Document ID: FAA-2009-1240-0001
Agency: faa
Document Type: Rule
Title: Civil Penalty Inflation Adjustment for Commercial Space Adjudications
Posted Date: 2010-06-02T04:00Z

[Federal Register: June 2, 2010 (Volume 75, Number 105)]
[Rules and Regulations]               
[Page 30690-30693]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn10-5]                         

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 406

[Docket No. FAA-2009-1240; Amendment No. 406-6]
RIN 2120-AJ63

 
Civil Penalty Inflation Adjustment for Commercial Space 
Adjudications

AGENCY: Federal Aviation Administration, DOT.

ACTION: Final rule.

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SUMMARY: This final rule brings Federal Aviation Administration 
commercial space transportation regulations into compliance with the 
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by 
the Debt Collection Improvement Act of 1996. The rule makes mandatory 
inflation-based adjustments to the maximum civil penalty contained in 
14 CFR part 406 authorized for violations of the Commercial Space 
Launch Act of 1984, as codified at 49 U.S.C. subtitle IX, ch. 701, 
Commercial Space Launch Activities.

DATES: This amendment becomes effective July 2, 2010.

FOR FURTHER INFORMATION CONTACT: Laura Montgomery, Senior Attorney, 
Office of the Chief Counsel, Regulations Division, AGC-200, Federal 
Aviation Administration, 800 Independence Avenue, SW., Washington, DC 
20591; telephone (202) 267-3150; facsimile (202) 267-7971; e-mail 
laura.montgomery@faa.gov.

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking and Applicable Statutes

    The statute under which the Secretary of Transportation regulates 
commercial space transportation, 49 U.S.C. Subtitle IX, sections 70101-
70121 (chapter 701), provides for the Department of Transportation 
(DOT), and, through delegation, the Federal Aviation Administration 
(FAA) to impose civil penalties on persons who violate chapter 701, a 
regulation issued under chapter 701, or any term or condition of a 
license or permit issued or transferred under chapter 701. 49 U.S.C. 
70105a(h)(i), 70115.
    This rule implements the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (FCPIAA), Public Law (Pub. L.) 101-410, as 
amended by the Debt Collection Improvement Act of 1996, Public Law 104-
134, codified at 28 U.S.C. 2461 note.

[[Page 30691]]

    The FCPIAA requires Federal agencies to adjust minimum and maximum 
civil penalty amounts for inflation to preserve their deterrent impact. 
Under these laws, each agency must make an initial inflationary 
adjustment for all applicable civil monetary penalties, and further 
adjust these penalties at least once every 4 years. The FCPIAA required 
the first adjustment to the maximum civil penalty found in 14 CFR part 
406 to have been made in 1996.

Prior Rulemakings

    This rule is the FAA's initial adjustment to the maximum civil 
penalty found in 14 CFR part 406 which governs commercial space 
transportation adjudications. The FAA has routinely adjusted for 
inflation civil monetary penalties for aviation contained in 14 CFR 
part 13. [See 61 FR 67445, Dec. 20, 1996, as amended by Amdt. 13-28, 62 
FR 4134, Jan. 29, 1997; 67 FR 6366, Feb. 11, 2002; Amdt. 13-33, 71 FR 
28522, May 16, 2006; 71 FR 47077, Aug. 16, 2006; 71 FR 52407, Sept. 6, 
2006.]

Background

    The FCPIAA determines inflationary adjustments by increasing civil 
penalties by a cost-of-living adjustment (COLA). The COLA for each 
civil penalty is the percentage by which the U.S. Department of Labor's 
Consumer Price Index for all-urban consumers (CPI-U) for the month of 
June of the calendar year preceding the adjustment exceeds the CPI-U 
for the month of June of the calendar year in which the amount of such 
civil penalty was last set or adjusted pursuant to the FCPIAA. The 
FCPIAA contains specific rules for rounding the inflationary increase 
based on the initial amount of the civil penalty being adjusted. 
However, the FCPIAA limits the increase to a maximum of ten percent for 
the first adjustment. This limitation does not apply to subsequent 
adjustments.

