[Federal Register Volume 66, Number 246 (Friday, December 21, 2001)]
[Proposed Rules]
[Pages 66238-66247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31435]



[[Page 66237]]

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

Part V





Department of Transportation





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



Federal Aviation Administration



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



14 CFR Part 154



Procedures for Reimbursement of Airports, On-Airport Parking Lots and 
Vendors of On-Airfield Direct Services to Air Carriers for Security; 
Proposed Rule

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / 
Proposed Rules

[[Page 66238]]


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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 154

[Docket No. FAA--2001-11172 Notice No. 01-13]
RIN 2120-AH60


Procedures for Reimbursement of Airports, On-Airport Parking Lots 
and Vendors of On-Airfield Direct Services to Air Carriers for Security 
Mandates

AGENCY: Federal Aviation Administration (FAA) DOT.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: We are proposing procedures for certain operators to apply for 
reimbursement of allowable costs incurred to comply with certain 
security requirements imposed by the FAA or Transportation Security 
Administration (TSA) on or after September 11, 2001. These procedures 
are need to inform airport operations, on-airport parking lots, and 
vendors of on-airfield direct services to air carriers how to apply for 
reimbursement of allowable costs. In the event that funds are 
appropriated for this purpose, the FAA or TSA would use the 
applications to approve reimbursement of allowable costs as described 
in this proposed rule.

DATES: Submit comments by January 22, 2002.

ADDRESSES: Address your comments to the Dockets Management System, U.S. 
Department of Transportation, Room Plaza 401, 400 Seventh Street, SW., 
Washington, DC 20590. You must identify the docket number FAA-2001-
11172 at the beginning of your comments, and you should submit two 
copies of your comments. If you wish to receive confirmation that the 
FAA and the TSA received your comments, include a self-addressed, 
stamped postcard. You may also submit comments through the Internet to 
http://dms.dot.gov.
    You may review the public docket containing comments to these 
regulations in person in the Dockets Office between 9:00 a.m. and 5:00 
p.m., Monday through Friday, except Federal holidays. The Dockets 
Office is on the plaza level of the NASSIF Building at the Department 
of Transportation at the above address. Also, you may review public 
dockets on the Internet at 
http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Barry Molar, Manager, Airports 
Financial Assistance Division, Office of the Associate Administrator 
for Airports, (202) 267-3831, or Frank J. San Martin, Airports Law 
Branch, Office of the Chief Counsel, (202) 267-3199/3473 Federal 
Aviation Administration, 800 Independence Avenue, SW., Washington, DC, 
20590.

SUPPLEMENTARY INFORMATION:

Comments Invited

    Interested person are invited to participate in this rulemaking by 
submitting written data, views, or arguments. Comments relating to 
environmental, energy, federalism, or international trade impacts that 
might result from this amendment also are invited. Comments must 
include the regulatory docket or amendment number and must be submitted 
in duplicate to the address above. All comments received, as well as a 
report summarizing each substantive public contact with FAA personnel 
on this rulemaking, will be filed in the public docket. The docket is 
available for public inspection before and after the comment closing 
date.
    The FAA will consider all comments received on or before the 
closing date for comments. Late-filed comments will be considered to 
the extent practicable. The proposals in this Notice may be changed in 
light of the comments received.
    See ADDRESSES above for information on how to submit comments.

Availability of Proposed Rule

    You can get an electronic copy using the Internet by taking the 
following steps:
    (1) Go to search function of the Department of Transportation's 
electronic Docket Management System (DMS) Web page (http://dms.dot.gov/search.).
    (2) On the search page type in the last five digits of the Docket 
number shown at the beginning of this notice. Click on ``search.''
    (3) On the next page, which contains the Docket summary information 
for the Docket you selected, click on the rulemaking.
    You can also get an electronic copy using the Internet through 
FAA's web page at http://www.faa.gov/avr/armhome.htm or the Government 
Printing Office's web page at http://www.access.gpo.gov/su_docs/aces/aces140html.
    You can also get a copy by submitting a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the amendment number or docket number of this final 
rule.

Small Entity Inquiries

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires the FAA to comply with small entity requests for 
information and advise about compliance with statutes and regulations 
within the FAA's jurisdiction. Therefore, any small entity that has a 
question regarding this document may contact its local FAA official. 
Internet users can find additional information on SBREFA on the FAA's 
web page at http:www.faa.gov/avr/arm/sbrefa.htm and send electronic 
inquiries to the following Internet address: <a href="/cdn-cgi/l/email-protection#f0c9ddb1a7b1dda3b2a2b5b6b1b0969191de979f86"><span class="__cf_email__" data-cfemail="576e7a1600167a0415051211161731363679303821">[email protected]</span></a>.

