[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Proposed Rules]
[Pages 64419-64438]
[FR Doc No: 2021-24141]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 61 and 68

[Docket No. FAA-2021-1040; Notice No. 22-02]
RIN 2120-AL51

Medical Certification Standards for Commercial Balloon Operations

AGENCY: Federal Aviation Administration (FAA), Department of
Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes that airmen hold a valid second-class medical
certificate when exercising the privileges of a commercial pilot
certificate in a balloon for compensation or hire except when
conducting flight training in a balloon. In addition, the FAA proposes
miscellaneous amendments related to medical certification requirements
for medical flight tests and a minor change to the BasicMed
regulations.

DATES: Send comments on or before January 18, 2022.

ADDRESSES: Send comments identified by docket number FAA-2021-1040
using any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S.
Department of Transportation (DOT), 1200 New Jersey Avenue SE, Room
W12-140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Take comments to Docket
Operations in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue SE, Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments
from the public to better inform its rulemaking process. DOT posts
these comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at https://www.transportation.gov/privacy.
    Docket: Background documents or comments received may be read at
https://www.regulations.gov at any time. Follow the online instructions
for accessing the docket or go to the Docket Operations in Room W12-140
of the West Building Ground Floor at 1200 New Jersey Avenue SE,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Bradley Zeigler, Airman Training and
Certification Branch, Federal Aviation Administration, 800 Independence
Avenue SW, Washington, DC 20591;<PHONE_NUMBER>; email
[email protected].

SUPPLEMENTARY INFORMATION:

List of Abbreviations and Acronyms Frequently Used in This Document

AMCD Aerospace Medical Certification Division
ADHD Attention Deficit Hyperactivity Disorder
AME Aviation Medical Examiner
ASI Aviation Safety Inspector
ATP Airline Transport Pilot
BFA Balloon Federation of America
IRFA Initial Regulatory Flexibility Analysis
LOA Letter of Authorization
NDR National Driver Register
NPRM Notice of proposed rulemaking
NTSB National Transportation Safety Board
PDPS Problem Driver Pointer System
PIC Pilot in Command
SIC Second in Command
SODA Statement of Demonstrated Ability

I. Executive Summary

    This rulemaking proposes amendments in Sec. Sec.  61.3 and 61.23 of
title 14 of the Code of Federal Regulations (14 CFR) to require
commercial balloon pilots \1\ conducting operations for compensation or
hire to hold a valid second-class medical certificate. Additionally,
this proposed rule would continue to allow pilots to provide flight
training in balloons without requiring a medical certificate. The
proposed rule includes related amendments to the table of medical
certificate duration in Sec.  61.23(d) for consistency with the
proposed amendments to Sec. Sec.  61.3 and 61.23(a) and (b). The FAA is
also proposing miscellaneous amendments related to medical
certification for medical flight tests and a minor change to the
Alternative Pilot Physical Examination and Education Requirements final
rule, which amended sections of part 61 and established part 68. In
this preamble, these regulations will be referred to as BasicMed.
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    \1\ The FAA uses the term ``commercial balloon pilots'' in this
NPRM to refer to airmen conducting operations in a balloon for
compensation or hire, including operations involving the carriage of
persons or property.
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    This rulemaking would implement section 318 (``Commercial Balloon
Pilot Safety Act of 2018'') of Public Law 115-254, the FAA
Reauthorization Act of 2018. In addition, this rulemaking responds to
National Transportation Safety Board (NTSB) Safety Recommendation A-17-
034, which recommends that the FAA remove the medical certification
exemption in part 61 for commercial balloon pilots receiving
compensation for transporting passengers.
    The proposed rule would generate costs for balloon pilots to obtain
a second-class medical certificate and for some pilots to seek
authorization through special issuance. There would also be costs to
the FAA to implement this requirement in terms of reviewing and
processing submissions related to certification. The FAA estimates the
present value of total costs over ten years is $2.6 million to $17.8
million with a mid-estimate of $7.5 million at a 7 percent discount
rate and $3.1 million to $21.7 million with a mid-estimate of $9.1
million at a 3 percent discount rate. The annualized costs over ten
years is $0.4 million to $2.5 million with a mid-estimate of $1.1
million at a 7 percent discount rate and $0.4 million to $2.5 million
with a mid-estimate of $1.1 million at a 3 percent discount rate. The
wide range in the cost estimates primarily reflect the uncertainty on
the number of commercial balloon pilots.\2\
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    \2\ For more detail on the model used to predict the range,
please refer to the ``Affected Entities'' under section V.A. of this
preamble.
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    The benefits of the proposed rule include enhanced safety of
commercial

balloon operations through reduced risks of accidents, fatalities, and
injuries caused by medical impairment of balloon pilots.

II. Authority for the Rulemaking

    The FAA's authority to issue rules on aviation safety is in title
49 of the United States Code. Subtitle I, section 106 describes the
authority of the FAA Administrator. Subtitle VII, Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this proposal under the authority described in
Subtitle VII, Part A, Subpart iii, Section 44701, General Requirements;
Section 44702, Issuance of Certificates; and Section 44703, Airman
Certificates. Under these sections, the FAA prescribes regulations and
minimum standards for practices, methods, and procedures the
Administrator finds necessary for safety in air commerce. The FAA is
also authorized to issue certificates, including airman certificates
and medical certificates, to qualified individuals. This rulemaking
proposal is within the scope of that authority.
    Further, Section 318 of Public Law 115-254, directs the
Administrator to revise 14 CFR 61.3(c) (relating to second-class
medical certificates) to apply to an operator of an air balloon to the
same extent such regulations apply to a pilot flightcrew member of
other aircraft.

III. Background

A. Current Regulatory Framework

    Under current regulations, a person may serve as a required pilot
flightcrew member of an aircraft only if that person holds the
appropriate medical certificate.\3\ There are certain exceptions to
this requirement, including pilots operating under the provisions of
BasicMed,\4\ or those flying balloons, gliders, or light sport
aircraft.\5\ Additionally, part 61 sets forth which operations require
a medical certificate.\6\
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    \3\ 14 CFR 61.3(c)(1). When referring to a ``medical
certificate'' in this NPRM, the FAA is referring only to a current
and valid first-, second-, or third-class FAA airman medical
certificate issued under 14 CFR part 67, which may have been issued
under an authorization for special issuance. Under certain
circumstances, this may include other documentation acceptable to
the FAA, such as temporary documentation provided to the airman by
the FAA when that person is awaiting the replacement of a lost or
destroyed certificate. 62 FR 16220, page 16237 (Apr. 4, 1997).
    \4\ In order to establish medical eligibility to conduct
operations under BasicMed, a person must meet the requirements of
Sec.  61.23(c)(3).
    \5\ 14 CFR 61.3(c)(2).
    \6\ 14 CFR 61.23(a).
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    A medical certificate provides validation that a person meets FAA
medical certification requirements. Airmen must meet the applicable
medical standards of part 67 to receive an unrestricted medical
certificate. An aviation medical examiner (AME) makes this
determination by conducting a physical examination and medical history
review. In cases where the airman's medical condition does not meet the
part 67 standard, the airman may be issued a medical certificate by
authorization for special issuance or statement of demonstrated ability
(SODA) when the Federal Air Surgeon has determined that the risk
associated with the medical condition(s) is sufficiently mitigated.\7\
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    \7\ 14 CFR 67.401.
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    Part 67 provides for the issuance of three classes of medical
certificates--first-, second-, and third-class medical certificates. In
most cases, a first-class medical certificate is required for
operations requiring an airline transport pilot (ATP) certificate. At
minimum, a second-class medical certificate is required for operations
requiring a commercial pilot certificate. Unless an airman chooses to
operate under the conditions and limitations of BasicMed, a third-class
medical certificate is required for operations requiring a private
pilot certificate, a recreational pilot certificate, a flight
instructor certificate (when acting as pilot-in-command (PIC) or
serving as a required flightcrew member in operations other than a
light sport aircraft, glider, or balloon), or a student pilot
certificate (other than a light sport aircraft, glider or balloon).\8\
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    \8\ Airmen exercising sport pilot privileges in a light sport
aircraft without a medical certificate must meet the requirements of
Sec.  61.23(c)(2).
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    A person obtains a medical certificate by completing an online
application (FAA form 8500-8, Application for Medical Certificate)
using the FAA's medical certificate application tool, MedXPress \9\ and
undergoing a physical examination with an FAA-designated AME. An AME
may defer an applicant to the FAA for further review when there is
information indicating the existence or potential of an adverse medical
finding that may warrant further FAA medical evaluation or oversight.
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    \9\ https://medxpress.faa.gov/.
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    Under Sec.  61.53, all airmen--regardless of whether they are
required to hold a medical certificate--are prohibited from operating
an aircraft during a medical deficiency. Specifically, Sec.  61.53(b)
prohibits a person who is not required to hold a medical certificate
from conducting operations while that person knows or has reason to
know of any medical condition that would make him or her unable to
operate the aircraft in a safe manner. Accordingly, even in the absence
of an existing requirement for balloon pilots to hold a medical
certificate, all balloon pilots are currently subject to the
requirements of Sec.  61.53(b).
    As discussed earlier, pilots conducting operations in a balloon are
not required to hold a medical certificate. Specifically, under Sec.
61.3(c)(2)(vi), a person holding a pilot certificate with a balloon
class rating who is piloting or providing training in a balloon is
excepted from the requirement to hold a medical certificate.
    A person holding a commercial pilot certificate with a balloon
class rating is granted privileges to conduct flights for compensation
or hire and to provide flight training. As described in Sec.
61.133(a), an airman who holds a commercial pilot certificate may act
as PIC of an aircraft for compensation or hire, including operations
involving the carriage of persons or property, provided the person is
qualified in accordance with part 61 and other parts (such as part 91,
121 or 135) that apply to the operation. Further, the FAA does not
issue flight instructor certificates with lighter-than-air category
ratings.\10\ Flight training privileges in a balloon are included in
the privileges conveyed to the holder of a commercial pilot certificate
with a balloon class rating. This approach is unlike other aircraft
categories such as airplanes, gliders, and rotorcraft, which require a
person to hold a flight instructor certificate in order to exercise
such privileges.\11\
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    \10\ There are two classes within the lighter-than-air aircraft
category: Airship and balloon.
    \11\ Section 61.133(a)(2) sets forth certain additional
privileges granted to airmen holding commercial pilot certificates
with a lighter-than-air category rating. Airmen who hold a lighter-
than-air category with balloon class rating on their commercial
pilot certificate have the following privileges:
    1. Give flight and ground training in a balloon for the issuance
of a certificate or rating;
    2. Give an endorsement for a pilot certificate with a balloon
rating;
    3. Endorse a pilot's logbook for solo operating privileges in a
balloon; and
    4. Give ground and flight training and endorsements that are
required for a flight review, an operating privilege, or recency-of-
experience requirements of part 61.
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B. Medical Certificate Requirements for Commercial Flight Operations

