included a proposal to 
administratively incentivize carriers to use larger planes. The FAA 
prefers to use measures that allow carriers to respond to market forces 
to drive the most efficient airline behavior and is amending its 
original proposal. To minimize disruption, the FAA proposes to 
grandfather the majority of operations at the airport and develop a 
robust secondary market by annually auctioning off a limited number of 
slots. The FAA is proposing two different, mutually exclusive options. 
Under the first option, the FAA would auction off and retire a portion 
of the slots and would use the proceeds to mitigate congestion and 
delay in the New York City area. Under the second option, the FAA would 
conduct an auction as it would under the first option, but the proceeds 
would go to the carrier holding the slot rather than the FAA and no 
portion of existing slots would be retired. This proposal also contains 
provisions for use-or-lose, unscheduled operations, and withdrawal for 
operational need. The FAA proposes to sunset the rule in ten years.

DATES: Send your comments on or before June 16, 2008.

ADDRESSES: You may send comments identified by Docket Number FAA-2006-
25709 using any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for sending your 
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S. 
Department of Transportation, 1200 New Jersey Avenue, SE., Room W12-
140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Bring comments to Docket 
Operations in Room W12-140 of the West Building Ground Floor at 1200 
New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at 202-493-2251.
For more information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to 
http://www.regulations.gov, including any personal information you 
provide. Using the search function of our docket Web site, anyone can 
find and read the electronic form of all comments received into any of 
our dockets, including the name of the individual sending the comment 
(or signing the comment for an association, business, labor union, 
etc.). You may review Department of Transportation's complete Privacy 
Act Statement in the Federal Register published on April 11, 2000 (65 
FR 19477-78) or you may visit http://DocketsInfo.dot.gov.
    Docket: To read background documents or comments received, go to 
http://www.regulations.gov at any time and follow the online 
instructions for accessing the docket. Or, go to the Docket Operations 
in Room W12-140 of the West Building Ground Floor at 1200 New Jersey 
Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For technical questions regarding this 
rulemaking, contact: Molly W. Smith, Office of Aviation Policy and 
Plans, APO-001, Federal Aviation Administration, 800 Independence 
Avenue, SW., Washington, DC 20591; telephone (202) 267-3275; e-mail 
[email protected]. For legal questions concerning this rulemaking, 
contact: Rebecca MacPherson, FAA Office of the Chief Counsel, 800 
Independence Ave., SW., Washington, DC 20591; telephone (202) 267-3073; 
e-mail [email protected].

SUPPLEMENTARY INFORMATION: Later in this preamble under the Additional 
Information section, we discuss how you can comment on this proposal 
and how we will handle your comments. Included in this discussion is 
related information about the docket, privacy, and the handling of 
proprietary or confidential business information. We also discuss how 
you can get a copy of this proposal and related rulemaking documents.

Authority for This Rulemaking

    The FAA has broad authority under 49 U.S.C. 40103 to regulate the 
use of the navigable airspace of the United States. This section 
authorizes the FAA to develop plans and policy for the use of navigable 
airspace and to assign the use that the FAA deems necessary for its 
safe and efficient utilization. It further directs the FAA to prescribe 
air traffic rules and regulations governing the efficient utilization 
of the navigable airspace.

Table of Contents

I. Background
    A. History of Congestion Management Initiatives at LaGuardia
    B. Summary of the SNPRM
II. Discussion of the NPRM
    A. Withdrawal of Upgauging Proposal
    B. Perimeter Rule
    C. Finite Operating Lives
III. Proposal To Allocate Limited Capacity at LaGuardia Efficiently
    A. Need for a Cap on Operations
    B. Sunset Provision
    C. Need for More Efficient Allocation
    D. Authority To Allocate Slots at LaGuardia
    1. Authority To Determine the Best Use of the Airspace
    2. Authority To Enter Into Leases and Cooperative Agreements
    3. The FAA's Proposed Actions Do Not Constitute a Taking in 
Violation of the Fifth Amendment
    E. Allocation of Slots
    1. Categories of Slots
    2. Initial Allocation of Capacity
    3. Market-Based Reallocation of Capacity
    4. New and Returned Capacity
    F. Auction Procedures
    G. Secondary Trading
IV. Unscheduled Operations
V. Other Issues
    A. 30-Minute Allocations
    B. Limit on Arrivals and Departures
    C. Use-or-Lose
VI. Regulatory Notices and Analyses
VII. Draft Regulatory Text

I. Background

A. History of Congestion Management Initiatives at LaGuardia

    The FAA managed congestion at LaGuardia under the High Density Rule 
(HDR) from 1969 through 2006. 14 CFR part 93 subparts K and S. The FAA 
first established allocation procedures for slots under the HDR in 
1985. 50 FR 52195, December 20, 1985. These procedures included use-or-
lose provisions and, while explicitly stating

[[Page 20847]]

that the slots were not the carriers' property, allowed carriers to 
buy, sell or lease the slots on the secondary market. On April 5, 2000, 
Congress enacted the Wendell H. Ford Aviation and Investment Reform Act 
of the 21st Century (AIR-21 or the Act). The Act phased out the HDR at 
LaGuardia effective January 1, 2007. In addition to phasing out the 
HDR, AIR-21 directed the Secretary of Transportation to grant 
exemptions from the HDR's flight restrictions for flights operated by 
new entrant carriers or flights serving Small-Hub and Non-Hub airports 
as long as the aircraft had less than 71 seats. The Act also preserved 
the FAA's authority to impose flight restrictions by stating that 
``[n]othing in this section * * * shall be construed * * * as affecting 
the Federal Aviation Administration's authority for safety and the 
movement of air traffic.'' 49 U.S.C. 41715(b).
    The slot exemptions mandated by Congress under AIR-21 resulted in 
gridlock at the airport as the number of exempted operations soared 
throughout 2000. Using its authority in 49 U.S.C. 40103, the FAA capped 
AIR-21 slot exemptions and hourly operations at LaGuardia. On December 
4, 2000, the agency conducted a lottery that allocated the limited 
number of exemptions. While hourly operations were limited at the 
airport, the new cap at LaGuardia was significantly higher than it had 
been under the HDR prior to enactment of AIR-21.
    Slots allocated under the HDR were scheduled to expire on January 
1, 2007. Based on its experience in 2000, the FAA determined that 
simply lifting the HDR at LaGuardia would have a significantly adverse 
impact on the airspace around New York City and potentially on the 
National Airspace System (NAS) as a whole. Accordingly, on August 29, 
2006, the FAA published a notice of proposed rulemaking (NPRM) 
proposing continuation of the cap on hourly operations at the airport 
as well as a new method of allocating capacity (71 FR 51360). 
Specifically, the FAA proposed to cap scheduled operations at 75 per 
hour; cap unscheduled operations at six per hour; impose an average 
minimum aircraft size requirement for much of the fleet serving the 
airport; and implement a limit on the duration of operating lives, 
known as Operating Authorizations, that would assure ten percent of the 
capacity at the airport would be available annually for reallocation 
based on an undetermined market mechanism. The average minimum aircraft 
size proposal was known as the aircraft upgauging proposal. This 
proposal was designed to maximize airport throughput consistent with 
the airport's physical constraints. The comment period closed December 
29, 2006.
    The FAA recognized that it would be unable to complete its 
rulemaking by January 1, 2007, when the HDR was scheduled to expire. On 
December 27, 2006 the agency published an FAA Order Operating 
Limitations at New York LaGuardia Airport (LaGuardia Order) (71FR 
77854).\1\ The LaGuardia Order retained the existing cap at the airport 
of 75 scheduled operations and imposed a reservation system for 
unscheduled operations that permitted six unscheduled operations per 
hour. The LaGuardia Order did not retain the conditions imposed by 
Congress on the AIR-21 exemptions; rather, flights conducted pursuant 
to the exemptions were rolled into the hourly cap without restriction.
    The industry response to the new allocation method proposed in the 
NPRM was universally negative, although very few commenters argued that 
a cap on operations at the airport was unnecessary. The FAA received 
comments from 61 different commenters, with some commenters making 
multiple submissions. The largest group of commenters consisted of 
Federal, state and local government representatives and community 
groups who were concerned the FAA's proposal, if adopted, would result 
in specific communities losing direct service to and from LaGuardia. 
Fifteen carriers and four of their associations commented on the 
proposal, as did two airport associations, three other associations, 
the airport's proprietor the Port Authority of New York and New Jersey 
(Port Authority), the Canadian Embassy and nine individuals speaking in 
their private capacity.
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    \1\ The LaGuardia Order was amended on November 8, 2007 (72 FR 
63224).
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    In general, the carriers and their associations criticized any 
attempt by the FAA to regulate beyond the simple imposition of a cap on 
operations, arguing the proposal was too complicated, would not meet 
the agency's stated objectives, and would prove disruptive to the 
airport as a whole. Other commenters questioned the FAA's attempt to 
impose a market-based solution to fair allocation--not because they 
deemed the measures unduly oppressive, but because they believed 
market-based measures could not be implemented in a manner that 
adequately protected the interests of all affected parties. The 
American Association of Airport Executives (AAAE) expressed this 
sentiment most succinctly when it stated that while market-based 
solutions are generally preferable (since they are more predictable 
than administrative solutions), they are not preferable when their 
outcomes are likely to conflict with public policy goals or when 
artificial constraints are imposed.
    While operations at LaGuardia remained capped throughout 2007, caps 
were lifted on afternoon operations at John F. Kennedy International 
Airport (JFK) on January 1, 2007, when the HDR expired at that airport. 
Operations at JFK had already begun to increase during the morning 
hours, but the increase in operations in the afternoon hours soon led 
to system overload. Nationally, the summer of 2007 was the second worst 
on record for flight delays. On September 27, 2007, the Secretary of 
Transportation announced the formation of the New York Aviation 
Rulemaking Committee (ARC) to help the Department of Transportation 
(Department) and the FAA explore available options for congestion 
management and how changes to current policy at all three major 
commercial New York City airports would affect the airlines and the 
airports.
    By design, the ARC provided ample opportunity for extensive input 
by all stakeholders, having members from every major air carrier in the 
United States as well as foreign carriers and the Port Authority. 
Through the ARC process, these stakeholders played a key role in 
exploring ideas to address congestion and ensuring that any actions 
contemplated by the Department and the FAA would be fully informed. The 
ARC worked throughout the fall and submitted a report to the Secretary, 
dated December 13, 2007, discussing its findings. A copy of the ARC 
Report may be found at http://www.dot.gov/affairs/FinalARCReport.pdf.

B. Summary of the SNPRM

    Today's proposal considers not only the concerns raised by 
commenters in response to the NPRM, but also takes into account the 
extensive discussions and issues raised by the members of the ARC. In 
response to the concerns and issues raised, the FAA has decided to 
withdraw both its upgauging proposal and its proposal to have Operating 
Authorizations that would have expired on a rolling ten-year cycle. In 
deference to the universal use of the term ``slots,'' the FAA has also 
decided to return to the use of that term rather than calling the 
operational authority to conduct scheduled operations at LaGuardia

[[Page 20848]]

Operating Authorizations.\2\ Accordingly, for purposes of this 
rulemaking, a slot is defined as the operational authority assigned by 
the FAA to a carrier to conduct one scheduled arrival or departure 
operation at LaGuardia on a particular day of the week during a 
specific 30-minute period.
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    \2\ When discussing comments to the NPRM, the FAA will use the 
term ``Operating Authorization'' since that was the term used in the 
NPRM. In discussing today's proposal, the agency will use the term 
``slots''.
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    Rather than pursue its earlier proposal for allocating capacity, 
the FAA today proposes to lease the majority of operations at the 
airport to the historic operators for non-monetary consideration under 
its cooperative agreement authority. The agency also proposes to 
develop a robust market by annually auctioning off leases for a limited 
number of slots during the first five years of the rule. The FAA plans 
to evaluate the effects of the slot program proposed today on the 
distribution of slots and entry into LaGuardia on an ongoing basis. The 
agency intends to take this experience into account in all congestion 
management activities.
    The FAA is proposing two different, mutually exclusive options. 
Under the first option, the FAA would auction off or retire a portion 
of the slots and would use the proceeds to mitigate congestion and 
delay in the New York City area. Under the second option, the FAA would 
conduct an auction as it would under the first option, but no slots 
would be retired and the proceeds would go to the carrier holding the 
slot after the FAA recoups the cost of the auction, rather than the 
FAA. In order to facilitate understanding of how each option would work 
within the entire regulatory scheme, the complete regulatory text for 
each option is set out in the ``Draft Regulatory Text'' section of this 
document.
    Today's proposal also contains provisions for use-or-lose, 
unscheduled operations, and withdrawal for operational need. The FAA 
proposes to sunset the rule in ten years.
    The following table briefly summarizes today's proposal and 
identifies differences between the two options.

          Options 1 and 2 of Proposed Regulation for LaGuardia
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            Feature                    Option 1             Option 2
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Base Schedule.................  Week 2 January 2007...  Same.
Slot..........................  Defined as right to     Same.
                                 land or depart (not
                                 both) in a 30-minute
                                 time window.
Number of Slots...............  75/hour + 3             75/hour + 3
                                 unscheduled less 2%     unscheduled.
                                 retired and not
                                 redistributed.
Slot Definitions..............  Common Slots: The       Common Slots:
                                 Baseline (up to 20      The Baseline
                                 slots per carrier)      (up to 20 slots
                                 plus 90% of slots       per carrier)
                                 above 20 have 10 year   plus 80% of
                                 leases; Limited         slots above 20
                                 Slots: 8% above the     would have 10
                                 Baseline would have     year leases;
                                 shorter leases and be   Limited Slots
                                 auctioned over five     20% would have
                                 years (1.6% each)       shorter leases
                                 (after which they       and then be
                                 convert to              reallocated via
                                 Unrestricted Slots);    auction over
                                 and 2% would have       five years (4%/
                                 shorter leases & then   yr).
                                 be retired over 5
                                 years (0.4%/yr).
Slot Time of Day..............  6 a.m. through 9:59     Same.
                                 p.m., Monday through
                                 Friday and Sunday
                                 from 12 noon through
                                 9:59 p.m.; no more
                                 than 75 in any one
                                 hour or 38 in any
                                 half-hour.
Mechanics.....................  ``Fair'' initial        Same.
                                 distribution with
                                 half of slots with
                                 less than 10 years
                                 life selected by
                                 carriers; the other
                                 half selected by FAA
                                 according to
                                 specified rules.
Auction.......................  For slots returned to   Same.
                                 FAA because life has
                                 expired, an ascending
                                 clock auction among
                                 air carriers.
Auction Proceeds..............  Auction funds to FAA    Auction funds
                                 to defray costs of      (net of auction
                                 auction, then to NY     costs) to
                                 capacity/projects.      incumbent
                                                         holder;
                                                         incumbent
                                                         cannot bid on
                                                         own slots.
Use/Lose......................  Only on grandfathered   Same.
                                 slots as
                                 consideration for
                                 slots.
Term..........................  Program is through      Same.
                                 March 2019; slot
                                 lives are whatever
                                 proportion of 10
                                 years remain upon
                                 reallocation.
Bidders.......................  Airlines..............  Same.
Holders.......................  Holders of record (not  Same.
                                 marketing carrier).
New or returned capacity......  Auctioned.............  Same.
Secondary market..............  Transparent not blind:  Same.
                                 carrier notifies FAA
                                 of intent to sell;
                                 FAA makes slot
                                 availability known;
                                 bilateral
                                 negotiations; final
                                 terms disclosed to
                                 OST for monitoring.
Logistical swaps of slots.....  Permitted.............  Same.
------------------------------------------------------------------------

II. Discussion of the NPRM

A.Withdrawal of Upgauging Proposal

     In the NPRM, the FAA proposed a requirement that incentivized 
carriers to upgauge the size of their aircraft based on an average 
number of seats. The FAA maintained that increasing the overall number 
of passengers using the airport would constitute a more efficient use 
of the NAS. In particular, the proposal was based on the FAA's belief 
that some of the inefficiencies at LaGuardia are related to the use of 
smaller aircraft in arguably saturated markets.
    Under the NPRM's proposal, if a carrier failed to meet the 
airport's average aircraft size requirement, it would lose its least 
productive Operating Authorizations. Each carrier would have been 
allowed to maintain a baseline of operations of 10 daily operations 
without consideration of aircraft size, so as to minimize disruption. 
Recognizing the importance of service to LaGuardia to and from 
relatively small communities, the proposal also included special 
treatment for small communities, which would have permitted carriers 
serving those communities to continue service on smaller aircraft 
without the risk of losing an Operating Authorization. The

[[Page 20849]]