Background

    As a consequence of the terrorists attacks on the United States on 
September 11, 2001, airport operators, on-airport parking lots, and 
vendors of on-airfield direct services to air carriers have been 
required to dramatically increase security.
    Acting to preserve the continued viability and security of the U.S. 
air transportation system, Congress enacted, and President Bush signed, 
the Aviation and Transportation Security Act (``the Act),'' Public Law 
107-71, 115 Stat. 597 (November 19, 2001).
    Section 121(a) of the Act authorized to be appropriated to the 
Secretary of Transportation for fiscal years 2002 and 2003 a total of 
$1.5 billion to reimburse airport operators, on-airport parking lots, 
and vendors of on-airfield direct services to air carriers for direct 
costs incurred to comply with new, additional, or revised security 
requirements imposed by the FAA or the TSA on or after September 11, 
2001. Under Section 121(b), cost must be documented to the satisfaction 
of the Secretary using sworn financial statements or other appropriate 
data demonstrating that the cost is eligible for reimbursement and was 
in fact incurred.
    Section 121(c) requires that within 30 days (by December 19, 2001) 
and after consultation with airports operators, on-airport parking 
lots, and vendors of on-airfield direct services to air carriers, the 
Secretary publish in the Federal Register the procedures for filing 
claims for reimbursement under section 121 of eligible costs incurred. 
In December 2001, FAA airports, security, and counsel staff consulted 
on proposed claim procedures, as required by the Act, with 
representatives of Airports Council International, Metropolitan 
Washington Airports Authority, Maryland Aviation Administration, 
American Association of Airport

[[Page 66239]]

Executives, National Air Transportation Association (NATA), individual 
NATA members who provide services to air carriers, and vendors of on-
airfield services. Consultations with representatives of on-airport 
parking lots are pending. Airport operators advised that a high 
percentage of on-airport parking lots are controlled by the airports 
and not by independent business entities.
    This action contains the proposed procedures for filing claims for 
reimbursement under section 121 of eligible costs incurred by airport 
operators, on-airport parking lots, and vendors of on-airfield direct 
services to air carriers.

Section-by-Section Analysis

Subpart A--General Provisions

Section 154.1  What Is the Purpose of This Part?

    This section states the purpose of part 154, which is to carry out 
the statutory provisions of the Act with respect to reimbursement of 
airport operators, on-airport parking lots, and vendors of on-airfield 
direct services to air carriers for direct costs, incurred to comply 
with new, additional, or revised security mandates imposed by the FAA 
or TSA on or after September 11, 2001.

Section 154.3  Definitions

    This section provides definitions for the terms used in the Act. 
Several definitions incorporate terms from the act or other existing 
sources. The term ``air carrier'' is defined as in 49 U.S.C. 40102 and 
``airport'' is defined as it is found in 49 U.S.C. 47102(2). The 
definition of ``airport'' is broader than current definitions because 
the Act does not limit reimbursement to airport operators who are 
eligible to receive federal Airport Improvement Program grants or to 
airports in the National Plan of Integrated Airport Systems (NPIAS).
    The terms ``on-airport parking lot'' and ``vendor of on-airfield 
direct services to air carriers'' are defined to identify the two other 
groups of possible applicants for reimbursement under the Act. The 
definition of ``on-airport parking lot'' excludes those on-airport 
parking lots controlled by airport operators. Claims for direct costs 
incurred by an on-airport parking lot controlled by an airport operator 
would be included in the airport operator's application. The statutory 
term ``vendor of on-airfield direct services to air carriers'' by terms 
requires that the direct service to an air carrier be conducted on the 
airfield. Direct services to an air carrier include, cleaning, fueling, 
maintenance, baggage handling, food and beverage services, or other 
services for aircraft on the airfield. The term ``on-the airfield'' is 
not defined in the Act or in Title 49, United States Code. For purposes 
of this Part the term airfield denotes the aircraft operating area of 
an airport, where most of the aeronautical activities occur. The 
location of the vendor's business need not be on the airport so long as 
the work is performed on the airfield. For example, a vendor that 
repairs aircraft must perform at least part of the service on the 
airfield to be covered. Other definitions were incorporated with 
modifications from the Federal Acquisition Regulations, 48 CFR part 31, 
Office of Management and Budget circulars, and similar sources 
reflecting generally accepted accounting terms.
    The definitions of ``eligible security requirements'' reflects the 
condition imposed by the Act that reimbursement be limited to direct 
costs incurred to comply with new, additional, or revised security 
requirements imposed by the FAA or TSA on or after September 11, 2001. 
The security requirements found in security directives, emergency 
amendments, orders, regulations, approved airport and air carrier 
security programs, contingency measures, and implementing instructions 
constitute sensitive security information (SSI) under 14 CFR part 191. 
Applicants are required to associate a specific provision in the 
applicable Security Directive, emergency to a security program under 
Part 107, Part 108, or Part 129, order, regulation or other directive 
with each claimed direct cost and identify it as security sensitive 
information under 14 CFR part 191 in the application. That information 
would be withheld from public disclosure under the terms of part 191. 
Claims for reimbursement submitted under these procedures would be 
initially reviewed by the field offices of the FAA's Office of Civil 
Aviation Security Operations or the appropriate office of the TSA to 
determine whether the claim is appropriately based on new, additional, 
or revised security requirements imposed by the FAA or TSA on or after 
September 11, 2001.

Section 154.5  What Funds Will the FAA Distribute Under This Part?

