[Federal Register Volume 78, Number 175 (Tuesday, September 10, 2013)]
[Notices]
[Pages 55330-55336]
[FR Doc No: 2013-21905]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

RIN 2120-AF90

Policy Regarding Airport Rates and Charges

AGENCY: Department of Transportation, Federal Aviation Administration.

ACTION: Notice; publication of entire policy statement as amended.

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SUMMARY: This action publishes the entire Department of Transportation
(``Department''), Federal Aviation Administration (``FAA''), ``Policy
Regarding Airport Rates and Charges'' (``Policy'') to reflect all
deletions from and amendments to the policy to date. The Policy was
originally published in the Federal Register on June 21, 1996 (``1996
Rates and Charges Policy''). In response to a subsequent petition for
review, the U.S. Court of Appeals for the District of Columbia Circuit
issued a decision in 1997 that vacated the challenged provisions of the
1996 Rates and Charges Policy and the Secretary's supporting discussion
in the preamble. In 2008, the Department and FAA adopted three
amendments to the Policy, to allow operators of congested airports to
use landing fees to provide incentives to air carriers to use the
airport at less congested times or to use alternate airports to meet
regional air service needs. The Federal Register notice publishing
those amendments set out the amendments, but did not publish an entire
version of the policy as amended. As a convenience for the public and
for regulated entities, this notice publishes the entire Policy
Regarding Airport Rates and Charges currently in effect in a single
document. The FAA is not adopting or proposing any new amendments to
the Policy in this notice.

DATES: This Policy statement reflects the most recent amendments to the
Policy Regarding Airport Rates and Charges, which took effect on July
14, 2008.

ADDRESSES: To read background documents or comments received, go to
http://www.regulations.gov at any time or to Room W12-140 on the ground
floor of the West Building, 1200 New Jersey Avenue SE., Washington, DC,
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays.

FOR FURTHER INFORMATION CONTACT: Randall S. Fiertz, Director, Office of
Airport Compliance and Management Analysis, ACO-1, Federal Aviation
Administration, 800 Independence Avenue SW., Washington, DC 20591,
telephone<PHONE_NUMBER>; facsimile<PHONE_NUMBER>; email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Availability of Documents

    You can get an electronic copy of this notice and all other
documents in this docket using the Internet by:
    (1) Searching the Federal eRulemaking portal (http://www.regulations.gov/search);
    (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.access.gpo.gov/su_docs/aces/aces140.html.

Authority for This Proceeding

    This notice is published under the authority described in Subtitle
VII, Part B, Chapter 471, Sec.  47129 of Title 49 United States Code.
Under subsection (b) of Sec.  47129, the Secretary of Transportation is
required to publish policy statements establishing standards or
guidelines the Secretary will use in determining the reasonableness of
airport fees charged to airlines under Sec.  47129.

Background

    The Department of Transportation (Department) and the Federal
Aviation Administration (FAA) published a Policy Regarding Airport
Rates and Charges in the Federal Register on June 21, 1996 (61 FR
31994). (``1996 Rates and Charges Policy''). The statement of policy
was required by Sec.  113 of the FAA Authorization Act of 1994, Public
Law 103-305 (August 23, 1994), now codified at 49 U.S.C., 47129,
Specific sections of the 1996 Rates and Charges Policy (namely,
paragraphs 2.4, 2.4.1, 2.4.1(a), 2.5.1, 2.5.1(a)-(e), 2.5.3(a), 2.6 and
other portions of the Policy necessarily implicated by the Court's
holding) were subsequently vacated by the United States Court of
Appeals for the District of Columbia Circuit in Air Transport Ass'n of
America v. DOT, 119 F.3d 38, amended by 129 F.3d 625 (D.C. Cir. 1997).
In July 2008, following notice and opportunity for public comment, the
Department and FAA adopted three

amendments to the Policy (73 FR 40430, July 14, 2008). The amendments
are intended to provide greater flexibility to operators of congested
airports to use landing fees to provide incentives to air carriers to
use the airport at less congested times or to use alternate airports to
meet regional air service needs. The amendments to the Policy were
affirmed by the United States Court of Appeals for the District of
Columbia Circuit, Air Transport Ass'n v. DOT, 613 F.3d 206 (D.C. Cir.
2010). In 2012, Congress included foreign air carriers (in addition to
air carriers) under Sec.  47129. See, Sec.  148 of the FAA
Authorization Act of 2012, Public Law 112-95, 126 Stat. 11 (Feb. 14,
2012)
    The FAA has received requests for a complete official version of
the Policy, as amended since 1996, and FAA understands the convenience
of a complete statement of the policy for anyone needing to refer to
the contents of this Policy. Accordingly, by this notice, FAA is
publishing an official version of the entire Policy Regarding Airport
Rates and Charges that reflects all of the changes to the language of
the Policy since 1996, and is republished solely for the convenience of
stating a complete version of the Policy in a single document.

Rates and Charges Policy

    The FAA is publishing the full text of the current Policy Regarding
Airport Rates and Charges, which has been in effect since the most
recent amendment of the policy on July 14, 2008, as follows:

Policy Regarding Airport Rates and Charges

Introduction

    It is the fundamental position of the Department that the issue of
rates and charges is best addressed at the local level by agreement
between users and airports. The Department is adopting this Policy
Statement on the standards applicable to airport fees imposed for
aeronautical use of the airport to provide guidance to airport
proprietors and aeronautical users, to encourage direct negotiation
between these parties, to minimize the need for direct Federal
intervention to resolve differences over airport fees and to establish
the standards which the Department will apply in addressing airport fee
disputes under 49 U.S.C., 47129 and in addressing questions of airport
proprietors' compliance with Federal requirements governing airport
fees.

Applicability of the Policy

A. Scope of Policy
    Under the terms of grant agreements administered by FAA for airport
improvement, all aeronautical users are entitled to airport access on
fair and reasonable terms without unjust discrimination. Therefore, the
Department considers that the principles and guidance set forth in this
policy statement apply to all aeronautical uses of the airport. The
Department recognizes, however, that airport proprietors may use
different mechanisms and methodologies to establish fees for different
facilities, e.g., for the airfield and terminal area, and for different
aeronautical users, e.g., air carriers and fixed-base operators.
Various elements of the policy reflect these differences. In addition,
the Department will take these differences into account if we are
called upon to resolve a dispute over aeronautical fees or otherwise
consider whether an airport sponsor is in compliance with its
obligation to provide access on fair and reasonable terms without
unjust discrimination.
B. Aeronautical Use and Users
    The Department considers the aeronautical use of an airport to be
any activity that involves, makes possible, is required for the safety
of, or is otherwise directly related to, the operation of aircraft.
Aeronautical use includes services provided by air carriers related
directly and substantially to the movement of passengers, baggage, mail
and cargo on the airport. Persons, whether individuals or businesses,
engaged in aeronautical uses involving the operation of aircraft, or
providing flight support directly related to the operation of aircraft,
are considered to be aeronautical users.
    Conversely, the Department considers that the operation by U.S. or
foreign air carriers of facilities such as a reservations center,
headquarters office, or flight kitchen on an airport does not
constitute an aeronautical use subject to the principles and guidance
contained in this policy statement with respect to reasonableness and
unjust discrimination. Such facilities need not be located on an
airport. A carrier's decision to locate such facilities is based on the
negotiation of a lease or sale of property. Accordingly, the Department
relies on the normal forces of competition for nonaeronautical
commercial or industrial property to assure that fees for such property
are not excessive.
C. Applicability of Sec.  113 of the FAA Authorization Act of 1994
    Section 113 of the Federal Aviation Authorization Act of 1994
(``Authorization Act''), 49 U.S.C. 47129, directs the Secretary of
Transportation to issue a determination on the reasonableness of
certain fees imposed on air carriers and foreign air carriers in
response to carrier complaints or a request for determination by an
airport proprietor. Section 47129 further directs the Secretary to
publish final regulations, policy statements, or guidelines
establishing procedures for deciding cases under Sec.  47129 and the
standards to be used by the Secretary in determining whether a fee is
reasonable. Section 47129 also provides for the issuance of credits or
refunds in the event that the Secretary determines a fee is
unreasonable after a complaint is filed. Section 47129(e) excludes from
the applicability of Sec.  47129 a fee imposed pursuant to a written
agreement with air carriers or foreign air carriers, a fee imposed
pursuant to a financing agreement or covenant entered into before the
date of enactment of the statute (August 23, 1994), and an existing fee
not in dispute on August 23, 1994. Section 47129(f) further provides
that Sec.  47129 shall not adversely affect the rights of any party
under an existing airport agreement with an air carrier or foreign air
carrier or the ability of an airport to meet its obligations under a
financing agreement or covenant that is in effect on August 23, 1994.
    The Department does not interpret Sec.  47129 to repeal or narrow
the scope of the basic requirement that fees imposed on all
aeronautical users be reasonable and not unjustly discriminatory or to
narrow the obligation on the Secretary to receive satisfactory
assurances that, inter alia, airport sponsors will provide access on
reasonable terms before approving Airport Improvement Program (``AIP'')
grants. Moreover, the Department does not interpret Sections 47129(e)
and (f) to preclude the Department from adopting policy guidance to
carry out the Department's statutory obligation to assure that
aeronautical fees are being imposed at AIP-funded airports in a manner
that is consistent with the obligation to provide airport access on
reasonable terms.
    Therefore, the Department will apply the policy guidance in all
cases in which we are called upon to determine if an airport sponsor is
carrying out its obligation to make the airport available on reasonable
terms. However, a dispute that is not subject to processing under the
expedited procedures mandated by

