[Federal Register: April 23, 2007 (Volume 72, Number 77)]
[Rules and Regulations]
[Page 20034-20036]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ap07-3]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 204 and 399
[Docket No. OST-2003-15759]
RIN 2105-AD25
Review of Data Filed by Certificated or Commuter Air Carriers To
Support Continuing Fitness Determinations Involving Citizenship Issues
AGENCY: Office of the Secretary, DOT.
ACTION: Final rule.
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SUMMARY: The Department is adopting its proposed editorial changes to
its rules on Data to Support Fitness Determinations, 14 CFR part 204,
and has determined to maintain its existing procedures for conducting
reviews of the continuing fitness of air carriers. These actions
complete this rulemaking. The Department had earlier withdrawn a
proposal made in this rulemaking to modify the Department's standards
for determining whether carriers remain under the actual control of
U.S. citizens.
EFFECTIVE DATE: The rule is effective May 23, 2007.
FOR FURTHER INFORMATION CONTACT: William M. Bertram, Chief, Air Carrier
Fitness Division (X-56), Office of Aviation Analysis, U.S. Department
of Transportation, 400 7th Street, SW., Washington, DC 20590; (202)
366-9721.
SUPPLEMENTARY INFORMATION:
Introduction
By statute, only citizens of the United States may obtain and hold
certificate authority under 49 U.S.C. 41102 or 41103 authorizing them
to provide air transportation within the United States or operate as a
U.S. air carrier on international routes. The statutory citizenship
requirements require that at least 75 percent of the voting interest of
a U.S. air carrier be owned and controlled by U.S. citizens, that the
president and two-thirds of the board of directors and managing
officers be U.S. citizens, and that U.S. carriers be subject to the
actual control of U.S. citizens. 49 U.S.C. 40102(a)(15). In this
proceeding, we invited public comment on three matters related to our
consideration of citizenship issues: (i) We proposed technical changes
to our rules governing citizenship and fitness determinations, 14 CFR
part 204; (ii) we considered whether we should modify our procedures
for reviewing whether a carrier is complying with the continuing
citizenship requirement; and (iii) we proposed to modify the standards
used for determining whether a carrier is actually controlled by U.S.
citizens. We have withdrawn the proposal to modify our standards on
actual control. 71 FR 71106 (December 8, 2006). In this final rule, we
are resolving the other two matters. We are adopting the proposed
technical changes to part 204, and we explain why we have decided to
continue following our procedural practices in continuing fitness
cases.
Background
We examine carrier citizenship primarily in two situations. First,
when a firm applies for authority to operate as a U.S. carrier, we
conduct an initial fitness review, which necessarily includes a review
of the carrier's citizenship. We conduct initial fitness reviews
through docketed proceedings, where a public record of the pleadings is
maintained; we publish all Department decisions in the case; and we
give interested persons an opportunity to comment on the application.
Second, we conduct a continuing fitness review if an existing carrier
undergoes a substantial change in ownership, operations, or management.
We usually conduct continuing fitness investigations without a public
proceeding and therefore do not create a docket containing record
material, publish a final decision, or provide an opportunity for
public comment. In some continuing fitness cases, we may decide to use
more formal public procedures. See 71 FR 26426-26427.
Rulemaking Notices
We issued a Notice of Proposed Rulemaking (NPRM) that proposed to
update our interpretation of actual control and to continue using our
informal procedures in most continuing fitness reviews. 70 FR 67389
(November 7, 2005). We also proposed changes to part 204 to correct
minor typographical errors, update statutory references, and clarify
some language. 70 FR 67395. We thereafter issued a Supplemental Notice
of Proposed Rulemaking (SNPRM) to address the comments made on the
NPRM, and to propose additional refinements to our proposed
modification of our actual control standard. 71 FR 26425 (May 5, 2006).
We again proposed to continue using our informal procedures in most
continuing fitness reviews.
In the NPRM and SNPRM, we stated that we had tentatively determined
to continue using the same informal procedures for continuing fitness
reviews that we have always used. 71 FR 26436; 70 FR 67392. We believed
that significant potential harm could result if we made all substantial
foreign investment cases subject to public notice and comment, and that
using public proceedings in all significant cases appeared to be
unnecessary for the protection of interested persons. We stated that we
would have the option of beginning a public proceeding in any case if
we found that doing so would be useful. 71 FR 26436.
Comments
The comments on the NPRM and SNPRM focused on our proposed change
to our standard for defining when U.S. citizens had actual control of a
U.S. carrier. None of the commenters opposed our proposed changes to
part 204. While several commenters discussed the procedural issues in
their responses to our NPRM, only Continental commented in any detail
on our SNPRM's proposed decision to continue using informal procedures
in most continuing fitness reviews. Continental asserted that the
informal procedures enable us to resolve citizenship matters after
negotiating only with the carrier and its foreign investors, not with
other persons affected by the transaction. Continental Comments at 9.