    The Act authorizes to be appropriated to the Secretary of 
Transportation $1.5 billion in reimbursement of direct costs for fiscal 
years (FY) 2002 and 2003. As of the date of this proposed rule no funds 
have been appropriated for reimbursement under Section 121. The FAA 
plans to disburse funds under Section 121 of the Act after 
appropriation by Congress for FY 2002 and/or FY 2003. In contrast to 
Section 119 of the Act, which provides for funding for aviation 
security with Airport Improvements Program (AIP) funds under 49 U.S.C. 
Sec. 47101 et seq., the amount authorized to be appropriated under 
section 121 is not considered AIP funds.
    Reimbursement provided under Section 121 of the Act would qualify 
as Federal assistance pursuant to 49 U.S.C. Sec. 47133. Therefore, 
airport operator recipients of reimbursement under Section 121 of the 
Act would be subject to the restriction on use of airport revenues of 
49 U.S.C. Sec. 47133. Neither Section 47133 nor its legislative history 
explained the term Federal assistance. In Section II(A) of FAA Policy 
and Procedures Concerning the Use of Airport Revenue, 64 FR 7696, 
(February 16, 1999), the FAA provided a non-exclusive list of five 
types of federal airport grants and conveyances that is considered to 
be Federal financial assistance. Reimbursements under Section 121 would 
be similar to federal airport grants in that they constitute 
reimbursement for funds spend by the airport operator.

Section 154.7 How Much of an Eligible Applicant's Estimated 
Reimbursement Will Be Distributed Under This Part?

    As discussed below, June 1, 2002 would be the due date for 
applications, and only costs incurred between September 11, 2001 and 
March 31, 2002 will be considered. The FAA would consider all 
applications together to determine the allowable costs. If the total of 
allowable costs exceeds the amounts appropriated, the FAA would 
allocate funds on a pro-rated basis, based on the ratio of each 
applicant's allowable costs to the total of all allowable costs 
claimed. If additional funds are subsequently appropriated, the FAA 
would give priority to fully reimbursing unreimbursed allowable costs 
incurred before March 31, 2002.
    If the total of allowable costs is less than the amounts 
appropriated, the FAA would pay claimed expenses in full (subject to 10 
percent withholding for audited results) and establish by Federal 
Register notice a due date for a new round of applications. Consistent 
with the Act applicants will receive reimbursement for which they 
demonstrate that they are eligible. To be eligible to receive 
reimbursement, an applicant would have to demonstrate to the 
satisfaction of the FAA that it has actually incurred direct costs for 
the purposes specified in the Act. The burden of proof with respect to

[[Page 66240]]

eligibility rests with applicants applying for reimbursement.

Section 154.9  What Are the Limits on Reimbursement to the Applicants?

    Pursuant to the Act, applicants would only be reimbursed for direct 
costs incurred to comply with new, additional, or revised security 
requirements imposed by the FAA or TSA on or after September 11, 2001. 
Initial applications would be limited to allowable costs incurred 
during the period between September 11, 2001 and March 31, 2002, so 
that applicants may have time to determine their direct costs under 
their normal accounting procedures. Direct costs, as explained in the 
discussion of the definitions section above, would be the only costs 
allowable for reimbursement under Section 121 of the Act. Direct costs 
are those costs that airport operators, on-airport parking lots and 
vendors of on-airfield direct services to air carriers can demonstrate 
to be unique to the new, additional, or revised security requirements. 
Unallowable costs include indirect costs, lost revenue, operating 
losses, prudent measures, normal costs, and capital costs, as well as 
pre-September 11, 2001 costs. In addition, costs that would be eligible 
for reimbursement but that are otherwise recovered by the eligible 
applicant are generally not reimbursable. Where costs are recovered by 
a direct surcharge or charge-back for incremental security costs, or by 
a specific grant, insurance payment, or other financial assistance 
device, the costs would not be reimbursed. Where the cost was recovered 
by a general increase in prices or rates and charges, the FAA may 
approve reimbursement, subject to a requirement that the eligible 
applicant provide an appropriate rebate to its customers, tenants, or 
users.

Section 154.11  Who Is Eligible To Apply for Compensation Under This 
Part?

    Airport operators, on-airport parking lots, and vendors of on-
airfield direct services to air carriers would be eligible to apply. 
Airport operator applicants would not be limited to public airports or 
certain categories of privately owned public use airports that are 
eligible to receive AIP grants under the terms of 49 U.S.C. 47102, and 
they would not limited to airports in the National Plan of Integrated 
Airport Systems (NPIAS).

Subpart B--Application Procedures

Section 154.13  When Must Applicants Apply for Reimbursement?

    All eligible entities would submit a completed application in 
triplicate, which must be received by June 1, 2002. Submissions would 
reflect costs incurred from September 11, 2001 through March 30, 2002. 
Unless an applicant could demonstrate to the satisfaction of the FAA 
that extremely unusual extenuating circumstances, completely beyond its 
control, prevented it from making a timely submissions, the FAA would 
not accept a late submission. If funds initially appropriated under 
this Part exceed total allowable costs or if additional funds become 
available, the FAA would publish a new due date for new applications in 
the Federal Register.

Section 154.15  To What Address Must Applicants Send Their Application?

    This section provides the address to which applicants must submit 
their application. The FAA would not accept applications sent to 
another address. In addition, applications would be required to be 
mailed or personally delivered. Faxes and e-mails alone would not be 
acceptable, unless hard copies are also submitted by mail or personal 
delivery. Hand-carried applications will be subject to arrangements to 
receive hand-carried applications consistent with current FAA security 
procedures. Applications also must be complete, containing all the 
required information. The FAA would not accept incomplete applications.

Section 154.17  What Documentation is Necessary To Support an 
Application?

