[Federal Register Volume 87, Number 224 (Tuesday, November 22, 2022)]
[Rules and Regulations]
[Pages 71218-71238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25288]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 61 and 68

[Docket No. FAA-2021-1040; Amdt. Nos. 61-152 and 68-2]
RIN 2120-AL51


Medical Certification Standards for Commercial Balloon Operations

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

ACTION: Final rule.

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

DATES: This rule is effective December 22, 2022, except for the 
amendments to Sec. Sec.  61.3(c)(2)(vi), 61.23(a)(2)(i), 
61.23(a)(2)(ii), 61.23(a)(2)(iii), 61.23(b)(3), 61.23(b)(4), 
61.23(b)(5), 61.23(d)(1)(iii), and 61.23(d)(2)(i)), which are effective 
May 22, 2023.

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: Bradley Zeigler, Training & 
Certification Group, Federal Aviation Administration, 800 Independence 
Avenue SW, Washington, DC 20591; telephone (202) 267-9601; email 
[email protected].

SUPPLEMENTARY INFORMATION: 

List of Abbreviations and Acronyms Frequently Used in This Document

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

Table of Contents

I. Executive Summary
    A. Purpose of the Regulatory Action
    B. Changes Made in This Final Rule
    C. Summary of the Costs and Benefits
II. Authority for This Rulemaking
III. Background
    A. Need for Regulation
    B. National Transportation Safety Board (NTSB) Recommendations
    C. Summary of the NPRM
    D. General Overview of Comments
IV. Discussion of Comments and the Final Rule
    A. Application of Medical Certificate Requirement to Only 
Operations Based on Size of Envelope or Passenger Capacity
    B. Application of Rule to Commercial Balloon Operations Without 
Passengers
    C. Drug and Alcohol Testing
    D. Miscellaneous Issues
    E. Comments Regarding Miscellaneous Amendments
V. Regulatory Notices and Analyses
    A. Summary of the Regulatory Impact Analysis
    B. Regulatory Flexibility Act
    C. International Trade Impact Assessment
    D. Unfunded Mandates Assessment
    E. Paperwork Reduction Act
    F. International Compatibility
    G. Environmental Analysis
VI. Executive Order Determination
    A. Executive Order 13132, Federalism
    B. Executive Order 13211, Regulations That Significantly Affect 
Energy Supply, Distribution, or Use
    C. Executive Order 13609, International Cooperation
VII. Privacy
VIII. Additional Information
    A. Electronic Access and Filing
    B. Small Business Regulatory Enforcement Fairness Act

I. Executive Summary

A. Purpose of the Regulatory Action

    This final rule implements section 318 (``Commercial Balloon Pilot 
Safety Act of 2018'') of Public Law 115-254, the FAA Reauthorization 
Act of 2018. In addition, this final rule responds to National 
Transportation Safety Board (NTSB) Safety Recommendation A-17-034, 
which recommends that the FAA remove the medical certification 
exemption in part 61 for commercial balloon pilots \1\ receiving 
compensation for transporting passengers.
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    \1\ The FAA uses the term ``commercial balloon pilots'' in this 
rule to refer to airmen conducting operations in a balloon for 
compensation or hire, including operations involving the carriage of 
persons or property.
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    This final rule amends Sec. Sec.  61.3 and 61.23 of title 14 of the 
Code of Federal Regulations (14 CFR) to require commercial balloon 
pilots conducting

[[Page 71219]]

operations for compensation or hire to hold a valid second-class 
medical certificate. However, this final rule will continue to allow 
pilots to provide flight training in balloons without requiring a 
medical certificate. The rule also amends the table setting forth 
medical certificate durations in Sec.  61.23(d) for consistency with 
amendments to Sec. Sec.  61.3 and 61.23(a) and (b).
    The FAA is also making two miscellaneous amendments. First, the FAA 
is amending sections of part 61 to allow persons to act as pilot in 
command (PIC) during a special medical flight test authorized under 
part 67 without holding a medical certificate.
    The second is making a minor change to regulations amended or 
established by the Alternative Pilot Physical Examination and Education 
Requirements final rule to \2\ allow a required pilot flightcrew member 
who is not acting as PIC to operate under BasicMed.
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    \2\ The Alternative Pilot Physical Examination and Education 
Requirements final rule amended sections of part 61 and established 
part 68 to allow persons to conduct certain flight operations in 
powered aircraft while exercising the privileges of a private pilot 
certificate without holding a medical certificate issued under part 
67. The provisions established by Alternative Pilot Physical 
Examination and Education Requirements final rule will be 
collectively referred to in this preamble as BasicMed. 82 FR 3149 
(Jan. 11, 2017).
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B. Changes Made in This Final Rule

    The FAA published a Notice of Proposed Rulemaking (NPRM), Medical 
Certification Standards for Commercial Balloon Operations on November 
18, 2021 (86 FR 64419). This rulemaking finalizes the proposal, without 
change.

C. Summary of the Costs and Benefits

    This final rule will generate costs for balloon pilots to obtain a 
second-class medical certificate and for some pilots to seek an 
Authorization for Special Issuance of a Medical Certificate (special 
issuance). There will also be costs to the FAA to implement this 
requirement in terms of reviewing and processing submissions related to 
certification. The FAA estimates the present value of total costs over 
ten years is $2.4 million to $16.3 million with a mid-estimate of $6.9 
million at a 7 percent discount rate and $2.9 million to $19.9 million 
with a mid-estimate of $8.4 million at a 3 percent discount rate. The 
annualized costs over ten years are $0.3 million to $2.3 million with a 
mid-estimate of $1.0 million at a 7 percent discount rate and $0.3 
million to $2.3 million with a mid-estimate of $1.0 million at a 3 
percent discount rate. The wide range in the cost estimates primarily 
reflects the uncertainty on the number of commercial balloon pilots who 
will seek medical certification.
    The benefits of the final rule include enhanced safety of 
commercial balloon operations through reduced risks of accidents, 
fatalities, and injuries caused by medical impairment of balloon 
pilots.

II. Authority for This Rulemaking

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

III. Background

A. Need for Regulation

    On the morning of July 30, 2016, a hot air balloon struck power 
lines and burst into flames over a pasture near Lockhart, Texas, 
killing all 15 passengers and the pilot. The flight was conducted in a 
balloon (N2469L) operated by Heart of Texas Hot Air Balloon Rides under 
part 91 as a sightseeing passenger flight. The pilot was exercising the 
privileges of a commercial pilot certificate.
    Through its investigation, the NTSB determined that the pilot had 
been diagnosed with depression and attention deficit hyperactivity 
disorder (ADHD) \3\ and identified medications found in the pilot's 
system that are known to cause impairment.\4\
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    \3\ ADHD is known to cause cognitive deficits that may affect 
decision-making and, ultimately, safety of flight.
    \4\ The medications identified by the NTSB are listed on the 
FAA's ``Do Not Issue'' and ``Do Not Fly'' lists found in the AME 
Guide. https://www.faa.gov/about/office_org/headquarters_offices/avs/offices/aam/ame/guide/pharm/dni_dnf/.
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    The NTSB determined that the probable cause of this accident was 
the pilot's pattern of poor decision-making that led to the initial 
launch, continued flight in fog and above clouds, and descent near or 
through clouds that decreased the pilot's ability to see and avoid 
obstacles. The NTSB further determined that (1) the pilot's impairing 
medical conditions and medications, and (2) the FAA's policy to not 
require a medical certificate for commercial balloon pilots, were 
contributing factors in the accident.\5\
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    \5\ NTSB Accident Report NTSB/AAR-17/03 PB2018-100161 at p. 49.
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    Prior to the Heart of Texas accident, the FAA generally considered 
commercial balloon operations to be a low-risk and extremely small 
segment of aviation in the United States. Research conducted by the FAA 
revealed 54 commercial hot air balloon accidents between 2003 and 2013, 
including four fatal accidents. In 2015, commercial sightseeing balloon 
operations represented 0.057% of the flight hours of total civil 
aircraft operations.\6\ Prior to this accident, pilots conducted 
commercial balloon operations in the U.S. for decades without any 
accidents specifically attributed to medical deficiencies.
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    \6\ FAA Docket Submission to the National Transportation Safety 
Board for the investigation of the Heart of Texas Hot Air Balloon 
Accident Balony Kubicek BB85Z balloon, N2469L, Lockhart, Texas; July 
30, 2016, Dated April 19, 2017. Page 6.
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    In response to the Heart of Texas accident, the FAA worked with 
industry advocacy organization Balloon Federation of America (BFA) to 
support its 2017 Envelope of Safety Program.\7\ The voluntary program 
promoted safety within the commercial balloon industry by educating 
consumers with information when making balloon ride purchase decisions 
and offered multiple tiers of safety accreditation by the BFA. While 
the FAA supports the efforts of the BFA to enhance safety and 
professionalism of the industry while providing consumers with more 
information when choosing a commercial balloon ride operator, the 
agency notes that not all balloon operators are members of the BFA, and 
BFA members are not required to adhere to any specific standards in 
order to maintain professional membership. Consequently, the FAA 
considered BFA's efforts to achieve voluntary compliance with industry 
standards to be insufficient alone to address the need for additional 
oversight of airmen

[[Page 71220]]

conducting balloon operations for compensation or hire.
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    \7\ https://www.bfa.net/88888979-news/1579-envelope-of-safety-program-announced.
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    In Section 318 (``Commercial Balloon Pilot Safety Act of 2018'') of 
Public Law 115-254, The FAA Reauthorization Act of 2018 (the Act), 
Congress directed the FAA to ``revise section 61.3(c) of Title 14, Code 
of Federal Regulations (relating to second-class medical certificates), 
to apply to an operator of an air balloon to the same extent such 
regulations apply to a pilot flightcrew member of other aircraft.''

B. National Transportation Safety Board Recommendations

    The NTSB made two Safety Recommendations in response to the 2016 
Heart of Texas accident. Safety Recommendation A-17-034 urged the FAA 
to ``Remove the medical certificate exemption in 14 [CFR] 61.23(b) for 
pilots who are exercising their privileges as commercial balloon pilots 
and are receiving compensation for transporting passengers.'' Safety 
Recommendation A-17-045 urged the FAA to ``analyze your current 
policies, procedures, and tools for conducting oversight of commercial 
balloon operations in accordance with your Integrated Oversight 
Philosophy, taking into account the findings of this accident; [and] 
based on this analysis, develop and implement more effective ways to 
target oversight of the operators and operations that pose the most 
significant safety risks to the public.''
    The FAA agreed with the safety benefits of Safety Recommendation A-
17-034 \8\ and stated its intention to add the recommended change to 
its rulemaking agenda. The FAA responded to Safety Recommendation A-17-
045 \9\ by initiating a plan to develop and implement more effective 
ways to target oversight of operators posing the most significant 
safety risk to the public. The FAA identified and increased 
surveillance on the operators of the largest classes of balloons using 
information obtained from the Civil Aviation Registry, repair stations, 
and industry.
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    \8\ NTSB Safety Recommendation A-17-034 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-17-034.
    \9\ NTSB Safety Recommendation A-17-045 https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=A-17-045.
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C. Summary of the NPRM

    The FAA proposed amending the exception to hold a medical 
certificate for balloon pilots in Sec.  61.3(c)(2)(vi) by limiting it 
to certain types of balloon operations. Specifically, the FAA proposed 
that any person holding a pilot certificate with a balloon class rating 
and exercising the privileges of a private pilot certificate in a 
balloon; or providing flight training in a balloon in accordance with 
Sec.  61.133(a)(2)(ii) is not required to hold a medical certificate. 
As a result of the amendment, the general requirement in Sec.  
61.3(c)(1) for a person to hold a medical certificate to serve as a 
pilot flight crewmember would apply to balloon pilots conducting 
operations for compensation or hire in a balloon (other than flight 
training) to hold a medical certificate issued under part 67.
    Section 61.23 sets forth the specific requirements for when a 
particular class of medical certificate is required. Under Sec.  
61.23(a)(2)(ii), a second-class medical certificate generally is 
required when exercising the privileges of a commercial pilot 
certificate. Currently, under Sec.  61.23(b)(3), a second-class medical 
certificate is not required when exercising the privileges of a pilot 
certificate with a glider category rating or balloon class rating in a 
glider or balloon, as appropriate.
    First, the NPRM proposed to amend Sec.  61.23(a)(2) to add a 
requirement for any person exercising the privileges of a commercial 
pilot certificate for compensation or hire in a balloon to hold a 
second-class medical certificate. Second, the NPRM proposed to remove 
the allowance in Sec.  61.23(b) by specifying that a medical 
certificate is not required when exercising the privileges of a private 
pilot certificate with a balloon class rating in a balloon or when a 
person is exercising the privileges of a commercial pilot certificate 
with a balloon class rating in a balloon and providing flight training 
in accordance with Sec.  61.133(a)(2)(ii).
    Section 61.23(d) includes a table providing the duration for each 
class of medical certificate depending on several factors, including 
the medical certificate privilege that is being exercised. In order to 
maintain consistency with other medical certificate privileges in Sec.  
61.23(d), the NPRM proposed related amendments to the table of medical 
certificate durations at Sec.  61.23(d)(1)(iii) and (d)(2)(i). 
Specifically, the NPRM proposed to add persons who are exercising the 
privileges of a commercial pilot certificate (other than for flight 
training) in a balloon to the established medical certificate duration 
table in Sec.  61.23(d).
    In addition, the NPRM proposed amendments to alleviate confusion 
and eliminate burdens for persons obtaining special medical flight 
tests and for persons operating under BasicMed.
    First, the NPRM proposed amending Sec. Sec.  61.3(c)(2) and 
61.23(b) to allow persons to act as PIC during a special medical flight 
test authorized under part 67 without holding a medical certificate. 
Second, the NPRM proposed amending several sections to alleviate 
certain burdens that resulted from the BasicMed final rule. 
Specifically, the NPRM proposed amending Sec. Sec.  61.3(c)(2)(xiv), 
61.23(c)(3)(i)(C) through (E), 61.113(i), 68.3(a) and (b), and 68.9(a) 
by expanding the requirements to allow required pilot flightcrew 
members to operate under BasicMed in addition to those individuals 
acting as PIC.

