19628 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 187

[Docket No. 27809; Amendment No. 187–

5]

RIN 2120–AE72

Fees for Certification Services and

Approvals Performed Outside the

United States

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This rulemaking: Updates

existing fees for airman and repair

station certification services to reflect

current cost levels for such services

performed outside the United States

(U.S.); Establishes a schedule of fees

where no fee currently exists for all

tests, authorizations, certificates,

permits, or ratings relating to any

airman certification or repair station

certification performed outside the U.S.;

Establishes the methodology for

computing user fees and a timetable for

periodic updates of fees; and Establishes

additional methods of collecting those

fees.

This regulation is necessary to allow

the FAA to fully recover the costs it

incurs in performing airman

certification and repair station

certification services outside the U.S.

and to bring current airman fees charges

in line with the General Agreement on

Tariffs and Trade (GATT) and other

international treaties.

The intended effect of this action is to

offset the costs of providing airman and

repair station certification services

outside the U.S. Recovering these costs

will allow the FAA to continue to

provide airman and repair station

certification services outside the U.S.,

thereby facilitating the FAA’s effort to

assure ready acceptance of U.S.

aeronautical exports overseas.

EFFECTIVE DATE: May 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Emily A. White, Flight Standards

Service, AFS–50, Federal Aviation

Administration, 800 Independence

Avenue SW., Washington, DC 20591,

telephone (202) 267–3301.

SUPPLEMENTARY INFORMATION:

Background

Statement of the Problem

The fee schedule that appears in 14

CFR part 187, Appendix A, was

established by rulemaking and became

effective on October 18, 1982. It

contains fees for certain certification

services performed outside of the U.S.

by the FAA. However, it does not

contain fees for the full scope of

activities for which fees may be charged

under current statutory authority.

Rather, the fee schedule lists only fees

for services that were being rendered

outside the United States at the time of

that rulemaking. The fee schedule has

not been updated since 1982, although

the FAA’s costs for performing these

services has escalated since adoption of

the present rule in 1982. The FAA

incurs special costs to operate overseas

that increase the costs for providing

services outside the U.S. These

additional costs include cost-of-living

allowances as well as allowances for

housing and education. Due to these

costs, employing an inspector outside

the U.S. is approximately $85.4

thousand more costly than employing

the same inspector within the U.S.

It is currently necessary to update part

187, including Appendix A, to reflect

the services for which fees will be

charged and to reflect the methodology

for computing current and future fees.

The fees for the services described in

Appendix A are published in the

‘‘Notices’’ section of the Federal

Register. The current fees are published

in the ‘‘Notices’’ section of the Federal

Register whenever a fee is revised.

Changes to these fees will be published

in the ‘‘Notices’’ section.

The changes set out in this rule make

the FAA’s fees practice more nearly

consistent with the principles of

nondiscrimination and most-favorednation treatment that are at the core of

the international trade regime set up by

the GATT, and which includes the

Aircraft Code and the General

Agreement on Trade in Services

(GATS). Under these core trade

principles, governments should not treat

foreign nationals differently in the

measures that they take that affect

international trade. Airman

certifications are not governed by any

trade agreement to which the U.S. is a

party, but the FAA has determined that

bringing its fee practices into line with

international trade practices is

desirable, if not required by any special

obligation of the U.S. The FAA

measures with regard to certification of

foreign repair stations, however,

including fees charged, will be subject

to U.S. obligations under the GATS,

which entered into force January 1,

1995. Applying multilateral trade

principles to trade in service for the first

time, the GATS covers measures

affecting aircraft repair and maintenance

services. This regulation is consistent

with U.S. obligations under the GATS.

History

Statutory Authority

Under 49 U.S.C. 44701, formerly,

Title VI of the Federal Aviation Act of

1958, as amended (the Act), gives the

Administrator authority to issue

certificates for airman, instructors,

schools, and repair stations.