    The application must include the completed form in Appendix A. The 
applicant would be required to support the costs it claims for 
reimbursement with the normal invoices, vouchers, payrolls and 
supporting accounting records that constitute adequate documentary 
evidence for the purposes of an independent audit. Supporting 
accounting records include general and specialized journals, ledgers, 
manuals, and supporting worksheets and other analyses; and 
corroborating evidence such as invoices, and vouchers. Audited 
financial statements are adequate support provided they show the 
specific costs submitted for reimbursement. Documentary evidence would 
be required to show that the amounts requested for reimbursement. 
Documentary evidence would be required to show that the amounts 
requested for reimbursement were actually incurred. Budget estimates or 
cost allocations would not be sufficient by themselves to establish a 
claim for reimbursement. This standard of documentation is the same as 
the standard used in FAA's Policy and Procedures Concerning the Use of 
Airport Revenue.
    Applicants would be required to identify the specific security 
requirement and the FAA or TSA source document associated with each 
claimed allowable cost. This information would be identified as 
security sensitive information, subject to confidential treatment under 
14 CFR Part 191 and would be marked with the warning provided in 
Section 154.17. The FAA or TSA would review this information to verify 
that the cost was incurred to satisfy an eligible security requirement. 
Questions concerning security requirements applicable to a particular 
eligible applicant may be addressed to Special Projects Officer, Office 
of Civil Aviation Security Operations (202) 267-7296 or 7262 at the 
Federal Aviation Administration. Airport operators must also certify 
that they have consulted with their non-air carrier tenants regarding 
an adjustment of rates and charges in accordance with section 122 of 
the Act.

Section 154.19  Must Applicants Certify The Truth and Accuracy of Data 
They Submit?

    This section provides the form of a certification that the Chief 
Executive Officer, Chief Financial Officer, or Chief Operating Officer, 
or equivalent official, of an applicant would be required to make the 
respect to applications for reimbursement and participation in the 
reimbursement program. The certification would attest to the truth and 
accuracy of the information and compliance with Section 121 of the Act.

Section 154.21  What Records Must Applicants Retain?

    An applicant that applies for reimbursement under this part would 
be required to retain all books, records, and other source and summary 
documentation supporting its claims for reimbursement of direct costs 
pursuant to Section 121 of the Act. This requirement includes, but is 
not limited to, retaining supporting evidence and documentation 
demonstrating the validity of the data provided; obtaining and 
retaining all reports, working papers and supporting documentation 
pertaining to audits or review conducted by independent auditors under 
the requirements of this part.
    An applicant would be required to preserve and maintain this

[[Page 66241]]

documentation for five years in a manner that readily permits its audit 
and examination by representatives of the FAA, the TSA, the Office of 
the Secretary, Department of Transportation (including the Office of 
the Inspector General), the Comptroller General of the United States, 
or other authorized Federal agencies. An applicant must make all 
requested data available within one week from a request by such 
activities.

Section 154.23  Are Applicants That Participate in This Program Subject 
to Audit?

    All claims by applicants are subject to audit the FAA, TSA, Office 
of the Secretary of Transportation (including the Office of Inspector 
General), the Comptroller General, or other authorized Federal 
agencies. All information submitted with the application and all 
records and documentation retained would be subject to audit.
    To accommodate each applicant's normal fiscal year and audit cycle, 
the FAA would partially release approved reimbursements prior to 
completion of the annual audit on the condition that the audit will be 
forwarded to the FAA (same address as the application) within 30 days 
after completion. Until completion of the audit, the FAA would retain 
10% of the approved reimbursement. Upon receipt of the audit, the 
Department would adjust the reimbursement to conform to the results of 
audit and the requirements of this Rule.
    Airport operators must follow the Office of Management and Budget 
Circular No. A-133 Single Audit Requirements (for availability see 5 
CFR 1310.3); consequently, their requests for reimbursement must be 
treated as though the amount had been a Federal award and audited in 
accordance with OMB Circular A-133. If the airport operator did not 
have Federal assistance of $300,000 or more to meet the criteria for 
having a single audit, that operator may rely on the submission of 
supporting documentation as specified in section 154.17. Vendors of on-
airfield direct services to air carriers, parking lot operators, and 
other entities that request reimbursement but are not subject to OMB 
Circular A-133 would be required to comply with the following 
requirements. For requests of $300,000 or more, the amount must be 
subject to annual audit and the amount for the period under audit must 
be commented upon and certified by the auditor. If the amount requested 
for reimbursement spans more than one audit period, the independent 
auditor must comment and certify the amount for each period. As an 
alternative, the applicant may submit a single certified audit report 
that specifically addresses the amount requested for reimbursement. For 
requests under $300,000, the applicant, as an alternative to audit, may 
submit with its application its supporting documentation, as specified 
in Section 154.17.