D. General Overview of Comments

    The FAA considered 192 comments received during the 60-day public 
comment period. Of the comments received, 15 were out of scope, 17 were 
generally supportive of the proposed rule, and 112 generally opposed 
the rule as proposed. A significant number of commenters (142 
commenters) suggested changes to the proposed rule. The remaining 
comments expressed neither support nor opposition to the rule. The 
majority of commenters were individuals. Two industry advocacy 
organizations submitted comments, as well as the NTSB.

IV. Discussion of Comments and the Final Rule

    This rule amends part 61 to require a person who holds a commercial 
pilot certificate with a lighter-than-air category and balloon class 
rating to hold a valid second-class medical certificate when exercising 
the privileges of that certificate in a balloon for compensation or 
hire, unless that person is conducting flight training in accordance 
with Sec.  61.133(a)(2)(ii).
    Specifically, the exception in Sec.  61.3(c)(2)(vi) is amended to 
reflect that any person holding a pilot certificate with a balloon 
class rating who is exercising the privileges of a private pilot 
certificate in a balloon; or providing flight training in a balloon in 
accordance with Sec.  61.133(a)(2)(ii) is not required to hold a 
medical certificate. By revising the exception in Sec.  61.3(c)(2)(vi), 
balloon pilots conducting operations for compensation or hire in a 
balloon (other than flight training), such as carrying passengers or 
property and advertising operations, are required under Sec.  
61.3(c)(1) to hold a medical certificate issued under part 67.
    Further and for consistency across the regulations, the FAA is 
amending Sec.  61.23(a)(2) to require any person exercising the 
privileges of a commercial pilot certificate for compensation or hire 
in a balloon, except when conducting flight training, to hold a second-
class medical

[[Page 71221]]

certificate; and Sec.  61.23(b) to remove the allowance to exercise the 
privileges of a balloon pilot certificate without a medical 
certificate. Additionally, the FAA adds an exception at Sec.  
61.23(b)(4)-(5) to explain under what circumstances balloon operations 
are excepted from the requirement to hold a second-class medical 
certificate.

A. Application of Medical Certificate Requirement to Operations Based 
on Size of Envelope or Passenger Capacity

    Seventy-two commenters recommended that the proposed rule should 
only apply to certain operations based on size of envelope or number of 
people in the basket. Commenters proposed a passenger threshold ranging 
from 3 or more to 8 or more people. The Balloon Federation of America 
(BFA) stated that ``any medical requirement for commercial balloon 
pilots should be limited to those operating balloons of such size as to 
legally transport 6 or more passengers.'' Other commenters described 
the threshold as balloons with envelopes with volumes ranging from 
77,682 cubic feet to 180,000 cubic feet.
    Many of the commenters emphasized that these thresholds separated 
small-scale commercial balloonists from large-scale professional 
balloon ride operators. A common sentiment among commenters was that 
small commercial balloon operators were being over-regulated as a 
result of mishaps from larger balloon operators. Some commenters 
suggested that the NTSB safety recommendations were specifically 
directed toward the safety of larger passenger-carrying balloons.
    The FAA notes that the second-class medical certification 
requirement represents a minimum safety standard for commercial 
operations. For non-air carrier operations, the regulatory requirements 
for medical certification do not vary based on the number of passengers 
aboard the aircraft or the size of the balloon. The FAA has long held 
that a passenger who engages with an aircraft operator in common 
carriage has a higher expectation of safety and oversight. The FAA 
notes that while operators of smaller balloons generally carry fewer 
passengers per year, the risk to any individual passenger in a smaller 
balloon is not significantly different than the risk to which they are 
exposed in a larger balloon.
    The FAA does not concur with the assertion that the NTSB safety 
recommendations were specifically directed toward the safety of larger 
passenger-carrying balloons. Recommendation A-17-034 recommends that 
the FAA ``remove the medical certification exemption in 14 Code of 
Federal Regulations 61.23(b) for pilots who are exercising their 
privileges as commercial balloon pilots and are receiving compensation 
for transporting passengers.'' The FAA notes that while the NTSB 
directed the recommendation towards operations receiving compensation 
for transporting passengers, the NTSB did not distinguish between 
classes of operators in terms of size or passenger carrying capacity. 
Likewise, Congress included no distinction based on size or passenger-
capacity in Section 318 when it directed the FAA to remove the 
exception from medical certification for commercial balloon pilots.
    Accordingly, this medical certification requirement will apply to 
all holders of a commercial pilot certificate with a lighter-than-air 
category balloon class rating when exercising the privileges of that 
certificate in a balloon for compensation or hire, unless that person 
is conducting flight training, regardless of the size of the aircraft 
or the number of passengers carried.

B. Application of Rule to Commercial Balloon Operations Without 
Passengers

    The medical certification requirement in this final rule does not 
provide an exception to commercial operations not involving the 
carriage of passengers.
    Several commenters contended that commercial balloon operations 
that do not involve the carriage of passengers for compensation or hire 
should not require the PIC to hold a second-class medical certificate. 
BFA stated that ``there is no more risk to the flying public in these 
activities, which include commercial advertising contract flying and 
special shape flying, than private ballooning for sport.'' The BFA 
strongly opposed the inclusion of commercial operations that do not 
conduct paying passenger activities.
    Commenters to the proposed rule provided multiple examples of how 
commercial operations frequently occur without passengers. For example, 
one commenter operates a one-of-a-kind specially shaped balloon that is 
hired by events for its uniqueness and popularity. The city of Albany 
Parks & Recreation noted that the proposed rule would have a 
significant impact on their ability to recruit pilots for their annual 
festival. This commenter noted that ``the second-class medical 
requirement may significantly impact the number of balloons available 
for the festivals as some pilots may decide to forego the expense and 
trouble.''
    Another commenter said that many companies incorporate balloons 
into their marketing strategies, noting that these balloons are 
utilized as portable billboards to either be displayed while tethering 
on the ground or while conducting promotional flights during balloon 
festivals. One commenter observed that some events exclude private 
pilots from attending ``since they interpret that getting your room, 
show up money or propane as `compensation'.'' \10\
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    \10\ The FAA notes that compensation for display of an aircraft 
from the ground does not constitute a commercial operation. See 
Legal Interpretation to Karen Torres (March 17, 2011). A balloon 
operator may be compensated for attending an event and displaying a 
balloon, including inflating the envelope while the aircraft remains 
on the ground. An operation is generally considered a commercial 
operation when the operator is compensated to fly the aircraft, with 
or without passengers. Further, a balloon pilot may exercise private 
pilot privileges to fly the balloon at an event he or she received 
compensation for attending, provided the compensation was not 
provided with the expectation that the operator fly the balloon 
during the event. See Legal Interpretation to Tucker Comstock (Sept. 
8, 1977); see also Legal Interpretation to Gary Bruce Eaton (Dec. 7, 
2012).
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    Section 318 of the FAA Reauthorization Act of 2018 directed the FAA 
to ``revise section 61.3(c) of title 14, Code of Federal Regulations 
(relating to second-class medical certificates), to apply to an 
operator of an air balloon to the same extent such regulations apply to 
a pilot flightcrew member of other aircraft.''
    The FAA proposed this rule specifically to implement section 318 of 
the FAA Reauthorization Act of 2018. Accordingly, the FAA proposed a 
requirement that any person exercising the privileges of a commercial 
pilot certificate for compensation or hire in a balloon, except when 
conducting flight training, hold a second-class medical certificate. 
The proposed rule made no distinction regarding whether the affected 
operation involved the carriage of passengers for compensation or hire, 
instead describing affected operations as including, but not limited 
to, operations for purposes of passenger sightseeing, aerial 
advertising, maintenance test flights, and research and development 
flights.
    FAA regulations require a second-class medical certificate for all 
commercial pilots of fixed-wing aircraft and rotorcraft, regardless of 
whether the operation involves the carriage of passengers. Further, the 
statute does not allow an exception for commercial operations not 
involving the carriage of passengers. Therefore, in accordance with the 
express statutory language in Section 318 of the FAA Reauthorization 
Act of 2018, the FAA will require all commercial balloon pilots to hold 
a

[[Page 71222]]

second-class medical certificate, as proposed in the NPRM.\11\
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    \11\ The FAA excluded flight training because the legislation 
directed that the FAA to apply medical certification to commercial 
balloon pilots to the same extent as commercial pilots of other 
aircraft. The FAA has historically treated medical certification for 
persons conducting flight training different from other commercial 
operations.
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C. Drug and Alcohol Testing

    As discussed in the NPRM, the FAA considered whether to expand the 
definition of an operator under Sec.  91.147 to include commercial 
balloon operations carrying passengers for compensation or hire. Doing 
so would have created a new requirement for such operators to obtain a 
Letter of Authorization (LOA) from the FAA, which would include a 
requirement to implement drug and alcohol testing programs in 
accordance with 14 CFR part 120. The FAA specifically sought comment on 
whether drug and alcohol testing should be required for commercial 
balloon operations.
    Several commenters noted that the rule is insufficient because it 
lacks drug and alcohol testing. Most of the commenters expressing this 
sentiment used it as a rationale for opposing the rule, pointing out 
that holding a medical certificate does not compel a person to be 
randomly tested for prohibited substances and, as such, would have done 
little to prevent the Lockhart, Texas and Albuquerque, New Mexico \12\ 
accidents.
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    \12\ On June 26, 2021, the pilot and 4 passengers of a balloon 
were killed in an accident in Albuquerque, New Mexico. The accident 
is currently under investigation by the NTSB. (NTSB Accident No. 
WPR21FA242).
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    The FAA considered this alternative and concluded that such a 
requirement goes beyond the scope of the statutory mandate. The FAA 
established the Sec.  91.147 provision in the 2007 National Air Tour 
Safety Standards final rule \13\ following a pattern of accidents in 
powered aircraft. In that rule, the FAA specifically excluded balloon 
operations. The FAA notes that any future revisions of National Air 
Tour Safety Standards will require a risk-based assessment of need 
based on available safety data.
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    \13\ 72 FR 19382, Apr 18, 2007.
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    While medical certification under part 67 does not include a drug 
and alcohol testing component, it does require the applicant to 
authorize the FAA to access the applicant's National Driver Register 
(NDR) records. The NDR Problem Driver Pointer System (PDPS) identifies 
records on individuals whose privilege to operate a motor vehicle has 
been revoked, suspended, canceled or denied, or who have been convicted 
of serious traffic-related offenses. Even if the applicant fails to 
disclose these convictions on the medical certificate application, the 
FAA receives a report from the NDR, providing an additional safeguard 
and mechanism for verifying the accuracy of the information provided by 
the airman.
    In the case of the pilot of the Lockhart accident, the accident 
pilot had a 20-year history of drug and alcohol convictions. Even if 
the airman had omitted his history of traffic offenses on an 
application for a medical certificate, the FAA would likely have been 
made aware of the motor vehicle actions from NDR records and had the 
opportunity to deny the application for a medical certificate based on 
evidence of substance dependence or substance abuse, in accordance with 
Sec. Sec.  67.207(a)(4), 67.207(b), 67.107(a)(4), and 67.107(b).
    Accordingly, this final rule does not set forth a regulatory 
requirement for commercial balloon operators and pilots to implement a 
drug and alcohol testing program at this time.