Method of Calculation

    14 CFR 406.9 states that under 49 U.S.C. 70115(c)(1)(a) a maximum 
civil penalty of $100,000 is imposed for violations of chapter 701, a 
regulation proscribed under chapter 701, or any term or condition of a 
license or permit issued or transferred under chapter 701. However, 
this rulemaking is our initial adjustment and any adjustment in civil 
penalty is limited by statute to a maximum ten percent increase. Thus, 
instead of using the COLA, the penalty is increased by ten percent of 
$100,000, which is $10,000. Therefore, the new civil penalty becomes 
$110,000 ($100,000 + $10,000).
    Four years from now, when the next adjustment is due, we will 
employ the COLA methodology. It works as follows, using the current 
year only as an example. Were we using the COLA method this year, we 
would first determine the appropriate CPI-U for June of the calendar 
year preceding the year of adjustment. For an adjustment in 2010, we 
would use the CPI-U for June of 2009, which was 215.693. We would also 
determine the CPI-U for June of the year the civil penalty came into 
force. Because the civil penalty came into force in 1984, we would use 
the CPI-U for June of 1984, which was 103.7.
    Second, we would calculate the COLA. To do this we would subtract 
the CPI-U for June 1984 (103.7) from the CPI-U of June 2009 (215.693). 
Next, we would divide the resulting difference (111.993) by the CPI-U 
for June 1984 (103.7). The resulting quotient (1.07997) is then 
multiplied by 100 yielding a COLA of 107.997%.
    Were this not our initial adjustment, we would calculate the raw 
inflationary increase by multiplying the maximum civil penalty 
($100,000) by the COLA (107.997%). This would provide a raw inflation 
increase of $107,997. Next, we would round the raw inflation amounts by 
the statutory rounding formula found in Section 5(a) of the FCPIAA. 
Determination of the proper rounding formula depends on the current 
amount of the civil penalty at the time the calculation is made, not 
the size of the raw inflationary increase. The applicable rounding 
formula for the existing civil penalty of $100,000 would be that 
``[a]ny increase * * * is rounded to the nearest * * *[m]ultiple of 
$5,000 in the case of penalties greater than $10,000 but less than or 
equal to $100,000 * * *'' Thus, the raw increase of $107,997 would 
become $105,000 after rounding. Finally, the increase of $105,000 would 
be added to the initial civil penalty $100,000 for an adjusted civil 
penalty of $205,000.

Good Cause for Immediate Effectiveness of Final Rule

    Under the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), a 
final rule may be issued without public notice and comment if the 
agency finds good cause that notice and comment are impractical, 
unnecessary, or contrary to public interest. Good cause exists in this 
rule to dispense with public notice and comment because adjustments to 
civil penalties for inflation are required by Congress, as set forth in 
Section 5 of the FCPIAA, in order to maintain the deterrent effect of 
civil penalties and promote compliance with the law. This rulemaking is 
ministerial, technical, and noncontroversial. The FCPIAA serves as a 
Congressional mandate and the FAA may not exercise any discretion or 
policy judgments. The FAA has no discretion as to the amount of the 
adjustment. Furthermore, it would be contrary to the public interest to 
delay these adjustments in order to receive public comment because the 
regulation concerns a civil penalty for conduct that is already illegal 
under existing law. Also, any delay would be unnecessary as the FAA 
cannot change the method of application of the mandatory inflation 
adjustment as defined by the FCPIAA.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d), requires 
that the FAA consider the impact of paperwork and other information 
collection burdens imposed on the public. The FAA has determined that 
there are no current or new requirements for information collection 
associated with this rule.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to conform to 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these regulations.

Regulatory Evaluation, Regulatory Flexibility Determination, 
International Trade Impact Assessment, and Unfunded Mandates Assessment

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulations justify its costs. 
Second, the Regulatory Flexibility Act of 1980 (RFA), Public Law 96-
354, codified at 5 U.S.C. 601-612, as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, 
requires agencies to analyze the economic impact of regulatory changes 
on small entities. Third, the Trade Agreements Act of 1999 (Trade Act), 
Public Law 96-39, codified at 19 U.S.C. 2501-2581, prohibits agencies 
from setting standards that create unnecessary obstacles to the foreign 
commerce of the U.S. In developing U.S. standards, the Trade Act 
requires agencies to consider

[[Page 30692]]

international standards and, where appropriate, that they be the basis 
of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995, 
(Pub. L. 104-4), codified at 2 U.S.C. 658, 1501-03, and 1531-34, 
requires agencies to prepare a written assessment of the costs, 
benefits, and other effects of proposed or final rules that include a 
Federal mandate likely to result in the expenditure by State, local, or 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more, in any one year (adjusted for inflation).
    DOT Order 2100.5 prescribes policies and procedures for 
simplification, analysis, and review of regulations. If the expected 
impact is so minimal that a proposed or final rule does not warrant a 
full evaluation, this order permits that a statement to that effect and 
the basis for it be included in the preamble if a full regulatory 
evaluation of the cost and benefits is not prepared. Such a 
determination has been made for this final rule. The reasoning for this 
determination is as follows. This rule adjusts for inflation the 
maximum civil penalty for violations of the Commercial Space Launch Act 
of 1984, to be in compliance with the Federal Civil Penalties Inflation 
Adjustment Act of 1990. This inflation adjustment is an economic 
transfer and not a social cost.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation. To achieve this principle, agencies are required 
to solicit and consider flexible regulatory proposals and to explain 
the rationale for their actions to assure that such proposals are given 
serious consideration.'' The RFA covers a wide-range of small entities, 
including small businesses, not-for-profit organizations, and small 
governmental jurisdictions.
    Agencies must perform a review to determine whether a rule will 
have a significant economic impact on a substantial number of small 
entities. If the agency determines that it will, the agency must 
prepare a regulatory flexibility analysis as described in the RFA.
    However, if an agency determines that a rule is not expected to 
have a significant economic impact on a substantial number of small 
entities, section 605(b) of the RFA provides that the head of the 
agency may so certify and a regulatory flexibility analysis is not 
required. The certification must include a statement providing the 
factual basis for this determination, and the reasoning should be 
clear.
    As already noted, this rule adjusts for inflation only, as required 
by the Federal Civil Penalties Inflation Adjustment Act of 1990. 
Therefore, as FAA Administrator, I certify that this rule will not have 
a significant economic impact on a substantial number of small 
entities.

