[Federal Register Volume 79, Number 119 (Friday, June 20, 2014)]
[Rules and Regulations]
[Pages 35462-35473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14488]



[[Page 35461]]

Vol. 79

Friday,

No. 119

June 20, 2014

Part III





 Department of Homeland Security





-----------------------------------------------------------------------





Transportation Security Administration





-----------------------------------------------------------------------





49 CFR Part 1510





Adjustment of Passenger Civil Aviation Security Service Fee; Interim 
Final Rule

  Federal Register / Vol. 79 , No. 119 / Friday, June 20, 2014 / Rules 
and Regulations  

[[Page 35462]]


-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Transportation Security Administration

49 CFR Part 1510

[Docket No. TSA-2001-11120; Amendment No. 1510-4]
RIN 1652-AA68


Adjustment of Passenger Civil Aviation Security Service Fee

AGENCY: Transportation Security Administration, DHS.

ACTION: Interim final rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Transportation Security Administration (TSA) is issuing an 
interim final rule (IFR) to implement the passenger civil aviation 
security service fee (security service fee) increase mandated by the 
Bipartisan Budget Act of 2013.

DATES: Effective Date: This IFR is effective at 12:00 a.m. (Eastern 
Daylight Time) on July 21, 2014.
    Comment Date: Comments must be received by August 19, 2014.

ADDRESSES: You may submit comments, identified by the TSA docket number 
to this rulemaking, to the Federal Docket Management System (FDMS), a 
government-wide, electronic docket management system, using any one of 
the following methods:
    Electronically: You may submit comments through the Federal 
eRulemaking portal at http://www.regulations.gov. Follow the online 
instructions for submitting comments.
    Mail, In Person, or Fax: Address, hand-deliver, or fax your written 
comments to the Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, 
Room W12-140, Washington, DC 20590-0001; fax (202) 493-2251. The 
Department of Transportation (DOT), which maintains and processes TSA's 
official regulatory dockets, will scan the submission and post it to 
FDMS.
    See SUPPLEMENTARY INFORMATION for format and other information 
about comment submissions.

FOR FURTHER INFORMATION CONTACT: Michael Gambone, Office of Revenue, 
TSA-14, Transportation Security Administration, 601 South 12th Street, 
Arlington, VA 20598-6014; telephone (571) 227-2323; email: [email protected].

SUPPLEMENTARY INFORMATION: 

Comments Invited

    TSA 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 this rulemaking action. See ADDRESSES above for 
information on where to submit comments.
    With each comment, please identify the docket number at the 
beginning of your comments. TSA encourages commenters to provide their 
names and addresses. The most helpful comments reference a specific 
portion of the rulemaking, explain the reason for any recommended 
change, and include supporting data. You may submit comments and 
material electronically, in person, by mail, or fax as provided under 
ADDRESSES, but please submit your comments and material by only one 
means. If you submit comments by mail or delivery, submit them in an 
unbound format, no larger than 8.5 by 11 inches, suitable for copying 
and electronic filing.
    If you would like TSA to acknowledge receipt of comments submitted 
by mail, include with your comments a self-addressed, stamped postcard 
on which the docket number appears. We will stamp the date on the 
postcard and mail it to you.
    TSA will file all comments to our docket address, as well as items 
sent to the address or email under FOR FURTHER INFORMATION CONTACT, in 
the public docket, except for comments containing confidential 
information and sensitive security information (SSI). Should you wish 
your personally identifiable information redacted prior to filing in 
the docket, please so state. TSA will consider all comments that are in 
the docket on or before the closing date for comments and will consider 
comments filed late to the extent practicable. The docket is available 
for public inspection before and after the comment closing date.

Handling of Confidential or Proprietary Information and Sensitive 
Security Information (SSI) Submitted in Public Comments

    Do not submit comments that include trade secrets, confidential 
commercial or financial information, or SSI to the public regulatory 
docket. Please submit such comments separately from other comments on 
the rulemaking. Comments containing this type of information should be 
appropriately marked as containing such information and submitted by 
mail to the address listed in FOR FURTHER INFORMATION CONTACT section.
    TSA will not place comments containing SSI in the public docket and 
will handle them in accordance with applicable safeguards and 
restrictions on access. TSA will hold documents containing SSI, 
confidential business information, or trade secrets in a separate file 
to which the public does not have access, and place a note in the 
public docket explaining that commenters have submitted such documents. 
TSA may include a redacted version of the comment in the public docket. 
If an individual requests to examine or copy information that is not in 
the public docket, TSA will treat it as any other request under the 
Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Department of 
Homeland Security's (DHS') FOIA regulation found in 6 CFR part 5.

Reviewing Comments in the Docket

    Please be aware that anyone is able to search the electronic form 
of all comments in any of our dockets by the name of the individual who 
submitted the comment (or signed the comment, if an association, 
business, labor union, etc., submitted the comment). You may review the 
applicable Privacy Act Statement published in the Federal Register on 
April 11, 2000 (65 FR 19477) and modified on January 17, 2008 (73 FR 
3316).
    You may review TSA's electronic public docket on the Internet at 
http://www.regulations.gov. In addition, DOT's Docket Management 
Facility provides a physical facility, staff, equipment, and assistance 
to the public. To obtain assistance or to review comments in TSA's 
public docket, you may visit this facility between 9:00 a.m. and 5:00 
p.m., Monday through Friday, excluding legal holidays, or call (202) 
366-9826. This docket operations facility is located in the West 
Building Ground Floor, Room W12-140 at 1200 New Jersey Avenue SE., 
Washington, DC 20590.

Availability of Rulemaking Document

    You may obtain an electronic copy of this document using the 
Internet by--
    (1) Searching the electronic Federal Docket Management System 
(FDMS) Web page at http://www.regulations.gov;
    (2) Accessing the Government Printing Office's Web page at http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR to view 
the daily published Federal Register edition; or accessing the ``Search 
the Federal Register by Citation'' in the ``Related Resources'' column 
on the left, if you need to do a Simple or Advanced search for

[[Page 35463]]

information, such as a type of document that crosses multiple agencies 
or dates; or
    (3) Visiting TSA's Security Regulations Web page at http://www.tsa.gov and accessing the link for ``Stakeholders'' at the top of 
the page, then the link ``Research Center'' in the left column.
    In addition, copies are available by writing or calling the 
individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to 
identify the docket number of this rulemaking.

Small Entity Inquiries

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) requires TSA to comply with small entity requests for 
information and advice about compliance with statutes and regulations 
within TSA's jurisdiction. Any small entity that has a question 
regarding this document may contact the person listed in FOR FURTHER 
INFORMATION CONTACT. Persons can obtain further information regarding 
SBREFA on the Small Business Administration's Web page at http://www.sba.gov/advo/laws/law_lib.html.

Background

    This IFR implements amendments to 49 U.S.C. 44940, which authorizes 
TSA to impose fees to defray the government's costs for providing civil 
aviation security services, such as those related to screening 
personnel, screening equipment, and other specified security 
services.\1\
---------------------------------------------------------------------------

    \1\ See 49 U.S.C. 44940(a)(1) (enumerating specific aviation 
security services intended to be funded at least in part by the fee 
referenced herein).
---------------------------------------------------------------------------

    The Aviation and Transportation Security Act. Section 44940 of 
title 49 U.S.C. was originally enacted in 2001 as part of the Aviation 
and Transportation Security Act (ATSA).\2\ Under the authorizing 
language of section 44940(a), the security service fee applies to 
passengers of air carriers and foreign air carriers, traveling in air 
transportation \3\ or intrastate air transportation originating at 
airports in the United States.\4\
---------------------------------------------------------------------------

    \2\ Pub. L. 107-71 (115 Stat. 597; Nov. 19, 2001) (codified in 
relevant portions at 49 U.S.C. 44940). See also 49 U.S.C. 114(a). 
TSA was initially established within the Department of 
Transportation. The agency was subsequently transferred to the 
Department of Homeland Security. Homeland Security Act of 2002, Pub. 
L. 107-296 (116 Stat. 2135; Nov. 25, 202), sec. 403(2), 6 U.S.C. 
203(2).
    \3\ Consistent with 49 U.S.C. 40102(a)(5), ``air 
transportation'' means ``foreign air transportation, intrastate air 
transportation, or the transportation of mail by aircraft.''
    \4\ 49 U.S.C. 44940(a). ATSA included two fees to defray TSA's 
costs for providing civil aviation security services: ``Passenger 
fees'' (sec. 44940(a)(1)) and ``Air carrier fees'' (sec. 
44940(a)(2)). Regulations implementing the passenger fees, 49 CFR 
part 1510, refer to the ``September 11th Security Fee'' and 
``security service fees.'' The air carrier fees are referred to in 
applicable regulations, 49 CFR part 1511, as the ``Aviation Security 
Infrastructure Fee'' (ASIF). The Budget Act repeals the air carrier 
fees provision effective October 1, 2014. Any adjustments to TSA's 
regulations related to the ASIF will be addressed in a separate 
rulemaking.
---------------------------------------------------------------------------