Sec.  47129, including a dispute over matters described by Sec.  47129
(e) and (f), will be processed by FAA under procedures applicable to
airport compliance matters in general. In considering such a dispute,
FAA's role is to determine whether the airport proprietor is in
compliance with its grant obligations and statutory obligations
relating to airport fees. The FAA proceeding is not intended to provide
a mechanism for adjudicating the respective rights of the parties to a
fee dispute.
    In addition, the Department will not entertain a complaint about
the reasonableness of a fee set by agreement filed by a party to the
agreement setting the disputed fee. In the case of a complaint about
the reasonableness of a fee set by agreement filed by an aeronautical
user who is not a party to the agreement, the Department may take into
account the existence of an agreement between air carriers or foreign
air carriers, and the airport proprietor, in making a determination on
the complaint.
    Further, FAA will not ordinarily investigate the reasonableness of
a general aviation airport's fees absent evidence of a progressive
accumulation of surplus aeronautical revenues.
D. Components of Airfield
    The Department considers the airfield assets to consist of ramps or
aprons not subject to preferential or exclusive lease or use
agreements, runways, taxiways, and land associated with these
facilities. The Department also considers the airfield to include land
acquired for the purpose of assuring land-use compatibility with the
airfield, if the land is included in the rate base associated with the
airfield under the provisions of this policy.

Principles Applicable to Airport Rates and Charges

    1. In general, the Department relies upon airport proprietors,
aeronautical users, and the market and institutional arrangements
within which they operate, to ensure compliance with applicable legal
requirements. Direct Federal intervention will be available, however,
where needed.
    2. Rates, fees, rentals, landing fees, and other service charges
(``fees'') imposed on aeronautical users for aeronautical use of
airport facilities (``aeronautical fees'') must be fair and reasonable.
    3. Aeronautical fees may not unjustly discriminate against
aeronautical users or user groups.
    4. Airport proprietors must maintain a fee and rental structure
that in the circumstances of the airport makes the airport as
financially self-sustaining as possible.
    5. In accordance with relevant Federal statutory provisions
governing the use of airport revenue, airport proprietors may expend
revenue generated by the airport only for statutorily allowable
purposes.
    6. Fees imposed on international operations must also comply with
the international obligations of the United States, which include the
requirements that the fees be just, reasonable, not unjustly
discriminatory, equitably apportioned among categories of users, no
less favorable to foreign airlines than to U.S. airlines, and not in
excess of the full cost to the competent charging authorities of
providing the facilities and services efficiently and economically at
the airport or within the airport system.

Local Negotiation and Resolution

    1. In general, the Department relies upon airport proprietors,
aeronautical users, and the market and institutional arrangements
within which they operate, to ensure compliance with applicable legal
requirements. Direct Federal intervention will be available, however,
where needed.
    1.1 The Department encourages direct resolution of differences at
the local level between aeronautical users and the airport proprietor.
Such resolution is best achieved through adequate and timely
consultation between the airport proprietor and the aeronautical users
about airport fees.
    1.1.1 Airport proprietors should consult with aeronautical users
well in advance, if practical, of introducing significant changes in
charging systems and procedures or in the level of charges. The
proprietor should provide adequate information to permit aeronautical
users to evaluate the airport proprietor's justification for the change
and to assess the reasonableness of the proposal. For consultations to
be effective, airport proprietors should give due regard to the views
of aeronautical users and to the effect upon them of changes in fees.
Likewise, aeronautical users should give due regard to the views of the
airport proprietor and the financial needs of the airport.
    1.1.2 To further the goal of effective consultation, Appendix 1 of
this policy statement contains a description of information that the
Department considers would be useful to the U.S. and foreign air
carriers and other aeronautical users to permit meaningful consultation
and evaluation of a proposal to modify fees.
    1.1.3 Airport proprietors should consider the public interest in
establishing airport fees, and aeronautical users should consider the
public interest in consulting with airports on setting such fees.
    1.1.4 Airport proprietors and aeronautical users should consult and
make a good-faith effort to reach agreement. Absent agreement, airport
proprietors are free to act in accordance with their proposals, subject
to review by the Secretary or the Administrator on complaint by the
user or, in the case of fees subject to 49 U.S.C. 47129, upon request
by the airport operator, or, in unusual circumstances, on the
Department's initiative.
    1.1.5 To facilitate local resolution and reduce the need for direct
Federal intervention to resolve differences over aeronautical fees, the
Department encourages airport proprietors and aeronautical users to
include alternative dispute resolution procedures in their lease and
use agreements.
    1.1.6 Any newly established fee or fee increase that is the subject
of a complaint under 49 U.S.C. 47129 that is not dismissed by the
Secretary must be paid to the airport proprietor under protest by the
complainant. Unless the airport proprietor and complainant agree
otherwise, the airport proprietor will obtain a letter of credit, or
surety bond, or other suitable credit instrument in accordance with the
provisions of 49 U.S.C. 47129(d). Pending issuance of a final order
determining reasonableness, an airport proprietor may not deny a
complainant currently providing air service at the airport reasonable
access to airport facilities or services, or otherwise interfere with
that complainant's prices, routes, or services, as a means of enforcing
the fee, if the complainant has complied with the requirements for
payment under protest.
    1.2 Where airport proprietors and aeronautical users have been
unable, despite all reasonable efforts, to resolve disputes between
them, the Department will act to resolve the issues raised in the
dispute.
    1.2.1 In the case of a fee imposed on one or more U.S. air carriers
or foreign air carriers, the Department will issue a determination on
the reasonableness of the fee upon the filing of a written request for
a determination by the airport proprietor or, if the Department
determines that a significant dispute exists, upon the filing of a
complaint by one or more U.S. air carriers or foreign air carriers, in
accordance with 49 U.S.C. 47129 and implementing regulations. Pursuant
to the provisions of 49 U.S.C. 47129, the Department may only determine
whether a fee is

reasonable or unreasonable, and may not set the level of the fee.
    1.2.2 The Department will first offer its good offices to help
parties reach a mutually satisfactory outcome in a timely manner.
Prompt resolution of these disputes is always desirable since extensive
delay can lead to uncertainty for the public and a hardening of the
parties' positions. U.S. air carriers and foreign air carriers may
request the assistance of the Department in advance of or in lieu of
the formal complaint procedure described in 1.2.1; however, the 60-day
period for filing a complaint under Sec.  47129 shall not be extended
or tolled by such a request.
    1.2.3 In the case of fees imposed on other aeronautical users,
where negotiations between the parties are unsuccessful and a complaint
is filed alleging that airport fees violate an airport proprietor's
Federal grant obligations, the Department will, where warranted,
exercise the agency's broad statutory authority to review the legality
of those fees and to issue such determinations and take such actions as
are appropriate based on that review. Other aeronautical users may also
request the assistance of the Department in advance of, or in lieu of,
the filing of a formal complaint with FAA.
    1.3 Airport proprietors must retain the ability to respond to local
conditions with flexibility and innovation. An airport proprietor is
encouraged to achieve consensus and agreement with its aeronautical
users before implementing a practice that would represent a major
departure from this guidance. However, the requirements of any law,
including the requirements for the use of airport revenue, may not be
waived, even by agreement with the aeronautical users.

