
[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Rules and Regulations]
[Pages 85843-85854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28589]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 187

[Docket No.: FAA-2015-3597; Amdt. No. 187-36]
RIN 2120-AK53


Update of Overflight Fee Rates

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

ACTION: Final rule.

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SUMMARY: This final rule updates existing overflight fee rates using 
Fiscal Year (FY) 2013 FAA cost accounting and air traffic activity 
data. Overflight fees are charges for aircraft flights that transit 
U.S.-controlled airspace, but neither land in nor depart from the 
United States. Overflight fee rates were last updated in 2011. As a 
result, the FAA is not recovering the full cost of the services it 
provides. The FAA is increasing the rates for enroute and oceanic 
overflights based on Fiscal Year (FY) 2013 cost and air traffic 
activity data. The FAA is phasing in this rate increase over 3 years in 
equal percentage terms. This is a less burdensome approach than the 
alternative of phasing in the new rates in equal absolute terms, and is 
the same methodology used in the previous rulemaking. Finally, the FAA 
is making several organizational and clarifying revisions to the 
overflight fee requirements.

DATES: This rule is effective January 1, 2017.

ADDRESSES: For information on where to obtain copies of rulemaking 
documents and other information related to this final rule, see ``How 
to Obtain Additional Information'' in the SUPPLEMENTARY INFORMATION 
section of this document.

FOR FURTHER INFORMATION CONTACT: Aleksandra Damsz, Financial Analyst, 
Office of Financial Analysis, AFA-400, Federal Aviation Administration, 
800 Independence Avenue SW., Washington, DC 20591; telephone (202) 267-
8055; email aleksandra.damsz@faa.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    On August 28, 2015, the FAA published the notice of proposed 
rulemaking (NPRM), Update of Overflight Fee Rates (80 FR 52217). This 
rulemaking updates the existing overflight fees (last updated in a 2011

[[Page 85844]]

Final Rule) using more current FAA cost accounting and air traffic 
activity data.
    The FAA is increasing the rates for enroute and oceanic overflights 
over three 12-month intervals to bring cost recovery from FY 2008 to FY 
2013 recovery. The following table shows the increases:

       Table 1--Rate Increases for Enroute and Oceanic Overflights
------------------------------------------------------------------------
                                           Enroute rate    Oceanic rate
                                             (per 100        (per 100
              Revision date                  nautical        nautical
                                              miles)          miles)
------------------------------------------------------------------------
Current Rate............................          $56.86          $21.63
January 1, 2017 to January 1, 2018......           58.45           23.15
January 1, 2018 to January 1, 2019......           60.07           24.77
January 1, 2019 and Beyond..............           61.75           26.51
------------------------------------------------------------------------

    Each fee rate will be effective for a 12-month period. However, the 
FAA will not make fee adjustments based on fiscal year or calendar 
year, but rather in 12-month intervals based on the effective date of 
this final rule.
    The FAA received 74 comments to the NPRM. The Aircraft Owners and 
Pilots Association (AOPA) and 37 individuals (25 of whom were part of a 
form letter campaign) raised the issue that the $250 overflight fee 
billing threshold has not been raised while the fee rate has been 
raised. As a result, flights that were not getting billed in previous 
years because they were below the $250 threshold amount are now 
receiving a bill. Based on the comments received and subsequent 
analysis, the FAA is increasing the overflight fee billing threshold 
from $250 to $400.
    The FAA also finalizes several organizational and content revisions 
to part 187 to clarify the overflight fees requirements.

Summary of Costs and Benefits of the Final Rule

    The higher overflight rates based on FY 2013 unit costs will allow 
the FAA to move closer to full cost recovery of air traffic control 
services already being provided to operators. The present value of the 
fee increases through the third 12-month interval--when the full 
increase in rates will have taken place--is $9,560,692 for foreign 
operators and $141,888 for domestic operators. The increased fees 
provide greater incentives for foreign and domestic operators to 
economize on U.S. air traffic control facilities and U.S.-controlled 
airspace, thus increasing the efficient allocation of resources.

II. Authority for This Rulemaking

    The FAA's authority to issue rules on aviation safety is found in 
Title 49 of the United States Code. Subtitle I, Section 106 describes 
the authority of the FAA Administrator. Subtitle VII, Aviation 
Programs, describes in more detail the scope of the agency's authority.
    This rulemaking is promulgated under the authority described in 
Chapter 453, Section 45301, et seq. Under that Chapter, the FAA is 
charged with prescribing regulations for the collection of fees for air 
traffic control and related services provided to aircraft, other than 
military and civilian aircraft of the United States Government or a 
foreign government, that transit U.S.-controlled airspace, but neither 
take off from nor land in the United States (``overflights''). This 
final rule is within the scope of that authority.

III. Background

A. History of Overflight Fees

    The FAA's overflight fees were initially authorized in section 273 
of the Federal Aviation Reauthorization Act of 1996. After a series of 
legal challenges and refinements, overflight fee rates were implemented 
in their current form in 2001. Since that time the fee rates have been 
based on cost data from the FAA's Cost Accounting System and air 
traffic data from the FAA's Traffic Flow Management System (TFMS). They 
were last updated in 2011. The 2011 final rule updated the existing 
rates by using cost and activity data for FY 2008. Because the rates 
had not been updated for 9 years, and the total enroute and oceanic 
rate increases were significant, the FAA decided to phase in the 
increases. The 2011 final rule phased in the increases over a 4-year 
period, with rate increases occurring on October 1 of 2011, 2012, 2013, 
and 2014. Thus, on October 1, 2014, the FAA was recovering the amounts 
that would have produced full cost recovery in FY 2008.

B. Aviation Rulemaking Committee

    The FAA established and chartered an Overflight Fees Aviation 
Rulemaking Committee (ARC) consisting of foreign air carriers (and 
trade associations of those carriers) that are subject to the FAA's 
overflight fees. The ARC was chartered on May 1, 2013, with the task to 
provide the FAA a report detailing recommendations for tasks moving 
forward with the process of updating the overflight fee rates.
    The ARC met with the FAA on June 12, 2013, and on January 23, 2014. 
On February 14, 2014, the ARC submitted several recommendations on 
future overflight rate updates. For a full discussion of the ARC's 
recommendations and FAA's responses, see the NPRM published at 80 FR 
52218-52219.

IV. Discussion of the Final Rule

    The FAA received 74 comments to the FAA's notice of proposed 
rulemaking to update the fee rates. Sixty-eight comments were received 
from individuals. Of the 68 individual comments received, there were 25 
commenters who commented as part of a form letter campaign that focused 
on the interests of general aviation pilots flying from the U.S. to the 
Caribbean who make one or more intermediate stops enroute due to the 
aircraft's limited range or human physiological needs.\1\ The FAA also 
received comments from three carriers and three associations: Carriers 
included British Airways, Lufthansa Airlines and Air Canada, and 
associations included National Airlines Council of Canada (NACC), 
International Air Transport Association (IATA) and Aircraft Owners and 
Pilots Association (AOPA).
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    \1\ The flight leg between the intermediate fuel or rest stop 
outside of the United States and the destination outside of the 
United States qualifies as an overflight generating a fee where the 
flight leg transits U.S.-controlled airspace.
---------------------------------------------------------------------------

    Commenters raised a total of 17 issues. These issues, as well as 
FAA's responses, are discussed below.