    As originally enacted and currently implemented, section 44940(c) 
imposes a ceiling on the amount of the fee.\5\ As enacted by ATSA, the 
statute authorizes TSA to impose a fee of up to $2.50 per enplanement, 
as long as the total fee per one-way trip does not exceed $5.00. To the 
extent the security service fee imposed on passengers is insufficient 
to cover TSA's cost for providing civil aviation security services, 
section 44940 as enacted by ATSA also authorized TSA to impose an 
additional fee on air carriers and foreign air carriers, known as the 
Aviation Security Infrastructure Fee (ASIF), which was subsequently 
capped at a per-industry aggregate limit of $420 million per year.\6\
---------------------------------------------------------------------------

    \5\ 49 U.S.C. 44940(c).
    \6\ See 49 U.S.C. 44940(a)(2). The determination of the 
aggregate cap for the ASIF was upheld by the courts in Southwest 
Airlines co. v. Transportation Security Administration, 650 F.3d 752 
(D.C. Cir. 2011). A copy of the opinion is available at http://www.tsa.gov/stakeholders/aviation-security-infrastructure-fee-air-carrier-fee.
---------------------------------------------------------------------------

    TSA's Implementing Regulations. TSA implemented the passenger fee 
authority through an IFR published in December 2001 (2001 IFR),\7\ 
codified at 49 CFR part 1510.\8\ Under TSA's current regulations, the 
security service fee is $2.50 per passenger enplanement and imposed 
only on passengers of direct air carriers and foreign air carriers 
described in Sec. 1510.9(a). Passengers may not be charged for more 
than two enplanements per one-way trip or four enplanements per round 
trip.\9\
---------------------------------------------------------------------------

    \7\ Any reference to ``current regulation(s)'' in this preamble 
is a reference to current 49 CFR part 1510--i.e., the rule as 
originally published in 2001. As noted above, this IFR, which amends 
current regulations, will take effect 30 days after its publication.
    \8\ 66 FR 67698 (Dec. 31, 2001) (codified at 49 CFR part 1510). 
This rulemaking does not finalize the 2001 IFR. Comments received on 
the 2001 IFR will be addressed in a separate rulemaking, as they 
pertain to areas not amended by this IFR.
    \9\ See 49 CFR 1510.5(a).
---------------------------------------------------------------------------

    Section 1510.3 defines ``passenger enplanement'' as a person 
boarding in the United States in scheduled or nonscheduled service on 
aircraft in intrastate, interstate, or foreign air transportation; a 
``one-way trip'' as any trip that is not a round trip; and ``round 
trip'' as a trip on an air travel itinerary that terminates at the 
origin point.\10\
---------------------------------------------------------------------------

    \10\ See 49 CFR 1510.3.
---------------------------------------------------------------------------

    At the request of the commercial aviation industry, which is 
required to collect the fee in the course of selling air transportation 
to passengers, TSA subsequently adopted the following interpretation of 
``one-way trip.''

    One-way trip means continuous travel from a point to another 
point during which a stopover does not occur. A ``stopover'' is a 
break in travel of more than 4 hours between two domestic flights or 
12 hours between a domestic flight and an international flight or 
two international flights.'' \11\

    \11\ See Letter from Air Transport Association to Docket TSA-
2001-11120 (dated March 1, 2002) (ATA 2002 Letter). See also U.S. 
DHS/TSA Letter re: Rule-Fees-ATA Docket Response and Clarification 
Letter TSA 06-11-07 (dated October 24, 2006) (TSA 2006 Letter), 
confirming use of these definitions. Both documents are available at 
www.regulations.gov, the former under Docket No. TSA-2001-11120-0032 
and the later as TSA-2001-11120-0075.
---------------------------------------------------------------------------

Since 2002, TSA has interpreted its fee authorities and regulations 
consistent with these definitions.

    As noted above, under ATSA, the revenue collected as a result of 
the fees authorized in 44940(a) is deposited in the general fund of the 
Treasury as a partial offset for TSA's appropriations dedicated to 
providing civil aviation security services. As TSA explains further 
below, the revenue from the fees has never neared the full 
appropriation to TSA for these costs. TSA anticipates that this will 
continue to be the case under the restructured fee discussed below.
    Restructuring the Security Service Fee. The Bipartisan Budget Act 
of 2013 (Budget Act), signed into law on December 26, 2013,\12\ made 
significant amendments to sec. 44940, including eliminating the ASIF 
(the separate fee on air carriers),\13\ restructuring the security 
service fee imposed on passengers by amending sec. 44940(c),\14\ and 
stipulating specific amounts of the revenue collected from passengers 
to be credited as offsetting receipts and deposited in the general fund 
of the Treasury.\15\ There are no changes to TSA's authorities in 
section 44940(a) regarding imposition of this security service fee.\16\ 
While TSA describes each of these changes further in this preamble, 
this IFR solely addresses the amendments to sec. 44940(c) related to 
restructuring the security service fee.\17\
---------------------------------------------------------------------------

    \12\ Public Law 113-67 (127 Stat. 1165; Dec. 26, 2013).
    \13\ See id. at sec. 601(a).
    \14\ See id. at sec. 601(b).
    \15\ See id. at sec. 601(c).
    \16\ See 49 U.S.C. 44940(a).
    \17\ TSA addresses fiscal implications of eliminating the fee on 
air carriers in the economic analysis. Due to the different 
effective dates, TSA will address elimination of the fee imposed on 
air carriers and foreign air carriers (known as the Aviation 
Security Infrastructure Fee (ASIF) and implemented through 49 CFR 
part 1511) in a separate rulemaking.

---------------------------------------------------------------------------

[[Page 35464]]

    The ``fee increase'' appears at section 601(b) of the Budget Act 
under the heading ``Restructuring of Passenger Fee.'' The Budget Act 
amends 44940(c) as follows:
     Before the Budget Act, the statute mandated that the fee 
``may not exceed $2.50 per enplanement in air transportation or 
intrastate air transportation that originates at an airport in the 
United States, except that the total amount of such fees may not exceed 
$5.00 per one-way trip.''
     Following the Budget Act, the statute mandates the fee 
``shall be $5.60 per one-way trip in air transportation or intrastate 
air transportation that originates at an airport in the United 
States.''
    As noted above, the Budget Act simplifies the structure by (1) 
requiring that the fee be imposed on a one-way trip basis rather than a 
per-enplanement basis and (2) eliminating language that provided a cap 
on the amount of the fee as it relates to one-way trips. Where the 
original amount of the fee was calculated in terms of the number of 
enplanements in air transportation or intrastate air transportation 
originating at airports in the United States, under the Budget Act 
amendments, the restructured fee is based on each one-way trip. The 
Budget Act stipulates a July 1, 2014 effective date.\18\
---------------------------------------------------------------------------

    \18\ See Public Law 113-67, sec. 601(d).
---------------------------------------------------------------------------

    The statute is very specific about the use of the revenue 
generated. Since its initial enactment in 2001, 49 U.S.C. 44940 has 
required that the revenue from the security service fee is to be a 
partial offset for the portion of TSA's appropriation dedicated to 
providing civil aviation security services of the type identified in 
section 44940(a)(1). The Budget Act amended section 44940 to require 
that a portion of the fee revenue, $12.63 billion generated over 10 
years, is deposited in the general fund as offsetting receipts for the 
Federal budget.\19\ As previously noted, the amount of revenue from the 
passenger fee used to offset TSA's appropriation for providing civil 
aviation security services is significantly less than the appropriated 
amount. Thus, of the total revenue collected, the law requires (1) 
stipulated amounts to be deposited in the general fund of the Treasury 
and (2) the remainder to be deposited in the general fund as a partial 
offset for the appropriation to TSA for providing civil aviation 
security services. While the amount of the fee increase and policy 
decisions regarding how it is used are congressional determinations 
beyond the scope of this rulemaking, the fiscal impact of the Budget 
Act's amendments to section 44940 is addressed in the Regulatory Impact 
Analysis, below.
---------------------------------------------------------------------------

    \19\ See sec. 601(c) of the Budget Act, codified at 49 U.S.C. 
44940(i).
---------------------------------------------------------------------------

Good Cause for Adoption Without Prior Notice and Comment

    TSA is taking this action without providing prior public notice and 
comment. Section 601(d) of the Budget Act provides for implementation 
of the fee increase by July 1, 2014, through publication of notice of 
the fee in the Federal Register, ``notwithstanding [31 U.S.C. 9701] and 
the procedural requirements of [5 U.S.C. 553].'' \20\ Thus, the user 
fee requirements of 31 U.S.C. 9701 and the procedural rulemaking 
requirements of 5 U.S.C. 553 do not apply to this action.\21\ In order 
to afford industry the opportunity to make the necessary changes to 
reservations systems as necessary to collect the restructured fee, this 
IFR will take effect at 12:00 a.m. (Eastern Daylight Time) on July 21, 
2014. The current regulations remain in effect until the effective date 
for this IFR.
---------------------------------------------------------------------------