D. Miscellaneous Issues

Whether Commercial Ballooning Poses a Risk Significant Enough To 
Warrant Additional Regulation
    Multiple commenters stated that ballooning is an insignificant 
activity in the National Airspace System (NAS) and should not be 
subject to additional regulation.
    The FAA does not consider commercial ballooning an insignificant 
activity. The FAA notes that the Lockhart, Texas and Albuquerque, New 
Mexico accidents demonstrate that ballooning is not insignificant, and 
the potential risk for catastrophic accidents is not insignificant. 
While the FAA concurs with commenters who asserted that balloon 
operations represent a small percentage of the total operations in the 
NAS, the FAA notes that balloons are frequently used for carrying 
passengers for compensation and present a risk that justifies a level 
of medical oversight equivalent to that of pilots of powered aircraft 
for certain operations such as commercial sightseeing operations. 
Further, the NTSB and Congress have identified this risk and called on 
the FAA to extend the requirements for medical certification to balloon 
pilots operating for compensation or hire.
Effects to the Industry Due to the Cost and Ability To Comply With the 
Rule
    A number of commenters expressed concerns that the final rule would 
greatly reduce the number of balloon pilots due to costs associated 
with obtaining a second-class medical certificate. The FAA acknowledges 
that in some cases, some commercial operators--particularly low-volume 
commercial operators--may opt to no longer conduct commercial 
operations due to the cost of obtaining a medical certificate 
outweighing the marginal economic benefit of conducting operations for 
compensation. While some pilots may leave the industry, other balloon 
pilots may opt to enter the commercial balloon industry to fill the 
void left by departing commercial pilots.
    While the FAA does not expect a significant decrease in the 
availability of balloon pilots, changes in supply of balloon pilots 
could affect prices as well. The regulatory economic analysis does not 
quantify any potential changes in consumer and producer surplus from 
changes in supply. If the rule effectively screens out certain 
individuals for disqualifying medical conditions as intended, any 
potential adverse effects on individual applicants should be offset by 
the safety gains to the public. Nevertheless, the cost to obtain a 
second-class medical certificate is unlikely to be the sole reason to 
cause a commercial balloon pilot to discontinue commercial operations. 
The FAA estimates the cost per pilot to obtain a second-class medical 
certificate would be between $160 and $685 annually, depending on 
whether a special issuance would be necessary. This amount equates to 
about 0.06% to 0.37% of average annual revenues for small entities.\14\
---------------------------------------------------------------------------

    \14\ See Final Regulatory Flexibility Analysis discussed later 
in this preamble.
---------------------------------------------------------------------------

    The opportunity cost (including the time and fees) of seeking a 
second-class medical certification for some pilots may outweigh the 
monetary gains of operating commercially, resulting in some pilots 
opting not to seek medical certification. The FAA does not have 
sufficient information to predict how the supply of commercial balloon 
pilots would change as a result of this rule.
    Multiple commenters stated that following the Heart of Texas 
accident, the ballooning insurance providers have required all 
commercial pilots flying balloons larger than 120,000 cubic feet to 
hold a second-class medical certificate. The revised regulatory 
economic analysis has factored in roughly 8.8% out of 4,869 commercial 
pilots with balloon class ratings who probably fall into this group, 
based on 2021 data from the Airmen Certification Database. The intent 
of the rule is to provide safety protection for all balloon

[[Page 71223]]

passengers, not just passengers flying with companies operating larger 
balloons.
Treatment of Balloon Operations for Compensation or Hire as Commercial 
Aviation Operations
    Commenters acknowledged that, while they do receive compensation, 
they do not consider themselves ``commercial'' in a traditional sense. 
Many commenters used examples of being offered limited compensation in 
the form of lodging or fuel to participate in ballooning events, often 
without the expectation to carry passengers. Several commenters noted 
that many commercial operators only occasionally conduct operations for 
compensation or hire and do so to subsidize the cost of ballooning.
    The concept of conducting commercial operations for compensation or 
hire for the purpose of defraying the cost of flying is not unique to 
ballooning. The FAA has long held that when a passenger responds to an 
offer made by an operator to the public to provide an aeronautical 
service in exchange for receipt of anything of value that is contingent 
on the pilot operating the aircraft, the public expects a higher level 
of oversight and safety assurance. The FAA does not delineate the 
volume of passenger activity for purposes of defining medical 
eligibility requirements.
    The FAA notes that there are certain circumstances in which a pilot 
may accept limited compensation for operating an aircraft when 
exercising private pilot privileges. These exceptions are enumerated in 
Sec.  61.113(b) through (h). Balloon pilots exercising private pilot 
privileges may share expenses with passengers under Sec.  61.113(c), 
provided those expenses are limited to items such as fuel, oil, airport 
expenditures, or rental fees. Further, a pilot sharing expenses under 
Sec.  61.113(c) may not pay less than the pro rata share of the 
operating expenses, and must not engage in common carriage by ``holding 
out'' to the public.
Suggestions for Alternative Methods of Establishing Medical Eligibility
    Several commenters suggested alternative methods of meeting medical 
eligibility requirements. A few commenters suggested the FAA should 
allow BasicMed in lieu of a second-class medical certificate for 
commercial balloon operations. Multiple commenters proposed to allow 
state division of motor vehicle (DMV) record checks or NDR checks in 
lieu of medical certificate requirements. Finally, commenters suggested 
the medical certificate requirement not be applied to existing 
commercial pilot certificate holders.
    The FAA does not support allowing balloon pilots exercising 
commercial pilot privileges to establish medical eligibility under 
BasicMed. Section 318 of the 2018 FAA Reauthorization Act directed the 
FAA to revise regulations relating to second-class medical certificates 
to apply to commercial balloon pilots to the same extent such 
regulations apply to pilots of other aircraft.
    Section 2307 of the FAA Extension, Safety, and Security Act of 2016 
directed the FAA to issue or revise regulations to establish physical 
examination and education requirements, resulting in BasicMed. BasicMed 
was intended by statute to serve as an alternative means of 
establishing medical eligibility for limited non-commercial operations 
by persons exercising the privileges of a private pilot certificate. 
Section 2307 specifically excluded operations conducted for 
compensation or hire and specifically prohibited passenger or property 
carried for compensation or hire.
    The FAA does not concur with the suggestion that the FAA implement 
motor vehicle record checks for commercial balloon pilots instead of a 
second-class medical certificate requirement. A motor vehicle record 
alone provides an incomplete picture of a person's medical history and 
does not provide enough information to determine whether that person 
has a medical condition that would prevent him or her from safely 
operating an aircraft. Further, the medical eligibility requirements to 
hold a driver's license are not consistent from state to state and, 
therefore, may not be sufficient to ensure the safety of pilots 
operating a balloon carrying passengers for compensation or hire.
    When applying for a medical certificate in MedXPress, an applicant 
authorizes the NDR, through a designated State Department of Motor 
Vehicles, to furnish to the FAA information pertaining to his or her 
driving record consistent with 49 U.S.C. 30305(b)(3). The NDR PDPS 
identifies records on individuals whose privilege to operate a motor 
vehicle has been revoked, suspended, canceled or denied, or who have 
been convicted of serious traffic-related offenses.
    NDR checks are just one part of the medical screening process and 
are insufficient alone to screen for disqualifying medical conditions. 
A person's motor vehicle arrest record reveals only the times an 
individual was arrested while operating a motor vehicle under the 
influence of alcohol or another drug. Further, an NDR check alone would 
not reveal evidence of a substance abuse problem if the applicant does 
not operate a motor vehicle while intoxicated. Most substantially, an 
NDR check alone would not uncover the myriad of potential non-substance 
abuse-related medical conditions that are evaluated in conjunction with 
a medical examination conducted under part 67.
    The FAA does not consider the concept of excluding existing 
commercial pilot certificate holders from having to comply with a 
medical certificate requirement to be in the interest of flight safety. 
Existing commercial pilot certificate holders pose a similar medical 
risk to the NAS as new commercial pilot certificate holders. Such an 
exception for existing commercial pilots would remove this group from 
the safety benefit of medical certification without any additional 
medical risk mitigation.
Insurance Requirements
    Commenters contended the rule is unnecessary because commercial 
insurers already require medical certificates. One commenter reported 
that insurance companies now require second-class medical certification 
for pilots of large passenger-carrying hot air balloons. The commenter 
added that the insurance requirement makes the proposed rule redundant 
and unnecessary.
    Commercial balloon operators are not required by regulation to be 
insured, so withholding a regulatory requirement to hold a medical 
certificate and relying on insurance companies and operators to comply 
voluntarily with the insurance requirements would be insufficient alone 
to address the need for additional oversight of airmen conducting 
balloon operations for compensation or hire.
    The FAA notes that commercial insurance requirements are not 
uniform and apply only to operators who choose to obtain such coverage 
and comply with the policy conditions. Further, insurance requirements 
for a medical certificate are not universal. Insurance providers 
typically require medical certificates for the pilots of commercial 
operations that are larger in terms of passenger capacity and number of 
operations.
Focus on FAA Enforcement
    Commenters noted that the FAA should focus on enforcement of 
existing rules and/or surveillance for balloon operators, rather than 
put forward new

[[Page 71224]]

regulations requiring medical certification.
    The FAA establishes regulatory standards to ensure safe operations 
in the NAS. The FAA's system is largely based on, and dependent upon, a 
culture of compliance with regulatory standards within the regulated 
community. FAA personnel use compliance, administrative, or legal 
enforcement actions to uphold the public's safety interest in ensuring 
that all regulated persons conform their conduct to statutory and 
regulatory requirements.
    The FAA applies risk-based analysis to determine how, when, and 
where oversight and surveillance activities take place. The Integrated 
Oversight Philosophy allows both certificate holders and non-
certificate holders to work with the FAA to ensure corrective action is 
appropriate and aims to address the root cause(s) of safety issues. 
Using this philosophy, the FAA oversight focus has been on existing 
surveillance, education, and awareness to the entire balloon industry 
to reduce the accident rate and improve balloon safety.
Comparison of Balloon and Glider Operations
    Multiple commenters noted that the FAA stated in the NPRM that 
gliders were out of scope because they carried only 1 or 2 passengers. 
The commenters argued that based on the FAA's rationale, balloons that 
carry 2 passengers or less should be excluded as well.
    The FAA proposed this rule specifically to implement section 318 of 
the FAA Reauthorization Act of 2018 and respond to NTSB Safety 
Recommendation A-17-034, which recommended that the FAA remove the 
medical certification exemption in part 61 for commercial balloon 
pilots receiving compensation for transporting passengers. Section 318 
directed the FAA to revise regulations as they relate to operators of 
balloons. The FAA considered whether glider operations conducted for 
compensation or hire should be included in the scope of this rule. The 
FAA ultimately determined that as a category of aircraft, the safety 
record and general operational risk profile of gliders carrying 
passengers for compensation or hire did not warrant further regulatory 
oversight concerning the medical suitability of commercial glider 
pilots.
Efficacy of Medical Certificate Requirement
    Several commenters expressed doubt that a medical certification 
requirement will reduce the accident rate of commercial balloon 
operations. Commenters noted that inflight medical incapacitation is 
rare, and the FAA medical standards do not address the operational 
considerations of ballooning versus other aircraft. They contended the 
FAA lacks sufficient data to support a medical certification 
requirement. Further, they contended that a medical certificate 
requirement would not have affected the outcome of the two most recent 
significant fatal commercial accidents in Lockhart, Texas and 
Albuquerque, New Mexico.
    The FAA is statutorily mandated to establish standards necessary to 
determine that an airman is physically able to perform the duties 
related to the privileges of their pilot certificate. See 49 U.S.C. 
44703. Further, the FAA is statutorily mandated to revise regulations 
related to second-class medical certificates to apply to commercial 
balloon pilots.
    In regards to whether medical standards address the operational 
considerations of ballooning, the FAA notes that medical certification 
standards address multiple dimensions of medical qualification, 
including medical factors that could diminish judgment and decision-
making in addition to sudden physical incapacitation. While the 
standards do not apply to any specific type of aircraft operation, the 
standards do address general categories of medical considerations that 
are applicable to balloon operations. These categories include: vision; 
ear, nose, and throat; equilibrium; mental; neurological; 
cardiovascular; and general health. The standards established under 
part 67 are minimum standards. However, the Federal Air Surgeon does 
have the discretion to authorize special issuance of a medical 
certificate or a Statement of Demonstrated Ability (SODA), which offers 
flexibility for the FAA to issue a medical certificate based on the 
individual circumstances of an applicant.
    As noted in the proposed rule, the 2016 Lockhart accident served as 
an example of how a lack of medical oversight allowed the pilot to 
continue to operate a balloon for compensation or hire in spite of a 
questionable medical history. While instances of sudden inflight 
incapacitation are rare, there are documented cases of events 
occurring. Medical incapacitation incidents are often not reported if 
no accident occurred. When an accident does occur, it can be difficult 
to pinpoint whether medical issues of the pilot were a factor, as 
evidence is often limited to the pilot's available medical records, 
postmortem toxicology and autopsy reports. Consequently, it is 
difficult to quantify the impact of medical factors on aviation safety.
    While medical certification cannot completely mitigate the risk of 
an accident due to a medical condition of the pilot, the public holds 
an expectation for a higher level of operational oversight when the 
flight is conducted for compensation or hire. One method the FAA has to 
accomplish this objective is medical certification.
Medical Certificates for All Balloon Operations
    One commenter suggested that medical certificates should be 
required for all balloon operations.
    The FAA will not extend the medical certificate requirement to 
balloon pilots exercising private or sport pilot privileges. Non-
commercial balloon operations are among the lowest-risk operations in 
the NAS and do not warrant the additional regulatory burden of medical 
certification requirements. While pilots exercising the privileges of a 
private pilot or sport pilot certificate in a balloon are not required 
to hold a medical certificate, they must comply with the 14 CFR 
61.53(b) requirement to abstain from operating an aircraft while that 
person knows or has reason to know of any medical condition that would 
make that person unable to operate in a safe manner. In addition, these 
pilots have fewer privileges, and in the case of sport pilots, more 
operational restrictions, than a commercial pilot holding his or her 
flight services out to the public for compensation. The FAA has 
determined that compliance with a prohibition from operating an 
aircraft during a medical deficiency sufficiently mitigates the risk of 
an accident in a balloon due to a medical-related issue in an operation 
exercising private or sport pilot privileges.