In addition, under Title V of the

Independent Offices Appropriation Act

of 1952 (31 U.S.C. 9701), the FAA has

been charged with establishing a fair

and equitable system for recovering full

costs expended for any service, such as

the issuance of the certificates, that

provide a special benefit to an

individual beyond those that accrue to

the general public. Section 403a of that

Act provides, in part, as follows:

It is the sense of the Congress that any

work service, publication, report, document,

benefit, privilege, authority, use, franchise,

license, permit, certificate, registration, or

similar thing of value or utility performed,

furnished, provided, granted, prepared or

issued by any Federal Agency * * * to or for

any person (including groups, associations,

organizations, partnerships, corporations, or

businesses), except those engaged in the

transaction of official business of the

Government, shall be self-sustaining to the

fullest extent possible * * *.

Section 403a further provides, in part:

The head of each Federal agency is

authorized by regulation (which, in the case

of agencies in the Executive Branch, shall be

as uniform as practicable and subject to such

policies as the President may prescribe) to

prescribe therefore such fee, charge, or price,

if any, as he shall determine, in case none

exists, or redetermine, in case of any existing

one, to be fair and equitable taking into

consideration direct and indirect cost to the

Government, value to the recipient, public

policy or interest served, and other pertinent

facts * * *.

In 1980, Congress passed the

International Air Transportation

Competition Act of 1979 (hereinafter

‘‘IATC Act’’) giving the FAA authority

to establish fee schedules for airman

and repair station certification services

provided outside the U.S. Section 28 of

the IATC Act amended Section 45 of the

Airline Deregulation Act to read as

follows:

Nothing in this section shall prohibit the

Secretary of Transportation or the

Administrator from collecting a fee, charge,

or price for any test, authorization,

certificate, permit, or rating, administered or

issued outside the United States, relating to

any airman or repair station. (49 U.S.C. 334,

second sentence).

Since the notice of proposed

rulemaking (NPRM) was published (59

FR 33832, June 30, 1994), the Congress

passed the Federal Aviation

Administration Authorization Act of
Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations 19629

1994 (hereinafter ‘‘FAA Authorization

Act of 1994’’), P.L. 103–305 (108 Stat.

1569), which was signed into law on

August 23, 1994. Section 209 of the

FAA Authorization Act of 1994,

amended Section 45301 of Title 49 to,

among other items, specifically require

the FAA to establish and collect fees for

foreign repair station certification and

inspection actions outside the U.S. at

such levels to fully recover the costs of

providing such services. Section 209

reads in part:

(2) Foreign Repair Station

Certification and Inspection Fees—The

Administrator must establish and

collect under this subsection fees for

certification and inspection of repair

stations outside of the United States.

(3) Level of Fees—Fees shall be

established under this subsection as

necessary * * * except that the

Administrator may for such services as

the Administrator designates (and shall

for certification and inspection of repair

stations outside the United States)

establish fees at a level necessary to

recover the full cost of providing such

services.

The amounts collected shall be paid

to the Federal Government.

Office of Management and Budget

(OMB) Guidelines

To aid in establishing fee schedules,

OMB has prescribed in Circular No. A–

25 the general guidelines to be used in

developing an equitable and reasonable

uniform system of charges for certain

government services and property. The

circular provides that ‘‘where a service

(or privilege) provides special benefits

to an identifiable recipient above and

beyond those that accrue to the public

at large, a charge should be imposed to

receive the full cost to the Federal

Government of rendering that service.’’

Circular No. A–25 specifies the

following:

A special benefit will be considered to

accrue and a charge should be imposed

when a Government-rendered service:

(a) Enables the beneficiary to obtain

more immediate or substantial gains or

values (which may or may not be

measurable in monetary terms) than

those which accrue to the general public

(for example, receiving a patent, crop

insurance, or license to carry on a

specific business), or

(b) Provides business stability or

assures public confidence in the

business activity of the beneficiary (for

example, certificates of necessity and

convenience [sic: convenience and

necessity] for airline routes, or safety

inspections of craft); or

(c) Is performed at the request of the

recipient and is above and beyond the

services regularly received by other

members of the same industry or group,

or of the general public (for example,

receiving passport visa, airman’s

certificate, or an inspection after regular

duty hours).