Decision on Procedures
We have determined to continue following our existing procedures
for continuing fitness reviews for the reasons stated in our earlier
notices. We can, of course, always choose to use public procedures in
any continuing fitness review, and interested persons have the right to
ask us to do so. See 71 FR 26436.
[[Page 20035]]
We think that our procedures give the public a significant amount
of information on our decisions in fitness cases, notwithstanding
Continental's assertion to the contrary, although we will be
considering whether they can be improved. First, we decide all initial
fitness cases in public orders that explain the basis for our decision
on all significant issues. If such a case presents a significant
citizenship issue, the order deciding the case will discuss why we find
that the applicant is (or is not) actually controlled by U.S. citizens.
Second, in continuing fitness reviews where we begin public
proceedings, any final decision on the merits would be a public order
that would explain the basis for that decision.
When we use the more informal procedures in continuing fitness
reviews, we do not publish our final decision explaining our analysis
of any citizenship issues. However, we will be following the same
procedures in such cases that we use in other situations where we
believe that a carrier or other person may have violated our
regulations or statute. Continental has presented no reason why we
should treat continuing fitness reviews differently from all other
enforcement investigations, which are typically done informally unless
the enforcement office determines that there is a need for a formal
enforcement proceeding.
Nevertheless, we think it may be helpful if carriers, potential
investors, and the public generally had additional information on our
analyses in citizenship cases. We will consider developing procedures
that would give the public more information on our decisions in
citizenship matters, and we are actively exploring whether there are
practicable means of doing so in appropriate cases.
Airports Council International--Europe (``ACI''), bmi, and Virgin
Atlantic Airways would like us to make commitments on the timetable for
the completion of our review of citizenship issues in initial fitness
cases. bmi Comments at 2; Virgin Atlantic Comments at 4; ACI Comments
at 2. We appreciate the interest of a carrier and its investors,
officers, and employees in obtaining a prompt decision from us on any
application for operating authority. We intend to complete our
decisions in such cases as promptly as possible and with the aim of
imposing the minimum administrative burden consistent with ensuring
that the standards we have set forth are met. However, we do not
proceed on an initial application for operating authority until the
record is complete, and the applicant has the responsibility of
providing us with a complete record. 14 CFR 302.209. Citizenship,
moreover, is but one of several matters that must be addressed in
determining whether a carrier is fit, for we must also review the
applicant's financial fitness, managerial competence, and compliance
disposition. In initial fitness cases deadlines for the completion of
our decision-making process are set by 49 U.S.C. 41108 and 14 CFR part
302, subpart B.
Part 204 Modifications
Part 204 of our rules governs the data needed for fitness
determinations. We proposed minor changes to that part to correct
typographical errors, clarify some language, and update references to
the applicable statutory language. 71 FR 26436. In section 204.2, we
are amending the definition of ``citizen of the United States'' to
mirror the language that is now contained in 49 U.S.C. 40102(a)(15). We
believe that the regulations should mirror the text of the statute as
it is currently written. Finally, we are making minor changes to
section 204.5 to clarify language in paragraph (a)(2); deleting a
typographical error in paragraph (b); revising the address in paragraph
(c); and adding a new paragraph (d) that would replace the last
sentence of paragraph (c). These amendments to part 204 should make the
regulations easier to understand for carriers consulting the sections.
Because we have withdrawn the proposed policy statement on our
standards for determining actual control, we will not adopt the
proposal to include a cross-reference to that policy statement in part
204.
No commenter opposed these changes, and we find that they should be
made for the reasons given in the SNPRM.
Rulemaking Analyses and Notices
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
Executive Order 12866, Regulatory Planning and Review, directs the
Department to assess both the costs and the benefits of a regulatory
change. This rulemaking was initially considered significant under DOT
Policies and Procedures and E.O. 12866 because of significant public
interest in our proposal to adopt a policy statement modifying our
standards for determining actual control. The NPRM and the SNPRM were
reviewed by the Office of Management and Budget under Executive Order
12866. In the NPRM and SNPRM, we tentatively concluded that the
benefits of our proposed rule would outweigh its costs, which would be
minimal because the rule would not impose any new costs on the affected
certificated and commuter air carriers. 70 FR 67389, 67395; 71 FR
26440.
Commenters had an opportunity to submit comments on our tentative
analysis. None of the commenters submitted comments on our tentative
regulatory evaluation.
We have withdrawn the proposed policy statement, 71 FR 71106
(December 8, 2006), and there is no significant public interest in the
technical changes that we are adopting for part 204, which will not
make any substantive changes. In this proceeding we are not changing
our procedures for resolving continuing fitness issues.