Fair and Reasonable Fees

    2. Rates, fees, rentals, landing fees, and other service charges
(``fees'') imposed on aeronautical users for the aeronautical use of
the airport (``aeronautical fees'') must be fair and reasonable.
    2.1 Federal law does not require a single approach to airport rate-
setting. Fees may be set according to a ``residual'' or
``compensatory'' rate-setting methodology, or any combination of the
two, or according to another rate-setting methodology, as long as the
methodology used is applied consistently to similarly situated
aeronautical users and conforms with the requirements of this policy.
Airport proprietors may set fees for aeronautical use of airport
facilities by ordinance, statute or resolution, regulation, or
agreement.
    2.1.1 Aeronautical users may receive a cross-credit of
nonaeronautical revenues only if the airport proprietor agrees.
Agreements providing for such cross-crediting are commonly referred to
as ``residual agreements'' and generally provide a sharing of
nonaeronautical revenues with aeronautical users. The aeronautical
users may in turn agree to assume part or all of the liability for
nonaeronautical costs. An airport proprietor may cross-credit
nonaeronautical revenues to aeronautical users even in the absence of
such an agreement, but an airport proprietor may not require
aeronautical users to cover losses generated by nonaeronautical
facilities except by agreement.
    2.1.2 In other situations, an airport proprietor assumes all
liability for airport costs and retains all airport revenues for its
own use in accordance with Federal requirements. This approach to
airport rate-setting is generally referred to as the compensatory
approach.
    2.1.3 Airports frequently adopt rate-setting systems that employ
elements of both approaches.
    2.1.4 An airport proprietor may impose a two-part landing fee
consisting of a combination of a per-operation charge and a weight-
based charge provided that (1) the two-part fee reasonably allocates
costs to users on a rational and economically justified basis; and (2)
the total revenues from the two-part landing fee do not exceed the
allowable costs of the airfield.
    (a) The proportionately higher costs per passenger for aircraft
with fewer seats that will result from the per-operation component of a
two-part fee may be justified by the effect of the fee on congestion
and operating delays and the total number of passengers accommodated
during congested hours.
    (b) An airport proprietor may exempt flights subsidized under the
Essential Air Service Program from the general application of a 2-part
landing fee, and instead charge those flights a landing fee that would
have been charged if a conventional weight-based fee was in effect. To
the extent an exemption reduces total airfield fees recovered, the
difference may not be recovered by increasing charges to other
operators currently operating at the airport.
    2.2 Revenues from fees imposed for use of the airfield (``airfield
revenues'') may not exceed the costs to the airport proprietor of
providing airfield services and airfield assets currently in
aeronautical use unless:
    (a) Otherwise agreed to by the affected aeronautical users; or
    (b) The fee includes charges in accordance with paragraph 2.5.3 or
paragraph 2.5.4(a), and there is a corresponding reduction in fees for
users that would otherwise have paid those charges.
    2.3 The ``rate base'' is the total of all costs of providing
airfield facilities and services to aeronautical users (which may
include a share of public-use roadway costs allocated to the airfield
in accordance with this policy) that may be recovered from aeronautical
users through fees charged for providing airfield aeronautical services
and facilities (``airfield fees''). Airport proprietors must employ a
reasonable, consistent, and ``transparent'' (i.e., clear and fully
justified) method of establishing the rate base and adjusting the rate
base on a timely and predictable schedule.
    2.4 [Reserved]
    2.4.1 [Reserved]
    2.4.2 Airport proprietors may include reasonable environmental
costs in the rate base to the extent that the airport proprietor incurs
a corresponding actual expense. All revenues received based on the
inclusion of these costs in the rate base are subject to Federal
requirements on the use of airport revenue. Reasonable environmental
costs include, but are not necessarily limited to, the following:
    (a) The costs of investigating and remediating environmental
contamination caused by airfield operations at the airport at least to
the extent that such investigation or remediation is required by or
consistent with local, state or Federal environmental law, and to the
extent such requirements are applied to other similarly situated
enterprises.
    (b) the cost of mitigating the environmental impact of an airport
development project (if the development project is one for which costs
may be included in the rate base), at least to the extent that these
costs are incurred in order to secure necessary approvals for such
projects, including but not limited to approvals under the National
Environmental Policy Act and similar state statutes;
    (c) the costs of aircraft noise abatement and mitigation measures,
both on and off the airport, including but not limited to land
acquisition and acoustical insulation expenses, to the extent that such
measures are undertaken as part of a comprehensive and publicly-
disclosed airport noise compatibility program; and
    (d) the costs of insuring against future liability for
environmental contamination caused by current airfield activities.
Under this provision,

the costs of self-insurance may be included in the rate base only to
the extent that they are incurred pursuant to a self-insurance program
that conforms to applicable standards for self-insurance practices.
    2.4.3 Airport proprietors are encouraged to establish fees with due
regard for economy and efficiency.
    2.4.4 The airport proprietor may include in the rate base amounts
needed to fund debt service and other reserves and to meet cash flow
requirements as specified in financing agreements or covenants (for
facilities in use or in accordance with paragraph 2.5.3), including,
but not limited to, reasonable amounts to meet debt-service coverage
requirements; to fund cash reserves to protect against the risks of
cash-flow fluctuations associated with normal airfield operations; and
to fund reasonable cash reserves to protect against other
contingencies.
    2.4.5 Unless otherwise agreed by aeronautical users, the airport
proprietor must allocate capital and operating costs among cost centers
in accordance with the following guidance, which is based on the
principle of cost causation:
    (a) Costs of airfield facilities and services directly used by the
aeronautical users may be fully included in the rate base, in a manner
consistent with this policy. For example, the capital cost of a runway
may be included in the rate base used to establish landing fees.
    (b) Costs of airport facilities and services used for both
aeronautical and nonaeronautical uses (shared costs) may be included in
the rate base if the facility or service in question supports the
airfield activity reflected in that rate base. The portion of shared
costs allocated to aeronautical users and among aeronautical uses
should not exceed an amount that reflects the respective aeronautical
purposes and proportionate aeronautical uses of the facility in
relation to each other and in relation to the nonaeronautical use of
the facility, and must be allocated by a reasonable, ``transparent''
and not unjustly discriminatory methodology. Aeronautical users may not
be allocated all costs of facilities or services that are used by both
aeronautical and nonaeronautical users unless they agree to that
allocation. Likewise, the airfield may not be allocated all of the
aeronautical share of commonly-used facilities or services, unless the
airfield is the only aeronautical use the facility or service supports.
    2.5 Airport proprietors must comply with the following practices in
establishing the rate base, provided, however, that one or more
aeronautical users may agree to a rate base that deviates from these
practices in the establishment of those users' fees.
    2.5.1 [Reserved]
    2.5.2 When assets in the rate-base have different costs, the
airport proprietor may combine the costs of comparable assets to
develop a single cost basis for those assets.
    2.5.3 The proprietor of a congested airport may include in the
rate-base used to determine airfield charges during congested hours a
portion of the costs of an airfield project under construction so long
as (1) all planning and environmental approvals have been obtained for
the project; (2) the proprietor has obtained financing for the project;
(3) construction has commenced on the project; and (4) the added costs
for current operators would have the effect of reducing or preventing
congestion and operating delays at that airport.
    (a) The airport proprietor must deduct from the total costs of the
projects any principal and interest collected during the period of
construction in determining the amount of project costs to be
capitalized and amortized once the project is commissioned and put in
service.
    (b) The amount of project costs included in current charges may not
exceed an amount corresponding to costs actually incurred during the
construction period, calculated in accordance with a commercially
reasonable amortization period based on the expected term for the
permanent financing of the project.
    2.5.4 The rate base of an airport may include costs associated with
another airport currently in use only if: (1) The proprietor of the
first airport is also the proprietor of the other airport; (2) the
other airport is currently in use; and (3) the costs of the other
airport to be included in the first airport's rate base are reasonably
related to the aviation benefits that the other airport provides or is
expected to provide to the aeronautical users of the first airport.
    (a) Element no. 3 above will be presumed to be satisfied if:
    (1) The other airport is designated as a reliever airport for the
first airport in the FAA's National Plan of Integrated Airport Systems
(``NPIAS''); or
    (2) The first airport is a congested airport; the other airport has
been designated by FAA as a secondary airport serving the community,
metropolitan area or region served by the first airport; and adding
airfield costs of the second airport to the rate base of the first
airport during congested hours would have the effect of reducing or
preventing congestion and operating delays at that airport in those
hours.
    (b) In the case of a methodology of charging for a system of
airports that is in place on the effective date of this policy, the
Department will consider an airport proprietor's claim that the
methodology is reasonable, even if all three elements are not
satisfied.
    (c) If an airport proprietor closes an operating airport as part of
an approved plan for the construction and opening of a new airport,
reasonable costs of disposition of the closed airport facility may be
included in the rate base of the new airport, to the extent that such
costs exceed the proceeds from the disposition. The Department would
not ordinarily consider redevelopment costs to be a reasonable cost of
disposition.
    (d) Pending reasonable disposition of the closed airport, the
airport proprietor may charge airfield users at the new airport for
reasonable maintenance costs of the old airport, provided that those
costs are refunded or credited-back to those users upon the receipt of
the proceeds from a whole or partial disposition.
    (e) Costs of the second airport that may be included in the rate
base of the first airport are limited to customary airfield cost center
charges. The total airfield revenue recovered from the users of both
airports cannot exceed the total allowable costs of the two airports
combined.
    2.6 [Reserved]
    2.6.1 Reasonable methodologies may include, but are not limited to,
historic cost valuation, direct negotiation with aeronautical users, or
objective determinations of fair market value.
    2.6.2 If an airport proprietor determines fees for such other
facilities on the basis of HCA costs, the airport proprietor must
follow the guidance set forth in paragraph 2.4.5 for the allocation of
shared costs.
    2.7 At all times, airport proprietors must comply with the
following practices:
    2.7.1 Indirect costs may not be included in the fees charged for
aeronautical use of the airport unless they are based on a reasonable,
``transparent'' cost allocation formula calculated consistently for
other units or cost centers within the control of the airport sponsor.
    2.7.2 The costs of airport development or planning projects paid
for with Federal Government grants and contributions or passenger
facility charges (PFCs) may not be included in the fees charged for
aeronautical use of the airport.

