We have also not quantified the potential benefits from a fuel tank
explosion being misinterpreted as a terrorist-caused event because such
an

outcome is too speculative to include in the main body of the analysis.
However, we have provided a quantified estimate of the possible
benefits from preventing this misinterpretation in Appendix A of the
FRE.
    However, some of the public will cancel or curtail their air travel
after they discover that the in-flight accident was caused by an
airplane electrical or mechanical malfunction. An in-flight explosion
is a catastrophic accident. There is a long history that air travel
declines for two to three months after a major catastrophic accident.
We use a study by Wong and Yen, ``Impact of Flight Accidents on
Passenger Traffic Volume of the Airlines in Taiwan'', in the Journal of
Eastern Asia Society for Transportation Studies, vol. 5, October 2003,
to provide an estimate of the potential demand losses from a fuel tank
explosion.
2. Likelihood of Future Explosions in Flight
    The IRE assumed that all future accidents caused by fuel tank
explosions will occur in flight. This assumption was based upon an
evaluation of the flammability exposure times for various flight phases
that showed the majority of the time fuel tanks are flammable is during
flight. The method used by us in the IRE to estimate the likelihood of
future explosions occurring in flight or on the ground was based upon
an earlier version of the Monte Carlo model, ``Fuel Tank Flammability
Assessment Method User's Manual, DOT/FAA/AR-05/8.'' This earlier model
used ground times of 30, 60 and 90 minutes for short, medium, and long-
range airplanes. Using this model, we determined 90 percent of the
flammability exposure time occurred during flight. We then simplified
the IRE by assuming all future accidents would occur in flight.
    Our review of recent fleet data collected from in-service airplanes
indicates that ground times are longer than used in the earlier version
of the Monte Carlo model. This results in a higher percentage of the
flammability exposure time being when an airplane is on the ground. In
addition, the historical accident rate of one accident out of three
occurring in flight is based upon a limited number of events and is not
a valid sample size for establishing the future accident rate. Since
ignition sources may occur at any time during ground or flight
operations, the ARAC fuel tank study concluded that the likelihood of
future fuel tank explosions correlates to the flammability exposure of
a fuel tank. We agree with this conclusion.
    MyTravel Airlines, AEA, Alaska Airlines, ATA, and Airbus stated
that, the probabilities of an in-flight explosion and an on-the-ground
explosion is the simple extrapolation of the three events; that is,
there is a 33.33 percent probability of an in-flight explosion and a
66.67 percent probability of an on-the-ground explosion. Boeing
commented that its engineering analysis indicated an 80 percent
probability of an in-flight explosion and a 20 percent probability of
an on-the-ground explosion and supported its recommendation with a
recent flammability assessment using a revised Monte Carlo model.
Boeing also recommended that a sensitivity analysis be included in the
regulatory evaluation varying the number of in-flight events by values
of 33 percent or 50 percent. In the GRA, Incorporated appendix to the
ATA comment, they noted that using plausible assumptions in FAA's
model, a better estimate of the percentage of time that a tank is
flammable would be 78 percent in the air.
    We believe that the appropriate method to evaluate the future risk
is through a flammability assessment rather than observations of an
infrequently occurring event. As a result, we agree with the Boeing
analysis and disagree with the ATA and Airbus analyses and revise our
risk analysis so that there is an 80 percent probability that an
explosion will occur in flight and a 20 percent probability that it
will occur on the ground.
    Finally, we do not agree with Boeing's recommendation to include in
the FRE an assessment of the sensitivity of varying the ground versus
flight accidents between 30 and 50 percent. The IRE already included
variations in many factors that affect the predicted cost and benefits
and adding another sensitivity factor would not provide useful data for
determining the need for this rule.
3. Costs to Society of Future Accidents
    Several commenters said the cost of future accidents used in the
IRE did not include all the costs to society. They said the IRE
excluded the costs of investigating the accident, cleanup at the
accident scene, replacement and retraining of flight crew, and any
design change needed to correct failures of parts or systems on the
airplane. They added that an accident would also cause a loss of
confidence in the aviation industry leading to the public reducing
their airline travel. They requested these additional costs be included
in the final rule.
    We agree with some of these comments and, as previously discussed,
we include quantitative estimates of the potential benefits from the
loss of confidence in aviation transport. We disagree that we did not
include accident investigation and clean-up costs because the IRE
contained a specific $8 million cost for the accident investigation.
Although it may occur that design changes will need to be made, these
changes would be done via rulemaking or AD and the costs for those
specific changes would be estimated when proposed.
4. Value of a Prevented Fatality
    AEA and ATA stated that the value of a prevented fatality should be
3 million dollars. AEA stated there is no basis for using a higher
value.
    Different government entities use different estimates of the value
of a prevented fatality. For example, the Environmental Protection
Agency uses a value of $7 million and the Department of Transportation
has historically used a value of $3 million (which we used in the IRE).
There are several different values that have been reported in economic
literature and there is no one value on which there is universal or
near-universal agreement. The Office of Management and Budget allows
agencies to evaluate their cost-benefit analyses using alternative
values for a prevented fatality in order to evaluate how sensitive the
analytic results are to the assumed values. Therefore, we believe that
varying the value to show the range of reasonable effects is
appropriate and we have included values of $3 million, $5.5 million,
and $8 million to provide a better understanding of the sensitivity of
the evaluation to changes in this baseline assumption.
5. Cost Savings if Transient Suppression Units (TSUs) Are Not Required
    The NTSB determined that the probable cause of the TWA Flight 800
explosion was ignition of the flammable fuel/air mixture in the center
wing fuel tank. Although the ignition source could not be determined
with certainty, the NTSB determined that the most likely source was a
short circuit outside of the center wing tank that allowed excessive
voltage to enter the tank through electrical wiring associated with the
fuel quantity indication system (FQIS). We issued ADs mandating
separation of the FQIS wiring that enters the fuel tank from high power
wires and circuits on the classic Boeing 737 and 747 airplanes after
the TWA 800 accident, and this resulted in installation of TSUs as an

alternative method of compliance with the ADs.
    In the NPRM for this rulemaking, we requested public comment on the
possible cost savings that would occur if airlines were not required to
install transient suppression units (TSUs) on the fuel quantity gauging
systems of the high flammability fuel tanks that would need FRM to
comply with this rule. We received the following responses:
     Several commenters stated that we need to clarify the
requirements for design changes resulting from SFAR 88, since they
believed no additional changes to incorporate TSU would be needed for
their fleet.
     According to ATA, the cost avoidances would be minor,
compared to the impact of the ignition-prevention ADs and pending SFAR
88 maintenance upgrades.
     AEA stated that TSUs will not be removed, so there is no
cost savings. If the TSUs were removed, additional costs would be
incurred for certification, service bulletins, manpower, and hangar
space.
     Airbus and My Travel Airways commented that they
anticipate no significant savings since only a fraction of the fleet is
designed with a need for these devices, and the cost of these devices
is small, compared to the cost of flammability reduction systems.
     Transport Canada commented that ignition prevention should
not be traded off against flammability reduction. Both should be
required.
     Qantas stated that, if these devices could be removed from
its existing fleet, it would realize a significant cost savings in
operations and maintenance. Qantas also said that the cost of these
devices is minimal compared to the installation of an FRM, but if the
FQIS requires replacement of the fuel gauging system to make the
devices effective, it would be similar in cost to an FRM. However,
Qantas noted that an FRM may produce a weight penalty such that a FQIS
replacement would still be preferred.
    Prior to this rule, the findings from the analysis required by SFAR
88 showed that most transport category airplanes with high flammability
fuel tanks needed TSUs to prevent electrical energy from airplane
wiring from entering the fuel tanks in the event of a latent failure in
combination with a single failure. Since this rule requires FRM or IMM
to mitigate an unsafe condition by converting these fuel tanks into low
flammability fuel tanks, TSUs will no longer be needed. Therefore, we
believe it is appropriate to include this as a cost avoidance of this
rule. However, based on the comments that installing these TSUs will
impose a minimal cost, we did not estimate a cost offset for those
airplanes that would have been required to have TSUs installed but are
no longer required to do so under this rule.
6. Corrections About Boeing Statements
    Boeing stated that the IRE has several statements that should be
corrected in the final version. First, Boeing will not provide
engineering analyses via service bulletins or provide initial aid to
large airlines and independent third party repair stations. Boeing
asked that these statements be deleted. Boeing also indicated that it
will follow the regulatory requirements for providing service
information. Finally, Boeing pointed out that the IRE improperly
references STCs where it should be referencing amended TCs.
    We agree with Boeing and have revised these issues in the FRE
accordingly.
7. 757 Size Category
    Boeing noted that the Model 757 was classified as a small airplane
in the IRE and suggested that it be included in the medium category.
Boeing based this on the fact that the Model 757's fuel tank volume and
airplane performance is similar to that of other airplanes categorized
as medium-sized by ARAC.
    We agree and have included the Boeing 757 in the medium category
and have adjusted the weight and cost estimates accordingly.
8. Number of Future Older In-Service Airplanes Overestimated
    Alaska Airlines commented that the IRE overestimated the number of
older in-service airplanes in future years, which artificially
increases the benefits of the FRM retrofit requirements. Alaska
Airlines asserted that industry projects a higher proportion of newer
airplanes versus older airplanes for the projected benefit period.
    The fleet mix in the IRE was based upon our fleet forecast.
Therefore, the number of newer airplanes reflected the official FAA
fleet projections. In the FRE, we have updated the fleet mix data using
the most recent FAA Aerospace Forecasts Fiscal Years 2006-2017. This
forecast projects higher retirement rates than those forecasted in the
FAA Aerospace Forecasts Fiscal Years 2004-2015, which we used in the
IRE.
9. Revisions to the FRM Kit Costs
    ATA, AEA, AAPA, Federal Express, Airbus, and Boeing suggest that we
revise the price of the FRM components because the original ARAC
estimates had not been fully developed and tested and, subsequent to
this additional development, the FRM kit costs are higher.
    Boeing has provided new kit costs for its various models, which are
revised from its previous component costs. We agree with Boeing and use
them in the FRE for production airplanes.
    However, United/Shaw Aero Devices/Air Liquide have recently
developed an FTI system to retrofit in airplanes and they have reported
kit costs. As they have a patent for the system and operational
prototypes, we use the United/Shaw Aero Devices/Air Liquide
retrofitting kit costs in this analysis.
10. Revisions to the Labor Time To Retrofit FRM Components
    Several commenters reported that the labor hours to retrofit an
airplane used in the IRE were too low. In its discussions with the
airlines, Boeing provided an estimated number of labor hours to
retrofit its kits by model. The ATA reviewed these estimated hours and
commented that its expected labor hours were approximated 25 percent to
40 percent higher than the preliminary numbers provided by Boeing.
Qantas reported that the retrofitting labor hours are 50 percent
greater than those in the service bulletins.
    However, the United/Shaw Aero Devices/Air Liquide retrofitting kit
is different from the retrofitting kit on which the ATA based its
reported hours. As a result, just as we use the United/Shaw Aero
Devices/Air Liquide retrofitting kit costs, we also use their labor
hour estimates to install their system.
    However, the labor hours to retrofit these kits will decline over
time due to mechanics becoming more familiar with the installation
procedures. T.P. Wright found that an 80 percent learning efficiency
has been a common occurrence in airplane production. We assume that
this 80 percent learning efficiency also applies to retrofitting
operations.
11. Retrofitting Costs per Airplane
    Cathay Pacific and the AAPA commented that the per airplane
retrofitting costs reported by EASA for an Airbus airplane would be
between $600,000 to about $1 million (converting Euros into Dollars).
Airbus provided similar comments.
    In combining the United/Shaw Aero Devices/Air Liquide kit costs and
their labor hours costs, we calculate that the per airplane
retrofitting costs will initially be $110,000 to $250,000. Over time,
these costs will decline by $10,000 to $17,000 per airplane.