FAA has decided against moving forward with a proposal requiring 
upgauging at this time.
    Several carriers and their associations alleged the FAA's upgauging 
proposal would be overly disruptive. Among the concerns cited were that 
the withdrawal of any one Operating Authorization would effectively 
mean the loss of a second one as well; the proposed one year effective 
date to upgauge was unduly restrictive and did not give carriers 
sufficient opportunity to change their fleet mix; and the proposal 
failed to acknowledge existing lease agreements with the Port 
Authority. United Airlines (United) and the Republic Group questioned 
how increasing aircraft size would actually lead to greater throughput, 
since carriers are presumably already using aircraft suitable for the 
markets they serve. Along with American Airlines (American), these 
commenters stated that the upgauging proposal was predicated on the 
premise that ground facilities are inadequately utilized, and that the 
inadequate utilization is a function of small and medium aircraft being 
overused. Not only did the FAA provide no data to support its position, 
they asserted, but in fact the relatively low load factors at LaGuardia 
indicate that the proper size aircraft are being used.
    In addition, the Port Authority and The City of New York noted that 
gates at LaGuardia are not interchangeable and that many gates (and 
taxiways) at the airport cannot accommodate larger aircraft. Thus, the 
proposal would not work because of a fundamental mismatch between the 
proposal and the management of landside infrastructure. US Airways 
suggested that if the FAA was committed to upgauging, it could require 
an increase in the number of available seats, but in a gradual, phased-
in manner that is economically sustainable.
    Some carriers also opined that the proposal was overly disruptive 
in that the proposed baseline of operations that would be exempt from 
the upgauging requirements was too small. While carriers with a smaller 
presence at the airport like JetBlue Airways (JetBlue) favored an 
increase in the number of protected operations (e.g., 20 daily 
operations), US Airways favored a carrier being able to protect at 
least 11 percent of its fleet, with smaller carriers being able to 
protect 10 operations.
    Notwithstanding the contemplated carve-out for small community 
service, United, and to some extent the Regional Airline Association 
(RAA), argued that requiring upgauging may force a carrier to 
discontinue service from smaller communities because the market in that 
community may only support a smaller aircraft. US Airways noted that 
these operations can be profitable and are unlikely to be discontinued 
completely; the carrier also asserted that the proposal would likely 
have the most adverse impact on medium-sized airports that benefit from 
multiple daily frequencies on smaller aircraft. Concern over the 
potential loss of small community service was echoed by the Federal, 
state and local representatives who wrote to the FAA expressing concern 
that service to specific communities could be lost.
    Finally, United argued that the upgauging proposal was not 
rationally related to Congressional authorization in 49 U.S.C. 
40103(b), because increasing passenger throughput has nothing to do 
with assigning the use of the airspace or prescribing air traffic 
regulations. Rather, according to United, the proposal would have 
mandated which equipment a carrier may use to access the runway at 
LaGuardia, and was accordingly beyond the FAA's authority. The Port 
Authority was likewise concerned that the proposal impermissibly 
infringed on its rights as the airport proprietor.
    Based on careful review of the public comments, the FAA has 
determined that there are simpler, less prescriptive ways to permit 
airlines to respond more directly to market forces. Given carriers' 
long-term leasing and purchasing arrangements, the timeframes for 
implementing the proposal may have been too short; and if adopted, the 
proposal potentially could have inadvertently disrupted operations at 
the airport. The FAA recognizes the long-term contractual relationships 
that exist at LaGuardia. At the same time, the agency prefers that the 
limited asset that makes up an Operating Authorization be allocated 
using market principles rather than regulatory or administrative 
principles. Today's proposal meets that objective without unduly 
burdening either the airport or the carriers.
    At this point in time, the FAA does not believe there is a need to 
dictate a minimum aircraft size to achieve the overall objective that 
service to and from LaGuardia be reasonably available to the maximum 
number of people who wish to use it without undue delay. Accordingly, 
the FAA is withdrawing its proposal for upgauging.
    Nevertheless, the agency believes that the concept behind its 
upgauging proposal remains valid: capacity cannot be considered merely 
in terms of the number of aircraft being handled by the FAA's Air 
Traffic Control system (ATC). The FAA believes United's interpretation 
of the FAA's statutory authority to manage the efficient use of the 
airspace as being limited to the movement of aircraft generically is 
overly narrow. The characterization of operations in terms of aircraft 
makes sense to the air traffic controllers, whose job it is to control 
all aircraft flying under instrument flight rules (IFR) within their 
sector. United's characterization does not make sense as a matter of 
policy or statutory interpretation because it ignores the reality that 
aircraft operations are designed to move people and cargo.
    The FAA does not believe the relatively low load factors at 
LaGuardia support the premise that the market dictates the use of 
smaller aircraft to many of the markets with service to the airport. It 
is true that some smaller communities may not be able to support daily 
operations on larger aircraft. The FAA asserts, however, that certain 
market patterns, where multiple daily flights on small aircraft are not 
related to the size of the communities served, indicate an inefficient 
use of the slot, or behavior that stifles competition. The relatively 
low load factors in these routes indicate that many of these flights 
could be combined, resulting in a more efficient use of the system.
    The FAA also acknowledges that the use of small aircraft to densely 
populated communities on a frequent basis is not purely a function of 
the market. As noted by the Port Authority, excessive use of smaller 
aircraft is to some degree a combination of customer preference for 
frequent access, but it is also a function of political concerns and a 
long-standing regulatory regime that created incentives favoring the 
use of small aircraft. The expiration of the HDR and AIR-21 exemptions 
should naturally encourage more efficient use of aircraft because there 
is no longer a perverse incentive to use smaller aircraft, regardless 
of the market being served. As to consumer preference for more regular 
flights, the decision to offer numerous daily flights in any particular 
market will inevitably be driven by market considerations. The FAA 
believes that the options being proposed today should reduce delay and 
permit airlines to respond more freely to market forces, favoring 
efficiency and aircraft upgauging without the government dictating any 
particular method of increasing overall passenger throughput and 
without sacrificing service to small communities.

B. Perimeter Rule

    As an alternative to the upgauging proposal, US Airways suggested 
the

[[Page 20850]]

FAA preempt the Port Authority's Perimeter Rule.\3\ It argued the 
Perimeter Rule drives the use of smaller aircraft because carriers 
cannot engage in the long-range operations that support the use of 
larger aircraft. Alaska Airlines also supported lifting the Perimeter 
Rule.
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    \3\ The Perimeter Rule prohibits non-stop flights of more than 
1,500 miles into and out of LaGuardia, except for flights in and out 
of Denver. The Perimeter Rule was first established in the late 
1950s under an informal arrangement between the Port Authority and 
the airlines. It was formalized in 1984 and unsuccessfully 
challenged in Western Airlines v. Port Authority of New York and New 
Jersey, 658 F. Supp. 952 (SDNY 1986), aff'd 817 F2d. 222 (2nd Cir., 
1987), cert. denied, 485 U.S. 1006 (1988).
---------------------------------------------------------------------------

    US Airways maintained there is no justification for retention of 
the Perimeter Rule. Not only is LaGuardia no longer primarily an 
airport for business travelers, but JFK no longer needs development, 
and the introduction of Stage-3 aircraft has sufficiently reduced the 
airport's overall noise footprint from when the Port Authority 
established the Perimeter Rule. Thus, according to US Airways, the 
rationale that the Port Authority provided to the court in Western Air 
Lines v. Port Authority of New York and New Jersey is no longer 
applicable.
    The FAA has decided against addressing the Perimeter Rule in this 
rulemaking because of the need to explore more fully several 
operational and policy issues that may be impacted by changes in the 
Rule, including potential impacts on airport capacity and air services. 
The FAA intends to monitor the impact of today's proposal, if adopted, 
as well as the implications of changes to or elimination of the Rule. 
Should the agency deem that Federal action on the rule is in the public 
interest, it may choose to preempt.

C. Finite Operating Lives

    The FAA proposed to initially allocate all Operating Authorizations 
previously allocated under the HDR, and then pull back ten percent of 
them every year to force an active market for this scarce resource. The 
Operating Authorizations would have had an initial operating life 
ranging from three to thirteen years and, once reallocated, would have 
had a ten-year operating life. While providing a general discussion of 
how the Operating Authorizations would be withdrawn, the FAA did not 
provide a discussion of how they would be reallocated, other than to 
say that the agency was seeking legislation that would provide 
additional flexibility in allowing the FAA to reallocate via a market-
based mechanism such as an auction or congestion pricing. The FAA has 
decided that a ten percent annual turnover at LaGuardia could be overly 
disruptive as a first step in applying market principles and has 
decided to propose a scaled back reallocation mechanism. This scaled 
back proposal is discussed in detail later in this document.
    In general, most commenters characterized the proposal to introduce 
expiring Operating Authorizations at LaGuardia as unnecessary, 
unworkable, and unlawful under the Administrative Procedure Act and the 
Takings Clause of the Fifth Amendment of the US Constitution. Others 
claimed that the proposal did not go far enough.
    American asked why the FAA thought it needed such an intrusive and 
complicated regulatory scheme to promote access to new entrants. It 
noted that the agency promoted access to new entrants at Chicago's 
O'Hare International Airport (O'Hare) by adopting a blind Buy/Sell 
secondary market. Midwest Airlines, Delta Air Lines (Delta) and the RAA 
argued that the underlying premise that limited operating lives were 
required to open up the airport to new entrants was based on a false 
assumption that the airport would otherwise be shut down to new 
entrants or carriers with a limited presence at the airport. They 
argued that slots were successfully purchased under the Buy/Sell rule, 
and that the secondary market only failed when exemptions to the HDR 
were given away for free under AIR-21.
    Consistent with their comments on the upgauging proposal, most 
carriers and their associations argued that randomly terminating and 
reallocating ten percent of Operating Authorizations each year would 
wreak havoc with the carriers' schedules. They asserted the impact on 
industry would be so severe and unreasonable as to render the proposal 
unworkable, creating perpetual instability that could disrupt airport 
services and traveler expectations. In particular, The City of New 
York, Delta and US Airways claimed the full operational impact of the 
rule could make it virtually impossible to operate short-haul shuttles. 
American, Delta, and AAAE argued the impact could be especially bad on 
small communities as transfer of Operating Authorizations from carrier 
to carrier would make consistent service to these communities 
difficult. As with the upgauging proposal, the Port Authority said it 
would be difficult to handle gate assignments and leases with an annual 
turnover of up to ten percent. American claimed the churning of 
Operating Authorizations would fragment real estate across the airport 
over time. The carrier argued this fragmentation would be extremely 
burdensome for the Port Authority and disruptive to airlines and 
consumers.
    Some carriers noted that the operating lives would actually serve 
as a damper on the free market, rather than the catalyst that the FAA 
envisioned. American said the proposal failed to recognize that 
investment in routes and infrastructure is largely dependent on the 
ability to continue serving that route. US Airways and Midwest Airlines 
echoed this sentiment, positing expiring lives would actually act as a 
disincentive to invest in the airport, because there will be no 
assurance that investment expectations can be met. The Air Transport 
Association of America (ATA) queried what impact expiration dates and 
other restrictions would have on the value of slots in the secondary 
market.
    While many commenters claimed they could not meaningfully comment 
on the proposal since the FAA did not explain how it intended to 
reallocate withdrawn capacity,\4\ others argued that the proposal would 
be unlawful even if the reallocation mechanism had been explained. 
United and Midwest Airlines claimed the proposal did not implicate 
safety or movement of air traffic and was accordingly beyond the FAA's 
authority. Assuming the FAA retained its authority to impose caps after 
AIR-21, the ATA and the Airports Council International--North America 
(ACI-NA) argued it did not necessarily follow that this authority 
encompasses ``management of the nationwide system of air commerce,'' as 
the FAA asserted in the NPRM. They claimed such an assertion connotes 
the business of air transportation, which exceeds the agency's 
authority to regulate the safety and movement of air traffic. United 
asserted that the FAA appeared to rely on the Department's authority in 
49 U.S.C. 40101(a), but noted that reliance on that authority was 
equally misguided since it is limited to the Department's exercise of 
economic regulation.
---------------------------------------------------------------------------

    \4\ The FAA stated that it did not provide the reallocation 
mechanism because it did not have the authority to reallocate other 
than through an administrative mechanism. The FAA's original 
analysis was overly simplistic. The FAA correctly stated that it did 
not have the authority to implement a congestion pricing scheme. 
However, we also said that we did not have the authority to conduct 
auctions; this statement was incorrect. As discussed more fully 
later in the document, the FAA has ample authority to lease or 
otherwise dispose of its property without running afoul of the 
restriction on user fees, the restriction that the FAA initially 
believed was problematic.
---------------------------------------------------------------------------

    While carriers generally claimed the proposed reallocation of 
Operating

[[Page 20851]]

Authorizations as a confiscation of their respective property rights, 
some argued the FAA's proposal was in violation of the Takings Clause 
of the U.S. Constitution because carriers would be deprived of all 
beneficial use of the property,\5\ and the FAA could not meet the 
standards set forth in Penn Central Transportation Co v. City of New 
York.\6\ In particular, United and US Airways argued that handicapping 
competitors through a forced transfer of operating rights does not 
advance a legitimate government interest, particularly when there is no 
showing that a forced transfer will actually enhance competition or 
consumer welfare.
---------------------------------------------------------------------------

    \5\ Cf., Lingle v. Chevron USA, Inc., 544 U.S. 528 (2005).
    \6\ 438 U.S. 104 (1978).
---------------------------------------------------------------------------

    In contrast, the Air Carrier Association of America (ACAA) argued 
that legacy carriers were given large numbers of slots through AIR-21, 
and did not need the market protection contained within the proposal. 
It noted that under the LaGuardia Order and the HDR, operating rights 
were never permanently allocated; nor were carriers offered assurances 
that they could do whatever they wanted with them. In fact, carriers 
have always been on notice that the Operating Authorizations and their 
predecessor slots could be recalled. Accordingly, ACAA urged the FAA to 
withdraw immediately ten percent of all Operating Authorizations held 
by carriers holding more than 75 Operating Authorizations and 
redistribute them to limited incumbents operating larger aircraft. It 
maintained whatever reallocation mechanism was used should kick in 
before the proposed three years since that extended timeframe 
unnecessarily restricts the market. AirTran Airways (AirTran) and 
WestJet supported the concept of the FAA increasing the number of 
Operating Authorizations provided to small carriers and immediate 
implementation of the rule.
    The FAA disagrees with American's claim that a staggered withdrawal 
and reallocation of Operating Authorizations is not needed to protect 
new entrants. This approach is one of several rational means of 
ensuring that carriers with modest service, or no access at all, have 
an opportunity to gain or increase access at one of the most sought-
after airports in the country. While a blind secondary market would 
also facilitate new entrant access, and the FAA uses this method to 
assist new entrants at O'Hare, the agency also made specific provisions 
in that rulemaking to make new and returned capacity preferentially 
available to new entrants and carriers with a limited presence at the 
airport. The FAA does not believe a blind secondary market alone is 
sufficient to provide opportunities for new or increased access.
    The FAA agrees that its original proposal could have caused 
disruption at the airport. The premise underlying the proposal to 
require a full ten percent turnover at the airport each year was not to 
force disruption, but rather to ensure the efficient use of a scarce 
resource and to provide access to new entrants and existing operators 
in a manner other than creating preferences or exemptions. It is 
exactly these preferences and exemptions that many commenters claim 
marginalized the secondary market under the HDR. As the FAA has stated 
several times over the past few years, its primary goal in addressing 
congestion is to increase capacity wherever possible. Limiting the 
number of operations at an airport is a last option because it 
restricts access to the airport. The FAA also believes the market 
should play an active role in the allocation of the limited resource 
whenever it becomes necessary to limit operations for more than a short 
period of time.
    The options being proposed today meet the same policy objective 
that drove the proposal in the NPRM to have operating lives expire, 
albeit in a less aggressive manner. The FAA believes this new approach 
will help foster a vibrant secondary market while maintaining stability 
at the airport. The legal concerns raised by commenters will be 
addressed later in this document.

III. Proposal To Allocate Limited Capacity at LaGuardia Efficiently

A. Need for a Cap on Operations

    The FAA believes that at least for the next several years, 
LaGuardia will likely be oversubscribed in terms of its physical 
ability to handle aircraft. Simply put, expansion of the airport by 
adding runways is not a viable option given its location. Accordingly, 
a cap on operations at the airport is necessary to provide for the 
efficient use of the NAS. In the NPRM, the FAA proposed to cap weekday 
and Sunday afternoon operations at 81 per hour (75 for scheduled 
operations and six for general aviation). The airport is already capped 
under the LaGuardia Order at 81 (75 for scheduled operations and six 
for general aviation). Today's proposal, if adopted, will replace that 
order. The FAA does not intend to raise the cap unless new capacity 
becomes available and has proposed reducing the number of operations 
available for general aviation to three per hour.
    The Port Authority claimed that 75 scheduled operations per hour 
was too high, since delays were increasing, and argued that the cap 
should start at 6 a.m. and cover Saturday mornings because these time 
periods have operations that exceed runway capacity.
    In response to the NPRM, the ATA claimed that the FAA had not 
presented any new data indicating that a cap is necessary, instead 
relying on delays during the summer of 2000. The ATA argued that the 
FAA merely assumed that demand exceeds capacity at LaGuardia, without 
discussing how the proposal would impact that demand.
    The impact of either the NPRM or today's proposal on demand at 
LaGuardia is difficult to judge because the LaGuardia Order has kept 
operations from growing since the expiration of the HDR. Accordingly, 
the comparison in terms of delay reduction should not be between the 
LaGuardia Order and any final rule, but rather between an unconstrained 
airport and a final rule. The last time the airport was close to 
unconstrained was in 2000, which is why the FAA relied on its 
experience in 2000 in the NPRM.
    The FAA believes the summer of 2007 served as a stark reminder that 
the demand for access to New York City is exceptional. New York City is 
served by three major airports; theoretically there should be more than 
enough capacity. However, while LaGuardia remained a constrained 
airport last summer, JFK and Newark were not constrained and carriers 
were allowed to add flights at will. As a result, the New York City 
area airports experienced nearly unprecedented delays last summer, and 
the level of flight delays were regularly reported in the local and 
national press. The delay numbers at JFK were so high that the FAA 
initiated a Scheduling Reduction Meeting in October 2007 and announced 
a cap at the airport in January of this year. Concerned that those 
carriers that could not obtain desired access at JFK would quickly 
oversubscribe Newark, the FAA proposed a cap there in March. Looking 
forward, all three major airports in the New York City area will be 
capped.
    The FAA is unwilling to lift the cap at LaGuardia simply because 
the last time there was significant growth at the airport was in 2000. 
Notwithstanding ATA's assertion that perhaps there is no need for a 
cap, its members appear to support reasonable limits on the number of 
operations at the airport. When the FAA imposed the cap on LaGuardia 
after the expiration of the HDR at the

[[Page 20852]]

end of 2006, no carrier argued that a cap was inappropriate.
    We agree with the Port Authority that operations at the airport 
should be limited as early as 6 a.m., and the LaGuardia Order limits 
operations beginning at that hour. Carriers have moved their morning 
schedules out sufficiently early that the FAA is encountering excess 
demand by 6 a.m. The agency has tentatively decided against capping 
operations on all day Saturday and Sunday morning because the level of 
congestion during these time periods is significantly less than during 
the workweek and on Sunday afternoons. The Port Authority has not 
provided data indicating that a cap is needed on Saturday mornings; it 
has merely asserted that there are runway constraints. Should the Port 
Authority continue to believe the cap should be expanded, the FAA 
welcomes an analysis of the capacity problems on Saturday mornings.