    \20\ Sec. 601(d) of the Budget Act states: (d) Imposition of Fee 
Increase.--The Secretary of Homeland Security shall implement the 
fee increase authorized by the amendment made by subsection (b)--(1) 
beginning on July 1, 2014; and (2) through the publication of notice 
of such fee in the Federal Register, notwithstanding section 9701 of 
title 31, United States Code, and the procedural requirements of 
section 553 of title 5, United States Code.
    \21\ Id. See also 49 U.S.C. 44940(d)(1) for the same exemptions 
in ATSA.
---------------------------------------------------------------------------

    Apart from the statutory exemption discussed above, in light of the 
deadline and potential budgetary impacts, it would be impracticable and 
contrary to the public interest to provide for notice and comment 
before issuing this IFR. Section 553(b) of the Administrative Procedure 
Act \22\ (APA) authorizes agencies to issue final rules without 
affording the public a prior opportunity to comment if it is 
``impracticable, unnecessary, or contrary to the public interest.''
---------------------------------------------------------------------------

    \22\ 5 U.S.C. 551 et seq.
---------------------------------------------------------------------------

    While the statute exempts TSA from notice and comment requirements, 
TSA has chosen to issue this rulemaking as an IFR to provide an 
opportunity for comments before the rule is finalized. The amendments 
to 49 CFR part 1510 under this IFR take effect at 12:00 a.m. (Eastern 
Daylight Time) on July 21, 2014. TSA will accept comments on this rule 
until August 19, 2014. See DATES and SUPPLEMENTARY INFORMATION for 
guidance on the schedule and method for submitting comments. TSA will 
address the comments received on this IFR in a final rule.

Summary of the Interim Final Rule

    TSA is required by 49 U.S.C. 44940(c), as amended, to increase the 
security service fee to $5.60 per one-way trip. This rulemaking amends 
current 49 CFR part 1510 to implement the mandated security service fee 
increase.\23\
---------------------------------------------------------------------------

    \23\ Individuals with questions regarding aspects of 49 CFR part 
1510 not affected by this rulemaking should refer to the 2001 IFR, 
as well as information in the docket that provides further clarity 
to implementation of the 2001 IFR. Links for this information are 
available on TSA's Web site at http://www.tsa.gov/stakeholders/september-11-security-fee-passenger-fee. Note that the comment 
period for the 2001 IFR has closed.
---------------------------------------------------------------------------

    Definitions (Sec.  1510.3). As amendments to section 44940 revise 
the structure for the imposition of the fee to base it on one-way trips 
rather than enplanements, the definition of ``passenger enplanement'' 
is being removed as it is no longer relevant to imposition of the fee.
    As previously discussed, in 2002, representatives of the U.S. 
aviation industry asked TSA to implement the passenger fee provisions 
of the 2001 IFR using a definition of one-way trip that was more 
consistent with how the term was understood within the industry. The 
industry proposed that one-way trip should mean continuous travel from 
a point to another point during which a stopover does not occur, and 
that ``stopover'' should mean a break in travel of more than 4 hours 
between two domestic flights or 12 hours between a domestic flight and 
an international flight or two international flights.\24\ The industry 
stated that these definitions were consistent with common usage within 
the industry and already incorporated into computer and ticket sales 
systems.
---------------------------------------------------------------------------

    \24\ See ATA 2002 Letter.
---------------------------------------------------------------------------

    TSA accepted this proposal and has used these definitions for 
purposes of imposing the fee since 2002. For example, in 2006, TSA 
posted additional guidance to the docket for this rulemaking, 
reiterating treatment of multiple one-way and round trips, non-revenue 
to revenue air transportation, and involuntary re-routes, as well as 
use of the definitions of ``one-way trip'' and ``stopover'' proposed by 
the industry in March 2002.\25\ This IFR amends Sec.  1510.3 to 
incorporate these definitions, with modifications, as described below.
---------------------------------------------------------------------------

    \25\ See TSA 2006 Letter.
---------------------------------------------------------------------------

    TSA is continuing to use the definition of ``one-way trip'' 
proposed by industry, with one minor change. One-way trip means 
continuous air

[[Page 35465]]

transportation, during which a stopover does not occur; there may be 
multiple one-way trips on the same air travel itinerary. This change is 
necessary to make the terminology consistent with the rest of the 
regulation.
    TSA is continuing to employ the framework for the definition of 
``stopover'' proposed by the industry, with modifications necessary to 
provide a distinction between continental and non-continental air 
transportation. Consistent with the definition provided by industry, a 
break in travel of more than four hours will be required before a 
stopover would occur (thus triggering a new one-way trip) for 
continental interstate or intrastate air transportation. A break in 
travel of more than 12 hours will be required before a stopover would 
occur (thus triggering a new one-way trip) for foreign air 
transportation. For purposes of this IFR, the continental United States 
includes the 48 contiguous States and the District of Columbia. This 
term excludes the non-contiguous States (Hawaii and Alaska), 
territories, and possessions of the United States.
    In addition, a break in travel of more than 12 hours will be 
required before a stopover would occur (thus triggering a new one-way 
trip) for non-continental interstate or intrastate air transportation. 
Non-continental United States is not defined in the regulation because 
it logically includes those parts of the United States not considered 
``continental.'' \26\ For example, currently a fee of $10.00 (4 one-way 
trips, with 1 chargeable enplanement per trip x $2.50) would apply to 
the following itinerary:
---------------------------------------------------------------------------

    \26\ TSA regulations define the United States in a geographical 
sense, [to mean] the States of the United States, the District of 
Columbia, and territories and possessions of the United States, 
including the territorial sea and the overlying airspace. See 49 CFR 
1500.3. Therefore, non-continental includes the states of Alaska and 
Hawaii as well as the territories and possessions of the United 
States.

Juneau to Anchorage (10 hour break in travel = stopover)
Anchorage to Seattle (10 hour break in travel = stopover)
Seattle to Chicago (10 hour break in travel = stopover)
Chicago to New York

    Under the definition of ``stopover'' in this IFR, a fee of $11.20 
would apply for the same itinerary because the itinerary would only 
involve two one-way trips:

Juneau to Anchorage (10 hour break in travel [ne] stopover)
Anchorage to Seattle (10 hour break in travel [ne] stopover)
Seattle to Chicago (10 hour break in travel = stopover)
Chicago to New York

If a stopover was still defined as a four hour break in travel for this 
itinerary under the restructured fee, a charge of $22.40 would apply (4 
one-way trips x $5.60).

    TSA took several factors into consideration in determining to apply 
a 12-hour break for non-continental interstate and non-continental 
intrastate air transportation. Non-continental air transportation is 
more similar to foreign air transportation, often involving long breaks 
in connecting air transportation. In addition, including the 12-hour 
break in travel for non-continental intrastate air transportation 
recognizes the unique geographic situations that often make air 
transportation the only practical method of travel. TSA also notes that 
there are other provisions of law that distinguish between air 
transportation based on locations, such as federal excise taxes for air 
transportation \27\ and the passenger facility charge imposed under 49 
U.S.C. 40117. To implement these modifications, TSA is also amending 
and adding definitions to distinguish between continental and non-
continental air transportation. TSA requests comment on the 
appropriateness of this change. TSA also requests comment on whether 
similar modifications to the stopover definition--such as a 12-hour 
break in travel--might be necessary or appropriate in light of 
considerations regarding other categories of air transportation, such 
as air transportation involving airports located in rural communities 
(or certain types of rural communities).
---------------------------------------------------------------------------

    \27\ See, e.g., ATA 2002 Letter (citing 26 U.S.C. 4262(c)(3) to 
support a definition of stopover that applies a 12-hour break in 
travel for air transportation between an international location and 
a U.S. location or two international locations); IRS Publication 
510, Excise Taxes (describing how the tax treatment of domestic 
flight segments beginning or ending in Alaska or Hawaii differs from 
the tax treatment of other flights).
---------------------------------------------------------------------------