International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal 
agencies from establishing any standards or engaging in related 
activities 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 U.S. standards.
    The FAA has assessed the potential effect of this final rule and 
determined that it would impose identical inflation adjusted civil 
penalties on domestic and international entities that violate 14 CFR 
part 406, and thus would have a neutral trade impact. Furthermore, the 
inflationary adjustment is a legitimate domestic objective preserving 
the existing deterrent impact of 49 U.S.C. subtitle IX, chapter 701. 
Therefore, we have determined that this rule will result in a neutral 
impact on international trade.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) 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 an expenditure of $100 million or more 
(adjusted annually for inflation with the base year 1995) in any one 
year by State, local, and tribal governments, in the aggregate, or by 
the private sector; such a mandate is deemed to be a ``significant 
regulatory action.'' The FAA currently uses an inflation-adjusted value 
of $143.1 million in lieu of $100 million.
    Because this final rule only increases a civil penalty by $10,000, 
as required by FCPIAA, it does not contain a mandate that meets this 
threshold amount. Therefore, the requirements of Title II of the act do 
not apply.

Executive Order 13132, Federalism

    The FAA has analyzed this final rule under the principles and 
criteria of Executive Order 13132, Federalism. The FAA determined that 
this action would 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 and responsibilities among the various 
levels of government. Therefore, the FAA has determined that this final 
rule does not have federalism implications.

Environmental Analysis

    FAA Order 1050.1E defines FAA actions that are categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act (NEPA) in the absence of extraordinary circumstances. The FAA has 
determined this final rule qualifies for the categorical exclusion 
identified in Chapter 3, paragraph 312d, and involves no extraordinary 
circumstances.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA has analyzed this final rule under Executive Order 13211, 
Actions Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). We have determined that it is not 
a ``significant energy action'' under the executive order because it is 
not a ``significant regulatory action'' under Executive Order 12866, 
and it is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy.

Availability of Rulemaking Documents

    You can get an electronic copy of rulemaking documents using the 
Internet by--
    1. Searching the Federal eRulemaking Portal (http://
www.regulations.gov);
    2. Visiting the FAA's Regulations and Policies Web page at http://
www.faa.gov/regulations_policies/; or
    3. Accessing the Government Printing Office's Web page at http://
www.gpoaccess.gov/fr/index.html.
    You can also get a copy by sending 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 
rulemaking.
    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act

[[Page 30693]]

statement in the Federal Register published on April 11, 2000 (Volume 
65, Number 70; Pages 19477-78) or you may visit http://
DocketsInfo.dot.gov.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires FAA to comply with small entity requests for information 
or advice about compliance with statutes and regulations within its 
jurisdiction. If you are a small entity and you have a question 
regarding this document, you may contact your local FAA official, or 
the person listed under the FOR FURTHER INFORMATION CONTACT heading at 
the beginning of the preamble. You can find out more about SBREFA on 
the Internet at http://www.faa.gov/regulations_policies/rulemaking/
sbre_act/.

List of Subjects in 14 CFR Part 406

    Administrative procedure and review, Commercial space 
transportation, Enforcement, Investigations, Penalties, Rules of 
adjudication.

The Amendment

0
In consideration of the foregoing, the Federal Aviation Administration 
amends part 406 of Title 14, Code of Federal Regulations as follows:

PART 406--INVESTIGATIONS, ENFORCEMENT, AND ADMINISTRATIVE REVIEW

0
1. The authority citation for part 406 continues to read as follows:

    Authority: 49 U.S.C. 70101-70121.

0
2. Amend Sec.  406.9 by revising paragraph (a) to read as follows:

Sec.  406.9  Civil penalties.

    (a) Civil penalty liability. Under 49 U.S.C. 70115(c), a person 
found by the FAA to have violated a requirement of the Act, a 
regulation issued under the Act, or any term or condition of a license 
or permit issued or transferred under the Act, is liable to the United 
States for a civil penalty of not more than $110,000 for each 
violation, as adjusted for inflation. A separate violation occurs for 
each day the violation continues.
* * * * *

    Issued in Washington, DC, on May 25, 2010.
J. Randolph Babbitt,
Administrator.
[FR Doc. 2010-13218 Filed 6-1-10; 8:45 am]
BILLING CODE 4910-13-P