B. Sunset Provision

    The FAA's proposed rule, if adopted, will expire in ten years. To 
the extent new capacity became available, the FAA could increase the 
size of the cap and auction off that new capacity for the life of the 
rule. One of the criticisms of the HDR was that it was a temporary rule 
that has lasted almost 40 years. As such, it became difficult to 
manage, particularly as it was amended to address changes in business 
models. We believe the public interest is better served by directly 
providing the rule will sunset in ten years. This approach will allow 
for future determinations by the FAA as to whether a cap is still 
needed and, if so, whether changes are needed to more efficiently 
allocate and constrain the scarce resource. At present it is impossible 
to determine what changes in business models may occur over the next 
ten years. In addition, full implementation of the New York/New Jersey/
Philadelphia Metropolitan Area Airspace Redesign project and NextGen 
technologies are expected to mitigate and improve air traffic 
efficiency within the next ten years, and we should not prejudge the 
market response.

C. Need for More Efficient Allocation

    As noted by American in its comments to the NPRM, Congress has 
directed the Department to place ``maximum reliance on competitive 
market forces and on actual and potential competition'' (49 U.S.C. 
40101(a)(6)). This maximum reliance means the FAA is obliged not to 
simply walk away from an airport once it has imposed caps, but rather 
to take steps to ensure that there are, in fact, competitive market 
forces and actual and potential competition. Competition at an airport 
benefits the flying public by providing price competition and expanded 
service. The ability of carriers to initiate or expand service at the 
airport is hindered, in large part, by the imposition of the cap. 
Accordingly, the FAA believes it must strike a balance between (1) 
promoting competition and permitting access to new entrants and (2) 
recognizing historical investments in the airport and the need to 
provide continuity. It is not the role of the Government either to 
dictate particular business models or to constrain a market and provide 
no means for others to enter that limited market.
    Not only is the FAA required to assure the efficient use of the 
NAS, but it must do so in a manner that does not penalize all potential 
operators at the airport by effectively shutting them out of the 
market. Accordingly, the FAA believes that it is well within the 
agency's authority in 49 U.S.C. 40103 to provide some mechanism for 
reallocation. Today's proposal attempts to strike the appropriate 
balance by actively developing a robust secondary market that properly 
values the limited asset that the FAA created.

D. Authority To Allocate Slots at LaGuardia

    The FAA intends to allocate some portion of the available slots at 
LaGuardia via an auction process. The FAA would initially allocate the 
vast majority of slots to incumbents at the airport by entering into a 
cooperative agreement that would lease the slots for a period of ten 
years. The remaining slots would revert to the FAA over a five year 
period for retirement or reallocation via an FAA-sponsored auction. As 
a result of the auction, the acquiring carrier would enter into a lease 
agreement with the FAA that would last the remainder of the rule. 
Leases awarded under the cooperative agreements or awarded pursuant to 
an auction would be subject to lease terms, and the failure to abide by 
those lease terms would constitute a default of the lease. Carriers 
would be allowed to sublease their slots subject to the same terms and 
conditions imposed by the FAA in the original lease, although new terms 
and conditions unrelated to the carrier's obligations to the FAA could 
be added.
    Under Option 1, the FAA would retain all auction proceeds and 
dedicate their use to congestion management in the New York City area. 
Under Option 2, the carrier that had held the slot would be allowed to 
keep the proceeds after the FAA had recouped its costs associated with 
running the auction.
    In the NPRM, the FAA stated that it did not have the authority to 
reallocate Operating Authorizations via a market-based mechanism. The 
FAA was concerned that it did not have this authority because of annual 
appropriations restrictions dating back to 1998 that prohibit the 
agency from expending funds to ``finalize or implement any regulation 
that would promulgate new aviation user fees not specifically 
authorized by law after the date of enactment of this Act.'' \7\ The 
FAA continues to believe that it cannot rely on a market-based 
allocation method under a purely regulatory approach, which is why it 
explicitly sought legislation on this matter.
---------------------------------------------------------------------------

    \7\ In 2006 this provision could be found in Public Law 109-115. 
For 2008, the same provision may be found in Public Law 110-161.
---------------------------------------------------------------------------

    However, the FAA's authority is not limited to regulatory action. 
The agency has independent authority to dispose of property,\8\ and 
regulatory action is not required prior to the lease of property. The 
FAA implemented its general authority to dispose of property in its 
Acquisition Management System, which went into effect on April 1, 1996.
---------------------------------------------------------------------------

    \8\ The FAA has had express authority to lease property to 
others since 1996, Pub. L. 104-264, and general authority to dispose 
of an interest in property for adequate compensation for long before 
that in 49 U.S.C. 40110(a)(2).
---------------------------------------------------------------------------

    Because of the congressional mandate in 49 U.S.C. 40101(a)(6) to 
rely to the maximum extent possible on competitive market forces, the 
FAA has determined that it is appropriate to take a bifurcated 
approach. Today the agency is requesting comment on an approach whereby 
the FAA would establish a cap on operations and address which slots 
would revert to the FAA for reallocation through a regulation, but 
would use its transaction authority to allow for reallocation of slots 
via a market-based mechanism.
    As discussed below, this approach has the added benefit of 
clarifying the unsettled issue of the extent to which a slot holding 
should be imbued with property rights.
1. Authority To Determine the Best Use of the Airspace
    The United States Government claimed exclusive sovereignty over 
United States airspace in 49 U.S.C. 40103. Citizens of the United 
States have a public right of transit through navigable airspace, but 
the FAA is authorized to assign the use of the airspace necessary to 
ensure the safety of aircraft and the efficient use of airspace. To the 
extent these needs can

[[Page 20853]]

be met without specifying which citizen may transit or reserve a 
particular segment of airspace at a particular time, there was no need 
for the FAA to place constraints such as slots on the use of the 
airspace--this remains the case for the vast majority of the NAS.
    As described above, however, at LaGuardia and a few other airports, 
in order to ensure the efficient use of airspace, the FAA has had to 
impose constraints by assigning to carriers operational authority to 
conduct a scheduled IFR arrival or departure operation on a particular 
day of the week during a specified 30-minute period. These reservations 
of airspace were called slots under the HDR. After the FAA issued the 
Buy/Sell rule, these slots were treated not only as property of the 
United States Government, but also as if the carriers had a property 
interest, albeit an interest that was heavily encumbered by the 
restrictions imposed by the FAA. The nature of this proprietary 
interest, however, has always been somewhat unclear. To encourage the 
most efficient use of constrained airspace the FAA is clarifying the 
property interest that the FAA is willing to transfer to airlines for a 
limited period of time. However, the FAA has determined that in order 
to assure the efficient use of airspace, it cannot simply permit those 
to whom it grants authority to use the airspace to treat that authority 
as their own. Such an approach would not only ignore the inherently 
valuable nature of the airspace usage assignment, but allows a select 
few to profit from a governmental interest to the detriment of their 
competitors and the public as a whole. Ultimately, it is the FAA that 
has sovereignty over and controls the airspace.
2. Authority To Enter Into Leases and Cooperative Agreements
    The FAA has authority to lease real and personal property, 
including intangible property, to others. 49 U.S.C. 106(l)(6) and 
106(n). When disposing of an interest in property, however, the FAA 
must receive adequate compensation. 49 U.S.C. 40110(a)(2). The FAA 
also, however, has broad authority to enter into cooperative agreements 
on such terms and conditions as the agency may consider appropriate. 49 
U.S.C. 106(l)(6). Under the Federal Grants and Cooperative Agreements 
Act, a cooperative agreement is to be used when the principal purpose 
of the agreement is to transfer a thing of value to a recipient, either 
public or private, to carry out a public purpose of support or 
stimulation authorized by law, instead of acquiring (by purchase, lease 
or barter) property or services for the direct use or benefit of the 
agency, and there is substantial Federal involvement in the activity. 
The FAA believes this is the appropriate vehicle to use to transfer 
most of the slots as described in the following options, for a ten year 
period, to the carriers that currently have Operating Authorizations at 
LaGuardia. Doing so will recognize these carriers' historical 
investment in LaGuardia, and the public interest that has been served 
by that investment. In addition, doing so will prevent the disruption 
to the national air transportation system described in the comments to 
the NPRM that might otherwise occur, allowing the public to benefit 
from continued certainty of readily available air transportation to and 
from this airport. There will, however, be substantial ongoing Federal 
involvement with these slots, as the FAA will retain ATC 
responsibilities for assuring that the use of these segments of 
airspace for their specified times is done safely and with maximum 
possible efficiency. It is therefore appropriate to use cooperative 
agreements to transfer these property interests.\9\
---------------------------------------------------------------------------

    \9\ Under the cooperative agreements the FAA will be 
transferring a leasehold interest in the slots, but it will not 
entirely dispose of its property. Receiving monetary compensation 
from these transfers is antithetical to the definition of a 
cooperative agreement. Nonetheless, to the degree that adequate 
compensation might be considered required under 49 U.S.C. 
40110(a)(2), the compensation will be the carriers' agreement to be 
bound by the terms in the cooperative agreement as well as FAA's 
recognition of the public value received by the carriers' historical 
investment at LaGuardia.
---------------------------------------------------------------------------

3. The FAA's Proposed Actions Do Not Constitute a Taking in Violation 
of the Fifth Amendment
    United's and US Airways' assertion that the imposition of a cap on 
operations at LaGuardia and any reallocation mechanism that does not 
give incumbent carriers an unrestricted right to the slots created by 
the cap constitutes a taking in violation of the Fifth Amendment is 
simply incorrect. Carriers possess no absolute property interest in 
slots unless the FAA gives it to them. The FAA has consistently refused 
to do that under both the HDR and the LaGuardia Order. Indeed, upon the 
expiration of the HDR, any putative interest in those slots expired on 
December 31, 2006, and the LaGuardia Order specifically states that 
carriers have no right to Operating Authorizations after the expiration 
of the order. If the FAA proceeds with today's proposal, carriers will 
have some property rights in the resulting slots, but those rights will 
be limited by the terms of any final rule and any lease terms that the 
FAA specifies. Ultimately, it is the FAA that controls the airspace and 
controls the rights of carriers to use it.
    United's reliance on Lingle and Penn Central in arguing that the 
annual reversion of Operating Authorizations for reallocation by the 
FAA would constitute a taking was misplaced, and remains inapplicable 
to today's proposal.\10\ Neither case stands for the proposition that 
the federal government cannot implement a regulatory scheme like the 
one proposed here. In Penn Central the Supreme Court set forth a 
general test for determining whether a government regulatory action 
resulted in a taking of property without just compensation. While 
noting that such determinations are necessarily fact-specific, the 
Court set forth three basic criteria to evaluate: (1) The economic 
impact of the regulatory action on the claimant, (2) the level of 
interference with reasonable investment-backed expectations, and (3) 
the character of the governmental action.\11\ These standards do not 
suggest a Takings Clause claim in this instance.
---------------------------------------------------------------------------

    \10\ The FAA is puzzled by United's reliance on Lingle. The 
holding in Lingle was unrelated to any determination by the Court 
that there was a ``permanent physical invasion of her property.'' 
544 U.S. 528, citing Lucas v. South Carolina Coastal Council, 505 
U.S. 1003, 1019 (1992). United has not alleged that the imposition 
of a slot regime results in its inability to use its property. 
Rather, it asserts that its flight schedule is an intangible asset, 
the use of which is critical for utilizing its tangible assets, 
i.e., its terminal facilities, gates, servicing facilities, and 
aircraft (United comments at p. 29). The correct analysis is 
conducted under Penn Central and Connelly v. Pension Benefit 
Guarantee Corp., 475 U.S. 211 (1986).
    \11\ Connelly at 224-225.
---------------------------------------------------------------------------

    Given the fact that LaGuardia has operated under some type of cap 
for the past 40 years, no carrier could realistically have investment 
expectations either that the airport will be unconstrained before 
sufficient capacity is realized or that it would be granted absolute 
rights in its historical operating schedule. Indeed, the HDR imposed 
much more stringent constraints on how carriers could conduct 
operations at the airport than the FAA is proposing here.
    Likewise, there is no evidence that the proposed rule, if adopted, 
will have an unduly harmful impact on any air carrier. At most, less 
than 20 percent of any carrier's current operations at LaGuardia will 
be affected. As stated by the Court in Penn Central, `` `[t]aking' 
jurisprudence does not divide a single parcel into discrete segments 
and attempt to determine whether rights in a particular segment have 
been entirely

[[Page 20854]]

abrogated.'' \12\ When viewed as a whole, the impact of today's 
proposal on even the most negatively affected carrier is not sufficient 
to trigger a plausible takings claim. The vast majority of operations 
will continue under slots grandfathered to the carriers at no charge. 
Each carrier will be assured that up to 20 of their operations will be 
protected from any reversion if it meets the minimum usage 
requirements, and only ten to twenty percent of its operations above 
twenty will be subject to reversion to the FAA for retirement or 
reallocation. In addition, carriers will be allowed to sublease their 
slots subject to the terms and conditions set forth in the lease 
agreement, thus potentially avoiding the loss of a slot for inadequate 
usage.
---------------------------------------------------------------------------

    \12\ Penn Central at 130.
---------------------------------------------------------------------------

    Nor does the proposed action have the character of a taking as 
interpreted in well-settled jurisprudence. This rulemaking proposes to 
minimally adjust the benefits and burdens of the economic life of 
carriers at LaGuardia in order to promote the common good. The 
rulemaking proposes to limit flights at LaGuardia in order to relieve 
congestion that impacts the NAS as a whole and LaGuardia in particular. 
As such, it will benefit the airline industry, businesses relying on 
aviation to timely meet their delivery schedules, and the travelling 
public. The proposed rule anticipates only a modest reduction, under 
one of two proposed options, in the number of flights currently allowed 
at LaGuardia under the LaGuardia Order, which has been in place, 
unchallenged, since January 1, 2007. Unlike the governmental action in 
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), the proposed 
rulemaking does not single out an air carrier based on conduct far in 
the past and unrelated to any future commitments or injury it caused.