    Finally, TSA is removing the definition of ``round trip'' as it is 
no longer relevant to either the definition of ``one-way trip'' or 
imposition of the fee, as discussed below. The definition of ``origin 
point'' is being removed as it is only relevant to the deleted 
definition of ``round trip.''
    Imposition of security service fees (Sec.  1510.5). This section is 
amended to include the new security service fee and remove references 
to enplanements, as required under section 601 of the Budget Act. For 
example, if a passenger purchases air transportation that includes 
changing planes three times (but none of the breaks in travel are 
greater than four hours), a security service fee of $5.60 will be 
imposed for a single one-way trip.
    As with the current regulations, imposition of the fee is 
applicable to air transportation \28\ originating at an airport in the 
United States, regardless of where the passenger began his or her 
travel. For example, under the current regulations, a fee of $5.00 is 
imposed for an Atlanta-New York-Chicago itinerary (two enplanements 
both departing from airports in the United States with no stopovers 
greater than 4 hours). A fee of $2.50 is imposed for a Paris-New York-
Chicago itinerary (one enplanement in air transportation originating in 
the United States). Consistent with the Budget Act's restructuring of 
the fee, a fee of $5.60 will be imposed for both itineraries as they 
both have air transportation originating at an airport in the United 
States.
---------------------------------------------------------------------------

    \28\ ``Air transportation'' is currently defined in 49 CFR 
1510.3.
---------------------------------------------------------------------------

    There is no indication that Congress intended to create any 
disparity between treatment of itineraries like these when it 
restructured the fee limitation. To the extent any underlying ambiguity 
exists in the limitation provision, it is clarified in the context of 
TSA's authority under 49 U.S.C. 44940(a)(1), which mandates TSA to 
impose a fee for passengers ``in air transportation and intrastate air 
transportation originating at airports in the United States'' with no 
distinction between segments and trips. Therefore, if there is covered 
air transportation at any point in the trip (in other words, any 
portion of the itinerary includes air transportation originating at an 
airport in the United States), TSA has authority to impose the fee and 
has done so consistently since the current regulations took effect in 
2002. This better aligns the imposition of the fee with those who 
benefit from the security services provided for air transportation.
    Finally, TSA is removing language that effectively applied a cap to 
the amount of the fee that could be imposed per ``round trip.'' Under 
current Sec.  1510.5(a), passengers may not be charged for more than 
two enplanements per one-way trip or four enplanements per round trip. 
This provision effectively created a $10 cap on round-trip travel--in 
other words, it set a $10 cap on any itinerary that ended at its origin 
point, even if the itinerary included more than four $2.50 enplanements 
with lengthy stopovers.
    Thus, for instance, if a passenger purchased a round trip for an 
itinerary involving ten enplanements, each separated by a three-day 
stopover, but ultimately ending at the origin point, a

[[Page 35466]]

$10 fee would be imposed because the regulation caps a round trip at 4 
enplanements. At the same time, a different passenger travelling on the 
same exact flights (same days, same planes, same stopovers and 
destinations) who does not purchase the travel as a single round trip 
itinerary could potentially be charged up to $25.00 ($2.50 x 10 
enplanements). Thus, as a result of the distinction between round-trip 
and other itineraries, similarly situated passengers could be charged 
different fees.\29\ TSA received comments on the 2001 IFR questioning 
the round trip cap on the basis that it was not specifically stipulated 
in the statute and had the effect of decreasing revenue.\30\
---------------------------------------------------------------------------

    \29\ In other words, under the current regulations, if Passenger 
A were to book such an itinerary beginning and ending at New York's 
John F. Kennedy International Airport (JFK), and Passenger B were to 
book the same exact itinerary, except that Passenger B planned to 
return to Boston, Passenger A would owe $10, and Passenger B would 
owe $25.00. Similarly, Passengers C and D could both fly on the same 
days, flights, stopovers, and destinations, but pay different fees 
based on how the air transportation was purchased (for example, 
Passenger C purchases air transportation as a single five-stopover 
round trip itinerary but Passenger D purchases the same air 
transportation in separate transactions, creating multiple 
itineraries).
    \30\ See, e.g., ATA 2002 Letter.
---------------------------------------------------------------------------

    As enacted by ATSA in 2001, section 44940(a) required imposition of 
a ``uniform fee'' on passengers, but specifically imposed a one-way cap 
on the fee amount in 44940(c). As discussed above, prior to the Budget 
Act amendments, section 44940(c) provided that the fee ``may not exceed 
$2.50 per enplanement in air transportation or intrastate air 
transportation that originates at an airport in the United States, 
except that the total amount of such fees may not exceed $5.00 per one-
way trip.'' This language provided TSA with clear discretion to limit 
the amount of fee charged per enplanement and, therefore, to provide a 
cap on the amount charged per round trip. Amending section 44940(c) by 
mandating a fee of $5.60 per one-way trip, as well as eliminating the 
cap language that was in the statute as enacted in 2001, is consistent 
with the authorizing language of section 44940(a) and the requirement 
to impose a ``uniform fee.''
    Accordingly, in the absence of statutory language authorizing such 
a cap, and in light of the fact that a round-trip cap under the revised 
fee structure would have the effect of the fee being far less for some 
passengers than the mandatory $5.60 per one-way trip, this IFR does not 
include a limit on the number of one-way trips that can be charged per 
itinerary. TSA notes that by eliminating the round-trip cap, the 
restructured fee mitigates the likelihood of disparate treatment for 
substantially similar travel--some booked as round trips on one 
itinerary, and some not.
    TSA seeks comment on removal of the round-trip cap, and 
specifically on whether TSA should consider reinstating a cap, and if 
so, what the cap should be in light of the statute's mandate that the 
fee be uniform (under 44940(a)). TSA also seeks comment on the 
definition of ``one-way trip'' and, in the Alternatives Discussion 
section below, on the definition of ``stopover.''
    Table 1 provides examples of the impact of the Budget Act's 
restructuring of the fee and removal of the round trip cap. They are 
ordered according to the approximate likelihood (from the type of 
itinerary most frequently purchased to those most infrequently 
purchased).

        Table 1--Comparison of Current Fee Imposition and Fee Imposition Following Budget Act Amendments
----------------------------------------------------------------------------------------------------------------
                                             Current regulation         TSA's interpretation of Budget Act fee
           Itinerary examples                     structure                          restructure
----------------------------------------------------------------------------------------------------------------
Washington Dulles to Chicago             $5.00; 1 round trip with 2  $11.20; 2 one-way trips.
 (stopover), Chicago to Washington        chargeable enplanements.
 Dulles.
Washington Dulles to Chicago, Chicago    $10.00; 1 round trip with   $11.20; 2 one-way trips.
 to Los Angeles (stopover), Los Angeles   4 chargeable enplanements.
 to Chicago, Chicago to Washington
 Dulles.
Washington Dulles to Chicago, Chicago    $10.00; 1 round trip with   $11.20; 2 one-way trips.
 to Los Angeles, Los Angeles to Seattle   4 chargeable enplanements.
 (stopover), Seattle to Los Angeles,
 Los Angeles to Chicago, Chicago to
 Washington Dulles.
Washington Dulles to Chicago...........  $2.50; 1 one-way trip with  $5.60; 1 one-way trip.
                                          1 chargeable enplanement.
Washington Dulles to Chicago, Chicago    $7.50; 2 one-way trips      $11.20; 2 one-way trips.
 to Los Angeles, Los Angeles to Seattle   with 3 chargeable
 (stopover), Seattle to Los Angeles.      enplanements.
Paris to New York, New York to Chicago.  $2.50; 1 one-way trip with  $5.60; 1 one-way trip.
                                          1 chargeable enplanement.
Chicago to New York (stopover), New      $7.50; 3 one-way trips      $16.80; 3 one-way trips.
 York to Frankfurt (stopover),            with 3 chargeable
 Frankfurt to Chicago, Chicago to         enplanements.
 Minneapolis.
Newark to Chicago (stopover), Chicago    $12.50; 5 one-way trips     $28.00; 5 one-way trips.
 to Denver (stopover), Denver to Las      with 5 chargeable
 Vegas (stopover), Las Vegas to Chicago   enplanements.
 (stopover), Chicago to San Francisco.
Newark to Chicago (stopover), Chicago    $10.00; 1 round trip with   $28.00; 5 one-way trips.
 to Denver (stopover), Denver to Las      4 chargeable enplanements.
 Vegas (stopover), Las Vegas to Chicago
 (stopover), Chicago to Newark.
Orlando to Pittsburgh (stopover),        $15.00; 3 round trips with  $33.60; 6 one-way trips.
 Pittsburgh to Orlando (stopover),        6 chargeable enplanements.
 Orlando to Pittsburgh (stopover),
 Pittsburgh to Orlando (stopover),
 Orlando to Pittsburgh (stopover),
 Pittsburgh to Orlando.
----------------------------------------------------------------------------------------------------------------

    Collection of security service fees (Sec.  1510.9). TSA is amending 
Sec.  1510.9(a) regarding the direct air carriers and foreign air 
carriers that are required to impose the fee in order to remove 
references to enplanements and make conforming changes regarding 
departures from airports in the United States. In addition, Sec.  
1510.9(b) is

