66238 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

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: 9–AWA–

SBREFA@faa.gov.

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, onairport parking lots, and vendors of onairfield 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

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 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 onairport 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, onairport parking lots, and vendors of onairfield 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. § 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.

§ 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. § 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 nonexclusive 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

66240 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

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, onairport parking lots and vendors of onairfield 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

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

66242 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

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, ONAIRPORT 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

§ 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.

§ 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.

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

§ 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).

§ 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.

§ 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.

§ 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

§ 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.

§ 154.15 To what address must applicants

send their applications?

(a) You must submit your application,

and all required supporting information,

66244 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

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.

§ 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.

§ 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.

§ 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.

§ 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 nonFederal local governments, and nonprofit 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.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 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 § 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 § 154.17.

Information identified in § 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 § 191.5 of this

chapter.

Appendix A to Part 154—Form for

Application for Reimbursement

BILLING CODE 4910–13–M

66246 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 66247

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