Federal Register / Vol. 67, No. 1 / Wednesday, January 2, 2002 / Proposed Rules 263

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 330

[Docket OST–2001–10885]

RIN 2105–AD06

Procedures for Compensation of Air

Carriers

AGENCY: Office of the Secretary, DOT.

ACTION: Request for comments.

SUMMARY: On September 22, 2001,

President Bush signed into law the Air

Transportation Safety and System

Stabilization Act (‘‘the Act’’). The Act

makes available to the President funds

to compensate air carriers, as defined in

the Act, for direct losses suffered as a

result of any Federal ground stop order

and incremental losses beginning

September 11, 2001, and ending

December 31, 2001, resulting from the

September 11 terrorist attacks on the

United States. In a final rule being

published in today’s Federal Register,

the Department is amending its

application procedures for this

compensation program. This document

requests further comments on the issue

of whether the Department should

establish a set-aside of compensation

funds for classes of air carriers, such as

air ambulances and air tour operators,

for whom the final rule’s compensation

formula may not adequately reflect their

share of direct and incremental losses.

DATES: Comments should be received by

January 16, 2002; late-filed comments

will be considered to the extent

practicable.

ADDRESSES: Interested persons should

sent comments to Docket Clerk, Docket

OST–2001–10885, Department of

Transportation, 400 7th Street, SW.,

Room PL–401, Washington, DC 20590.

Commenters wishing to have their

submissions acknowledged should

include a stamped, self-addressed

postcard with their comments. The

Docket Clerk will date stamp the

postcard and return it to the commenter.

Comments will be available for

inspection at the above address from 10

a.m. to 5 p.m., Monday through Friday.

Comments also may be sent

electronically to the Dockets

Management System (DMS) at the

following Internet address: http://

dms.dot.gov/. Commenters who wish to

file comments electronically should

follow the instructions on the DMS Web

site. Interested persons can also review

comments through this same Web site.

FOR FURTHER INFORMATION CONTACT:

Steven Hatley, U.S. Department of

Transportation, Office of International

Aviation, 400 7th Street, SW., Room

6402, Washington, DC 20590.

Telephone 202–366–1213.

SUPPLEMENTARY INFORMATION: As noted

in the preamble to the final rule on

airline compensation procedures that

the Department is publishing in today’s

Federal Register, commenters expressed

a concern about the provisions of the

Act that based calculations of

compensation for which air carriers are

eligible on available seat-miles (ASMs).

The concern was basically that this

ASM-based formula would not

adequately compensate air ambulances

and air tour operators for the losses they

suffered as the result of the September

11 attacks.

In the Aviation and Transportation

Security Act (Public Law 107–71),

Congress addressed the situations of air

ambulances, air tour operators and other

similarly situated classes of air carriers.

Section 124(d) of this statute amended

section 103 of the Air Transportation

Safety and System Stabilization Act.

The purpose of this amendment,

according to the Conference Report

(House Report 107–296 at p. 79), is to

‘‘to allow for a modified system of

providing compensation to air tour

operators and air ambulances to better

address their needs after industry wide

losses.’’ The following is the text of this

amendment:

(d) Compensation for Certain Air

Carriers.—

(1) Set-aside.—The President may set aside

a portion of the amount of compensation

payable to air carriers under section 101(a)(2)

to provide compensation to classes of air

carriers, such as air tour operators and air

ambulances (including hospitals operating

air ambulances) for whom application of a

distribution formula containing available seat

miles as a factor would inadequately reflect

their share of direct and incremental losses.

The President shall reduce the $4,500,00,000

specified in subsection (b)(2)(A)(i) by the

amount set aside under this subsection.

(2) Distribution of Amounts.—The

President shall distribute the amount set

aside under this subsection proportionally

among such air carriers based on an

appropriate auditable measure, as

determined by the President.

Under the statutory language, use of this

set-aside authority is discretionary

(‘‘The President may set aside * * *’’).

Neither the statute nor the Conference

Report provides any guidance

concerning the appropriate size of such

a set-aside, the methodology for

proportionally allocating any funds set

aside, or the identity of any other

‘‘classes’’ of air carriers that could be

included in it, if the President chooses

to use the authority.

The Department is considering using

the discretion provided by section

124(d) of the Transportation Security

Act to set aside a portion of the $4.5

billion compensation available for

passenger carriers for air tour operators,

air ambulances and other classes of air

carriers for whom application of an

ASM-based compensation formula

would inadequately reflect their share of

direct and incremental losses. The

Department does not have sufficient

information to determine whether to

create such a set-aside at this time,

which classes of carriers a set-aside

would cover, what the appropriate size

of such a set-aside would be, or how any

funds set aside should be allocated.

While we have some information about

the situation of air ambulances, we have

little information about the situation of

other classes of air carriers to which

such a set-aside could apply.

