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[Federal Register Volume 78, Number 46 (Friday, March 8, 2013)]
[Rules and Regulations]
[Pages 14913-14914]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05475]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 254

RIN 2105-AE21
[Docket DOT-OST-2013-0044]

Domestic Baggage Liability

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

ACTION: Final rule.

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SUMMARY: In accordance with existing regulations, this final rule 
raises the minimum limit on domestic baggage liability applicable to 
air carriers to reflect inflation since July 2008, the basis month of 
the most recent previous revision to the liability limit. DOT 
regulations require that the Department of Transportation periodically 
revise the limit to reflect changes in the Consumer Price Index for All 
Urban Consumers (CPI-U). This revision adjusts the minimum limit of 
liability from the current amount of $3,300, set by the Department in 
November 2008, to $3,400, to take into account the changes in consumer 
prices since the prior revision.

DATES: This rule is effective on June 6, 2013.

FOR FURTHER INFORMATION CONTACT: Nicholas Lowry, Senior Attorney, 
Office of the General Counsel, Department of Transportation, 1200 New 
Jersey Ave. SE., Washington, DC 20590; 202-366-9351, 
nick.lowry@dot.gov.

SUPPLEMENTARY INFORMATION:

I. Revision of Liability Limit

    Part 254 of the Department's rules (14 CFR part 254) establishes 
minimum baggage liability limits applicable to domestic air service. 
Section 254.6 of this rule requires the Department to review every 2 
years the minimum limit of liability prescribed in Part 254 in light of 
changes in the CPI-U and to revise the limit of liability to reflect 
changes in that index as of July of each review year. Section 254.6 
prescribes the use of a specific formula to calculate the revised 
minimum liability amount when making these periodic adjustments. The 
formula is below.

$2500 x (a/b) rounded to the nearest $100

Where:

a = July CPI-U of year of current adjustment
b = the CPI-U figure in December 1999 when the inflation adjustment 
provision was added to part 254.

The review in 2010 indicated that no inflation adjustment was required. 
In 2012, the review indicated that an inflation adjustment is required. 
Applying the formula to price index changes occurring between December 
1999 (the basis month required by the formula) and July 2012 (the month 
for each biannual adjustment as specified in the formula), the 
appropriate inflation adjustment is $2,500 x 228.723/168.8 [$2,500 x 
1.355], which yields $3,387.50. (The base amount of $2,500 in the 
formula was the minimum liability limit in Part 254 at the time that 
this biennial indexing provision was added to the rule, 228.723 was the 
CPI-U for July 2012, and 168.8 was the CPI-U for December 1999. The 
CPI-U data are from the seasonally adjusted series.) Section 254.6 
requires us to round the adjustment to the nearest $100, or to $3,400 
in this case.

    In its rule ``Enhancing Airline Passenger Protections'' (76 FR 
23110, Apr. 25, 2011), the Department required the amount of 
compensation due to passengers in instances of denied boarding (DBC) to 
be adjusted to reflect CPI-U changes. Under 14 CFR 250.5(e), the review 
of denied boarding compensation was to take place every 2 years, with 
the first such review occurring in July 2012, to coincide with our 
review of the baggage liability amount. We have reviewed the 
compensation amounts stated in the 2011 rule according to the formula 
set out in section 250.5(e) and found that no change in DBC amounts is 
warranted in 2012.

II. Regulatory Analyses and Notices

    The Administrative Procedure Act (APA) (5 U.S.C. 553) contains a 
``good cause'' exemption which allows agencies to dispense with notice 
and comment if those procedures are impracticable, unnecessary or 
contrary to the public interest. We have determined that under 5 U.S.C. 
553(b)(3)(B) good cause exists for dispensing with a notice of proposed 
rulemaking and public comment as the application of this rule does not 
involve any agency discretion. This rulemaking is required by the terms 
of 14 CFR

[[Page 14914]]

254.6, as most recently amended in (73 FR 70591, November 21, 2008) and 
is simply a ministerial inflation update based on a formula. 
Accordingly, we find that prior notice and comment are unnecessary, and 
we are issuing these revisions to Part 254 as a final rule.
    Although this final rule will become effective on June 6, 2013, in 
order to avoid imposing an undue burden the Department will defer 
enforcement of the notice provision in the rule (section 254.5) as it 
pertains to printed notices about the new limit for a reasonable time 
period to allow carriers to replace or update any current paper ticket 
stock and ticket jackets or inserts. Electronic notices about the 
minimum domestic liability limit, including notices that are printed 
``on demand'' from an electronic source (e.g., Web sites, email 
messages, and airport kiosks) should be updated no later than the 
effective date of this final rule. Carriers are subject to enforcement 
action from the effective date of this final rule if they fail to 
provide notice of the new minimum liability limit in the manner 
described above, or if they fail to apply the new limit.