Paperwork Reduction Act

    This rule contains information collection requirements subject to 
the Paperwork Reduction Act (PRA), specifically the application 
documents that airport operators, on-airport parking lots, and vendors 
of on-airfield direct services to air carriers must submit to the FAA 
to obtain reimbursement. The title, description, and respondent 
description of the information collections as well as an estimate of 
the annual recordkeeping and periodic reporting burden are shown below. 
Included in the estimate is the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    Title: Procedures for Reimbursement of Airports for Security 
Mandates.
    Need for Information: The information is required to administer the 
requirements of the Act.
    Use of Information: The FAA would use the data submitted by the 
applicants to determine whether the applicants' documented costs are 
eligible for reimbursement under the Act as direct costs, incurred by 
operators, on-airport parking lots, or vendors of on-airfield direct 
services to air carriers to comply with new, additional, or revised 
security requirements imposed by the FAA or TSA on or after September 
11, 2001.
    Frequency: For this final rule, the FAA will collect the 
information once, unless an additional application period is necessary 
to apply for additional appropriated funds.
    Respondents: THe respondents include a possible estimated 4000 
applicants. This number is based on an estimate of the number of 
commercial service airports, with assumptions of one parking operator 
per airport and 5 vendors of on-airfield services to air carriers.
    Burden Estimate: Total of 16,000 burden hours (4 hours per 
application multiplied by an estimated 4,000 potential applicants). 
Total cost to industry would be approximately $455,200.
    Form(s): The data would be collected both electronically and from 
paper sources.
    Average Burden Hours per Respondent: 4 hours per applicant at an 
average cost of about $114 per respondent.
    The Office of Management and Budget has approved this information 
collection, with Control Number    .

Executive Order 12866 and DOT Regulatory Policies and Procedures

    Executive Order 12866, Regulatory Planning and Review, directs the 
FAA to assess both the costs and benefits of a regulatory change. We 
are not allowed to propose or adopt a regulation unless we make a 
reasoned determination that the benefits of the intended regulation 
justify the costs. Under this proposed rule no entity would be required 
to take any action so that the economic impact is minimal. Since its 
costs and benefits do not make it a ``significant regulatory action'' 
as defined in the Order, we have not prepared a ``regulatory 
evaluation,'' which is the written cost/benefit analysis ordinarily 
required for all rulemaking under the DOT Regulatory and Procedures. We 
do not need to do the latter analysis where the economic impact is 
minimal.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) of 1980, 5 U.S.C. 601-612, 
directs the FAA to fit regulatory requirements to the scale of the 
business, organizations, and governmental jurisdictions subject to the 
regulation. We are required to determine whether a proposed or final 
action will have a ``significant economic impact on a substantial 
number of small entities'' as defined in the Act. If we find that the 
action will have a significant impact, we must do a ``regulatory 
flexibility analysis.''
    Under this proposed rule no entity would be required to take any 
action. Those that choose to apply under this proposed rule may obtain 
a benefit. The costs of complying are those stated in the Paperwork 
Reduction Act section in this preamble, and are minimal. Therefore, we 
certify that this action will not have a significant economic impact on 
a substantial number of small entities.

Trade Impact Assessment

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activity 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

[[Page 66242]]

U.S. standards. The FAA has assessed the potential effect of this 
rulemaking and has determined that it will have only a domestic impact 
and therefore no effect on any trade-sensitive activity.

Unfunded Mandates Assessment

    The Unfunded Mandates Reform Act of 1995 (UMRA), enacted as Public 
Law 104-4 on March 22, 1995, 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 agency 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.
    This proposed rule does not contain such a mandate. Therefore, the 
requirements of Title II of the Unfunded Mandates Reform Act of 1995 do 
not apply.

Executive Order 13132, Federalism

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

Environmental Analysis

    FAA Order 1050.1D defines FAA actions that may be categorically 
excluded from preparation of a National Environmental Policy (NEPA) 
environmental impact statement. In accordance with FAA Order 1050.ID, 
appendix 4, paragraph 4(j) this rulemaking action qualifies for a 
categorical exclusion.

Energy Impact

    The energy impact of this proposal has been assessed in accordance 
with the Energy Policy and Conservation Act (EPCA) Public Law 94-163, 
as amended (42 U.S.C. 6362) and FAA Order 1053.1. It has been 
determined that this rule is not a major regulatory action under the 
provisions of the EPCA.

List of Subjects in 14 CFR Part 154

    Airports, Business and industry, Reimbursement, Reporting and 
recordkeeping requirements.

The Amendments

    For the reasons set forth in the preamble, the FAA proposes to add 
new part 154 to Title 14, Code of Federal Regulations, to read as 
follows:

PART 154--PROCEDURES FOR REIMBURSEMENT OF AIRPORTS, ON-AIRPORT 
PARKING LOTS AND VENDORS OF ON-AIRFIELD DIRECT SERVICES TO AIR 
CARRIERS FOR SECURITY MANDATES

Subpart A--General Provisions
Sec.
154.1   What is the purpose of this part?
154.3   Definitions.
154.5   What funds will the FAA distribute under this part?
154.7   How much of an eligible applicant's estimated reimbursement 
will be distributed under this part?
154.9   What are the limits on reimbursement to applicants?
154.11   Who is eligible to apply for reimbursement under this part?
Subpart B--Application Procedures
154.13   When must applicants apply for reimbursement?
154.15   To what address must applicants send their applications?
154.17   What documentation is necessary to support an application?
154.19   Must applicants certify the truth accuracy of data they 
submit?
154.21   What records must applicants retain?
154.23   Are applicants that participate in this program subject to 
audit?
Appendix A to Part 154--Form for Application for Reimbursement

    Authority: Section 121 of Pub. L. 107-71, 115 Stat. 597.

Subpart A--General Provisions


Sec. 154.1  What is the purpose of this part?

    The purpose of this part is to establish procedures to implement 
section 121 of the Aviation and Transportation Security Act (``the 
Act''), Public Law 107-71, 115 Stat. 597. This statutory provision 
authorizes appropriations to reimburse airport operators, on-airport 
parking lots, and vendors of on-airfield direct services to air 
carriers, for direct costs incurred by such operators to comply with 
new, additional, or revised security requirements imposed by the FAA or 
the Transportation Security Administration (TSA) on or after September 
11, 2001.