Both because of this lack of

information and our desire to avoid

delays in distributing the second

increment of compensation funds to

carriers, the Department did not make a

determination, for purposes of today’s

final rule, about whether to create a setaside. After this second increment of

funds is distributed, approximately 15

percent of the authorized $4.5 billion

will remain. This should be more than

enough to use for the purpose of

compensating carriers who would be

subject to such a set-aside. If the

Department decides to implement a setaside, we would do so in connection

with the third increment of

compensation funds. To help the

Department decide whether to

implement a set-aside, the Department

requests information concerning

whether there are classes of air carriers

for whom application of an ASM-based

compensation formula would

inadequately reflect their share of direct

and incremental losses for which use of

this set-aside authority would be

appropriate. This information should

pertain to classes of carriers, not just to

individual carriers, and concern such

subjects as the type of operations

conducted by a class of carriers and the

reasons why use of the statute’s general

approach to compensation is inadequate

for the class. Commenters should note

that the statute’s general approach does

not assure that all losses attributable to

the terrorist events will be compensated;

because of the statute’s default

provision to the ASM formula, the vast

majority of passenger carriers are

scheduled to receive compensation well

below their claimed losses.

If the Department were to establish a

set-aside, there are a number of possible

ways that funds from the set-aside could

264 Federal Register / Vol. 67, No. 1 / Wednesday, January 2, 2002 / Proposed Rules

be allocated. In its comment, the

Association of Air Medical Services

(AAMS) recommended that the

Department calculate lost volume by

comparing the flight volume of August

and September 2001, multiplying the

difference by the average revenue per

flight, and extrapolating the result to the

industry as a whole. AAMS suggested

that the functional equivalent of ASMs

(i.e., as a measurement of capacity)

could be calculated by multiplying the

average number of seats in air

ambulances aircraft (six) times the

average speed of the aircraft (150 m.p.h.)

times the hours per day it is staffed and

ready (24). This, AAMS suggested,

would create a reasonable

approximation of the capacity of an air

ambulance aircraft per day. This

suggestion, a variation of it, or some

other surrogate for ASMs could be one

possible approach to distribution of

compensation under a set-aside.

Subsequent to the enactment of the

Transportation and Aviation Security

Act, AAMS and the air carrier MEDjet

approached the Department separately

with alternative approaches for

compensating air ambulances, that do

not rely on ASM’s as a factor. These

proposed alternative approaches are

derived from the Medicare Fee

Schedule, which both AAMS and

MEDjet propose could be used as a

benchmark for determining lost revenue

based on lost volume. Both AAMS and

MEDjet propose that the lost revenues

for an air ambulance could be

determined by taking a base rate for

each lost trip and adding that amount to

the product of the lost miles for that trip

and a fixed mileage rate. The base rate

and the mileage rate would be derived

from the Medicare Fee Schedule. Both

AAMS and MEDjet proposed a different,

limited period of time to be used for

calculating lost trips as well as different

base rate and mileage rate figures. One

disadvantage to these approaches is that

they may not be readily adaptable to use

for air tour operators or other classes of

carriers.

Another approach could be to

calculate the average percentage of

documented direct and incremental

losses that applicant carriers have

received in compensation. We could

then apply that percentage to the direct

and incremental losses that carriers in

the class or classes subject to the setaside could document. For example, if

on average all carriers were eligible,

under the statutory formula, for

compensation equivalent to 60 percent

of their documented losses, the

Department could compensate carriers

participating in the set-aside for 60

percent of their documented losses.

The Department seeks comments on

these or other approaches that the

Department could use to allocate funds

from a set-aside, as well as on the

underlying question of whether the

Department should use its discretionary

authority to establish a set-aside in the

first place.

The Department will keep the docket

open for 14 days to receive comments

on this set of issues. If the Department

decides to establish a set-aside, we

would amend Part 330 in the future to

provide application instructions for

carriers who sought compensation

under the set-aside.

Regulatory Analyses and Notices

This request for comments pertains to

an underlying rule (49 CFR Part 330)

that is significant for purposes of

Executive Order 12886 and the

Department of Transportation’s

rulemaking policies and procedures. If

the Department decides to undertake

further rulemaking after reviewing

comments, the Department will follow

applicable provisions of these

requirements.

If the Department proceeds with

further rulemaking on the subject of this

notice, the rulemaking may have a

significant economic effect on a

substantial number of small entities.

Among the entities in question are air

ambulances and other classes of air

carriers that include small entities. In

analyzing small entity impact for

purposes of the Regulatory Flexibility

Act, we believe that, to the extent that

the use of the Department’s set-aside

authority impacts small air carriers, the

impact will be a favorable one, since it

will consist of receiving additional

compensation. The Department has also

concluded that this rule does not have

sufficient Federalism implications to

warrant the consultation requirements

of Executive Order 13132.

List of Subjects in 14 CFR Part 330

Air carriers, Grant programs—

transportation, Reporting and

recordkeeping requirements.

Issued this 26th day of December, 2001, at

Washington, DC.

Read C. Van de Water,

Assistant Secretary for Aviation and

International Affairs.

[FR Doc. 01–32177 Filed 12–27–01; 4:28 pm]

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