12. Percentage of Retrofits Completed During a Heavy Check
    Airbus commented that the average time between heavy checks is 10
to 12 years. Thus, 85 percent of the retrofits could not be completed
within the proposed 8 year time-frame.
    We disagree. Our experience has been that the vast majority of
airplanes in commercial passenger service in the United States have
some form of a heavy check no later than every 8 years.
    The AEA commented that 60 percent of the retrofits would be
completed during a heavy check while ATA commented that 85 percent
would be completed during a heavy check. In the IRE, we had used 85
percent.
    We agree with the ATA comment and use the 85 percent value in the
FRE. Operators who choose to take advantage of the extension allowed by
use of ground conditioned air will be able to complete the retrofits of
an even higher percentage of their fleet during heavy checks.
13. Number of Additional Days of Out-of-Service Time To Complete a
Retrofit
    The ATA commented that retrofitting FRM during a heavy check would
add two days of out-of-service time, AEA commented that it would add
two to three days, while Airbus commented that the airlines had told
EASA that it would add one day.
    In the IRE, we had used two days. We agree with ATA and use two
days in the FRE for the out-of-service time if the retrofit is
performed during a heavy check.
    Airbus commented that retrofitting FRM during a medium check would
add 5 days while it would add seven days if completed during a special
maintenance visit. In the IRE, we had used four days out-of-service for
a retrofit performed during a special maintenance visit based on the
ARAC report. Airbus provided no justification for its disagreement with
the ARAC conclusion. As we received no comments other than the Airbus
comment on this topic, we disagree with Airbus and use four days out-
of-service for a special maintenance visit.
14. Economic Losses From an Out-of-Service Day
    Airbus and the ATA commented that the losses to an airline from an
out-of-service day should be based on the airplane on ground economic
loss or the loss in net operating revenue, not a pro-rated monthly
lease rate as used in the IRE.
    We disagree. While it is true that the loss to air carrier A is
greater than the prorated monthly lease rate, most potential air
travelers will use alternative air carrier B if air carrier A takes an
airplane out of service for a short time. Consequently, alternative air
carrier B receives an economic benefit that is not captured by only
focusing on the air carrier airplane that is out of service. The FAA's
responsibility is to cost the potential loss to the aviation system,
not individual air carriers at specific points in time. This is
particularly apparent when alternative air carrier B will need to
remove an airplane from service and air carrier B's air travelers will
use air carrier A that will receive an economic benefit that is not
captured by focusing solely on the loss to air carrier B at that
specific point in time.
    Airbus commented that the FRM cost for its products is
underestimated by a factor of two to three. Based upon review of all
comments, including those based upon a certificated FRM provided by
Boeing, we believe the FAA cost estimates should be revised by a factor
of 1.6 and we have adjusted the regulatory evaluation accordingly. We
applied the revised retrofitted airplane costs for the certificated FRM
systems to all similarly-sized airplane models because we determined
that the fuel tank inerting systems will be similar for both
manufacturers.
15. Updated FRM Weight Data
    Boeing provided updated weight data for the flammability reduction
systems that have been or are being developed for its airplane models.
Boeing stated that the final weights for the Boeing 747-400 and 737-NG
systems are known since the designs have been certified. Boeing
estimated the weight for the Boeing 777 system. As for the Boeing 757
and 767 systems, preliminary designs indicate these systems will be
similar and Boeing estimated the weights based upon comparison to the
other models. Boeing also provided updated estimates for average annual
flight hours for Boeing airplanes.
    We have revised the weight and annual flight hour data in the FRE
for production airplanes based on Boeing's updated information. We also
used this updated data for similarly sized Airbus airplane models.
    United/Shaw Aero Devices/Air Liquide reported that their
retrofitting kits weigh less than the Boeing kits. We used United/Shaw
Aero Devices/Air Liquide kit weights for the retrofitted airplanes.
16. Updated Fuel Consumption Data
    Boeing also provided revised annual fuel consumption due to the FRM
weight and increased bleed flow and ram drag. A GRA, Incorporated
report that surveyed several air carriers provided current air carrier
fuel consumption per pound of additional weight.
    For the annual fuel consumption due to the FRM weight, we have used
the GRA values from the air carriers because we believe the air
carriers will be more accurate in reflecting their actual usage over a
variety of flight mission lengths and conditions than the Boeing
engineers would be. We used the Boeing estimates of the additional fuel
consumption for increased bleed air flow and ram drag in the FRE. We
used these rates for both production and retrofitted airplanes because
United/Shaw Aero Devices/Air Liquide did not provide independent
estimated rates for their kits.
17. Updated Fuel Cost Data
    Several commenters reported that the $1 per gallon aviation fuel
cost used in the IRE no longer reflected the economic reality. For a
cost per gallon, Frontier suggested $2.11, ATA suggested $1.50, Qantas
suggested $2.00, and Airbus suggested $1.50.
    We agree that the per gallon price of aviation fuel has increased.
Based on our FAA Aerospace Forecasts Fiscal Years 2008-2025, we
determined that the average future price per gallon will be $2.01.
Although this fuel price is based on the most recently published FAA
forecast, we recognize that, given the current record high oil prices,
this estimate may underestimate the long term aviation fuel cost.
18. Cost of Inspections
    Air Safety Group, UK commented that the NPRM does not include any
costs associated with the impact of FRM inspections on flight delays
and cancellations. The commenter recommended that the cost/benefit
analysis be revised to take a more realistic account of these
additional operational costs. Boeing's comments included revised
estimates of these costs.
    With respect to flight delays and cancellations due to these
inspections, the DAH requirements allow placing a nonfunctional FRM or
IMM on the MEL provided the overall system performance meets the
minimum criteria. We agree with the revised costs from Boeing on the
costs of delays and cancellations in the FRE and used them for both
production and retrofitted airplanes.

19. Inspection and Maintenance Labor Hours
    Boeing commented that the annual labor hours for inerting system
inspection and maintenance time should be revised to 6 hours for Boeing
passenger and all-cargo airplanes. Boeing cited design features and
related fault indication systems that will eliminate the need for
scheduled maintenance performance checks on the inerting systems.
Boeing also reported that unscheduled delays will only occur for
failures that require locking the NGS Shutoff Valve closed.
    We agree with Boeing's estimates for both production and
retrofitted airplanes and use them in the FRE.
20. Daily Check
    ATA commented that its estimates for inerting system operational
and maintenance costs are much higher than those used by the FAA. ATA
stated that 15 maintenance minutes per airplane per day will be
required and this was not accounted for by the FAA.
    We infer from ATA's comment that ATA believes that our estimated
maintenance costs should be revised to include a 15 minute daily check
of the FRM. The inerting system certified by the FAA (and validated by
EASA) for the Boeing Model 737NG and 747-400 airplanes did not include
a daily check. Specific features of the design, in conjunction with
indication systems, removed the need for a daily check. We anticipate
that Airbus's design will be similar in that the electronic centralized
airplane monitor will be utilized for FRM status. This would impose no
greater burden on operators than the FRM systems that have been
certified to date. As a result, we have not included costs associated
to a 15 minute daily check of the FRM in the FRE.
21. Spare Parts Costs
    Boeing asked that the inerting system spare parts costs be revised
based on its updated costs from suppliers. Boeing estimated that the
air separator/filter capacity and life is directly related to the
environment in which the airplane is operated. Boeing added that its
filter installation includes monitoring for excessive pressure drop
that is used to determine when the filter needs to be replaced.
Finally, Boeing noted that its expected filter maintenance interval is
greater than one year for average environmental conditions.
    We agree with the cost information provided by Boeing and used the
new cost for the filter element replacement in the FRE. While we
acknowledge the filters will be replaced when the pressure across the
filter is excessive, Boeing did not provide an expected average filter
replacement interval. In general, air separator/filters are expected to
last between 1 and 3 years, depending upon the conditions under which
the airplane is flown. An annual filter element replacement is a worst
case situation. As a result, in the FRE, we use an average filter
element replacement interval of every 2 years.
22. Air Separation Module (ASM) Replacement
    Boeing asked the FAA to revise the cost of ASMs that would need to
be purchased for replacing modules when they reach their design life.
The IRE contained estimates ranging from $5,275 to $28,814. Boeing
stated the revised costs range from $30,520 to $151,000. As United/Shaw
Aero Devices/Air Liquide did not provide an estimate for this cost
component, we applied the Boeing estimate to retrofitted airplanes.
    Boeing also requested that the ASM replacement costs be evaluated
based upon data provided in a table for average annual utilization by
Boeing airplane model. Boeing believed this data is more realistic of
model specific fleet utilization. While the IRE assumed an average
utilization rate of 3,000 flight hours, Boeing's current data for
different models range from 3,000 to 4,250 flight hours for passenger
carrying airplanes and 1,000 to 4,250 for all-cargo airplanes. Finally,
Boeing stated that the design life goal for the ASM remains 27,000
hours. FedEx commented that a manufacturer had told them that the ASMs
will need to be replaced every few years.
    We agree with Boeing that the design goal of an ASM replacement
every 27,000 flight hours will be reached and we use that interval for
the ASM replacement frequencies in this Regulatory Evaluation.

L. Miscellaneous

1. Harmonization
    Several commenters (Boeing, Transport Canada, Alitalia, AAPA,
Virgin, Cathay) expressed the need for harmonization of FAA
requirements with those of other national aviation authorities. These
commenters noted that harmonization with the other major regulatory
agencies would benefit the industry and encourage a broader dialogue.
We agree that harmonization of the fuel tank flammability safety
requirements is usually desirable. Prior to and throughout the
development of this rule, we used several avenues to involve other
foreign regulatory authorities and industry, including:
     Aviation Rulemaking Advisory Committee (ARAC) working
groups comprised of representatives of foreign regulatory authorities
and industry and other interested parties were used to review issues
and provide recommendations for developing and harmonizing this rule.
EASA, Transport Canada and the Brazilian CTA participated in these
working groups, which conducted extensive studies of fuel tank safety.
These studies included a review of the fleet history as well as
evaluating the various options for improving airplane safety through
flammability reduction. One working group was created to review fuel
tank flammability and methods to reduce flammability in the tanks. This
then led to the creation of a second working group that exclusively
reviewed fuel tank inerting. The recommendations from these working
groups became part of the basis for this proposed rule. The
recommendations from the two fuel tank safety ARAC studies guided our
rulemaking proposal and this final rule.
     We also participated in an industry and regulatory
authority group assembled by EASA to review fuel tank flammability
safety and produce an EASA Regulatory Impact Assessment (RIA). This RIA
is available on EASA's Web site at (www.easa.eu.int/doc/Events/
fueltanksafety_24062005/easa_fueltanksafety_24062005_qa_
summary.pdf).
    EASA's RIA recommended production incorporation of FRM on newly
produced airplanes that have high flammability tanks and EASA has
indicated that it plans to propose an amendment to their regulations
applying to new transport airplane designs in CS-25. We anticipate
harmonization of these requirements. However, EASA has not yet
determined that FRM retrofit should be required.\30\ We believe the
fleet operation projections show that the risk of an explosion
occurring on existing airplanes and newly produced airplanes is
similar. This safety issue needs to be addressed, despite the lack of
harmonization, and we have included a FRM retrofit requirement in this
final rule.
---------------------------------------------------------------------------

    \30\ EASA has commissioned a study to reconsider the
desirability of a retrofit requirement.
---------------------------------------------------------------------------

    While we remain committed to the goal of harmonization, our primary
objective in this rulemaking is to improve aviation safety. When we
determine that the need exists for a certain regulation, and the other
regulatory agencies find that a more stringent or lenient requirement
is appropriate, we review their findings

and will revise our regulation if our regulatory goals are met, an
equivalent level of safety is achieved, and any additional burden
imposed on the industry is justified. This is the approach we have
taken in drafting this rule.
2. Part 25 Safety Targets
    AEA commented that part 25 is missing safety targets and
recommended the final rule include a specific target for both ignition
and flammability reduction. This target could be achieved by ignition
source prevention in combination with flammability reduction. AEA
proposed the target be the same as for any other catastrophic event in
transport category airplanes: 10-9 per flight hour.
    We do not agree with AEA's proposal to include a safety target in
part 25. As discussed previously, because ignition sources are caused
by human error and other unpredictable factors, it is impossible to
assign an accurate probability value to them. Therefore, Sec.  25.981
is based on a balanced approach for preventing fuel tank explosions.
This section provides both ignition prevention plus an additional
safety improvement by controlling fuel tank flammability exposure to an
acceptable level. Today's rule adds requirements for fuel tanks located
in the fuselage contour and extend the mitigation into the fleet of
existing airplanes.