In support of the President’s guidance

in Circular No. A–25, this final rule

enables the FAA to fully recover its

costs for repair station and airman

certification services performed outside

the U.S. This rule is also consistent with

the guidance in Circular A–25 regarding

the use of excise taxes because once the

new fees are implemented, appropriated

funds will not be used to support these

services.

Related Activity

If adopted, the proposed new part

142, Aircraft Flight Simulator Use in

Pilot Training, Testing, and Checking

and at Training Centers (Notice No. 92–

10), and Special Federal Aviation

Regulation No. 58, Advanced

Qualification Program, will provide for

certification of training centers outside

the U.S. The certification provisions

relating to these training centers will be

contained in the proposed new part 142.

The fees for the certification of training

centers and for airman certification will

be contained in a new FAA advisory

circular discussed elsewhere in this

document.

The FAA Authorization Act of 1994,

cited above, broadened the FAA’s

Statutory authority to charge for services

outside the U.S. Prior to the enactment

of this legislation, FAA authority to

charge fees for services performed

outside the U.S. was limited to repair

station and airman certification actions.

Under this legislation, authority to

charge fees for services performed

outside the U.S. is extended to: ‘‘any

test, authorization, certificate, permit,

rating, evaluation, approval, inspection,

review,’’ (49 U.S.C. 45301 (2)(c)). New

fees authorized under this expanded

authority will be proposed in future

rulemaking action.

Discussion of Comments Received

The FAA mailed over 600 advance

copies of Notice No. 94–24, Fees for

Certification Services and Approvals

Performed Outside the United States, to

the Civil Aviation Authorities of

member countries of the International

Civil Aviation Organization (ICAO),

FAA certificated foreign repair station

operators, and interested Aviation

Rulemaking Advisory Committee

(ARAC) members. The ARAC is a formal

standing committee, comprised of

representatives from aviation

associations and industry. ARAC

provides industry input in the form of

information, advice, and

recommendations to be considered in

the full range of FAA rulemaking

activities.

Two commenters responded to the

NPRM: Air Line Pilots Association

(ALPA) and General Aviation

Manufacturers Association (GAMA). All

comments received were carefully

considered.

The ALPA is concerned that raising

fees to reflect current costs for providing

services will make FAA airman

certification actions too expensive for

potential applicants.

The FAA noted in Notice 94–24 that,

in the past, most U.S. citizens outside

the U.S. have sought airman

certification services from designees,

who charge market rates for such

services, rather than seeking free airman

certification services from the FAA.

Even so, under the new schedule, FAA

charges for airman certification services

will be comparable to, or less than,

those charged by designees. For

example, a written test given by an FAA

Aviation Safety Inspector will now be

$40, whereas the same test given at an

FAA approved test center ranges from

$60 to $150 depending upon the

location. Accordingly, the fees adopted

by this rulemaking are not excessive or

too expensive for potential applicants.

Also regarding testing, GAMA

questioned if FAA was, in effect,

receiving more than full cost recovery

where multiple applicants would be

simultaneously taking tests.

The proposed time of 0.5 hours, or

one-half hour, as the base time for

computation of fees for all written tests

is based on the time that an FAA

Aviation Safety Inspector must spend

on each individual applicant in

checking qualifications to take specific

tests, review of the completed test

package, and other individual

instruction that might be necessary.

This 0.5 hour number does not include

the actual test monitoring time, which

averages two hours per written test

under FAA regulations, where multiple

applicants might be involved. FAA

specifically sought to avoid the

potential of multiple charges by not

proposing charges for test monitoring

time.

GAMA had several concerns

regarding the charging for repair station

certification actions that can be

addressed by an elaboration on exactly

how the U.S. Government may charge

for its services.

Under the U.S. Government

guidelines and proposed rules, the FAA

may charge only for the actual service

provided and may not make a profit

from its services. Consequently, if no
19630 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations

government time or resources are

expended on a particular service, then

the FAA cannot charge for that service.

There are oversight offices both within

and outside of U.S. Government

Agencies to assure agency compliance

with applicable laws and regulations.

GAMA recommends the use of

bilateral-type agreements with foreign

governments to accomplish the FAA’s

foreign repair station workload, rather

than using FAA inspectors on a cost

recovery basis.