E. Effective Date

    Commenters recommended the FAA should delay the effective date of 
the medical certificate requirement provision beyond 180 days. Most of 
those comments suggested that the rule take effect one year after 
publication. Commenters cited a lack of Aviation Medical Examiners 
(AMEs), the ongoing COVID-19 public health emergency, and delays in 
processing applications by the FAA.
    Multiple commenters expressed concern that there are delays in 
processing medical certificate applications if a special issuance is 
required, preventing applicants from complying with the rule within 180

[[Page 71225]]

days. The BFA asserted that the process of obtaining a special issuance 
is burdensome and may take months, or in some cases years, to obtain a 
medical certificate.
    The FAA proposed in the NPRM that compliance with the medical 
certificate requirement become effective 180 days from publication of 
the final rule. This would provide sufficient time for the majority of 
affected persons to comply with this rule by obtaining a medical 
certificate prior to the effective date. For reasons explained below, 
the medical certificate requirement will go into effect on May 22, 
2023, 180 days after publication of this rule.
    Based on historical data, the FAA estimates that over 95% of 
applicants, including those who need a special issuance, will have a 
disposition within 150 days. Approximately 1% of all applicants for FAA 
medical certificates are issued a denial. Of those denials, 95% of the 
final dispositions resulted from a lack of response to FAA requests for 
additional information. Only 4% of applicants take over 150 days for 
certification. Many of these individuals have medical conditions, which 
require mandatory periods of observation to demonstrate stability and/
or allow for the risk of recurrence to diminish.
    The FAA acknowledges that pilots with certain medical conditions 
may be required to obtain additional evaluation(s) prior to issuance of 
a medical certificate. The FAA recommends that affected airmen, 
especially those with known health conditions, initiate the process to 
apply for a medical certificate in a timely manner, taking into 
consideration the time needed to obtain relevant medical information 
and the time necessary for the FAA to review. Individuals who delay 
applying for a medical certificate risk loss of some operating 
privileges due to the inability to comply with the requirement to hold 
a second-class medical certificate.
    Several commenters noted that the ongoing COVID-19 public health 
emergency would affect the ability of balloon pilots to obtain a 
medical certificate within 180 days. These commenters noted that there 
is a limited availability of health care workers due to COVID-19.
    Commenters did not provide evidence that COVID-19 continues to 
limit the access to AMEs. While initial response to COVID-19 did result 
in significant restrictions and more limited access to healthcare 
facilities and physicians, access to AMEs has since returned to pre-
pandemic levels.
    Multiple commenters noted that balloon pilots never had medical 
certification requirements prior to this rule. BFA noted that a 
significant proportion of commercial balloon pilots are older and at an 
age where they likely have one or more medical conditions requiring a 
special issuance. Accordingly, commenters suggested that, as a 
population, balloon pilots will require more time to obtain a medical 
certificate.
    The FAA notes that, as a group, older pilots are more likely to 
have medical conditions that need additional evaluation. The FAA does 
not have evidence to support the assertion that balloon pilots are as a 
population older than other pilots.
    Multiple commenters noted a lack of available AMEs. One commenter 
noted that there was only one AME serving Albuquerque, New Mexico.
    The FAA notes that at the time of publication of the final rule, 
AMEs were practicing at 2,056 locations across the United States, 
including 13 locations in New Mexico. Of the 11 AMEs practicing at 13 
locations in New Mexico, six were practicing in Albuquerque.\15\
---------------------------------------------------------------------------

    \15\ FAA Designee Management System, as of Oct 17, 2022. https://designee.faa.gov/#/designeeLocator.
---------------------------------------------------------------------------

    In the NPRM, the FAA proposed that the two miscellaneous amendments 
be made effective 30 days after publication of the final rule. No 
comments were received regarding the effective date of either 
miscellaneous amendment. Accordingly, both provisions will become 
effective on December 22, 2022, 30 days after publication of this rule.

F. Comments Regarding Miscellaneous Amendments

    The FAA received generally supportive comments from individual 
commenters and the Aircraft Owners and Pilots Association in regard to 
the two miscellaneous amendments in the NPRM. The proposal to remove 
the requirement for a medical certificate in order to act as PIC in a 
special medical flight test received two supporting comments. 
Accordingly, the FAA is implementing the amendments as proposed. To 
allow persons to act as PIC during special medical flight tests, the 
FAA is amending Sec.  61.3(c)(2) by adding new paragraph (xv), which 
allows persons to act as PIC during authorized special medical flight 
tests without holding a medical certificate. The FAA also adds a 
parallel provision in Sec.  61.23(b)(12).
    The proposal to extend BasicMed to persons serving as required 
flightcrew members but not acting as PIC received ten supporting 
comments. Accordingly, the FAA is implementing the amendments as 
proposed. Specifically, the FAA is amending Sec. Sec.  61.3(c)(2)(xiv), 
61.23(c)(3)(i)(C) through (E), 61.113(i), 68.3(a) and, 68.3(b), and 
68.9(a) by expanding the requirements to include required pilot 
flightcrew members.

V. Regulatory Notices and Analyses

    Federal agencies consider impacts of regulatory actions under a 
variety of executive orders and other requirements. First, Executive 
Order 12866 and Executive Order 13563 direct that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulation justify the costs. Second, 
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires 
agencies to analyze the economic impact of regulatory changes on small 
entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits 
agencies from setting standards that create unnecessary obstacles to 
the foreign commerce of the United States. Fourth, the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to 
prepare a written assessment of the costs, benefits, and other effects 
of proposed or final rules that include a Federal mandate that may 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100,000,000 or more 
(adjusted annually for inflation) in any one year. The current 
threshold after adjustment for inflation is $165 million, using the 
most current (2021) Implicit Price Deflator for the Gross Domestic 
Product.
    In conducting these analyses, the FAA has determined that this 
rule: will result in benefits that justify costs; is not a 
``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866; may have a significant economic impact on a 
substantial number of small entities; will not create unnecessary 
obstacles to the foreign commerce of the United States; and will not 
impose an unfunded mandate on State, local, or tribal governments, or 
on the private sector.

A. Regulatory Impact Analysis

Benefits and Costs of This Rule
    The final rule will generate costs for balloon pilots to obtain a 
second-class medical certificate and for some pilots to seek 
authorization through special issuance. There is a separate cost for 
the FAA to implement this requirement in terms of reviewing and 
processing submissions related to medical certification. The FAA 
estimates the present value of total costs over ten years is $2.4 
million to $16.3 million

[[Page 71226]]

with a mid-estimate of $6.9 million at a 7 percent discount rate, and 
$2.9 million to $19.9 million with a mid-estimate of $8.4 million at a 
3 percent discount rate. The FAA estimates the annualized costs over 
ten years is $0.3 million to $2.3 million with a mid-estimate of $1.0 
million at a 7 percent discount rate and $0.3 million to $2.3 million 
with a mid-estimate of $1.0 million at a 3 percent discount rate. While 
lack of data on the effectiveness of the rule prevents quantification 
of benefits, the FAA anticipates the rule will enhance safety of 
commercial balloon operations, including reduced risks of accidents, 
fatalities, and injuries caused by medical impairment of balloon 
pilots. The FAA estimates that it would take between 0.3 to 2.8 averted 
fatalities in the next ten years for the benefits to breakeven with the 
costs of this rule.
    In addition to the requirement for commercial balloon pilots to 
hold a second-class medical certificate, the rule made two 
miscellaneous amendments. The first amendment addresses certain 
inconsistencies in current regulations for conducting special medical 
flight tests and the second amendment addresses inconsistencies 
regarding who may operate under BasicMed. The FAA does not quantify the 
effects of the two miscellaneous amendments, but anticipates there will 
be minor cost savings. By allowing persons to receive special medical 
flight tests under part 67 without holding a medical certificate, the 
FAA aviation safety inspector will no longer have the burden of 
assuming the responsibility as PIC while conducting a medical test 
flight with an applicant. This also eliminates the inconsistency of 
both having to hold a medical certificate for the purposes of receiving 
a special medical flight test and needing the special medical flight 
test to obtain a medical certificate. The amendment to extend BasicMed 
eligibility to other required pilot flightcrew members reduces the 
burden for those pilots not acting as PIC of having to hold a medical 
certificate under current regulations and holds them to the same 
standard as those pilots acting as PIC under BasicMed. This may also 
result in more pilots seeking opportunities to serve as a safety pilot 
by lowering the medical certificate barrier without compromising 
safety. It also increases the number of pilots eligible to serve as 
safety pilot, easing the burden of pilots with instrument privileges 
conducting flights to meet recent flight experience requirements and 
consequently increasing overall safety in the national airspace system.
Statement of Need
    This rulemaking addresses the need for additional oversight of 
airmen conducting balloon operations for compensation or hire by 
implementing the statutory mandate under the Commercial Balloon Pilot 
Safety Act of 2018 and NTSB Safety Recommendation A-17-034 to extend 
second-class medical certification requirements to operators of 
balloons. As discussed elsewhere in this document, the 2016 Heart of 
Texas accident highlights the potential for a pilot's medical condition 
to pose safety risks, which are not necessarily less than that of 
powered aircraft sightseeing operations that require at least a second-
class medical certificate (e.g., commercial transportation of 
skydivers, banner towing, or aerial photography). Following the 2016 
Heart of Texas accident, there have been voluntary efforts by the 
industry to raise the standard for balloon pilots, notably through the 
Envelope of Safety Program. While incentives to ensure a certain level 
of safety exist in the private market for commercial balloon 
operations, it is unlikely in the absence of federal regulation that 
all balloon pilots would choose to comply with the requirements of a 
second-class medical certificate. At the same time, consumers may be 
insufficiently aware of the risks associated with balloon pilots 
operating under a lower standard to demand full compliance. Therefore, 
this rulemaking is necessary to achieve a higher level of safety for 
commercial balloon operations.
Data and Assumptions
    This section summarizes key data sources and assumptions used 
throughout the analysis:
     Costs and benefits are estimated over 10 years.
     Costs and benefits are presented in 2021 dollars.
     The present value discount rate of seven and three percent 
is used, as required by the Office of Management and Budget.
     The cost for a medical examination fee with an AME is in 
the following range: Low = $100, Mid = $150 or High = $200.\16\
---------------------------------------------------------------------------

    \16\ According to FAA subject matter experts and Phoenix East 
Aviation, https://www.pea.com/blog/posts/the-faa-medical-exam-common-questions/, the cost per medical exam ranges from $100 to 
$200.
---------------------------------------------------------------------------

     The hourly rate of a pilot (VPT) exercising their 
commercial balloon rating varies greatly. Therefore, the FAA used the 
following hourly wages: Low = $15, Mid = $31.50 or High = $48.\17\
---------------------------------------------------------------------------

    \17\ According to the FAA subject matter experts, responses from 
the Balloon Federation of America and online sources, the FAA 
estimates a commercial balloon pilot earns from $15 to $48 an hour. 
Online source: https://www.jobmonkey.com/uniquejobs3/hot-air-balloon-pilot-jobs/.
---------------------------------------------------------------------------

     Vehicle operating cost per mile (VOC) as determined by the 
Internal Revenue Service (IRS) is $0.16.\18\
---------------------------------------------------------------------------

    \18\ https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2021. Accessed on April 21, 2021.
---------------------------------------------------------------------------

     The FAA assumes 1.5 hours to complete the MedXPress 
form.\19\
---------------------------------------------------------------------------

    \19\ This estimate is consistent with FAA's estimated burden 
hours associated with the MedXPress form 8500-8 approved under OMB 
No. 2120-0034.
---------------------------------------------------------------------------

     The FAA assumes 1 hour to complete a medical examination.
     The FAA assumes 1 hour of travel time to and from an AME's 
office.
Affected Entities
    At the time of writing, the FAA used 2021 data from the Airmen 
Certification database to identify pilots certificated as commercial 
balloon pilots. There are currently 4,869 commercial pilots with 
balloon class ratings. During the public comment period, the FAA 
learned that most insurance providers have required commercial pilots 
flying balloons larger than 120,000 cubic feet to hold a second-class 
medical certificate. FAA sources indicate that of the 4,869 commercial 
pilots with balloon class ratings, 427 balloon pilots (approximately 
8.8% of total commercial balloon pilots) fall into this category.\20\ 
Therefore, the updated estimated number of balloon pilots without 
medical certification in 2021 is 4,442.
---------------------------------------------------------------------------

    \20\ FAA Airman Registry internal analysis as of July 2021.
---------------------------------------------------------------------------

    This balloon class rating does not have an expiration date, and 
unlike certain other pilot ratings, a person exercising the privileges 
of a balloon class rating is not required to hold a valid first-, 
second-, or third-class medical certificate. Because of this, there is 
uncertainty in the number of commercial balloon pilots actively 
exercising commercial pilot privileges. For this reason, the FAA 
produced a low, mid, and high-range estimate of how many pilots would 
possibly be affected by this final rule.
    In addition to the current number of certificated pilots with a 
commercial balloon rating, the FAA gathered data from the last 14 years 
to estimate an average growth of newly certificated commercial balloon 
pilots per year. Over the course of the last 14 years, from 2007 
through 2020, there was, on

[[Page 71227]]

average, 56 newly certificated commercial balloon pilots per year.
    As mentioned earlier, there is uncertainty with the number of 
active pilots exercising their commercial balloon privileges. The FAA 
assumes a low estimate of 20%, a mid-estimate of 50% and a high 
estimate of 100% of the 4,442 impacted commercial pilots with a balloon 
class rating. Table 1 displays the potential number of airmen that 
would be affected by the final rule over the course of ten years. Note 
that in the first year and thereafter, the number of impacted 
commercial pilots includes an additional 56 newly certificated 
commercial balloon pilots each year to account for growth over time. 
Corresponding to the number of active balloon pilots is the number of 
expected application submissions for second-class medical certificates 
each year.