E. Allocation of Slots

    The FAA is proposing two different options for allocating slots. 
Under both options the vast majority of slots would be grandfathered to 
existing carriers at the airport, with a relatively small minority 
either retired or auctioned off in the free market. The FAA believes 
either approach would help stimulate a secondary market and would lead 
to a proper assessment of the slots' true value. The agency also 
believes that either approach would have a minimal impact on operations 
at the airport and would avoid much of the potential disruption 
associated with its proposals in the NPRM.
1. Categories of Slots
    Under today's proposal, the FAA would lease carriers property 
interests in slots to carriers for a period of up to ten years, the 
date the rule would sunset. There would be three categories of slots: 
common slots, unrestricted slots, and limited slots.
    Common Slots are those slots grandfathered to carriers currently at 
the airport. They would be awarded to the carriers under a cooperative 
agreement for the duration of the rule. The cooperative agreement would 
provide carriers with a ten-year leasehold interest. Once the rule 
sunsets, all interests would revert to the FAA. Unlike slots allocated 
under the HDR and Operating Authorizations allocated under the 
LaGuardia Order, carriers would be granted clear property rights to 
Common Slots, which could be collateralized or subleased to another 
carrier for consideration. These property rights, however, would not be 
absolute. Common Slots would be subject to reversion to the FAA under 
the rule's minimum usage provision, and could be temporarily withdrawn 
for operational reasons.
    Those slots not categorized as Common Slots would be categorized 
initially as Limited Slots and then as Unrestricted Slots once they are 
reallocated.
    Unrestricted Slots are slots that a carrier would acquire as a 
leasehold under the auction process discussed later in this document. 
Since a carrier leasing an Unrestricted Slot would be required to do so 
because of government action, these slots would not be withdrawn by the 
FAA either under the use-or-lose provisions or for operational reasons. 
As with Common Slots, Unrestricted Slots would expire when the rule 
sunsets.
    Limited Slots are slots that are identified for retirement or 
auction and are leased to the carriers under a cooperative agreement 
for a period of 1-4 years \13\ so that they can be retired or 
reallocated via auction after that period of time. Limited Slots would 
convert to Unrestricted Slots after they are auctioned off. As with 
Common Slots, Limited Slots could be withdrawn under the proposed use-
or-lose provision, or for operational reasons.
---------------------------------------------------------------------------

    \13\ Twenty percent of the Limited Slots would not be leased to 
carriers as Limited Slots. This is because the FAA intends to either 
retire them or auction them as Unrestricted Slots shortly after the 
final rule, if adopted, takes effect.
---------------------------------------------------------------------------

2. Initial Allocation of Capacity
    Upon the rule's effective date, each carrier at LaGuardia would 
automatically be awarded up to 20 common slots, which would constitute 
the carrier's base of operations. The FAA believes this is a rational 
approach to assuring that no carrier is impacted at a level that could 
seriously disrupt its existing operations. Air Canada would be awarded 
an additional 22 common slots because of the United States' treaty 
obligations with Canada. Under Option 1, 90 percent of the remaining 
slots would also be grandfathered as Common Slots to the carrier 
holding the corresponding Operating Authorization under the LaGuardia 
Order. Under Option 2, 80 percent of the remaining slots would be 
grandfathered as Common Slots. The determination of which carrier is 
entitled to any particular slot will be based on which carrier was 
allocated the corresponding Operating Authorization for that slot 
during the first full week of January 2007.\14\ The FAA is proposing to 
grandfather the majority of slots at the airport in order to minimize 
disruption and to recognize the carriers' historical investments in 
both the airport and the community. The FAA seeks comment on the 
percentage of slots that should be available for reallocation under 
either option.
---------------------------------------------------------------------------

    \14\ US Airways had argued in its comments to the NPRM that 
looking at a single week did not adequately account for seasonal 
usage. The FAA has looked at usage patterns at the airport 
throughout the year, and has not found a significant difference in 
which carriers are operating at the airport throughout the year. To 
the extent there is seasonal usage, the FAA believes carriers should 
be able to lease slots on the secondary market or engage in one-for-
one trades.
---------------------------------------------------------------------------

    As noted above, the remaining slots will be categorized as Limited 
Slots. Limited Slots may either be retired by the FAA or reallocated 
via auction. Under the proposal, the number of slots that a particular 
carrier would have classified as Limited Slots would be based 
proportionally on the carrier's presence at the airport, taking into 
consideration each carrier's base of operations. The FAA would inform 
all carriers that will be awarded Limited Slots how many Limited Slots 
they will be entitled to no later than the rule's effective date.
    Under Option 1, the FAA would randomly select operations in excess 
of 75 in those hours where there are more than 75 scheduled 
operations.\15\ These operations will be designated as Limited Slots 
and will be retired, so that there are no hours where there are more 
than 75 scheduled operations. The FAA has tentatively decided to select 
these slots because the agency believes delay is

[[Page 20855]]

best mitigated under this proposal by assuring there are no hours with 
scheduled operations above 75. An affected carrier would then have ten 
days to classify 50 percent of the remaining slots that will be 
scheduled to revert to the FAA for auction or retirement. During the 
following ten days, the FAA would then determine through a randomized 
process the remainder of slots that will be categorized as Limited 
Slots. Thus, if a carrier had 200 Operating Authorizations under the 
LaGuardia Order, it would be notified on the effective date of the rule 
that 18 of its slots (ten percent of 180) were subject to designation 
as Limited Slots. The carrier would have 10 days to notify the FAA 
which nine slots it designated as Limited Slots, and the FAA would 
designate the remaining nine.
---------------------------------------------------------------------------

    \15\ During the first full week of January, 2007, there were 
more than 75 hourly operations during the 0900 and 1700 hours.
---------------------------------------------------------------------------

    In determining which slots should be designated as limited slots, 
the FAA would initially exclude from consideration slots held during 
all hours where carriers have collectively determined two or more slots 
should be a Limited Slot. This approach will assure slots will be 
available for auction throughout the day. The FAA would also determine 
in what year (1-4) each Limited Slot will revert to the FAA for 
reallocation or retirement. In this way, all carriers would know within 
20 days of the rule's effective date what slots will become available 
for purchase and when. The FAA does not currently intend to target any 
slots for retirement under Option 2. Otherwise, the process to select 
limited slots would be the same as under Option 1.
    The FAA is concerned that today's proposal is primarily focused on 
the efficient allocation of slots and does not significantly reduce 
delay from levels established under the HDR after AIR-21 and the 
LaGuardia Order. It recognizes that even under Option 1, the level of 
delay mitigation would be minimal, with only 18 slots retired after 
five years. The agency anticipates that at the end of the scheduled 
retirements, the average minutes of delay would be reduced by 
approximately one minute as the result of scheduled retirements. The 
FAA believes that it may be appropriate to better address delay 
mitigation by reducing the overall number of hourly operations at the 
airport. In contrast to the 78 total hourly operations proposed today, 
the HDR permitted a maximum total number of operations at LaGuardia of 
68 per hour.\16\ The numerous exemptions issued pursuant to AIR-21 
effectively increased that hourly rate to approximately 81 operations 
per hour, with roughly 75 of those operations dedicated to scheduled 
operations.
---------------------------------------------------------------------------

    \16\ Of these operations, 48 were allocated to air carriers, 14 
were allocated to commuter service, and six were allocated to 
unscheduled operations.
---------------------------------------------------------------------------

    Accordingly, the agency specifically requests comment as to whether 
it should reduce the maximum number of scheduled operations from 75 to 
a lower number. In addition, the agency seeks comment on whether it 
should maintain a maximum number of scheduled operations at 75 per hour 
but increase the number of slots that would be retired. The FAA also 
requests comment on whether it should retire some percentage of slots 
under Option 2 and, if so, by how much. Finally, there are a few hours 
where there are slightly fewer than 75 scheduled operations. The FAA 
seeks comment on whether these slots should be retired or reallocated 
via an auction.
    The FAA also recognizes that the percentage of slots that the 
agency proposes to reallocate represents a relatively small percentage 
of the total number of slots at the airport, particularly since up to 
20 of each carrier's slot will not be subject to reversion. 
Accordingly, the FAA requests comment on whether the percentages 
proposed under either option are sufficient to ensure the opportunity 
for new entry and an efficient allocation of slots among all carriers 
at the airport, such that each slot is allocated to the user who values 
it the most highly. In addition, the agency seeks input on the 
appropriate percentages of slots available for auction (both in total 
and annually) sufficient to assure an efficient allocation of this 
scarce resource.
    Under both options, the time windows for the Limited Slots would be 
evenly distributed over the day to the extent possible. The duration of 
each Limited Slot would be assigned by a fair allocation process such 
that each affected carrier's aggregate lease duration would be 
approximately equal to that of the other affected carriers. A technical 
report fully explaining how Limited Slots will be categorized and 
allocated has been placed in the docket for this rulemaking. Commenters 
are encouraged to review and comment on that document.
3. Market-Based Reallocation of Capacity
    For the first five years of the rule the FAA would conduct an 
auction of Limited Slots on an annual basis. Under option one, 80 
percent of the Limited Slots would be auctioned off over five years, 
with 20 percent retired. Under option 2, 100 percent of the Limited 
Slots would be auctioned off over five years. This auction process 
would guarantee carriers wishing to initiate or extend operations at 
the airport an opportunity to acquire slots. Each year there would be 
approximately 14 (option 1) or 36 (option 2) slots available in the 
auction. Since carriers need pairs of slots, this is equivalent to 
seven or 18 round-trips per day. Assuming a minimum competitive pattern 
of service is between two and three round-trips per day, the equivalent 
of two to nine routes would be available per year. Carriers would be 
free to supplement their holdings in the secondary market, which the 
agency believes will be stimulated by this rule.
    Under Option 1, the FAA would auction off 16 percent of the Limited 
Slots annually. Any carrier could bid on the slot, and it would be 
awarded to the highest responsive bidder. The winning parties could 
commence operations using the newly acquired slots on the second Sunday 
of the following March. In the unlikely event no bids were received, 
the FAA would retire the slot until the next auction. The FAA would 
retain all auction proceeds. After recouping its costs, the FAA would 
spend the remainder of the proceeds on congestion and delay management 
initiatives in the New York City area.
    The FAA intends to retire four percent of the Limited Slots 
annually for the first five years of the rule under this option. Should 
sufficient efficiencies be realized through delay reduction or capacity 
enhancing measures, the FAA may decide to auction those Limited Slots 
rather than retire them. In addition, the FAA may decide to auction 
slots that had previously been retired as new capacity.
    Under Option 2, the FAA would auction off 20 percent of the Limited 
Slots annually in a blind auction, with the Unrestricted Slots awarded 
to the highest responsive bidders. The carrier initially holding the 
Limited Slot would not be able to bid on the slot, and it could not set 
a minimum bid price. However, that carrier would retain the auction 
proceeds after the FAA has recouped its costs associated with 
conducting the auction. As under Option 1, if no bids were received, 
the FAA would retire the slot until the next auction in the interest of 
delay mitigation. While carriers would be unable to bid on the slots 
that they are auctioning, each carrier may negotiate for subleases or 
transfers from other carriers in the secondary market or by

[[Page 20856]]

bidding on other slots concurrently up for auction and held by other 
carriers.\17\
---------------------------------------------------------------------------

    \17\ The FAA will attempt to auction an even number of slots 
during each hour to provide an opportunity for a carrier to replace 
a slot that it is auctioning. This may not always be possible.
---------------------------------------------------------------------------

    In response to the NPRM, some carriers urged the FAA to permit 
complete transparency with respect to the identity of the bidders and 
their bids in each round of an auction. The FAA believes that such 
transparency with respect to identity of the bidders and their 
corresponding bids would encourage gaming of the auction and 
significantly reduce the economic efficiency of the initial allocation 
of slots. The FAA also believes that an auction where the identity of 
the bidders is not known assists new entrants seeking to enter the 
market.
    The FAA does not intend to reallocate slots after the first five 
years (other than those returned under the rule's use-or-lose 
provisions) because it believes that ideally slots should transfer from 
one carrier to another through the secondary market. The FAA is 
proposing to be actively involved in a limited number of slot 
transactions during the first five years of the rule to help establish 
that market. Not only will the auctions help create a market for slots, 
but all carriers will be able to assess the true market value of a 
slot. As noted by Delta in its comments to the NPRM, giving carriers 
with marginally profitable slots a financial incentive to sell (or in 
this instance sublease) to the highest bidder reduces entry barriers 
and maximizes the value of the slot. Armed with information on how much 
a given slot is likely to be worth on the open market, carriers (and 
their shareholders) will be in a better position to determine whether 
to continue operating marginally-performing flights or to sublease the 
corresponding slot. The agency believes that it should not take more 
than five years for a robust secondary market to develop.
4. New and Returned Capacity
    Given the physical constraints at the airport and the carriers' 
ability to sublease slots if the operations associated with the slots 
are not financially productive, the FAA anticipates that there will be 
little new or returned capacity for most of the time the rule is in 
effect. With the advent of NextGen technology, there may be new 
capacity in the later years of the rule. To the extent there is any new 
or returned capacity, the FAA intends to auction off that capacity 
under both options, and would categorize the slots as Unrestricted 
Slots.\18\
---------------------------------------------------------------------------

    \18\ If any slots were not bid on in the final year of the 
annual auction, the FAA would retire those slots until it 
reallocated new or returned capacity. It is unlikely that enough new 
or returned capacity would be available to justify an annual 
reallocation.
---------------------------------------------------------------------------

F. Auction Procedures

    The FAA is currently engaged in procuring the services of a 
contractor to conduct auctions of the proposed Limited Slots.\19\ The 
details regarding the specifics of any potential auction will be 
disclosed after the contractor has developed and validated an auction 
process and the FAA is ready to proceed with an auction.\20\ In 
accordance with the agency's Acquisition Management System, the FAA 
will publicly announce its intent to conduct an auction on a particular 
date or over the course of a particular period of time. The FAA will 
also announce its proposed auction procedures and solicit comments on 
those procedures. The agency will consider the comments and then 
publish its planned auction procedures. An interested party may protest 
the procedures up until the date of the auction under 49 U.S.C. 
40110(d)(4) and 14 CFR part 17.
---------------------------------------------------------------------------

    \19\ As indicated in the Order Limiting Operations at John F. 
Kennedy International Airport, 73 FR 3510 (1/18/08) and the Notice 
of Proposed Order Limiting Scheduled Operations at Newark Liberty 
International Airport, 73 FR 14552 (3/18/08), the FAA intends to 
auction new or returned capacity, if any, under those orders. The 
contract would cover auctions at all possible airports. The FAA is 
not waiting until this rule is finalized to award the contract, 
because this proposal and the two orders contemplate potentially 
conducting the first auction before the end of the year.
    \20\ Since the auction will address the lease of slots awarded 
by the FAA under its leasing authority rather than under any 
administrative allocation, notice to interested parties will be 
governed by applicable procurement law rather than the 
Administrative Procedure Act.
---------------------------------------------------------------------------

    The FAA does believe that the auction should be structured to allow 
for package bidding. With package bidding, each bidder indicates which 
groups (packages) of slots it wishes to acquire at prices specified by 
the auctioneer at the beginning of each round of the auction. Given the 
network nature of the industry, airlines need multiple slots at an 
airport in order to operate efficiently. Package bidding will ensure 
that the airlines can use all of the slots that they acquire.
    In order to assure that auction participants understand how the 
auction process works, the FAA anticipates the contractor would have to 
conduct a training seminar and a mock auction prior to each auction. A 
single training seminar and mock auction would not suffice since 
presumably not every carrier will participate in every auction. The 
auction will also have to be structured to prevent gaming. This would 
likely be accomplished through the use of activity rules.
    Finally, the contractor would have to provide and maintain a secure 
communication mechanism for conducting the auction and develop a Web 
site that provides information on the availability of slots and the 
logistics of the auction.
    At present, the FAA is contemplating requiring bidding carriers to 
provide up-front payments as a prerequisite to participating in the 
auction and requiring full payment for the slots at the time of award. 
The Federal Communications Commission (FCC) has experienced problems 
with bidders who were not financially secure or who were otherwise 
unwilling or unable to pay for the awards. The upfront payment could 
also discourage bid-sniping by preventing carriers from adding slots to 
their bid package beyond the amount of the upfront payment. The FAA 
recognizes that paying for the entire lease at one time could be 
expensive; however, it also believes that serious bidders should be 
able to obtain the requisite financing.

G. Secondary Trading

    All slots will have value in the secondary market. To the extent 
that the secondary market is not mature and the value of slots is not 
well-known, the auction should inform potential buyers of the value of 
these slots and stimulate the secondary market. The FAA believes that 
ultimately the best way to maximize competition is with the development 
of a robust secondary market. To that end, the agency is not proposing 
a system of set-asides and exemptions that would be available to new 
entrants and limited incumbents. We agree with several of the carriers 
who commented on the NPRM and within the ARC that the system of 
preferences and exemptions developed under the HDR and AIR-21 may have 
significantly diluted the viability of the secondary market ostensibly 
created under the HDR's Buy/Sell Rule. However, we are also unconvinced 
that these exemptions and set-asides were the only reason the Buy/Sell 
Rule was less than fully effective. Throughout the years the FAA has 
received several complaints that carriers were unaware of possible 
opportunities to buy or lease slots and that incumbent carriers were 
colluding to keep new entrant carriers out of the airport.
    We believe some measures must be taken to assure access to the 
secondary market. First, we believe all carriers interested in 
initiating operations at

[[Page 20857]]

LaGuardia, or increasing their operations there, should have an 
opportunity to participate in any transactions. Accordingly, the FAA 
proposes to (1) permit carriers to include common slots for sale in the 
auction, organized by the FAA, and (2) establish a bulletin-board 
system whereby carriers seeking to sublet slots outside the auction 
process, or to acquire such subleases, would notify the FAA, which 
would then post the relevant information on its Web site.
    If a carrier wishes to include some of its common slots in the 
auction, these slots will be treated in the same manner as other slots 
being auctioned by the FAA. The carrier would be able to specify a 
minimum price for these slots so that it need not give up the slots 
unless they command a price that the carrier is willing to accept.
    The FAA has tentatively decided that transactions via the bulletin-
board-system would not have to be blind, and the transaction could 
include both cash and non-cash payments. While AirTran and ACAA argued 
in their comments to the NPRM that transparency among parties to the 
transaction encourages anti-competitive behavior, the FAA finds 
compelling the comments of other carriers that a blind, cash-only 
requirement is unduly restrictive. In particular, the FAA agrees with 
U.S. Airways and Delta that non-cash bids promote competition by 
enlarging the pool of potential bidders. Thus, non-cash transactions 
should result in both more bidders and potentially higher bids. 
However, as noted by United, Northwest Airlines (Northwest), American 
and Delta, it is critical that the identities of parties be known if 
non-cash assets are permitted because that is the only way to value 
those assets. In addition, the non-cash aspect of the transaction would 
require direct negotiating.
    The FAA requests comment on ways that these concerns could be met 
in a blind secondary market. For example, in the NPRM the FAA proposed 
a hybrid scheme whereby the initial offer and acceptance would be blind 
and limited to a cash offer, but the parties could negotiate non-cash 
assets after the offer had been accepted. The FAA continues to believe 
that such an approach may be workable. During the posting of the lease 
and subsequent bidding of the slots, the parties' identities would not 
be known. Once the auction closed, the FAA would forward the highest 
bid to the seller without any bidder identification. The seller would 
have a set number of business days to accept the bid. At that point, 
the parties' identities would be revealed, and they would have a set 
period of time to negotiate the possibility of non-cash assets in lieu 
of money as consideration for the lease. If the parties were unable to 
come to an agreement, the lease would have to proceed on a cash basis. 
Other alternatives may also be viable.
    The FAA takes to heart the concern raised by some commenters that 
non-blind transactions could encourage collusion. Regardless of which 
approach, if any, is ultimately adopted, the Department already has the 
authority under 49 U.S.C. 41712 to investigate, prohibit, and impose 
penalties on an air carrier for an unfair or deceptive practice or an 
unfair method of competition in air transportation or the sale of air 
transportation. The Department has consistently held that this 
authority empowers it to prohibit anticompetitive conduct (1) that 
violates the antitrust laws, (2) that is not yet serious enough to 
violate the antitrust laws but may do so in the future, or (3) that, 
although not a violation of the letter of the antitrust laws, is close 
to a violation or contrary to their spirit.\21\
---------------------------------------------------------------------------