    While unpowered \12\ commercial operations in balloons and gliders
currently have no associated medical

certificate requirement, similar commercial operations in powered
aircraft require either a first- or second-class medical certificate.
Powered aircraft operations that require a commercial pilot certificate
require the airman to hold at least a second-class medical certificate.
See 14 CFR 61.23(a)(2). Generally, these operations include any
operation for compensation or hire that does not require an ATP
certificate (which requires a first-class medical certificate) and does
not qualify under the compensation or hire exceptions in Sec.
61.113(b) through (h) for persons holding a private pilot certificate.
Examples of powered aircraft operations that require a commercial pilot
certificate with at least a second-class medical certificate include
sightseeing flights conducted under Sec.  91.147; \13\ commercial
transportation of skydivers, banner towing, or aerial photography; and
part 135 non-turbine operations of nine passengers or less.
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    \12\ For the purposes of this rulemaking proposal, the phrase
``unpowered aircraft'' includes self-launch gliders, which are
considered by type certificate to be gliders.
    \13\ Section 91.147 is a provision for airplane and helicopter
operations conducting passenger-carrying flights for compensation or
hire. This provision requires the operators to obtain a Letter of
Authorization (LOA) from the FAA, to comply with the various safety
provisions of part 136, subpart A, and to implement a drug and
alcohol testing program.
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    Currently, operations in balloons for compensation or hire that may
be conducted without a medical certificate include, but are not limited
to, operations for purposes of passenger sightseeing, aerial
advertising, maintenance test flights, and research and development
flights. There are no operating rules under part 91 that limit the
number of passengers an operator may carry. While an operator of a
sightseeing flight in a powered aircraft conducted under Sec.  91.147
is required to hold a second-class medical certificate when
transporting a single passenger, an operator of a balloon carrying any
number of passengers has no requirement to hold a medical certificate.
This NPRM includes a proposal to address this disparity.

C. Commercial Balloon Operations 14 in the U.S.
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    \14\ The FAA uses the term ``Commercial Balloon Operations'' in
this NPRM to refer to the operation of a balloon for compensation or
hire, including operations involving the carriage of persons or
property.
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    Approximately 4,870 commercial pilots hold balloon ratings,\15\ and
approximately 4,940 balloons are registered with the FAA.\16\ The FAA
does not have a database of commercial balloon operators actively
operating in the United States. Using commercial sources, the FAA
estimates there are about 356 individual operators.\17\ The commercial
balloon industry estimates it conducts 100,000 to 250,000 passenger
rides annually, as well as aerial advertising and other commercial
activities.\18\
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    \15\ FAA Airman Registry, as of July 2021. https://www.faa.gov/licenses_certificates/airmen_certification/releasable_airmen_download/.
    \16\ FAA Aircraft Registry, as of October 2019 https://registry.faa.gov/currentreg/.
    \17\ Estimate based on number of commercial operators
advertising on www.blastvalve.com. Accessed on April 27, 2021.
    \18\ Testimony of Scott Appelman, Representing the Professional
Ride Operators Division of the Balloon Federation of America to NTSB
Investigative Hearing, December 9, 2016. Transcript Page 53-54, a
copy of which has been placed in the docket for this rulemaking.
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    When ballooning was first regulated as an aeronautical activity in
the 1940s by the predecessor of the FAA, the Civil Aeronautics
Administration, pilots were required to complete a medical examination
(CAR part 22).\19\ This requirement continued through the establishment
of part 61 in 1962.\20\
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    \19\ Amendment 127 to Civil Air Regulations, Part 22 Lighter-
Than-Air Pilot Certificates. Effective September 15, 1941. Section
22.13 required the holder to complete ``a physical examination
conducted by an authorized medical examiner of the Administrator.''
This requirement was further refined in an October 15, 1942,
amendment, requiring a free balloon pilot certificate holder to meet
the third-class physical standards prescribed in CAR part 29.
    \20\ 27 FR 7954 (Aug. 10, 1962), Subchapter D Airmen [New]
Addition of Subchapter. Effective November 1, 1962, CAR part 22 was
recodified as 14 CFR part 61. Free balloon pilot certificates were
prescribed in Sec.  61.181 with a requirement for those certificate
holders to hold at least a third-class medical certificate issued
under the newly created part 67.
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    By the late 1960s, sport ballooning had grown significantly.\21\ In
1973, part 61 was revised substantially. Under the revision, a part 67
medical certificate was no longer required for either private or
commercial free balloon \22\ operations.\23\ The medical certificate
requirements for balloon operations have remained substantively
unchanged since the 1973 revision.
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    \21\ National Balloon Museum: History of Ballooning https://www.nationalballoonmuseum.com/about/history-of-ballooning/.
    \22\ The term ``free balloon'' was later replaced with
``balloon'' in April 4, 1997 revision of Part 61. 62 FR 16220.
    \23\ 37 FR 6012, 6018 (Mar. 23, 1972).
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D. FAA Oversight

    In the decades following the 1973 revisions, the FAA generally
considered commercial balloon operations to be a low-risk and extremely
small segment of aviation in the United States. Research conducted by
the Agency revealed 54 commercial hot air balloon accidents between
2003 and 2013, including four fatal accidents. In 2015, commercial
sightseeing balloon operations represented .057% of the flight hours of
total civil aircraft operations.\24\
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    \24\ FAA Docket Submission to the National Transportation Safety
Board for the investigation of the Heart of Texas Hot Air Balloon
Accident Balony Kubicek BB85Z balloon, N2469L, Lockhart, Texas; July
30, 2016, Dated April 19, 2017. Page 6.
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E. 2016 Heart of Texas Hot Air Balloon Accident 25
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    \25\ NTSB accident No. DCA16MA204, Lockhart, TX, July 30, 2016
Accident Report NTSB/AAR-17/03 PB2018-100161.
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    On the morning of July 30, 2016, a hot air balloon, N2469L,
operated by Heart of Texas Hot Air Balloon Rides, impacted power lines
and burst into flames over a pasture near Lockhart, Texas. The pilot
and all 15 passengers were killed. The balloon was destroyed by impact
forces and post-crash fire. The flight was conducted under part 91 as a
sightseeing passenger flight, and the pilot was exercising the
privileges of a commercial pilot certificate.
    The NTSB determined that forecast information before launch showed
that weather conditions were marginal and deteriorating. While the
pilot could have decided to cancel the flight, he opted to launch the
hot air balloon and continue the flight into worsening weather
conditions. The NTSB also determined that the pilot had been diagnosed
with depression and attention deficit hyperactivity disorder (ADHD).
These medical conditions are known to cause cognitive deficits that may
affect decision-making and, ultimately, safety of flight. The NTSB
stated that the medical conditions ``would likely have led an aviation
medical examiner (AME) to either defer or deny a medical certificate.''
In addition, the NTSB reported that medications were found in the
pilot's system that are known to cause impairment.\26\ The NTSB stated,
``[a]n AME would likely have deferred or denied a medical certificate
to a pilot reporting use of these medications.'' \27\
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    \26\ The medications identified by the NTSB are listed on the
FAA's ``Do Not Issue'' and ``Do Not Fly'' lists found in the AME
Guide.
    \27\ NTSB accident No. DCA16MA204, Lockhart, TX, July 30, 2016
Accident Report NTSB/AAR-17/03 PB2018-100161 Executive Summary Page
vii.
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    The NTSB determined that the probable cause of this accident was
the pilot's pattern of poor decision-making that led to the initial
launch, continued flight in fog and above clouds, and descent near or
through clouds that decreased the pilot's ability to see and avoid
obstacles. The NTSB further determined that (1) the pilot's impairing
medical conditions and medications, and (2) the FAA's policy to not
require a medical certificate for commercial

balloon pilots, were contributing factors in the accident.\28\
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    \28\ NTSB accident No. DCA16MA204, Lockhart TX, July 30, 2016
Accident Report NTSB/AAR-17/03 PB2018-100161 Page 49.
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F. NTSB Recommendations Following the 2016 Heart of Texas Balloon
Accident

    On October 31, 2017, the NTSB made two Safety Recommendations in
response to the 2016 Heart of Texas balloon accident. Safety
Recommendation A-17-034 \29\ urged the FAA to ``remove the medical
certificate exemption in 14 [CFR] 61.23(b) for pilots who are
exercising their privileges as commercial balloon pilots and are
receiving compensation for transporting passengers.'' Safety
Recommendation A-17-045 \30\ urged the FAA to ``analyze your current
policies, procedures, and tools for conducting oversight of commercial
balloon operations in accordance with your Integrated Oversight
Philosophy, taking into account the findings of this accident; [and]
based on this analysis, develop and implement more effective ways to
target oversight of the operators and operations that pose the most
significant safety risks.''
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    \29\ NTSB Safety Recommendation A-17-034 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-17-034.
    \30\ NTSB Safety Recommendation A-17-045 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-17-045.
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    The FAA agreed with the safety benefits of recommendation A-17-034
and stated its intention to add the proposed change to its rulemaking
agenda. The FAA responded to Safety Recommendation A-17-045 by
initiating a plan to develop and implement more effective ways to
target oversight of operators posing the most significant safety risk
to the public. The FAA identified and increased surveillance on the
operators of the largest classes of balloons using information obtained
from the Civil Aviation Registry, repair stations, and industry.

G. Industry Efforts and Voluntary Compliance

    Immediately following the 2016 Heart of Texas accident, the FAA
worked with an industry group, Balloon Federation of America (BFA), to
support its 2017 Envelope of Safety Program. The program promotes
safety within the commercial balloon industry by educating consumers
with information when making balloon ride purchase decisions. The
program includes voluntary standards for both pilots and operators and
offers multiple tiers of safety accreditation by the BFA.\31\
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    \31\ BFA Envelope of Safety Program https://www.bfa.net/envelope-of-safety-program.
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    The FAA supports the efforts of the BFA to enhance safety and
professionalism of the industry while providing consumers with more
information when choosing a commercial balloon ride operator. The
agency notes, however, that not all balloon operators are members of
BFA. Moreover, members are not required to adhere to any specific
standards in order to maintain professional membership. Consequently,
the FAA considers BFA's efforts to achieve voluntary compliance with
industry standards to be insufficient alone to address the need for
additional oversight of airmen conducting balloon operations for
compensation or hire.

IV. Discussion of the Proposed Rule

    This proposed rule would amend part 61 to require a person who
holds a commercial pilot certificate with a lighter-than-air category
balloon class rating to hold a valid second-class medical certificate
when exercising the privileges of that certificate in a balloon for
compensation or hire, unless that person is conducting flight training
in accordance with Sec.  61.133(a)(2)(ii).