    Table 1--Low, Middle and High Estimates of Active Balloon Pilots
------------------------------------------------------------------------
                     Year                        Low     Middle    High
------------------------------------------------------------------------
1............................................      944    2,277    4,498
2............................................    1,000    2,333    4,554
3............................................    1,056    2,389    4,610
4............................................    1,112    2,445    4,666
5............................................    1,168    2,501    4,722
6............................................    1,224    2,557    4,778
7............................................    1,280    2,613    4,834
8............................................    1,336    2,669    4,890
9............................................    1,392    2,725    4,946
10...........................................    1,448    2,781    5,002
                                              --------------------------
    Total....................................   11,960   25,290   47,500
------------------------------------------------------------------------

Benefits
    The benefits of this rule come from the value of averted accidents 
attributable to pilots operating commercial balloons with medical 
deficiencies. While under current regulations, balloon pilots must 
comply with Sec.  61.53(b), which states that ``a person shall not act 
as pilot in command, or in any other capacity as a required pilot 
flight crewmember, while that person knows or has reason to know of any 
medical condition that would make the person unable to operate the 
aircraft in a safe manner,'' the second-class medical certificate 
requirement would provide greater assurances of safety to balloon 
passengers and other balloon operations conducted for compensation or 
hire. By requiring balloon pilots to undergo a medical certification 
process, an AME will have the opportunity to identify potentially 
impairing medical conditions and treatments thereof to ensure 
sufficient mitigation of any associated risks.
    To quantify the benefits from this rule, it is necessary to: (1) 
forecast a baseline level of accidents attributable to medically 
impaired balloon pilots in the absence of this rule and (2) estimate 
the extent to which the medical certification requirement effectively 
reduces the risk. Based on the FAA's analysis of the NTSB accident 
database during the ten-year period from 2010-2020, the FAA finds that 
there has been one accident, the Heart of Texas accident, where the 
medical condition of the pilot was a factor. The Heart of Texas 
accident resulted in 16 fatalities. The commercial pilot and all 15 
passengers were killed, and the balloon was destroyed by impact forces 
and post-crash fire. For an accident of this magnitude, the FAA 
estimates that the social cost associated with the loss of life alone 
is $185.6 million using a value of statistical life of $11.6 
million.\21\ Additional costs of a similar accident would include non-
fatal injuries, the value of property loss and damage as well as the 
cost of the accident investigation and clean-up efforts. However, the 
FAA currently does not have enough information to monetize those 
additional costs.
---------------------------------------------------------------------------

    \21\ Value of a statistical life in 2020 is $11.6 million. See 
DOT published values at https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis.
---------------------------------------------------------------------------

    The FAA finds that the requirement for a second-class medical 
certificate could have prevented the Heart of Texas accident if: (1) 
information made available through the NDR database as part of the 
medical review process revealed the pilot's history of drug- and 
alcohol-related traffic offenses and resulted in a disqualification, 
(2) a medical review either prompted effective treatment of or 
disqualification for the pilot's medical conditions (depression and 
ADHD), or (3) discussion of the use of certain medications with an AME 
would have resulted in the pilot adjusting his behavior to avoid usage 
as a PIC during a balloon operation.
    Due to the infrequency of such events and limitations in the 
available data, it is difficult to quantify and monetize the benefits 
of the rule. The FAA intended to update its estimates of quantified 
benefits for the final rule based on additional information and data 
identified during the comment period. Specifically, the FAA requested 
information and data, including references and sources that could be 
used to predict the number of similar accidents that may occur in the 
future and the number of accidents that may be averted by this rule. No 
additional data was provided during the comment period.
    While the FAA describes the benefits of the rule qualitatively, the 
FAA expects that second-class medical certification provides additional 
screening to reduce the risk of commercial balloon pilots operating 
while medically impaired. In the section below, the FAA conducted a 
breakeven analysis to show that the monetized benefits of the rule 
equates costs if it averts 0.3 to 2.8 fatalities in the next ten years.
Costs
    This final rule results in private sector costs to balloon pilots 
for obtaining a second-class medical certificate, including the 
opportunity cost of time and fee for the medical exam with an AME. Some 
balloon pilots with certain health conditions that are otherwise 
disqualifying may also incur the cost of seeking a special issuance 
medical certificate or SODA. The FAA incurs costs for reviewing and 
processing the applications (i.e., MedXPress forms) and reviewing NDR 
information for a subset of submissions.
Cost to Industry
(1) Costs of Obtaining Second-Class Medical Certification
    To obtain a second-class medical certificate, an applicant needs to 
complete the MedXPress form and a medical exam with an AME. Because the 
second-class medical certificate expires 12 months after the date of 
the medical exam, the FAA assumes that pilots incur these costs on an 
annual basis. The FAA estimates the opportunity cost of time for each 
applicant would include 1.5 hours to complete the MedXPress form, 1 
hour for the medical examination, and 1 hour of travel time to and from 
the exam for a total of 3.5 hours.\22\ The FAA assumes an hourly wage 
for a balloon pilot ranges from $15 per hour to $48 per hour, with a 
mid-estimate of $31.50 per hour, to value time for the medical exam and 
completing the MedXPress form. For valuing travel time, the FAA uses an 
estimate of $13.60 per hour consistent with 2016 DOT guidance (in this 
analysis, $14.44 was used for year

[[Page 71228]]

2021).\23\ Multiplying the value of time by the amount of time spent 
yields an estimate of $51.94 to $134.44, with a mid-estimate of $93.19 
per applicant in opportunity cost of time. FAA subject matter experts 
estimate the cost per medical exam with an AME ranges from $100 to 
$200, with an average of $150. Additional costs arise from vehicle 
operating costs (VOC) of 16 cents per mile for an average of 50 miles 
traveled by vehicle to and from a medical exam, which yields $8 for 
each exam. Taking the sum of the value of time spent, medical exam fee, 
and VOC, the FAA estimates that each applicant incurs costs of 
approximately $160 to $342, with a mid-estimate of $251 to obtain a 
second-class medical certificate each year.
---------------------------------------------------------------------------

    \22\ According to the ``FAA Aerospace Medical Certification 
Services Airman Satisfaction Survey,'' (April 2017), over 60 percent 
of applicants traveled between 0 and 25 miles one way for an exam 
with an AME. (Retrieved from: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201904-2120-007).
    \23\ Department of Transportation. ``The Value of Travel Time 
Savings: Departmental Guidance for Conducting Economic Evaluations 
Revision 2 (2016 Update). Available at: https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-valuation-travel-time-economic. This analysis 
assumes that the value of travel time grows 1% a year. Year 2021: 
14.44.
---------------------------------------------------------------------------

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

                                   Table 2--Costs to Industry by Category To Obtain Second-Class Medical Certification
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Opportunity cost of time for exam,       Fee for medical exam with AME             Vehicle operating costs
                                           MedXPress form, and travel      -----------------------------------------------------------------------------
                Year                ---------------------------------------
                                         Low         Middle        High         Low         Middle        High         Low         Middle        High
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................................      $48,899     $211,875     $604,081      $94,400     $341,550     $899,600       $7,552      $18,216      $35,984
2..................................       51,940      217,412      612,240      100,000      349,950      910,800        8,000       18,664       36,432
3..................................       54,996      222,965      620,414      105,600      358,350      922,000        8,448       19,112       36,880
4..................................       58,080      228,559      628,650      111,200      366,750      933,200        8,896       19,560       37,328
5..................................       61,180      234,169      636,903      116,800      375,150      944,400        9,344       20,008       37,776
6..................................       64,297      239,795      645,173      122,400      383,550      955,600        9,792       20,456       38,224
7..................................       67,430      245,439      653,460      128,000      391,950      966,800       10,240       20,904       38,672
8..................................       70,581      251,100      661,764      133,600      400,350      978,000       10,688       21,352       39,120
9..................................       73,748      256,777      670,084      139,200      408,750      989,200       11,136       21,800       39,568
10.................................       76,932      262,471      678,421      144,800      417,150    1,000,400       11,584       22,248       40,016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The low, middle, and high estimates correspond to the low, middle, and high estimates of the number of active pilots and the range of costs per
  applicant in each category of costs.

(2) Cost of Obtaining a Special Issuance
    For applicants that do not initially meet the requirements of a 
second-class medical certification, there may be an additional cost to 
seek a special issuance medical certificate or SODA.\24\ The FAA 
assumes that an applicant seeking special issuance would incur the same 
costs and time of a second-class medical certification as estimated per 
applicant above. Based on the historical rate of special issuances, the 
FAA assumes that approximately 10 percent of affected balloon pilots 
would seek special issuance, including SODAs. Therefore, the FAA takes 
the sum of costs in each cost category for obtaining a second-class 
medical certification and multiplies by 0.1 to obtain the total 
industry cost for obtaining special issuances. Table 3 below shows the 
range of special issuance costs in each year.
---------------------------------------------------------------------------

    \24\ The cost to obtain a SODA is included in the estimated 
costs to obtain a special issuance medical certificate. Based on the 
FY2022 data from Aerospace Medical Certification Division, the FAA 
estimates that on average approximately 0.02% (or no more than one 
applicant a year) of medical certificate applicants will require a 
SODA.

                               Table 3--Total Industry Cost for Special Issuances
----------------------------------------------------------------------------------------------------------------
                                                                      Total private sector costs for special
                                                                                     issuance
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $15,085         $57,164        $153,967
2...............................................................          15,994          58,603         155,947
3...............................................................          16,904          60,043         157,929
4...............................................................          17,818          61,487         159,918
5...............................................................          18,732          62,933         161,908
6...............................................................          19,649          64,380         163,900
7...............................................................          20,567          65,829         165,893
8...............................................................          21,487          67,280         167,888
9...............................................................          22,408          68,733         169,885
10..............................................................          23,332          70,187         171,884
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         131,272         441,519       1,136,479
Annualized at 7%................................................          18,690          62,862         161,809
Present Value at 3%.............................................         161,857         540,060       1,385,536
Annualized at 3%................................................          18,975          63,311         162,427
----------------------------------------------------------------------------------------------------------------


[[Page 71229]]

Summary of Total Cost to Industry
    The FAA estimates the present value of total cost to industry 
associated with obtaining a second-class medical certification and 
special issuances to be $1.4 million to $12.5 million, with a mid-
estimate of $4.9 million at a 7 percent discount rate and $1.8 million 
to $15.2 million, with a mid-estimate of $5.9 million at a 3 percent 
discount rate. The annualized value of total cost to industry are $0.2 
million to $1.8 million with a mid-estimate of $0.7 million at a 7 
percent discount rate and $0.2 million to $1.8 million with a mid-
estimate of $0.7 million at a 3 percent discount rate. In Table 4 
below, the FAA shows these total costs to industry for obtaining a 
second-class medical certification and special issuances in each year. 
The low, middle, and high estimates correspond to the range of 
estimates on the number of affected pilots and costs associated with 
obtaining medical certification.

                                          Table 4--Total Industry Costs
----------------------------------------------------------------------------------------------------------------
                                                                              Total cost to industry
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $165,936        $628,805      $1,693,632
2...............................................................         175,934         644,629       1,715,419
3...............................................................         185,949         660,470       1,737,223
4...............................................................         195,993         676,355       1,759,096
5...............................................................         206,056         692,259       1,780,987
6...............................................................         216,138         708,182       1,802,897
7...............................................................         226,237         724,122       1,824,825
8...............................................................         236,356         740,082       1,846,772
9...............................................................         246,493         756,059       1,868,737
10..............................................................         256,648         772,056       1,890,721
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................       1,443,990       4,856,705      12,501,274
Annualized at 7%................................................         205,592         691,486       1,779,900
Present Value at 3%.............................................       1,780,422       5,940,655      15,240,897
Annualized at 3%................................................         208,720         696,426       1,786,698
----------------------------------------------------------------------------------------------------------------

Costs to FAA To Implement Requirement for Second-Class Medical 
Certification for Balloon Pilots
(1) FAA Cost of MedXPress Review and Processing
    The FAA incurs costs associated with reviewing and processing 
applications submitted through MedXPress. Based on internal FAA data on 
total personnel costs and benefits attributable to labor hours spent on 
review of airmen medical certification in FY 2019 through FY 2021, the 
FAA estimates an average cost of $30 to review and process each 
application. In Table 5 below, the Agency derives the FAA cost to 
review applications in each year using the estimated range for the 
number of submissions based on the forecasted number of active balloon 
pilots in each year.