The FAA has been considering

bilateral-type maintenance agreements

with foreign countries for some time.

The FAA expects that at the appropriate

time, maintenance-type bilateral

agreements will be concluded. This will

not only be a cost savings to the end

user but to the FAA as well.

GAMA questioned whether an hourly

charge for inspector services, such as for

repair station certification actions,

would encourage an inspector to

artificially extend the time required for

certification in order to generate more

income for the office or as a punitive

action against the applicant or

certificate holder.

It should be pointed out that hourly

billing for these services has been in

place for over twelve years with no

complaints from repair station

certificate holders. Not has any question

regarding billing practices ever arisen

during the course of regular FAA

financial management reviews. Fee

collection practices are also subject to

other audits by the U.S. Department of

Transportation Inspector General, the

General Accounting Office, and other

oversight offices. Cost allocation studies

have shown that the charging of an

hourly rate for services that can vary

widely in time per facility due to facility

size, complexity, and, potential

problems uncovered is a very fair and

nondiscriminatory way of charging for

these services.

GAMA is also concerned that

transportation and subsistence not be

charged for actions that are performed

in the office. Approximately 95 percent

of repair station certification actions are

performed on site at the facility. For

repair station certification actions, that

may be handled without a site visit, no

transportation and subsistence expense

will be incurred that could be charged

to the certificate holder.

Finally, GAMA states that since fees

collected do not directly affect the FAA

budget, the collection of these fees still

might not assure the service is available

when and where needed.

This statement is incorrect. Since

1991, the fees collected by FAA safety

inspectors for repair station and airman

certification actions outside the U.S. has

been credited back to the budget of the

safety office that performed the

certification action as reimbursement for

expenses. This procedure helps to

ensure that sufficient funds remain

available for necessary certification

services.

Editorial and Administrative Changes

In Notice No. 94–24, the FAA

proposed that certain administrative

changes be made to facilitate review and

adjustment of fees as necessary to reflect

changes in fees for services performed.

The FAA has removed the fees from the

chart contained in appendix A of part

187 and replaced it with the

methodology for determining fees and a

yearly timetable for review. The actual

fees derived from this methodology will

be contained in Advisory Circular 187–

1. Future notice of changes to fees for

services will be published in the

‘‘Notices’’ section of the Federal

Register.

Although the FAA proposed no

change to proposed redesignated

§ 187.15(a), editorial changes are

necessary to reflect the revised chart

which now describes the fees for

services.

All other proposals are adopted as

proposed.

Paperwork Reduction Act

There are no reporting or

recordkeeping requirements associated

with this rule.

Regulatory Evaluation Summary

Executive Order 12866 established the

requirement that, within the extent

permitted by law, a Federal regulatory

action may be undertaken only if the

potential benefits to society for the

regulation outweigh the potential costs

to society. In response to this

requirement, and in accordance with

Department of Transportation policies

and procedures, the FAA has estimated

the anticipated benefits and costs of this

rulemaking action. The FAA has

determined that this amended rule is

not a ‘‘significant rulemaking action,’’ as

defined by Executive Order 12866

(Regulatory Planning and Review). The

results are summarized in this section.

This rule will not impose any

additional costs on any members of

society other than those requesting FAA

certification services outside the United

States. The rule will reimburse the FAA

for the cost of services currently being

provided to the users. Thus, the

beneficiaries, rather than the general

taxpayers, will pay for the services

provided by the FAA. The new and

amended fees are considered equitable

and reflect the cost of providing these

services. The benefits of this rule will

therefore be the elimination of the need

for general federal revenues by the FAA

to cover the costs of these services

provided by the FAA.

Regulatory Flexibility Determination

The Regulatory Flexibility Act of 1980

(RFA) was enacted by Congress to

ensure that small entities are not

unnecessarily burdened by government

regulations. The RFA requires agencies

to consider the impact of rules on small

entities, that is, small businesses,

nonprofit organizations, and local

governments. If there is a significant

impact on a substantial numer of small

entities, the Agency must prepare a draft

Regulatory Flexibility Analysis (RFA)

for the final rule.

The amended rule will primarily

affect general aviation pilots and foreign

repair stations. The RFA applies neither

to individuals nor foreign entities.