    \21\ See United Airlines, Inc. v. Civil Aeronautics Board, 766 
F. 2d 1107, 1112, 1114 (7th Cir. 1985) and cases cited therein; see 
also H.R. Rep. No. 98-793, 98th Cong., 2d Sess. (1984) at 4-5, Order 
2002-9-2, Complaint of the American Society of Travel Agents, Inc., 
and Joseph Galloway against United Air Lines, Inc, et al. (Docket 
No. OST-99-6410) and Complaint of The American Society of Travel 
Agents, Inc., and Hillside Travel, Inc. against Delta Air Lines, et 
al. (Docket No. OST-02-12004) (September 4, 2002) at 22-23.
---------------------------------------------------------------------------

    In order to assure that the Department can conduct adequate 
oversight, today's proposal would require carriers to file with the 
Department a detailed breakdown of all lease terms and asset transfers 
for each transaction, and the subletting carrier must disclose all bids 
submitted in response to its solicitation. The slot could not be 
operated by the acquiring carrier until all documentation has been 
received, and the FAA has approved the transfer. Within the context of 
the proposed auction discussion in the NPRM, United suggested that the 
FAA could publicly disclose non-confidential business information so 
that all carriers have an assessment of the relative value of the slots 
that are being traded. We have not included language to this effect in 
the proposed regulatory text. However, we seek comment on whether it 
would be helpful for this type of information to be disclosed.
    Trades among marketing carriers and one-for-one trades would not 
have to be advertised. Marketing carriers should not have to open up 
transactions to the carrier community as a whole any more than a single 
carrier should have to disclose its scheduling decisions with other 
carriers. The FAA would approve these transactions, as it has done 
historically. Same day trades among marketing carriers that address 
emergency situations such as maintenance problems or other unforeseen 
operational issues could take place without prior approval by the FAA, 
but carriers must notify the FAA of the trade within five business 
days. One-for-one trades among carriers would not be subject to the 
restrictions of the secondary market because they enhance the 
operational efficiency of the airport. However, the exchange of slots 
on a one-for-one basis could not be for consideration.

IV. Unscheduled Operations

    As proposed in the NPRM, the FAA intends to limit unscheduled 
operations into and out of LaGuardia during the constrained hours. 
These operations have been restricted via the LaGuardia Order to six 
per hour, but the FAA has recently proposed to reduce that number to 
three. Under today's proposal, reservations would be required to use 
the airport (except for emergency operations) and could be obtained up 
to 72 hours in advance.
    United requested that scheduled carriers be allowed to ferry 
aircraft out of LaGuardia for maintenance without having to obtain a 
reservation for an unscheduled operation as long as the FAA was given 
advance notice. To the extent ATC can handle additional requests (for 
example in good weather), it will do so without regard to the reason 
for the request. In addition, ATC may decide that a single additional 
flight for maintenance purposes would not introduce any additional 
delay. However, there is no guarantee that the FAA would accept more 
than three reservations per hour, and the determination to handle more 
traffic would likely be made on that day. Reservations for all non-
emergency flights would still be required.
    The FAA originally believed that there was no need to treat public 
charter operations differently from other unscheduled operations. Based 
on comments from the National Air Carrier Association (NACA), the 
agency has reconsidered its position. The FAA proposes to allow public 
charter operators to reserve one of the three available allowable 
operations up to six months in advance. If more than one public charter 
operation is desired for a given hour, the public charter operator 
without the advance reservation could attempt to secure a reservation 
within the three-day window that is available for all other unscheduled 
operations.

[[Page 20858]]

V. Other Issues

A. 30-Minute Allocations

    The FAA had originally proposed allocating Operating Authorizations 
in 15-minute increments. The agency believed that 15-minute increments 
would minimize congestion from schedule peaking. Four carriers, United, 
Delta, Northwest and American, suggested that slots should be assigned 
within 30-minute periods, which is consistent with current practice. 
The carriers noted that shrinking the window to 15 minutes would have 
no meaningful, positive impact on congestion, but would have a 
tremendous negative impact on the ability of carriers to operate at the 
airport by unduly complicating scheduling practices. They argued that a 
15-minute window would lead to more schedule modifications as seasonal 
block times change, additional paperwork burden for carriers because 
more trades would be needed, and additional aircraft holdouts on the 
ramps leading to increased ramp and taxiway congestion. The FAA agrees 
with the commenters and now proposes slots be assigned in 30-minute 
windows. The FAA cautions, however, that peaking within the 30-minute 
windows could lead to increased congestion. The FAA will continue to 
monitor operations and will address any significant operational issues 
through discussions with carriers.

B. Limit on Arrivals and Departures

    In response to the NPRM, American and The City of New York 
suggested the final rule should regulate arrivals only. American noted 
that at O'Hare, the FAA determined delays tend to be more disruptive to 
arrivals, and the carrier suggested regulating arrivals only will 
adequately address the congestion problem because for each arrival 
there would generally be a corresponding departure.
    American is correct that the FAA determined there was no need to 
formally limit departures at O'Hare, and both commenters are correct 
that, in general, for every arrival there is a departure. However, the 
timing of those departures does not necessarily correlate with 
arrivals, and the hub scheduling patterns at O'Hare are different from 
LaGuardia. ATC also has greater flexibility at O'Hare in determining 
runway configurations to accommodate arrivals and departures. In 
addition, the sequencing of flights at LaGuardia is so tight that the 
FAA does not believe it can merely limit arrivals. LaGuardia is 
constrained, arguably overly so, throughout the day. Simply limiting 
arrivals would increase the number of minutes of delay already 
encountered on a daily basis at the airport. Nor would limiting 
arrivals ensure that there is relative balance between arrival and 
departure demand that corresponds to available runway capacity. The 
agency's experience under the HDR and the LaGuardia Order shows that 
carriers often make internal scheduling adjustments between arrival and 
departure slots or trade with other carriers to keep schedules within 
available capacity. Limiting only arrivals or departures would not 
promote that balancing of demand. Accordingly, the FAA continues to 
believe both arrivals and departures should be slot-controlled.

C. Use-or-Lose

    For common and limited slots, the FAA is proposing the same use-or-
lose requirement that it proposed under the upgauging proposal in the 
NPRM and the requirement adopted in the LaGuardia Order. For operations 
not subject to the proposed minimum aircraft size requirement, the FAA 
proposed an 80 percent usage requirement over a 60-day period, with the 
usage requirements not applying to new operations for the first 90 
days. If the usage requirement were not met, the slots would revert to 
the FAA and would be retired or auctioned as unrestricted slots in the 
next auction. The FAA is proposing that unrestricted slots would not be 
subject to a usage requirement.
    In response to the NPRM, the Port Authority argued that the FAA 
should adopt a 90 percent usage requirement rather than the proposed 80 
percent, because the lower number allows a carrier to schedule 
operations only four days of the week. The Port Authority argued that 
this type of scheduling was inefficient and should be discouraged. When 
looking at cancelled flights, the Port Authority claimed that carriers 
would have no problem meeting the suggested 90 percent usage 
requirement. In a similar vein, ACAA said that carriers should be 
required to release weekend and holiday slots that they did not intend 
to use. The association also argued that the usage requirement should 
be tied to each scheduled operation (i.e., each slot would be 
specifically tied to a particular flight). It maintained that the 
current system of determining usage allows carriers with larger 
holdings to manipulate their flights so that they meet the usage 
threshold even though a significant number of flights are cancelled.
    Delta argued that the proposed 90 percent usage requirement would 
be unduly restrictive. United suggested the FAA allow carriers to 
cancel a scheduled operation and substitute an unscheduled operation 
like a maintenance ferry or a charter flight. The Port Authority 
suggested a carrier that failed to meet the usage requirement be 
allowed to continue to operate the affected flight until used by 
another carrier and the new carrier should be given 120 days to start 
new service rather than the proposed 90.
    While there is a value to ensuring a limited resource like a slot 
is used, there are certain actions that a carrier must take to 
realistically initiate new or expanded service. In the case of 
subleases acquired through the secondary market, carriers have control 
over the leases' start and end dates. Accordingly, the FAA believes 90 
days is sufficient to initiate new service that results from 
transactions on the secondary market.
    Given the conflicting comments on whether the usage threshold 
should be set at 80 percent or 90 percent, the FAA specifically 
requests comment on the appropriate threshold. The Port Authority is 
correct that a more stringent usage requirement would allow fewer 
instances where a carrier could cancel a flight; however, the FAA 
believes that the potential problem raised by the Port Authority is 
less a function of usage requirements and more a function of carriers 
manipulating how cancelled flights are reported. Since carriers 
currently decide which flights to report under a particular Operating 
Authorization, it is possible for them to distribute flights to 
multiple Operating Authorizations and still meet the usage requirement. 
For example, four flights could be distributed over five Operating 
Authorizations and each Operating Authorization would meet the 80 
percent usage requirement.
    The FAA believes it is more meaningful to address this problem 
directly rather than by changing the usage requirement. Simply put, 
each slot should have a corresponding scheduled operation. Under 
today's proposal, carriers would be required to report a series of 
flights under a single slot number rather than in the aggregate. Flight 
number or other changes made primarily to circumvent the usage 
requirement will apply against the carrier for calculation of Use-or-
Lose. Carriers would be permitted to operate a charter, maintenance, or 
ferry operation in lieu of a scheduled operation and not have that 
operation discounted as long as they did not abuse the privilege.

[[Page 20859]]

Regulatory Notices and Analyses

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulation justify its costs. Second, 
the Regulatory Flexibility Act of 1980 requires agencies to analyze the 
economic impact of regulatory changes on small entities. Third, the 
Trade Agreements Act (19 U.S.C. 2531-2533) prohibits agencies from 
setting standards that create unnecessary obstacles to the foreign 
commerce of the United States. In developing U.S. standards, this Trade 
Act requires agencies to consider international standards and, where 
appropriate, to be the basis of U.S. standards. Fourth, the Unfunded 
Mandate Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare 
a written assessment of the costs, benefits, and other effects of 
proposed or final rules that include a Federal mandate likely to result 
in the expenditure by State, local, or tribal governments, in the 
aggregate, or by the private sector, of $100 million or more annually 
(adjusted for inflation).
    In conducting these analyses, FAA has determined this final rule 
(1) has benefits that justify its costs, is ``significant regulatory 
action'' as defined in section 3(f)(1) of Executive Order 12866, which 
is also known as an ``economically significant'' regulatory action, and 
is ``significant'' as defined in DOT's Regulatory Policies and 
Procedures; (2) would not have a significant economic impact on a 
substantial number of small entities; (3) would not adversely affect 
international trade; and (4) would not impose an unfunded mandate on 
State, local, or tribal governments, or on the private sector. These 
analyses, set forth in this document, are summarized below.

The 2006 NPRM Initial Regulatory Evaluation

    Most comments on the Initial Regulatory Evaluation of 2006 NPRM 
were attributed to cost and benefit estimates of the upgauging 
requirements and the related analysis of the role of aircraft size in 
competition and slot allocation. Since the FAA is withdrawing its 
proposal for upgauging, most of the comments are no longer relevant. 
See the ``Withdrawal of Upgauging Proposal'' section in today's notice 
for additional discussion of comments on and the withdrawal of the 
upgauging requirements. There were several policy related comments that 
were mentioned in tandem with comments on the regulatory evaluation. We 
have treated these comments in the ``Discussion of the NPRM'' and 
``Proposal to Allocate Limited Capacity at LaGuardia Efficiently'' 
sections of today's notice.
    ATA and Delta commented that the FAA used an unrealistic base case 
in the 2006 regulatory evaluation. They argued that the FAA used the 
unlikely assumption that LaGuardia would revert to a situation where 
there would be no cap on the level of operations and therefore the 
regulatory evaluation overestimated benefits. They claimed that the 
realistic baseline from which to estimate costs and benefits would be a 
cap on LaGuardia operations.
    As discussed elsewhere in today's notice the FAA contends that the 
LaGuardia Order has kept operations from growing since the expiration 
of the HDR, but the agency has always been clear that the Order is 
linked to the publication of a final rule. Therefore, the base case 
from which to compare the cost and benefits of proposed alternatives in 
terms of delay reduction should not be between the Order and any final 
rule, but between an unconstrained airport and a final rule. The 
airport was close to unconstrained in 2000, which is why the FAA used 
its experience in 2000 for the 2006 NPRM and today's notice. In 
addition, the New York City area airports experienced nearly 
unprecedented delays last summer, since JFK and Newark were not 
constrained and carriers were allowed to add flights at will.

Total Costs and Benefits of This Rulemaking

    The FAA estimates that this proposed rule would result in a long-
term improvement in the allocation of scarce slot resources at 
LaGuardia. The estimated present value of net benefits of this rule is 
between $65 million and $197 million between 2009 and 2019. The costs 
of the rule, with a present value between $12 million and $23 million, 
are due to the design, implementation and participation in an auction 
of slots.\22\
---------------------------------------------------------------------------

    \22\ Present value costs and benefits use a seven percent 
discount rate. The draft Regulatory Evaluation in the docket for 
this rulemaking contains additional valuations using a three percent 
discount rate.
---------------------------------------------------------------------------

    This regulatory impact analysis also assumes as a baseline that in 
the absence of this rulemaking. The FAA would not otherwise impose a 
cap on aircraft operations at LaGuardia. Therefore, consistent with the 
initial Regulatory Evaluation undertaken for the FAA's 2006 NPRM, the 
agency estimates that, through the long-term implementation of a cap on 
aircraft operations, this rulemaking would result in a 32 percent 
reduction in the average delay per operation at LaGuardia relative to 
the situation with no cap. This reduction in average delay would 
generate present value net benefits of approximately $2.02 billion 
between 2009 and 2019. The benefits are estimated by comparing the no-
rule scenario (similar to the situation at LaGuardia in 2000) with the 
proposed cap.

Who Is Potentially Affected by This Rulemaking

     Operators of scheduled and non-scheduled, domestic and 
international flights, and new entrants who do not yet operate at 
LaGuardia.
     All communities, including small communities with air 
service to LaGuardia.
     Passengers of scheduled flights to LaGuardia.
     The Port Authority of New York and New Jersey, which 
operates the airport.

Key Assumptions

     Base Case: No operating authorizations or caps.
     Cap on operations provides additional delay improvement.
     Option 1: 100 percent of slots held by carriers with fewer 
than 21 slots would be grandfathered with 10 years of life; for holders 
with 21 or more slots, 90 percent of slots would be grandfathered with 
leases of 10 years, two percent would be retired and eight percent 
would be assigned with shorter leases auctioned over five years.
     Delay improvement in Option 1 due to retirement of 
approximately one minute per average operation.
     Option 2: Identical to Option 1 except there would be no 
retirement of slots, and for holders with 21 or more slots, 80 percent 
would be grandfathered with 10 year leases and 20 percent would be 
assigned with shorter leases auctioned over five years.
     For the purposes of this evaluation, the effective date is 
(11/1/08).

Other Important Assumptions

     Discount Rate--7%.
     Assumes 2008 Current Year Dollars.
     Passenger Value of Travel Time--$30.86 per hour.\23\
---------------------------------------------------------------------------

    \23\ GRA, Incorporated ``Economic Values for FAA Investment and 
Regulatory Decisions, A Guide'' prepared for the FAA Office of 
Aviation Policy and Plans (October 3, 2007). Value is weighted using 
LaGuardia shares of 51 percent leisure and 49 percent business 
travel.

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[[Page 20860]]

Alternatives We Have Considered

     No caps (no action): This alternative would have allowed 
the HDR to expire on January 1, 2007 without replacing it. Based on 
history, the FAA expected operators would most likely continue to 
expand operations, further worsening airport delays.
     2006 NPRM (withdrawal): The 2006 NPRM would have 
instituted caps, provided for mandatory upgauging, and withdrawn 10 
percent of slots annually for reallocation. The FAA is replacing this 
proposal with the one proposed here.
     Caps: This alternative would permanently impose caps at 75 
scheduled operations and three unscheduled operations per hour. It 
would grandfather all current Operating Authorizations.
     Option 1 + Caps: This alternative would institute caps as 
above, retire approximately two percent of eligible slots in the 
interest of reducing delays and reallocate eight percent of eligible 
capacity via an annual auction over five years.
     Option 2 + Caps: This alternative would institute caps as 
above, and reallocate 20 percent of eligible slots via an annual 
auction over five years.
    We are requesting comment from industry on the range of 
alternatives considered.