                              Table 5--FAA Costs To Review and Process Applications
----------------------------------------------------------------------------------------------------------------
                                                                        FAA costs for review and processing
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $27,944         $67,402        $133,146
2...............................................................          29,601          69,060         134,804
3...............................................................          31,259          70,717         136,462
4...............................................................          32,917          72,375         138,119
5...............................................................          34,574          74,033         139,777
6...............................................................          36,232          75,690         141,435
7...............................................................          37,890          77,348         143,092
8...............................................................          39,547          79,006         144,750
9...............................................................          41,205          80,663         146,408
10..............................................................          42,863          82,321         148,065
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         242,207         519,347         981,108
Annualized at 7%................................................          34,485          73,943         139,688
Present Value at 3%.............................................         298,552         635,141       1,195,954
Annualized at 3%................................................          34,999          74,458         140,202
----------------------------------------------------------------------------------------------------------------

(2) FAA Cost of Special Issuance Review
    A MedXPress application that requires a special issuance medical 
certificate is deferred to the Aerospace Medical Certification Division 
(AMCD) for further consideration. Based on FAA internal data on 
personnel compensation and benefits attributable to labor hours spent 
on reviewing and processing special issuance medical certificates in FY 
2019 through FY 2021, the FAA estimates an average cost of 
approximately $126 per special issuance review. The table below 
displays the FAA cost for special issuance review assuming that 10 
percent of the applicants do not initially qualify for second-class 
medical certification.

[[Page 71230]]



                                  Table 6--FAA Cost of Special Issuance Review
----------------------------------------------------------------------------------------------------------------
                                                                       FAA costs for special issuance review
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $11,931         $28,779         $56,851
2...............................................................          12,639          29,487          57,559
3...............................................................          13,347          30,195          58,267
4...............................................................          14,055          30,903          58,974
5...............................................................          14,763          31,611          59,682
6...............................................................          15,470          32,318          60,390
7...............................................................          16,178          33,026          61,098
8...............................................................          16,886          33,734          61,806
9...............................................................          17,594          34,442          62,513
10..............................................................          18,302          35,150          63,221
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         103,418         221,751         418,915
Annualized at 7%................................................          14,724          31,572          59,644
Present Value at 3%.............................................         127,476         271,193         510,650
Annualized at 3%................................................          14,944          31,792          59,864
----------------------------------------------------------------------------------------------------------------

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

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


                                        Table 8--FAA Costs for NDR Review
----------------------------------------------------------------------------------------------------------------
                                                                             FAA costs for NDR review
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................         $68,172        $164,436        $324,828
2...............................................................          72,216         168,480         328,872
3...............................................................          76,260         172,524         332,916
4...............................................................          80,304         176,568         336,960
5...............................................................          84,348         180,612         341,004
6...............................................................          88,392         184,656         345,048
7...............................................................          92,436         188,700         349,092
8...............................................................          96,481         192,745         353,136
9...............................................................         100,525         196,789         357,180
10..............................................................         104,569         200,833         361,224
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         590,895       1,267,013       2,393,537
Annualized at 7%................................................          84,130         180,394         340,786
Present Value at 3%.............................................         728,356       1,549,507       2,917,681
Annualized at 3%................................................          85,386         181,650         342,041
----------------------------------------------------------------------------------------------------------------

Summary of Total Costs to FAA
    The total costs to the FAA to implement the requirement for 
commercial balloon pilots to hold a second-class medical certificate is 
the sum of the costs for FAA review and processing of MedXPress 
applications, review of special issuances, and review of NDR 
information associated with certain applications. The FAA estimates the 
present value of total costs to the Agency to be $0.9 million to $3.8

[[Page 71231]]

million, with a mid-estimate of $2.0 million at a 7 percent discount 
rate and $1.2 million to $4.6 million, with a mid-estimate of $2.5 
million at a 3 percent discount rate. The annualized value of total 
cost to FAA is $0.1 million to $0.5 million with a mid-estimate of $0.3 
million at a 7 percent discount rate and $0.1 million to $0.5 million 
with a mid-estimate of $0.3 million at a 3 percent discount rate.
    The FAA acknowledges the difficulty in estimating FAA burden and 
cost after the effective date of this rule given uncertainties in the 
number of pilot applicants and those pilots that would either receive a 
second-class medical certification or be granted a special issuance 
certification.

                                           Table 9--Total Costs to FAA
----------------------------------------------------------------------------------------------------------------
                                                                                 Total cost to FAA
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $108,047        $260,617        $514,825
2...............................................................         114,456         267,027         521,235
3...............................................................         120,866         273,436         527,644
4...............................................................         127,276         279,846         534,054
5...............................................................         133,685         286,256         540,463
6...............................................................         140,095         292,665         546,873
7...............................................................         146,504         299,075         553,282
8...............................................................         152,914         305,484         559,692
9...............................................................         159,323         311,894         566,102
10..............................................................         165,733         318,303         572,511
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................         936,521       2,008,111       3,793,560
Annualized at 7%................................................         133,339         285,910         540,118
Present Value at 3%.............................................       1,154,385       2,455,842       4,624,285
Annualized at 3%................................................         135,329         287,900         542,107
----------------------------------------------------------------------------------------------------------------

Total Costs of the Rule
    The total costs are shown in the table below, which includes both 
costs to industry and to the FAA. The total costs over the ten years 
include the costs for pilots to obtain their second-class medical 
certificate, special issuances and costs to the Agency for review of 
applications, special issuances, and NDR information. The FAA estimates 
the present value of total costs over ten years is $2.4 million to 
$16.3 million with a mid-estimate of $6.9 million at a 7 percent 
discount rate and $2.9 million to $19.9 million with a mid-estimate of 
$8.4 million at a 3 percent discount rate. The FAA estimates the 
annualized costs over ten years is $0.3 million to $2.3 million with a 
mid-estimate of $1.0 million at a 7 percent discount rate and $0.3 
million to $2.3 million with a mid-estimate of $1.0 million at a 3 
percent discount rate.
    As stated previously, in some cases, where the airman's medical 
condition does not meet the part 67 standard, the airman may still be 
issued a medical certificate by authorization for special issuance when 
the Federal Air Surgeon determines the risk associated with the medical 
condition(s) to be sufficiently mitigated. Based on the rate of special 
issuance for general aviation pilots, the FAA assumes that 10% of the 
commercial balloon pilot applicants would require a special issuance. 
For purposes of this analysis, the FAA assumes that most applicants 
would ultimately either receive a second-class medical certificate or 
be granted a special issuance and therefore does not quantify costs 
associated with not meeting the requirements.
    However, the FAA expects some applicants who would have otherwise 
been able to operate as commercial balloon pilots may not meet the 
requirements of a second-class medical certification nor the 
requirements for a special issuance. Furthermore, the opportunity cost 
(including the time and fees) of seeking a second-class medical 
certification for some pilots may outweigh their private gains from 
operating commercially, resulting in some pilots opting not to seek 
medical certification. The FAA does not have sufficient information to 
predict how the supply of commercial balloon pilots would change as a 
result of this rule.
    While the FAA does not expect a significant decrease in the 
availability of balloon pilots, changes in supply of balloon pilots 
could affect prices as well. This analysis does not quantify any 
potential changes in consumer and producer surplus from changes in 
supply. If the rule effectively screens out certain individuals for 
disqualifying medical conditions as intended, any potential adverse 
effects on individual applicants should be offset by the safety gains 
to the public.

                                        Table 10--Total Costs of the Rule
----------------------------------------------------------------------------------------------------------------
                                                                              Total cost of the rule
                              Year                               -----------------------------------------------
                                                                        Low           Middle           High
----------------------------------------------------------------------------------------------------------------
1...............................................................        $273,983        $889,422      $2,208,457
2...............................................................         290,390         911,656       2,236,654
3...............................................................         306,815         933,907       2,264,867
4...............................................................         323,269         956,201       2,293,150
5...............................................................         339,741         978,515       2,321,451
6...............................................................         356,232       1,000,847       2,349,770
7...............................................................         372,742       1,023,197       2,378,108
8...............................................................         389,270       1,045,566       2,406,464
9...............................................................         405,816       1,067,953       2,434,839

[[Page 71232]]

 
10..............................................................         422,381       1,090,359       2,463,232
----------------------------------------------------------------------------------------------------------------
Present Value at 7%.............................................       2,380,511       6,864,816      16,294,834
Annualized at 7%................................................         338,931         977,395       2,320,018
Present Value at 3%.............................................       2,934,807       8,396,497      19,865,182
Annualized at 3%................................................         344,049         984,326       2,328,805
----------------------------------------------------------------------------------------------------------------

Breakeven Analysis
    Given the uncertainties and limitations in the available data, the 
FAA conducted a breakeven analysis to determine the number of averted 
fatalities necessary to generate benefits equal to costs. The FAA 
divided the present value of total costs of the rule by the present 
value of a statistical life to estimate the number of fatalities needed 
to break even with the costs of the rule over a ten-year time horizon. 
Using a value of statistical life of $11.6 million and the range of 
present value of costs presented in Table 10 above, the monetized 
benefits of this rule will break even with costs if the new medical 
certification requirement averts between 0.4 to 2.8 fatalities under a 
7 percent discount rate and between 0.3 to 2.3 fatalities under a 3 
percent discount rate.\25\
---------------------------------------------------------------------------

    \25\ Departmental Guidance on Valuation of a Statistical Life in 
Economic Analysis https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis.
---------------------------------------------------------------------------

Regulatory Alternatives
    As discussed in the NPRM, the FAA considered one alternative to the 
proposed rule: Letter of Authorization (LOA) and Drug and Alcohol 
Testing.
    With this alternative, the FAA would have instituted both a medical 
certificate requirement as well as a requirement for obtaining an LOA 
from the FAA and mandatory drug and alcohol testing. This alternative 
would have expanded the definition of an operator under Sec.  91.147 to 
include balloons, which would have required the commercial balloon 
operators to obtain an LOA from the FAA in accordance with Sec.  91.147 
prior to conducting air tour operations, and implement a drug and 
alcohol testing program in accordance with 14 CFR part 120. However, as 
discussed elsewhere in this final rule, this alternative goes beyond 
the statutory mandate. Therefore, the FAA did not adopt this 
alternative.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354, 94 
Stat. 1164 (5 U.S.C. 601-612), as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 
857, Mar. 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L. 
111-240, 124 Stat. 2504 Sept. 27, 2010), requires Federal agencies to 
consider the effects of the regulatory action on small business and 
other small entities and to minimize any significant economic impact. 
The term ``small entities'' comprises small businesses and not-for-
profit organizations that are independently owned and operated and are 
not dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000.
    The FAA published an Initial Regulatory Flexibility Analysis (IRFA) 
in the proposed rule to aid the public in commenting on the potential 
impacts to small entities. The FAA considered the public comments in 
developing the final rule and this Final Regulatory Flexibility 
Analysis (FRFA). A FRFA must contain the following:
    (1) A statement of the need for, and objectives of, the rule;
    (2) A statement of the significant issues raised by the public 
comments in response to the IRFA, a statement of the assessment of the 
agency of such issues, and a statement of any changes made in the 
proposed rule as a result of such comments;
    (3) The response of the agency to any comments filed by the Chief 
Counsel for Advocacy of the Small Business Administration (SBA) in 
response to the proposed rule, and a detailed statement of any change 
made to the proposed rule in the final rule as a result of the 
comments;
    (4) A description of and an estimate of the number of small 
entities to which the rule will apply or an explanation of why no such 
estimate is available;
    (5) A description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities which will be subject to the requirement and 
the type of professional skills necessary for preparation of the report 
or record; and
    (6) A description of the steps the agency has taken to minimize the 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of the 
factual, policy, and legal reasons for selecting the alternative 
adopted in the final rule and why each of the other significant 
alternatives to the rule considered by the agency which affect the 
impact on small entities was rejected.
Statement of the Need for and Objectives of the Rule
    This rulemaking addresses the need for additional oversight of 
airmen conducting balloon operations for compensation or hire by 
implementing the statutory mandate under the Commercial Balloon Pilot 
Safety Act of 2018 and NTSB Safety Recommendation A-17-034 to extend 
second-class medical certification requirements to operators of 
balloons.
    The objective of the rule is to enhance safety for passengers of 
commercial balloon operations by requiring pilots to obtain and hold 
second-class medical certificates, in compliance with Section 318, to 
prevent potential accidents in commercial balloon operations.
Significant Issues Raised in Public Comments
    The FAA received 192 comments during the public comment period. One 
significant issue commenters raised was the concern that the proposed 
rule would impose significant burdens on balloon pilots and could put 
some of them out of business, causing the supply of balloon pilots to 
shrink. The FAA assessed this concern and does not believe that the 
costs of the rule would cause such an undue burden. The cost estimate 
per pilot to obtain a second-class medical certificate is between $160 
and $685 annually, depending on whether a special issuance would be 
necessary, which is the equivalent of 0.06% to 0.37% of average annual