    (a) In the case of a PFC-funded project for terminal development,
for gates and related areas, or for a facility that is occupied by one
or more carriers on an exclusive or preferential use basis, the fees
paid to use those facilities shall be no less than the fees charged for
similar facilities that were not financed with PFC revenue.

Prohibition on Unjust Discrimination

    3. Aeronautical fees may not unjustly discriminate against
aeronautical users or user groups.
    3.1 The airport proprietor must apply a consistent methodology in
establishing fees for comparable aeronautical users of the airport.
When the airport proprietor uses a cost-based methodology, aeronautical
fees imposed on any aeronautical user or group of aeronautical users
may not exceed the costs allocated to that user or user group under a
cost allocation methodology adopted by the airport proprietor that is
consistent with this guidance, unless aeronautical users otherwise
agree.
    3.1.1 The prohibition on unjust discrimination does not prevent an
airport proprietor from making reasonable distinctions among
aeronautical users (such as signatory and nonsignatory carriers) and
assessing higher fees on certain categories of aeronautical users based
on those distinctions (such as higher fees for nonsignatory carriers,
as compared to signatory carriers).
    3.2 A properly structured peak pricing system that allocates
limited resources using price during periods of congestion will not be
considered to be unjustly discriminatory. An airport proprietor may,
consistent with the policies expressed in this policy statement,
establish fees that enhance the efficient utilization of the airport.
    3.3 Relevant provisions of the Convention on International Civil
Aviation (Chicago Convention) and many bilateral aviation agreements
specify, inter alia, that charges imposed on foreign airlines must not
be unjustly discriminatory, must not be higher than those imposed on
domestic airlines engaged in similar international air services and
must be equitably apportioned among categories of users. Charges to
foreign air carriers for aeronautical use that are inconsistent with
these principles will be considered unjustly discriminatory or unfair
and unreasonable.
    3.4 Allowable costs--costs properly included in the rate base--must
be allocated to aeronautical users by a transparent, reasonable, and
not unjustly discriminatory rate-setting methodology. The methodology
must be applied consistently and cost differences must be determined
quantitatively, when practical.
    3.4.1 Common costs (costs not directly attributable to a specific
user group or cost center) must be allocated according to a reasonable,
transparent and not unjustly discriminatory cost allocation methodology
that is applied consistently, and does not require any aeronautical
user or user group to pay costs properly allocable to other users or
user groups.

Requirement To Be Financially Self-Sustaining

    4. Airport proprietors must maintain a fee and rental structure
that in the circumstances of the airport makes the airport as
financially self-sustaining as possible.
    4.1 If market conditions or demand for air service do not permit
the airport to be financially self-sustaining, the airport proprietor
should establish long-term goals and targets to make the airport as
financially self-sustaining as possible.
    4.1.1 Airport proprietors are encouraged, when entering into new or
revised agreements or otherwise establishing rates, charges, and fees,
to undertake reasonable efforts to make their particular airports as
self sustaining as possible in the circumstances existing at such
airports.
    (a) Absent agreement with aeronautical users, the obligation to
make the airport as self-sustaining as possible does not permit the
airport proprietor to establish fees for the use of the airfield that
exceed the airport proprietor's airfield costs.
    (b) For those facilities for which this policy permits the use of
fair market value, the Department does not construe the obligation on
self-sustainability to compel the use of fair market value to establish
fees.
    4.1.2 At some airports, market conditions may not permit an airport
proprietor to establish fees that are sufficiently high to recover
aeronautical costs and sufficiently low to attract and retain
commercial aeronautical services. In such circumstances, an airport
proprietor's decision to charge rates that are below those needed to
achieve self-sustainability in order to assure that services are
provided to the public is not inherently inconsistent with the
obligation to make the airport as self-sustaining as possible in the
circumstances.
    4.2 In establishing new fees, and generating revenues from all
sources, airport owners and operators should not seek to create revenue
surpluses that exceed the amounts to be used for airport system
purposes and for other purposes for which airport revenues may be spent
under 49 U.S.C. 47107(b)(1), including reasonable reserves and other
funds to facilitate financing and to cover contingencies. While fees
charged to nonaeronautical users may exceed the costs of service to
those users, the surplus funds accumulated from those fees must be used
in accordance with Sec.  47107(b).
    4.2.1 The Department assumes that the limitation on the use of
airport revenue and effective market discipline for aeronautical
services and facilities other than the airfield will be effective in
holding aeronautical revenues, over time, to the airport proprietor's
costs of providing aeronautical services and facilities, including
reasonable capital costs. However, the progressive accumulation of
substantial amounts of surplus aeronautical revenue may warrant an FAA
inquiry into whether aeronautical fees are consistent with the airport
proprietor's obligations to make the airport available on fair and
reasonable terms.

Requirements Governing Revenue Application and Use

    5. In accordance with relevant Federal statutory provisions
governing the use of airport revenue, airport proprietors may expend
revenue generated by the airport only for statutorily allowable
purposes.
    5.1 Additional information on the statutorily allowed uses of
airport revenue is contained in separate guidance published by FAA
pursuant to Sec.  112 of the FAA Authorization Act of 1994, which is
codified at 49 U.S.C. 47107(l).
    5.2 The progressive accumulation of substantial amounts of airport
revenues may warrant an FAA inquiry into the airport proprietor's
application of revenues to the local airport system.

Congested Airports

    6. Congested Airports
    (a) The Department considers a currently congested airport to be--
    (1) An airport at which the number of operating delays is one per
cent or more of the total operating delays at the 55 airports with the
highest number of operating delays; or
    (2) An airport identified as congested by FAA listed in table 1 of
FAA's Airport Capacity Benchmark Report 2004, or the most recent
version of the Airport Capacity Benchmark Report.
    (b) The Department considers an airport to be a future congested
airport if an airport is forecasted to meet a defined threshold level
of congestion reported in the Future Airport Capacity

Task 2 study entitled Capacity Needs in the National Airspace System
2007-2025: An analysis of Airports and Metropolitan Area Demand and
Operational Capacity in the Future (FACT 2 Report), or any update to
that report that FAA may publish from time-to-time.
    (c) A congested hour is an hour during which demand exceeds average
runway capacity resulting in volume-related delays, or is anticipated
to do so.
    6.1 Because charges provided in paragraphs 2.1.4, 2.5.3 and 2.5.4
to address congestion can result in higher fees for some or all
operators, it is especially important for airport operators proposing
such charges to provide carriers in advance the information listed in
Appendix 1, with special emphasis on data, analysis and forecasts used
to justify the charges.
    6.2 The proprietor of a future congested airport may adopt measures
to address congestion in accordance with paragraphs 2.1.4, 2.5.3 and
2.5.4 of this policy, if the measures will not take effect or have any
effect on airfield charges until a time when the airport meets the
definition of a congested airport in paragraph 6(a) or is anticipated
to do so. This kind of measure would typically identify the specific
condition, e.g., operating delays that regularly exceed a certain level
at the airport that would trigger the implementation of the special
charges to address congestion.
    6.3 An airport proprietor may exempt flights subsidized under the
Essential Air Service Program from charges imposed under paragraphs
2.5.3 and 2.5.4 of this policy.

    Issued in Washington, DC, on August 23, 2013.
Susan L. Kurland,
Assistant Secretary for Aviation and International Affairs.
Christa Fornarotto,
Associate Administrator for Airports, Federal Aviation Administration,

Appendix 1--Information for Aeronautical User Charges Consultations

    The Department of Transportation ordinarily expects the
following information to be available to aeronautical users in
connection with consultations over changes in airport rates and
charges:
    1. Historic Financial Information covering two fiscal years
prior to the current year including, at minimum, a profit and loss
statement, balance sheet and cash flow statement for the airport
implementing the charges, and any financial reports prepared by the
airport proprietor to satisfy the provisions of 49 U.S.C.
47107(a)(19) and 47107(k).
    2. Justification. Economic, financial and/or legal justification
for changes in the charging methodology or in the level of
aeronautical rates and charges at the airport. Airports should
provide information on the aeronautical costs they are including in
the rate base.
    3. Traffic Information. Annual numbers of terminal passengers
and aircraft movements for each of the two preceding years.
    4. Planning and Forecasting Information.
    (a) To the extent applicable to current or proposed fees, the
long-term airport strategy setting out long-term financial and
traffic forecasts, major capital projects and capital expenditure,
and particular areas requiring strategic action. This material
should include any material provided for public or government
reviews of major airport developments, including analyses of demand
and capacity and expenditure estimates.
    (b) Accurate, complete information specific to the airport for
the current and the forecast year, including the current and
proposed budgets, forecasts of airport charges revenue, the
projected number of landings and passengers, expected operating and
capital expenditures, debt service payments, contributions to
restricted funds, or other required accounts or reserves.
    (c) To the extent the airport uses a residual or hybrid charging
methodology, a description of key factors expected to affect
commercial or other nonaeronautical revenues and operating costs in
the current and following years.