Sec. 154.3  Definitions

    The following terms apply to this part:
    Air carrier means any U.S. carrier or foreign air carrier as 
defined in 49 U.S.C. 40102.
    Airport means any U.S. airport as defined in 49 U.S.C. 47102.
    Airport operator means the owner or individual, public, or business 
entity that controls the daily operation, maintenance, and management 
of an airport.
    Allowable cost means the direct costs incurred by an eligible 
applicant to comply with eligible security requirement son or after 
September 11, 2001.
    Capital cost means a cost that in accordance with accrual 
accounting procedures would not be charged as an expense to a single 
fiscal period. Capital costs include expenditures for extensive 
terminal or parking garage remodeling, road construction, and 
installation of permanent barricades. The costs of minor terminal and 
parking alterations, installation of temporary barricades, such as 
Jersey barriers, and minor purchases of equipment are not considered to 
be capital costs. Any project or purchase that would be AIP eligible 
under the standards of eligibility in effect prior to enactment of the 
Act is a capital expenditure. The eligible applicant's normal cost 
accounting procedures will weigh heavily for determining whether a 
transaction should be considered a current year expenditure or a 
capital expenditure. Entities that are on a cash accounting basis 
should apply accrual accounting principles to determine whether a 
transaction is a current year expenditure or a capital expenditure.
    Costs otherwise recovered means costs that would otherwise be 
eligible for reimbursement under this part, but that the eligible 
agency passed through to vendors, customers, subcontractors, or the 
public, or costs that were recovered through insurance, grant programs, 
or other kinds of aid.
    Direct costs means the costs that eligible applicants can 
specifically identify as being unique to new, additional, or revised 
security requirements imposed by the FAA or the TSA on or after 
September 11, 2001. Such sots must be incurred on or after September 
11, 2001 and may not be allocable from or to other cost pools or cost 
objectives.
    Eligible applicant means an airport operator, on-airport parking 
lot, or vendor of on-airfield direct services to air carriers eligible 
to apply for reimbursement under this part.
    Eligible security requirement means a new, additional, or revised 
security requirement imposed by the FAA or the TSA through a Security 
Directive, emergency amendment to a security program under Part 107, 
Part 108 or Part 129 of this chapter, order, regulation, or other 
directive on or after September 11, 2001.

[[Page 66243]]

    Indirect costs are any costs that are not directly identified with 
a single, final cost objective. Indirect administrative costs are the 
accounting, budgeting, data processing, legal services, insurance, 
office space, utilities, printing, reproduction, and other costs that 
are not directly traceable to the new additional, or revised security 
requirements. Indirect management costs are those costs incurred from 
the corporate, division, and local officers and supervisors that were 
reasonable for implementing the new, additional, or revised security 
requirements, but who also continued to have their normal managerial or 
supervisory responsibilities. For example, a local supervisor may have 
been responsible for implementing the reissuance of security badges, 
but that supervisor may have also continued with his normal duties, 
such as, the routine scheduling of shift personnel or the supervision 
of personnel in the normal course of their duties.
    Lost revenue means those revenues which the eligible applicant 
would have earned were it not for measures required by the Department 
of Transportation or law enforcement agencies in response to the events 
of September 11, 2001. An example of lost revenue is the lost revenue 
from parking spaces that were placed out of service as the result of 
FAA security requirements. Lost revenue also includes, but is not 
limited to, the loss of airport landing fees resulting from decreased 
air traffic as the result of FAA suspending air operations, and reduced 
fees paid by airport vendors due to the lost sales that they incurred 
as the result of FAA suspending air operations.
    Normal costs means the costs incurred by eligible applicants for 
the purpose of airport security that are not directly related to the 
new, additional, or revised security requirements imposed by the FAA or 
the TSA on or after September 11, 2001.
    On-airport parking lot means the individual or business entity, 
other than an airport operator, that controls through lease or other 
business arrangement with an airport operator, the daily operation, 
maintenance, and management of a parking lot located on land identified 
as airport property on an airport property map.
    Operator losses mean the losses resulting from decreased revenue or 
increased expenses resulting from FAA security requirements.
    Pre-September 11, 2001 costs means costs otherwise budgeted or 
expended prior to September 11, 2001.
    Prudent measure means a new or additional measure undertaken by an 
eligible applicant to improve airport and passenger security which was 
not directly ordered by the FAA. Contracting for on-airport catering to 
provide meals for law enforcement officers located at the airport in 
response to an FAA security directive but not specifically directed by 
the FAA would be an example of a prudent measure.
    Unallowable costs means those costs that do not meet the 
definitions of allowable and direct costs. Unallowable costs include 
capital costs, indirect costs, normal costs, lost revenue, operating 
losses, and prudent measures, as well as pre-September 11, 2001 costs.
    Vendor of on-airfield direct services to air carriers means an 
individual or business entity, other than the serviced air carrier or 
airport operator, that provides through a fee arrangement cleaning, 
fueling, maintenance, baggage handling, food and beverages or other 
services for aircraft on the airfield. For the purposes of this 
definitions, an air carrier that performs such services for another air 
carrier is considered to be a vendor when performing the same or 
similar services on the airfield. For purposes of this part the term 
airfield denotes the aircraft operating area of an airport where most 
of the aeronautical activities occur. The location of the vendor's 
business need not be on the airport so long as the work is performed on 
the airfield.