[[Page 35467]]

amended to reflect the effective date of the revised fee, 12:00 a.m. 
(Eastern Daylight Time) on July 21, 2014. In general, sales of air 
transportation and changes to itineraries as a result of the Budget 
Act's fee increase are to be treated consistent with current practice. 
For example, the revised fee amount applies at the time air 
transportation is sold, not when the flight may occur. Air 
transportation purchased before July 21, 2014, but utilized after, is 
not subject to the adjusted fee. In other words, if a passenger 
purchases a ticket on June 15th for travel on September 7th, the 
revised fee would not apply even though the travel is to occur after 
the fee increase takes effect.
    Also consistent with current practice, if a passenger's scheduled 
itinerary at the time the air transportation is sold includes a 
stopover, a separate fee will be imposed for travel beyond that point 
as each stopover triggers a separate one-way trip. Under current Sec.  
1510.9, if the passenger changes the itinerary to alter the number of 
one-way trips, additional collection of fee or a refund of the security 
service fee is required, as appropriate. The imposition of the fee is 
based on the itinerary at the time the transportation is sold.
    Involuntary changes to the itinerary have no impact on the fee. For 
example, if two fees are imposed for an itinerary because of a stopover 
greater than four hours, but the plane departs earlier than scheduled 
and the break in travel becomes less than four hours, that is a change 
beyond the passenger's control and occurs after the air transportation 
is purchased. Therefore, no refund is to be provided. Similarly, if the 
passenger's itinerary has no breaks in travel greater than four hours, 
but due to weather or mechanical issues, the break is extended beyond 
the four hour point, it would be inappropriate for the direct air 
carrier or foreign air carrier to collect an additional fee for that 
itinerary.
    Finally, TSA notes that, under 49 CFR 1510.9, the requirement to 
collect the fee applies to passengers of direct air carriers and 
foreign air carriers on scheduled passenger or public charter passenger 
operation with an aircraft having passenger seating configuration of 
more than 60 seats or a scheduled passenger or public charter passenger 
operation with an aircraft having a passenger seating configuration of 
less than 61 seats when passengers are enplaned from or deplaned into a 
sterile area. As a result of this provision, the fee is not imposed on 
passengers travelling on smaller aircraft providing air transportation 
directly to or from rural communities (frequently served by non-
Federalized airports). TSA requests comment regarding this aspect of 
air transportation directly to or from a rural community.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq.) 
requires that a Federal agency consider the impact of paperwork and 
other information collection burdens imposed on the public and, under 
the provisions of PRA section 3507(d), obtain approval from the Office 
of Management and Budget (OMB) for each collection of information it 
conducts, sponsors, or requires through regulations.
    Information collection requirements associated with the security 
service fee requirements of 49 CFR part 1510 have been approved by the 
OMB through August 31, 2015, under the PRA provisions, and assigned OMB 
Control Number 1652-0001. TSA has made available in the docket for this 
rulemaking, technical changes to its PRA documents as necessary based 
on the Budget Act's restructuring of the fee. The primary change is to 
eliminate outdated references to a per-enplanement fee. The changes 
will be effective beginning August 1, 2014. TSA welcomes comments on 
these changes and any other changes the public considers relevant to 
TSA's implementation of the Budget Act's amendments. TSA will consider 
and respond to such comments as appropriate.
    The current PRA approval covers the requirements for air carriers 
to submit quarterly reports to TSA which provide an accounting of the 
fees imposed, collected, refunded to passengers, and remitted to TSA, 
and to retain the source information. TSA notes that this IFR does not 
modify these requirements, which continue to be in force.
    As provided by the PRA, as amended, an agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.

Regulatory Impact Analysis

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') direct agencies 
to assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility.
    This rulemaking is an ``economically significant regulatory 
action,'' under section 3(f)(1) of Executive Order 12866. As further 
required by this Executive Order, OMB has reviewed this IFR and TSA has 
prepared an analysis of its estimated costs and benefits, presented in 
the following paragraphs. Table 2 presents the OMB Circular A-4 
Accounting Statement for this rule.
    This IFR implements an increase in the security service fee 
mandated by the Budget Act. As previously discussed, under this IFR 
direct air carriers and foreign air carriers will be required to impose 
a security service fee of $5.60 per one-way trip.

                  Table 2--OMB A-4 Accounting Statement
             [Fiscal year 2014, quarter 4--fiscal year 2023]
------------------------------------------------------------------------
             Category                     Estimate
---------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Annualized monetized benefits.
Annualized quantified, but
 unmonetized, benefits.
Qualitative (un-quantified)            Allow TSA to continue providing
 benefits.                           security functions made possible by
                                           the collection of fees.
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Annualized monetized costs.
Annualized quantified, but
 unmonetized, costs

[[Page 35468]]

 
Qualitative (un-quantified) costs.   Direct air carriers and foreign air
                                        carriers are expected to incur
                                      costs to update their computer and
                                     ticket sales systems to reflect the
                                              new fee structure.
------------------------------------------------------------------------
                                Transfers
------------------------------------------------------------------------
Annualized monetized transfers *..  $1,630,931,041......              7%
                                    $1,665,414,731......              3%
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
From whom to whom?................       From air passengers to the
                                                 Government.
------------------------------------------------------------------------
* Note: Discount rate appears to the right of the estimates.

    As discussed in the Background section of this preamble, under 
current regulations, the amount of the security service fee is set at 
$2.50 per enplanement \31\ with a cap of $5.00 per one-way trip and 
$10.00 per round trip. The Budget Act's amendments to 49 U.S.C. 
44940(c) eliminate fee differences based on the number of enplanements, 
changing the fee from $2.50 per enplanement to $5.60 per one-way trip, 
regardless of the number of enplanements.
---------------------------------------------------------------------------

    \31\ As noted earlier, ``passenger enplanement'' is defined in 
49 CFR 1510.3.
---------------------------------------------------------------------------

    One-way trips have been consistently defined by TSA as any 
continuous travel during which a stopover does not occur (for further 
discussion on one-way trips and stopovers please see the section on 
Definitions (Sec.  1510.3), in this preamble). Thus, if an itinerary 
has a one-way trip with only one enplanement, under the current 
regulations, a security service fee of $2.50 is imposed. In addition, 
if an itinerary has a one-way trip with two or more enplanements, under 
the current regulations, a security service fee of $5.00 is imposed, 
regardless of the number of enplanements.
    In Fiscal Year 2013 (FY 13), 173 direct air carriers and foreign 
air carriers remitted the security service fee. In order to assess the 
change in the fee amounts required by the Budget Act, TSA estimated 
collections under both fee structures and projected the number of one-
way trips for ten years (FY 14 through FY 23). As the Budget Act 
requires the new fee structure to be implemented starting with the 
fourth quarter (Q4) of FY 14, our analysis considers the impacts of 
this IFR starting at FY 14 (Q4). TSA uses historical data on fees 
collected to estimate the number of chargeable enplanements for FY 14 
(Q4) through FY 23.\32\ TSA then converts the number of chargeable 
enplanements into one-way trips using Bureau of Transportation 
Statistics (BTS) data.\33\ TSA analyzed the number of fees collected 
based on enplanements under the current system and the number of fees 
collected based on one-way trips under the new system. Under the 
definition of a stopover in this IFR, non-continental interstate or 
intrastate air transportation would require a break in travel of more 
than 12 hours to trigger a new one-way trip. TSA is not aware of a data 
source that would provide the information necessary for this analysis 
to be sensitive to different stopover lengths for air transportation 
based on the itinerary. TSA sought this data on an expedited basis, but 
did not identify such a source. As such, for purposes of this analysis, 
TSA considers a break in travel greater than four hours to trigger a 
new one-way trip, regardless of whether continental or non-continental 
air transportation. As a result, our estimates of transfer payments 
from passengers to the government might be somewhat overstated. These 
numbers were used to analyze the change in total security service fee 
revenues from FY 14 (Q4) through FY 23.\34\ Under the current 
structure, the security service fee collection would be approximately 
$19.58 billion (undiscounted) from FY 14 (Q4) through FY 23. Table 3 
shows the total in fee revenue based on the current fee structure.
---------------------------------------------------------------------------

    \32\ Based on actual collections, TSA assumes a 2 percent 
increase in enplanements each year from 2013-2023 to account for 
projected changes in the market.
    \33\ TSA uses the DB1B Market Survey showing the Number of 
Passengers by MktCoupons for 2012. BTS data shows that 66.4 percent 
of one-way trips have travel of one segment followed by a break in 
travel and 33.6 percent of one-way trips have travel of at least two 
segments followed by a break in travel. TSA used these percentages 
to determine the expected number of one-way trips by multiplying the 
number of chargeable enplanements by the above percentages and then 
dividing the result by the number of fees that would be imposed 
under the current fee structure for trips with one enplanement and 
for those with multiple enplanements.
    \34\ The Budget Act specifies the amount of funds to be 
collected for the general fund for the next 10 years. As such, we 
assess the impacts of this rule based on a period of analysis from 
FY 14 (Q4) through FY 23.