[FR Doc. 2013-21905 Filed 9-9-13; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: June 28, 2010 (Volume 75, Number 123)]
[Proposed Rules]
[Page 36585-36586]
[DOCID:fr28jn10-20]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2010-0529; Airspace Docket No. 10-ANM-3]

Proposed Establishment of Class E Airspace; Panguitch, UT

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

-----------------------------------------------------------------------

SUMMARY: This action proposes to establish Class E airspace at
Panguitch Municipal Airport, Panguitch UT. Controlled airspace is
necessary to accommodate aircraft using a new Area Navigation (RNAV)
Global Positioning System (GPS) Standard Instrument Approach Procedure
(SIAP) at Panguitch Municipal Airport. The FAA is proposing this action
to enhance the safety and management of Instrument Flight Rules (IFR)
operations at the airport.

DATES: Comments must be received on or before August 12, 2010.

ADDRESSES: Send comments on this proposal to the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590;
telephone<PHONE_NUMBER>. You must identify FAA Docket No. FAA-2010-
0529; Airspace Docket No. 10-ANM-3, at the beginning of your comments.
You may also submit comments through the Internet at http://
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Eldon Taylor, Federal Aviation
Administration, Operations Support Group, Western Service Center, 1601
Lind Avenue, SW., Renton, WA 98057; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments, as
they may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
    Communications should identify both docket numbers (FAA Docket No.
FAA-2010-0529 and Airspace Docket No. 10-ANM-3) and be submitted in
triplicate to the Docket Management System (see ADDRESSES section for
address and phone number). You may also submit comments through the
Internet at http://www.regulations.gov.
    Commenters wishing the FAA to acknowledge receipt of their comments
on this action must submit with those comments a self-addressed stamped
postcard on which the following statement is made: ``Comments to FAA
Docket No. FAA-2010-0529 and Airspace Docket No. 10-ANM-3''. The
postcard will be date/time stamped and returned to the commenter.
    All communications received on or before the specified closing date
for comments will be considered before taking action on the proposed
rule. The proposal contained in this action may be changed in light of
comments received. All comments submitted will be available for
examination in the public docket both before and after the closing date
for comments. A report summarizing each substantive public contact with
FAA personnel concerned with this rulemaking will be filed in the
docket.

Availability of NPRMs

    An electronic copy of this document may be downloaded through the
Internet at http://www.regulations.gov. Recently published rulemaking
documents can also be accessed through the FAA's Web page at http://
www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_
amendments/.
    You may review the public docket containing the proposal, any
comments received, and any final disposition in person in the Dockets
Office (see the ADDRESSES section for the address and phone number)
between 9 a.m. and 5 p.m., Monday through Friday, except federal
holidays. An informal docket may also be examined during normal
business hours at the Northwest Mountain Regional Office of the Federal
Aviation Administration, Air Traffic Organization, Western Service
Center, Operations Support Group, 1601 Lind Avenue, SW., Renton, WA
98057.
    Persons interested in being placed on a mailing list for future
NPRMs should contact the FAA's Office of Rulemaking,<PHONE_NUMBER>,
for a copy of Advisory Circular No. 11-2A, Notice of Proposed
Rulemaking Distribution System, which describes the application
procedure.

The Proposal

    The FAA is proposing an amendment to Title 14 Code of Federal
Regulations (14 CFR) part 71 by establishing Class E airspace at
Panguitch Municipal Airport, Panguitch UT. Controlled airspace
extending upward from 700 feet above the surface is necessary to
accommodate aircraft using the new RNAV (GPS) SIAPs at Panguitch
Municipal Airport. This action would enhance the safety and management
of aircraft operations at the airport.
    Class E airspace designations are published in paragraph 6005, of
FAA Order 7400.9T, signed August 27, 2009, and effective September 15,
2009, which is incorporated by reference in 14 CFR 71.1. The Class E
airspace designation listed in this document would be published
subsequently in this Order.
    The FAA has determined this proposed regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore, this proposed regulation; (1) Is not a ``significant
regulatory action'' under Executive Order 12866; (2) is not a
``significant rule'' under DOT Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3) does not warrant preparation of a
regulatory evaluation as the anticipated impact is so minimal. Since
this is a routine matter that will only affect air traffic procedures
and air navigation, it is certified this proposed rule, when
promulgated, would not have a significant economic impact on a
substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the U.S. Code. Subtitle 1, section 106, describes
the authority for 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 I, section 40103. Under that section, the
FAA is charged with prescribing regulations to assign the use of the
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace.
    This regulation is within the scope of that authority as it would
establish controlled airspace at Panguitch Municipal Airport, Panguitch
UT.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

The Proposed Amendment

    Accordingly, pursuant to the authority delegated to me, the Federal
Aviation Administration proposes to amend 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

    1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority:  49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854,
24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

    2. The incorporation by reference in 14 CFR 71.1 of the FAA Order
7400.9T, Airspace Designations and Reporting Points, signed August 27,
2009, and effective September 15, 2009 is amended as follows:

Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.

* * * * *

ANM UT E5 Panguitch, UT [New]

Panguitch Municipal Airport, UT
    (Lat. 37[deg]50'43'' N., long. 112[deg]23'31'' W.)

    That airspace extending from 700 feet above the surface within
an 11.7-mile radius of the Panguitch Municipal Airport.

    Issued in Seattle, Washington, on June 14, 2010.
Kevin Nolan,
Acting Manager, Operations Support Group, Western Service Center.
[FR Doc. 2010-15532 Filed 6-25-10; 8:45 am]
BILLING CODE 4910-13-P


incinerators) may result in greater impacts that the HAP emissions that they control. According to a life cycle analysis conducted by one commenter, incinerators used to limit HAP emissions from low risk wood products facilities would create more harm than good through their consumption of electricity and natural gas. The commenter noted that incinerators emit carbon monoxide ( CO2) and criteria pollutants, which could affect a State's ability to meet the National Ambient Air Quality Standards ( NAAQS) attainment requirements under the CAA. In particular, the commenter referred to EPA's projection that adoption of MACT floor level controls would result in increased emissions of NOx, a precursor to ozone and PM. According to the commenter, the proposed rule ( without risk provisions) would work against the industry's voluntary commitment, in response to President Bush's initiative, to reduce the emissions of greenhouse gases by 12 percent over the next 10 years. The commenter noted that the costly mandatory controls proposed,

coupled with stiff foreign competition and regulatory mandates under other MACT rules, would also create significant financial hardship across all sectors of the industry and jeopardize the commercial viability of numerous 217 facilities, many of which are the principal employer in the small, rural towns in which they are located. The projected costs for the proposed rule are enormous amounts of money for an industry already operating at the margin in a depressed economic climate. Noting EPA's prediction that the proposed rule would avert 0.07 cases of cancer per year,

or one case every 14 years, the commenter stated that this would yield a cost effectiveness of $ 2.4 billion per cancer case averted. The commenter compared the cost per premature death averted for several rules and found the PCWP rule as proposed to be one of the more costly. The commenter concluded that, in its proposed form, the rule would impose hundreds of millions of dollars ofsignificant additional cost with virtually no gain to either the environment or the health. The commenter stated that the proposed rule would be one of the most cost ineffective rules ever promulgated by EPA. According to the commenter, the overwhelming advantage of the risk based approach is that it avoids imposing high costs on low risk facilities, where there is little or no benefit to be gained for either the environment or the public interest. The commenter stated that the wood products industry as a whole poses a small to insignificant risk to human health and the environment.

The commenter stated that the final rule should include reasonable risk based mechanisms to allow facilities posing 218 no significant risk to limit their emissions below levels of concern without having to install incinerator controls. The commenter stated that facilities wishing to take advantage of the risk based exemption would take a federally enforceable permit limit that would guarantee that their emissions remain below the risk based emission standard. This would constitute an emission limitation,

within the statutory definition of the term, and it would allow facilities to forego the installation of incinerators where they are not warranted by public health and environmental considerations, the commenter claimed.

Some commenters argued that the risk based options are legally justified, protective of human health and the environment, and economically sensible. These commenters stated that the risk based options are supported under the CAA, through EPA's authority under sections 112( d)( 4) and 112( c)( 9) to set emission standards other than MACT for certain low risk facilities and delist technology defined low risk subcategories, respectively, and through what they claimed is EPA's inherent de minimis authority to avoid undertaking regulatory action in the absence of meaningful risk. One commenter pointed out that, by meeting the stringent health benchmarks necessary to qualify for the risk based compliance approaches, facilities already would have satisfied the residual risk provisions 8 years ahead of 219 the statutory requirements set forth in section 112( f) of the CAA.

Two commenters believed that the risk based approach would particularly benefit small mills located in rural areas with timber dependent economies. One commenter stated that, by offering manufacturers an opportunity to apply for subcategorization on a site specific basis, facilities that are remotely located, or which were originally planned and sited with thorough consideration of airshed impacts, would not be unduly burdened with MACT requirements which yield little or no public health benefits.

Some commenters argued that such low risk facilities should not be burdened with the requirements of MACT. One commenter noted that the regulatory framework exists within their State to implement a risk based approach. Another commenter agreed with the concept of a risk based approach but stated that it would not be appropriate for State and local programs to determine which facilities should be exempted from MACT. Another commenter suggested that exemptions be provided on a case by case basis to individual facilities that are able to demonstrate that they pose no significant risk to public health or the environment.