A. Overflight Fee Billing Threshold

    AOPA and 37 individuals (25 of whom were part of the form letter 
campaign) raised the issue that the $250 overflight fee billing 
threshold should be raised. Their concern was that while the overflight 
fee rate has increased, the billing threshold has not increased. As a 
result, flights that were not being billed in previous years because 
they

[[Page 85845]]

were below the threshold are now receiving a bill. Commenters also 
asked that the threshold be increased to $450 and that the amendment 
should provide for automatic adjustments to correspond with future 
increases in overflight fees rates.
    FAA concurs that the overflight fee billing threshold should be 
increased. In consideration of the comments, the FAA has analyzed the 
minimum threshold for overflight billings and has decided to increase 
this minimum threshold from $250 to $400 as part of this rulemaking. 
Overflight fee rates (per 100 nautical miles) in the August 2001 final 
rule were $33.72 for enroute and $18.94 for oceanic and the rule 
included a minimum billing threshold of $250. The NPRM proposed the 
following rates over a 3 year period:

             Table 2--Proposed Enroute and Oceanic Fee Rates
------------------------------------------------------------------------
                                           Enroute rate    Oceanic rate
              Revision date                (per 100 nm)    (per 100 nm)
------------------------------------------------------------------------
Current Rate............................          $56.86          $21.63
October 1, 2015.........................           58.45           23.15
October 1, 2016.........................           60.07           24.77
October 1, 2017.........................           61.75           26.51
------------------------------------------------------------------------

    This final rule adopts the rates as proposed. The rates under this 
final rule are 83% higher for enroute and 40% higher for oceanic as 
compared with the rates in the 2001 final rule ($33.72 for enroute and 
$18.94 for oceanic). The minimum billing threshold of $250 has been 
updated to account for the percentage growth in the fee rates, 
resulting in a threshold of $457.81 for enroute and $349.92 for 
oceanic. A weighted average of the two rates is then calculated using 
actual FY 2014 enroute and oceanic miles to calculate the updated 
billing threshold of $400.

B. Excluding General Aviation

    AOPA and 67 individuals (25 of whom were part of a form letter 
campaign) commented that U.S. general aviation should be exempt from 
paying overflight fees. These commenters stated that Congress did not 
intend to impose overflight fees on general aviation when it granted 
FAA authority to establish overflight fees.
    Commenters also stated that charging general aviation traffic does 
little to recover air traffic control costs and general aviation 
traffic should not be burdened with overflight fees since they are an 
existing active consumer of fuel and other taxes which fund FAA and 
aviation services.
    Further, commenters stated their view that because the FAA excluded 
enroute Guam and San Juan costs from total costs in the NPRM, that FAA 
therefore acknowledged that these fees should not apply to U.S. general 
aviation traffic.
    The FAA notes that Congress did not differentiate between general 
aviation and commercial aviation in the overflight fees statute. Title 
49 U.S.C. 45301 (a) states that ``[t]he Administrator shall establish a 
schedule of new fees, and a collection process for such fees, for . . . 
[a]ir traffic control and related services provided to aircraft other 
than military and civilian aircraft of the United States government or 
of a foreign government that neither take off from, nor land in, the 
United States.'' Similarly, under the FAA's Fee Regulation, 14 CFR part 
187, App. B, any person who conducts a flight through U.S.-controlled 
airspace that does not include a landing or takeoff in the United 
States must pay a fee for the FAA's rendering or providing certain 
services, including but not limited to the following: Air traffic 
management; communications; navigation; radar surveillance, including 
separation services; flight information services; procedural control; 
and emergency services and training.
    Consistent with the statutory and regulatory requirements, the FAA 
is required to collect overflight fees from any person who transits US 
airspace and neither takes off or lands in the United States. Neither 
the statute nor the regulation permit the FAA to exclude general 
aviation operators or to consider whether one aviation user group 
utilizes air traffic control services more than another. Additionally, 
there is no statutory or regulatory exception to the overflight fee 
requirement when persons covered by the requirement pay fuel or other 
related aviation taxes.
    With regard to enroute Guam and San Juan costs and miles being 
excluded, the FAA has determined that the NPRM incorrectly stated that 
the combined enroute Guam and San Juan control facilities ``may handle 
a mix of general and commercial aviation traffic.'' The FAA had 
intended to state that these control facilities ``may handle a mix of 
terminal and enroute aviation traffic.'' This correction does not 
impact the underlying analysis.
    Overflight fees are assessed on all traffic types with the 
exceptions noted in the August 28, 2015 NPRM, which stated that ``The 
FAA's costs used for this fee calculation are total costs because the 
services provided benefit all system users, including overflight 
users''. 80 FR at 52218. While combined control facilities may handle a 
mix of Terminal and Enroute aviation traffic, this is not an issue 
because 49 U.S.C. 45301, as noted above, does not distinguish or exempt 
general aviation users from the fees.

C. General Aviation Charged for Same Day Fuel Stops

    AOPA and 32 individuals (25 of whom were part of a form letter 
campaign) stated that the FAA's proposal would impose overflight fees 
on U.S. registered general aviation operations that land in or depart 
from the United States but also make intermediate stops enroute due to 
the aircraft's limited range or human physiological needs. AOPA 
provided an example as follows:

    [A]n aircraft departs from an airport in Florida destined for 
the Dominican Republic in the Caribbean, but stops enroute at Nassau 
to refuel before continuing on to the Dominican Republic that same 
day. While overflight fees will not be assessed for the first leg of 
the flight between Florida and the fuel stop in Nassau, overflight 
fees under the NPRM will be assessed for the second leg of the 
flight between the fuel stop and the Dominican Republic. In 
comparison, a non-stop flight between Florida and the Dominican 
Republic would not result in any overflight fees.

    The commenters also noted that when general aviation is charged for 
same-day fuel stops, a significant amount of time is wasted in working 
with the FAA to get these charges reversed.
    The FAA emphasizes that overflight fees are assessed based on an 
evaluation of each flight. During the evaluation process, each flight 
is reviewed to consider whether an intermediate stop for fuel has 
occurred. A flight is not considered to be an overflight (i.e., 
triggering an overflight fee) if it departs or lands in the United 
States and the FAA can determine that an intermediate

[[Page 85846]]

stop for fuel occurred. In that case, no fee is assessed. The amount of 
time on the ground at an intermediary location is considered when 
making the determination.

D. Compromising Safety

    AOPA and 6 individuals stated that by failing to recognize the 
limitations of most general aviation aircraft, the proposed rule may 
encourage non-stop flights to or from U.S. airports in order to avoid 
overflight fees, even though an intermediate fuel stop would increase 
the safety of the operation or is otherwise physiologically necessary. 
Commenters argued that this is not in the best interest of safety. One 
commenter stated that to avoid the fees ``[t]he pilots will not use air 
traffic services. They will not travel, or travel unsafely, perhaps to 
the point of turning off transponders. And with this will cause 
preventable accidents.''
    As previously stated, overflight fees are assessed based on an 
evaluation of each flight. A flight is not considered to be an 
overflight if it departs or lands in the United States. This can 
include intermediate stops for fuel.
    Additionally, as discussed previously, the FAA is raising the 
minimum billing threshold from $250 to $400 as part of this rulemaking 
action. This will provide for air traffic control services in many 
instances without the pilot necessarily incurring any cost.
    Discussion of turning off transponders is an unlikely scenario and 
an unnecessary action. Use of a transponder in and of itself will not 
generate user fees. User fees are based on the filing of a flight plan 
and receiving air traffic control services such as flight following or 
instrument flight rules separation services. A discrete transponder 
code would also need to be assigned to the aircraft. One could continue 
to use the transponder without incurring any cost, such as squawking 
1200, indicating a Visual Flight Rules (VFR) operation without 
necessarily receiving air traffic control services.
    A desire to reduce or minimize the dollar cost associated with any 
flight does not alleviate a pilot from the duties and responsibilities 
associated with acting as pilot in command. The pilot in command is the 
final authority and ultimately responsible for the operational safety 
of that flight. Pilots avoiding necessary fuel stops and/or turning off 
transponders to avoid air traffic control services and fees will likely 
jeopardize the safety of that flight and create unnecessary risk. The 
overflight fee must be considered part of the planning and associated 
cost of any flight, where a pilot does not take off or land from an 
airport located in the United States. Again, intermediate fuel stops 
that are of a short duration can be considered part of an overall 
flight that originates or departs from a United States location.