IV. Rulemaking Analyses and Notices

Paperwork Reduction Act

    As required by the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)), the FAA submitted a copy of the new (or amended) information
collection requirement(s) in this final rule to the Office of
Management and Budget for its review. OMB approved the collection of
this information and assigned OMB Control Number 2120-0710.
    This rule supports the information needs of the FAA in approving
design approval holder and operator compliance with the rule. The
likely respondents to this proposed information requirement are the
design approval holders such as Boeing, Airbus and several auxiliary
fuel tank manufacturers as well as operators. The rule requires the
certificate holders to submit a report to the FAA twice each year for a
period up to 5 years. Operators who choose to use ground air
conditioning would be required to provide a one time statement of their
intent to use this option. The burden would consist of the work
necessary for:
     DAH to develop flammability analysis reports and the
service instructions for installation of IMM or FRM.
     DAH to develop changes and incorporate a maintenance plan
into the existing maintenance programs.
     DAH to provide bi-annual reliability reports for FRM for
the first 5 years of operation.
     Operators to provide notification to the FAA of their
intent to use ground air conditioning.
     Operators to record the results of the installation and
maintenance activities.
    The largest paperwork burden will be a one-time effort (spread over
3 years) associated with the Design approval holders (TC and STC
holders) to develop design changes. Operators will also need to update
their maintenance programs, including maintenance manuals, to include
the design changes. The basis for these estimates is the industry
Aviation Rulemaking Advisory Committee report, which provided hours for
each of the 3 major areas of paperwork. Based on an aerospace engineer
total compensation rate of $110 an hour, the total burden will be as
follows:

------------------------------------------------------------------------
                                                            Total cost
  Documents required to show compliance        Hours       (in millions
           with the final rule                               of $2007)
------------------------------------------------------------------------
Application to FAA for Amended TC or STC         405,000          44.550
Documents (Specifications, ICDs, etc.)..          30,900           3.399
Revisions to Manuals (Flight Manuals,             29,500           3.245
 Operations, and Maintenance) for FRM
 Systems................................
                                         -------------------------------
    Total...............................         465,400          51.194
------------------------------------------------------------------------

    As these recordkeeping costs will be spread out evenly over the
three years, the yearly burden will be $17.065 million and involve
155,133 hours.
    After this initial 3-year period, this rulemaking would result in
an annual recordkeeping and reporting burden of 4,000 hours. This
burden is based on five (5) design approval holders submitting 40 total
reports per year requiring an average of 100 hours to complete each
report. All records that will be generated to verify the installation,
to record any fuel tank system inerting failures, and to record any
maintenance would use forms currently required by the FAA.
    The FAA computed the annual recordkeeping (Total Pages) burden by
analyzing the necessary paperwork requirements needed to satisfy each
process of the rule.
    An agency may not collect or sponsor the collection of information,
nor may it impose an information collection requirement unless it
displays a currently valid Office of Management and Budget (OMB)
control number.

International Compatibility

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

Regulatory Evaluation Summary

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

    Changes to Federal regulations must undergo several economic
analyses. First, Executive Order 12866 directs that each Federal agency
shall propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify its 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. In developing U.S.
standards, this Trade

Act requires agencies to consider international standards and, where
appropriate, that they be the basis of U.S. standards. Fourth, the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies
to prepare a written assessment of the costs, benefits, and other
effects of proposed or final rules that include a Federal mandate
likely to result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, of $100
million or more annually (adjusted for inflation with base year of
1995). This portion of the preamble summarizes the FAA's analysis of
the economic impacts of this final rule. We suggest readers seeking
greater detail read the full regulatory evaluation, a copy of which we
have placed in the docket for this rulemaking.
    In conducting these analyses, the FAA has determined that this
final rule: (1) Has benefits that justify its costs, (2) is an
economically ``significant regulatory action'' as defined in section
3(f) of Executive Order 12866, (3) is ``significant'' as defined in
DOT's Regulatory Policies and Procedures; (4) will have a significant
economic impact on a substantial number of small entities; (5) will not
create unnecessary obstacles to the foreign commerce of the United
States; and (6) will impose an unfunded mandate on state, local, or
tribal governments, or on the private sector by exceeding the
previously identified threshold. These analyses are summarized as
follows.
Aviation Industry Affected
    The rule affects Boeing, Airbus, and operators of certain Boeing
and Airbus airplanes that have heated center wing tanks (HCWTs).\31\
---------------------------------------------------------------------------

    \31\ The following airplane models are not included as HCWT
airplanes: B-717; B-727; certain B-767 and B-777 models, A-321, A-
330-200 and A380. In addition, the B-787 is not included because it
needs FRM to comply with its existing Part 25 certification
requirements.
---------------------------------------------------------------------------

Disposition of Comments
    There were many comments on the Initial Regulatory Evaluation (IRE)
associated with FRM. We accepted many of these comments. However, the
volume and the technical nature of these comments require a more
detailed response than is possible in this summary. As a result, the
complete disposition of the economic comments and their effects on the
economic analysis are contained in the complete Final Regulatory
Evaluation, which is filed separately.
Period of Analysis and Affected Airplanes
    The period of analysis begins in 2008 and concludes in 2042. We
used a 10-year time period (2008-2017) to calculate the equipment
installation costs for airplanes affected by the final rule. The end of
the analysis period of 2042 captures the full operative lives of the
2009-2017 production airplanes.
    The airplanes affected by the final rule include passenger
airplanes with HCWTs manufactured prior to the 2009 production cut-in
date. These airplanes will need to be retrofitted with FRM by 2017. In
addition, these affected airplanes also include all production
passenger and cargo airplanes with HCWTs that will be manufactured
between 2009 and 2017 (except the B-787 and A380 that will be
manufactured with FRM. Cargo airplanes manufactured before 2009 and
cargo airplanes that have been or will be converted from passenger
airplanes (conversion cargo airplanes) are not included unless FRM was
installed while the airplane was used in passenger service.
    Airplanes have an average 25-year life expectancy. Thus, the 2009
production airplanes will be retired in 2033 and the last of the
production airplanes in this analysis (those produced in 2017) will be
out of service by 2042. Similarly, all of the pre-2009 existing
airplanes requiring retrofitting will be retired by 2033 (the 2008
production airplanes will be the last year of production airplanes will
not have FRM installed as original equipment). Thus, the maintenance
and fuel costs will begin in 2009 and continue to 2042 for production
airplanes and will begin in 2010 and continue to 2033 for retrofitted
airplanes.
    During the analysis period the final rule will affect an estimated
5,110 airplanes, 5,022 retrofitted and production passenger airplanes
(2,732 retrofitted and 2,290 production) and 88 production cargo
airplanes (see Table 1). These airplanes will fly 370 million hours,
364 million for passenger airplanes and 6 million for production cargo.
Of the 364 million passenger airplane flight hours, 303 million will be
flown by airplanes with FRM and 61 million will be flown by airplanes
without FRM. The airplanes without FRM will be those manufactured prior
to 2009 until they are retired or retrofitted between 2008 and 2017.

  Table 1.--Summary of the Total Numbers of Airplanes and Flight Hours
                          Affected by the Rule
------------------------------------------------------------------------
                                                           Flight hours
            Airplane category                Airplanes      (millions)
------------------------------------------------------------------------
PASSENGER PRODUCTION....................           2,290             199
RETROFITTED WITH FRM....................           2,732             105
NO FRM..................................  ..............              61
                                         -------------------------------
    TOTAL PASSENGER.....................           5,022             364
CARGO PRODUCTION........................              88               6
                                         -------------------------------
    TOTAL...............................           5,110             370
------------------------------------------------------------------------

Risk of a HCWT Explosion
    If there were no final rule and no SFAR 88, engineering analysis
indicates that there would be 1 explosion for every 100 million HCWT
airplane flight hours. Air carrier passenger airplanes would incur 3.64
explosions of which production airplanes would incur 1.99 explosions
and retrofitted airplanes would incur 1.65 explosions. Of the
retrofitted airplanes, 1.04 would occur to airplanes with FRM and 0.61
would occur to airplanes without FRM. Production cargo airplanes would
incur 0.06 explosions. As, obviously, fractions of accidents do not
occur, we describe the cumulative probability of the number of
accidents in fractions of an accident for analytic purposes. For
example, engineering analysis would project that the first accident
would occur in 2012, the second one in 2019, the third one in 2026, and
the final 0.64 of an accident in 2035. However, care

should be taken in assuming that these rare events will necessarily
occur in the forecasted year. As an illustration, in a 1,000 Monte
Carlo simulation trials, 3 accidents occurred 233 times out of the 1000
trials. For those 3-accident cases, two accidents happened in the same
year 25 times.
Number of HCWT Explosions Potentially Affected by the Rule
    Our Monte Carlo analysis indicates that we cannot statistically
reject the hypothesis that SFAR 88 is 50 percent effective in
preventing these accidents. This analysis, in combination with the
service history since the implementation of SFAR 88, indicates that a
50 percent SFAR 88 effectiveness rate is appropriate, but we conducted
a sensitivity analysis using two other possible SFAR 88 effectiveness
rates of 25 percent and 75 percent in the Final Regulatory Evaluation.
Using a 50 percent SFAR 88 effectiveness rate, in the absence of this
final rule, we calculate that there would be 1.82 HCWT air carrier
passenger airplane explosions occurring to the HCWT airplanes during
the time period of the analysis. As it will take time to install FRM,
77 percent of the flight hours will be flown by airplanes with FRM
while 23 percent of the flight hours will be flown by airplanes without
FRM. Thus, 1.52 air carrier passenger airplane HCWT explosions will be
prevented by the rule and 0.3 HCWT explosions could occur to airplanes
without FRM.
Percentage of In-Flight Explosions
    Our engineering analysis determined that eighty percent of the
accidents would occur in flight and twenty percent would occur on the
ground.
Benefits
    There are two types of benefits from preventing an airplane
explosion. Direct safety benefits arise from preventing the resulting
fatalities and property losses. Secondly, demand benefits arise from
preventing the aviation demand losses resulting from the reduction in
demand to fly, which will be a consequence of a loss of public
confidence in commercial aviation safety following an airplane
explosion. Further, the explosion that results from an electrical
charge is indistinguishable (until the accident is investigated) from
an explosion caused by a terrorist bomb. This uncertainty about the
explosion cause may result in costly governmental and industry
reactions to a perceived terrorist plot. However, the benefits
preventing such a potential reaction is too speculative to provide a
definitive quantitative benefit estimate, although we have quantified a
possible estimate in Appendix A of the Regulatory Evaluation.
Quantified Demand Benefits
    As discussed in the economic literature, there is a direct,
immediate, but temporary decrease in air travel in the aftermath of a
catastrophic air carrier passenger airplane explosion. We estimate the
loss to the aviation industry to be $292 million from such an accident.
Quantified Direct Benefits
Direct Benefits From Preventing a HCWT Explosion--Assumptions and
Values
     Final rule is published on January 1, 2008.
     Discount rate is 7 percent.
     Passenger airplanes would be retrofitted between 2010 and
2017.
     No airplane scheduled to be retired before 2018 will be
retrofitted.
     Passenger airplanes have a 25-year service life.
     With no SFAR 88 and no FRM rule, a heated center wing tank
(HCWT) airplane will have a fuel tank explosion every 100 million
flight hours.
     Special Federal Air Regulation (SFAR) 88 will prevent half
of the future explosions.
     Boeing and Airbus HCWT airplanes have equal explosion
risks.
     80 percent of the accidents will be catastrophic in-flight
accidents; with an average of 142 fatalities for a passenger airplane
and 2 fatalities for a cargo airplane.
     20 percent of the accidents will occur on-the-ground with
an average of 14 fatalities for a passenger airplane and no fatalities
for a cargo airplane.
     The airplane is destroyed in an HCWT explosion.
     The value of a prevented fatality is $5.5 million.
Direct Benefits From Preventing a HCWT Explosion--Results
     The average undiscounted direct benefits from preventing
an air carrier passenger airplane in-flight HCWT explosion will be $841
million, with a range of $628 million to $2.2 billion.
     The average undiscounted direct benefits from preventing
an air carrier passenger airplane on-the-ground HCWT explosion will be
$115 million, with a range of $77 million to $320 million.
     The average undiscounted direct benefits from preventing
an air carrier passenger airplane HCWT explosion weighted by an 80
percent probability of an in-flight accident and a 20 percent
probability of an on-the-ground accident will be $696 million.
     The average undiscounted direct benefits from preventing
an air carrier cargo airplane HCWT explosion will be $77 million.
Total Benefits
    Of great concern to the FAA is that a practical solution now exists
for a real threat of an aviation catastrophe. Even though these are low
probability accidents, they are high consequence accidents. For
example, if a single in-flight catastrophic accident with 190 occupants
(235 seats) is prevented by 2012, the present value of the benefits
will be greater than the present value of the costs. Using a $5.5
million value for a prevented fatality, the benefits from preventing an
in-flight explosion range of $625 million to $750 million for a B-737
or an A-320 family airplane to $1.0 billion to $2.15 billion for all
other affected airplanes. The mean of the estimated benefits from
preventing an in-flight explosion (weighted by the number of flight
hours for each type of affected airplane model) are $840 million.
    Thus, the undiscounted total weighted average benefit from
preventing an in-flight explosion is $1.130 billion. Adjusting this
value for the 20 percent of the accidents that will occur on the ground
produces an undiscounted average benefit of about $1 billion.
    We calculated that the present value of the weighted average
benefits from preventing the 1.5 accidents would be $657 million.
Compliance Cost Assumptions and Values
    The compliance costs are based on installing a fuel tank inerting
(FTI) system because that is the only FRM system that has been
developed. If a future FRM system is developed that competes with FTI
then we have likely overestimated the compliance costs.
     Fully burdened aviation engineer labor rate is $110 an
hour.
     Fully burdened aviation mechanic labor rate is $80 an
hour.
     One-time engineering costs to develop STCs or modified TCs
are between $2.2 million to $5.7 million a model.
     Retrofitting kits cost from $77,000 (B-737 and A-320
Family), $120,000-$164,000 (B-757, B-767, and A-300/310), to $165,000-
$192,000 (all other airplanes).
     Initial retrofitting labor costs in 2010 will range from
$24,000 to $70,000.