Therefore, a RFA is not required.

International Trade Impact

This rule will affect primarily general

aviation pilots and foreign repair

stations. The rule will have a favorable

competitive impact on U.S. repair

stations by removing the subsidy that

the FAA has provided to foreign repair

stations in the form of lower charges for

certification services. The rule will

enhance the competitiveness of

domestic firms.

Federalism Implications

The regulations hereing will not have

substantial direct implications on the

states, on the relationship between the

national government and the states, or

on the distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12612,

it is determined that this regulation will

not have sufficient federalism

implications to warrant the preparataion

of a Federalism Assessment.

Conclusion

For the reasons discussed in the

preamble, and based on the findings in

the Regulatory Flexibility Determination

and the International Trade Impact

Analysis, the FAA has determined that

this regulation is not significant under

Executive Order 12866. In addition, the

FAA certifies that this regulation will

not have a significant economic impact,

positive or negative, on a substantial

number of small entities under the

criteria of the Regulatory Flexibility Act.

This regulation is considered

nonsignificant under DOT Order 2100.5,

Policies and Procedures for
Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations 19631

Simplification, Analysis, and Review of

Regulations. A final regulatory

evaluation of the regulation, including a

Regulatory Flexibility Determination

and International Trade Impact

Analysis, has been placed in the docket.

A copy may be obtained by contacting

the person identified under FOR FURTHER

INFORMATION CONTACT.

List of Subjects in 14 CFR Part 187

Administrative practice and

procedure, Air transportation.

The Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends chapter I of title 14 of the Code

of Federal Regulations as follows:

PART 187—FEES

1. The authority citation for part 187

continues to read as follows:

Authority: Sec. 501, 65 Stat. 290; 31 U.S.C.

483a; secs. 301, 302, 303, 305, 307, 313, 314;

72 Stat. 744, 747, 749, 752, 754; 49 U.S.C.

1341, 1343, 1344, 1346, 1348, 1354, 1355.

Section 187.15 is revised to read as

follows:

§ 187.15 Payment of fees.

(a) The fees described in Appendix A

of this part and published in the

‘‘Notices’’ section of the Federal

Register are payable to the Federal

Aviation Administration by check,

money order, or draft payable in U.S.

currency and drawn on a U.S. bank.

(b) The fees described in Appendix A

of this part and published in the

‘‘Notices’’ section of the Federal

Register may be paid by wire transfer.

(c) Applicants for the FAA services

described in Appendix A of this part

shall pay bank processing charges, when

such charges are assessed by banks on

U.S. Government deposits.

3. Appendix A to part 187 is revised

to read as follows:

Appendix A to Part 187—Methodology

for Computation of Fees for

Certification Services Performed

Outside the United States

(a) Fixed fees and hourly rates have been

derived using the methodology described

below to ensure full cost recovery for

certification actions or approvals provided by

the FAA for persons outside the United

States.

(b) These rates are based on aviation safety

inspector time rather than calculating a

separate rate for managerial or clerical time

because the inspector is the individual

performing the actual service. Charging for

inspector time, while building in all costs

into the rate base, provides for efficient cost

recovery and time management.

(c) The hourly billing rate has been

determined by using the annual operations

budget of the Flight Standards Service. The

budget is comprised of the following:

(1) Personnel compensation and benefits,

budget code series 1100 (excluding codes

1151 and 1152—overtime, Sunday and

holiday pay), 1200, and 1300.

(2) Travel and transportation of persons,

budget code series 2100 (excluding code

2100—site visit travel).

(3) Transportation of things, budget code

series 2200.

(4) Rental, communications, utilities,

budget code series 2300.

(5) Printing and reproduction, budget code

series 2400.

(6) Contractual services, budget code series

2500.

(7) Supplies and materials, budget code

series 2600.

(8) Equipment, budget code series 3100.

(9) Lands and structures, budget code

series 3200.

(10) Insurance claims and indemnities,

budget code series 4200.