A. Proposed Rule Amendments

    As previously discussed, balloon pilots currently are not required
to hold a medical certificate when exercising the privileges of a
commercial pilot certificate. Section 318 (``Commercial Balloon Pilot
Safety Act of 2018'') of Public Law 115-254, The FAA Reauthorization
Act of 2018, directed the FAA to ``revise section 61.3(c) of title 14,
Code of Federal Regulations (relating to second-class medical
certificates), to apply to an operator of an air balloon to the same
extent such regulations apply to a pilot flightcrew member of other
aircraft.'' While the statute specifically directs the FAA to revise
Sec.  61.3(c), the FAA notes that Sec.  61.23, Medical certificates:
Requirement and duration, establishes the requirements and exceptions
for medical certificates based on certain types of operations. The FAA
proposes to amend Sec.  61.23 in addition to Sec.  61.3(c) for purposes
of implementing the statutory requirement.
    Section 61.3(c)(1) sets forth the requirement for any person
serving as a required pilot flightcrew member of an aircraft to hold
the appropriate medical certificate issued under part 67 and to keep
evidence of such certificate in the person's physical possession or
readily accessible in the aircraft. Exceptions to the medical
certificate requirement are set forth in Sec.  61.3(c)(2). Currently,
under Sec.  61.3(c)(2)(vi), a person holding a pilot certificate with a
balloon class rating who is piloting or providing training in a balloon
is not required to hold a medical certificate.
    Consistent with the legislative directive, the FAA proposes to
amend the medical certificate requirement exception in Sec.
61.3(c)(2)(vi) by limiting it to certain balloon operations.
Specifically, the exception would be amended to reflect that any person
holding a pilot certificate with a balloon class rating who is (A)
exercising the privileges of a private pilot certificate in a balloon;
or (B) providing flight training in a balloon in accordance with Sec.
61.133(a)(2)(ii) is not required to hold a medical certificate. By
revising the exception in Sec.  61.3(c)(2)(vi), balloon pilots
conducting operations for compensation or hire in a balloon (other than
flight training), such as carrying passengers or property and
advertising operations, would be required under Sec.  61.3(c)(1) to
hold a medical certificate issued under part 67.
    Section 61.23 sets forth the specific requirements for when a
particular class of medical certificate is required. Under Sec.
61.23(a)(2)(ii), a second-class medical certificate generally is
required when exercising the privileges of a commercial pilot
certificate. However, under Sec.  61.23(b)(3), a second-class medical
certificate is not required when exercising the privileges of a pilot
certificate with a glider category rating or balloon class rating in a
glider or balloon, as appropriate.
    The FAA proposes amending Sec.  61.23 to require any person
exercising the privileges of a commercial pilot certificate for
compensation or hire in a balloon, except when conducting flight
training, to hold a second-class medical certificate. First, the FAA
proposes to amend Sec.  61.23(a)(2) to add a requirement for any person
exercising the privileges of a commercial pilot certificate for
compensation or hire in a balloon to hold a second-class medical
certificate. Second, the FAA proposes to amend Sec.  61.23(b) to remove
the allowance to exercise the privileges of a balloon pilot certificate
without a medical certificate. Third and finally, the FAA proposes to
add an exception at Sec.  61.23(b)(4)-(5) to explain under what
circumstances balloon operations are excepted from the proposed
requirement to hold a second-class medical certificate. This exception
would specify that a medical certificate is not required when
exercising the privileges of a private pilot certificate

with a balloon class rating in a balloon or when exercising the
privileges of a commercial pilot certificate with a balloon class
rating in a balloon if the PIC is providing flight training in
accordance with Sec.  61.133(a)(2)(ii).
    Further, Sec.  61.23(d) includes a table providing the duration for
each class of medical certificate depending on the several factors
including the certificate privilege that is being exercised. The FAA
proposes to make related amendments to the table of medical certificate
durations at Sec.  61.23(d)(1)(iii) and (d)(2)(i). Specifically, the
FAA proposes to add persons who are exercising the privileges of a
commercial pilot certificate (other than for flight training) in a
balloon to the established medical certificate durations in Sec.
61.23(d).\32\ These proposed amendments are for clarification and
consistency with the other proposed amendments to Sec. Sec.  61.3 and
61.23. The FAA does not propose to amend any existing substantive
requirement to change the duration of a medical certificate.
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    \32\ As a miscellaneous amendment, the FAA has added flight
engineers to Sec.  61.23(d). Section 65.3(b) requires a person
serving as a flight engineer of an aircraft to hold a current
second-class (or higher) medical certificate issued to that person
under part 67, or other documentation acceptable to the FAA, that is
in that person's physical possession or readily accessible in the
aircraft. In developing this rule, the FAA identified that flight
engineers had been inadvertently omitted from the medical
certificate duration in Sec.  61.23(d). The FAA proposes to correct
that error in this rulemaking.
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    All certificated airmen are prohibited from operating an aircraft
in the national airspace system during a medical deficiency, regardless
of whether they hold a medical certificate or not. This requirement in
Sec.  61.53 for medical self-evaluation applies to every flight a
person conducts as a required flightcrew member. Airmen conducting
commercial balloon operations are currently subject to the requirements
of Sec.  61.53(b). Under the proposal, these airmen would be subject to
Sec.  61.53(a) by virtue of exercising the privileges of a commercial
pilot certificate in a balloon for compensation or hire.

B. Rationale for Medical Requirement for Commercial Balloons

    Some medical conditions, such as mental health conditions,
inherently impair the judgement of the person to properly self-evaluate
their medical condition. A lack of medical knowledge about one's own
condition may also preclude an airman from effectively determining his
or her ability to safely operate the aircraft. Lastly, external
factors, such as economic factors or concerns about customer
dissatisfaction, may affect the ability of a commercial balloon pilot
to make an impartial assessment of his or her health.
    Operators conducting flights for compensation or hire are held to a
higher safety standard with increased oversight. The commercial balloon
industry has evolved and commercial operators today fly much larger
balloons carrying many more passengers than in the past. As a result,
the risk associated with commercial balloon operations has increased.
This increased risk justifies a level of medical oversight equivalent
to that of pilots of powered aircraft for certain operations such as
commercial sightseeing operations.
    The purpose of the FAA medical certification program is to ensure
that only pilots, who are physically and mentally fit, will be
authorized to operate aircraft, thereby enhancing aviation safety by
mitigating the risk of medical factors as a cause of aircraft
accidents.
    Prior to the Heart of Texas accident, pilots conducted commercial
balloon operations in the U.S. for decades without any accidents
attributed to medical deficiencies. However, the FAA agrees with the
NTSB and Congress that a second-class medical certificate is necessary
to increase balloon passenger safety and other balloon operations
conducted for compensation or hire. The Heart of Texas accident
highlights how the medical certification process could reduce the risk
of a similar accident in the future by increasing the level of FAA
oversight of commercial balloon operations.
    For instance, the pilot in the Heart of Texas accident had a 20-
year history of drug and alcohol convictions, which he failed to report
to the FAA in accordance with Sec.  61.15(e). If the airman had been
required to hold a medical certificate, he would have been required to
disclose any history of those arrests and convictions on his medical
application form, completed through MedXPress. By signing and
submitting the medical application, the airman authorizes the FAA to
receive National Driver Register (NDR) pointer data as well as any
individual state records, as applicable, as part of the medical
certificate application.\33\
---------------------------------------------------------------------------

    \33\ When applying for a medical certificate in MedXPress, an
applicant authorizes the National Driver Register (NDR), through a
designated State Department of Motor Vehicles, to furnish to the FAA
information pertaining to his or her driving record consistent with
49 U.S.C. 30305(b)(3).
---------------------------------------------------------------------------

    The NDR Problem Driver Pointer System (PDPS) identifies records on
individuals whose privilege to operate a motor vehicle has been
revoked, suspended, canceled or denied, or who have been convicted of
serious traffic-related offenses. Even if an airman fails to disclose
these convictions on the application, the FAA receives a report from
the NDR, providing an additional safeguard and mechanism for verifying
the accuracy of the information provided by the airman.
    In addition, this pilot had multiple known medical conditions--
notably depression and ADHD--which generally could be disqualifying for
any class of medical certification under Sec. Sec.  67.107(c),
67.207(c), and 67.307(c), respectively. Unless the airman was able to
demonstrate, to the satisfaction of the Federal Air Surgeon, that the
risk associated with each condition and associated treatment warranted
an authorization for special issuance, an application for a medical
certificate with this medical history disclosed would likely have been
denied, if a medical certificate had been required as provided for in
this proposal.\34\
---------------------------------------------------------------------------

    \34\ FAA AME Guide: Pharmaceuticals https://faa.gov/go/ameguide.
---------------------------------------------------------------------------

    Finally, the accident pilot was also using medications that
typically are disqualifying \35\ for use due to sedation and cognitive
impairment. Had he reported their usage to an AME during a medical
review, the AME would have discussed this matter with the airman and
addressed appropriate usage.
---------------------------------------------------------------------------

    \35\ Such medications are typically prohibited for a period of
five half-lives. A half-life is a pharmacologic term for the period
of time, based on average human physiology, that 50% of the drug can
be expected to remain in the body following consumption.
---------------------------------------------------------------------------

    Performance demands of a commercial balloon pilot are very similar
to the performance demands of a pilot operating a powered aircraft. In
both contexts, commercial pilots should be required to be both
physically and mentally fit to operate their respective aircraft. The
Heart of Texas accident serves as an example of how a lack of medical
oversight allowed the pilot to continue to operate a balloon for
compensation or hire in spite of a questionable medical history. The
FAA therefore concludes the unpowered nature of commercial balloon
operations no longer justifies excepting operators from holding a
second-class medical certificate in order to act as PIC.
Flight Training
    Unlike other categories of aircraft, the FAA does not issue a
flight instructor certificate with a lighter-than-air category rating
for part 61 subpart H flight instructors. Flight training privileges in
a balloon are conferred to commercial pilots via a balloon rating

on the individual's commercial pilot certificate.
    While the FAA considers flight training to be a commercial
operation, it has--for purposes of medical certification--distinguished
instructors providing flight training from pilots engaged in other
commercial operations involving the carriage of passengers or property
for compensation or hire. For example, under current regulations,
conducting flight training while serving as PIC in either a glider or
balloon does not require any medical certification. See Sec. Sec.
61.3(c)(2) and 61.23(b).
    The FAA acknowledges that a flight instructor serving as PIC in an
operation other than a glider or lighter-than-air aircraft during which
private pilot privileges are being exercised must hold a third-class
medical certificate or opt into the requirements of BasicMed in
accordance with Sec.  61.23(a)(3) or Sec.  61.23(c). However, section
318 of Public Law 115-254 specifically directs the FAA to ``revise
section 61.3(c) of title 14, Code of Federal Regulations (relating to
second-class medical certificates), to apply to an operator of an air
balloon to the same extent such regulations apply to a pilot flightcrew
member of other aircraft'' (emphasis added). Therefore, the FAA has
determined that Congress did not intend amendments to be made to other
classes of medical certification. As such, the FAA is not proposing in
this NPRM to extend third-class medical certification requirements to
balloon operations during which flight instruction is conducted by an
airman serving as PIC. However, the FAA invites comment on this issue.
    As previously explained, Sec.  61.23(b)(4) and (5) would specify
that a medical certificate is not required when exercising the
privileges of a private pilot certificate with a balloon class rating
in a balloon or when exercising the privileges of a commercial pilot
certificate with a balloon class rating in a balloon if the PIC is
providing flight training in accordance with Sec.  61.133(a)(2)(ii).
The FAA notes that, in some cases, flight training may be conducted
concurrently with an operation conducted for compensation or hire.\36\
In circumstances such as this, the PIC would be required to hold either
a first- or second-class medical certificate, as appropriate, for the
commercial operation being conducted in conjunction with the flight
instruction.
---------------------------------------------------------------------------