     There is a retrofitting labor learning curve of 30 percent
such that the retrofitting labor hours (and costs) will be
approximately 70 percent of the 2010 labor hours in 2013 and 49 percent
of the 2010 labor hours by 2017.
     Retrofitting kit and labor costs in 2010 will range from
$100,000 for the B-737 and A-320 Family and $148,000 to $203,000 (for
all other airplanes).
     Out-of-Service Losses (Associated with a retrofit during a
routine ``D'' check) are $10,000 to $28,000.
     Out-of-Service Losses (Associated with a retrofit during a
special maintenance session) are $30,000 to $84,000.
     The same reduction in hours out-of-service for labor hours
will apply to the number of out-of-service hours.
     Retrofitting kits weigh 84 pounds (for the B-737 and the
A-320 family), 117 pounds to 150 pounds (for the B-757, B-767, and A-
300/310), and 182 pounds to 215 pounds for the B-747, B-777, and A-330/
340).
     Retrofitted airplane increased annual fuel burn from
weight, bleed air intake, and ram drag is 2,000-2,500 gallons (B-737)
to 4,000 gallons (A-320 Family) to 4,400 to 6,500 gallons (everything
else).
     Production airplane FTI kit costs are $92,000 (B-737 and
A-320) to $186,000-$205,000 (for all other airplanes).
     Production airplane labor installation costs are $6,500-
$8,000.
     Production kit and labor costs in 2009 will be $100,000
for the B-737 and A-320 Family) and $195,000 to $212,500 (for all other
airplanes).
     Production airplane FTI weight is 105 pounds (B-737 and A-
30 Family) to 250-300 pounds (for all other airplanes).
     Production airplane increased annual fuel burn from
weight, bleed air intake, and ram drag is 2,900 gallons (B-737) to
4,600 gallons (A-320 Family) to 6,300 to 7,100 gallons (everything
else).
     Cost of aviation fuel is $2.01 per gallon.
     Additional scheduled and unscheduled maintenance, delays,
and water separator/filter replacement costs are $3,250 to $5,150.
     Annual operating costs are between $10,000 (B-737) to
$15,000 (A-320 Family) to $17,500-$20,000 (for all other airplanes).
     Air separation module (ASM) replaced every 27,000 flight
hours.
     ASM replacement cost is $45,000 (B-737 and A-320 Family)
to $135,000-$153,000 (for all other airplanes).
    Weighted average compliance costs (excluding the engineering costs)
are:
    Retrofitted Passenger Airplanes: $213,000 ($135,000 for retrofit
and $78,000 for operational). Range: $144,000 to $395,000.
    Production Passenger Airplanes: $177,000 ($68,000 for installation
and $109,000 for operational). Range: $156,000 to 410,000.
Total Compliance Costs
    As shown in Table 2, the present value of the total compliance
costs is $1.012 billion, of which $975 million will be incurred by air
carrier passenger airplane operators, and $37 million will be incurred
by air carrier production cargo airplanes.
    Of the air carrier passenger airplane present value costs of $975
million, operators of retrofitted airplanes will incur $436 million (43
percent) while operators of production airplanes will incur $539
million (57 percent).

                      Table 2.--Compliance Costs by Type of Operation and Type of Airplane
                                          [In millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Total costs
                                                                 -----------------------------------------------
                            Operator                                               Present value   Present value
                                                                   Undiscounted        (7%)            (3%)
----------------------------------------------------------------------------------------------------------------
AIR CARRIER PASSENGER:
    RETROFITTED.................................................            $839            $436            $623
    PRODUCTION..................................................           1,237             539             825
    AUXILIARY FUEL TANKS........................................              <1              <1              <1
                                                                 -----------------------------------------------
        TOTAL...................................................           2,076             975           1,448
AIR CARRIER CARGO:
    PRODUCTION..................................................             100              37              63
        TOTAL...................................................             100              37              63
                                                                 -----------------------------------------------
        GRAND TOTAL.............................................           2,176           1,012           1,511
----------------------------------------------------------------------------------------------------------------

    As shown in Table 3, 54 percent of the present value costs (at 7
percent) for retrofitted air carrier passenger airplanes are from the
engineering and one-time equipment installation costs while these costs
are 47 percent for production airplanes. Similarly, 46 percent of the
present value costs for retrofitted airplanes are due to additional
fuel, operational, and ASM (air separation module) costs while these
costs are 53 percent for production airplanes.

                         Table 3.--Compliance Costs for Air Carrier Passenger Airplanes
                                          [In millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Total costs
                                                                 -----------------------------------------------
                          Cost category                                            Present value   Present value
                                                                   Undiscounted        (7%)            (3%)
----------------------------------------------------------------------------------------------------------------
RETROFITTED:
    ENGINEERING.................................................             $19             $16             $18
    INSTALLATION................................................             346             220             283
    INVENTORY...................................................               9               6               7
    FUEL........................................................             215              93             149
    OPERATIONAL.................................................             113              49              77

    ASM REPLACEMENT.............................................             137              52              89
                                                                 -----------------------------------------------
        TOTAL...................................................             839             436             623
PRODUCTION:
    ENGINEERING.................................................             107             100             103
    INSTALLATION................................................             230             152             191
    INVENTORY...................................................               7               4               5
    FUEL........................................................             459             149             272
    OPERATIONAL.................................................             197              63             116
    ASM REPLACEMENT.............................................             237              71             138
                                                                 -----------------------------------------------
        TOTAL...................................................           1,237             539             825
                                                                 -----------------------------------------------
        GRAND TOTAL.............................................           2,076             975           1,448
----------------------------------------------------------------------------------------------------------------

Benefit Cost Analysis
    As previously described, these are low probability, high
consequence accidents. If a single in-flight catastrophic accident with
190 occupants (a 235 seat airplane) were to be prevented by 2012, the
present value of the benefits will be greater than the present value of
the costs. Further, as shown in the Regulatory Evaluation in Appendix
IV-7, there is a 26 percent probability that the final rule present
value benefits will be greater than its present value costs.
    As shown in Table 4, using the weighted average benefits at a 7
percent discount rate, the net benefit losses for the final rule would
be $355 million, of which production passenger airplanes would account
for $151 million, retrofitted passenger airplanes would account for
$167 million and production cargo airplanes would account for $37
million.

                             Table 4.--Present Value of the Rule Benefits and Costs
                                          [In millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Present value (7%)
                        Type of operation                        -----------------------------------------------
                                                                     Benefits          Costs       Net benefits
----------------------------------------------------------------------------------------------------------------
PASSENGER:
    RETROFITTED.................................................            $271            $438          ($167)
    PRODUCTION..................................................             386             537           (151)
                                                                 -----------------------------------------------
        TOTAL...................................................             657             975           (318)
    PRODUCTION CARGO............................................              <1              37            (37)
                                                                 -----------------------------------------------
        GRAND TOTAL.............................................             657           1,012           (355)
----------------------------------------------------------------------------------------------------------------

Sensitivity Analysis of the Rule Costs and Benefits
    Table 5 provides a sensitivity analysis for the final rule that,
using the weighted by flight hours average benefit value, varies the
discount rate (7 and 3 percent), the value of preventing a statistical
fatality ($3 million, $5.5 million, and $8 million), and the SFAR 88
effectiveness rate (25, 50, and 75 percent). As is shown, the
quantified benefits are greater than the costs when the SFAR 88
effectiveness rate is 25 percent for: (1) An $8 million value of a
prevented fatality and; (2) a $5.5 million value of a prevented
fatality using a 3 percent discount rate. Net benefits numbers in
parentheses are negative.

   Table 5.--Present Values of the Benefits and Costs for all Affected Airplanes by Discount Rate, Value of a
                               Prevented Fatality, and SFAR 88 Effectiveness Rate
                                          [In millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                      SFAR 88                     Present values
          Discount rate              Value of      effectiveness -----------------------------------------------
                                     fatality        (percent)       Benefits          Costs       Net benefits
----------------------------------------------------------------------------------------------------------------
7%..............................            $5.5              50            $657          $1,012          ($355)
7%..............................               3              50             469           1,012           (543)
7%..............................               8              50             828           1,012           (184)
7%..............................             5.5              25             989           1,012            (23)
7%..............................               3              25             704           1,012           (308)

7%..............................               8              25           1,242           1,012             230
7%..............................             5.5              75             330           1,012           (682)
7%..............................               3              75             235           1,012           (777)
7%..............................               8              75             414           1,012           (598)
----------------------------------------------------------------------------------------------------------------
3%..............................             5.5              50           1,141           1,509           (368)
3%..............................               3              50             842           1,509           (667)
3%..............................               8              50           1,434           1,509            (75)
3%..............................             5.5              25           1,658           1,509             149
3%..............................               3              25           1,263           1,509           (246)
3%..............................               8              25           2,151           1,509             642
3%..............................             5.5              75             517           1,509           (992)
3%..............................               3              75             421           1,509         (1,088)
3%..............................               8              75             717           1,509           (792)
----------------------------------------------------------------------------------------------------------------

Differences Between the Initial Regulatory Evaluation (IRE) and Final
Regulatory Evaluation (FRE) Assumptions and Unit Values
    In the IRE, we had estimated that the present value of the proposed
rule's direct benefits would be $495 million and that the present value
of the proposed rule's costs would be $808 million. Table 6 provides a
summary of the important differences in the assumptions and the unit
values between those in the IRE and those used in this FRE. The
significant benefits increases are due to the quantification of the
demand benefits and the use of $5.5 million for the value of a
prevented fatality. In the final rule the benefits and costs were both
substantially increased by the inclusion of Boeing production airplanes
(except the B-787). In the NPRM analysis we assumed Boeing would
voluntarily comply for its production airplanes; we did not assume this
for the final rule analysis. The benefits and costs were both decreased
by the shorter period of analysis. The significant cost increases are
due to the increases in the production FTI kit costs, their annual
additional fuel consumption due to the FTI weights and the bleed air
and ram drag effects, the increased price of aviation fuel, and the air
separation module (ASM) replacement costs (there will be 1 ASM
replacement for most retrofitted airplanes and 2 ASM replacements for
most production airplanes).