(d) In order to recover overhead costs

attributable to the budget, all costs other than

direct inspector transportation and

subsistence, overtime, and Sunday/holiday

costs, are assigned to the number of inspector

positions. An hourly cost per inspector is

developed by dividing the annual Flight

Standards Operations Budget, excluding the

items enumerated above, by the number of

aviation safety inspections (OMB position

series 1825) on board at the beginning of the

fiscal year, to determine the annual cost of

an aviation safety inspector. This annual cost

of an aviation safety inspector is divided by

2,087 hours, which is the annual paid hours

of a U.S. Federal Government employee. This

result in the hourly government paid cost of

an aviation safety inspector.

(e) To ensure that the hourly inspector cost

represents a billing rate that ensures full

recovery of costs, the hourly cost per

inspector must be multiplied by an indirect

work factor to determine the hourly inspector

billing rate. This is necessary for the

following reasons:

(1) Inspectors spend a significant amount

of time in indirect work to support their

inspection activities, much of which cannot

be allocated to any one client.

(2) Not all 2,087 annual paid hours are

available as work hours because training,

providing technical assistance, leave, and

other indirect work activities reduce the

work time that may be directly billed.

Consequently, the hourly cost per inspector

must be adjusted upwards by an indirect

work factor. The calculation of an indirect

work factor is discussed in paragraph (f) of

this appendix.

(f)(1) The indirect work factor is

determined using the following formula:

1 1

1

+ 









 ∑a b i + =

k

( ) indirect work factor

where:

a=indirect work rate, and

b=leave usage (total leave hours divided

by total hours available for work.

(2) The components of the formula are

derived as follows:

(i) a=indirect work rate. Indirect work

rate is take from the Flight Standards

Staffing Standard Order and is used to

project the amount of time an aviation

safety inspector spends in indirect

activities, as opposed to certification

and surveillance work. The indirect

work activities are:

(A) Development of master minimum

equipment lists on Flight Operations

Evaluation Board.

(B) Development of aircraft training

documents on Flight Standardization

Board.

(C) Development of Maintenance

program documents on Maintenance

Review Board.

(D) Providing technical assistance.

(E) Assisting legal counsel.

(F) Evaluation of technical

documents.

(G) Leave (all types).

(H) Training.

(I) Administrative time.

(J) Travel for indirect work.

(ii) b=leave usage (total leave hours

divided by total hours available for

work). This is computed by using OMB

guidelines of 280 average annual leave

hours and 1,800 average annual hours

available for work for computer

manpower requirements.

(g) The hourly inspector cost, when

multiplied by the indirect work factor,

yields the hourly inspector billing rate

and ensures full cost recovery by

incorporating the total amount of FAA

paid hours needed to produce one hour

of direct billable inspector time.

(h) Certifications and approvals for

which there are fixed times, such as

airman tests, are determined by

multiplying the time used in the Flight

Standards Staffing Standard or airman

test guidelines by the inspector hourly

billing rate.

(i) Certifications and approvals for

which there are no fixed work rates,
19632 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations

such as airman and repair station

facilities (air agencies), are billed at the

hourly inspector billing rate.

(j) Actual transportation and

subsistence expenses incurred in

certification or approval actions will be

billed in addition to the hourly

inspector billing rate, where such

expenses are incurred.

(k) In no event will the fees exceed

the actual costs of providing

certification or approval services.

(l) The methodology for computing

user fees is published in this Appendix.

The User fee schedule is published in

an FAA Advisory Circular entitled

‘‘Flight Standards Service Schedule of

Charges Outside the United States.’’ A

copy of this publication may be

obtained from: New Orders,

Superintendent of Documents, P.O. Box

371954, Pittsburgh, PA 15250–7954

(m) Fees will be reviewed every year,

at the beginning of the fiscal year, and

adjusted either upward or downward in

order to reflect the current costs of

performing tests, authorizations,

certifications, permits, or ratings.

(n) Notice of each change to a fee for

a service described in the user fee

schedule will be published in the

‘‘Notices’’ section of the Federal

Register.

Issued in Washington, D.C. on April 10,

1995.

David R. Hinson,

Administrator.

[FR Doc. 95–9150 Filed 4–18–95; 8:45 am]

BILLING CODE 4910–13–M