E. Cost Recovery Rate Increase

    In the NPRM, the FAA asked for comments on whether it should 
expedite the increase of overflight fee rates to achieve full cost 
recovery. IATA, NACC, Lufthansa, Air Canada and British Airways opposed 
an expedited increase to enable cost recovery and suggested that the 
overflight fee rates be frozen at their present level until the ARC is 
re-convened and a new proposal for the rate increases is discussed and 
agreed upon. Air Canada noted that the Air Transport Agreement between 
Canada and the United States states that user charges must be ``just, 
reasonable, and not unjustly discriminatory.''
    The FAA has reviewed the feedback on expediting the increase in 
overflight fee rates for cost recovery and has decided to proceed with 
the rate increases proposed in the NPRM without expediting them. 
Congress has directed the FAA to establish and maintain overflight fees 
``reasonably related to the Administration's costs.'' To retain the 
cost-based relationship, that means the FAA must periodically review 
and revise its overflight fee rates, and that is why the FAA is now 
proceeding to the final rule to impose the fee rates proposed in the 
NPRM. The FAA believes that fees ``reasonably related to the 
Administration's costs'' would necessarily be ``just, reasonable, and 
not unjustly discriminatory,'' under the Transport Agreement. In 
addition, the overflight fees are not unjustly discriminatory because 
they are assessed only on aircraft flights that transit U.S.-controlled 
airspace, but neither land in nor depart from the United States. Both 
foreign and domestic operators are charged in the same manner. Those 
aircraft that do not transit U.S.-controlled airspace pay no fee.

F. Marginal Allocation

    Lufthansa, Air Canada, and IATA commented on the issue of the cost 
base used for the fee calculation and stated two concerns:
    The first comment on marginal cost allocation stated generally is 
that costs for services neither used nor required by overflights should 
be removed from the cost base. The commenters also expressed concern 
that the level of overflight fees goes beyond that which is reasonably 
related to costs for providing air traffic control and related services 
to these operations. Commenters pointed out that the ARC noted that the 
amount recovered for non-overflight \2\ services has remained 
unchanged, while overflight fees have continued to rise at a steady 
pace over the same period. IATA stated that insufficient data has been 
provided to justify FAA's claim that under the ARC proposal, ``the FAA 
would have recovered slightly less than 60% for enroute and 50% for 
oceanic of the total increase between FY 2015 rates (based on FY 2008 
costs) and rates using FY 2013 data.''
---------------------------------------------------------------------------

    \2\ ``Non-overflight services'' refers to services provided by 
the FAA to aircraft that do land in or takeoff from the United 
States, and operate in U.S. airspace under the direction of the FAA.
---------------------------------------------------------------------------

    Second, these commenters asserted that it is difficult to allocate 
overhead costs in a fair and justifiable manner to the air navigation 
cost base, specifically to the cost base of overflight charges. They 
asserted that this is because, contrary to most other air navigation 
service providers around the world, the FAA does not exclusively 
provide air traffic control services and hence, according to Air 
Canada, there is a fundamental problem with the FAA's ``organizational 
structure and complexity and the size of the overhead cost.''
    The FAA notes the cost base concerns raised by Lufthansa, Air 
Canada, and IATA are not accurate. The methodology for estimating the 
fee is the same one used in the FY 2011 Final Rule to which the ARC had 
agreed.
    Since the original issuance of the Final Rule relating to 
overflight fees in August 2001, the statutory standard for the fees was 
relaxed by Congress to provide that the fees need to be ``reasonably 
related'' to costs. This is in contrast to the previous standard in 
effect at the time of the issuance of the original Interim Final Rule 
in August 2000. That standard provided that the fees needed to be 
``directly'' related to the FAA's costs of providing the air traffic 
control and related services.
    The FAA continues to use the same methodology for calculating the 
fee rates as was used in the 2011 update. The overflight fee rate is 
calculated by dividing total ATO costs by the total flight miles. The 
rate calculation methodology is used separately for both enroute and 
oceanic cost and mile data to derive the overflight fee rate for 
enroute and oceanic. ATO costs and flight miles used in this 
calculation are system totals and not related only to overflights. 
Therefore, there is no need to exclude any costs from the cost base.

[[Page 85847]]

The FAA and ARC proposals are both based on FY 13 actual rates. The 
difference in methodology is that the FAA proposed a 3 year compounded 
annual growth rate (CAGR) phased-in over 3 years. The ARC proposal is 
based on a 5 year CAGR that only includes 3 years of phase-in. After 
year 3 the ARC recommended that a new ARC be re-convened to determine 
the need for updates after that period. Under the ARC's proposal 
therefore, the FAA would recover less than the FY13 levels.
    In response to IATA's statement that the FAA has not provided the 
data to support its claim that ``the FAA would have recovered slightly 
less than 60% for enroute and 50% for oceanic of the total increase 
between FY 2015 rates (based on FY 2008 costs) and rates using FY 2013 
data,'' the FAA provides the following details (per 100 nautical 
miles):

                    Table 3--Cost Recovery Comparison
------------------------------------------------------------------------
                                              Enroute         Oceanic
------------------------------------------------------------------------
FAA Rate--FY 2008 Cost Recovery.........          $56.86          $21.63
FAA Rate--FY 2013 Cost Recovery.........           61.75           26.51
FAA Increase............................            4.89            4.88
ARC Final Proposed Rate.................           59.75           24.09
ARC Increase............................            2.89            2.46
ARC Proposed Increase as % of FAA                    60%             50%
 Increase...............................
------------------------------------------------------------------------

    Inclusion of overhead is a commonly accepted practice in fee 
setting, is consistent with generally accepted accounting principles, 
and is a specifically allowable element of cost under Office of 
Management and Budget (OMB) Circular No. A-25 on User Charges as well 
as International Civil Aviation Organization's (ICAO'S) Policies on 
Charges for Airports and Air Navigation Services. In addition, the same 
Act of Congress that changed the above fee setting standard from 
``directly'' to ``reasonably related'' also gave the Administrator sole 
and final discretion in the determination of FAA costs. 49 U.S.C. 
45301(b)(1). Again, the methodology used for determining overhead also 
remains unchanged from the FY2011 Final Rule and is based on FAA's Cost 
Accounting System.

G. FAA Costs

    Lufthansa, Air Canada, NACC and IATA commented on the issue of 
increasing FAA costs. They expressed concern over the steady pace at 
which FAA operational costs continue to rise and their impact on 
overflight fees. Industry partners are expected to embark on cost 
control and cost reduction efforts and the FAA is urged to commit to a 
cost efficiency target that remains below inflation. Also, IATA 
expressed disagreement with the NPRM stating that the FAA ``believes 
forecasting based on projected traffic is more appropriate than using 
arbitrary cost targets'' and stated that it has found that 
unanticipated and untimely economic occurrences can significantly 
impact forecast-based traffic projections, resulting in inaccurate 
accounting of traffic demand, business plans, required resources, and 
funding streams. As an example, over the past several years, the FAA 
forecast has consistently overestimated the growth projections for 
operations in the National Airspace System. Lufthansa suggested 
freezing the overflight fee rates at their current level and 
``reconsider the whole question of overflight fees.''
    The issue of FAA's operational costs, and the rate at which they 
may increase, is outside the scope of this rulemaking. Under the 
statutory requirement, overflight fees must be ``reasonably related to 
the Administration's costs, as determined by the Administrator, of 
providing the services rendered.'' 49 U.S.C. 45301(b)(1). Neither the 
FAA traffic forecast nor cost targets are used in the fee calculation, 
but rather fees are calculated based on actual cost and miles.