                    Table 6.--Differences in the Assumptions/Values in the IRE and in the FRE
----------------------------------------------------------------------------------------------------------------
           Assumptions/values                        FRE                                 IRE
----------------------------------------------------------------------------------------------------------------
Time Period of Analysis................  2009-2042.................  2006-2055.
Accident Rate..........................  1 Every 100 Million HCWT    1 Every 60 Million HCWT Flight Hours.
                                          Flight Hours.
Number of Flight Hours.................  370 Million Total.........  460 Million.
                                         364 Million Passenger.....
                                         6 Million Production
                                          Cargo..
Number of Accidents....................  3.7 Total.................  7.67.
                                         3.64 Passenger............
                                         0.06 Cargo................
Percentage of In-Flight Accidents......  80%.......................  100%.
Base Year for Dollars..................  2007......................  2004.
Reduction in Air Travel Demand.........  $292 Million (annual real   Qualitatively large.
                                          growth rate of 3%).
Value of a Prevented Fatality..........  $5.5 Million..............  $3 Million.
Average Number of In-Flight Fatalities.  142.......................  142.
Average Number of On-the-Ground          14........................  8.
 Fatalities.
Average Accident Value for an In-Flight  $841 Million..............  $505 Million.
 Explosion (Passenger Airplane).
Average Accident Value for an On-the-    $115 Million..............  Not Estimated.
 Ground Explosion (Passenger Airplane).
Weighted Average Accident Value          $696 Million..............  $505 Million.
 (Passenger Airplane).
Weighted Average Accident Value          $77 Million...............  $75 Million.
 (Production Cargo Airplane).
Hourly Labor Rates.....................  Engineer $110.............  Engineer $115.
                                         Mechanic $80..............  Mechanic $75.
Total Number of Retrofits..............  Passenger 2,732...........  Passenger 3,328.
                                         Boeing 1,780..............  Boeing 2,327.
                                         Airbus 952................  Airbus 1,001.
Retrofitting Kit Costs.................  Small $77,000.............  Small $105,000.
                                         Medium $120,000-$164,000..  Medium $135,000.
                                         Large $175,000-$192,000...  Large $179,000.
Retrofitting Labor Costs (Scheduled      $24,000-$28,000...........  $30,000-$35,000.
 Maintenance).

Number of Out-of-Service Days            2.........................  2.
 (Scheduled Maintenance).
Out-of-Service Costs (Scheduled          Small $10,000.............  Small $9,000.
 Maintenance).
                                         Medium $22,000............  Medium $14,000.
                                         Large $28,000.............  Large $13,000.
Retrofitting Costs (Scheduled            Small $110,000............  Small $135,000.
 Maintenance).
                                         Medium $165,000-$215,000..  Medium $170,000.
                                         Large $214,000-$229,000...  Large $214,000.
Retrofitting Labor Costs (Dedicated      $62,000-$70,000...........  $40,000-$45,000.
 Visit).
Number of Out-of-Service Days            6.........................  4.
 (Dedicated Visit).
Out-of-Service Costs (Dedicated Visit).  Small $30,000.............  Small $19,000.
                                         Medium $66,000............  Medium $56,000.
                                         Large $84,000.............  Large $53,000.
Retrofitting Costs (Dedicated Visit)...  Small $137,000............  Small $163,000.
                                         Medium $211,000-$264,000..  Medium $234,000.
                                         Large $289,000-$311,000...  Large $276,000.
Fuel Cost per Gallon...................  $2.01.....................  $1.00.
Retrofitting FTI Weight................  Small 84 lbs..............  Small 95 lbs.
                                         Medium 117-150 lbs........  Medium 148 lbs.
                                         Large 182-215 lbs.........  Large 218 lbs.
Annual Retrofitted Passenger Airplane    Small 2,500-4,000 Gals....  Small 1,500-3,900.
 Fuel Consumption (Weight, Bleed Air,
 and Ram Drag).
                                         Medium 3,000-4,125 Gals...  Medium 2,900.
                                         Large 4,500-6,550 Gals....  Large 4,800.
Annual Retrofitted Passenger Airplane    Small $5,250-$8,000.......  Small $1,500-$3,900.
 Fuel Cost.
                                         Medium $6,000-$8,300......  Medium $2,900.
                                         Large $9,000-$13,150......  Large $4,800.
Total Number of Production Passenger     Total 2,290 (2009-2017)...  Total 3,274 (2008-2030).
 Airplanes.
                                         Boeing 1,268..............  Boeing 0.
                                         Airbus 1,022..............  Airbus 2,650.
Total Number of Production (No           Total 88 (2009-2017)......  Total 624 (2008-2030).
 Conversion) Cargo Airplanes.
                                         Boeing 66.................  Boeing 0.
                                         Airbus 22.................  Airbus 624 (includes Conversion).
Production Kit Costs...................  Small $92,000.............  Small $83,000.
                                         Medium $186,000...........  Medium $107,000.
                                         Large $205,000............  Large $137,000.
Production Labor Costs.................  $6,500-$8.000.............  $7,000-$8.000.
Unit Production Costs..................  Small $98,000.............  Small $90,000.
                                         Medium $194,000...........  Medium $115,000.
                                         Large $213,000............  Large $145,000.
Production FTI Weight..................  Small 105 lbs.............  Small 95 lbs.
                                         Medium 280 lbs............  Medium 148 lbs.
                                         Large 300 lbs.............  Large 218 lbs.
Annual Production Passenger Airplane     Small 2,300-4,625 Gals....  Small 1,500-3,900.
 Fuel Consumption (Weight, Bleed Air,
 and Ram Drag).
                                         Medium 5,600-6,725 Gals...  Medium 2,900.
                                         Large 6,850-8,600 Gals....  Large 4,800.
Annual Production Passenger Airplane     Small $3,850-$7,625.......  Small $1,500-$3,900.
 Fuel Cost.
                                         Medium $9,250-$11,100.....  Medium $2,900.
                                         Large $11,300-$14,300.....  Large $4,800.
Maintenance............................  $3,250-$5,150.............  $5,900-$7,500.
ASM Replacement Cost (Every 9 Years)...  Small $30,500-$45,000.....  Small $5,275.
                                         Medium $135,000...........  Medium $18,761.
                                         Large $153,000............  Large $28,814.
----------------------------------------------------------------------------------------------------------------

Costs and Benefits of Alternatives to the Final Rule
    As shown in Table 7, we evaluated the baseline costs and weighted
average benefits for the 8 alternatives to the final rule using a value
of $5.5 million for a prevented fatality, a 7 percent discount rate,
and a 50 percent SFAR 88 effectiveness rate. These expected benefits
are based on a rare event mean probability. The date when an avoided
accident occurs has a significant impact on the expected benefits.

ALTERNATIVE 1. Cover only air carrier passenger airplanes
ALTERNATIVE 2. Exclude auxiliary fuel tanks
ALTERNATIVE 3. Cover only air carrier retrofitted passenger airplanes
ALTERNATIVE 4. Cover only air carrier production passenger airplanes
ALTERNATIVE 5. Cover only air carrier production passenger and cargo
airplanes
ALTERNATIVE 6. Final rule plus part 91 airplanes
ALTERNATIVE 7. Final rule plus conversion cargo airplanes
ALTERNATIVE 8. Final rule plus conversion and retrofitted cargo
airplanes

  Table 7.--Benefits and Cost Summaries for 8 Alternatives to the Final
  Rule Using a $5.5 Million Value for a Prevented Fatality, a 7 Percent
       Discount Rate, and a 50 Percent SFAR 88 Effectiveness Rate
                      [In millions of 2007 dollars]
------------------------------------------------------------------------
                                      Present value (7%)
              Option              --------------------------     Net
                                     Benefits      Costs       benefits
------------------------------------------------------------------------
FINAL RULE.......................         $657       $1,012       ($355)
ALTERNATIVES:
    1. Cover Only Part 121                 657          975        (318)
     Passenger Airplanes
     (excludes Part 121 cargo and
     Part 91)....................
    2. Cover Only Part 121                 657          975        (318)
     Passenger Airplanes but No
     Auxiliary Tanks.............
    3. Cover Only Part 121                 271          438        (167)
     Retrofitted Passenger
     Airplanes (excludes All
     Production Passenger, all
     Cargo, and Part 91
     Airplanes)..................
    4. Cover Only Part 121                 386          537        (151)
     Production Passenger
     Airplanes...................
    5. Cover Only Part 121                 386          574        (188)
     Production Passenger and
     Cargo Airplanes.............
    6. Final Rule Plus Part 91             657        1,026        (369)
     Airplanes...................
    7. Final Rule Plus Conversion          657        1,109        (452)
     Cargo Airplanes.............
    8. Final Rule Plus Conversion          657        1,229        (572)
     and Retrofitted Cargo
     Airplanes...................
------------------------------------------------------------------------

    Another way to analyze these alternatives is to evaluate them on an
incremental cost per life saved; i.e., a cost-effectiveness analysis.
For this rule, the effectiveness metric is the number of expected
prevented fuel tank explosions, which is then converted into the
present value of the number of fatalities prevented. The mid-point of
the time-frame in which an accident would happen is 2022 for production
airplanes and 2019 for retrofitted airplanes. For all other airplanes,
the mid-point would be about 50 years from today, or 2060. In Table 8,
the first column lists the specific types of airplanes that could have
FRM installed. The second column reports the number of fuel tank
explosions that FRM would prevent using an SFAR 88 effectiveness rate
of 50 percent. The third column provides the present value of the total
costs to install FRM on those airplanes minus the present value of the
destroyed airplane and minus the demand benefits weighted by the number
of flight hours. The passenger airplane hull value is $50, which gives
present values of $19 million for production airplanes and $24 million
for retrofitted airplanes. The present value of the demand benefits
would be $100 million for retrofitted airplanes and $151 million for
production airplanes. The fourth column takes the number of prevented
explosions and divides it into the costs to calculate the present value
of the cost to prevent one explosion. The fifth column provides the
number of fatalities that would be prevented if FRM were installed on
the airplane assuming that 80 percent of the explosions would be in-
flight and 20 percent would be on the ground. These numbers are then
adjusted by the discount rate to reflect the present value of the
fatalities for production and retrofitted passenger airplanes. The
final column supplies the average present value of the cost for that
option to prevent one fatality. As shown in Table 8, the two most cost-
effective options would be to install FRM on production passenger
airplanes and on existing passenger airplanes. The final rule contains
all of the options except conversion cargo airplanes and retrofitted
cargo airplanes.