Sec. 154.5  What funds will the FAA distribute udner this part?

    (a) Through the regulations in this part, the FAA is distributing 
reimbursement authorized under section 121 of the Act, to the extent 
such funds are appropriated by Congress. As of December 21, 2002, no 
such funds have been appropriated.
    (b) The reimbursement provided under this part to an airport is 
Federal assistance within the meaning of 49 U.S.C. 47133, and Federal 
financial assistance within the meaning of the FAA Policy and 
Procedures Concerning the Use of Airport Revenue published on February 
16, 1999 (for availability see http://www.faa.gov/arp/fedreg/htm).


Sec. 154.7  How much of an eligible applicant's estimated reimbursement 
will be distributed under this part?

    Upon appropriation, and after all applications are received in 
accordance with this part, the FAA will determine the total amount of 
all allowable costs requested. In the event the total allowable costs 
exceed appropriated funds, the FAA will approve reimbursement of a 
uniform percentage of allowable costs that equates the total approved 
reimbursements with the appropriated amount. In the event that 
additional funds are subsequently made available, the FAA will give 
priority to fully reimbursing allowable costs claimed in initial 
applications. If total allowable costs are less than appropriated 
funds, the FAA will publish a notice in the Federal Register of the due 
date for the filing of further applications.


Sec. 154.9  What are the limits on reimbursement to applicants?

    (a) The FAA approves reimbursement only for allowable costs, 
subject to the limitation in paragraph (c)(3) of this section.
    (b) Initial applications must be limited to allowable costs 
incurred during the period between September 11, 2001 and March 31, 
2002.
    (c) The following items are not eligible for reimbursement:
    (1) Unallowable costs.
    (2) Lost revenue.
    (3) Costs otherwise recovered. Where the costs are recovered by 
direct charge, surcharge, or charge-back for incremental or new 
security costs, or by a specific grant, insurance payment, or other 
financial assistance device, the costs will not be reimbursed. Where 
the cost are recovered by a general increase in prices or rates and 
charges, the FAA may approve reimbursement, subject to a requirement 
that the eligible applicant provide an appropriate rebate of reimbursed 
amounts to its customers, tenants, or users.


Sec. 154.11  Who is eligible to apply for reimbursement under this 
part?

    The following are eligible to apply for reimbursement under this 
part:
    (a) Airport operators.
    (b) On-airport parking lots.
    (c) Vendor of on-airfield direct services to air carriers.

Subpart B--Application Procedures


Sec. 154.13  When must applicants apply for reimbursement?

    (a) All eligible applicants must submit an initial completed 
application covering the period September 11, 2001 through March 31, 
2002. The FAA must receive applications by June 1, 2002.
    (b) If funds initially appropriated for reimbursement under this 
part exceed total allowable costs included in all applications, or if 
additional funds subsequently become available, the FAA will publish a 
new application due date in the Federal Register.


Sec. 154.15  To what address must applicants send their applications?

    (a) You must submit your application, and all required supporting 
information,

[[Page 66244]]

in hard copy (not solely by fax or electronic means) in triplicate to 
the following address: Federal Aviation Administration, Office of 
Airport Planning and Programming, Airport Financial Assistance 
Division, APP-500, 800 Independence Avenue SW., Washington, DC 20591.
    (b) If your complete application is not sent to the address in 
paragraph (a) of this section, the FAA will not accept it.


Sec. 154.17  What documentation is necessary to support an application?

    (a) The application must include the completed form in Appendix A 
of this Part. You must support the costs of claims for reimbursement 
with the normal invoices, vouchers, payrolls, and supporting accounting 
records that constitute adequate documentary evidence for the purposes 
of an independent audit. Supporting accounting records include general 
and specialized journals, ledgers, manuals, and supporting worksheets 
and other analyses, and corroborating evidence such as invoices and 
vouchers. You must supply a copy of this supporting documentation to 
the FAA upon request. Audited financial statements are adequate support 
provided they show the specific costs submitted for reimbursement. 
Documentary evidence must show that the amounts requested for 
reimbursement were actually incurred. Budget estimates or cost 
allocations are not sufficient by themselves to establish a claim for 
reimbursement.
    (b) You must designate the specific security requirement and the 
Federal Aviation Administration or Transportation Security 
Administration source document associated with each claimed allowable 
cost by citing the Security Directive number and paragraph, Emergency 
Amendment number and paragraph, or other specific cite. You must 
identify this information as sensitive security information (SSI) under 
14 CFR Part 191, by marking the top and bottom of the first page 
``Sensitive Security Information'' and marking each page that contains 
SSI with the following:

Warning:

THIS DOCUMENT CONTAINS SENSITIVE SECURITY INFORMATION THAT IS 
CONTROLLED UNDER THE PROVISIONS OF 14 CFR PART 191. THE INFORMATION 
MAY NOT BE RELEASED IN ANY FORM WITHOUT THE EXPRESS PRIOR WRITTEN 
CONSENT OF THE ADMINISTRATOR OR ASSOCIATE ADMINISTRATOR FOR CIVIL 
AVIATION SECURITY, ACS-1. IN ACCORDANCE WITH 49 U.S.C. 40119, THIS 
INFORMATION IS EXEMPT BY STATUTE FROM DISCLOSURE UNDER THE FOIA. 
UNDER THE PROVISIONS OF 14 CFR 191.5(D), VIOLATORS ARE SUBJECT TO 
CIVIL PENALTY OR OTHER ACTION BY THE FAA.