H. Overflight Fee Calculation Cost Base

    Lufthansa, IATA and Air Canada commented on the cost base used for 
the overflight fee rate calculation. Lufthansa and Air Canada both 
asserted that Air Route Traffic Control Center's (ARTCC's) have staff 
dedicated to manage, organize and optimize traffic approaching major 
airports in metropolitan areas. These working positions and all 
associated costs are included in the cost base for enroute, as the 
traffic concerned is still hundreds of miles away from the respective 
TRACON. As part of the enroute cost base, the costs are partly paid for 
by overflight fees. However, according to the commenters, overflying 
traffic does not require those services and hence, these costs should 
be excluded from the cost base used for the rate calculation. IATA also 
reiterated that the ARC recommended that the costs for services not 
used by overflights (e.g., flow control into major airports and 
approach services at airports and airfields not served by a TRACON) be 
removed from the cost base.
    Lufthansa also commented that it is unacceptable for the FAA to 
simply qualify services as ``de minimis'' without providing any details 
and justification. According to Lufthansa, ``[t]he NPRM on overflight 
fees is about facts and data and transparency of these. The term[] ``de 
minimis'' is a qualification, but not a quantification, and is not 
appropriate or acceptable in this context.''
    The FAA does not agree that costs relating to flow control should 
be removed from the enroute cost base. The Traffic Management Unit 
personnel at the enroute centers are responsible for the safe and 
efficient flow of all traffic, including overflights, in their 
airspace, and it would be neither reasonable nor practicable for the 
FAA to attempt to sort out and exclude the portion of such costs solely 
attributed to overflights.

    Moreover, air traffic flow management is a specifically allowable 
item for cost recovery under ICAO's Policies on Charges for Airports 
and Air Navigation Services (ICAO Document 9082).
    While it is true that there are low activity airports and airfields 
that are not served by a TRACON or an air traffic control tower, and 
that in these instances the air traffic control services are provided 
by enroute controllers, the level of such activity is sufficiently low 
that it does not require increased staffing. See 76 FR 43114-43115 
(July 20, 2011).

I. Failed ARC Process

    British Airways, Air Canada, Lufthansa, IATA and NACC expressed 
disappointment that the FAA has chosen to dismiss the ARC's 
recommendations and stated that they viewed the ARC process as failed. 
They stated concern that the FAA's proposed rule included several new 
methodologies for which there had not

[[Page 85848]]

been any consultation with industry and for which prior indication and 
relevant information required to accurately determine the cost-based 
charges had not been provided. Had any prior indication or concerns 
been raised, these ARC members stated that they could have provided 
guidance to the Agency. Additionally, these ARC members stated that the 
FAA released its NPRM one month prior to the current rate expiration 
date, leaving no time for the ARC members to react to it and develop an 
alternative that could be supported by all parties.
    Under the ARC's May 1, 2013 Charter, the objective of the ARC was 
to provide ``advice and recommendations on the appropriate amounts for 
future overflight fees.'' However, the FAA has no obligation to accept 
the advice and recommendations; it takes the ARC's report under 
advisement. The agency also is not required to coordinate with the ARC 
after the ARC has issued its report. In most cases, the ARC would be 
terminated after its business has concluded.
    While the FAA considered the ARC's recommendations, it declined to 
implement the recommendations. Also, FY 2015 enroute and oceanic 
overflight fee rates do not have a set expiration date and remain in 
effect until notice of new rates is published and the new rates are 
effective. Consequently, the NPRM was not released one month prior to 
the expiration date of these fee rates.

J. ARC Data Transparency

    Lufthansa, British Airways and IATA commented that the ARC was not 
provided with relevant information such as staffing levels, labor 
costs, actual and projected traffic growth, and efficiency measures, to 
be able to accurately determine the cost-based user fee. They stated 
that without this information it is impossible to accurately determine 
cost based charges.
    The FAA does not concur that information relevant to overflight 
fees was kept from the ARC. The FAA provided detailed responses to ARC 
questions in 2013. Moreover, during the ARC meetings, the FAA provided 
the following relevant information to ARC members:

 Number of airports providing service for approach and 
departure services
 Difference between lower and higher level sectors
 IFR flights operating from these airports
 Inclusion and exclusion in cost allocation for enroute
 Stable and decreasing expenses from 2010 to 2013
 Specific FAA initiatives to improve efficiency
 Classification of flight miles for IFR and VFR traffic
 Detailed description and breakout of overhead costs, staffing 
levels, and capital expenditure
 Methodology for overflight fee calculation
 Results of sequestration on ATO costs
 Current rates and collection data for overflight fees
 Use of overflight fee collections
 Cost Accounting System cost of service documents
 Enroute and oceanic flight miles
 2013 President's Budget (budget in effect when the ARC met)
 2013 Senate Appropriations Bill
 Detailed summary of FAA budget breakdown
 Detailed summary specific to FAA operating budget
 Detailed summary specific to FAA capital programs
 Detailed summary specific to FAA NextGen programs
 Detailed summary specific to FAA NextGen Research, Engineering 
& Development
 Air Traffic Controller Workforce headcount, hires, and 
attrition
 System wide Traffic and Controller Trends

    The data stated above as well as responses to the ARC's questions 
include the details to accurately determine cost based fee charges.

K. Guam and San Juan Costs and Miles Exclusion

    Lufthansa noted FAA's proposal in the NPRM to exclude enroute Guam 
and San Juan costs from total FAA costs. Lufthansa noted that while it 
did not disagree with the exclusion in principle, it did not see in the 
NPRM how the exclusion would impact cost base, traffic, and fees. 
Lufthansa then questioned why this change and others in the NPRM had 
not been brought to the attention of the ARC.
    The FAA response is as follows:
    As an initial matter, the ARC concluded business on February 14, 
2014, when it issued its recommendations. It was not until August 28, 
2015, however, that FAA announced in the NPRM that it was proposing to 
exclude Guam and San Juan costs from total FAA costs. As a result, this 
change could not have been brought before the ARC, which was terminated 
18 months prior to the time that the NPRM was issued.
    Costs:
    Guam and San Juan facilities are being excluded from the enroute 
costs to be consistent with Honolulu. This determination was made after 
reviewing the ARC recommendations. As a result, the FAA enroute costs 
have decreased.
    Traffic Mileage:
    The enroute miles associated with Honolulu and oceanic miles for 
Guam were double-counted when presented to the ARC as they are also 
counted as part of the Oakland oceanic airspace. It was determined that 
the mileage was to be removed for these facilities. As a result, the 
total flight miles (GCD-nm) for enroute and oceanic were lower.
    Net Impact:
    With the decrease in costs and flight miles for enroute, the per 
100nm fee decreased. On the oceanic side, the costs remained un-changed 
while the flight miles decreased, resulting in an increased per 100 nm 
fee.
    This change was not brought to the attention of the ARC before the 
publication of the NPRM because, at the time of the change, the FAA had 
already received the ARC's recommendations.