 Table 8.--Incremental Cost Effectiveness Analysis of the Individual Alternatives Using a Present Value Analysis
                   With a 7 Percent Discount Rate and a 50 Percent SFAR 88 Effectiveness Rate
                                    [Total costs in millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                       PV           PV                              PV
                                      Number of  -------------------------- Average No. ------------------------
              Options                 explosions  Costs--hull    Cost to         of
                                      prevented    and demand  prevent one   fatalities     Cost to prevent 1
                                                      loss       accident                  statistical fatality
----------------------------------------------------------------------------------------------------------------
Production Passenger Airplanes.....         1.00         $367         $367           46                   $8.000
Production Cargo Airplanes.........       0.0385           37          961         .055               17,473.000
Production Part 91 Airplanes.......      0.00082            2        2,439         .249                9,785.000
Retrofitted Passenger Airplanes....         0.52          314          604           56                   11.000
Conversion Cargo Airplanes.........        0.095           83          874         .055               15,891.000
Retrofitted Cargo Airplanes........        0.064          110        1,719         .055               31,255.000
Retrofitted Part 91 Airplanes......       0.0194           12        6,186         .249               24,843.000
Final Rule.........................       1.5585          741          475           49                   10.000
----------------------------------------------------------------------------------------------------------------

Conclusion
    When modeling discrete rare events such as fuel tank explosions, it
is important to understand and evaluate the distribution around the
mean value rather than to rely only on a single point estimated value.
This variability analysis indicates there is a substantial (23 percent)
probability that the quantified benefits will be greater than the
costs.
    The Federal Aviation Administration believes that the correct
public policy choice is to eliminate the substantial probability of a
high consequence fuel tank explosion accident by proceeding with the
final rule.
Regulatory Flexibility Analysis
Introduction and Purpose of This Analysis
    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA)
establishes ``as a principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives of the rule and of

applicable statutes, to fit regulatory and informational requirements
to the scale of the businesses, organizations, and governmental
jurisdictions subject to regulation. To achieve this principle,
agencies are required to solicit and consider flexible regulatory
proposals and to explain the rationale for their actions to assure that
such proposals are given serious consideration.'' The RFA covers a
wide-range of small entities, including small businesses, not-for-
profit organizations, and small governmental jurisdictions.
    Agencies must perform a review to determine whether a rule will
have a significant economic impact on a substantial number of small
entities. If the agency determines that it will, the agency must
prepare a regulatory flexibility analysis as described in the RFA.
    We believe that this final rule will have a significant economic
impact on a substantial number of small entities. The purpose of this
analysis is to provide the reasoning underlying the FAA determination.
The FAA has determined that:

--There will not be a significant impact on a substantial number of
manufacturers.
--There will be a significant impact on a substantial number of small
operators.

    To make this determination in this final rule, we perform a
Regulatory Flexibility Analysis (RFA). Under Section 63(b) of the RFA,
the analysis must address:

--Description of reasons the agency is considering the action.
--Statement of the legal basis and objectives for the rule.
--Significant issues raised during public comment.
--Description of the recordkeeping and other compliance requirements of
the rule.
--All federal rules that may duplicate, overlap, or conflict with the
rule.
--Description and an estimated number of small entities.
--Economic impact.
--Describe the alternatives considered.
Description of Reasons the Agency Is Considering the Action
    Fuel tank explosions have been a threat with serious aviation
safety implications for many years. The explosion of TWA Flight 800 (a
Boeing 747) off Long Island, New York in 1996 occurred in-flight with
the loss of all 230 on board. Two other explosions on airplanes
operated by Philippine Airlines and Thai Airlines occurred on the
ground (resulting in nine fatalities). While the accident
investigations of the TWA, Philippine Airlines, and Thai Airlines
accidents failed to identify the ignition source that caused the
explosion, the investigations found several similarities
    The requirements contained in this final rule will reduce the
likelihood of fuel tank fires, and mitigate the effects of a fire if
one occurs.
Statement of the Legal Basis and Objectives for the Rule
    The FAA's authority to issue rules regarding 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.
    This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701, ``General
requirements.'' Under that section, the FAA is charged with promoting
safe flight of civil aircraft in air commerce by prescribing minimum
standards required in the interest of safety for the design and
performance of aircraft; regulations and minimum standards in the
interest of aviation safety for inspecting, servicing, and overhauling
aircraft; and regulations for other practices, methods, and procedures
the Administrator finds necessary for safety in air commerce. This
regulation is within the scope of that authority because it prescribes:
     New safety standards for the design of transport category
airplanes, and
     New requirements necessary for safety for the design,
production, operation and maintenance of those airplanes, and for other
practices, methods, and procedures related to those airplanes.
    Accordingly, this final rule amends Title 14 of the Code of Federal
Regulations and address deficiencies in current regulations regarding
airplane designs of the current and future fleet. The rule will require
transport category airplanes to minimize flammability of fuel tanks.
Significant Issues Raised During Public Comment
    Individuals and companies commented that they will incur costs as a
result of the requirements contained in the rule. The National Air
Carrier Association (NACA) supports FRM being applied to production
passenger airplanes. They oppose applying FRM to existing passenger
airplanes and to any cargo airplanes. Their primary concerns were that
the cost of retrofitting passenger airplanes was too high for the
potential benefits and they believe that cargo airplanes were not at
risk. They did not provide specific cost estimates. The Regional
Airline Association (RAA) opposes any FRM requirement, although only
one of their member airlines has airplanes that will be affected by the
final rule.
Description of the Recordkeeping and Other Compliance Requirements of
the Rule
    We expect no more than minimal new reporting and recordkeeping
compliant requirements to result from this rule. The rule will require
additional entries in existing required maintenance records to account
for either the additional maintenance requirements or the installation
of nitrogen-inerting systems and the addition of insulation between
heat-generating equipment and fuel tanks.
All Federal Rules That May Duplicate, Overlap, or Conflict With the
Rule
    SFAR 88 was enacted to ensure no ignition sources exist in the fuel
tanks. After that rule was promulgated and the manufacturers' safety
analyses were submitted to the regulatory authorities, we continued to
find ignition sources that had not been revealed in the safety
analyses. Thus, SFAR 88 cannot eliminate all future ignition sources.
This rule is designed to work in conjunction with SFAR 88 to prevent
future HCWT explosions. We are unaware that the rule will overlap,
duplicate or conflict with any other existing Federal Rules.
Description and an Estimated Number of Small Entities
    The FAA uses the size standards from the Small Business
Administration for Air Transportation and Aircraft Manufacturing
specifying companies having less than 1,500 employees as small
entities. Boeing is the sole U.S. manufacturer affected by this final
rule. As Boeing has more than 1,500 employees and is not considered a
small entity, there will not be a significant impact on a substantial
number of manufacturers.
    We identified a total of 15 U.S. operators who will be affected by
this final rule and qualify as small businesses because they have fewer
than 1,500 employees. These 15 entities operate a total of 214
airplanes. Once the firms were classified as small entities, we
gathered information on their annual revenues.
    We obtained the small entities' fleets using data from FAA Flight
Standards and BACK Associates Fleet Database. The number of employees
and revenues

were obtained from the U.S. Department of Transportation Form 41
filings, BTS Office of Airline Information, Hoovers Online, and Thomas
Gale Business and Company Resource Center.
Economic Impact
    To assess the cost impact to small business part 121 airlines, we
estimated the present value retrofit cost for the affected aircraft in
the small entities fleet. Table 8 summarizes the cost to retrofit per
airplane and the associated model types.

                Table 8.--Retrofit Cost by Airplane Model
------------------------------------------------------------------------
                                                               Present
                           Model                              value cost
------------------------------------------------------------------------
Retrofit Cost Per Model:
    B-737-Classic..........................................     $137,000
    B-737-NG...............................................      121,000
    B-757..................................................      211,000
    B-767..................................................      264,000
    B747-100/100/300.......................................      289,000
    B-747-400..............................................      289,000
    B-777..................................................      311,000
    A-320 Family...........................................      137,000
    A-330..................................................      311,000
------------------------------------------------------------------------

    We estimated each operator's compliance cost by multiplying the
average retrofit cost per airplane by the total number of each type of
airplane the operator currently has. Then we measured the economic
impact on small entities by dividing the firms' total estimated present
value compliance cost by its annual revenue. We believe that if the
retrofit cost exceeds 2% of a firm's annual revenue, then there is a
significant economic impact. As shown in the following table, the
present value of the retrofitting costs is estimated to be greater than
two percent of annual revenues for three small operators. Thus, as the
rule will have a significant economic impact on three small operators
we determined this final rule will have a significant impact on a
substantial number of small entities.

   Table 9.--Total Retrofitting Costs and Their Percentage of Annual Revenues for the Affected Small Operators
----------------------------------------------------------------------------------------------------------------
                                                         Number of                                    Cost as a
          Airplane model               Small entity       affected       Cost       Annual revenue    percent of
                                         operator         aircraft                                     revenue
----------------------------------------------------------------------------------------------------------------
BOEING 737-700...................  ALOHA AIRLINES.....            2     $242,000  .................  ...........
BOEING 737-700...................  ALOHA AIRLINES.....            5      605,000  .................  ...........
BOEING 737-700...................  ALOHA AIRLINES.....            1      121,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........      968,000       $300,601,582         0.32
                                                                    ============================================
BOEING 737-300...................  ATA AIRLINES.......            3      411,000  .................  ...........
BOEING 737-800...................  ATA AIRLINES.......           11    1,331,000  .................  ...........
BOEING 737-800...................  ATA AIRLINES.......            1      121,000  .................  ...........
BOEING 757-200...................  ATA AIRLINES.......            4    1,055,000  .................  ...........
BOEING 757-200...................  ATA AIRLINES.......            2      422,000  .................  ...........
BOEING 757-300...................  ATA AIRLINES.......            4      844,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........    4,184,000        330,177,135         1.27
                                                                    ============================================
BOEING 757-200...................  EOS AIRLINES.......            3      633,000          1,084,907       58.350
AIRBUS A318-100..................  FRONTIER AIRLINES              8    1,096,000  .................  ...........
                                    [CO-USA].
AIRBUS A319-100..................  FRONTIER AIRLINES             39    5,343,000  .................  ...........
                                    [CO-USA].
AIRBUS A319-100..................  FRONTIER AIRLINES             10    1,370,000  .................  ...........
                                    [CO-USA].
                                                                    --------------------------------------------
    Total........................  ...................  ...........    7,809,000      1,130,837,682         0.69
                                                                    ============================================
BOEING 767-300...................  HAWAIIAN AIRLINES..            4    1,056,000  .................  ...........
BOEING 767-300...................  HAWAIIAN AIRLINES..            8    2,112,000  .................  ...........
BOEING 767-300...................  HAWAIIAN AIRLINES..            3      792,000  .................  ...........
BOEING 767-300...................  HAWAIIAN AIRLINES..            3      792,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........    4,752,000        881,599,398         0.54
                                                                    ============================================
BOEING 767-200...................  MAXJET AIRWAYS.....            1      264,000  .................  ...........
BOEING 767-200...................  MAXJET AIRWAYS.....            1      264,000  .................  ...........
BOEING 767-200...................  MAXJET AIRWAYS.....            1      264,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........      792,000          2,422,199        32.70
                                                                    ============================================
BOEING 737-400...................  MIAMI AIR                      2      274,000  .................  ...........
                                    INTERNATIONAL.
BOEING 737-800...................  MIAMI AIR                      3      363,000  .................  ...........
                                    INTERNATIONAL.
BOEING 737-800...................  MIAMI AIR                      1      121,000  .................  ...........
                                    INTERNATIONAL.
BOEING 737-800...................  MIAMI AIR                      1      121,000  .................  ...........
                                    INTERNATIONAL.
BOEING 737-800...................  MIAMI AIR                      2      121,000  .................  ...........
                                    INTERNATIONAL.
                                                                    --------------------------------------------
    Total........................  ...................  ...........    1,000,000         73,403,477         1.36
                                                                    ============================================
BOEING 757-200...................  PRIMARIS AIRLINES..            1      211,000         19,403,658         1.09
BOEING 737-300...................  RYAN INTERNATIONAL             1      137,000  .................  ...........
                                    AIRLINES.
BOEING 737-400...................  RYAN INTERNATIONAL             1      137,000  .................  ...........
                                    AIRLINES.
BOEING 737-800...................  RYAN INTERNATIONAL             2      242,000  .................  ...........
                                    AIRLINES.
BOEING 737-800...................  RYAN INTERNATIONAL             1      121,000  .................  ...........
                                    AIRLINES.