                                         Table 3--Estimated Security Service Fee Revenue Under Current Structure
                                                       [Before Budget Act--based on enplanements]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          One-way trips with
                     Fiscal Year                      One-way trips with       multiple           Total fees          Total fees          Total fees
                                                        one enplanement      enplanements                         (discounted at 3%)  (discounted at 7%)
                                                                     (a)                 (b)   (c) = (a) x $2.50  ..................  ..................
                                                                                                   + (b) x $5.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY14 Q4.............................................         135,398,036          34,257,334        $509,781,761        $494,933,748        $476,431,552
FY15................................................         519,195,475         131,362,711       1,954,802,240       1,842,588,595       1,707,399,983
FY16................................................         529,579,384         133,989,965       1,993,898,285       1,824,699,385       1,627,614,937
FY17................................................         540,170,972         136,669,764       2,033,776,251       1,806,983,857       1,551,558,164
FY18................................................         550,974,392         139,403,159       2,074,451,776       1,789,440,324       1,479,055,446
FY19................................................         561,993,879         142,191,223       2,115,940,811       1,772,067,117       1,409,940,706

[[Page 35469]]

 
FY20................................................         573,233,757         145,035,047       2,158,259,627       1,754,862,582       1,344,055,626
FY21................................................         584,698,432         147,935,748       2,201,424,820       1,737,825,082       1,281,249,288
FY22................................................         596,392,401         150,894,463       2,245,453,316       1,720,952,993       1,221,377,826
FY23................................................         608,320,249         153,912,352       2,290,362,383       1,704,244,712       1,164,304,096
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................       5,199,956,977       1,315,651,765      19,578,151,270      16,448,598,396      13,262,987,623
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The security service fee, as amended by the Budget Act, is expected 
to result in a collection of approximately $36.49 billion 
(undiscounted) from FY 14 (Q4) through FY 23. Table 4 shows the total 
in fee revenue reflecting the statutory fee increase (estimated number 
of one-way trips x $5.60). The estimated number of one-way trips is the 
sum of (a) and (b) in Table 3.
    For the purposes of this analysis, TSA assumes that all one-way 
trips will incur a fee of $5.60 under the new fee structure. The number 
of one-way trips was derived using the most accurate information 
available. This analysis is the first instance of estimating a 
passenger fee imposed on one-way air transportation. As TSA has not 
previously collected fees on a per one-way trip basis, it is possible 
that the estimated number of one-way trips may differ from the actual 
number of fees imposed. The implementation of this IFR would provide 
further insight into the exact nature of travel itineraries, such as 
occurrence of stopovers, and will help improve revenue estimation. The 
analysis of actual revenue patterns under the revised fee structure 
will help to further improve prospective revenue estimates.

                                 Table 4--Estimated Security Service Fee Revenue
                                   [After Budget Act--based on one-way trips]
----------------------------------------------------------------------------------------------------------------
                                                          Total fees          Total fees          Total fees
           Fiscal year             Estimated number    collected: $5.60        collected           collected
                                   of one-way trips    per one-way trip   (discounted at 3%)  (discounted at 7%)
----------------------------------------------------------------------------------------------------------------
FY14 Q4.........................         169,655,370        $950,070,072        $922,398,128        $887,915,955
FY15............................         650,558,186       3,643,125,839       3,433,995,512       3,182,047,200
FY16............................         663,569,349       3,715,988,356       3,400,655,750       3,033,353,405
FY17............................         676,840,736       3,790,308,123       3,367,639,675       2,891,607,919
FY18............................         690,377,551       3,866,114,285       3,334,944,144       2,756,486,054
FY19............................         704,185,102       3,943,436,571       3,302,566,045       2,627,678,294
FY20............................         718,268,804       4,022,305,302       3,270,502,297       2,504,889,589
FY21............................         732,634,180       4,102,751,408       3,238,749,848       2,387,838,673
FY22............................         747,286,864       4,184,806,437       3,207,305,675       2,276,257,427
FY23............................         762,232,601       4,268,502,565       3,176,166,785       2,169,890,258
                                 -------------------------------------------------------------------------------
    Total.......................       6,515,608,743      36,487,408,958      30,654,923,859      24,717,964,774
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    TSA estimated the change in security service fees collected by 
comparing estimated fees based on enplanements under the statute prior 
to the Budget Act (Table 3) and estimated fees based on one-way trips 
under the statute after the Budget Act (Table 4). The fee change will 
result in increased revenue of approximately $16.91 billion 
(undiscounted) from FY 14 (Q4) through FY 23. Table 5 compares the 
current fee with the fee increase mandated by the Budget Act. This fee 
increase will result in a transfer payment from air passengers to the 
Government in the form of increased fees. This transfer will increase 
the cost to air passengers while reducing the burden on the Government.

                                                   Table 5--Comparison of Security Service Fee Revenue
                                                     [Prior to Budget Act vs. after Budget Act] \35\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Statutory fee                        Difference in fees  Difference in fees
                     Fiscal year                      Current: $2.50 per    increase: $5.60   Difference in fees       collected           collected
                                                          enplanement      per one-way trip        collected      (discounted at 3%)  (discounted at 7%)
                                                                     (a)                 (b)           (c = b-a)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY14 Q4.............................................        $509,781,761        $950,070,072        $440,288,311        $427,464,380        $411,484,403
FY15................................................       1,954,802,240    3,643,125,838.95       1,688,323,599       1,591,406,918       1,474,647,217

[[Page 35470]]

 
FY16................................................       1,993,898,285    3,715,988,355.73       1,722,090,071       1,575,956,365       1,405,738,469
FY17................................................       2,033,776,251    3,790,308,122.84       1,756,531,872       1,560,655,817       1,340,049,755
FY18................................................       2,074,451,776    3,866,114,285.30       1,791,662,509       1,545,503,819       1,277,430,607
FY19................................................       2,115,940,811    3,943,436,571.01       1,827,495,760       1,530,498,928       1,217,737,589
FY20................................................       2,158,259,627    4,022,305,302.43       1,864,045,675       1,515,639,715       1,160,833,963
FY21................................................       2,201,424,820    4,102,751,408.47       1,901,326,588       1,500,924,766       1,106,589,385
FY22................................................       2,245,453,316    4,184,806,436.64       1,939,353,121       1,486,352,682       1,054,879,601
FY23................................................       2,290,362,383    4,268,502,565.38       1,978,140,182       1,471,922,073       1,005,586,161
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................      19,578,151,270      36,487,408,958      16,909,257,689      14,206,325,463      11,454,977,151
                                                     ---------------------------------------------------------------------------------------------------
    Annualized (reported in Table 2)................  ..................  ..................  ..................       1,665,414,731       1,630,931,041
--------------------------------------------------------------------------------------------------------------------------------------------------------

    From the total estimated collection of approximately $36.49 
billion, the Budget Act requires stipulated amounts to be credited as 
offsetting receipts to the Federal budget and deposited in the general 
funds of the Treasury for FY 14 (Q4) through FY 23,\36\ totaling $12.63 
billion for the period; resulting in a total net fee collected for 
security services of $23.86 billion (undiscounted) from FY 14 (Q4) 
through FY 23. The funds collected for security services are then used 
to offset appropriations provided to TSA to conduct security services. 
The amount collected for security services under this fee is 
significantly less than TSA's total cost for security services.
---------------------------------------------------------------------------

    \35\ The estimated fees collected under the statutory fee 
increase may be somewhat overestimated due to the inclusion of non-
continental interstate or intrastate air transportation with breaks 
in travel greater than four hours being considered additional one-
way trips.
    \36\ Budget Act sec. 601(c), amending 49 U.S.C. 44940(i).
---------------------------------------------------------------------------

    As previously discussed, section 44940 as enacted in 2001 
authorized TSA to impose two fees. In addition to the fee imposed on 
passengers under 44940(a)(1), TSA was authorized to impose a second fee 
on air carriers to the extent the passenger fee was insufficient to 
cover TSA's costs for providing civil aviation security.\37\ 
Historically, the revenue from both of these fees has been 
significantly less than TSA's costs for providing aviation security.
---------------------------------------------------------------------------

    \37\ See 49 U.S.C. 44940(a)(2) as enacted in 2001.
---------------------------------------------------------------------------

    Section 601 of the Budget Act includes a July 1, 2014 
implementation date for implementation of the restructured passenger 
fee and an October 1, 2014 implementation date for discontinuing 
imposition of the ASIF. As the timing of the effective date of these 
two requirements is separated by several months, TSA has decided to 
treat them as two separate rulemakings.\38\ For purposes of this 
analysis, however, TSA estimates $23.86 billion in revenue from the 
security service fee, as amended by the Budget Act, is approximately 
equivalent to the amount of forecasted collections for FY 14 (Q4) 
through FY 23 for both fees authorized under sec. 44940 as enacted in 
2001 (the fee imposed on passengers + the ASIF). Under the requirements 
of sec. 44940(a)(2)(B)(i), the ASIF is capped at $420 million per year. 
The total revenue from these two fees, without the amendments made by 
the Budget Act, is estimated at $23.47 billion ($19.58 billion from the 
passenger security service fees at $2.50 per enplanement + $3.89 
billion from ASIF) over the 10-year period of analysis. Table 6 shows 
the breakdown of the new fee that will be allocated to offset TSA's 
provision of security services and Federal costs pursuant to the Budget 
Act's amendments to 49 U.S.C. 44940(i).
---------------------------------------------------------------------------

    \38\ TSA intends to make necessary conforming changes to its 
regulations regarding the ASIF in a separate rulemaking, targeted 
for publication before the October 1, 2014 effective date.