             Table 4--Impact of the Guam and San Juan Change
------------------------------------------------------------------------
                                    Prior to Guam and  Post Guam and San
                                     San Juan change      Juan change
------------------------------------------------------------------------
                                 Enroute
------------------------------------------------------------------------
FAA Cost..........................     $4,645,629,212     $4,597,808,058
Total Flight Miles (GCD-nm).......      7,504,243,185      7,445,668,883
Rate Prior to Change (/100nm).....             $61.91             $61.75
------------------------------------------------------------------------
                                 Oceanic
------------------------------------------------------------------------
FAA Cost..........................       $184,391,603       $184,391,603

[[Page 85849]]

 
Total Flight Miles (GCD-nm).......        708,610,831        695,620,413
Rate After Change (/100nm)........             $26.02             $26.51
------------------------------------------------------------------------

    Enroute fees are $61.75 per 100 nautical miles (based on FY13 cost 
recovery) and oceanic fees are $26.51/100 nautical miles (based on FY13 
cost recovery).

L. Weight-Based Fee Rates

    Thirteen individuals stated that it is not fair that small planes 
are charged the same fee rate as large commercial planes. They 
suggested that a tiered rate be charged on only U.S.-registered 
aircraft with a not-to-exceed amount depending upon the aircraft total 
gross weight similar to landing fees at larger airports or that the 
rate be based on the number of seats on the plane.
    The FAA does not concur that the fee rates should be charged based 
on weight or the number of seats on the aircraft. As noted above, the 
FAA is required to collect overflight fees from any person who transits 
US airspace and neither takes off or lands. 49 U.S.C. 45301(a); 14 CFR 
part 187, App. B. The statutory requirement is that the overflight fees 
be ``reasonably related to the Administration's costs, as determined by 
the Administrator, of providing the services rendered.'' 49 U.S.C. 
45301(b). No distinction is made in the law between types of aircraft, 
aircraft weight, or number of seats. In addition, VFR aircraft 
utilizing flight following services are provided similar service as IFR 
traffic. They are both charged overflight fees.

M. General Aviation Excluded From the Aviation Rulemaking Committee

    One individual stated that general aviation was not represented in 
the ARC, which was established to examine overflight fees and provide 
the FAA recommendations on future overflight fee rates.
    The 2013 ARC inadvertently did not include representatives from 
general aviation because historically, members of this ARC and its 
predecessors were primarily composed of the parties from the extensive 
1997-2003 overflight fees litigation--the Air Transport Association of 
Canada and seven international air carriers. Representatives from 
general aviation were not parties to the litigation. Membership of the 
2013 ARC appears to have been an outgrowth of the 2008 overflight fees 
ARC, which appears to have been an outgrowth of the 2004 ARC on 
overflight fees. According to the August 26, 2009 ARC Report, ``[a]s 
part of the settlement with the litigating carriers, the FAA agreed to 
the creation of the ARC, which was to consist of FAA and industry 
representatives working to examine in depth the FAA's methodology for 
overflight fees and to recommend whether it should be modified.''
    Despite the fact that general aviation was not represented on the 
ARC, general aviation was provided an opportunity to review and comment 
on the final rule. Twenty-five of the 74 comments that the FAA received 
in response to the NPRM were filed by advocates of general aviation. As 
noted above, the general aviation commenters raised the issue that the 
$250 overflight fee billing threshold had not been raised while the fee 
rate had been raised. As a result, flights that were not getting billed 
in previous years because they were below the $250 threshold amount 
were now receiving a bill. As noted, the FAA concurred with the general 
aviation commenters that billing threshold should be increased. In 
consideration of the comments, the FAA will be increasing the minimum 
threshold from $250 to $400 as part of this rulemaking.

N. General Aviation Visual Flight Rules

    Lufthansa, Air Canada, NACC and IATA asked for further 
clarification on the timeline of VFR flights being included in the 
calculation of overflight fees. Additionally, three individuals stated 
that because VFR traffic neither requires nor receives the same level 
of service as IFR traffic, VFR traffic should be charged less or 
excluded from the overflight fees requirement.
    VFR traffic utilizing flight following services are already 
included in the total mileage. Hence, there is no need for a timeline. 
In order to provide VFR flight following services, air traffic control 
generates a ``flight plan'' within FAA systems that is captured in the 
TFMS. This allows the aircraft call-sign (typically tail number for VFR 
flights) to be displayed and tracked against the discrete beacon code 
assigned by air traffic control. Non-discrete beacon codes (e.g., 1200) 
are not provided by TFMS and therefore not captured in the overflights 
data. These VFR flights would not be assessed an overflight fee. This 
is consistent with the recommendation.
    Air traffic control actively monitors and controls VFR flight 
following aircraft providing them with updates and guidance when 
necessary. VFR aircraft utilizing flight following are provided similar 
service as IFR traffic.

O. Great Circle Distance

    Lufthansa, Air Canada, IATA and NACC commented on the use of great 
circle distance for calculating the nautical mile distance used in the 
overflight fee rate calculation. They stated that great circle distance 
was not part of the ARC agenda, nor was it discussed in terms of 
calculating overflight fees and stress the importance of ensuring the 
adoption of great circle distance be revenue neutral to the FAA. 
Further, they ask that a clearly defined GCD catalogue be published and 
consulted with airline users before it takes effect and that the FAA 
provide examples of same-route cost comparisons between great circle 
distance, as proposed, versus cost data (via the Cost Accounting 
System) and air traffic data (from TFMS).
    The FAA has not changed the application of great circle distance 
within overflights. The great circle distance methodology is the same 
as used in the previous rulemaking (2011 Final Rule) with no change to 
the way the fees are generated. The formula in the rule was rewritten 
to enhance clarity and transparency concerning how the fees are 
assessed. Since the great circle distance use and methodology remains 
the same, FAA has determined there is not a need to consult with the 
airline users before taking effect (since it has already been in 
effect), nor is there a need for a great circle distance catalogue to 
be published.

P. Regulatory Costs on Small Entities

    According to IATA, the NPRM indicates that there were 469 domestic 
operators (mostly small entities) that overflew U.S. controlled 
airspace in FY 2013. The NPRM provided assurances that the rulemaking 
would not have a significant economic impact on small entities 
(estimated at an average increase of $36.50 per operation). In its 
comments, IATA asked for further detail

[[Page 85850]]

as to the air traffic control services rendered to these domestic 
operators: ``how much they cost and (most importantly) who is covering 
those costs.'' IATA stated that its members should not be required to 
cover the costs incurred by these domestic operators.
    The FAA concurs that IATA members are not and will not be assessed 
costs incurred by domestic operators. Any aircraft that overflies U.S. 
controlled airspace will be charged the same overflight fee, calculated 
based on systemwide cost and traffic, regardless if it is a domestic US 
or foreign operator. Regardless of the level of exception, which is 
applied to both domestic and foreign carriers, operator origin does not 
affect overflight fee billings.