Several commenters opposed the risk based exemptions.

Two commenters stated that the use of risk based concepts to evade MACT applicability is contrary to the intent of the 220 CAA and is based on a flawed interpretation of section 112( d)( 4) written by an industry subject to regulation. One commenter added that the CAA requires a technology based floor level of control and does not provide exclusions for risk or secondary impacts in applying the MACT floor. The other commenter was particularly concerned about industry's unprecedented proposal to include de minimis exemptions and cost in the MACT standard process. The commenter stated that including case by case risk based exemptions would jeopardize the effectiveness of the national air toxics program to adequately protect public health and the environment and to establish a level playing field. A third commenter noted that subcategorization and source category deletions under CAA section 112( c) have been implemented several times since the MACT program began.

Some commenters pointed out that they have not been able to comment on the technical merit of the risk analysis employed by the EPA. They argued that, until the residual risk analysis procedures have been implemented via the CAA section 112( f) process, risk analysis should not be used in making MACT determinations pursuant to CAA section 112( d)( 4). Also, risk analysis could never be used to establish a MACT floor.

One commenter pointed out that, in separate rulemakings and lawsuits, EPA adopted legal positions and policies that 221 they claimed refute and contradict the very risk based and cost based approaches contained in the proposal. In these other arenas, EPA properly rejected risk assessment to alter the establishment of MACT standards. The EPA also properly rejected cost in determining MACT floors and in denying a basis for avoiding the MACT floor. ( See Brief for Respondent Environmental Protection Agency, Sierra Club v.

EPA; Brief for Respondent Environmental Protection Agency,

Cement Kiln Recycling Coalition v. EPA, No. 99 1457 and consolidated cases, ( D. C. Cir.) ( Jan. 18, 2001); Brief for Respondent Environmental Protection Agency, National Lime Ass'n v. EPA, 233 F. 3D 625 ( D. C. Cir. 2000) ( July 14,

2000).)

Response: We feel that the assertions by one commenter about the negative environmental disbenefits of the PCWP rule as proposed are overstated. We disagree that the PCWP industry as a whole poses a small to insignificant risk to human health and the environment. However, we acknowledge that there are some PCWP facilities that pose little risk to human health and the environment. Consequently, we have included an option in today's final PCWP rule that would allow individual facilities to be found eligible for membership in a delisted low risk subcategory if they demonstrate that they do not pose a significant risk to human health or the environment. The low risk subcategory 222 delisting in today's final PCWP rule is based on our authority under CAA sections 112( c)( 1) and ( 9). The statute requires that categories or subcategories meet specific risk criteria in order to be delisted. To determine whether source categories and subcategories, and their constituent sources, meet these criteria, risk analyses may be used. We disagree with the commenter that we must wait for implementation of CAA section 112( f) before utilizing risk analysis in this manner. Section 112( d)( 1) of the CAA gives us the authority to distinguish among classes, types, and sizes of sources within a category, and CAA section 112( c)( 1) does not restrict our authority to base categories and subcategories on other appropriate criteria. As discussed in more detail elsewhere in this notice, we feel these provisions of the CAA allow us to define a subcategory of sources in terms of risk. Thus, the low risk subcategory of PCWP facilities is defined in terms of risk, not cost.

We are not subcategorizing or determining MACT floors based on cost. Furthermore, because most facilities will make their low risk demonstrations following promulgation of today's final PCWP rule, the MACT level of emissions reduction required by today's final rule is not affected by facilities becoming part of the low risk subcategory.

We are not pursuing the risk based exemptions based on CAA section 112( d)( 4). We do not feel that a risk based 223 approach based on section 112( d)( 4) is appropriate for the PCWP industry because PCWP facilities emit HAP for which no health thresholds have been established and because the legislative history of the 1990 Amendments to the CAA indicates that Congress considered and rejected allowing us to grant such source specific exemptions from the MACT floor. We also are not relying on de minimis authority.

Legal issues associated with the risk based provisions are addressed elsewhere in this preamble.

In today's final PCWP rule, we are identifying the criteria we will use to identify low risk PCWP facilities and requesting that any candidate facilities, in addition to the facilities already identified as low risk in today's action, submit information to us based on those criteria so that we can evaluate whether they might be low risk.

Today's final PCWP rule also establishes a low risk PCWP subcategory based on the criteria ( and including several identified facilities) and delists the subcategory based on our finding that no source that would be eligible to be included in the subcategory based on our adopted criteria emits HAP at levels that exceed the thresholds specified in section 112( c)( 9)( B) of the CAA. To be found eligible to be included in the delisted source category, facilities will have to demonstrate to us that they meet the criteria established by today's final PCWP rule and assume federally 224 enforceable limitations that ensure their HAP emissions do not subsequently increase to exceed levels reflected in their eligibility demonstrations.

The criteria defining the low risk subcategory of PCWP facilities are included in appendix B to subpart DDDD of 40 CFR part 63. The criteria in the appendix were developed for and apply only to the PCWP industry and are not applicable to other industries. Today's final PCWP rule provides two ways that a facility may demonstrate that it is part of the low risk subcategory of PCWP facilities. First,

look up tables allow facilities to determine, using a limited number of site specific input parameters, whether emissions from their sources might cause a hazard index ( HI)

limit for noncarcinogens or a cancer benchmark of one in a million to be exceeded. Second, a site specific modeling approach can be used by those facilities that cannot demonstrate that they are part of the low risk subcategory using the look up tables.

The low risk subcategory delisting that is included in today's final PCWP rule is intended to avoid imposing unnecessary controls on facilities that pose little risk to human health or the environment. Facilities will have to select controls or other methods of limiting risk and then demonstrate, using appendix B to subpart DDDD of 40 CFR part 63 and other analytical tools, such as the " Air Toxics Risk 225 Assessment Reference Library," if appropriate in a source's case, that their emissions qualify them to be included in the low risk subcategory, and, therefore, to not be subject to the MACT compliance options included in today's final PCWP rule.

Comment: Several commenters objected to EPA using the preambles of individual rule proposals as the forum for introducing significant changes in the way that MACT standards are established. One commenter stated that, for many years, it has coordinated with EPA on development of MACT standards for the national air toxics program, and there has been no indication of any kind regarding inclusion of risk based exemptions in the first phase of the MACT program. The commenter thought it was unprecedented and alarming that EPA was proposing such a radical change at the end of Phase 1 of the MACT standard process. The commenter believed that allowing risk based exemptions requires changes to existing law and that such a debate should take place within the democratic legislative process and not in the MACT standard process. Another commenter stated that precedent setting changes of the magnitude that EPA has raised should be discussed openly and carefully with all affected parties instead of being buried in the preambles of individual standards. A third commenter expressed concern that other parties may miss commenting on the risk based 226 exemptions because they are contained within six separate proposals. The commenter added that to give the issue full consideration, the risk provisions should not be adopted within any of the final rules but should be addressed in one place, such as in revisions to the General Provisions of 40 CFR part 63, subpart A.

Response: The discussion of risk based provisions in MACT was included in individual proposals for several reasons. First, we recognize that such provisions might only be appropriate for certain source categories, and our decision making process required source category specific input from stakeholders. Second, the 10 year MACT standards, which are now being completed, are the last group of MACT standards currently planned for development, and for any risk provisions to be useful, the provisions must be finalized in a timely manner. Third, the risk based provisions are not available for any other standards that have already been implemented, and any decisions regarding risk must, therefore, be applied on a source category specific basis. We do not agree that changes to existing law are necessary because of the discretion provided to the Administrator under CAA section 112( d)( 1) to distinguish among classes, types, and sizes of sources within a category and under CAA section 112( c)( 1) to base categories and subcategories on any appropriate criteria. We consider low 227 risk facilities to be an appropriate subcategory of sources within the PCWP source category.

Comment: Several commenters stated that the risk based exemption proposal removes the level playing field that would result from the proper implementation of technologybased MACT standards. According to the commenters,

establishing a baseline level of control is essential to prevent industry from moving to areas of the country that have the least stringent air toxics programs, which was one of the primary goals of developing a uniform national air toxics program under section 112 of the 1990 CAA amendments.

The commenters argued that risk based approaches would jeopardize future reductions of HAP in a uniform and consistent manner across the nation. One commenter stated that National Air Toxics Assessment ( NATA) data show that virtually no area of the country has escaped measurable concentrations of toxic air pollution. The NATA information indicates that exposure to air toxics is high in both densely populated and remote rural areas.

One commenter disagreed with the assertion that the level playing field would be removed. The commenter pointed out that the argument that EPA should impose unnecessary and potentially environmentally damaging controls for the sole purpose of equalizing control costs across facilities would be at odds with the stated purpose of the CAA. According to 228 the commenter, the claim that the risk based approach would favor facilities located away from population centers is incorrect. As contemplated, the risk based approaches to the NESHAP would be keyed to the comparison of health benchmarks with potential maximum exposure, regardless of whether actual receptors are present at the exposure location. According to the commenter, the presence or absence of human populations would have no effect on whether facilities would qualify.

