
[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Rules and Regulations]
[Pages 61990-61992]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24528]



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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 406

[Docket No. FAA-2014-0822; Amdt. No. 406-8]
RIN 2120-AK55


Civil Penalty Inflation Adjustment for Commercial Space 
Adjudications; Second Amendment

AGENCY: Federal Aviation Administration, DOT.

ACTION: Immediately adopted final rule.

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SUMMARY: This final rule is the second mandatory inflation-based 
adjustment to the maximum civil penalty authorized for violations of 
the Commercial Space Launch Act of 1984, as amended. This adjustment is 
done to bring the authorized penalty for violations into compliance 
with the requirements of the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996.

DATES: Effective November 17, 2014.

FOR FURTHER INFORMATION CONTACT: Alex Zektser, General Attorney, Office 
of the Chief Counsel, International Law, Legislation, and Regulations 
Division, AGC-200, Federal Aviation Administration, 800 Independence 
Avenue SW., Washington, DC 20591; telephone (202) 267-3073; email 
Alex.Zektser@faa.gov.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking and Applicable Statutes

    The statute under which the Secretary of Transportation regulates 
commercial space transportation, 51 U.S.C. Subtitle V, sections 50901-
50923 (chapter 509), provides for the Department of Transportation 
(DOT), and, through delegation, the Federal Aviation Administration 
(FAA) to impose civil penalties on persons who violate chapter 509, a 
regulation issued under chapter 509, or any term or condition of a 
license or permit issued or transferred under chapter 509. 51 U.S.C. 
50906(h)-(i), 50917.
    This rule implements the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (FCPIAA), Public Law (Pub. L.) 101-410, as 
amended by the Debt Collection Improvement Act (DCIA) of 1996, Public 
Law 104-134, codified at 28 U.S.C. 2461 note.
    The FCPIAA and DCIA require Federal agencies to adjust minimum and 
maximum civil penalty amounts for inflation to preserve their deterrent 
impact. Under these laws, each agency must make an initial inflationary 
adjustment for all applicable civil monetary penalties, and further 
adjust these penalties at least once every four years. The agency must 
adjust the amount of the penalty using a strict statutory formula 
discussed in more detail below.

Prior Rulemakings

    This rule is the FAA's second adjustment to the maximum civil 
penalty found in 14 CFR part 406 which governs commercial space 
transportation adjudications. The initial adjustment to the maximum 
civil penalty found in 14 CFR part 406 occurred in 2010.\1\
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    \1\ Civil Penalty Inflation Adjustment for Commercial Space 
Adjudications, 75 FR 30690 (June 2, 2010).
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Background

    The FCPIAA determines inflationary adjustments by increasing civil 
penalties by a cost-of-living adjustment (COLA). Under the FCPIAA, the 
COLA for each civil penalty is the percentage by which the U.S. 
Department of Labor's Consumer Price Index for all-urban consumers 
(CPI-U) for the month of June of the calendar year preceding the 
adjustment exceeds the CPI-U for the month of June of the calendar year 
in which the amount of such civil penalty was last set or adjusted 
pursuant to the FCPIAA. The FCPIAA contains specific rules for rounding 
the inflationary increase.

Method of Calculation

    Section 406.9 of 14 CFR currently imposes a maximum civil penalty 
of $110,000 for violations of chapter 509, a regulation proscribed 
under chapter 509, or any term or condition of a license or permit 
issued or transferred under chapter 509. To determine the appropriate 
adjustment that must be made pursuant to the FCPIAA, we first find the 
CPI-U for June of the calendar year preceding the year of adjustment is 
determined. Because the adjustment in this case is being made in 2014, 
we will use the June of 2013 CPI-U, which is 233.504.\2\ Next, we 
determine the CPI-U for June of the year the civil penalty was last 
adjusted. Because the civil penalty was last adjusted in 2010, we would 
use the CPI-U for June of 2010, which is 217.965.\3\
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    \2\ See Bureau of Labor Statistics, CPI Detailed Report: Data 
for June 2013, Table 1, which may be found at http://www.bls.gov/cpi/cpid1306.pdf.
    \3\ See Bureau of Labor Statistics, CPI Detailed Report: Data 
for June 2010, Table 1, which may be found at http://www.bls.gov/cpi/cpid1006.pdf.
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    Next, we use the above CPI-U numbers to calculate the COLA. To do 
this, we subtract the CPI-U for June 2010 (217.965) from the CPI-U of 
June 2013 (233.504). We then divide the resulting difference (15.539) 
by the CPI-U for June 2010 (217.965). The resulting quotient (.07129) 
is then multiplied by 100 yielding a COLA of 7.129%.
    To calculate the raw inflationary increase we multiply the current 
maximum civil penalty ($110,000) by the COLA (7.129%). This provides a 
raw inflation increase of $7,842. Next, we round the raw inflation 
amounts by the statutory rounding formula found in Section 5(a) of the 
FCPIAA. Determination of the proper rounding formula depends on the 
current amount of the civil penalty at the time the calculation is 
made, not the size of the raw inflationary increase. The applicable 
rounding formula for the existing civil penalty of $110,000 would be 
that ``[a]ny increase . . . is rounded to the nearest . . . [m]ultiple 
of $10,000 in the case of penalties greater than $100,000 but less than 
or equal to $200,000 . . .'' Thus, the raw increase of $7,842 becomes 
$10,000 after being rounded to the nearest $10,000. Finally, the 
increase of $10,000 is added to the current civil penalty $110,000, 
resulting in an inflation-adjusted civil penalty of $120,000.