Q. Meaning of $250 Billing Threshold Language

    One individual commented that the NPRM's ``wording of Section 
187.55(b) changes the wording in the current rules from a prohibition 
on the FAA sending an invoice when monthly fees are below the threshold 
to a statement that the FAA will send an invoice when monthly fees are 
above the threshold.'' The commenter further stated that, if strictly 
interpreted, this would allow the FAA ``to send invoices when fees are 
below the threshold at its discretion'' and would require invoices 
``when fees are above the threshold.'' The commenter advised that this 
would be ``opposite to the original meaning,'' and recommended that 
``the prohibition on below-threshold invoices should be restored as 
this appears unintentional. If intentional, the FAA has offered no 
justification for the change as would be required by the rulemaking 
process.''
    The current regulatory provision addressing invoicing of overflight 
fees includes billing and states that the FAA will send an invoice to 
each user that is covered by this appendix when fees are owed to the 
FAA. If the FAA cannot identify the user, then an invoice will be sent 
to the registered owner. No invoice will be sent unless the monthly 
(based on Greenwich Mean Time) fees for service equal or exceed $250. 
Users will be billed at the address of record in the country where the 
aircraft is registered, unless a billing address is otherwise provided. 
(14 CFR part 187, appendix B, paragraph (f)(1).)
    Under this provision, if the overflight fee amount owed is less 
than $250, no invoice will be sent and no billing results. Overflight 
fees are only assessed when the invoice amount is $250 or more.
    In the NPRM, FAA suggested regulatory text that would replace the 
language in appendix B relating to invoicing. (The NPRM proposed to 
remove and reserve appendix B). (80 FR 52217, 52224 (Aug. 28, 2015).)
    The FAA does not agree that the change in wording would permit the 
agency to issue invoices for fees when the fee amount is below the $250 
threshold. The FAA also does not agree with the comment that the change 
would be ``opposite to the original meaning.'' As adopted in this final 
rule, the proposed language in section 187.55 makes no substantive 
change. It does nothing different than the existing appendix B 
provision. In both cases, the FAA will send an invoice if fees are 
owed. In both cases, if the fees equal or exceed $400, as adjusted from 
$250 based on the comments received, the FAA will send an invoice. If 
the fees are less than $400, as adjusted from $250 based on the 
comments received, then the FAA will not send an invoice and no fees 
will be owed for the services rendered. As indicated in the NPRM, the 
FAA proposed this change and others as ``organizational changes to part 
187 to clarify the overflight fee requirements.'' 80 FR 52220. The NPRM 
proposed no substantive changes to the current regulatory provision 
addressing invoicing of overflight fees found in appendix B, paragraph 
(f)(1). ``The proposed billing and payment procedures in new Sec.  
187.55 are unchanged from those in existing Appendix B.'' 80 FR 52220.

V. Summary of Regulatory Text Changes

    The changes to the existing regulatory text made pursuant to this 
final rule generally reflect ``organizational changes to part 187 to 
clarify the overflight fee requirements.'' 80 FR 52220.
    The FAA has revised the authority citation for part 187 to reflect 
current law.
    In Sec.  187.1, ``Scope,'' the FAA has removed the duplicate 
reference to Appendix A, removed the reference to Appendix B because 
Appendix B is being removed, and added a reference to Appendix C that 
inadvertently had not been added when Appendix C (computation of fees 
for production certification-related services performed outside the 
United States) was added.
    The FAA has added a new Sec.  187.3, ``Definitions,'' section to 
the rule, which revises four existing definitions from former Appendix 
B and adds a new definition for ``great circle distance'' consistent 
with the FAA's method used for calculating overflight fees.
    The FAA has added a new Sec.  187.51, ``Applicability of overflight 
fees,'' in which subparagraph (a) specifies who must pay an overflight 
fee. The FAA has added a new subparagraph (d) to address fees for 
flights through U.S.-controlled airspace covered by an FAA agreement or 
other binding arrangement. The FAA periodically enters into agreements 
with foreign states, regional groups of states, or foreign air 
navigation services providers to set the terms for the FAA's management 
or control of foreign airspace among other air navigation services 
provided by the FAA.
    The FAA has added a new Sec.  187.53, ``Calculation of overflight 
fees,'' which in subparagraph (a) retains the formula for calculating 
overflight fees from the former Appendix B but also clarifies the 
explanation of calculating that fee. Subparagraph (b) addresses how 
miles flown through each segment of airspace will be calculated, using 
great circle distance (GCD), from the point of entry into U.S.-
controlled airspace to the point of exit from U.S.-controlled airspace. 
Subparagraph (c) includes a table providing the rate for each 100 
nautical miles flown through enroute or oceanic airspace. Subparagraph 
(d) provides the mathematical formula for the total overflight fee. 
Subparagraph (e) states that the FAA will review the rates described in 
this section at least once every 2 years and will adjust them to 
reflect current costs and volume of services provided.
    In Sec.  187.55, ``Overflight fees billing and payment 
procedures,'' are unchanged from those in former Appendix B.

VI. Regulatory Notices and Analyses

A. Regulatory Evaluation

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Orders 12866 and 13563 direct that each 
Federal agency shall propose or adopt a regulation only upon a reasoned 
determination that the benefits of the intended regulation justify its 
costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) 
requires agencies to analyze the economic impact of regulatory changes 
on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) 
prohibits agencies from setting standards that create unnecessary 
obstacles to the foreign commerce of the United States. In developing 
U.S. standards, this Trade Act requires agencies to consider 
international standards and, where appropriate, that they be the basis 
of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4) requires agencies to prepare a written assessment of 
the costs, benefits, and other effects

[[Page 85851]]

of proposed or final rules that include a Federal mandate likely to 
result in the expenditure by State, local, or tribal governments, in 
the aggregate, or by the private sector, of $100 million or more 
annually (adjusted for inflation with base year of 1995). This portion 
of the preamble summarizes the FAA's analysis of the economic impacts 
of this final rule.
    In conducting these analyses, FAA has determined that this final 
rule: (1) Has benefits that justify its costs, (2) is not an 
economically ``significant regulatory action'' as defined in section 
3(f) of Executive Order 12866, (3) is not ``significant'' as defined in 
DOT's Regulatory Policies and Procedures; (4) will not have a 
significant economic impact on a substantial number of small entities; 
(5) will not create unnecessary obstacles to the foreign commerce of 
the United States; and (6) will not impose an unfunded mandate on 
state, local, or tribal governments, or on the private sector by 
exceeding the threshold identified above. These analyses are summarized 
below.
    DOT Order 2100.5 prescribes policies and procedures for 
simplification, analysis, and review of regulations. If the expected 
cost 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 to be included in the preamble if a full 
regulatory evaluation of the costs and benefits is not prepared. Such a 
determination has been made for this final rule. The reasoning for this 
determination follows.
    This rule will institute a 3-year phase-in of rate increases for 
oceanic and enroute overflights, with rates per 100 nautical miles 
increasing in three 12-month intervals to $23.15, $24.77, and $26.51 
for oceanic flights, and to $58.45, $60.07, and $61.75 for enroute 
flights. The final rate of $26.51 for oceanic services, reached at the 
end of the third 12-month interval, is derived from the FAA's FY 2013 
total cost of providing these services ($184,391,603) divided by the 
total nautical miles (695,620,413 nm) flown by operators (overflights 
and non-overflights) in oceanic airspace. An analogous calculation is 
made to obtain the third 12-month interval rate of $61.75 for enroute 
services ($4,597,808,058/7,445,668,883 nm). These higher rates based on 
FY 2013 unit costs will allow the FAA to move closer to full cost 
recovery of air traffic control services already being provided to 
operators.
    Tables 5 and 6 show estimates of the increase in overflight fees 
for domestic operators and foreign operators for the three 12-month 
intervals, using FY 2013 overflight mileage totals, thus assuming no 
annual growth. As the tables show, the present value (at a 7 percent 
discount rate) in 2013 dollars of the projected fee increases through 
the third 12-month interval--when the full increase in rates will have 
taken place--is $141,888 for domestic operators and $9,560,692 for 
foreign operators. The updated fee rates will provide greater 
incentives for foreign and domestic operators to economize on U.S. air 
traffic control facilities and U.S.-controlled airspace, thus 
increasing the efficient allocation of resources.