    \36\ An example of this may be an operator who is providing
flight instruction, but is conducting the instruction in a balloon
that displays aerial advertising and the operator has received
compensation to display the advertising.
---------------------------------------------------------------------------

    While the medical certificate requirements in Sec. Sec.  61.3(c)(2)
and 61.23(b) do not apply to both balloons and gliders, the FAA is not
proposing to extend the second-class medical certification requirement
described in this NPRM to commercial glider operations at this time.
Due to the limited passenger carrying capacity of gliders,\37\ the FAA
has not identified a safety risk basis for imposing similar medical
certification requirements on glider operations. However, the FAA
invites comment on this issue.
---------------------------------------------------------------------------

    \37\ Gliders are typically limited to a capacity of 1-2
passengers in addition to the pilot in command.
---------------------------------------------------------------------------

C. Invitation for Comment Regarding Options for Enhanced Safety
Oversight of Commercial Balloon Operations

    As previously discussed, balloon operations conducted for
compensation or hire-many of which involve passenger-carrying
operations conducted for purposes of sightseeing-are not required under
Sec.  91.147 to obtain a Letter of Authorization (LOA) from the FAA.
Under Sec.  91.147, to obtain an LOA, a sightseeing operator must: (1)
Identify the business, where it is located, where it principally
operates from, and who is responsible for management and maintenance;
(2) identify the type of aircraft used; and (3) implement an Antidrug
and Alcohol Misuse Prevention Program in accordance with 14 CFR part
120.
    Following a 2013 non-fatal accident of a commercially operated
balloon carrying 10 passengers, the NTSB issued Safety Recommendations
A-14-011 \38\ and A-14-012.\39\ The recommendations urged the FAA to
require commercial balloon operators to obtain and maintain an LOA
under Sec.  91.147 to conduct air tour flights and to enhance oversight
by including commercial balloon operators in general surveillance
activities. Recommendations A-14-011 and A-14-012 were ultimately
superseded by Safety Recommendation A-17-045, described previously.
---------------------------------------------------------------------------

    \38\ NTSB Safety Recommendation A-14-011 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-14-011.
    \39\ NTSB Safety Recommendation A-14-012 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-14-012.
---------------------------------------------------------------------------

    The FAA is not proposing to apply similar requirements to balloon
operations conducted for compensation or hire in this rulemaking. The
FAA, however, invites comment on whether the FAA should consider
rulemaking in the future to expand the definition of an operator under
Sec.  91.147 to include nonstop passenger-carrying flights in a
balloon, which would require an LOA and drug and alcohol testing
requirements for balloon operations conducted for compensation or
hire.\40\ Specifically, the FAA requests information and data regarding
the following:
---------------------------------------------------------------------------

    \40\ More information about initiating a Drug and Alcohol
Testing Program can be found at: http://www.faa.gov/about/office_org/headquarters_offices/avs/offices/aam/drug_alcohol/starting/media/Air_Tour_Operators_Defined_in_Section_91_147_Implementation.pdf.
---------------------------------------------------------------------------

    (1) Should the applicability of Sec.  91.147 LOA and drug and
alcohol testing requirements be limited to certain thresholds of
balloon operations? If so, what thresholds, such as passenger capacity,
number of annual operations, or size of aircraft should be used?
    (2) Currently, operators who are required to comply with drug and
alcohol testing under part 120 must establish a program that covers all
individuals performing safety-sensitive functions directly or by
contract. In the context of balloon operations, this testing would
include non-pilots, such as persons conducting maintenance of the
balloon. If the applicability of such testing was extended to operators
conducting passenger carrying operations in a balloon for compensation
or hire, what factors might affect the ability of the balloon operator
to comply with a requirement to test all individuals performing safety-
sensitive functions? How many personnel conducting safety-sensitive
functions does each operator have and what are their functions?
    (3) What current voluntary drug and alcohol testing is being
conducted among commercial balloon operators? Do these testing programs
apply only to persons serving as PIC or to all individuals performing
safety-sensitive functions?
    (4) What are the incremental initial and recurring costs and
benefits of implementing and executing drug and alcohol testing and
complying with LOA requirements?

D. Miscellaneous Amendments

    The FAA is also proposing miscellaneous amendments to alleviate
confusion and eliminate burdens for persons obtaining medical flight
tests and for persons operating under BasicMed.
    First, the FAA proposes an amendment to Sec. Sec.  61.3(c)(2) and
61.23(b) to allow persons to receive medical flight tests authorized
under part 67 without holding a medical certificate. Some medical
certificate applicants are

not qualified for an unrestricted medical certificate due to
disqualifying medical conditions and therefore require the issuance by
authorization for a special issuance or SODA as discussed above. In
most cases, the FAA can determine if an individual is eligible for a
special issuance or SODA by means of additional medical evaluations.
However, for some conditions, a medical flight test is necessary to
determine whether the individual is qualified to hold a medical
certificate.
    In the past, the FAA issued a medical certificate to applicants for
the sole purpose of conducting a medical flight test to determine
whether a special issuance was appropriate. The FAA has determined that
temporary issuance of medical certificates for this purpose is
inconsistent with the requirements in part 67. Accordingly, the FAA has
ceased issuing them. As a result, a person authorized to take a medical
flight test may not currently act as PIC during the test because he or
she does not hold a medical certificate (for those aircraft for which a
medical certificate is required).\41\ This places an unintentional
burden on the FAA aviation safety inspector (ASI) who conducts the
medical flight test because to complete the medical flight test, the
ASI would need to assume the duties of PIC.\42\ To allow persons to
continue to act as PIC during these medical flight tests, the FAA is
proposing to amend Sec.  61.3(c)(2) by adding new paragraph (xv), which
would allow persons to act as PIC during authorized medical flight
tests without holding a medical certificate.\43\ The FAA has also
proposed to add a parallel provision in Sec.  61.23(b)(12). This
proposed change would not apply to any other flight activity for which
a medical certificate is required. The FAA has determined that this
action would not compromise safety. First, by policy, the ASI must hold
a valid medical certificate in order to conduct medical flight tests
regardless of whether the ASI acts as PIC.\44\ Second, in order for the
FAA to initiate an LOA for a medical flight test, the applicant must
have a medical evaluation that determines that the applicant is
otherwise medically qualified.\45\
---------------------------------------------------------------------------

    \41\ Under the current regulations, a person may act as PIC
during a medical flight test only if that person holds a medical
certificate issued under part 67. 14 CFR 61.3(c)(1).
    \42\ A PIC is the person who has final authority and
responsibility for the operation and safety of the flight. 14 CFR
1.1. By FAA policy, Aviation Safety Inspectors (ASI) do not
routinely act as PIC during airman evaluation flights (e.g.,
practical tests, medical flight tests, etc.).
    \43\ The FAA notes that it proposes to remove the ``or'' from
paragraph (c)(2)(xiii) and relocate it to paragraph (c)(2)(xiv) to
coincide with the additional paragraph FAA proposes to add to the
list of exceptions in Sec.  61.3(c)(2).
    \44\ FAA order 8900.1 Volume 5, Chapter 8, Section 1, paragraph
5-1523(D)(3) and Volume 1, Chapter 3, Section 6.
    \45\ FAA order 8900.1 Volume 5, Chapter 8, Section 1, paragraph
5-1523(B).
---------------------------------------------------------------------------

    Additionally, the FAA is proposing to amend Sec. Sec.  61.3(c)(2),
61.23(c)(3), 61.113(i), 68.3, and 68.9 to alleviate certain burdens
that resulted from the BasicMed final rule.\46\ This rule codified
section 2307 of the FAA Extension, Safety, and Security Act of 2016,
(Pub. L. 114-190) (FESSA). Section 2307 directed the FAA to ``issue or
revise regulations to ensure that an individual may operate as pilot in
command of a covered aircraft'' without having to undergo the medical
certification process under part 67. In that final rule, the FAA
adopted the statutory language set forth in section 2307, without
interpretation.
---------------------------------------------------------------------------

    \46\ 82 FR 3149 (Jan. 11, 2017).
---------------------------------------------------------------------------

    To accommodate safety pilots \47\ who wish to operate under
BasicMed, but who are not acting as PIC, the FAA is proposing to expand
the BasicMed requirements to include persons serving as required pilot
flightcrew members who are not acting as PIC. Currently, BasicMed
applies only to PICs, because section 2307 of FESSA applies only to
PICs.\48\ As a result, BasicMed does not provide relief from the
requirement to hold a medical certificate under Sec.  61.3(c) to a
person who is not acting as PIC. Specifically, pilots who are acting as
safety pilots in accordance with Sec.  91.109(c), but who are not
acting as PIC, must hold a medical certificate because they are
required flightcrew members. Instead, a safety pilot who intends to
operate under BasicMed must agree to act as PIC for the portion of the
flight in which they will serve as safety pilot.\49\
---------------------------------------------------------------------------

    \47\ A safety pilot is a person who occupies a control seat in
an aircraft and maintains a visual watch when the pilot manipulating
the flight controls of the aircraft is using a view-limiting device
to simulate flight by reference to instruments. See 14 CFR 91.109.
    \48\ There is statutory evidence that the provision creating
BasicMed was not intended to be limited to only persons acting as
PIC. One of the attestations that a person intending to operate
under BasicMed must agree to states ``I understand that I cannot act
as pilot in command, or any other capacity as a required flight crew
member [emphasis added], if I know or have reason to know of any
medical condition that would make me unable to operate the aircraft
in a safe manner.''
    \49\ In certain circumstances, a person who is qualified to act
as a safety pilot may not meet the regulatory requirements to act as
PIC for the flight. Further, a person may not agree to act as PIC
while acting as safety pilot for several non-regulatory reasons,
personal limits, operating experience, aircraft rental requirements,
or insurance coverage.
---------------------------------------------------------------------------

    The FAA encourages pilots to seek opportunities to increase
proficiency through operations, such as simulated instrument flying. As
such, the FAA proposes to alleviate the current burden on safety pilots
by allowing persons to operate under BasicMed while serving as required
pilot flightcrew members.
    Specifically, the FAA is proposing to amend Sec. Sec.
61.3(c)(2)(xiv), 61.23(c)(3)(i)(C) through (E), 61.113(i), 68.3(a) and
(b), and 68.9(a) by expanding the requirements to include required
pilot flightcrew members. The FAA notes that, in very limited
circumstances, this amendment would also allow a private pilot to act
as second-in-command (SIC) of an aircraft type certificated for more
than one required pilot flightcrew member or in operations requiring a
SIC flightcrew member while operating under BasicMed, provided the
aircraft meets the covered aircraft requirements of Sec.  61.113(i)(1).