Response: We agree that one of the primary goals of developing a uniform national air toxics program under section 112 of the 1990 CAA amendments was to establish a level playing field. We do not feel that defining a lowrisk subcategory in today's final PCWP rule does anything to remove the level playing field for PCWP facilities. Today's final PCWP rule and its criteria for demonstrating eligibility for the delisted low risk subcategory apply uniformly to all PCWP facilities across the nation. Today's final PCWP rule establishes a baseline level of emission reduction or a baseline level of risk ( for the low risk subcategory). All PCWP facilities are subject to these same baseline levels, and all facilities have the same opportunity to demonstrate that they are part of the delisted low risk subcategory. The criteria for the lowrisk subcategory are not dependent on local air toxics 229 programs. Therefore, concerns regarding facilities moving to areas of the country with less stringent air toxics programs should be alleviated.

Although NATA may show measurable concentrations of toxic air pollution across the country, these data do not suggest that PCWP facilities that do not contribute to the high exposures and risk should be included in MACT regulations, notwithstanding our authority under CAA section 112( c)( 9). A discussion is provided elsewhere in this section regarding how background concentrations are accounted for by facilities demonstrating eligibility for the delisted low risk subcategory.

Comment: One commenter stated that the dockets for the MACT proposals that contain the risk approaches make it clear that the White House Office of Management and Budget ( OMB) and industry were the driving forces behind the appearance of these unlawful approaches in EPA's proposals.

The commenter cited internal e mails between the White House OMB and EPA that it asserts reveal OMB officials exerting pressure on EPA to take ownership of the deregulatory approaches developed by industry. The commenter noted that comparison of the proposal language for both the Brick and Structural Clay Products ( BSCP) rule and PCWP rule makes it clear that EPA capitulated to OMB pressure to remove references to the risk based exemptions in the PCWP proposal 230 preamble as being industry's suggested approaches, according to the commenter. The commenter cited preamble edits from OMB that the commenter believes reveals an OMB agenda to dictate EPA adoption of industry's risk based approaches,

and to signal these plans in the rulemaking proposals, even before public comment has been taken. The commenter also noted that OMB urged support of a dangerous and technically unfounded HI of 10.0. The commenter condemned the industry driven agenda that it claimed is being promoted by the White House OMB.

A second commenter stated that the accusations that EPA succumbed to industry lobbying and internal pressures are entirely unfounded. The commenter stated that risk based approaches are warranted because EPA's NESHAP program has now turned to the low risk source categories that Congress instructed EPA to address last. The commenter pointed out that 80 source categories have already been addressed with MACT standards. According to the commenter, the remaining source categories are lower priority and include a large number of facilities that pose negligible risk to public health and environment. The commenter stated that EPA purposefully saved those categories for last in accordance with Congress' explicit, risk based priority setting mandate expressed in CAA section 112( e)( 2). The commenter concluded that EPA has now reached the point where regulation by MACT 231 would result in more environmental harm than good.

Response: The first commenter is correct in stating that industry representatives and OMB support the inclusion of risk based approaches in today's final PCWP rule as a method of reducing costs. We are required by Executive Order 12866 to submit to OMB for review all proposed and final rulemaking packages that would have an annual effect on the economy of $ 100 million or more. The comments we received from OMB reflect their position that low facilities do not warrant regulation. However, the commenter is incorrect in implying that we have not exercised our independent judgment in addressing these issues. Our rationale for adopting the risk based approach in this PCWP rulemaking is that which is included in our rulemaking record, and is not based on an inappropriate abdication of our dutiessuch an approach is fully authorized under the CAA.

Effects on MACT program Comment: Several commenters expressed concern about the impact of a risk based approach on the MACT program. Some commenters stated that the proposal to include risk based exemptions is contrary to the 1990 CAA Amendments, which calls for MACT standards based on technology rather than risk as a first step. The commenters pointed out that Congress incorporated the residual risk program under CAA 232 section 112( f) to follow the MACT standards, not to replace them. One commenter added that risk based approaches would be used separately to augment and improve technology based standards that do not adequately provide protection to the public.

Another commenter believed that CAA section 112( d)( 4)

and the regulatory precedent established in over 80 MACT standards reject the inclusion of risk in the first phase of the MACT standards process. The commenter argued that the use of risk assessment at this stage of the MACT program is,

in fact, directly opposed to title III of the CAA.

Response: We disagree that inclusion of a low risk subcategory in today's final PCWP rule is contrary to the 1990 CAA Amendments. The PCWP MACT rule is a technologybased standard developed using the procedures dictated by section 112 of the CAA. The only difference between today's final PCWP rule and other MACT rules is that we used our discretion under CAA sections 112( c)( 1) and ( 9) to subcategorize and delist low risk facilities, in addition to fulfilling our duties under CAA section 112( d) to set MACT.

The CAA requires that categories or subcategories meet specific risk criteria, and to determine this, risk analyses may be used. We disagree with the commenter that we must wait for implementation of CAA section 112( f) before utilizing risk analysis in this manner. We feel that 233 today's final PCWP rule is particularly well suited for a risk based option because of the specific pollutants that are emitted by PCWP sources. For many facilities, the pollutants are emitted in amounts that pose little risk to the surrounding population. However, the cost of controlling these pollutants is high, and may not be justified by environmental benefits for these low risk facilities. Only those PCWP facilities that demonstrate that they are low risk are eligible for inclusion in the delisted low risk subcategory. The criteria included in today's final PCWP rule defining the delisted low risk subcategory are based on sufficient information to develop health protective estimates of risk and will provide ample protection of human health and the environment.

Inclusion of a low risk subcategory in today's final PCWP rule does not alter the MACT program or affect the schedule for promulgation of the remaining MACT standards.

We recognize that such provisions are only appropriate for certain source categories, and our decision making process required source category specific input from stakeholders.

The 10 year MACT standards, which are now being completed,

are the last group of MACT standards currently planned for development, and for any risk provisions to be useful, the provisions must be finalized in a timely manner.

Comment: Several commenters stated that the inclusion 234 of a risk based approach would delay the MACT program and/ or promulgation of the PCWP MACT standard. Commenters stated that the proposal to allow risk based exemptions would divert back to the time consuming NESHAP development process that existed prior to the 1990 CAA Amendments. Under this process, which began with a risk assessment step, only eight NESHAP were promulgated during a 20 year period. If the proposed approaches are inserted into upcoming standards,

the commenters feared the MACT program ( which is already far behind schedule) would be further delayed.

One commenter stated that they were strongly opposed to returning to the morass of risk based analysis in an attempt to preempt the application of technology based MACT standards and exempt facilities. The commenter stated that designing a risk based analysis procedure would also take significant resources, as evidenced by the fact that it took five plus pages in the Federal Register to discuss just the basic issues to be considered in the analysis. The commenter indicated that the demand on government resources could cause a delay in the application of MACT nationwide.

The commenter stated that EPA should also consider the issue of fairness since the rest of the industrial sector whose NESHAP have already been promulgated did not have a riskbased option.

Another commenter stated that it is evident that the 235 proposed risk based exemptions would require extensive debate and review in order to launch, which would further delay promulgation of the remaining MACT standards. The commenter stated that delays could be exacerbated by litigation following legal challenges to the rules, and such delays would trigger the CAA section 112( j) MACT hammer provision, which would unnecessarily burden the State and local agencies and the industries. The commenter concluded that, obviously, further delay is unacceptable. Another commenter agreed, stating that it is imperative that EPA meet the new deadlines for promulgating the final MACT standards.

Two commenters stated that EPA's proposal to improperly incorporate risk assessment into the technology based standard process would cripple a MACT program already in disarray. The commenters argued that the risk based approach could exacerbate the delay in HAP emissions reductions required by CAA section 112. One commenter noted that EPA's Office of Inspector General recently found that EPA is nearly 2 years behind in fulfilling its statutory responsibilities for implementing Phase 1 MACT standards.

According to the commenter, this delay potentially harms the public and environment. The inclusion of risk based exemptions in 10 year MACT standards would only further delay this process. The other commenter noted that EPA 236 lacks adequate emissions and exposure data, source characterization data, and health and ecological effects information to conduct this process anyway. This commenter believed that the air toxics program is flawed and failing to protect public health and the environment and argued that it was irresponsible for EPA to pursue a deregulatory agenda that would further weaken the effectiveness of the air toxics program. The commenter noted that EPA acknowledged the complexity and delays associated with the proposed riskbased approaches in deciding not to adopt the approaches in the final BSCP rule.

Response: We disagree that identification and delisting of a low risk subcategory in today's final PCWP rule will alter the MACT program or affect the schedule for promulgation of the remaining MACT standards, especially the PCWP MACT rule. In fact, it has not caused such a delay for the final rule. We do not anticipate any further delays in completing the remaining MACT standards. The delisting of a low risk subcategory in today's final PCWP rule affects only the PCWP rule, and not any other MACT standards.