                                             Table 6--Fee Allocation
----------------------------------------------------------------------------------------------------------------
                                                                                                  Total fees
                     Fiscal year                      Fees allocated for  Fees allocated for   collected--$5.60
                                                       security services   the General Fund    per one-way trip
----------------------------------------------------------------------------------------------------------------
FY14 Q4.............................................        $560,070,072        $390,000,000        $950,070,072
FY15................................................       2,453,125,839       1,190,000,000       3,643,125,839
FY16................................................       2,465,988,356       1,250,000,000       3,715,988,356
FY17................................................       2,510,308,123       1,280,000,000       3,790,308,123
FY18................................................       2,546,114,285       1,320,000,000       3,866,114,285
FY19................................................       2,583,436,571       1,360,000,000       3,943,436,571
FY20................................................       2,622,305,302       1,400,000,000       4,022,305,302
FY21................................................       2,662,751,408       1,440,000,000       4,102,751,408
FY22................................................       2,704,806,437       1,480,000,000       4,184,806,437
FY23................................................       2,748,502,565       1,520,000,000       4,268,502,565
                                                     -----------------------------------------------------------
    Total...........................................      23,857,408,958      12,630,000,000      36,487,408,958
----------------------------------------------------------------------------------------------------------------


[[Page 35471]]

    TSA anticipates that there might be costs associated with each 
direct and foreign air carrier updating their current computer and 
ticket sales systems to reflect the new fee structure. TSA welcomes 
comments containing information on the implementation costs to 
industry, particularly in the following areas.
     Would the burden of implementing the security service fee 
be a one-time cost or would there be an incremental increase in annual 
operating and maintenance costs as well?
     Would there be any other costs, besides labor costs, 
associated with the implementation?
     How many hours of labor would be needed and what category 
of labor (and wage) would be required to implement the changes in the 
system?
     Would there be multiple laborers working on the project?
     Would industry rely on their internal workforce or would 
they outsource this work to contractors?
     Would industries other than carriers be impacted? If so, 
would these impacts be short-term, or would they have lasting effects 
on these indirect industries?

Responses to these questions would better inform TSA on the impacts of 
this IFR.

Alternatives Discussion

    For purposes of this regulatory impact analysis, TSA analyzed 
several alternatives when considering the impacts of this IFR. The 
Budget Act's amendments to the security service fee remove discretion 
from TSA regarding the amount of the fee to be imposed. As amended, 49 
U.S.C. 44940(c) states that the fee ``shall be $5.60 per one-way trip 
in air transportation or intrastate air transportation that originates 
at an airport in the United States.'' The alternatives that TSA 
considered for purposes of this economic analysis are based on how the 
fee will be imposed. TSA was able to quantify the preferred and no 
action alternatives. TSA also presents a qualitative discussion and 
requests public comment, particularly with respect to issues related to 
a cap and the definition of ``stopover.'' Table 7 below summarizes the 
following regulatory alternatives:
     Alternative 1 (Preferred): Alternative 1, the preferred 
alternative, most closely follows the statutory mandate pursuant to the 
Budget Act and allows TSA to collect revenue used to offset a portion 
of the costs of providing aviation security services and the additional 
amount specified for deposit to the general fund for other purposes. 
The estimated revenue associated with this alternative is fully 
discussed in the Regulatory Impact Analysis section of this preamble 
(see table 4 for revenue estimates). The total undiscounted 10-year 
estimated fee collected is $36.49 billion.
     Alternative 2 (No Action): Alternative 2 involves no 
action; the fee structure and amounts are unchanged. As the change in 
fee is statutorily mandated by the Budget Act, TSA rejects the no 
action alternative because it would not meet the statutory mandate. 
Under 49 U.S.C. 44940, as amended by the Budget Act, TSA is required to 
collect fees as necessary to offset a portion of the appropriations to 
TSA for providing aviation security services (sec. 44940(a)(1)) and 
sufficient to deposit the specified amounts in the general fund of the 
Treasury (sec. 44940(i) as amended by the Budget Act). In light of the 
cessation of the ASIF, previously discussed, TSA would not be able to 
collect sufficient amounts if no action was taken.

                                       Table 7--Comparison of Alternatives
----------------------------------------------------------------------------------------------------------------
                                                                      Total number of       Total fee collected
            Alternatives                     Description           chargeable fees (FY14     (FY14 Q4 to FY23,
                                                                        Q4 to FY23)            undiscounted)
----------------------------------------------------------------------------------------------------------------
Alternative 1 (Preferred             Statutory fee increase of    6,515,608,743.........  $36,487,408,958.
 Alternative).                        $5.60 to all one-way trips  (Table 4).............  (Table 4).
                                      (as established by the
                                      Budget Act).
Alternative 2 (No Action)..........  Maintain current fee         See Table 3 for         $19,578,151,270.
                                      structure of $2.50 per       information on         (Table 3).
                                      enplanement with a cap of    chargeable
                                      $5.00.                       enplanements and
                                                                   respective fee.
----------------------------------------------------------------------------------------------------------------

    TSA also assessed the possibility of using a break in travel 
greater or less than four hours for continental interstate and 
continental intrastate air transportation. The occurrence of a stopover 
triggers the beginning of a new ``one-way trip,'' resulting in 
imposition of an additional $5.60 fee on the passenger. As such, a 
stopover for continental interstate or continental intrastate air 
transportation defined as a break in travel of less than four hours 
could potentially lead to a larger number of fees being collected, 
while a stopover based on a break in travel greater than four hours 
(such as six or eight hours) could result in fewer fees collected, as 
compared to the preferred alternative. As TSA is not aware of data on 
the duration of breaks in travel, TSA was unable to estimate the number 
of one-way trips that would be affected by changes to the definition of 
stopovers as it affects continental interstate and intrastate air 
transportation, nor how this would affect fee collection. As previously 
noted, TSA welcomes comments on appropriate alternatives to the 
definition of a stopover and how any changes in this definition may 
impact the imposition of this fee.
    For example, under the definitions in this IFR, a passenger 
purchasing air transportation from New York to Boston, returning to New 
York with less than a four hour break in travel would be subject to a 
fee of $5.60 because the itinerary consists of a single one-way trip. 
If the stopover definition for continental interstate or continental 
intrastate air transportation is changed to require a break in travel 
greater than four hours, the likelihood of this occurring would 
increase, resulting in less revenue for the purposes intended by 49 
U.S.C. 44940. As discussed above, TSA will consider and respond to 
comments in the final rule, as appropriate.
    Under the current fee structure, a fee cannot be imposed for more 
than two enplanements per one-way trip or four enplanements per round 
trip, regardless of the number of enplanements. Because the Budget Act 
requires TSA to impose fees based on one-way trips rather than 
enplanements, the cap provided for under the current fee structure is 
no longer valid. Under the definition of one-way trip in the IFR, the 
new structure is already capped at one fee per one-way trip. 
Furthermore, the statute does not specify a cap or direct TSA to 
implement a cap. As discussed, data on the duration of stopovers is 
unavailable, which makes estimating

[[Page 35472]]

possible impacts of a cap on fees difficult. TSA welcomes comment on 
whether or not a cap should be placed on the imposition of fees, and if 
so, what that cap should be.