                                  Table 5--Domestic Operators--Overflight Fees
----------------------------------------------------------------------------------------------------------------
               Domestic Operators                     Current         Year 1          Year 2          Year 3
----------------------------------------------------------------------------------------------------------------
Oceanic Fees (per 100 nm).......................          $21.63          $23.15          $24.77          $26.51
Oceanic Billings w/o Final Rule.................         528,616         528,616         528,616         528,616
Oceanic Billings w/Final Rule...................         528,616         565,707         605,400         647,878
    Increase in Oceanic Billings................               0          37,091          76,784         119,262
Enroute Fees (per 100 nm).......................           56.86           58.45           60.07           61.75
Enroute Billings w/o Final Rule.................         634,376         634,376         634,376         634,376
Enroute Billings w/Final Rule...................         634,376         652,064         670,245         688,933
    Increase in Enroute Billings................               0          17,688          35,869          54,557
    Increase in Overflight Billings.............               0          54,779         112,653         173,819
    PV Increase in Overflight Billings..........               0          51,195          98,395         141,888
----------------------------------------------------------------------------------------------------------------


                                   Table 6--Foreign Operators--Overflight Fees
----------------------------------------------------------------------------------------------------------------
                Foreign Operators                     Current         Year 1          Year 2          Year 3
----------------------------------------------------------------------------------------------------------------
Oceanic Fees (per 100 nm).......................          $21.63          $23.15          $24.77          $26.51
Oceanic Billings w/o Final Rule.................      28,072,427      28,072,427      28,072,427      28,072,427
Oceanic Billings w/Final Rule...................      28,072,427      30,042,152      32,150,083      34,405,920
    Increase in Oceanic Billings................               0       1,969,724       4,077,656       6,333,493
Enroute Fees (per 100 nm).......................           56.86           58.45           60.07           61.75
Enroute Billings w/o Proposed Rule..............      62,543,288      62,543,288      62,543,288      62,543,288
Enroute Billings w/Proposed Rule................      62,543,288      64,287,136      66,079,607      67,922,055
    Increase in Enroute Billings................               0       1,743,848       3,536,318       5,378,767
    Increase in Overflight Billings.............               0       3,713,572       7,613,974      11,712,259
    PV Increase in Overflight Billings..........               0       3,470,628       6,650,340       9,560,692
----------------------------------------------------------------------------------------------------------------
Notes: 1. Rates for overflights are per 100 nautical miles. 2. Fees are in U.S. dollars. 3. Values are
  discounted back to the effective date of the rule at a 7% discount rate.\3\ 4. Fees are slightly overstated in
  that we do not account for the fact that under the old rule operators incurring a bill of less than $250 were
  not charged, and under the new rule operators incurring a bill of less than $400 will not be charged. Over the
  3-year period, FY2013-FY2015, monthly fees of less than $250 were small, constituting between 0.3% and 0.4% of
  annual total fees, and monthly fees of between $250 and $400 were smaller, constituting between 0.2% and 0.3%
  of annual total fees.

B. Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354, subsection 
(b)) (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

[[Page 85852]]

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.
---------------------------------------------------------------------------

    \3\ Office of Management and Budget, Circular A-94, ``Guidelines 
and Discount Rates for Benefit-Cost Analysis of Federal Programs,'' 
October 29, 1992, p. 8.
---------------------------------------------------------------------------

    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.
    While the FAA did not receive comments on the regulatory 
flexibility analysis, the FAA did receive comments from 25 individuals 
and from AOPA, an industry group representing small entities. They 
commented that the overflight fees should not be applied to general 
aviation aircraft and that the fees went up but the $250 threshold was 
not changed. The FAA notes that Congress did not differentiate between 
general aviation and commercial aviation in the overflight fee statute. 
AOPA commented that with the fee increase users were now paying fees 
when they exceeded the $250 threshold. In response, the FAA has raised 
the threshold to $400 in this final rule.
    We ranked in descending order all 469 domestic operators based on 
their overflight fees for fiscal year 2013 and found that the 14 top 
ranked operators accounted for more than 40% of that year's total 
domestic overflight fees. Of these 14 operators we identified 4 as 
small entities (using a size standard of 1,500 or fewer employees) and 
found all of them to have an increase in overflight fees as a 
percentage of annual revenues to be less than 1 percent. 4 5 
We believe this rule does not impose a significant economic impact on 
those small entities.
---------------------------------------------------------------------------

    \4\ Employment and revenue data is from www.Manta.com.
    \5\ Since our overflight fees by operator include both enroute 
and oceanic overflights, we first calculate the weighted average 
percentage increase in fees from the final rule, which we find to be 
14.95%. To assess the economic impact on any one U.S. operator, we 
then multiply the operator's 2013 operating fees by 14.95% to 
estimate the increase in that operator's fees as a result of the 
final rule. We then divide this estimate by the operator's annual 
revenue to assess the impact of the final rule on the operator.
---------------------------------------------------------------------------

    Therefore, as provided in section 605(b), the head of the FAA 
certifies that this rulemaking will not result in a significant 
economic impact on a substantial number of small entities.

C. International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the 
Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal 
agencies from establishing standards or engaging in related activities 
that create unnecessary obstacles to the foreign commerce of the United 
States. Pursuant to these Acts, the establishment of standards is not 
considered an unnecessary obstacle to the foreign commerce of the 
United States, so long as the standard has a legitimate domestic 
objective, such as the protection of safety, and does not operate in a 
manner that excludes imports that meet this objective. The statute also 
requires consideration of international standards and, where 
appropriate, that they be the basis for U.S. standards. ICAO standards 
allow providers of navigation services to require users of these 
services to pay their share of the related costs. The FAA has 
determined that this rule primarily affects foreign commercial 
operators. The recovery of costs of providing air navigation services 
is consistent with ICAO standards and international practice. Foreign 
operators will be charged a fee only if they use U.S.-controlled 
airspace without taking off or landing in the U.S., and U.S. operators 
will be charged in the same manner. Accordingly, the FAA does not 
believe this rule will create an unnecessary obstacle to the foreign 
commerce of the United States.

D. 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 
(in 1995 dollars) 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 $155.0 million in lieu of $100 
million.
    This rule does not contain such a mandate. Therefore, the 
requirements of Title II of the Act do not apply.

E. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that the FAA consider the impact of paperwork and other information 
collection burdens imposed on the public. The FAA has determined that 
there is no new requirement for information collection associated with 
this rule. The information used to track overflights (including the 
information collection necessary to implement this rule) can be 
accessed from flight plans filed with the FAA. The collection of 
information from the Domestic and International Flight Plans is 
approved under OMB information collection 2120-0026.

F. International Compatibility and Cooperation

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to conform to 
International Civil Aviation Organization Standards and Recommended 
Practices to the maximum extent practicable. The FAA has reviewed the 
corresponding ICAO Standards and Recommended Practices and has 
identified no differences with these regulations.
    The ICAO guidance document on aviation fees and charges, ICAO 
Document 9082 (Ninth Edition--2012), ICAO's Policies on Charges for 
Airports and Air Navigation Services, recommends consultations before 
imposing fees. In addition, Article 12 of the Air Transport Agreement 
between the United States of America and the European Union and its 
Member States (April 30, 2007, as amended June 24, 2010) encourages 
consultation.
    By convening an ARC, presenting updated cost and traffic data to 
the ARC, and considering the ARC's recommendations, the FAA consulted 
with system users prior to proposing the overflight fee update. 80 FR 
52217 (August 28, 2015). Additionally, the FAA invited comments on the 
proposal as part of its rulemaking process, which permitted 
participation by all interested parties.