[[Page 71233]]

revenues for small entities. The FAA considers this expense to be non-
significant to cause such a decline in the number of balloon pilots. A 
more detailed analysis may be found under the Description and an 
Estimated Number of Small Entities Impacted section.
    In addition, several commenters noted that larger balloon 
operations require their pilots to carry second-class medical 
certificates as part of insurance requirements. These balloon pilots do 
not have to incur additional costs as a result of the final rule. The 
FAA estimates about 8.8% of balloon pilots fall into this category. 
However, the vast majority of balloon pilots are not currently required 
to hold second-class medical certificates either by the FAA or 
insurance carriers. There was no change made to the final rule as a 
result of public comments.
Response to SBA Comments
    The FAA received no comments from the Chief Counsel for Advocacy of 
the Small Business Administration.
Description and an Estimated Number of Small Entities Impacted
    The final rule affects commercial balloon pilots and establishments 
involved in commercial balloon operations. The FAA does not maintain a 
database of commercial balloon operators actively operating in the 
United States. Using commercial sources, the FAA estimates that number 
to be about 356 \26\ companies. Approximately 4,870 commercial pilots 
hold balloon ratings, and approximately 4,940 balloons are registered 
with the FAA. The commercial balloon industry estimates that 100,000 to 
250,000 passenger rides are conducted annually, as well as aerial 
advertising and other commercial activities.
---------------------------------------------------------------------------

    \26\ http://www.blastvalve.com/Balloon_Rides/USA/index.shtml.
---------------------------------------------------------------------------

    FAA used the definition of small entities in the RFA for this 
analysis. The RFA defines small entities as small businesses, small 
governmental jurisdictions, or small organizations. In 5 U.S.C. Sec.  
601(3), the RFA defines ``small business'' to have the same meaning as 
``small business concern'' under section 3 of the Small Business Act. 
The Small Business Act authorizes the Small Business Administration 
(SBA) to define ``small business'' by issuing regulations. SBA (2019) 
has established size standards for various types of economic 
activities, or industries, under the North American Industry 
Classification System (NAICS).\27\ These size standards generally 
define small businesses based on the number of employees or annual 
receipts. Note that the SBA definition of a small business applies to 
the parent company and all affiliates as a single entity.
---------------------------------------------------------------------------

    \27\ Small Business Administration (SBA). 2019. Table of Size 
Standards. Effective August 12, 2019. https://www.sba.gov/document/support--table-size-standards.
---------------------------------------------------------------------------

    To identify small entities, the FAA first identified the primary 
NAICS of the airline or parent company, and then used data from 
different sources (e.g., company annual reports, Bureau of 
Transportation Statistics) to determine whether the parent company 
meets the applicable size standard. Businesses affected by this rule 
are classified using the 2017 North American Industry Classification 
System \28\ under NAICS code 487990 ``Scenic and Sightseeing 
Transportation, Other.'' This industry comprises establishments 
primarily engaged in providing scenic and sightseeing transportation 
(except on land and water). The U.S. Small Business Administration 
(SBA) defines entities in this industry as ``small'' using an average 
annual revenue threshold of $8 million.\29\ With limited information 
and data on sales revenues for each of the affected commercial balloon 
operators, the FAA has uncertainty as to how many entities would meet 
the SBA's small-entity criteria.\30\ Furthermore, the FAA has 
uncertainty as to how the burden associated with the final rule would 
be distributed across commercial balloon companies versus individual 
balloon pilots employed by an operator. The FAA requested comment and 
data on the average annual sales revenues for the affected small 
businesses and to what extent the costs of obtaining a second-class 
medical certification would be considered an ``out-of-pocket'' cost 
incurred by commercial balloon pilots rather than a cost to the 
commercial balloon operator. The only information received was that the 
ballooning insurance providers have required commercial pilots flying 
balloons larger than 120,000 cubic feet to hold a second-class medical 
certificate. Data indicated 427 balloon pilots have second-class 
medical certificates, and the FAA has made this adjustment to recompute 
the costs of this final rule. As previously described, the FAA 
estimates the cost per pilot to obtain a second-class medical 
certificate would be between $160 and $685 annually, depending on 
whether a special issuance would be necessary.
---------------------------------------------------------------------------

    \28\ https://www.census.gov/naics/?input=487990&year=2017&details=487990.
    \29\ https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
    \30\ Rainbow Ryders is one of the larger commercial balloon 
companies and are under the Small Business Administration small-
entity criteria. Therefore, the FAA estimates that all of the 
Commercial balloon companies are a small entity. It's Been a Year of 
Growth for Rainbow Ryders, https://www.abqjournal.com/1095655/its-been-a-growth-year-for-rainbow-ryders.html, September 9, 2019.
---------------------------------------------------------------------------

    For purposes of this final regulatory flexibility analysis, the FAA 
assumes that the private sector costs of this rule (i.e., the cost to 
obtain a second-class medical certification or special issuance) fall 
entirely on commercial balloon operators. In the absence of data on 
annual receipts specific to the commercial balloon industry, the FAA 
relies on the most recent data available on average revenues for all 
businesses, including commercial balloon operators, classified under 
NAICS 487990 ``Scenic and Sightseeing Transportation, Other'' from the 
2017 Census Bureau's Statistics of U.S. Businesses (SUSB) \31\ to 
inform the analysis. Note that the total number of firms identified for 
this industry is less than the FAA estimated number of commercial 
balloon operators. In this analysis, the FAA uses the SUSB data to 
estimate the proportion of balloon companies for each size category by 
annual receipts.
---------------------------------------------------------------------------

    \31\ Available at https://www.census.gov/data/tables/2017/econ/subs/2017-annual.html, retrieved on August 15, 2021.
---------------------------------------------------------------------------

    The table below summarizes the total number of firms, employment, 
and estimated annual receipts by annual receipt category for the entire 
industry classified under NAICS 487990 ``Scenic and Sightseeing 
Transportation, Other'' for the year 2017. Note that blanks in the 
table below reflect data that the Census Bureau withheld to avoid 
disclosing data for individual companies but are included in the 
higher-level totals. After adjusting the 2017 dollar values to constant 
2021 dollars using the GDP deflator,\32\ the FAA estimates that 
approximately 93 percent of companies (or about 331 balloon operators 
extrapolating from this percentage) may be considered small entities 
under the SBA definition.
---------------------------------------------------------------------------

    \32\ Available at: https://www.whitehouse.gov/omb/historical-tables/.
---------------------------------------------------------------------------

    To compare the compliance costs of the rule to the average revenues 
of small entities, for each receipt size category the FAA multiplies 
the proportion of total employment by the annualized private sector 
costs of the rule and divides by the estimated annual receipts

[[Page 71234]]

in 2021 dollars.\33\ Assuming that costs are proportional to employment 
size, which may be reasonable given that costs are driven by the number 
of pilots requiring a second-class medical certification, the FAA 
estimates that the costs of the final rule constitutes 0.06% to 0.37% 
of average annual revenues for small entities. Given the currency and 
level of aggregation of the data available, the FAA requested comment 
on accuracy of these estimates and any other information or data that 
would be relevant for estimating the effects of the rule on small 
entities but did not receive any during the comment period.
---------------------------------------------------------------------------

    \33\ For this calculation, the FAA uses the mid-estimate of 
$691,486 for the total private sector costs annualized at a 7 
percent discount rate.

   Table 11--Number of Firms, Establishments, Employment, and Estimated Receipts by Enterprise Receipt Sizes for the United States, NAICS 487990: 2017
                                                         [Census statistics of U.S. businesses]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Cost for all
                                             Number of     Percentage of                   Percentage of     Estimated     firms in size     Cost as a
       Enterprise receipt size \a\           firms \b\         firms        Employment         total         receipts        category      percentage of
                                                                                            employment       ($1,000)        ($1,000)        receipts
--------------------------------------------------------------------------------------------------------------------------------------------------------
<$100,000...............................              53              17              48               1           2,255               9            0.37
$100,000-499,999........................             119              39             192               5          29,644              37            0.11
$500,000-999,999........................              47              15             237               7          32,765              45            0.13
$1,000,000-2,499,999....................              43              14             365              10          63,134              70            0.10
$2,500,000-4,999,999....................              18               6             323               9          65,788              62            0.09
$5,000,000-7,499,999....................               6               2             106               3          29,465              20            0.06
$7,500,000-9,999,999....................               5               2             213               6          41,585              41            0.09
$10,000,000-14,999,999..................               4             1.3             196               5          50,270              38            0.07
$20,000,000-24,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$25,000,000-29,999,999..................               3             1.0              93               3          19,490              18            0.08
$30,000,000-34,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$35,000,000-39,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$50,000,000-74,999,999..................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
$100,000,000+...........................               4               1           1,044              29         251,871             200            0.07
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................             309             100           3,611             100         762,426             691            0.08
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Using the Gross Domestic Product (GDP) deflator, the FAA finds that $7.49 million in 2017 dollars would be approximately $ 8.16 million in 2021
  dollars. Therefore, the FAA assumes firms with receipts of less than $7.49 million in 2017 dollars would be considered small.
\b\ The FAA notes that the number of firms in NAICS 487990 is lower than FAA's estimate of the number of balloon operators. For purposes of this
  analysis, the SUSB data is used to estimate the percentage of small entities and the distribution of costs relative to revenues.

Description of the Recordkeeping and Other Compliance Requirements
    The FAA requires that airmen hold a valid second-class medical 
certificate when exercising the privileges of a commercial pilot 
certificate in a balloon for compensation or hire. A medical 
certificate is not required for commercial pilots conducting flight 
training in a balloon. As determined by a physical examination and 
review of medical history, airmen must meet the applicable medical 
standards of part 67 in order to receive an unrestricted medical 
certificate. In cases where the airman's medical condition does not 
meet the part 67 standard, the airman may still be issued a medical 
certificate by authorization for special issuance or SODA when the 
Federal Air Surgeon had determined that the risk associated with the 
medical condition(s) is sufficiently mitigated.
    A person obtains a medical certificate by completing an online 
application (FAA form 8500-8, Application for Medical Certificate) 
using the FAA's medical certificate application tool, MedXPress,\34\ 
and undergoing a physical examination with an FAA-designated AME. An 
AME may defer an applicant to the FAA for further review (which may 
include further examination and testing by a specialist physician) when 
there is information indicating the existence or potential of an 
adverse medical finding that may warrant further FAA medical evaluation 
and oversight. Second-class medical certificates held for any 
operations requiring a commercial pilot certificate (including the 
second-class medical certificates that is required for balloon 
operations under this final rule) expire at the end of the last day of 
the 12th month after the month of the date of examination shown on the 
medical certificate.
---------------------------------------------------------------------------

    \34\ https://medxpress.faa.gov/.
---------------------------------------------------------------------------

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

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. The FAA has 
assessed the potential effect of this final rule and determined that it 
will not create unnecessary obstacles to the foreign commerce of the 
United States.
    The FAA has assessed the potential effect of this rule and 
determined that it ensures the safety of the American public and does 
not exclude imports that meet this objective. As a result, the

[[Page 71235]]

FAA does not consider this rule as creating an unnecessary obstacle to 
foreign commerce.

D. Unfunded Mandates Assessment

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
governs the issuance of Federal regulations that require unfunded 
mandates. An unfunded mandate is a regulation that requires a State, 
local, or tribal government or the private sector to incur direct costs 
without the Federal government having first provided the funds to pay 
those costs. The FAA determined that the final rule will not result in 
the expenditure of $165,000,000 or more by State, local, or tribal 
governments, in the aggregate, or the private sector, in any one year.

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.
    According to the 1995 amendments to the Paperwork Reduction Act (5 
CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the 
collection of information, nor may it impose an information collection 
requirement unless it displays a currently valid Office of Management 
and Budget (OMB) control number.
    This final rule contains the following amendments to the existing 
information collection requirements previously approved under OMB 
Control No. 2120-0034. In the analysis below, the FAA describes the 
incremental changes in the number of respondents, annual burden, and 
monetized costs of the existing information collection requirement 
previously approved under OMB Control No. 2120-0034. As required by the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has 
submitted the information collection requirements to OMB for its 
review.
Requirements To Hold a Second-Class Medical Certificate
    The final rule requires airmen to hold a valid second-class medical 
certificate when exercising the privileges of a commercial pilot 
certificate in a balloon for compensation or hire. To obtain a medical 
certificate, an airman has to complete an online application (FAA form 
8500-8, Application for Medical Certificate) using the FAA's medical 
certificate application tool, MedXPress and undergo a physical 
examination with an FAA-designated Aviation Medical Examiner (AME).
    In Table 12 below, the FAA shows the incremental burden of this 
rule to the approved information collection under OMB Control No. 2120-
0034. Additional details on assumptions and calculations used in this 
section are presented elsewhere in the Regulatory Evaluation section of 
this document.
Estimates of the Hour Burden of the Collection of Information
    The mid estimate of the number of applicants in the first year is 
2,277.