    (c) The Federal Aviation Administration or Transportation Security 
Administration will review this information to verify that the cost was 
incurred to satisfy an eligible requirement. Questions concerning 
security requirements applicable to a particular eligible applicant may 
be addressed to Special Projects Officer, Office of CAS Operations 
(202) 267-7296 or 7262 at the Federal Aviation Administration.
    (d) You must certify that you have consulted with airport tenants 
regarding adjustment in rental rates in accordance with section 122 of 
the Act.
    (e) You must document the extent to which you recovered costs 
otherwise eligible for reimbursement.


Sec. 154.19  Must applicants certify the truth and accuracy of data 
they submit?

    The Chief Officer (CEO), Chief Financial Officer (CFO), or the 
Chief Operating Officer (COO) must certify the request for 
reimbursement on the form in Appendix A of this part. The certification 
must attest to the truth and accuracy of the information and to 
compliance with Section 121 of the Aviation and Transportation Security 
Act.


Sec. 154.21  What records must applicants retain?

    As an applicant that applies for reimbursement under this part:
    (a) You must retain all books, records, and other source and 
summary documentation supporting your claims for reimbursement of 
direct costs pursuant to Section 121 of the Act. This requirement 
includes, but is not limited to:
    (1) Supporting evidence and documentation demonstrating the 
validity of the data you provide; and
    (2) All reports, working papers, and supporting documentation 
pertaining to audits or review conducted by independent auditors under 
the requirements of this part.
    (b) You must preserve and maintain this documentation in a manner 
that readily permits its audit and examination by representatives of 
the FAA, the TSA, the Office of the Secretary, Department of 
Transportation (including the Office of the Inspector General), the 
Comptroller General of the United States, or other authorized Federal 
agencies.
    (c) You must retain this documentation for five years.
    (c) You must make all requested data available within one week from 
a request by the FAA, the TSA, the Office of the Secretary, the 
Department of Transportation (including the Office of the Inspector 
General), the Comptroller General of the United States, or other 
authorized Federal agencies.


Sec. 154.23  Are applicants that participate in this program subject to 
audit?

    (a) All requests for reimbursement are subject to audit. All 
information you submit with your applications and all records and 
documentation that you retain are also subject to audit.
    (b) To accommodate each eligible applicant's normal fiscal year and 
audit cycle, the FAA will partially release approved reimbursement 
prior to completion of the annual audit on the condition that the audit 
will be forwarded to the FAA (same address as the application) within 
30 days after completion. Until completion of the audit, the FAA will 
retain 10% of the approved reimbursement. Upon receipt of the audit, 
the Department will adjust the reimbursement to conform with the 
results of audit and the requirements of this part.
    (c) Airport operators that are non-Federal local governments, and 
non-profit organizations, must follow the Office of Management and 
Budget Circular No. A-133 Single Audit Requirements (for availability 
see 5 CFR 1310.3). Consequently, their requests for reimbursement must 
be treated as though the amount had been a Federal award and must be 
audited in accordance with OMB Circular A-133. If the airport operator 
did not have Federal assistance of $300,000 or more to meet the 
criteria for having a single audit, that operator follow the procedures 
set forth in paragraph (d)(2) of this section governing requests 
``under $300,000.''
    (d) Vendors of on-airfield direct services to air carriers, parking 
lot operators, and other eligible applicants that request reimbursement 
but are not subject to OMB Circular A-133 (for availability see 5 CFR 
1310.3) must comply with the following requirements:
    (1) For requests of $300,000 or more, the amount must be subject to 
annual audit and the amount for the period under audit must be 
commented upon and certified by the auditor. If the amount requested 
for reimbursement spans more than one audit period, the independent 
auditor must comment and certify the amount for each period. As an 
alternative, the applicant may submit a single certified audit report 
that specifically addresses the amount requested for reimbursement.

[[Page 66245]]

    (2) For requests under $300,000, the eligible applicant, as an 
alternative to audit, may submit with its application copies of its 
supporting documentation, as described in Sec. 154.17(a) upon request 
by the FAA.
    (e) Questions regarding audit procedures, or the reimbursement form 
may be addressed to AAS-400, at (202) 267-5879.
    (f) The auditor is not responsible for expressing an opinion on 
whether a particular claimed cost was incurred to comply with an 
eligible requirement. That determination will be made by the FAA or the 
TSA based on the information submitted with the application as set 
forth in Sec. 154.17. Information identified in Sec. 154.17(b) is SSI 
and may be disclosed to auditors only on a need to know basis, in 
accordance with part 191 of this chapter. Each auditor is considered to 
be employed by, contracted to, or acting for an airport operator or air 
carrier, and is responsible for restricting disclosure of SSI in 
accordance with Sec. 191.5 of this chapter.

Appendix A to Part 154--Form for Application for Reimbursement

BILLING CODE 4910-13-M

[[Page 66246]]

[GRAPHIC] [TIFF OMITTED] TP21DE01.000


[[Page 66247]]


[GRAPHIC] [TIFF OMITTED] TP21DE01.001


    Issued in Washington, DC on December 17, 2001.
Jane F. Garvey,
Administrator.

[FR Doc. 01-31435 Filed 12-18-01; 3:57 pm]
BILLING CODE 4910-13-C


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>