G. Environmental Analysis

    FAA Order 1050.1F identifies FAA actions that are categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act in the absence of extraordinary circumstances. The FAA has 
determined this rulemaking action qualifies for the

[[Page 85853]]

categorical exclusion identified in paragraph 5-6.6f and involves no 
extraordinary circumstances.

VII. Executive Order Determinations

A. Executive Order 13132, Federalism

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

B. Executive Order 13211, Regulations That Significantly Affect Energy 
Supply, Distribution, or Use

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

C. Executive Order 13609, Promoting International Regulatory 
Cooperation

    Executive Order 13609, Promoting International Regulatory 
Cooperation, (77 FR 26413, May 4, 2012) promotes international 
regulatory cooperation to meet shared challenges involving health, 
safety, labor, security, environmental, and other issues and to reduce, 
eliminate, or prevent unnecessary differences in regulatory 
requirements. The FAA has analyzed this action under the policies and 
agency responsibilities of Executive Order 13609, and has determined 
that this action will have no effect on international regulatory 
cooperation.

VIII. Additional Information

A. Availability of Rulemaking Documents

    An electronic copy of rulemaking documents may be obtained from the 
Internet by--
     Searching the Federal eRulemaking Portal (http://www.regulations.gov);
     Visiting the FAA's Regulations and Policies Web page at 
http://www.faa.gov/regulations_policies or
     Accessing the Government Publishing Office's Web page at 
http://www.fdsys.gov
    Copies may also be obtained 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) 267-9677. 
Commenters must identify the docket, notice, or amendment number of 
this rulemaking.
    All documents the FAA considered in developing this final rule, 
including economic analyses and technical reports, may be accessed from 
the Internet through the Federal eRulemaking Portal referenced above.

B. Comments Submitted to the Docket

    Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the 
docket number for this action. Anyone is able to search the electronic 
form of all comments received into any of the FAA's 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.).

C. Small Business Regulatory Enforcement Fairness Act

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

List of Subjects in 14 CFR Part 187

    Administrative practice and procedure, Air transportation.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends chapter I of title 14, Code of Federal 
Regulations as follows:

PART 187--FEES

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1. Revise the authority citation for part 187 to read as follows:

    Authority:  31 U.S.C. 9701; 49 U.S.C. 106(f), 106(g), 106(l)(6), 
40104-40105, 40109, 40113-40114, 44702, 45301.


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2. Revise Sec.  187.1 to read as follows:


Sec.  187.1   Scope.

    This part prescribes fees only for FAA services for which fees are 
not prescribed in other parts of this chapter or in 49 CFR part 7. The 
fees for services furnished in connection with making information 
available to the public are prescribed exclusively in 49 CFR part 7. 
Appendix A to this part prescribes the methodology for computation of 
fees for certification services performed outside the United States. 
Appendix C to this part prescribes the methodology for computation of 
fees for production certification-related services performed outside 
the United States.

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3. Add Sec.  187.3 to read as follows:


Sec.  187.3   Definitions.

    For the purpose of this part:
    Great circle distance means the shortest distance between two 
points on the surface of the Earth.
    Overflight means a flight through U.S.-controlled airspace that 
does not include a landing in or takeoff from the United States.
    Overflight through Enroute airspace means an overflight through 
U.S.-controlled airspace where primarily radar-based air traffic 
services are provided.
    Overflight through Oceanic airspace means an overflight through 
U.S.-controlled airspace where primarily procedural air traffic 
services are provided.
    U.S.-controlled airspace means all airspace over the territory of 
the United States, extending 12 nautical miles from the coastline of 
U.S. territory; any airspace delegated to the United States for U.S. 
control by other countries or under a regional air navigation 
agreement; or any international airspace, or airspace of undetermined 
sovereignty, for which the United States has accepted responsibility 
for providing air traffic control services.

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4. Add new Sec. Sec.  187.51, 187.53, and 187.55 to read as follows:


Sec.  187.51   Applicability of overflight fees.

    (a) Except as provided in paragraphs (c) or (d) of this section, 
any person who conducts an overflight through either Enroute or Oceanic 
airspace must pay a fee as calculated in Sec.  187.53.
    (b) Services. Persons covered by paragraph (a) of this section must 
pay a fee for the FAA's rendering or providing of certain services, 
including but not limited to the following:
    (1) Air traffic management.
    (2) Communications.
    (3) Navigation.
    (4) Radar surveillance, including separation services.
    (5) Flight information services.
    (6) Procedural control.
    (7) Emergency services and training.
    (c) The FAA does not assess a fee for any military or civilian 
overflight operated by the United States Government or by any foreign 
government.

[[Page 85854]]

    (d) Fees for overflights through U.S.-controlled airspace covered 
by a written FAA agreement or other binding arrangement are charged 
according to the terms of that agreement or arrangement unless the 
terms are silent on fees.


Sec.  187.53   Calculation of overflight fees.

    (a) The FAA assesses a total fee that is the sum of the Enroute and 
Oceanic calculated fees.
    (1) Enroute fee. The Enroute fee is calculated by multiplying the 
Enroute rate in paragraph (c) of this section by the total number of 
nautical miles flown through each segment of Enroute airspace divided 
by 100 (because the Enroute rate is expressed per 100 nautical miles).
    (2) Oceanic fee. The Oceanic fee is calculated by multiplying the 
Oceanic rate in paragraph (c) of this section by the total number of 
nautical miles flown through each segment of Oceanic airspace divided 
by 100 (because the Oceanic rate is expressed per 100 nautical miles).
    (b) Distance flown through each segment of Enroute or Oceanic 
airspace is based on the great circle distance (GCD) from the point of 
entry into U.S.-controlled airspace to the point of exit from U.S.-
controlled airspace based on FAA flight data. Where actual entry and 
exit points are not available, the FAA will use the best available 
flight data to calculate the entry and exit points.
    (c) The rate for each 100 nautical miles flown through Enroute or 
Oceanic airspace is:

 
------------------------------------------------------------------------
               Time period                 Enroute rate    Oceanic rate
------------------------------------------------------------------------
January 1, 2017 to January 1, 2018......           58.45           23.15
January 1,2018 to January 1, 2019.......           60.07           24.77
January 1, 2019 and Beyond..............           61.75           26.51
------------------------------------------------------------------------

    (d) The formula for the total overflight fee is:

Rij = E*DEij/100 + O*DOij/100

Where:

Rij = the total fee charged to aircraft flying between entry point i 
and exit point j.
DEij = total distance flown through each segment of Enroute airspace 
between entry point i and exit point j.
DOij = total distance flown through each segment of Oceanic airspace 
between entry point i and exit point j.
E and O = the Enroute and Oceanic rates, respectively, set forth in 
paragraph (c) of this section.

    (e) The FAA will review the rates described in this section at 
least once every 2 years and will adjust them to reflect the current 
costs and volume of the services provided.


Sec.  187.55   Overflight fees billing and payment procedures.

    (a) The FAA will send an invoice to each user when fees are owed to 
the FAA. If the FAA cannot identify the user, then an invoice will be 
sent to the registered owner. Users will be billed at the address of 
record in the country where the aircraft is registered, unless a 
billing address is otherwise provided.
    (b) The FAA will send an invoice if the monthly (based on Universal 
Coordinated Time) fees equal or exceed $400.
    (c) Payment must be made by one of the methods described in Sec.  
187.15(d).

Appendix B to Part 187--[Removed and Reserved]

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5. Remove and reserve Appendix B to Part 187.

    Issued under authority provided by 49 U.S.C. 106(f) and 45302, 
in Washington, DC, on November 7, 2016.
Michael P. Huerta,
Administrator.
[FR Doc. 2016-28589 Filed 11-28-16; 8:45 am]
 BILLING CODE 4910-13-P