Executive Order 12866

    This final rule has been evaluated in accordance with existing 
policies and procedures and is considered not significant under both 
Executive Order 12866 and DOT's Regulatory Policies and Procedures. The 
rule has not been reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866. This revision of 14 CFR 254.4 provides for 
an inflation adjustment to the amount of the minimum limit on baggage 
liability that air carriers may incur in cases of mishandled baggage, 
as required by section 254.6. The provisions are required by current 
regulatory language, without interpretation.
    This rule will pose minor additional costs to airlines only in 
those instances in which carriers lose, damage or delay baggage and 
where the amount of the passenger's claim in those instances exceeds 
the prior minimum liability limit of $3,300. The maximum potential 
impact in those instances is $100 on each such claim. Reports filed 
each month with the Department by airlines that each account for at 
least one percent of total domestic scheduled-service passenger 
revenues show that, in 2012, approximately 0.3 percent (.003) of 
domestic passengers experience a mishandled bag. The total number of 
domestic scheduled passenger enplanements in 2012 was 652,178,681. This 
means that approximately 2 million domestic scheduled passengers 
experience a mishandled bag each year (.003 multiplied by 652.2 equals 
1,956,536). However, the vast majority of the instances of mishandled 
baggage do not result in a claim in an amount that is affected by the 
liability limit in this rule. We contacted a few carriers to determine 
how many of their domestic passengers have had claims that exceed the 
prior minimum liability limit of $3,300. Based on the information 
provided, we believe a little more than one half percent (0.0058) of 
the domestic passengers who experience a mishandled bag would benefit 
from an increase in the minimum limit on baggage liability, i.e., about 
11,300 passengers. Therefore, we expect that there would be a cost to 
the airline industry of $1.1 million each year (the number of domestic 
passengers who receive a baggage settlement that exceeds the prior 
minimum liability limit of $3,300, which is 11,300 passengers 
multiplied by the maximum potential impact in those instances which is 
$100). There would also be a benefit to passengers in the same amount.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) requires 
an assessment of the impact of proposed and final rules on small 
entities unless the agency certifies that the proposed regulation will 
not have a significant economic impact on a substantial number of small 
entities. Since notice and comment rulemaking is not necessary for this 
rule, the provisions of the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612) do not apply. However, DOT has evaluated the effects 
of this action on small entities and has determined that the action 
would not have a significant economic impact on a substantial number of 
small entities. An air carrier is a small business if it provides air 
transportation only with small aircraft (i.e., aircraft with up to 60 
seats/18,000 pound payload capacity). See 14 CFR 399.73. This revision 
affects only flight segments operated with large aircraft and other 
flight segments appearing on the same ticket as a large-aircraft 
segment. As a result, many operations of small entities, such as air 
taxis and many commuter air carriers, are not covered by the rule. 
Moreover, any additional costs for small entities associated with the 
rule should be minimal and may be covered by insurance. Accordingly, we 
certify that this action will not have a significant economic impact on 
a substantial number of small entities.

Paperwork Reduction Act

    This final rule imposes no new reporting or record keeping 
requirements necessitating clearance by OMB.

List of Subjects in 14 CFR Part 254

    Air carriers, Administrative practice and procedure, Consumer 
protection, Department of Transportation.

    Accordingly, the Department of Transportation amends 14 CFR part 
254 as follows:

PART 254--DOMESTIC BAGGAGE LIABILITY

0
1. The authority citation for part 254 continues to read as follows:

    Authority: 49 U.S.C. 40113, 41501, 41504, 41510, 41702 and 
41707.

Sec.  254.4  [Amended]

0
2. Section 254.4 is amended by removing ``$3,300,'' and adding 
``$3,400'' in its place.

Sec.  254.5  [Amended]

0
3. In Sec.  254.5, paragraph (b) is amended by removing ``$3,300'' and 
adding ``$3,400'' in its place.

    Issued in Washington, DC, on March 4, 2013, pursuant to 
authority delegated in 49 CFR 1.27(n).
Robert S. Rivkin,
General Counsel.
[FR Doc. 2013-05475 Filed 3-7-13; 8:45 am]
BILLING CODE 4910-9X-P
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