We feel that the final PCWP rule is particularly wellsuited for a risk based option because of the specific pollutants that are emitted. For many facilities, the pollutants are emitted in amounts that pose little risk to the surrounding population. However, the cost of 237 controlling these pollutants is high and may not be justified by environmental benefits for these low risk facilities. Only those PCWP facilities that demonstrate that they are low risk are eligible for inclusion in the delisted low risk subcategory. The criteria defining the delisted low risk subcategory are based on sufficient information to develop health protective estimates of risk and will provide ample protection of human health and the environment.

Delisting of a low risk subcategory of PCWP facilities does not mean that we will provide risk based options for other industries. Furthermore, we have no intentions of reopening previously promulgated NESHAP in light of decisions made specific to the PCWP source category. The final PCWP NESHAP is being promulgated by the February 2004 court ordered deadline. Any delays in implementation of the final PCWP NESHAP caused by legal challenges, which could and often do occur for any MACT standard we promulgate without a risk based approach, are beyond our control.

2. Legal authority Section 112( d)( 4) of the CAA Comment: We received multiple comments stating that CAA section 112( d)( 4) provides EPA with authority to exclude sources that emit threshold pollutants from regulation. The commenters cited the language in section 112( d)( 4) and CAA 238 legislative history. The commenters pointed out that EPA exercised its section 112( d)( 4) authority previously in choosing not to impose control requirements on hydrogen chloride ( HCl) emissions from chemical recovery furnaces at pulp mills ( 40 CFR part 63, subpart MM, see 63 FR 18754,

18765 ( April 15, 1998)).

We also received multiple comments disagreeing that CAA section 112( d)( 4) can be interpreted to allow exemptions for individual sources. The commenters argued that section 112( d)( 4) applies only to categories or subcategories of sources and not to individual sources. These commenters also cited the language of section 112( d)( 4) and CAA legislative history. The commenters interpreted section 112( d)( 4) to state that health based thresholds can be considered when establishing the degree of the MACT floor requirements, but they should not be used in lieu of the requirements established pursuant to section 112( d)( 3). One commenter also argued that the third scenario suggested by EPA   application of section 112( d)( 4) exemption to emission points within a facility   is unlawful because there is no statutory provision within the CAA to authorize emission point by point exemption.

Several commenters supported the use of a CAA section 112( d)( 4) applicability cutoffs for both threshold and non threshold pollutants and believe that a health threshold 239 of one in a million cancer risk is appropriate for non threshold pollutants. The commenters interpreted the language in section 112( d)( 4) to mean EPA may issue standards for any pollutant for which a threshold may be established. The commenters believe that EPA could use its section 112( d)( 4) authority to establish a threshold risk of one in a million for non threshold carcinogens. The commenters also believe that section 112( d)( 4) may be properly applied to carcinogenic HAP that EPA determines have a threshold of safe exposure. The commenters claimed that the current health science for formaldehyde and acetaldehyde shows that these two HAP are threshold carcinogens that are emitted from wood products facilities at levels that will not pose a significant risk to human health.

Multiple other commenters stated that CAA section 112( d)( 4) does not apply for source categories that emit carcinogens. The commenters argued that EPA may only use the section 112( d)( 4) authority for pollutants with a well established health threshold. The commenters stated that section 112( d)( 4) only allows EPA to substitute a health threshold for a MACT standard when the threshold has been established. The commenters contended that Congress did not intend for EPA to spend time determining if a threshold exists and that it was Congress' intent that EPA 240 have a high degree of scientific certainty before using its section 112( d)( 4) authority. The commenters cited legislative history. ( See S. Rep. 101 228 at 171.) The commenters also stated that Congress specified that EPA must have direct evidence of no effects, i. e., use of a no observable effects level ( NOEL), before invoking section 112( d)( 4); thus, EPA must be sure that there are no effects from exposure at the level chosen for the emission standard.

The commenters further argued that all carcinogens must be treated as non threshold pollutants and noted that the history of the 1990 CAA Amendments shows that Congress legislated with an understanding that carcinogens do not have a safe threshold.

Response: We acknowledge the commenters' arguments regarding our discussion in the PCWP proposal preamble regarding potential applicability cutoffs for threshold pollutants under the authority of section 112( d)( 4) of the CAA. We feel that section 112( d)( 4) does not give us the authority to exempt facilities or emission points from MACT limitations on non threshold pollutant emissions. All PCWP facilities emit carcinogens ( e. g., formaldehyde), which are currently considered non threshold pollutants. Therefore,

we are not using section 112( d)( 4) authority to create riskbased options for PCWP. We do not expect to further explore the use of section 112( d)( 4) of the CAA to exempt PCWP 241 facilities from the MACT floor on a case by case basis or to set alternative standards, because PCWP facilities emit HAP for which no health thresholds have been established and because the legislative history to the 1990 Amendments to the CAA indicates that Congress considered and rejected allowing us to grant such source specific exemptions from the MACT floor. ( See, e. g., 1 Legis. Hist. at 866, 877; 2 Legis. Hist. at 2141 42, 3939.) As discussed below, we are establishing and delisting a subcategory of low risk PCWP facilities using our authority under CAA sections 112( c)( 1)

and ( 9).

We are establishing criteria in today's final PCWP rule that define a low risk subcategory of PCWP facilities, which requires demonstration that a facility warrants being included in this subcategory. The criteria are not included in the rule as emission standards or emission limits but are included in an appendix to the rule that specifies how facilities must make their low risk demonstrations and the steps that facilities must take to ensure that they remain in the low risk subcategory. We are not setting a riskbased emission limit, but, rather, we are using our CAA section 112( c)( 9) authority to delist facilities that demonstrate they meet the risk and hazard criteria for being included in this low risk subcategory.

De minimis 242 Comment: Some commenters attempted to identify a source of authority for risk based approaches that was not discussed in the preamble to the proposed rule. The commenters stated that a risk based compliance option for both threshold and non threshold HAP is well within EPA's authority under the CAA and the de minimis doctrine articulated by appellate courts. The commenters cited appellate case law which they believe makes it clear thatholds EPA may lawfully exempt de minimis sources of risk from MACT level controls because the legislative mandate of CAA section 112 is not extraordinarily rigid and the exemption is consistent with the CAA's health protective purpose. The commenters also argued that CAA sections 112( c)( 9) and 112( f)( 2) indicate that Congress considered a cancer risk below one in a million to be de minimis and,

therefore, insufficient to justify regulation under section 112. The commenters stated that ( and cited examples where)

EPA's exercise of de minimis authority has withstood judicial challenge, and that application of de minimis authority ( as well as its treatment by reviewing courts) is based on the degree of risk at issue, not on the mass of emissions to be regulated. The commenters stated that the D. C. Circuit has invalidated EPA's de minimis authority only where it was applied under statutory designs that are extraordinarily rigid. The commenters stated that CAA 243 section 112 provides clear indication of Congressional intent as to the degree of risk that properly is to be considered de minimis. A cancer risk of one in a million triggers further review under the residual risk provision of CAA section 112( f), and a one in a million cancer risk is the threshold below which EPA is authorized under CAA section 112( c)( 9)( B) to remove source categories from MACT regulation. One commenter attached a paper they developed entitled " Legal and Policy Basis for EPA's Exercise of Its De minimis Authority Under Section 112 of the Clean Air Act in the Context of the Wood Products MACT."

Other commenters argued that de minimis authority does not exist to create MACT exemptions on a facility by facility or category wide basis. In addition,

tThe commenters stated that EPA lacks de minimis authority to delist subcategories based on risk. The commenters cited case law and stated that EPA may not rely on its narrow de minimis exemption authority to escape the highly prescriptive provisions in section 112. The commenters further noted that EPA has not revealed any administrative record justifying a de minimis exemption, to demonstrate in any way that compliance with MACT would yield a gain of trivial or no value.

Response: We disagree with the commenters who claimed that the low risk approaches, especially the concentration 244 based exemption, can be justified by de minimis principles.

Our de minimis authority exists to help avoid excessive regulation of tiny amounts of pollutants, where regulation would yield a result contrary to a primary legislative goal.

It is unavailable where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs. EDF v. EPA, 82 F. 3d 451, 466 ( D. C. Cir. 1996); Public Citizen v. Young, 831 F. 2d 1108, 1112 13 ( D. C. Cir. 1987); Alabama Power v. EPA, 636 F. 2d 323, 360 61 & n. 89 ( D. C. Cir. 1979). Accordingly, a de minimis exemption to CAA section 112( d)( 3) is unavailable in today's final PCWP rule because it would frustrate a primary legislative goal by preventing application of the MACT floor to tons of PCWP facilities' HAP emissions.

The U. S. Court of Appeals for the District of Columbia Circuit has already addressed the de minimis concept in the MACT context, in National Lime Ass'n v. EPA, 233 F. 3d 625,

640 ( D. C. Cir. 2000) ( National Lime), in which the court rejected the industry petitioner's claim that, in light of both the high costs and low quantities of HAP at issue in that case, we should read a de minimis exception into the requirement that it regulate all HAP emitted by major sources. In that case, the Court found that " EPA reasonably rejected this argument on the ground that the statute ` does