Benefits of This Rulemaking

    The primary benefits of this rulemaking will be due to the delay 
reduction from the caps on operations and an improvement in the 
allocation of scarce slot resources through the use of an auction 
mechanism. In Option 1 of the proposed rulemaking, there will also be 
some additional benefits due to delay reduction associated with 
retiring approximately 18 slots. Consumers are likely to benefit from 
the delay reduction associated with the imposition of caps and the 
additional retirement of slots under Option 1. Consumers would also 
benefit from any new service resulting from the reallocation of 
resources.

Costs of This Rulemaking

    The major costs of this proposed rule cover the costs to the public 
and private sectors of designing, implementing and participating in the 
auction.

Paperwork Reduction Act

    This proposal contains the following new information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the FAA has submitted the information requirements 
associated with this proposal to the Office of Management and Budget 
for its review.
    Some of the information requirements in today's notice are similar 
to those originally proposed in the 2006 notice. The FAA has updated 
these requirements and summarized them below.
    Title: Congestion Management Rule for LaGuardia Airport. Summary: 
The FAA proposes to grandfather the majority of operations at LaGuardia 
and develop a secondary market by annually auctioning off a limited 
number of slots. This proposal also contains provisions for use-or-lose 
and withdrawal for operational need. The FAA proposes to sunset the 
rule in ten years. More information on the proposed requirements is 
detailed elsewhere in today's notice.
    Use of: The information is reported to the FAA by scheduled 
operators holding slots. The FAA logs, verifies, and processes the 
requests made by the operators.
    This information is used to allocate, track usage, withdraw, and 
confirm transfers of slots among the operators and facilitates the 
buying and selling of slots in the secondary market. The FAA also uses 
this information in order to maintain an accurate accounting of 
operations to ensure compliance with the operations permitted under the 
rule and those actually conducted at the airport.
    Respondents: The respondents to the proposed information 
requirements in today's notice are scheduled carriers with existing 
service at LaGuardia, carriers that plan to enter the LaGuardia market 
(by auction or secondary market), and carriers that enter the LaGuardia 
market in the future. There are currently fourteen (14) carriers with 
existing scheduled service at LaGuardia.
    Frequency: The information collection requirements of the rule 
involve scheduled carriers notifying the FAA of their use of slots. The 
carriers must notify the FAA of: (1) Its designation of 50 percent of 
its Limited Slots; (2) request for confirmation to sublease slots; (3) 
its consent to transfer slots under the transferring Carrier's 
marketing control; (4) requests for confirmation of one-for-one slot 
trades; (5) slot usage (operations); and (6) request for assignment of 
slots available on a temporary basis.
    Annual Burden Estimate: The annual reporting burden for each 
subsection of the rule is presented below. Annual burden estimates 
presented in today's notice are based on burden estimates from the 2006 
notice.
    The burden is calculated by the following formula:
    Annual Hourly Burden = ( of respondents) * (time involved) 
* (frequency of the response).
Sec.  93.64(c)(3) Categories of Slots: 50 Percent Designation of 
Limited Slots
(6 carriers) * (80 hours per submittal) = 480 hours

    Based on the current allocation of Operating Authorizations and the 
proposed level of baseline operations each carrier would be 
grandfathered under today's proposal, we assumed the 6 carriers with 
the most operations at LaGuardia would expend up to ten days of 
planning time each, potentially 80 hours, to develop and submit its 
designation of 50 percent of its Limited Slots. This designation would 
occur once, ten days after the final rule effective date.
Sections 93.65(c)-(d) and 93.66(a) Initial Assignment of Slots and 
Assignment of New or Returned Slots
    We assumed the 14 carriers operating at LaGuardia will expend time 
submitting and collecting information to participate in the proposed 
auctions for slot assignments. The FAA is currently in the process of 
procuring auction software and services. The FAA will make available 
burden estimates for information requirements relating to auction 
participation in a separate notice.
Section 93.68(b)-(f) Sublease and Transfer of Slots
(14 carriers) * (1.5 hours per submittal) * (4 occurrences per year) = 
84 hours

    Based on burden estimates from the 2006 notice, we assumed the 14 
carriers operating at LaGuardia would expend one and one half hours for 
each occurrence of a lease or transfer of a slot. For each operator, we 
assumed that a lease or transfer of a slot would occur on average 
quarterly.

Section 93.69(b) One-for-One Trades of Operating Authorizations
(14 carriers) * (1.5 hours per submittal) * (4 occurrences per year) = 
84 hours

    Based on burden estimates from the 2006 notice, we assumed the 14 
marketing carriers operating at LaGuardia expend one and one half hours 
for each occurrence of a one-for-one trade of a slot. For each 
operator, we assumed that a one-for-one trade of a slot would occur 
quarterly.

[[Page 20861]]

Section 93.72(a) Reporting Requirements
(14 carriers) * (1.5 hours per submittal) * (6 occurrences per year) = 
126 hours

    Based on burden estimates from the 2006 notice, we assumed the 14 
carriers operating at LaGuardia expend one and one half hours every two 
months of the data required by Sec.  93.72(a).
Section 93.73(d)-(e) Administrative Provisions
(14 carriers) * (1.5 hours per submittal) * (4 occurrence per year) = 
84 hours

    Based on burden estimates from the 2006 notice, we assumed the 14 
carriers operating at LaGuardia expend one and one half hours every 
quarter for administrative provisions.

Summary

    Total First Year Hourly Reporting Burden--858 Hours.
    Total Recurring Annual Hourly Reporting Burden (after first year)--
378 Hours.
    The agency is soliciting comments to--
    (1) Evaluate whether the proposed information requirements are 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the agency's estimate of the burden;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Individuals and organizations may submit comments on the 
information collection requirement by [insert date], and should direct 
them to the address listed in the ADDRESSES section of this document. 
Comments also should be submitted to the Office of Information and 
Regulatory Affairs, OMB, via facsimile at (202) 395-6974, Attention: 
Desk Officer for FAA.
    According to the 1995 amendments to the Paperwork Reduction Act (5 
CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the 
collection of information, nor may it impose an information collection 
requirement unless it displays a currently valid OMB control number. 
The OMB control number for this information collection will be 
published in the Federal Register, after the Office of Management and 
Budget approves it.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-3540 (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objective of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the business, organizations, and governmental jurisdictions subject 
to regulation.'' To achieve that principle, the RFA requires agencies 
to solicit and consider flexible regulatory proposals and to explain 
the rationale for their actions. The RFA covers a wide-range of small 
entities, including small businesses, not-for-profit organizations, and 
small governmental jurisdictions.
    Agencies must perform a review to determine whether a proposed or 
final rule would have a significant economic impact on a substantial 
number of small entities. If the agency determines that it would, the 
agency must prepare a regulatory flexibility analysis as described in 
the Act.
    However, if an agency determines that a proposed or final rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the 1980 RFA provides that 
the head of the agency may so certify and a regulatory flexibility 
analysis is not required. The certification must include a statement 
providing the factual basis for this determination, and the reasoning 
should be clear. Such a determination has been made for this proposed 
rule.
    The proposed rule affects all 26 scheduled operators at LGA. Based 
on a review of the number of employees for each scheduled operator, the 
FAA found none of the scheduled operators at LGA are considerd small 
entities by Small Buinsess Administration size standards (in this case, 
firms with 1,500 or fewer employees). In the NPRM, the FAA identified 
two carriers that it believed could qualify as a small business under 
the SBA size standards. The agency has reevaluated the size of all 
carriers currently operating at LaGuardia and has determined that none 
of them are small businesses.
    Using Enhanced Traffic Management System (ETMS) data, FAA has 
determined that there would be approximately 70 identifiable 
unscheduled operators at LGA which could be affected by this rule. 
While some of these operators may be small businesses, we do not 
believe they would be impacted signficantly by the proposed rule. While 
there would be three fewer slots per hour under our proposal, these 
operators seldomly use these slots and typically have greater 
flexibility to adjust operations than do scheduled operators.
    Using 2007 Census data, the FAA also reviewed whether there would 
be interruptions to service to communities of less than 50,000 in 
population. We do not know if there would be any service interruptions 
as a result of the rule. We have reviewed population statistics for 
every city served from LGA in January 2007 (the base for allocation of 
slots under the proposed rule) and found none with fewer than 50,000 in 
population.
    Therefore, the FAA certifies that this proposed rule would not have 
a significant economic impact on a substantial number of small 
entities.

International Trade Impact Assessment

    The Trade Agreements Act of 1979 prohibits Federal agencies from 
establishing any standards or engaging in related activities that 
create unnecessary obstacles to the foreign commerce of the United 
States. Legitimate domestic objectives, such as safety, are not 
considered unnecessary obstacles. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards. The FAA has assessed the 
potential effect of this proposed rule and determined that it would 
impose no costs on international entities and thus have a no trade 
impact. Canadian entities are the only foreign operators at LaGuardia 
and their slots are protected by a bilateral aviation agreement and not 
affected by the rule. They might benefit from the rule if they choose 
to participate in the proposed auction to acquire additional slots.

Unfunded Mandate Assessment

    The Unfunded Mandate Reform Act of 1995 (the Act) is intended, 
among other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of the Act 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in an expenditure of $100 million or more (adjusted 
annually for inflation) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector; such a mandate 
is deemed to be a ``significant regulatory action.'' The FAA currently 
uses an inflation-adjusted value of $136.1 million in lieu of $100 
million. This final rule does not contain such a mandate. The 
requirements of Title II do not apply.

[[Page 20862]]

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action would not have a substantial direct effect on the States, on the 
relationship between the national Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and, therefore, would not have federalism implications.

Environmental Analysis

    FAA Order 1050.1E, ``Environmental Impacts: Policies and 
Procedures'' identifies FAA actions that are normally categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act (NEPA) in the absence of extraordinary circumstances The FAA has 
determined that this rulemaking qualifies for the categorical 
exclusions identified in paragraph 312d ``Issuance of regulatory 
documents (e.g., Notices of Proposed Rulemaking and issuance of Final 
Rules) covering administration or procedural requirements (does not 
include Air Traffic procedures; specific Air traffic procedures that 
are categorically excluded are identified under paragraph 311 of this 
Order)'' and paragraph 312f, ``Regulations, standards, and exemptions 
(excluding those which if implemented may cause a significant impact on 
the human environment).'' It has further been determined that no 
extraordinary circumstances exist that may cause a significant impact 
and therefore no further environmental review is required. The FAA has 
documented this categorical exclusion determination. A copy of the 
determination and underlying documents has been included in the Docket 
for this rulemaking.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA has analyzed this NPRM under Executive Order 13211, Actions 
Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). We have determined that it is not 
a ``significant energy action'' under the executive order because while 
a ``significant regulatory action'' under Executive Order 12866, it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

Additional Information

Comments Invited

    The FAA invites interested persons to participate in this 
rulemaking by submitting written comments, data, or views. We also 
invite comments relating to the economic, environmental, energy or 
federalism impacts that might result from adopting the proposals in 
this document. The most helpful comments reference a specific portion 
of the proposal, explain the reason for any recommended change, and 
include supporting data. To ensure the docket does not contain 
duplicate comments, please send only one copy of written comments, or 
if you are filing comments electronically, please submit your comments 
only one time.
    We will file in the docket all comments we receive, as well as a 
report summarizing each substantive public contact with FAA personnel 
concerning this proposed rulemaking. Before acting on this proposal, we 
will consider all comments we receive on or before the closing date for 
comments. We will consider comments filed after the comment period has 
closed if it is possible to do so without incurring expense or delay. 
We may change this proposal in light of the comments we receive.

Proprietary or Confidential Business Information

    Do not file in the docket information that you consider to be 
proprietary or confidential business information. Send or deliver this 
information directly to the person identified in the FOR FURTHER 
INFORMATION CONTACT section of this document. You must mark the 
information that you consider proprietary or confidential. If you send 
the information on a disk or CD-ROM, mark the outside of the disk or 
CD-ROM and also identify electronically within the disk or CD-ROM the 
specific information that is proprietary or confidential.
    Under 14 CFR 11.35(b), when we are aware of proprietary information 
filed with a comment, we do not place it in the docket. We hold it in a 
separate file to which the public does not have access, and we place a 
note in the docket that we have received it. If we receive a request to 
examine or copy this information, we treat it as any other request 
under the Freedom of Information Act (5 U.S.C. 552). We process such a 
request under the DOT procedures found in 49 CFR part 7.

Availability of Rulemaking Documents

    You can get an electronic copy of rulemaking documents using the 
Internet by--
    1. Searching the Federal eRulemaking Portal (http://www.regulations.gov);
    2. Visiting the FAA's Regulations and Policies web page at http://www.faa.gov/regulations_policies/; or
    3. Accessing the Government Printing Office's web page at http://www.gpoaccess.gov/fr/index.html.
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the docket number, notice number, or amendment number 
of this rulemaking.
    You may access all documents the FAA considered in developing this 
proposed rule, including economic analyses and technical reports, from 
the Internet through the Federal eRulemaking Portal referenced in 
paragraph (1).

List of Subjects in 14 CFR Part 93

    Air traffic control, Airports, Navigation (air).

VII. Draft Regulatory Text

    In consideration of the foregoing, the Federal Aviation 
Administration proposes to amend Chapter I of Title 14, Code of Federal 
Regulations, as follows:

PART 93--SPECIAL AIR TRAFFIC RULES

    1. The authority for part 93 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40103, 40106, 40109, 40113, 44502, 
44514, 44701, 44719, 46301.

Proposed Amendment--Option 1

    2. Subpart C is added to read as follows:
Subpart C--LaGuardia Airport Traffic Rules
Sec.
93.61 Applicability.
93.62 Definitions.
93.63 Slots for scheduled arrivals and departures.
93.64 Categories of Slots.
93.65 Initial assignment of Slots.
93.66 Assignment of new or returned Slots.
93.67 Reversion and withdrawal of Slots.
93.68 Sublease and transfer of Slots.
93.69 One-for-one trade of Slots.
93.70 Minimum usage requirements.
93.71 Unscheduled Operations.
93.72 Reporting requirements.
93.73 Administrative provisions.

[[Page 20863]]

Subpart C--LaGuardia Airport Traffic Rules


Sec.  93.61  Applicability.

    (a) This subpart prescribes the air traffic rules for the arrival 
and departure of aircraft used for scheduled and unscheduled service, 
other than helicopters, at LaGuardia Airport (LaGuardia).
    (b) This subpart also prescribes procedures for the assignment, 
transfer, sublease and withdrawal of Slots issued by the FAA for 
scheduled operations at LaGuardia.
    (c) The provisions of this subpart apply to LaGuardia during the 
hours of 6 a.m. through 9:59 p.m., Eastern Time, Monday through Friday 
and from 12 noon through 9:59 p.m., Eastern Time, Sunday. No person 
shall operate any scheduled arrival or departure into or out of 
LaGuardia during such hours without first obtaining a Slot in 
accordance with this subpart. No person shall conduct an Unscheduled 
Operation to or from LaGuardia during such hours without first 
obtaining a Reservation.
    (d) Carriers that have Common Ownership shall be considered a 
single air carrier for purposes of this rule.
    (e) The Slots assigned under this subpart terminate at 10 p.m. on 
March 9, 2019.


Sec.  93.62  Definitions.

    For purposes of this subpart, the following definitions apply:
    Airport Reservation Office (ARO) is an operational unit of the 
FAA's David J. Hurley Air Traffic Control System Command Center. It is 
responsible for the administration of reservations for unscheduled 
operations at LaGuardia.
    Base of Operations are those common slots held by a carrier at 
LaGuardia on [final rule effective date], that do not exceed 20 
operations per day and all slots guaranteed under The Air Transport 
Agreement between the Government of the United States of America and 
the Government of Canada.
    Carrier is a U.S. or foreign air carrier with authority to conduct 
scheduled service under Parts 121, 129, or 135 of this chapter and the 
appropriate economic authority for scheduled service under 14 CFR 
chapter II and 49 U.S.C. chapter 411.
    Common Ownership with respect to two or more carriers means having 
in common at least 50 percent beneficial ownership or control by the 
same entity or entities.
    Common Slot (C-slot) is a slot that is allocated by the FAA as a 
lease under its cooperative agreement authority for the length of this 
rule.
    Enhanced Computer Voice Reservation System (e-CVRS) is the system 
used by the FAA to make arrival and/or departure reservations for 
unscheduled operations at LaGuardia and other designated airports.
    Limited Slot (L-slot) is a slot, the lease for which expires prior 
to the expiration of this rule for subsequent allocation by the FAA as 
an unrestricted slot.
    Public Charter is defined in 14 CFR 380.2 as a one-way or roundtrip 
charter flight to be performed by one or more direct air carriers that 
is arranged and sponsored by a public charter operator.
    Public Charter Operator is defined in 14 CFR 380.2 as a U.S. or 
foreign public charter operator.
    Reservation is an authorization received by a carrier or other 
operator of an aircraft, excluding helicopters, in accordance with 
procedures established by the FAA to operate an unscheduled arrival or 
departure on a particular day of the week during a specific 30-minute 
period.
    Scheduled Operation is the arrival or departure segment of any 
operation regularly conducted by a carrier between LaGuardia and 
another point regularly served by that carrier.
    Slot is the operational authority assigned by the FAA to a carrier 
to conduct one scheduled arrival or departure operation at LaGuardia on 
a particular day of the week during a specific 30-minute period.
    Unrestricted Slot (U-slot) is a slot that is allocated to a carrier 
by the FAA via the auction of a lease.
    Unscheduled Operation is an arrival or departure segment of any 
operation that is not regularly conducted by a carrier or other 
operator of an aircraft, excluding helicopters, between LaGuardia and 
another service point. The following types of carrier operations shall 
be considered unscheduled operations for the purposes of this rule: 
public, on-demand, and other charter flights; hired aircraft service; 
extra sections of scheduled flights; ferry flights; and other non-
passenger flights.