E. Effective Date

    The FAA proposes that the medical certificate requirement of this
proposed rule become effective no less than 180 days from publication
of the final rule. This time span would provide sufficient time for
affected persons to comply with this rule by obtaining a medical
certificate in a timely manner. The FAA notes that airman with certain
medical conditions may be required to obtain an authorization for
special issuance. The process for obtaining a special issuance may
require additional time for the FAA to review additional medical
information provided by the airman. As such, persons who are required
by this rule provision to obtain a medical certificate should seek to
obtain a medical certificate in a timely manner in order to avoid a
loss of operating privileges due to the inability to comply with the
requirement.
    The FAA proposes that the two miscellaneous amendments of this
proposed rule related to BasicMed become effective 30 days from
publication of the final rule.

V. Regulatory Notices and Analyses

    Federal agencies consider impacts of regulatory actions under a
variety of executive orders and other requirements. First, Executive
Order 12866 and Executive Order 13563 direct that each Federal agency
shall propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify the costs. Second,
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires
agencies to analyze the economic impact of regulatory changes on small
entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits
agencies

from setting standards that create unnecessary obstacles to the foreign
commerce of the United States. Fourth, the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104-4) requires agencies to prepare a written
assessment of the costs, benefits, and other effects of proposed or
final rules that include a Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100,000,000 or more (adjusted annually
for inflation) in any one year. The current threshold after adjustment
for inflation is $158,000,000, using the most current (2020) Implicit
Price Deflator for the Gross Domestic Product.
    In conducting these analyses, the FAA has determined that this
rule: Is not a ``significant regulatory action'' as defined in section
3(f) of Executive Order 12866; may have a significant economic impact
on a substantial number of small entities; will not create unnecessary
obstacles to the foreign commerce of the United States; and will not
impose an unfunded mandate on State, local, or tribal governments, or
on the private sector.

A. Regulatory Impact Analysis

Summary of Benefits and Costs of This Rule
    The proposed rule would generate costs for balloon pilots to obtain
a second-class medical certification and for some pilots to seek
authorization through special issuance. There would also be costs to
the FAA to implement this requirement in terms of reviewing and
processing submissions related to certification. The FAA estimates the
present value of total costs over ten years is $2.6 million to $17.8
million with a mid-estimate of $7.5 million at a 7 percent discount
rate and $3.1 million to $21.7 million with a mid-estimate of $9.1
million at a 3 percent discount rate. The FAA estimates the annualized
costs over ten years is $0.4 million to $2.5 million with a mid-
estimate of $1.1 million at a 7 percent discount rate and $0.4 million
to $2.5 million with a mid-estimate of $1.1 million at a 3 percent
discount rate. While lack of data on the effectiveness of the
rulemaking prevents quantification of benefits, the FAA anticipates the
rulemaking will enhance safety of commercial balloon operations,
including reduced risks of accidents, fatalities, and injuries caused
by medical impairment of balloon pilots. The FAA estimates that it
would take between 0.4 to 3.0 averted fatalities in the next ten years
for the benefits to breakeven with the costs of this rulemaking.
    In addition to the requirement for commercial balloon pilots to
hold a second-class medical certificate, the rule proposes two
miscellaneous amendments. The first amendment addresses certain
inconsistencies in current regulations for conducting medical flight
tests and the second amendment addresses inconsistencies regarding who
may operate under BasicMed. The FAA does not quantify the effects of
the two miscellaneous amendments but anticipates there would be minor
cost savings. By allowing persons to receive medical flight tests under
part 67 without holding a medical certificate, the FAA ASI will no
longer have the burden of assuming the responsibility as PIC. This
would also eliminate the inconsistency of both having to hold a medical
certificate for the purposes of receiving a medical flight test and
needing the medical flight test to obtain medical certification. The
amendment to extend BasicMed eligibility to other pilot flightcrew
members would reduce the burden for those pilots not acting as PIC of
having to hold a medical certificate under current regulations and
would hold them to the same standard as those acting as PIC. This may
also result in more pilots seeking opportunities to serve as safety
pilot by lowering the medical certificate barrier without compromising
safety. It would also increase the number of pilots eligible to serve
as safety pilot, easing the burden of pilots with instrument privileges
conducting flights to meet recent flight experience requirements and
consequently increasing overall safety in the national airspace system.
Statement of Need
    This rulemaking addresses the need for additional oversight of
airmen conducting balloon operations for compensation or hire by
implementing the statutory mandate under the Commercial Balloon Pilot
Safety Act of 2018 and NTSB Safety Recommendation A-17-034 to extend
second-class medical certification requirements to operators of air
balloons. As discussed elsewhere in the preamble, the 2016 Heart of
Texas balloon accident highlights the potential for a pilot's medical
condition to pose safety risks, which are not necessarily less than
that of powered aircraft sightseeing operations that require at least a
second-class medical certificate (e.g., commercial transportation of
skydivers, banner towing, or aerial photography). Following the 2016
Heart of Texas accident, there have been voluntary efforts by the
industry to raise the standard for balloon pilots notably through the
Envelope of Safety Program. While incentives to ensure a certain level
of safety exist in the private market for commercial balloon
operations, it is unlikely in the absence of federal regulation that
all balloon pilots would choose to comply with the requirements of a
second-class medical certification. At the same time, consumers may be
insufficiently aware of the risks associated with balloon pilots
operating under a lower standard to demand full compliance. Therefore,
this rulemaking is necessary to achieve a higher level of safety for
commercial balloon operations.
Data and Assumptions
    This section summarizes key data sources and assumptions used
throughout the analysis:
     Costs and benefits are estimated over 10 years.
     Costs and benefits are presented in 2020 dollars.
     The present value discount rate of seven and three percent
is used as required by the Office of Management and Budget.
     The cost for a medical examination fee with an AME is in
the following range: Low = $100, Mid = $150 or High = $200.\50\
---------------------------------------------------------------------------

    \50\ According to FAA subject matter experts and Phoenix East
Aviation, https://www.pea.com/blog/posts/the-faa-medical-exam-common-questions/, the cost per medical exam ranges from $100 to
$200.
---------------------------------------------------------------------------

     The hourly rate of a pilot (VPT) exercising their
commercial balloon rating varies greatly. Therefore, the FAA used the
following hourly wages: Low= $15, Mid= $31.50 or High= $48.\51\
---------------------------------------------------------------------------

    \51\ According to the FAA subject matter experts, responses from
the Balloon Federation of America and online sources, the FAA
estimates a commercial balloon pilot earns from $15 to $48 an hour.
Online source: https://www.jobmonkey.com/uniquejobs3/hot-air-balloon-pilot-jobs/.
---------------------------------------------------------------------------

     Vehicle operating cost per mile (VOC) as determined by the
Internal Revenue Service (IRS) is $0.16.\52\
---------------------------------------------------------------------------

    \52\ https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2021 Accessed on April 21, 2021.
---------------------------------------------------------------------------

     The FAA assumes 1.5 hour to complete the MedXPress
form.\53\
---------------------------------------------------------------------------

    \53\ This estimate is consistent with FAA's estimated burden
hours associated with the MedXPress form 8500-8 approved under OMB
No. 2120-0034.
---------------------------------------------------------------------------

     The FAA assumes 1 hour to complete a medical examination.
Affected Entities
    At the time of writing, the FAA used 2021 data from the Airmen
Certification database to identify pilots certified as commercial
balloon pilots. There are currently 4,869 commercial pilots with
balloon class ratings. This balloon class

rating does not have an expiration. Unlike other pilot ratings, a
person exercising the privileges of a balloon class rating does not
require an active first-, second-, or third-class medical certificate.
Because of this, there is uncertainty in the number of active
commercial balloon pilots actively exercising commercial pilot
privileges. For this reason, the FAA produced a low, mid, and high
range estimate of how many pilots would possibly be affected by this
proposed rule.
    In addition to the current number of certificated pilots with a
commercial balloon rating, the FAA gathered data from the last 14 years
to estimate an average growth of newly certificated commercial balloon
pilots per year. Over the course of the last 14 years from 2007 through
2020, there was on average 56 newly certificated commercial balloon
pilots per year.
    As mentioned earlier, there is uncertainty with the number of
active pilots exercising their commercial balloon privileges. The FAA
assumes a low estimate of 20%, a mid-estimate of 50% and a high
estimate of 100% of the 4,869 commercial pilots with a balloon class
rating would be active. Table 1 displays the potential number of airmen
that would be affected by the proposed rule over the course of ten
years. Corresponding to the number of active balloon pilots is the
number of expected submissions for second-class medical certifications
each year.

                        Table 1--Low, Middle and High Estimates of Active Balloon Pilots
----------------------------------------------------------------------------------------------------------------
                              Year                                      Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................           1,030           2,491           4,925
2...............................................................           1,086           2,547           4,981
3...............................................................           1,142           2,603           5,037
4...............................................................           1,198           2,659           5,093
5...............................................................           1,254           2,715           5,149
6...............................................................           1,310           2,771           5,205
7...............................................................           1,366           2,827           5,261
8...............................................................           1,422           2,883           5,317
9...............................................................           1,478           2,939           5,373
10..............................................................           1,534           2,995           5,429
                                                                 -----------------------------------------------
    Total.......................................................          12,820          27,430          51,770
----------------------------------------------------------------------------------------------------------------

Benefits
    The benefits of this rulemaking come from the value of averted
accidents attributable to pilots operating commercial balloons with
medical deficiencies. While under current regulations, balloon pilots
must comply with Sec.  61.53(b), which states that ``a person shall not
act as pilot in command, or in any other capacity as a required pilot
flight crewmember, while that person knows or has reason to know of any
medical condition that would make the person unable to operate the
aircraft in a safe manner,'' the second-class medical certification
requirement would provide greater assurances of safety to balloon
passengers and other balloon operations conducted for compensation or
hire. By requiring balloon pilots to undergo a medical certification
process, an AME should identify potentially impairing medical
conditions and treatments thereof to ensure sufficient mitigation of
any associated risks.
    To quantify the benefits from this rule, it is necessary to: (1)
Forecast a baseline level of accidents attributable to medically
impaired balloon pilots in the absence of this rule and (2) estimate
the extent to which the medical certification requirement effectively
reduces the risk. As previously discussed, based on the FAA's analysis
of the NTSB accident database during the ten-year period from 2010-
2020, the FAA finds that there has been one accident, the Heart of
Texas accident, where the medical condition of the pilot was a factor.
The Heart of Texas accident resulted in 16 fatalities. The commercial
pilot and all 15 passengers were killed, and the balloon was destroyed
by impact forces and post-crash fire. For an accident of this
magnitude, the FAA estimates that the social cost associated with the
loss of life alone is $185.6 million using a value of statistical life
of $11.6 million.\54\ Additional costs of a similar accident would
include non-fatal injuries, the value of property loss and damage as
well as the cost of the accident investigation and clean-up efforts.
However, the FAA currently does not have enough information to monetize
those additional costs.
---------------------------------------------------------------------------

    \54\ Value of a statistical life in 2020 is $11.6 million.
Letter from Acting Assistant Secretary for Transportation Policy
April 1, 2021.
---------------------------------------------------------------------------