Good Cause for Not Having Notice and Comment

    Under the Administrative Procedure Act, 5 U.S.C. 553(b)(B), a final 
rule may be issued without public notice and comment if the agency 
finds good cause that notice and comment are impractical, unnecessary, 
or contrary to public interest. Good cause exists in this case to 
dispense with public notice and comment because adjustments to civil 
penalties for inflation are required by Congress, as set forth in 
Section 5 of the FCPIAA, in order to maintain the deterrent effect of 
civil penalties and promote compliance with the law. The FCPIAA serves 
as a Congressional mandate and the FAA may not exercise any discretion 
or policy judgments. The FAA also has no discretion as to the amount of 
the adjustment because the amount of the adjustment is determined using 
a strict statutory formula. Since the FCPIAA does not provide the FAA 
with any discretion regarding any aspect of this rulemaking, the FAA 
would be unable to make any changes to this rule in response to public 
comment. Accordingly, public comment is unnecessary in this case.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d), requires 
that

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the FAA consider the impact of paperwork and other information 
collection burdens imposed on the public. The FAA has determined that 
there are no current or new requirements for information collection 
associated with this rule.

International Compatibility

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

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

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulations justify its costs. 
Second, the Regulatory Flexibility Act of 1980 (RFA), Public Law 96-
354, codified at 5 U.S.C. 601-612, as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, 
requires agencies to analyze the economic impact of regulatory changes 
on small entities. Third, the Trade Agreements Act of 1999 (Trade Act), 
Public Law 96-39, codified at 19 U.S.C. 2501-2581, prohibits agencies 
from setting standards that create unnecessary obstacles to the foreign 
commerce of the U.S. In developing U.S. standards, the Trade Act 
requires agencies to consider international standards and, where 
appropriate, that they be the basis of U.S. standards. Fourth, the 
Unfunded Mandates Reform Act of 1995, (Pub. L. 104-4), codified at 2 
U.S.C. 658, 1501-03, and 1531-34, requires agencies to prepare a 
written assessment of the costs, benefits, and other effects of 
proposed or final rules that include a Federal mandate likely to result 
in the expenditure by State, local, or tribal governments, in the 
aggregate, or by the private sector, of $100 million or more, in any 
one year (adjusted for inflation).
    DOT Order 2100.5 prescribes policies and procedures for 
simplification, analysis, and review of regulations. If the expected 
impact is so minimal that a proposed or final rule does not warrant a 
full evaluation, this order permits that a statement to that effect and 
the basis for it be included in the preamble if a full regulatory 
evaluation of the cost and benefits is not prepared. Such a 
determination has been made for this final rule. The reasoning for this 
determination is as follows. This rule adjusts for inflation the 
maximum civil penalty for violations of the Commercial Space Launch Act 
of 1984, to be in compliance with the Federal Civil Penalties Inflation 
Adjustment Act of 1990. This inflation adjustment is an economic 
transfer and not a social cost.

Regulatory Flexibility Determination

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

International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal 
agencies from establishing any standards or engaging in related 
activities that create unnecessary obstacles to the foreign commerce of 
the United States. Legitimate domestic objectives, such as safety, are 
not considered unnecessary obstacles. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards.
    The FAA has assessed the potential effect of this final rule and 
determined that it would impose identical inflation adjusted civil 
penalties on domestic and international entities that violate 14 CFR 
part 406, and thus would have a neutral trade impact. Furthermore, the 
inflationary adjustment is a legitimate domestic objective preserving 
the existing deterrent impact of 51 U.S.C. subtitle V, chapter 509. 
Therefore, we have determined that this rule will result in a neutral 
impact on international trade.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement 
assessing the effects of any Federal mandate in a proposed or final 
agency rule that may result in an expenditure of $100 million or more 
(adjusted annually for inflation with the base year 1995) in any one 
year by State, local, and tribal governments, in the aggregate, or by 
the private sector; such a mandate is deemed to be a ``significant 
regulatory action.'' The FAA currently uses an inflation-adjusted value 
of $151 million in lieu of $100 million.
    Because this final rule only increases a civil penalty by $10,000, 
as required by FCPIAA, it does not contain a mandate that meets this 
threshold amount. Therefore, the requirements of Title II of the act do 
not apply.

Executive Order 13132, Federalism

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

Environmental Analysis

    FAA Order 1050.1E defines FAA actions that are categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act (NEPA) in the absence of extraordinary circumstances. The FAA has 
determined this final rule qualifies for the categorical exclusion 
identified in Chapter 3, paragraph 312d,

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and involves no extraordinary circumstances.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

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

Availability of Rulemaking Documents

    You can get an electronic copy of rulemaking documents using the 
Internet by--
    1. Searching the Federal eRulemaking Portal (http://www.regulations.gov);
    2. Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/rulemaking/; or
    3. Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html.
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the amendment number or docket number of this 
rulemaking.
    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://www.regulations.gov.

Small Business Regulatory Enforcement Fairness Act

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

List of Subjects in 14 CFR Part 406

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

The Amendment

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

PART 406--INVESTIGATIONS, ENFORCEMENT, AND ADMINISTRATIVE REVIEW

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

    Authority:  51 U.S.C. 50901-50923.

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


Sec.  406.9  Civil penalties.

    (a) Civil penalty liability. Under 51 U.S.C. 50917(c), a person 
found by the FAA to have violated a requirement of the Act, a 
regulation issued under the Act, or any term or condition of a license 
or permit issued or transferred under the Act, is liable to the United 
States for a civil penalty of not more than $120,000 for each 
violation, as adjusted for inflation. A separate violation occurs for 
each day the violation continues.
* * * * *

    Issued under authority provided by 49 U.S.C. 106(f) and 51 
U.S.C. 50904-50905 in Washington, DC, on September 29, 2014.
Michael P. Huerta,
Administrator.
[FR Doc. 2014-24528 Filed 10-15-14; 8:45 am]
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