BOEING 737-800...................  RYAN INTERNATIONAL             1      121,000  .................  ...........
                                    AIRLINES.
BOEING 757-200...................  RYAN INTERNATIONAL             1      211,000  .................  ...........
                                    AIRLINES.
BOEING 757-200...................  RYAN INTERNATIONAL             1      211,000  .................  ...........
                                    AIRLINES.
BOEING 757-200...................  RYAN INTERNATIONAL             2      422,000  .................  ...........
                                    AIRLINES.
                                                                    --------------------------------------------
    Total........................  ...................  ...........    1,602,000        101,560,750         1.58
                                                                    ============================================
AIRBUS A319-100..................  SPIRIT AIRLINES               30    4,100,000  .................  ...........
                                    [USA].
AIRBUS A321-100..................  SPIRIT AIRLINES                6      822,000  .................  ...........
                                    [USA].
                                                                    --------------------------------------------
    Total........................  ...................  ...........    4,922,000        540,426,363         0.91
                                                                    ============================================
BOEING 737-800...................  SUN COUNTRY                    2      242,000  .................  ...........
                                    AIRLINES.
BOEING 737-800...................  SUN COUNTRY                    6      726,000  .................  ...........
                                    AIRLINES.
BOEING 737-800...................  SUN COUNTRY                    2      242,000  .................  ...........
                                    AIRLINES.
BOEING 737-800...................  SUN COUNTRY                    3      363,000  .................  ...........
                                    AIRLINES.
                                                                    --------------------------------------------
    Total........................  ...................  ...........    1,573,000        225,789,595         0.70
                                                                    ============================================
AIRBUS A320-100..................  USA 3000 AIRLINES..            1      137,000  .................  ...........
AIRBUS A320-100..................  USA 3000 AIRLINES..            1      137,000  .................  ...........
AIRBUS A320-100..................  USA 3000 AIRLINES..            9    1,233,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........    1,507,000        132,077,603         1.14
                                                                    ============================================
B-737-429........................  CASINO EXPRESS.....            1      137,000  .................  ...........
B-737-46B........................  CASINO EXPRESS.....            1      137,000  .................  ...........
B-737-4S3........................  CASINO EXPRESS.....            1      137,000  .................  ...........
B-737-8Q8........................  CASINO EXPRESS.....            2      242,000  .................  ...........
B-737-8Q8........................  CASINO EXPRESS.....            1      121,000  .................  ...........
B-737-86N........................  CASINO EXPRESS.....            1      121,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........      895,000         34,178,453         2.62
                                                                    ============================================
B-737-3Y0........................  PACE AIRLINES......            1      137,000  .................  ...........
B-757-256........................  PACE AIRLINES......            1      137,000  .................  ...........
B-757-236........................  PACE AIRLINES......            1      137,000  .................  ...........
                                                                    --------------------------------------------
    Total........................  ...................  ...........      411,000         40,411,353         1.02
----------------------------------------------------------------------------------------------------------------

Describe the Alternatives Considered
    As described in the Analysis of Alternatives section, we evaluated
the following 8 alternatives to the final rule.

ALTERNATIVE 1. Cover only air carrier passenger airplanes
ALTERNATIVE 2. Exclude auxiliary fuel tanks
ALTERNATIVE 3. Cover only air carrier retrofitted passenger airplanes
ALTERNATIVE 4. Cover only air carrier production passenger airplanes
ALTERNATIVE 5. Cover only air carrier production passenger and cargo
airplanes
ALTERNATIVE 6. Final rule plus part 91 airplanes
ALTERNATIVE 7. Final rule plus conversion cargo airplanes
ALTERNATIVE 8. Final rule plus conversion and retrofitted cargo
airplanes

    Our conclusion was that the final rule provided the best balance of
cost and benefits for the United States society. Whether an airplane is
flown by a small entity or by a large entity, the risk is largely the
same. Consequently, we determined that the final rule should apply to
all passenger airplanes and to production cargo airplanes.
Regulatory Flexibility Analysis Summary
    As the rule will have a significant economic impact on three small
operators, we determined this final rule will have a significant impact
on a substantial number of small entities.
International Trade Analysis
    The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the
Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal
agencies from establishing any standards or engaging in related
activities that create unnecessary obstacles to the foreign commerce of
the United States. Pursuant to these Acts, the establishment of
standards are not considered unnecessary obstacles to the foreign
commerce of the United States, when the standards have a legitimate
domestic objective, such as the protection of safety, and when the
standards do not operate in a manner that excludes imports that meet
this objective. The statute also requires consideration of
international standards and, where appropriate, that they be the basis
for U.S. standards. The FAA notes the purpose of this rule is to ensure
the safety of the American public. We have assessed the effects of this
rule to ensure that it does not exclude imports that meet this
objective. As a result, this rule is not considered as creating
unnecessary obstacles to foreign commerce.
Unfunded Mandates Act
    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4)

requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in an expenditure of $100 million or more (adjusted
annually for inflation with the base year 1995) in any one year by
State, local, and tribal governments, in the aggregate, or by the
private sector; such a mandate is deemed to be a ``significant
regulatory action.'' The FAA currently uses an inflation-adjusted value
of $136.1 million in lieu of $100 million.
    There will be 3 years (2015, 2016, and 2017) in which the
undiscounted costs will be greater than $136.1 million. Consequently,
in Table 7 of the regulatory evaluation summary, we evaluated the costs
and benefits of 8 alternatives to the final rule.

Executive Order 13132, Federalism

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

Regulations Affecting Intrastate Aviation in Alaska

    Section 1205 of the FAA Reauthorization Act of 1996 (110 Stat.
3213) requires the Administrator, when modifying regulations in title
14 of the CFR in manner affecting intrastate aviation in Alaska, to
consider the extent to which Alaska is not served by transportation
modes other than aviation, and to establish such regulatory
distinctions, as he or she considers appropriate. Because this rule
applies to the certification of future designs of transport category
airplanes and their subsequent operation, it could affect intrastate
aviation in Alaska. Nevertheless, the FAA has determined that it is
inappropriate to relieve intrastate aviation interests in Alaska from
the requirements of today's rule because of the safety objective served
by this rule.

Environmental Analysis

    FAA Order 1050.1E identifies FAA actions that are categorically
excluded from preparation of an environmental assessment or
environmental impact statement under the National Environmental Policy
Act in the absence of extraordinary circumstances. The FAA has
determined this rulemaking action qualifies for the categorical
exclusion identified in paragraph 312f and involves no extraordinary
circumstances.

Regulations that Significantly Affect Energy Supply, Distribution, or
Use

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

Submission of Comments

Request for Comments

    Comments should be submitted to Docket No. FAA-2005-22997 by
January 20, 2009. Comments may be submitted to the docket using any of
the means listed in the Addresses section below.
    We will file in the docket all comments we receive, as well as a
report summarizing each substantive public contact with FAA personnel
concerning this rulemaking. The docket is available for public
inspection before and after the comment closing date.
    Privacy Act: We will post all comments we receive, without change,
to http://www.regulations.gov, including any personal information you
provide. Using the search function of our docket Web site, anyone can
find and read the comments received into any of our dockets, including
the name of the individual sending the comment (or signing the comment
for an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://
DocketsInfo.dot.gov.

Proprietary or Confidential Business Information

    Do not file in the docket information that you consider to be
proprietary or confidential business information. Send or deliver this
information directly to the person identified in the FOR FURTHER
INFORMATION CONTACT section of this document. You must mark the
information that you consider proprietary or confidential. If you send
the information on a disk or CD ROM, mark the outside of the disk or CD
ROM and also identify electronically within the disk or CD ROM the
specific information that is proprietary or confidential.
    Under 14 CFR 11.35(b), when we are aware of proprietary information
filed with a comment, we do not place it in the docket. We hold it in a
separate file to which the public does not have access, and we place a
note in the docket that we have received it. If we receive a request to
examine or copy this information, we treat it as any other request
under the Freedom of Information Act (5 U.S.C. 552). We process such a
request under the DOT procedures found in 49 CFR part 7.

ADDRESSES: You may send comments identified by Docket Number FAA-2004-
22997 using any of the following methods:
     Federal eRulemaking Portal: Go to http://
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, 1200 New Jersey Avenue, SE., West
Building Ground Floor, Room W12-140, Washington, DC 20590-0001.
     Fax: Fax comments to the Docket Operations at 202-493-
2251.
     Hand Delivery or Courier: Bring 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.
    Docket: To read background documents or comments received, go to
http://www.regulations.gov at any time or to 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.

Availability of Rulemaking Documents

    You can get an electronic copy using the Internet by:
    (1) Searching the Federal eRulemaking Portal (http://
www.regulations.gov);
    (2) Visiting the FAA's Regulations and Policies Web page at http://
www.faa.gov/regulations_policies/; or
    (3) Accessing the Government Printing Office's web page at http://
www.gpoaccess.gov/fr/index.html.
    You can also get a copy by submitting a request to the Federal
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence
Avenue, SW., Washington, DC 20591, or by calling<PHONE_NUMBER>. Make
sure to identify the docket number, or amendment number of this
rulemaking.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SFREFA) of
1996 requires FAA to comply with

small entity requests for information or advice about compliance with
statutes and regulations within its jurisdiction. If you are a small
entity and you have a question regarding this document, you may contact
its local FAA official, or the person listed under FOR FURTHER
INFORMATION CONTACT. You can find out more about SBREFA on the Internet
at http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

List of Subjects

14 CFR part 25

    Aircraft, Aviation safety, Incorporation by reference, Reporting
and recordkeeping requirements.

14 CFR part 26

    Aircraft, Aviation safety, Continued airworthiness.

14 CFR part 121

    Air carriers, Aircraft, Aviation safety, Reporting and
recordkeeping requirements, Safety, Transportation.

14 CFR part 125

    Aircraft, Aviation safety, Reporting and recordkeeping
requirements.

14 CFR part 129

    Air carriers, Aircraft, Aviation safety, Reporting and
recordkeeping requirements, Security measures.

V. The Amendment

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In consideration of the foregoing, the Federal Aviation Administration
amends Chapter 1 of Title 14, Code of Federal Regulations (CFR) parts
25, 26, 121, 125, and 129, as follows:

PART 25--AIRWORTHINESS STANDARDS: TRANSPORT CATEGORY AIRPLANES

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1. The authority citation for part 25 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701, 44702 and 44704.

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2. Part 25 is amended by adding a new Sec.  25.5 to read as follows:

Sec.  25.5  Incorporations by reference.

    (a) The materials listed in this section are incorporated by
reference in the corresponding sections noted. These incorporations by
reference were approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. These materials are
incorporated as they exist on the date of the approval, and notice of
any change in these materials will be published in the Federal
Register. The materials are available for purchase at the corresponding
addresses noted below, and all are available for inspection at the
National Archives and Records Administration (NARA), and at FAA,
Transport Airplane Directorate, Aircraft Certification Service, 1601
Lind Avenue, SW., Renton, Washington 98057-3356. For information on the
availability of this material at NARA, call<PHONE_NUMBER>, or go to:
http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr_locations.html.
    (b) The following materials are available for purchase from the
following address: The National Technical Information Services (NTIS),
Springfield, Virginia 22166.
    (1) Fuel Tank Flammability Assessment Method User's Manual, dated
May 2008, document number DOT/FAA/AR-05/8, IBR approved for Sec.
25.981 and Appendix N. It can also be obtained at the following Web
site: http://www.fire.tc.faa.gov/systems/fueltank/FTFAM.stm.
    (2) [Reserved]

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3. Amend Sec.  25.981 by revising paragraphs (b) and (c) and adding a
new paragraph (d) to read as follows:

Sec.  25.981  Fuel tank explosion prevention.