    The FAA finds that the requirement for a second-class medical
certification could have prevented the Heart of Texas accident if: (1)
Information made available through the NDR database as part of the
medical review process revealed the pilot's history of drug- and
alcohol-related traffic offenses and resulted in a disqualification,
(2) a medical review either prompted effective treatment of or
disqualification for the pilot's medical conditions (depression and
ADHD), or (3) use of certain medications were discussed with an AME
would have resulted in the pilot adjusting his behavior to avoid usage
as a PIC during a balloon operation.
    Due to the infrequency of such events and limitations in the
available data, it is difficult to quantify and monetize the benefits
of the rulemaking. The FAA intends to update its estimates of
quantified benefits for the final rule based on additional information
and data identified during the comment period. Specifically, the FAA
requests information and data, including references and sources, that
can be used to predict the number of similar accidents that may occur
in the future and the number of accidents that could be averted by this
rulemaking.
    While the FAA describes the benefits of the rulemaking
qualitatively, the FAA expects that second-class medical certification
provides additional screening to reduce the risk of commercial balloon
pilots operating while medically impaired. In the section below, the
FAA conducted a breakeven analysis to show that the monetized benefits
of the rulemaking equates costs if it averts 0.4 to 3.0 fatalities in
the next ten years.
Costs
    This rulemaking would result in private sector costs to balloon
pilots for obtaining a second-class medical certificate, including the
opportunity

cost of time and fee for the medical exam with an AME. Some balloon
pilots with certain health conditions that are otherwise disqualifying
may also incur the cost of obtaining a LOA by special issuance. The FAA
would incur costs for reviewing and processing the applications (i.e.,
MedXPress forms) and reviewing NDR information for a subset of
submissions.
Cost to Industry
(1) Costs of Obtaining Second-Class Medical Certification
    To obtain a second-class medical certificate, an applicant would
need to complete the MedXPress form and a medical exam with an AME.
Because the second-class medical certificate expires 12 months after
the date of the medical exam, the FAA assumes that pilots would incur
these costs on an annual basis. The FAA estimates the opportunity cost
of time for each applicant would include 1.5 hour to complete the
MedXPress form, 1 hour for the medical examination, and 1 hour of
travel time to and from the exam for a total of 3.5 hours.\55\ The FAA
assumes an hourly wage for a balloon pilot ranges from $15 per hour to
$48 per hour, with a mid-estimate of $31.50 per hour, to value time for
the medical exam and completing the MedXPress form. For valuing travel
time, the FAA uses an estimate of $13.60 per hour consistent with 2016
DOT guidance (in this analysis, $14.30 was used for year 2020).\56\
Multiplying the value of time by the amount of time spent yields an
estimate of $51.80 to $134.30, with a mid-estimate of $93.05 per
applicant in opportunity cost of time. FAA subject matter experts
estimate the cost per medical exam with an AME ranges from $100 to
$200, with an average of $150. Additional costs arise from vehicle
operating costs (VOC) of 16 cents per mile for an average of 50 miles
traveled by vehicle to and from a medical exam, which yields $8 for
each exam. Taking the sum of the value of time spent, medical exam fee,
and VOC, the FAA estimates that each applicant would incur costs of
approximately $160 to $342, with a mid-estimate of $251 to obtain a
second-class medical certificate each year.
---------------------------------------------------------------------------

    \55\ According to the ``FAA Aerospace Medical Certification
Services Airman Satisfaction Survey,'' (April 2017), over 60 percent
of applicants traveled between 0 and 25 miles one way for an exam
with an AME. (Retrieved from: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201904-2120-007.)
    \56\ Department of Transportation. ``The Value of Travel Time
Savings: Departmental Guidance for Conducting Economic Evaluations
Revision 2 (2016 Update). Available at: https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-valuation-travel-time-economic. This analysis
assumes that the value of travel time grows 1% a year. Year 2020:
$14.30.
---------------------------------------------------------------------------

    Table 2 below shows the range of total costs to industry for
obtaining a second-class medical certificate. The FAA derives the
aggregated low, middle, and high costs by multiplying the estimated
number of active pilots (low, middle, high) as shown in Table 1 by the
corresponding low, middle, and high costs per applicant by cost
category.

                                   Table 2--Costs to Industry by Category To Obtain Second-Class Medical Certification
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Opportunity cost of time for exam,       Fee for medical exam with AME             Vehicle operating costs
                                           MedXPress form, and travel      -----------------------------------------------------------------------------
                Year                ---------------------------------------
                                         Low         Middle        High         Low         Middle        High         Low         Middle        High
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................................      $53,354     $231,788     $661,428     $103,000     $373,650     $985,000       $8,240      $19,928      $39,400
2..................................       56,407      237,355      669,646      108,600      382,050      996,200        8,688       20,376       39,848
3..................................       59,475      242,938      677,879      114,200      390,450    1,007,400        9,136       20,824       40,296
4..................................       62,572      248,563      686,180      119,800      398,850    1,018,600        9,584       21,272       40,744
5..................................       65,685      254,205      694,497      125,400      407,250    1,029,800       10,032       21,720       41,192
6..................................       68,814      259,864      702,831      131,000      415,650    1,041,000       10,480       22,168       41,640
7..................................       71,961      265,540      711,182      136,600      424,050    1,052,200       10,928       22,616       42,088
8..................................       75,124      271,233      719,550      142,200      432,450    1,063,400       11,376       23,064       42,536
9..................................       78,304      276,942      727,934      147,800      440,850    1,074,600       11,824       23,512       42,984
10.................................       81,501      282,668      736,335      153,400      449,250    1,085,800       12,272       23,960       43,432
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The low, middle, and high estimates correspond to the low, middle, and high estimates of the number of active pilots and the range of costs per
  applicant in each category of costs.

(2) Cost of Obtaining a Special Issuance
    For applicants that do not initially meet the requirements of a
second-class medical certification, there may be an additional cost to
seek a LOA by special issuance. The FAA assumes that an applicant
seeking special issuance would incur the same costs and time of a
second-class medical certification as estimated per applicant above.
Based on the historical rate of special issuances, the FAA assumes that
approximately 10 percent of affected balloon pilots would seek special
issuance. Therefore, the FAA takes the sum of costs in each cost
category for obtaining a second-class medical certification and
multiplies by 0.1 to obtain the total industry cost for obtaining
special issuances. Table 3 below shows the range of special issuance
costs in each year.

                               Table 3--Total Industry Cost for Special Issuances
----------------------------------------------------------------------------------------------------------------
                                                                      Total private sector costs for special
                                                                                issuance
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $16,459         $62,537        $168,583
2...............................................................          17,369          63,978         170,569
3...............................................................          18,281          65,421         172,558
4...............................................................          19,196          66,869         174,552
5...............................................................          20,112          68,318         176,549
6...............................................................          21,029          69,768         178,547

7...............................................................          21,949          71,221         180,547
8...............................................................          22,870          72,675         182,549
9...............................................................          23,793          74,130         184,552
10..............................................................          24,717          75,588         186,557
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         140,959         479,339       1,239,310
Annualized at 7%................................................          20,069          68,247         176,450
Present Value at 3%.............................................         173,625         586,001       1,510,442
Annualized at 3%................................................          20,354          68,697         177,070
----------------------------------------------------------------------------------------------------------------

Summary of Total Cost to Industry
    The FAA estimates the present value of total cost to industry
associated with obtaining a second-class medical certification and
special issuances to be $1.6 million to $13.6 million, with a mid-
estimate of $5.3 million at a 7 percent discount rate and $1.9 million
to $16.6 million, with a mid-estimate of $6.4 million at a 3 percent
discount rate. The annualized value of total cost to industry are $0.2
million to $1.9 million with a mid-estimate of $0.8 million at a 7
percent discount rate and $0.2 million to $1.9 million with a mid-
estimate of $0.8 million at a 3 percent discount rate. In Table 4
below, the FAA shows these total costs to industry for obtaining a
second-class medical certification and special issuances in each year.
The low, middle, and high estimates correspond to the range of
estimates on the number of affected pilots and costs associated with
obtaining medical certification.

                                          Table 4--Total Industry Costs
----------------------------------------------------------------------------------------------------------------
                                                                              Total cost to industry
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $181,053        $687,902      $1,854,410
2...............................................................         191,064         703,759       1,876,263
3...............................................................         201,092         719,633       1,898,133
4...............................................................         211,151         735,554       1,920,076
5...............................................................         221,228         751,493       1,942,038
6...............................................................         231,324         767,451       1,964,018
7...............................................................         241,438         783,427       1,986,017
8...............................................................         251,570         799,421       2,008,034
9...............................................................         261,721         815,434       2,030,070
10..............................................................         271,891         831,466       2,052,124
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................       1,550,549       5,272,731      13,632,413
Annualized at 7%................................................         220,763         750,718       1,940,949
Present Value at 3%.............................................       1,909,876       6,446,015      16,614,860
Annualized at 3%................................................         223,896         755,670       1,947,768
----------------------------------------------------------------------------------------------------------------

Costs to FAA To Implement Requirement for Second-Class Medical
Certification for Balloon Pilots
(1) FAA Cost of MedXPress Review and Processing
    The FAA would incur costs associated with reviewing and processing
applications submitted through MedXPress. Based on internal FAA data on
total personnel costs and benefits attributable to labor hours spent on
review of airmen medical certification in FY 2019 and FY 2020, the FAA
estimates an average cost of $30 to review and process each
application. In Table 5 below, the Agency derives the FAA cost to
review applications in each year using the estimated range for the
number of submissions based on the forecasted number of active balloon
pilots in each year.

                              Table 5--FAA Costs To Review and Process Applications
----------------------------------------------------------------------------------------------------------------
                                                                        FAA costs for review and processing
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $30,489         $73,737        $145,786
2...............................................................          32,147          75,394         147,444
3...............................................................          33,805          77,052         149,102
4...............................................................          35,462          78,710         150,759
5...............................................................          37,120          80,367         152,417
6...............................................................          38,778          82,025         154,075
7...............................................................          40,435          83,683         155,732
8...............................................................          42,093          85,340         157,390
9...............................................................          43,751          86,998         159,048

10..............................................................          45,408          88,656         160,705
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         260,087         563,839       1,069,884
Annualized at 7%................................................          37,031          80,278         152,327
Present Value at 3%.............................................         320,268         689,177       1,303,774
Annualized at 3%................................................          37,545          80,793         152,842
----------------------------------------------------------------------------------------------------------------

(2) FAA Cost of Special Issuance Review
    A MedXPress application that requires a special issuance medical
certificate is deferred to the Aerospace Medical Certification Division
(AMCD) of Oklahoma City for further consideration. Based on FAA
internal data on personnel compensation and benefits attributable to
labor hours spent on reviewing and processing special issuance medical
certificates in FY 2019 and FY 2020, the FAA estimates an average cost
of approximately $126 per special issuance review. The table below
displays the FAA cost for special issuance review assuming that 10
percent of the applicants do not initially qualify for second-class
medical certification.