Sec.  93.63  Slots for scheduled arrivals and departures.

    (a) During the hours of 6 a.m. through 9:59 p.m., Eastern Time, 
Monday through Friday and from 12 noon through 9:59 p.m., Eastern Time, 
Sunday, no person shall operate any scheduled arrival or departure into 
or out of LaGuardia without first obtaining a Slot in accordance with 
this subpart.
    (b) Except as otherwise established by the FAA under paragraph (c) 
of this section, the number of Slots shall be limited to no more than 
seventy-five (75) per hour. The number of Slots may not exceed 38 in 
any 30-minute period, and 75 in any 60-minute period. The number of 
arrival and departure slots in any period may be adjusted by the FAA as 
necessary based on the actual or potential delays created by such 
number or other considerations relating to congestion, airfield 
capacity and the air traffic control system.
    (c) Notwithstanding paragraph (b) of this section, the 
Administrator may increase the number of Slots based on a review of the 
following:
    (1) The number of delays;
    (2) The length of delays;
    (3) On-time arrivals and departures;
    (4) The number of actual operations;
    (5) Runway utilization and capacity plans; and
    (6) Other factors relating to the efficient management of the 
National Airspace System.


Sec.  93.64  Categories of Slots.

    (a) Each Slot shall be designated as a Common Slot, Limited Slot or 
Unrestricted Slot and shall be assigned to the Carrier under a lease 
agreement. A lease for a Common or Limited Slot shall be assigned via a 
cooperative agreement. A lease for an Unrestricted Slot shall be 
awarded via an auction.
    (b) Common Slots. (1) All Slots within any Carrier's Base of 
Operations as determined on [final rule effective date] shall be 
designated as Common Slots.
    (2) Ten percent of the Slots at LaGuardia on [final rule effective 
date] not otherwise designated as Common Slots under paragraph (b) (1) 
of this section shall be designated as Limited Slots or Unrestricted 
Slots. All other Slots shall be designated as Common Slots.
    (c) Limited Slots. Those Slots assigned to a Carrier subject to 
return to the FAA under Sec.  93.65(c) and (d) shall be designated as 
Limited Slots until the date of their reassignment by the FAA as 
Unrestricted Slots or their retirement by the FAA. A Carrier may 
continue to use a Limited Slot that has reverted to the FAA until the 
second Sunday in the following March.
    (1) In hours where there are more than 75 operations, the FAA shall 
designate the excess Slots as Limited Slots and will retire them in 
accordance with Sec.  93.65(d).
    (2) Each Carrier with a total number of daily operations at 
LaGuardia in excess of its Base of Operations, will be notified by 
[effective date of the final rule] which of its Slots have been 
designated as Limited Slots under paragraph (c)(1) of this section and 
how many of its remaining Slots will be designated as Limited Slots 
pursuant to paragraphs (c)(3) and (4) of this section.

[[Page 20864]]

    (3) A Carrier shall designate 50 percent of its Limited Slots. The 
Carrier must notify the FAA of its designation by [date 10 days after 
the final rule effective date].
    (4) The FAA will designate the remaining Limited Slots, excluding 
those hours in which two or more Slots have been designated as Limited 
Slots by the Carriers.
    (5) No later than [date 20 days after the final rule effective 
date], the FAA will publish a list of all Limited Slots and the dates 
upon which they will expire.
    (d) Unrestricted Slots. Unrestricted Slots are Slots acquired by a 
Carrier through a lease with the FAA awarded via an auction. 
Unrestricted Slots are not subject to withdrawal by the FAA.


Sec.  93.65  Initial assignment of Slots.

    (a) Except as provided for under paragraphs (b) and (c) of this 
section, any Carrier allocated operating rights under the Order, 
Operating Limitations at New York LaGuardia Airport, during the week of 
January 7-13, 2007, as evidenced by the FAA's records, will be assigned 
corresponding Slots in 30-minute periods consistent with the limits 
under Sec.  93.63(b). If necessary, the FAA may utilize administrative 
measures such as voluntary measures or a lottery to re-time the 
assigned Slots within the same hour to meet the 30-minute limits under 
Sec.  93.63(b). The FAA Vice President, System Operations Services, is 
the final decision-maker for determinations under this section.
    (b) If a Carrier was allocated operating rights under the Order 
Limiting Operations at LaGuardia airport during the week of January 7-
13, 2007, but the operating rights were held by another Carrier, then 
the corresponding Slots will be assigned to the Carrier that held the 
operating rights for that period, as evidenced by the FAA's records.
    (c) On [date 35 days after the effective date] and every year 
thereafter through 2012, sixteen (16) percent of the total number of 
Limited Slots shall revert to the FAA in accordance with the schedule 
published under Sec.  93.64(c)(5) and be auctioned as Unrestricted 
Slots by the FAA. Any Slot receiving no responsive bids will be retired 
until the next auction. An affected Carrier will be allowed to use the 
Limited Slot until the following second Sunday in March.
    (d) Starting March 8, 2009 and on the second Sunday in March every 
year thereafter through 2013, the FAA will retire four percent of the 
total number of Limited Slots returned to the FAA under Sec.  93.64(c). 
Based on the criteria set forth in Sec.  93.63(c), the Administrator 
may, at his discretion, auction Slots scheduled for retirement that 
year or auction retired Slots as new capacity.


Sec.  93.66  Assignment of new or returned Slots.

    (a) New capacity or capacity returned to the FAA pursuant to the 
provisions of Sec.  93.70 will be reassigned by the FAA via an auction 
conducted pursuant to Sec.  93.65(c). Slots acquired from the FAA under 
the auction proceeding shall be designated as Unrestricted Slots.
    (b) The FAA may decide to accumulate a quantity of Slots prior to 
conducting an auction.


Sec.  93.67  Reversion and withdrawal of Slots.

    (a) This section does not apply to Unrestricted Slots.
    (b) A Carrier's Common Slots or Limited Slots revert back to the 
FAA 30 days after the Carrier has ceased all operations at LaGuardia 
for any reasons other than a strike.
    (c) The FAA may retime, withdraw or temporarily suspend Common 
Slots and Limited Slots at any time to fulfill operational needs.
    (d) Common Slots and Limited Slots will be withdrawn in accordance 
with the priority list established under Sec.  93.73.
    (e) Except as otherwise provided in paragraph (a) of this section, 
the FAA will notify an affected Carrier before withdrawing or 
temporarily suspending a Common Slot or Limited Slot and specify the 
date by which operations under the Common Slot or Limited Slot must 
cease. The FAA will provide at least 45 days notice unless otherwise 
required by operational needs.
    (f) Any Common Slot or Limited Slot that is temporarily withdrawn 
under this paragraph will be reassigned, if at all, only to the Carrier 
from which it was withdrawn, provided the Carrier continues to conduct 
Scheduled Operations at LaGuardia.


Sec.  93.68  Sublease and transfer of Slots.

    (a) A Carrier may sublease its Slots to another Carrier in 
accordance with this section and subject to the provisions of the 
Carrier's lease agreement with the FAA.
    (b) A Carrier must provide notice to the FAA to sublease a Slot. 
Such notice must contain: The Slot number and time, effective dates 
and, if appropriate, the duration of the lease. The Carrier may also 
provide the FAA with a minimum bid price.
    (c) The FAA will post a notice of the offer to sublease the Slot 
and relevant details on the FAA Web site at http://www.faa.gov. An 
opening date, closing date and time by which bids must be received will 
be provided.
    (d) Upon consummation of the transaction, written evidence of each 
Carrier's consent to sublease must be provided to the FAA, as well as 
all bids received and the terms of the sublease, including but not 
limited to:
    (1) The names of all bidders and all parties to the transaction;
    (2) The offered and final length of the sublease;
    (3) The consideration offered by all bidders and provided by the 
sublessee.
    (e) The Slot may not be used until the conditions of paragraph (d) 
of this section have been met, and the FAA provides notice of its 
approval of the sublease.
    (f) A Carrier may transfer a Slot to another Carrier that conducts 
operations at LaGuardia solely under the transferring Carrier's 
marketing control, including the entire inventory of the flight. Each 
party to such transfer must provide written evidence of its consent to 
the transfer and the FAA must confirm and approve these transfers in 
writing prior to the effective date of the transaction. However, the 
FAA will approve transfers under this paragraph up to five business 
days after the actual operation to accommodate operational disruptions 
that occur on the same day of the scheduled operation. The FAA Vice 
President, System Operations Services is the final decision maker for 
any determinations under this section.
    (g) A Carrier wishing to sublease a Slot via an FAA auction under 
Sec.  93.65(c), rather than pursuant to this section may do so. The 
Carrier shall retain the proceeds and the Slot shall retain the same 
designation that it had prior to the Carrier placing it up for auction.


Sec.  93.69  One-for-one trade of Slots.

    (a) A Carrier may trade a Slot with another Carrier on a one-for-
one basis.
    (b) Written evidence of each Carrier's consent to the trade must be 
provided to the FAA.
    (c) Each recipient of the trade may not use the acquired Slot until 
written confirmation has been received from the FAA.
    (d) Carriers participating in a one-for-one trade must certify to 
the FAA that no consideration or promise of consideration was provided 
by either party to the trade.


Sec.  93.70  Minimum usage requirements.

    (a) This section does not apply to Unrestricted Slots.
    (b) Any Common Slot or Limited Slot that is not used at least 80 
percent of the time over a consecutive two-month period will be 
withdrawn by the FAA.
    (c) Paragraph (b) of this section does not apply to the first 90-
day period after

[[Page 20865]]

assignment of a Common Slot or Limited Slot through a sublease.
    (d) The FAA may waive the requirements of paragraph (b) of this 
section in the event of a highly unusual and unpredictable condition 
which is beyond the control of the Carrier and which affects Carrier 
operations for a period of five or more consecutive days. Examples of 
conditions which could justify a waiver under this paragraph are 
weather conditions that result in the restricted operation of the 
airport for an extended period of time or the grounding of an aircraft 
type.
    (e) The FAA will treat as used any Common Slot or Limited Slot held 
by a Carrier on Thanksgiving Day, the Friday following Thanksgiving 
Day, and the period from December 24 through the first Sunday of 
January.


Sec.  93.71  Unscheduled Operations.

    (a) During the hours of 6 a.m. through 9:59 p.m., Monday through 
Friday, and 12 p.m. through 9:59 p.m. on Sunday, no person may operate 
an aircraft other than a helicopter to or from LaGuardia unless he or 
she has received, for that Unscheduled Operation, a Reservation that is 
assigned by the Airport Reservation Office (ARO) or in the case of 
Public Charters, in accordance with the procedures in paragraph (d) of 
this section. Requests for Reservations will be accepted through the e-
CVRS beginning 72 hours prior to the proposed time of arrival to or 
departure from LaGuardia. Additional information on procedures for 
obtaining a Reservation is available on the Internet at http://www.fly.faa.gov/ecvrs.
    (b) Three Reservations are available per hour, including those 
assigned to Public Charter operations under paragraph (d) of this 
section. The ARO will assign Reservations on a 30-minute basis.
    (c) The ARO will receive and process all Reservation requests for 
unscheduled arrivals and departures at LaGuardia. Reservations are 
assigned on a ``first-come, first-served'' basis determined by the time 
the request is received at the ARO. Reservations must be cancelled if 
they will not be used as assigned.
    (d) One Reservation per hour will be available for allocation to 
Public Charter operations prior to the 72-hour Reservation window in 
paragraph (a) of this section.
    (1) The Public Charter Operator may request a reservation up to six 
months in advance of the date of flight operation. Reservation requests 
should be submitted to Federal Aviation Administration, Slot 
Administration Office, AGC-200, 800 Independence Avenue, SW., 
Washington, DC 20591. Submissions may be made via facsimile to (202) 
267-7277 or by e-mail to [email protected].
    (2) The Public Charter Operator must certify that its prospectus 
has been accepted by the Department of Transportation in accordance 
with 14 CFR part 380.
    (3) The Public Charter Operator must identify the call sign/flight 
number or aircraft registration number of the direct air carrier, the 
date and time of the proposed operation(s), the airport served 
immediately prior to or after LaGuardia, and aircraft type. Any changes 
to an approved Reservation must be approved in advance by the Slot 
Administration Office.
    (4) If Reservations under paragraph (d)(1) of this section have 
already been allocated, the Public Charter Operator may request a 
Reservation under paragraph (a) of this section.
    (e) The filing of a request for a Reservation does not constitute 
the filing of an IFR flight plan as required by regulation. The IFR 
flight plan may be filed only after the Reservation is obtained, must 
include the Reservation number in the ``Remarks'' section, and must be 
filed in accordance with FAA regulations and procedures.
    (f) Air Traffic Control will accommodate declared emergencies 
without regard to Reservations. Non-emergency flights in direct support 
of national security, law enforcement, military aircraft operations, or 
public-use aircraft operations may be accommodated above the 
Reservation limits with the prior approval of the Vice President, 
System Operations Services, Air Traffic Organization. Procedures for 
obtaining the appropriate waiver will be available on the Internet at 
http://www.fly.faa.gov/ecvrs.
    (g) Notwithstanding the limits in paragraph (b) of this section, if 
the Air Traffic Organization determines that air traffic control, 
weather and capacity conditions are favorable and significant delay is 
unlikely, the FAA may determine that additional Reservations may be 
accommodated for a specific time period. Unused Slots may also be made 
available temporarily for Unscheduled Operations. Reservations for 
additional operations must be obtained through the ARO.
    (h) Reservations may not be bought, sold or leased.


Sec.  93.72  Reporting requirements.

    (a) Within 14 days after the last day of the two-month period 
beginning March 8, 2009 and every two months thereafter, each Carrier 
holding a Common Slot or Limited Slot must report, in a format 
acceptable to the FAA, the following information for each Common Slot 
or Limited Slot:
    (1) The Slot number, time, and arrival or departure designation;
    (2) The operating Carrier;
    (3) The date and scheduled time of each of the operations conducted 
pursuant to the Slot, including the flight number and origin/
destination;
    (4) The aircraft type identifier.
    (b) The FAA may withdraw the Slot of any Carrier that does not meet 
the reporting requirements of paragraph (a) of this section.


Sec.  93.73  Administrative provisions.

    (a) Each Slot shall be assigned a number for administrative 
convenience.
    (b) The FAA will assign priority numbers by random lottery for 
Common Slots and Limited Slots at LaGuardia. Each Common Slot and 
Limited Slot will be assigned a withdrawal priority number, and the 30-
minute time period for the Common Slot or Limited Slot, frequency, and 
the arrival or departure designation.
    (c) If the FAA determines that operations need to be reduced for 
operational reasons, the lowest assigned priority number Common Slot or 
Limited Slot will be the last withdrawn.
    (d) Any Slot available on a temporary basis may be assigned by the 
FAA to a Carrier on a non-permanent, first-come, first-served basis 
subject to permanent assignment under this subpart. Any remaining Slots 
may be made available for Unscheduled Operations on a non-permanent 
basis and will be assigned under the same procedures applicable to 
other operating Reservations.
    (e) All transactions under this subpart must be in a written or 
electronic format approved by the FAA.

Proposed Amendment: Option 2

    3. Subpart C is added to read as follows:
    Subpart C--LaGuardia Airport Traffic Rules
Sec.
93.61 Applicability.
93.62 Definitions.
93.63 Slots for scheduled arrivals and departures.
93.64 Categories of Slots.
93.65 Initial assignment of Slots.
93.66 Assignment of new or returned Slots.
93.67 Reversion and withdrawal of Slots.
93.68 Sublease and transfer of Slots.
93.69 One-for-one trade of Slots.
93.70 Minimum usage requirements.
93.71 Unscheduled Operations.
93.72 Reporting requirements.
93.73 Administrative provisions.


Sec.  93.61  Applicability.

    (a) This subpart prescribes the air traffic rules for the arrival 
and departure of aircraft used for scheduled and

[[Page 20866]]

unscheduled service, other than helicopters, at LaGuardia Airport 
(LaGuardia).
    (b) This subpart also prescribes procedures for the assignment, 
transfer, sublease and withdrawal of Slots issued by the FAA for 
scheduled operations at LaGuardia.
    (c) The provisions of this subpart apply to LaGuardia during the 
hours of 6 a.m. through 9:59 p.m., Eastern Time, Monday through Friday 
and from 12 noon through 9:59 p.m., Eastern Time, Sunday. No person 
shall operate any scheduled arrival or departure into or out of 
LaGuardia during such hours without first obtaining a Slot in 
accordance with this subpart. No person shall conduct an Unscheduled 
Operation to or from LaGuardia during such hours without first 
obtaining a Reservation.
    (d) Carriers that have Common Ownership shall be considered a 
single air carrier for purposes of this rule.
    (e) The Slots assigned under this subpart terminate at 10 p.m. on 
March 9, 2019.


Sec.  93.62  Definitions.