* * * * *
    (b) Except as provided in paragraphs (b)(2) and (c) of this
section, no fuel tank Fleet Average Flammability Exposure on an
airplane may exceed three percent of the Flammability Exposure
Evaluation Time (FEET) as defined in Appendix N of this part, or that
of a fuel tank within the wing of the airplane model being evaluated,
whichever is greater. If the wing is not a conventional unheated
aluminum wing, the analysis must be based on an assumed Equivalent
Conventional Unheated Aluminum Wing Tank.
    (1) Fleet Average Flammability Exposure is determined in accordance
with Appendix N of this part. The assessment must be done in accordance
with the methods and procedures set forth in the Fuel Tank Flammability
Assessment Method User's Manual, dated May 2008, document number DOT/
FAA/AR-05/8 (incorporated by reference, see Sec.  25.5).
    (2) Any fuel tank other than a main fuel tank on an airplane must
meet the flammability exposure criteria of Appendix M to this part if
any portion of the tank is located within the fuselage contour.
    (3) As used in this paragraph,
    (i) Equivalent Conventional Unheated Aluminum Wing Tank is an
integral tank in an unheated semi-monocoque aluminum wing of a subsonic
airplane that is equivalent in aerodynamic performance, structural
capability, fuel tank capacity and tank configuration to the designed
wing.
    (ii) Fleet Average Flammability Exposure is defined in Appendix N
to this part and means the percentage of time each fuel tank ullage is
flammable for a fleet of an airplane type operating over the range of
flight lengths.
    (iii) Main Fuel Tank means a fuel tank that feeds fuel directly
into one or more engines and holds required fuel reserves continually
throughout each flight.
    (c) Paragraph (b) of this section does not apply to a fuel tank if
means are provided to mitigate the effects of an ignition of fuel
vapors within that fuel tank such that no damage caused by an ignition
will prevent continued safe flight and landing.
    (d) Critical design configuration control limitations (CDCCL),
inspections, or other procedures must be established, as necessary, to
prevent development of ignition sources within the fuel tank system
pursuant to paragraph (a) of this section, to prevent increasing the
flammability exposure of the tanks above that permitted under paragraph
(b) of this section, and to prevent degradation of the performance and
reliability of any means provided according to paragraphs (a) or (c) of
this section. These CDCCL, inspections, and procedures must be included
in the Airworthiness Limitations section of the instructions for
continued airworthiness required by Sec.  25.1529. Visible means of
identifying critical features of the design must be placed in areas of
the airplane where foreseeable maintenance actions, repairs, or
alterations may compromise the critical design configuration control
limitations (e.g., color-coding of wire to identify separation
limitation). These visible means must also be identified as CDCCL.

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4. Part 25 is amended by adding a new APPENDIX M to read as follows:

APPENDIX M TO PART 25--FUEL TANK SYSTEM FLAMMABILITY REDUCTION MEANS

    M25.1 Fuel tank flammability exposure requirements.
    (a) The Fleet Average Flammability Exposure of each fuel tank,
as determined in accordance with Appendix N of this part, may not
exceed 3 percent of the Flammability Exposure Evaluation Time
(FEET), as defined in Appendix N of this part. As a portion of this
3 percent, if flammability reduction means (FRM) are used, each of
the following time periods may not exceed 1.8 percent of the FEET:
    (1) When any FRM is operational but the fuel tank is not inert
and the tank is flammable; and
    (2) When any FRM is inoperative and the tank is flammable.
    (b) The Fleet Average Flammability Exposure, as defined in
Appendix N of this

part, of each fuel tank may not exceed 3 percent of the portion of
the FEET occurring during either ground or takeoff/climb phases of
flight during warm days. The analysis must consider the following
conditions.
    (1) The analysis must use the subset of those flights that begin
with a sea level ground ambient temperature of 80[deg] F (standard
day plus 21[deg] F atmosphere) or above, from the flammability
exposure analysis done for overall performance.
    (2) For the ground and takeoff/climb phases of flight, the
average flammability exposure must be calculated by dividing the
time during the specific flight phase the fuel tank is flammable by
the total time of the specific flight phase.
    (3) Compliance with this paragraph may be shown using only those
flights for which the airplane is dispatched with the flammability
reduction means operational.
    M25.2 Showing compliance.
    (a) The applicant must provide data from analysis, ground
testing, and flight testing, or any combination of these, that:
    (1) Validate the parameters used in the analysis required by
paragraph M25.1 of this appendix;
    (2) Substantiate that the FRM is effective at limiting
flammability exposure in all compartments of each tank for which the
FRM is used to show compliance with paragraph M25.1 of this
appendix; and
    (3) Describe the circumstances under which the FRM would not be
operated during each phase of flight.
    (b) The applicant must validate that the FRM meets the
requirements of paragraph M25.1 of this appendix with any airplane
or engine configuration affecting the performance of the FRM for
which approval is sought.
    M25.3 Reliability indications and maintenance access.
    (a) Reliability indications must be provided to identify
failures of the FRM that would otherwise be latent and whose
identification is necessary to ensure the fuel tank with an FRM
meets the fleet average flammability exposure requirements listed in
paragraph M25.1 of this appendix, including when the FRM is
inoperative.
    (b) Sufficient accessibility to FRM reliability indications must
be provided for maintenance personnel or the flightcrew.
    (c) The access doors and panels to the fuel tanks with FRMs
(including any tanks that communicate with a tank via a vent
system), and to any other confined spaces or enclosed areas that
could contain hazardous atmosphere under normal conditions or
failure conditions, must be permanently stenciled, marked, or
placarded to warn maintenance personnel of the possible presence of
a potentially hazardous atmosphere.
    M25.4 Airworthiness limitations and procedures.
    (a) If FRM is used to comply with paragraph M25.1 of this
appendix, Airworthiness Limitations must be identified for all
maintenance or inspection tasks required to identify failures of
components within the FRM that are needed to meet paragraph M25.1 of
this appendix.
    (b) Maintenance procedures must be developed to identify any
hazards to be considered during maintenance of the FRM. These
procedures must be included in the instructions for continued
airworthiness (ICA).
    M25.5 Reliability reporting.
    The effects of airplane component failures on FRM reliability
must be assessed on an on-going basis. The applicant/holder must do
the following:
    (a) Demonstrate effective means to ensure collection of FRM
reliability data. The means must provide data affecting FRM
reliability, such as component failures.
    (b) Unless alternative reporting procedures are approved by the
FAA Oversight Office, as defined in part 26 of this subchapter,
provide a report to the FAA every six months for the first five
years after service introduction. After that period, continued
reporting every six months may be replaced with other reliability
tracking methods found acceptable to the FAA or eliminated if it is
established that the reliability of the FRM meets, and will continue
to meet, the exposure requirements of paragraph M25.1 of this
appendix.
    (c) Develop service instructions or revise the applicable
airplane manual, according to a schedule approved by the FAA
Oversight Office, as defined in part 26 of this subchapter, to
correct any failures of the FRM that occur in service that could
increase any fuel tank's Fleet Average Flammability Exposure to more
than that required by paragraph M25.1 of this appendix.

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5. Part 25 is amended by adding a new APPENDIX N to read as follows:

APPENDIX N TO PART 25--FUEL TANK FLAMMABILITY EXPOSURE AND RELIABILITY
ANALYSIS

    N25.1 General.
    (a) This appendix specifies the requirements for conducting fuel
tank fleet average flammability exposure analyses required to meet
Sec.  25.981(b) and Appendix M of this part. For fuel tanks
installed in aluminum wings, a qualitative assessment is sufficient
if it substantiates that the tank is a conventional unheated wing
tank.
    (b) This appendix defines parameters affecting fuel tank
flammability that must be used in performing the analysis. These
include parameters that affect all airplanes within the fleet, such
as a statistical distribution of ambient temperature, fuel flash
point, flight lengths, and airplane descent rate. Demonstration of
compliance also requires application of factors specific to the
airplane model being evaluated. Factors that need to be included are
maximum range, cruise mach number, typical altitude where the
airplane begins initial cruise phase of flight, fuel temperature
during both ground and flight times, and the performance of a
flammability reduction means (FRM) if installed.
    (c) The following definitions, input variables, and data tables
must be used in the program to determine fleet average flammability
exposure for a specific airplane model.
    N25.2 Definitions.
    (a) Bulk Average Fuel Temperature means the average fuel
temperature within the fuel tank or different sections of the tank
if the tank is subdivided by baffles or compartments.
    (b) Flammability Exposure Evaluation Time (FEET). The time from
the start of preparing the airplane for flight, through the flight
and landing, until all payload is unloaded, and all passengers and
crew have disembarked. In the Monte Carlo program, the flight time
is randomly selected from the Flight Length Distribution (Table 2),
the pre-flight times are provided as a function of the flight time,
and the post-flight time is a constant 30 minutes.
    (c) Flammable. With respect to a fluid or gas, flammable means
susceptible to igniting readily or to exploding (14 CFR Part 1,
Definitions). A non-flammable ullage is one where the fuel-air vapor
is too lean or too rich to burn or is inert as defined below. For
the purposes of this appendix, a fuel tank that is not inert is
considered flammable when the bulk average fuel temperature within
the tank is within the flammable range for the fuel type being used.
For any fuel tank that is subdivided into sections by baffles or
compartments, the tank is considered flammable when the bulk average
fuel temperature within any section of the tank, that is not inert,
is within the flammable range for the fuel type being used.
    (d) Flash Point. The flash point of a flammable fluid means the
lowest temperature at which the application of a flame to a heated
sample causes the vapor to ignite momentarily, or ``flash.'' Table 1
of this appendix provides the flash point for the standard fuel to
be used in the analysis.
    (e) Fleet average flammability exposure is the percentage of the
flammability exposure evaluation time (FEET) each fuel tank ullage
is flammable for a fleet of an airplane type operating over the
range of flight lengths in a world-wide range of environmental
conditions and fuel properties as defined in this appendix.
    (f) Gaussian Distribution is another name for the normal
distribution, a symmetrical frequency distribution having a precise
mathematical formula relating the mean and standard deviation of the
samples. Gaussian distributions yield bell-shaped frequency curves
having a preponderance of values around the mean with progressively
fewer observations as the curve extends outward.
    (g) Hazardous atmosphere. An atmosphere that may expose
maintenance personnel, passengers or flight crew to the risk of
death, incapacitation, impairment of ability to self-rescue (that
is, escape unaided from a confined space), injury, or acute illness.
    (h) Inert. For the purpose of this appendix, the tank is
considered inert when the bulk average oxygen concentration within
each compartment of the tank is 12 percent or less from sea level up
to 10,000 feet altitude, then linearly increasing from 12 percent at
10,000 feet to 14.5 percent at 40,000 feet altitude, and
extrapolated linearly above that altitude.
    (i) Inerting. A process where a noncombustible gas is introduced
into the ullage of a fuel tank so that the ullage becomes non-
flammable.
    (j) Monte Carlo Analysis. The analytical method that is
specified in this appendix as the compliance means for assessing the
fleet average flammability exposure time for a fuel tank.

    (k) Oxygen evolution occurs when oxygen dissolved in the fuel is
released into the ullage as the pressure and temperature in the fuel
tank are reduced.
    (l) Standard deviation is a statistical measure of the
dispersion or variation in a distribution, equal to the square root
of the arithmetic mean of the squares of the deviations from the
arithmetic means.
    (m) Transport Effects. For purposes of this appendix, transport
effects are the change in fuel vapor concentration in a fuel tank
caused by low fuel conditions and fuel condensation and
vaporization.
    (n) Ullage. The volume within the fuel tank not occupied by
liquid fuel.
    N25.3 Fuel tank flammability exposure analysis.
    (a) A flammability exposure analysis must be conducted for the
fuel tank under evaluation to determine fleet average flammability
exposure for the airplane and fuel types under evaluation. For fuel
tanks that are subdivided by baffles or compartments, an analysis
must be performed either for each section of the tank, or for the