                                  Table 6--FAA Cost of Special Issuance Review
----------------------------------------------------------------------------------------------------------------
                                                                       FAA costs for special issuance review
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $13,018         $31,484         $62,248
2...............................................................          13,726          32,192          62,956
3...............................................................          14,434          32,900          63,664
4...............................................................          15,142          33,608          64,371
5...............................................................          15,850          34,315          65,079
6...............................................................          16,557          35,023          65,787
7...............................................................          17,265          35,731          66,495
8...............................................................          17,973          36,439          67,202
9...............................................................          18,681          37,147          67,910
10..............................................................          19,388          37,854          68,618
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         111,052         240,749         456,820
Annualized at 7%................................................          15,811          34,277          65,041
Present Value at 3%.............................................         136,748         294,266         556,687
Annualized at 3%................................................          16,031          34,497          65,261
----------------------------------------------------------------------------------------------------------------

(3) Cost of FAA Review of the National Driver Register (NDR) Reports
    Included within the medical certificate application is the
applicant's authorization for the FAA to receive NDR data, which
provides a report of applicable motor vehicle actions within the
preceding three years. Intentional failure to report required drug or
alcohol motor vehicle actions is grounds for suspension of a pilot
certificate. NDR checks help to identify persons who may have substance
abuse or dependence issues. Although the bulk of the process is
automated, the FAA estimates there is roughly a 3% return rate that
requires additional review and investigation. The FAA estimates that it
takes approximately 40 hours of additional review time by a special
agent for each applicant that is flagged through the NDR database.
Using a special agent hourly wage adjusted for fringe benefits of
$60.18 as shown in Table 7 below, the FAA estimates that each
submission that requires further investigation would cost $2,407. The
total costs to FAA associated with NDR review is estimated in Table 8
using the range of estimated submissions.

                                Table 7--Special Agent Wage With Fringe benefits
----------------------------------------------------------------------------------------------------------------
                                                                                Fringe
                                                      Yearly          Hourly         benefits          Total
----------------------------------------------------------------------------------------------------------------
Special Agent...................................         $91,877          $44.17          $16.01          $60.18
Federal Fringe Benefit Factor \1\ \2\ \3\.......  ..............  ..............          36.25%  ..............
----------------------------------------------------------------------------------------------------------------
\1\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2008/m08-13.pdf.
\2\ Percent of position's basic pay.
\3\ Dallas-Fort Worth, TX-OK locality plus fringe benefits, GS-12 Step 4. Retrieved from https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2021/DFW.pdf.

                                        Table 8--FAA Costs for NDR Review
----------------------------------------------------------------------------------------------------------------
                                                                             FAA costs for NDR review
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $74,382        $179,890        $355,664
2...............................................................          78,427         183,934         359,708
3...............................................................          82,471         187,978         363,752
4...............................................................          86,515         192,022         367,796
5...............................................................          90,559         196,066         371,840
6...............................................................          94,603         200,111         375,884
7...............................................................          98,647         204,155         379,928
8...............................................................         102,691         208,199         383,972
9...............................................................         106,735         212,243         388,017
10..............................................................         110,779         216,287         392,061
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         634,516       1,375,557       2,610,118
Annualized at 7%................................................          90,341         195,848         371,622
Present Value at 3%.............................................         781,334       1,681,335       3,180,721
Annualized at 3%................................................          91,596         197,104         372,877
----------------------------------------------------------------------------------------------------------------

Summary of Total Costs to FAA
    The total costs to the FAA to implement the requirement for
commercial balloon pilots to hold a second-class medical certificate is
the sum of the costs for FAA review and processing of MedXPress
applications, review of special issuances, and review of NDR
information associated with certain applications. The FAA estimates the
present value of total costs to the Agency to be $1.0 million to $4.1
million, with a mid-estimate of $2.2 million at a 7 percent discount
rate and $1.2 million to $5.0 million, with a mid-estimate of $2.7
million at a 3 percent discount rate. The annualized value of total
cost to FAA are $0.1 million to $0.6 million with a mid-estimate of
$0.3 million at a 7 percent discount rate and $0.1 million to $0.6
million with a mid-estimate of $0.3 million at a 3 percent discount
rate.
    These preliminary cost estimates to the FAA are subject to change
for the final rule and are not intended to inform future rulemakings or
policies involving user fees since these are point-in-time preliminary
estimates of additional personnel costs to FAA before the effective
date of the final rule. The FAA acknowledges the difficulty in
estimating FAA burden and cost after the effective date of this rule
given uncertainties in the number of pilot applicants and those pilots
that would either receive a second-class medical certification or be
granted a special issuance certification.

                                           Table 9--Total Costs to FAA
----------------------------------------------------------------------------------------------------------------
                                                                                Total cost to FAA
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $117,890        $285,111        $563,698
2...............................................................         124,300         291,521         570,107
3...............................................................         130,709         297,930         576,517
4...............................................................         137,119         304,340         582,927
5...............................................................         143,528         310,749         589,336
6...............................................................         149,938         317,159         595,746
7...............................................................         156,347         323,568         602,155
8...............................................................         162,757         329,978         608,565
9...............................................................         169,167         336,387         614,974
10..............................................................         175,576         342,797         621,384
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................       1,005,655       2,180,145       4,136,823
Annualized at 7%................................................         143,183         310,404         588,991
Present Value at 3%.............................................       1,238,350       2,664,778       5,041,181
Annualized at 3%................................................         145,172         312,393         590,980
----------------------------------------------------------------------------------------------------------------

Total Costs of the Rule
    The total costs are shown in the table below, which include both
costs to industry and to the FAA. The total costs over the ten years
include the costs for pilots to obtain their second-class medical
certificate, special issuances and costs to the Agency for review of
applications, special issuances, and NDR information. The FAA estimates
the present value of total costs over ten years is $2.6 million to
$17.8 million with a mid-estimate of $7.5 million at a 7 percent
discount rate and $3.1 million to $21.7 million with a mid-estimate of
$9.1 million at a 3 percent discount rate. The FAA estimates the
annualized costs over ten years is $0.4 million to $2.5 million with a
mid-estimate of $1.1 million at a 7 percent discount rate and $0.4
million to $2.5 million with a mid-estimate of $1.1 million at a 3
percent discount rate.
    As stated previously, in some cases, where the airman's medical
condition does not meet the part 67 standard, the airman may still be
issued a medical certificate by authorization for special issuance when
the Federal Air Surgeon determines the risk associated with the medical
condition(s) to be sufficiently mitigated. Based on the rate of special
issuance for general aviation, the FAA

assumes that 10% of the commercial balloon pilot applicants would
require a special issuance. For purposes of this analysis, the FAA
assumes that most applicants would ultimately either receive a second-
class medical certification or be granted a special issuance
certification and therefore does not quantify costs associated with not
meeting the requirements.
    However, the FAA expects some applicants who would have otherwise
been able to operate as commercial balloon pilots may not meet the
requirements of a second-class medical certification nor the
requirements for a special issuance. Furthermore, the opportunity cost
(including the time and fees) of seeking a second-class medical
certification for some pilots may outweigh their private gains from
operating commercially, resulting in some pilots opting not to seek
medical certification. The FAA does not have sufficient information to
predict how the supply of commercial balloon pilots would change as a
result of this rule.
    While the FAA does not expect a significant decrease in the
availability of balloon pilots, changes in supply of balloon pilots
could affect prices as well. This analysis does not quantify any
potential changes in consumer and producer surplus from changes in
supply. If the rule effectively screens out certain individuals for
disqualifying medical conditions as intended, any potential adverse
effects on individual applicants should be offset by the safety gains
to the public. The FAA requests comment on these assumptions and data
that would allow the FAA to quantify these potential impacts.

                                        Table 10--Total Costs of the Rule
----------------------------------------------------------------------------------------------------------------
                                                                              Total Cost of the Rule
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $298,944        $973,013      $2,418,108
2...............................................................         315,364         995,280       2,446,370
3...............................................................         331,802       1,017,563       2,474,650
4...............................................................         348,270       1,039,894       2,503,003
5...............................................................         364,757       1,062,242       2,531,374
6...............................................................         381,262       1,084,609       2,559,764
7...............................................................         397,785       1,106,995       2,588,172
8...............................................................         414,327       1,129,399       2,616,599
9...............................................................         430,888       1,151,822       2,645,044
10..............................................................         447,467       1,174,263       2,673,508
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................       2,556,204       7,452,875      17,769,236
Annualized at 7%................................................         363,946       1,061,122       2,529,939
Present Value at 3%.............................................       3,148,226       9,110,792      21,656,041
Annualized at 3%................................................         369,068       1,068,063       2,538,749
----------------------------------------------------------------------------------------------------------------

Breakeven Analysis
    Given the uncertainties and limitations in the available data, the
FAA conducted a breakeven analysis to determine the number of averted
fatalities necessary to generate benefits equal to costs. The FAA
divided the present value of total costs of the rule by the present
value of a statistical life to estimate the number of fatalities needed
to break even with the costs of the rule over a ten-year time horizon.
Using a value of statistical life of $11.6 million and the range of
present value of costs presented in Table 10 above, the monetized
benefits of this rule will break even with costs if the new medical
certification requirement averts between 0.4 to 3.0 fatalities under a
7 percent discount rate and between 0.4 to 2.5 fatalities under a 3
percent discount rate.\57\
---------------------------------------------------------------------------

    \57\ Departmental Guidance on Valuation of a Statistical Life in
Economic Analysis https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis.
---------------------------------------------------------------------------

Regulatory Alternatives
    The FAA considered one alternative to the proposed rule:
    Letter of Authorization (LOA) and Drug and Alcohol Testing. With
this alternative, the FAA would institute both a medical certificate
requirement as well as a requirement for obtaining an LOA from the FAA
and mandatory drug and alcohol testing. This alternative would expand
the definition of an operator under Sec.  91.147 to include balloons,
which would require the commercial balloon operators to obtain an LOA
from the FAA in accordance with Sec.  91.147 prior to conducting
operations, and implement drug and alcohol testing programs in
accordance with 14 CFR part 120. This alternative goes beyond the
statutory mandate and would add the additional administrative costs of
implementing a drug and alcohol testing program and obtaining a LOA to
commercial balloon operators and pilots.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354, 94
Stat. 1164 (5 U.S.C. 601-612), as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat.
857, Mar. 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L.
111-240, 124 Stat. 2504 Sept. 27, 2010), requires Federal agencies to
consider the effects of the regulatory action on small business and
other small entities and to minimize any significant economic impact.
The term ``small entities'' comprises small businesses and not-for-
profit organizations that are independently owned and operated and are
not dominant in their fields, and governmental jurisdictions with
populations of less than 50,000.
    The FAA is publishing this Initial Regulatory Flexibility Analysis
(IRFA) to aid the public in commenting on the potential impacts to
small entities from this proposal. The FAA invites interested parties
to submit data and information regarding the potential economic impact
that would result from the proposal. The FAA will consider comments
when making a determination or when completing a Final Regulatory
Flexibility Analysis.
    An IRFA must contain the following:
    (1) A description of the reasons why the action by the agency is
being considered;