    For purposes of this subpart, the following definitions apply:
    Airport Reservation Office (ARO) is an operational unit of the 
FAA's David J. Hurley Air Traffic Control System Command Center. It is 
responsible for the administration of reservations for unscheduled 
operations at LaGuardia.
    Base of Operations are those common slots held by a carrier on 
[final rule effective date], that do not exceed 20 operations per day 
and all slots guaranteed under The Air Transport Agreement between the 
Government of the United States of America and the Government of 
Canada.
    Carrier is a U.S. or foreign air carrier with authority to conduct 
scheduled service under Parts 121, 129, or 135 of this chapter and the 
appropriate economic authority for scheduled service under 14 CFR 
chapter II and 49 U.S.C. chapter 411.
    Common Ownership with respect to two or more carriers means having 
in common at least 50 percent beneficial ownership or control by the 
same entity or entities.
    Common Slot (C-slot) is a slot that is allocated by the FAA as a 
lease under its cooperative agreement authority for the length of this 
rule.
    Enhanced Computer Voice Reservation System (e-CVRS) is the system 
used by the FAA to make arrival and/or departure reservations for 
unscheduled operations at LaGuardia and other designated airports.
    Limited Slot (L-slot) is a slot, the lease for which must be 
transferred to another carrier by the holder of the limited slot as an 
unrestricted slot prior to the expiration of this rule.
    Public Charter is defined in 14 CFR 380.2 as a one-way or roundtrip 
charter flight to be performed by one or more direct air carriers that 
is arranged and sponsored by a public charter operator.
    Public Charter Operator is defined in 14 CFR 380.2 as a U.S. or 
foreign public charter operator.
    Reservation is an authorization received by a carrier or other 
operator of an aircraft, excluding helicopters, in accordance with 
procedures established by the FAA to operate an unscheduled arrival or 
departure on a particular day of the week during a specific 30-minute 
period.
    Scheduled Operation is the arrival or departure segment of any 
operation regularly conducted by a carrier between LaGuardia and 
another point regularly served by that carrier.
    Slot is the operational authority assigned by the FAA to a carrier 
to conduct one scheduled arrival or departure operation at LaGuardia on 
a particular day of the week during a specific 30-minute period.
    Unrestricted Slot (U-slot) is a slot that is assigned to another 
carrier by the holder of a limited slot pursuant to the mandatory lease 
transfer provisions of this subpart.
    Unscheduled Operation is an arrival or departure segment of any 
operation that is not regularly conducted by a carrier or other 
operator of an aircraft, excluding helicopters, between LaGuardia and 
another service point. The following types of carrier operations shall 
be considered unscheduled operations for the purposes of this rule: 
public, on-demand, and other charter flights; hired aircraft service; 
extra sections of scheduled flights; ferry flights; and other non-
passenger flights.


Sec.  93.63  Slots for scheduled arrivals and departures.

    (a) During the hours of 6 a.m. through 9:59 p.m., Eastern Time, 
Monday through Friday and from 12 noon through 9:59 p.m., Eastern Time, 
Sunday, no person shall operate any scheduled arrival or departure into 
or out of LaGuardia during such hours without first obtaining a Slot in 
accordance with this subpart.
    (b) Except as otherwise established by the FAA under paragraph (c) 
of this section, the number of Slots shall be limited to no more than 
seventy-five (75) per hour. The number of Slots may not exceed 38 in 
any 30-minute period, and 75 in any 60-minute period. The number of 
arrival and departure Slots in any period may be adjusted by the FAA as 
necessary based on the actual or potential delays created by such 
number or other considerations relating to congestion, airfield 
capacity and the air traffic control system.
    (c) Notwithstanding paragraph (b) of this section, the 
Administrator may increase the number of Slots based on a review of the 
following:
    (1) The number of delays;
    (2) The length of delays;
    (3) On-time arrivals and departures;
    (4) The number of actual operations;
    (5) Runway utilization and capacity plans; and
    (6) Other factors relating to the efficient management of the 
National Airspace System.


Sec.  93.64  Categories of Slots.

    (a) Each Slot shall be designated as a Common Slot, Limited Slot or 
Unrestricted Slot and shall be assigned to the Carrier under a lease 
agreement. A lease for a Common Slot or Limited Slot shall be assigned 
via a cooperative agreement. A lease for an Unrestricted Slot shall be 
awarded via an auction.
    (b) Common Slots. (1) All Slots within any Carrier's Base of 
Operations, as determined on [final rule effective date], shall be 
designated as Common Slots.
    (2) Twenty percent of the Slots at LaGuardia on [final rule 
effective date] not otherwise designated as Common Slots under 
paragraph (b)(1) of this section shall be designated as Limited Slots 
or Unrestricted Slots. All other Slots shall be designated as Common 
Slots.
    (c) Limited Slots. Those Slots assigned to a Carrier subject to 
return to the FAA under Sec.  93.65(c) shall be designated as Limited 
Slots until they are transferred to another Carrier under those 
provisions. A Carrier may continue to use a Limited Slot until 
reassigned to another Carrier as an Unrestricted Slot.
    (1) Each Carrier with a total number of daily operations at 
LaGuardia in excess of its Base of Operations, will be notified by 
[effective date of the final rule] how many of its slots will be 
designated as Limited Slots pursuant to paragraphs (c)(2) and (3) of 
this section.
    (2) A Carrier shall designate 50 percent of its Limited Slots. The 
Carrier must notify the FAA of its designation by [date 10 days after 
the final rule effective date].
    (3) The FAA will designate the remaining Limited Slots, excluding 
those hours in which two or more Slots have been designated as Limited 
Slots by the Carriers.
    (4) No later than [date 20 days after the final rule effective 
date], the FAA

[[Page 20867]]

will publish a list of all Limited Slots and the dates by which they 
will expire.
    (d) Unrestricted Slots are those Slots acquired by a Carrier 
through a lease with the FAA awarded via an auction. Unrestricted Slots 
are not subject to withdrawal by the FAA.


Sec.  93.65  Initial assignment of Slots.

    (a) Except as provided for under paragraphs (b) and (c) of this 
section, any Carrier allocated operating rights under the Order, 
Operating Limitations at New York LaGuardia Airport, as amended during 
the week of January 7-13, 2007, as evidenced by the FAA's records, will 
be assigned corresponding Slots in 30-minute periods consistent with 
the limits under Sec.  93.63(b). If necessary, the FAA may utilize 
administrative measures such as voluntary measures or a lottery to re-
time the assigned Slots within the same hour to meet the 30-minute 
limits under Sec.  93.63(b). The FAA Vice President, System Operations 
Services, is the final decision-maker for determinations under this 
section.
    (b) If a Carrier was allocated operating rights under the Order 
Limiting Operations at LaGuardia airport during the week of January 7-
13, 2007, but the operating rights were held by another Carrier, then 
the corresponding Slots will be assigned to the Carrier that held the 
operating rights for that period, as evidenced by the FAA's records.
    (c) On [date 35 days after the effective date] and every year 
thereafter through 2012, twenty (20) percent of the total number of 
Limited Slots identified on [date 20 days after the effective date] 
shall revert to the FAA in accordance with the schedule published under 
Sec.  93.64(c)(4) and be auctioned as Unrestricted Slots by the FAA and 
subsequently transferred to another Carrier, effective no later than 
the following second Sunday in March.
    (1) The auction shall be blind, and only cash may be bid.
    (2) The holder of a Limited Slot may not bid on its own Slots.
    (3) The holder of a Limited Slot shall retain all proceeds from the 
transaction.
    (4) The auction shall be conducted by the FAA, which will dictate 
all procedures related to the auction, including but not limited to the 
requirement that the Carrier may not specify a minimum bid price.
    (5) In the event no Carrier bids on the Slot, the FAA will retire 
it until the next auction.
    (6) The Carrier holding a Limited Slot will be allowed to use the 
Slot until the following second Sunday in March.


Sec.  93.66  Assignment of new or returned Slots.

    (a) New capacity or capacity returned to the FAA pursuant to the 
provisions of Sec.  93.70 will be reassigned by the FAA via an auction 
conducted pursuant to Sec.  93.65(c). Slots acquired from the FAA under 
this section shall be designated as Unrestricted Slots.
    (b) The FAA may decide to accumulate a quantity of Slots prior to 
conducting a auction.


Sec.  93.67  Reversion and withdrawal of Slots.

    (a) This section does not apply to Unrestricted Slots.
    (b) A Carrier's Common Slots and Limited Slots revert back to the 
FAA 30 days after the Carrier has ceased all operations at LaGuardia 
for any reasons other than a strike.
    (c) The FAA may retime, withdraw or temporarily suspend Common 
Slots and Limited Slots at any time to fulfill operational needs.
    (d) Common Slots and Limited Slots will be withdrawn in accordance 
with the priority list established under Sec.  93.73.
    (e) Except as otherwise provided in paragraph (b) of this section, 
the FAA will notify an affected Carrier before withdrawing or 
temporarily suspending a Common Slot or Limited Slot and specify the 
date by which operations under the Common Slot or Limited Slot must 
cease. The FAA will provide at least 45 days notice unless otherwise 
required by operational needs.
    (f) Any Common Slot or Limited Slot that is temporarily withdrawn 
under this paragraph will be reassigned, if at all, only to the Carrier 
from which it was withdrawn, provided the Carrier continues to conduct 
Scheduled Operations at LaGuardia.


Sec.  93.68  Sublease and transfer of Slots.

    (a) Carriers may sublease Slots to another Carrier in accordance 
with this section and subject to the provisions of the Carrier's lease 
agreement with the FAA.
    (b) A Carrier must provide notice to the FAA to sublease a Slot. 
Such notice must contain: The Slot number and time, effective dates 
and, if appropriate, the duration of the lease. The Carrier may also 
provide the FAA with a minimum bid price.
    (c) The FAA will post a notice of the offer to sublease the Slot 
and relevant details on the FAA Web site at http://www.faa.gov. An 
opening date, closing date and time by which bids must be received will 
be provided.
    (d) Upon consummation of the transaction, written evidence of each 
Carrier's consent to sublease must be provided to the FAA, as well as 
all bids received and the terms of the sublease, including but not 
limited to:
    (1) The names of all bidders and all parties to the transaction;
    (2) The offered and final length of the sublease;
    (3) The consideration offered by all bidders and provided by the 
sublessee.
    (e) The Slot may not be used until the conditions of paragraph (d) 
of this section have been met, and the FAA provides notice of its 
approval of the sublease.
    (f) A Carrier may transfer a Slot to another Carrier that conducts 
operations at LaGuardia solely under the transferring Carrier's 
marketing control, including the entire inventory of the flight. Each 
party to such transfer must provide written evidence of its consent to 
the transfer and the FAA must confirm and approve these transfers in 
writing prior to the effective date of the transaction. However, the 
FAA will approve transfers under this paragraph up to five business 
days after the actual operation to accommodate operational disruptions 
that occur on the same day of the scheduled operation. The FAA Vice 
President, System Operations Services is the final decision maker for 
any determinations under this section.
    (g) A Carrier wishing to sublease a Slot via an FAA auction under 
Sec.  93.65(c), rather than pursuant to this section may do so. The 
Carrier shall retain the proceeds and the Slot shall retain the same 
designation that it had prior to the Carrier placing it up for auction.


Sec.  93.69  One-for-one trade of Slots.

    (a) A Carrier may trade a Slot with another Carrier on a one-for-
one basis.
    (b) Written evidence of each Carrier's consent to the transfer must 
be provided to the FAA.
    (c) Each recipient of the trade may not use the acquired Slot until 
written confirmation has been received from the FAA.
    (d) Carriers participating in a one-for-one trade must certify to 
the FAA that no consideration or promise of consideration was provided 
by either party to the trade.


Sec.  93.70  Minimum usage requirements.

    (a) This section does not apply to Unrestricted Slots.
    (b) Any Common Slot or Limited Slot that is not used at least 80 
percent of the time over a consecutive two-month period will be 
withdrawn by the FAA.
    (c) Paragraph (b) of this section does not apply to the first 90-
day period after assignment of Common Slots or Limited Slots through a 
sublease.

[[Page 20868]]

    (d) The FAA may waive the requirements of paragraph (b) of this 
section in the event of a highly unusual and unpredictable condition 
which is beyond the control of the Carrier and which affects Carrier 
operations for a period of five or more consecutive days. Examples of 
conditions which could justify a waiver under this paragraph are 
weather conditions that result in the restricted operation of the 
airport for an extended period of time or the grounding of an aircraft 
type.
    (e) The FAA will treat as used any Common Slot or Limited Slot held 
by a Carrier on Thanksgiving Day, the Friday following Thanksgiving 
Day, and the period from December 24 through the first Sunday of 
January.


Sec.  93.71  Unscheduled Operations.

    (a) During the hours of 6 a.m. through 9:59 p.m., Monday through 
Friday, and 12 p.m. through 9:59 p.m. on Sunday, no person may operate 
an aircraft other than a helicopter to or from LaGuardia unless he or 
she has received, for that Unscheduled Operation, a Reservation that is 
assigned by the Airport Reservation Office (ARO) or in the case of 
Public Charters, in accordance with the procedures in paragraph (d) of 
this section. Requests for Reservations will be accepted through the e-
CVRS beginning 72 hours prior to the proposed time of arrival to or 
departure from LaGuardia. Additional information on procedures for 
obtaining a Reservation is available on the Internet at http://www.fly.faa.gov/ecvrs.
    (b) Three Reservations are available per hour, including those 
assigned to Public Charter operations pursuant to paragraph (d) of this 
section. The ARO will assign Reservations on a 30-minute basis.
    (c) The ARO will receive and process all Reservation requests for 
unscheduled arrivals and departures at LaGuardia. Reservations are 
assigned on a ``first-come, first-served'' basis determined by the time 
the request is received at the ARO. Reservations must be cancelled if 
they will not be used as assigned.
    (d) One Reservation per hour will be available for allocation to 
Public Charter operations prior to the 72-hour Reservation window in 
paragraph (a) of this section.
    (1) The Public Charter Operator may request a Reservation up to six 
months in advance of the date of flight operation. Reservation requests 
should be submitted to Federal Aviation Administration, Slot 
Administration Office, AGC-200, 800 Independence Avenue, SW., 
Washington, DC 20591. Submissions may be made via facsimile to (202) 
267-7277 or by e-mail to [email protected].
    (2) The Public Charter Operator must certify that its prospectus 
has been accepted by the Department of Transportation in accordance 
with 14 CFR part 380.
    (3) The Public Charter Operator must identify the call sign/flight 
number or aircraft registration number of the direct air carrier, the 
date and time of the proposed operation(s), the airport served 
immediately prior to or after LaGuardia, and aircraft type. Any changes 
to an approved Reservation must be approved in advance by the Slot 
Administration Office.
    (4) If Reservations under paragraph (d)(1) of this section have 
already been allocated, the Public Charter Operator may request a 
Reservation under paragraph (a) of this section.
    (e) The filing of a request for a Reservation does not constitute 
the filing of an IFR flight plan as required by regulation. The IFR 
flight plan may be filed only after the Reservation is obtained, must 
include the Reservation number in the ``Remarks'' section, and must be 
filed in accordance with FAA regulations and procedures.
    (f) Air Traffic Control will accommodate declared emergencies 
without regard to Reservations. Non-emergency flights in direct support 
of national security, law enforcement, military aircraft operations, or 
public-use aircraft operations may be accommodated above the 
Reservation limits with the prior approval of the Vice President, 
System Operations Services, Air Traffic Organization. Procedures for 
obtaining the appropriate waiver will be available on the Internet at 
http://www.fly.faa.gov/ecvrs.
    (g) Notwithstanding the limits in paragraph (b) of this section, if 
the Air Traffic Organization determines that air traffic control, 
weather and capacity conditions are favorable and significant delay is 
unlikely, the FAA may determine that additional Reservations may be 
accommodated for a specific time period. Unused Slots may also be made 
available temporarily for Unscheduled Operations. Reservations for 
additional operations must be obtained through the ARO.
    (h) Reservations may not be bought, sold or leased.


Sec.  93.72  Reporting requirements.

    (a) Within 14 days after the last day of the two-month period 
beginning March 8, 2009, and every two months thereafter, each Carrier 
holding a Common Slot or Limited Slot must report, in a format 
acceptable to the FAA, the following information for each Common Slot 
or Limited Slot:
    (1) The Slot number, time, and arrival or departure designation;
    (2) The operating Carrier;
    (3) The date and scheduled time of each of the operations conducted 
pursuant to the Slot, including the flight number and origin/
destination;
    (4) The aircraft type identifier.
    (b) The FAA may withdraw the Slot of any Carrier that does not meet 
the reporting requirements of paragraph (a) of this section.


Sec.  93.73  Administrative provisions.

    (a) Each Slot shall be assigned a number for administrative 
convenience.
    (b) The FAA will assign priority numbers by random lottery for 
Common Slots and Limited Slots at LaGuardia. Each Common Slot and 
Limited Slot will be assigned a withdrawal priority number, and the 30-
minute time period for the Common Slot or Limited Slot, frequency, and 
the arrival or departure designation.
    (c) If the FAA determines that operations need to be reduced for 
operational reasons, the lowest assigned priority number Common Slots 
or Limited Slots will be the last withdrawn.
    (d) Any Slot available on a temporary basis may be assigned by the 
FAA to a Carrier on a non-permanent, first-come, first-served basis 
subject to permanent assignment under this subpart. Any remaining Slot 
may be made available for Unscheduled Operations on a non-permanent 
basis and will be assigned under the same procedures applicable to 
other operating Reservations.
    (e) All transactions under this subpart must be in a written or 
electronic format approved by the FAA.

    Issued in Washington, DC, on April 14, 2008.
Nan Shellabarger,
Director of Aviation Policy and Plans.
 [FR Doc. E8-8308 Filed 4-16-08; 8:45 am]
BILLING CODE 4910-13-P