      Table 12--Burden Hours Associated With MedXPress Form 8500-8
------------------------------------------------------------------------
                       Number of          Hours per
     Form No.          applicants         applicant        Total hours
------------------------------------------------------------------------
         8500-8              2,277                1.5             3,416
------------------------------------------------------------------------

Estimate of the Total Annual Cost Burden to Respondents or Record 
Keepers Resulting From the Collection of Information
    Once the information on FAA Form 8500-8 is collected, respondents 
must receive a medical examination in order to be certificated to 
exercise commercial balloon pilot privileges. The average fee for a 
basic medical examination is estimated at $150. The total cost for 
medical exams in the first year is as follows:

$150 x 2,277 submissions of Form 8500-8 = $ 341,550
Estimates of Annualized Costs to the Federal Government
    The estimated annualized cost to the Federal Government to 
implement the final rule is between $133,339 and $540,118, with a mid-
estimate of $285,910 at a 7 percent discount rate. The FAA would incur 
costs associated with reviewing and processing applications submitted 
through MedXPress. It costs about $30 per medical certification review 
using the primary estimate for the number of applications in the first 
year, the FAA estimates a total cost of $67,399 (= $29.60 per 
application x 2,277) in the first year.
    Currently, a MedXPress application that requires a special issuance 
medical certificate is deferred to the AMCD of Oklahoma City for 
further consideration. The FAA assumes that 10 percent of the 
applicants do not initially qualify for second-class medical 
certification and, therefore, would require special issuance. The 
average cost to FAA for each medical certificate special issuance 
review is approximately $126.
    The total annualized costs for the FAA to review, including NDR and 
process MedXPress applications from commercial balloon applicants and 
costs for the FAA to conduct Special Issuance Review for commercial 
balloon applicants is between $98,855 and $400,430, with a mid-estimate 
of $211,967 at a 7 percent discount rate over ten years.

F. 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 
reviewed the corresponding ICAO Standards and Recommended Practices and 
has determined that this rule will require a minor modification to the 
existing differences filed in regard to medical certification for 
commercial balloon pilots. Currently, the U.S. has filed a difference 
stating that balloon pilots are not required to hold a medical 
certificate but are prohibited from operating during periods of medical 
deficiency. This statement will be updated to reflect the medical 
certificate requirement described in this rule.

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

[[Page 71236]]

VI. Executive Order Determination

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 does 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, does 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. The FAA has determined that this final rule is 
not a ``significant energy action'' under the executive order and it 
will not be likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

C. Executive Order 13609, International Cooperation

    Executive Order 13609, Promoting International Regulatory 
Cooperation, 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 reduces 
differences between U.S. aviation standards and those of other civil 
aviation authorities by bringing U.S. regulatory requirements partially 
into compliance with International Civil Aviation Organization (ICAO) 
standards for medical certification.\35\
---------------------------------------------------------------------------

    \35\ The 12th edition of the Annex 1 to the Convention on 
International Civil Aviation, Personnel Licensing, (July 2018), 
specifies that a person exercising the privileges of a Free Balloon 
Pilot License must hold a Class 2 medical. See 2.10.1.5.
---------------------------------------------------------------------------

VII. Privacy

    The information collected from FAA Form 8500-8 becomes part of the 
Privacy Act System of Records DOT/FAA 847, ``Aviation Records on 
Individuals,'' [DOT/FAA 847] and is provided the protection outlined in 
the description of the system as published in the Federal Register.

VIII. Additional Information

A. Electronic Access and Filing

    A copy of the NPRM, all comments received, this final rule, and all 
background material may be viewed online at https://www.regulations.gov 
using the docket number listed above. Electronic retrieval help and 
guidelines are available on the website. It is available 24 hours each 
day, 365 days each year. An electronic copy of this document may also 
be downloaded from the Office of the Federal Register's website at 
https://www.federalregister.gov and the Government Publishing Office's 
website at https://www.govinfo.gov. A copy may also be found on the 
FAA's Regulations and Policies website at https://www.faa.gov/regulations_policies.
    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 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 in 
the electronic docket for this rulemaking.

B. 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. 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 https://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

List of Subjects

14 CFR Part 61

    Aircraft, Airmen, Alcohol abuse, Aviation safety, Drug abuse, 
Flight instruction, Medical certification, Recreation and recreation 
areas, Reporting and recordkeeping requirements, Security measures, 
Teachers.

14 CFR Part 68

    Aircraft, Airmen, Health, Reporting and Recordkeeping requirements.

The Amendment

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

PART 61--CERTIFICATION: PILOTS, FLIGHT INSTRUCTORS, AND GROUND 
INSTRUCTORS

0
1. The authority citation for part 61 is revised to read as follows:

    Authority: 49 U.S.C. 106(f), 106(g), 40113, 44701-44703, 44707, 
44709-44711, 44729, 44903, 45102-45103, 45301-45302.


0
2. Amend Sec.  61.3 by revising paragraphs (c)(2)(xiii) and 
(c)(2)(xiv), and adding paragraph (c)(2)(xv) to read as follows:


Sec.  61.3  Requirement for certificates, ratings, and authorizations.

* * * * *
    (c) * * *
    (2) * * *
    (xiii) Is exercising the privileges of a student, recreational or 
private pilot certificate for operations conducted under the conditions 
and limitations set forth in Sec.  61.113(i) and holds a U.S. driver's 
license;
    (xiv) Is exercising the privileges of a flight instructor 
certificate and acting as pilot in command or a required flightcrew 
member for operations conducted under the conditions and limitations 
set forth in Sec.  61.113(i) and holds a U.S. driver's license; or
    (xv) Is exercising the privileges of a student pilot certificate or 
higher while acting as pilot in command on a special medical flight 
test authorized under part 67 of this chapter.
* * * * *

0
3. Effective May 22, 2023, amend Sec.  61.3 by revising paragraph 
(c)(2)(vi) to read as follows:


Sec.  61.3  Requirement for certificates, ratings, and authorizations.

* * * * *
    (c) * * *
    (2) * * *
    (vi) Is holding a pilot certificate with a balloon class rating and 
that person--
    (A) Is exercising the privileges of a private pilot certificate in 
a balloon; or
    (B) Is providing flight training in a balloon in accordance with 
Sec.  61.133(a)(2)(ii);
* * * * *

0
4. Amend Sec.  61.23 by:
0
a. Revising paragraphs (b)(8) and (b)(9)(ii);
0
b. Adding paragraph (b)(10); and
0
c. Revising paragraphs (c)(3)(i)(C), (c)(3)(i)(D), and (c)(3)(i)(E).
    The revisions and additions read as follows:

[[Page 71237]]

Sec.  61.23  Medical certificates: Requirement and duration.

* * * * *
    (b) * * *
    (8) When taking a practical test or a proficiency check for a 
certificate, rating, authorization or operating privilege conducted in 
a glider, balloon, flight simulator, or flight training device;
    (9) * * *
    (ii) The flight conducted is a domestic flight operation within 
U.S. airspace; or
    (10) When exercising the privileges of a student pilot certificate 
or higher while acting as pilot in command on a special medical flight 
test authorized under part 67 of this chapter.
    (c) * * *
    (3) * * *
    (i) * * *
    (C) Complete the medical education course set forth in Sec.  68.3 
of this chapter during the 24 calendar months before acting as pilot in 
command or serving as a required flightcrew member in an operation 
conducted under Sec.  61.113(i) and retain a certification of course 
completion in accordance with Sec.  68.3(b)(1) of this chapter;
    (D) Receive a comprehensive medical examination from a State-
licensed physician during the 48 months before acting as pilot in 
command or serving as a required flightcrew member of an operation 
conducted under Sec.  61.113(i) and that medical examination is 
conducted in accordance with the requirements in part 68 of this 
chapter; and
    (E) If the individual has been diagnosed with any medical condition 
that may impact the ability of the individual to fly, be under the care 
and treatment of a State-licensed physician when acting as pilot in 
command or serving as a required flightcrew member of an operation 
conducted under Sec.  61.113(i).
* * * * *

0
5. Effective May 22, 2023, amend Sec.  61.23 by:
0
a. Revising paragraphs (a)(2)(i) and (a)(2)(ii);
0
b. Adding paragraph (a)(2)(iii);
0
c. Revising paragraph (b)(3);
0
d. Redesignating paragraphs (b)(4) through (b)(10) as paragraphs (b)(6) 
through (b)(12); and
0
e. Adding new paragraphs (b)(4) and (b)(5);
0
f. Revising paragraphs (d)(1)(iii) and (d)(2)(i).
    The revisions and additions read as follows:


Sec.  61.23  Medical certificates: Requirement and duration.

    (a) * * *
    (2) * * *
    (i) Second-in-command privileges of an airline transport pilot 
certificate in part 121 of this chapter (other than operations 
specified in paragraph (a)(1)(ii) of this section);
    (ii) Privileges of a commercial pilot certificate in an aircraft 
other than a balloon or glider; or
    (iii) Except as provided in paragraph (b)(5) of this section, 
privileges of a commercial pilot certificate with a balloon class 
rating for compensation or hire; or
    (b) * * *
    (3) When exercising the privileges of a pilot certificate with a 
glider category rating in a glider;
    (4) When exercising the privileges of a private pilot certificate 
with a balloon class rating in a balloon;
    (5) When exercising the privileges of a commercial pilot 
certificate with a balloon class rating in a balloon if the person is 
providing flight training in accordance with Sec.  61.133(a)(2)(ii);
* * * * *
    (d) * * *

----------------------------------------------------------------------------------------------------------------
                                                                                             Then your medical
                                       And on the date of                                  certificate expires,
            If you hold               examination for your    And you are conducting an   for that operation, at
                                       most recent medical       operation requiring        the end of the last
                                      certificate you were                                      day of the
----------------------------------------------------------------------------------------------------------------
(1) * * *
----------------------------------------------------------------------------------------------------------------
                                     (iii) Any age.........  a commercial pilot           12th month after the
                                                              certificate (other than a    month of the date of
                                                              commercial pilot             examination shown on
                                                              certificate with a balloon   the medical
                                                              rating when conducting       certificate.
                                                              flight training), a flight
                                                              engineer certificate, or
                                                              an air traffic control
                                                              tower operator certificate.
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
(2) * * *
----------------------------------------------------------------------------------------------------------------
                                     (i) Any age...........  an airline transport pilot   12th month after the
                                                              certificate for second-in-   month of the date of
                                                              command privileges (other    examination shown on
                                                              than the operations          the medical
                                                              specified in paragraph       certificate.
                                                              (d)(1) of this section), a
                                                              commercial pilot
                                                              certificate (other than a
                                                              commercial pilot
                                                              certificate with a balloon
                                                              rating when conducting
                                                              flight training), a flight
                                                              engineer certificate, or
                                                              an air traffic control
                                                              tower operator certificate.
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------


0
6. Amend Sec.  61.113 by revising the introductory text of paragraph 
(i) to read as follows:


Sec.  61.113  Private pilot privileges and limitations: Pilot in 
command.

* * * * *
    (i) A private pilot may act as pilot in command or serve as a 
required flightcrew member of an aircraft without holding a medical 
certificate issued under part 67 of this chapter provided the pilot 
holds a valid U.S. driver's license, meets the requirements of Sec.  
61.23(c)(3), and complies with this section and all of the following 
conditions and limitations:
* * * * *

[[Page 71238]]

PART 68--REQUIREMENTS FOR OPERATING CERTAIN SMALL AIRCRAFT WITHOUT 
A MEDICAL CERTIFICATE

0
7. The authority citation for part 68 continues to read as follows:

    Authority: 49 U.S.C. 106(f), 44701-44703.


0
8. Amend Sec.  68.3 by revising the introductory text of paragraph (a) 
and the introductory text of paragraph (b) to read as follows:


Sec.  68.3  Medical education course requirements.

    (a) The medical education course required to act as pilot in 
command or serve as a required flightcrew member in an operation under 
Sec.  61.113(i) of this chapter must--
* * * * *
    (b) Upon successful completion of the medical education course, the 
following items must be electronically provided to the individual 
seeking to act as pilot in command or serve as a required flightcrew 
member under the conditions and limitations of Sec.  61.113(i) of this 
chapter and transmitted to the FAA--
* * * * *

0
9. Amend Sec.  68.9 by revising the introductory text of paragraph (a) 
to read as follows:


Sec.  68.9  Special Issuance process.

    (a) General. An individual who has met the qualifications to 
operate an aircraft under Sec.  61.113(i) of this chapter and is 
seeking to act as a pilot in command or serve as a required flightcrew 
member under that section must have completed the process for obtaining 
an Authorization for Special Issuance of a Medical Certificate for each 
of the following:
* * * * *

    Issued in Washington, DC, under authority provided by 49 U.S.C. 
106(f), 44701, 44702, and 44703 on or about November 16, 2022.
Billy Nolen,
Acting Administrator.
[FR Doc. 2022-25288 Filed 11-21-22; 8:45 am]
BILLING CODE 4910-13-P