    (2) A succinct statement of the objective of, and legal basis for,
the proposed rule;
    (3) A description of and, where feasible, an estimate of the number
of small entities to which the proposed rule will apply;
    (4) A description of the projected reporting, recordkeeping, and
other compliance requirements of the proposed rule, including an
estimate of the classes of small entities which will be subject to the
requirement and the type of professional skills necessary for
preparation of the report or record;
    (5) An identification, to the extent practicable, of all relevant
Federal rules that may duplicate, overlap, or conflict with the
proposed rule; and
    (6) A description of any significant alternatives to the proposed
rule which accomplish the stated objectives of applicable statutes and
which minimize any significant economic impact of the proposed rule on
small entities.
Description of Reasons the Agency Is Considering the Action
    The FAA is publishing this rulemaking to comply with the Commercial
Balloon Pilot Safety Act of 2018, which directs the FAA to require
commercial balloon pilots conducting operations for compensation or
hire to hold a valid second-class medical certificate. Congress
introduced this legislation in response to the 2016 Heart of Texas hot
air balloon accident and the NTSB finding that (1) the pilot's
impairing medical conditions and medications and (2) the FAA's policy
to not require a medical certificate for commercial balloon pilots were
contributing factors in the accident.
    This proposed rule would amend part 61 to require a second-class
medical certificate for balloon operations conducted for compensation
or hire, other than flight training. As such, a person who holds a
commercial pilot certificate with a balloon class rating would be
required to hold a valid second-class medical certificate when
exercising the privileges of that certificate in a balloon for
compensation or hire, unless that person is conducting flight training
in accordance with Sec.  61.133(a)(2)(ii).
Statement of the Legal Basis and Objectives
    The FAA's authority to issue rules on aviation safety is found in
title 49 of the United States Code. Subtitle I, section 106 describes
the authority of the FAA Administrator. Subtitle VII, Aviation
Programs, describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart iii, Section 44701, General Requirements;
Section 44702, Issuance of Certificates; and Section 44703, Airman
Certificates. Under these sections, the FAA is charged with prescribing
regulations and minimum standards for practices, methods, and
procedures the Administrator finds necessary for safety in air
commerce. The FAA is also authorized to issue certificates, including
airman certificates and medical certificates, to qualified individuals.
This rulemaking proposal is within the scope of that authority.
    Further, this rulemaking is issued under section 318 of the FAA
Reauthorization Act of 2018, Public Law 115-254, (``Commercial Balloon
Pilot Safety Act of 2018''). Section 318 directed the FAA to ``revise
section 61.3(c) of title 14, Code of Federal Regulations (relating to
second-class medical certificates), to apply to an operator of an air
balloon to the same extent such regulations apply to a pilot flight
crewmember of other aircraft.'' While the statute specifically directs
the FAA to revise Sec.  61.3(c), the FAA notes that Sec.  61.23,
Medical certificates: Requirement and duration establishes the
requirements and exceptions for medical certificates based on certain
types of operations. The FAA proposes to amend Sec.  61.23 in addition
to Sec.  61.3(c) for purposes of implementing the statutory
requirement.
Description of the Recordkeeping and Other Compliance Requirements
    The FAA proposes that airmen hold a valid second-class medical
certificate when exercising the privileges of a commercial pilot
certificate in a balloon for compensation or hire. A medical
certificate would not be required for commercial pilots conducting
flight training in a balloon. As determined by a physical examination
and review of medical history, airmen must meet the applicable medical
standards of part 67 in order to receive an unrestricted medical
certificate. In cases where the airman's medical condition does not
meet the part 67 standard, the airman may still be issued a medical
certificate by authorization for special issuance or SODA when the
Federal Air Surgeon had determined that the risk associated with the
medical condition(s) is sufficiently mitigated.
    A person obtains a medical certificate by completing an online
application (FAA form 8500-8, Application for Medical Certificate)
using the FAA's medical certificate application tool, MedXPress,\58\
and undergoing a physical examination with an FAA-designated AME. An
AME may defer an applicant to the FAA for further review (which may
include further examination and testing by a specialist physician) when
there is information indicating the existence or potential of an
adverse medical finding that may warrant further FAA medical evaluation
and oversight. Second-class medical certificates held for any
operations requiring a commercial pilot certificate (including the
second-class medical certificates that would be required for balloon
operations under this proposal) expire at the end of the last day of
the 12th month after the month of the date of examination shown on the
medical certificate.
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    \58\ https://medxpress.faa.gov/.
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All Federal Rules That May Duplicate, Overlap, or Conflict
    There are no relevant Federal rules that may duplicate, overlap, or
conflict with the proposed rule.
Description and an Estimated Number of Small Entities Impacted
    The proposed rule would affect commercial balloon pilots and
establishments involved in commercial balloon operations. The FAA does
not maintain a database of commercial balloon operators actively
operating in the United States. Using commercial sources, the FAA
estimates that number to be about 356 \59\ companies. Approximately
4,870 commercial pilots hold balloon ratings, and approximately 4,940
balloons are registered with the FAA. The commercial balloon industry
estimates that 100,000 to 250,000 passenger rides are conducted
annually, as well as aerial advertising and other commercial
activities.
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    \59\ http://www.blastvalve.com/Balloon_Rides/USA/index.shtml.
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    Businesses affected by this rule would be classified using the 2017
North American Industry Classification System \60\ under NAICS code
487990 ``Scenic and Sightseeing Transportation, Other.'' This industry
comprises establishments primarily engaged in providing scenic and
sightseeing transportation (except on land and water). The U.S. Small
Business Administration (SBA) defines entities in this industry as
``small'' using an average annual revenue threshold of $8 million.\61\
With limited information and

data on sales revenues for each of the affected commercial balloon
operators, the FAA has uncertainty as to how many entities would meet
the SBA's small-entity criteria.\62\ Furthermore, the FAA has
uncertainty as to how the burden associated with the proposed rule
would be distributed across commercial balloon companies versus
individual balloon pilots employed by an operator. The FAA requests
comment and data on the average annual sales revenues for the affected
small businesses and to what extent the costs of obtaining a second-
class medical certification would be considered an ``out-of-pocket''
cost incurred by commercial balloon pilots rather than a cost to the
commercial balloon operator. As previously described, the FAA estimates
the cost per pilot to obtain a second-class medical certificate would
be between $160 and $685 annually, depending on whether a special
issuance would be necessary.
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    \60\ https://www.census.gov/naics/?input=487990&year=2017&details=487990.
    \61\ https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
    \62\ Rainbow Ryders is one of the larger Commercial Balloon
companies and are under the Small Business Administration small-
entity criteria. Therefore, the FAA estimates that all of the
Commercial balloon companies are a small entity. It's Been a Year of
Growth for Rainbow Ryders, https://www.abqjournal.com/1095655/its-been-a-growth-year-for-rainbow-ryders.html, September 9, 2019.
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    For purposes of this initial regulatory flexibility analysis, the
FAA assumes that the private sector costs of this rule (i.e., the cost
to obtain a second-class medical certification or special issuance)
fall entirely on commercial balloon operators. In the absence of data
on annual receipts specific to the commercial balloon industry, the FAA
relies on the most recent data available on average revenues for all
businesses, including commercial balloon operators, classified under
NAICS 487990 ``Scenic and Sightseeing Transportation, Other'' from the
2017 Census Bureau's Statistics of U.S. Businesses (SUSB) \63\ to
inform the analysis. Note that the total number of firms identified for
this industry is less than the FAA estimated number of commercial
balloon operators. In this analysis, the FAA uses the SUSB data to
estimate the proportion of balloon companies for each size category by
annual receipts.
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    \63\ Available at: https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html, retrieved on August 15, 2021.
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    The table below summarizes the total number of firms, employment,
and estimated annual receipts by annual receipt category for the entire
industry classified under NAICS 487990 ``Scenic and Sightseeing
Transportation, Other'' for the year 2017. Note that blanks in the
table below reflect data that the Census Bureau withheld to avoid
disclosing data for individual companies, but are included in the
higher level totals. After adjusting the 2017 dollar values to constant
2020 dollars using the GDP deflator,\64\ the FAA estimates that
approximately 93 percent of companies (or about 331 balloon operators
extrapolating from this percentage) may be considered small entities
under the SBA definition.
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    \64\ Available at: https://www.whitehouse.gov/omb/historical-tables/, retrieved on January 15, 2020.
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    To compare the compliance costs of the rule to the average revenues
of small entities, for each receipt size category the FAA multiplies
the proportion of total employment by the annualized private sector
costs of the rule and divides by the estimated annual receipts in 2020
dollars.\65\ Assuming that costs are proportional to employment size,
which may be reasonable given that costs are driven by the number of
pilots requiring a second-class medical certification, the FAA
estimates that the costs of the proposed rule would constitute 0.07% to
0.42% of average annual revenues for small entities. Given the currency
and level of aggregation of the data available, the FAA requests
comment on accuracy of these estimates and any other information or
data that would be relevant for estimating the effects of the rule on
small entities.
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    \65\ For this calculation, the FAA uses the mid-estimate of
$750,718 for the total private sector costs annualized at a 7
percent discount rate.

   Table 11--Number of Firms, Establishments, Employment, and Estimated Receipts by Enterprise Receipt Sizes for the United States, NAICS 487900: 2017
                                                         (Census Statistics of U.S. Businesses)
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                                                                                Cost for all
                                             Number of     Percentage of                   Percentage of     Estimated     firms in size     Cost as a
       Enterprise receipt size [a]           firms [b]         firms        Employment         total         receipts        category      percentage of
                                                                                employment       ($1,000)        ($1,000)        receipts
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<$100,000...............................              53              17              48               1           2,255              10            0.42
$100,000-499,999........................             119              39             192               5          29,644              40            0.13
$500,000-999,999........................              47              15             237               7          32,765              49            0.14
$1,000,000-2,499,999....................              43              14             365              10          63,134              76            0.11
$2,500,000-4,999,999....................              18               6             323               9          65,788              67            0.10
$5,000,000-7,499,999....................               6               2             106               3          29,465              22            0.07
$7,500,000-9,999,999....................               5               2             213               6          41,585              44            0.10
$10,000,000-14,999,999..................               4             1.3             196               5          50,270              41            0.08
$20,000,000-24,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$25,000,000-29,999,999..................               3             1.0              93               3          19,490              19            0.09
$30,000,000-34,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$35,000,000-39,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$50,000,000-74,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$100,000,000+...........................               4               1           1,044              29         251,871             217            0.08
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................             309             100           3,611             100         762,426             751            0.09
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[a] Using the Gross Domestic Product (GDP) deflator, the FAA finds that $7.49 million in 2017 dollars would be approximately $7.97 million in 2020
  dollars. Therefore, the FAA assumes firms with receipts of less than $7.49 million in 2017 dollars would be considered small.
[b] The FAA notes that the number of firms in NAICS 487900 is lower than FAA's estimate of the number of balloon operators. For purposes of this
  analysis, the SUSB data is used to estimate the percentage of small entities and the distribution of costs relative to revenues.

Alternatives Considered To Minimize Any Significant Economic Impact on
Small Entities
    The FAA has not identified any significant alternative that would
minimize any significant economic impact on small entities which do not
conflict with the statutory mandate. The FAA solicits comment on
potential alternative approaches that could minimize the burden on
small entities while still accomplishing the objectives of the
proposal.