This final rule is not considered significant under Executive Order
12866 and was not reviewed by the Office of Management and Budget. This
rule would result in little, if any cost.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996,
requires federal agencies, as part of each rule, to consider regulatory
alternatives that minimize the impact on small entities while achieving
the objectives of the rulemaking. This rule makes only editorial
amendments to part 204 that do not change its substance. We certify
that this action will not have a significant economic impact on a
substantial number of small entities.
Trade Impact Assessments
The Trade Agreement 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
U.S. standards be compatible. The Department has assessed the potential
effect of this rule and has determined that it will have no effect on
any trade-sensitive activity.
International Compatibility
In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is the Department's policy to comply
with International Civil Aviation Organization (ICAO) Standards and
Recommended Practices to the maximum extent practicable. The Department
has determined that there are no ICAO Standards and
[[Page 20036]]
Recommended Practices that correspond to these regulations.
Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1955 (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.'' This rule does not
contain such a mandate. The requirements of Title II of the Act,
therefore, do not apply.
Executive Order 13132, Federalism
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 13132, dated August 4, 1999 (64
FR 43255). This rule does not have a substantial direct effect on, or
significant federalism implications for the States, nor would it limit
the policymaking discretion of the States.
This rule would not directly preempt any State law or regulation,
nor impose burdens on the States. This action would not have a
significant effect on the States' ability to execute traditional State
governmental functions. The agency has, therefore, determined that this
proposal does not have sufficient federalism implications to warrant
either the preparation of a federalism summary impact statement or
require consultations with State and local governments.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.)
requires Federal agencies to obtain approval from the Office of
Management and Budget (OMB) for each collection of information they
conduct, sponsor, or require through regulation. The agency has
determined that the rule would not impose any additional requirements
and does not change the paperwork collection that currently exists.
List of Subjects
14 CFR Part 204
Air carriers, Reporting and recordkeeping requirements.
14 CFR Part 399
Administration practice and procedure, Air carriers, Consumer
protection.
0
For the reasons stated in the preamble, the Department amends 14 CFR
part 204 as set forth below:
PART 204--DATA TO SUPPORT FITNESS DETERMINATIONS
0
1. The authority citation for part 204 continues to read as follows:
Authority: 49 U.S.C. Chapters 401, 411, 417.
0
2. Revise Sec. 204.1 to read as follows:
Sec. 204.1 Purpose.
This part sets forth the fitness data that must be submitted by
applicants for certificate authority, by applicants for authority to
provide service as a commuter air carrier to an eligible place, by
carriers proposing to provide essential air transportation, and by
certificated air carriers and commuter air carriers proposing a
substantial change in operations, ownership, or management. This part
also contains the procedures and filing requirements applicable to
carriers that hold dormant authority.
0
3. Revise Sec. 204.2(c)(3) to read as follows:
Sec. 204.2 Definitions.
* * * * *
(c) Citizen of the United States means:
* * * * *
(3) A corporation or association organized under the laws of the
United States or a State, the District of Columbia, or a territory or
possession of the United States, of which the president and at least
two-thirds of the board of directors and other managing officers are
citizens of the United States, which is under the actual control of
citizens of the United States, and in which at least 75 percent of the
voting interest is owned or controlled by persons that are citizens of
the United States.
* * * * *
0
4. Amend Sec. 204.5 as follows:
0
A. Revise paragraph (a)(2) to read as set forth below;
0
B. Amend paragraph (b) to remove the ``s'' after ``Carrier'' in the
third sentence in the reference to ``Air Carrier Fitness Division'';
0
C. Revise paragraph (c) to read as set forth below; and
0
D. Add a new paragraph (d) to read as set forth below.
The revisions read as follows:
Sec. 204.5 Certificated and commuter air carriers undergoing or
proposing to undergo a substantial change in operations, ownership, or
management.
(a) * * *
(2) The change substantially alters the factors upon which its
latest fitness finding is based, even if no new authority is required.
* * * * *
(c) Information filings pursuant to this section made to support an
application for new or amended certificate authority shall be filed
with the application and addressed to Docket Operations, M-30, U.S.
Department of Transportation, Washington, DC 20590, or by electronic
submission at [http://dms.dot.gov].
(d) Information filed in support of a certificated or commuter air
carrier's continuing fitness to operate under its existing authority in
light of substantial changes in its operations, management, or
ownership, including changes that may affect the air carrier's
citizenship, shall be addressed to the Chief, Air Carrier Fitness
Division, Office of the Secretary, U.S. Department of Transportation,
Washington, DC 20590.
Issued in Washington, DC, on April 16, 2007.
Andrew B. Steinberg,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. E7-7605 Filed 4-20-07; 8:45 am]
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