Regulatory Flexibility Act Assessment

    The Regulatory Flexibility Act (RFA) of 1980 \39\ requires agencies 
to consider the impact of their regulatory proposals on small entities, 
to analyze effective alternatives that minimize small entity impacts, 
and to make their analyses available for public comment. Small entities 
include small businesses, not-for-profit organizations, and small 
governmental jurisdictions. Individuals and States are not included in 
the definition of a small entity. When no notice of proposed rulemaking 
has first been published, no such assessment is required. Furthermore, 
5 U.S.C. 553(b)(B) exempts rules from the requirements of the RFA when 
an agency for good cause finds that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest. As 
discussed in the preamble, this IFR is exempt from the procedural 
rulemaking requirements of 5 U.S.C. 553.
---------------------------------------------------------------------------

    \39\ Public Law 96-354 (94 Stat. 1164; Sept. 19, 1980).
---------------------------------------------------------------------------

International Trade Impact Assessment

    The Trade Agreement Act of 1979 \40\ 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. TSA has assessed the potential 
effect of this rulemaking and as TSA has determined that it does not 
impose significant barriers to international trade.
---------------------------------------------------------------------------

    \40\ Public Law 96-39 (93 Stat. 144; July 26, 1979).
---------------------------------------------------------------------------

Unfunded Mandates Assessment

    The Unfunded Mandates Reform Act of 1995 \41\ (UMRA), is intended, 
among other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of UMRA 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final rule that may 
result in a $100 million or more expenditure (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.'' Before TSA promulgates a rule for 
which a written statement is needed, sec. 205 of UMRA generally 
requires TSA to identify and consider a reasonable number of regulatory 
alternatives and adopt the least costly, most cost effective, or least 
burdensome alternative that achieves the objectives of the rule. The 
provisions of sec. 205 do not apply when they are inconsistent with 
applicable law. In addition, the requirements of Title II of UMRA do 
not apply when rulemaking actions are taken without the issuance of a 
notice of proposed rulemaking. For reasons discussed above, no notice 
of proposed rulemaking is required for this regulatory action. 
Accordingly, TSA has not prepared a written statement.
---------------------------------------------------------------------------

    \41\ Public Law 104-4 (109 Stat. 66; March 22, 1995).
---------------------------------------------------------------------------

    TSA has, however, analyzed the UMRA requirements as if the 
requirement applied and determined that this IFR does not contain a 
Federal mandate that may reach the threshold of expenditures for State, 
local, and tribal governments in the aggregate. To the extent the 
increased fee affects the overall economy, resulting in an unfunded 
mandate on the private sector, this is a result of the Budget Act's 
revisions to 49 U.S.C. 44940, not a result of this rulemaking. The 
preceding discussion provides an analysis of the associated costs.
    Finally, TSA has not considered any alternatives as the purpose of 
this rulemaking is to implement the statutorily mandated fee change 
from $2.50 per enplanement to $5.60 per one-way trip.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is TSA policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. TSA has 
reviewed the corresponding ICAO Standards and Recommended Practices and 
has identified no differences with these regulations.
    The ICAO guidance document on aviation fees and charges, ICAO 
Document 9082 (Ninth Edition--2012), ICAO's Policies on Charges for 
Airports and Air Navigation Services, recommends consultations before 
fees are imposed on carriers. In addition, Article 12 of the Air 
Transport Agreement between the United States of America and the 
European Community and its Member States, signed on 25 and 30 April 
2007, encourages consultation between the charging authority and 
affected carriers.
    As the change to the security service fee has been set by Congress 
and there are no additional changes to how the program is implemented 
by TSA, no additional consultations are required.

Executive Order 13132, Federalism

    TSA has analyzed this IFR under the principles and criteria of E.O. 
13132, Federalism. We determined that this action will not have a 
substantial direct effect on the States, or 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, does not have federalism implications.

Environmental Analysis

    TSA has reviewed this action for purposes of the National 
Environmental Policy Act of 1969 \42\ (NEPA) and has determined that 
this action will not have a significant effect on the human 
environment. This action is covered by categorical exclusion (CATEX) 
number A3(b) in DHS Management Directive 023-01 (formerly Management 
Directive 5100.1), Environmental Planning Program, which guides TSA 
compliance with NEPA.
---------------------------------------------------------------------------

    \42\ 42 U.S.C. 4321 et seq.
---------------------------------------------------------------------------

Energy Impact Analysis

    The energy impact of the action has been assessed in accordance 
with the Energy Policy and Conservation Act \43\ (EPCA). We have 
determined that this rulemaking is not a major regulatory action under 
the provisions of the EPCA.
---------------------------------------------------------------------------

    \43\ Public Law 94-163 (89 Stat. 871; Dec. 22, 1975), as amended 
(42 U.S.C. 6362).
---------------------------------------------------------------------------

List of Subjects in 49 CFR Part 1510

    Accounting, Auditing, Air carriers, Air transportation, 
Enforcement, Federal oversight, Foreign air carriers, Reporting and 
recordkeeping requirements, Security measures.

The Amendments

    For the reasons set forth in the preamble, the Transportation 
Security Administration amends part 1510 of Chapter XII of Title 49, 
Code of Federal Regulations to read as follows:

PART 1510--PASSENGER CIVIL AVIATION SECURITY SERVICE FEES

0
1. The authority citation for part 1510 continues to read as follows:

    Authority: 49 U.S.C. 114, 40113, and 44940.


0
2. Revise Sec.  1510.1 to read as follows:

[[Page 35473]]

Sec.  1510.1  Applicability and purpose.

    This part prescribes a uniform fee to be paid by passengers of 
direct air carriers and foreign air carriers in air transportation, 
foreign air transportation, and intrastate air transportation 
originating at airports in the United States.


0
3. In Sec.  1510.3 revise the introductory text; remove the definitions 
of ``Administrator,'' ``Interstate air transportation,'' ``Intrastate 
air transportation,'' ``Origin point,'' ``Passenger enplanement,'' and 
``Round trip;'' revise the definition of ``Air transportation'' and 
``One-way trip;'' and, add definitions for ``Continental United 
States,'' ``Continental interstate air transportation,'' ``Continental 
intrastate air transportation,'' ``Non-continental interstate air 
transportation,'' ``Non-continental intrastate air transportation,'' 
and ``Stopover'' in alphabetical order to read as follows:


Sec.  1510.3  Definitions.

    In addition to the definitions in Sec. Sec.  1500.3, 1503.103, and 
1540.5 of this chapter, the following terms are used in this part:
* * * * *
    Air transportation means continental interstate air transportation, 
continental intrastate air transportation, foreign air transportation, 
non-continental interstate air transportation, or non-continental 
intrastate air transportation.
* * * * *
    Continental United States means the District of Columbia and the 
States other than Alaska and Hawaii.
    Continental interstate air transportation means the carriage by 
aircraft of persons for compensation or hire within the continental 
United States.
    Continental intrastate air transportation means the carriage by 
aircraft of persons for compensation or hire wholly within the same 
state of the continental United States.
* * * * *
    Non-continental interstate air transportation means the carriage by 
aircraft of persons for compensation or hire within the United States, 
but outside the continental United States.
    Non-continental intrastate air transportation means the carriage by 
aircraft of persons for compensation or hire wholly within the same 
state, territory or possession of the United States, but outside the 
continental United States.
* * * * *
    One-way trip means continuous air transportation, during which a 
stopover does not occur; there may be multiple one-way trips on the 
same air travel itinerary.
* * * * *
    Stopover means a break in travel of more than:
    (1) Four (4) hours for continental interstate air transportation or 
continental intrastate air transportation, and
    (2) Twelve (12) hours for non-continental interstate air 
transportation, non-continental intrastate air transportation, or 
foreign air transportation.

0
4. Revise Sec.  1510.5 to read as follows:


Sec.  1510.5  Imposition of security service fees.

    (a) Each direct air carrier and foreign air carrier described in 
Sec.  1510.9(a) shall impose a security service fee of $5.60 per one-
way trip for air transportation originating at an airport in the United 
States. Passengers may not be charged more than $5.60 per one-way trip.
    (b) The security service fee must be imposed on passengers who 
obtained the ticket for air transportation with a frequent flyer award, 
but may not be imposed on any other nonrevenue passengers.

0
5. Amend Sec.  1510.9 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1510.9  Collection of security service fees.

    (a) The following direct air carriers and foreign air carriers must 
collect security service fees from passengers on--
    (1) A scheduled passenger or public charter passenger operation 
with an aircraft having passenger seating configuration of more than 60 
seats.
    (2) A scheduled passenger or public charter passenger operation 
with an aircraft having a passenger seating configuration of less than 
61 seats when passengers are enplaned from or deplaned into a sterile 
area.
    (b) Direct air carriers and foreign air carriers must collect from 
each passenger, to the extent provided in Sec.  1510.5, a security 
service fee on air transportation sold on or after 12:00 a.m. (Eastern 
Daylight Time) on July 21, 2014. The security service fee must be based 
on the air travel itinerary at the time the air transportation is sold. 
Any changes by the passenger to the itinerary are subject to additional 
collection or refund of the security service fee by the direct air 
carrier or foreign air carrier, as appropriate.
* * * * *

    Dated: June 17, 2014.
John W. Halinski,
Deputy Administrator.
[FR Doc. 2014-14488 Filed 6-17-14; 4:15 pm]
BILLING CODE 9110-05-P