Daily Rules, Proposed Rules, and Notices of the Federal Government
The statute under which the Secretary of Transportation regulates commercial space transportation, 49 U.S.C. Subtitle IX, sections 70101-70121 (chapter 701), provides for the Department of Transportation (DOT), and, through delegation, the Federal Aviation Administration (FAA) to impose civil penalties on persons who violate chapter 701, a regulation issued under chapter 701, or any term or condition of a license or permit issued or transferred under chapter 701. 49 U.S.C. 70105a(h)(i), 70115.
This rule implements the Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), Public Law (Pub. L.) 101-410, as amended by the Debt Collection Improvement Act of 1996, Public Law 104-134, codified at 28 U.S.C. 2461 note.
The FCPIAA requires Federal agencies to adjust minimum and maximum civil penalty amounts for inflation to preserve their deterrent impact. Under these laws, each agency must make an initial inflationary adjustment for all applicable civil monetary penalties, and further adjust these penalties at least once every 4 years. The FCPIAA required the first adjustment to the maximum civil penalty found in 14 CFR part 406 to have been made in 1996.
This rule is the FAA's initial adjustment to the maximum civil penalty found in 14 CFR part 406 which governs commercial space transportation adjudications. The FAA has routinely adjusted for inflation civil monetary penalties for aviation contained in 14 CFR part 13. [See 61 FR 67445, Dec. 20, 1996, as amended by Amdt. 13-28, 62 FR 4134, Jan. 29, 1997; 67 FR 6366, Feb. 11, 2002; Amdt. 13-33, 71 FR 28522, May 16, 2006; 71 FR 47077, Aug. 16, 2006; 71 FR 52407, Sept. 6, 2006.]
The FCPIAA determines inflationary adjustments by increasing civil penalties by a cost-of-living adjustment (COLA). The COLA for each civil penalty is the percentage by which the U.S. Department of Labor's Consumer Price Index for all-urban consumers (CPI-U) for the month of June of the calendar year preceding the adjustment exceeds the CPI-U for the month of June of the calendar year in which the amount of such civil penalty was last set or adjusted pursuant to the FCPIAA. The FCPIAA contains specific rules for rounding the inflationary increase based on the initial amount of the civil penalty being adjusted. However, the FCPIAA limits the increase to a maximum of ten percent for the first adjustment. This limitation does not apply to subsequent adjustments.
14 CFR 406.9 states that under 49 U.S.C. 70115(c)(1)(a) a maximum civil penalty of $100,000 is imposed for violations of chapter 701, a regulation proscribed under chapter 701, or any term or condition of a license or permit issued or transferred under chapter 701. However, this rulemaking is our initial adjustment and any adjustment in civil penalty is limited by statute to a maximum ten percent increase. Thus, instead of using the COLA, the penalty is increased by ten percent of $100,000, which is $10,000. Therefore, the new civil penalty becomes $110,000 ($100,000 + $10,000).
Four years from now, when the next adjustment is due, we will employ the COLA methodology. It works as follows, using the current year only as an example. Were we using the COLA method this year, we would first determine the appropriate CPI-U for June of the calendar year preceding the year of adjustment. For an adjustment in 2010, we would use the CPI-U for June of 2009, which was 215.693. We would also determine the CPI-U for June of the year the civil penalty came into force. Because the civil penalty came into force in 1984, we would use the CPI-U for June of 1984, which was 103.7.
Second, we would calculate the COLA. To do this we would subtract the CPI-U for June 1984 (103.7) from the CPI-U of June 2009 (215.693). Next, we would divide the resulting difference (111.993) by the CPI-U for June 1984 (103.7). The resulting quotient (1.07997) is then multiplied by 100 yielding a COLA of 107.997%.
Were this not our initial adjustment, we would calculate the raw inflationary increase by multiplying the maximum civil penalty ($100,000) by the COLA (107.997%). This would provide a raw inflation increase of $107,997. Next, we would round the raw inflation amounts by the statutory rounding formula found in Section 5(a) of the FCPIAA. Determination of the proper rounding formula depends on the current amount of the civil penalty at the time the calculation is made, not the size of the raw inflationary increase. The applicable rounding formula for the existing civil penalty of $100,000 would be that “[a]ny increase * * * is rounded to the nearest * * *[m]ultiple of $5,000 in the case of penalties greater than $10,000 but less than or equal to $100,000 * * *” Thus, the raw increase of $107,997 would become $105,000 after rounding. Finally, the increase of $105,000 would be added to the initial civil penalty $100,000 for an adjusted civil penalty of $205,000.
Under the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), a final rule may be issued without public notice and comment if the agency finds good cause that notice and comment are impractical, unnecessary, or contrary to public interest. Good cause exists in this rule to dispense with public notice and comment because adjustments to civil penalties for inflation are required by Congress, as set forth in Section 5 of the FCPIAA, in order to maintain the deterrent effect of civil penalties and promote compliance with the law. This rulemaking is ministerial, technical, and noncontroversial. The FCPIAA serves as a Congressional mandate and the FAA may not exercise any discretion or policy judgments. The FAA has no discretion as to the amount of the adjustment. Furthermore, it would be contrary to the public interest to delay these adjustments in order to receive public comment because the regulation concerns a civil penalty for conduct that is already illegal under existing law. Also, any delay would be unnecessary as the FAA cannot change the method of application of the mandatory inflation adjustment as defined by the FCPIAA.
The Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d), requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there are no current or new requirements for information collection associated with this rule.
In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to these regulations.
Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulations justify its costs. Second, the Regulatory Flexibility Act of 1980 (RFA), Public Law 96-354, codified at 5 U.S.C. 601-612, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act of 1999 (Trade Act), Public Law 96-39, codified at 19 U.S.C. 2501-2581, prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the U.S. In developing U.S. standards, the Trade Act requires agencies to consider
DOT Order 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination is as follows. This rule adjusts for inflation the maximum civil penalty for violations of the Commercial Space Launch Act of 1984, to be in compliance with the Federal Civil Penalties Inflation Adjustment Act of 1990. This inflation adjustment is an economic transfer and not a social cost.
The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.
Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.
However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.
As already noted, this rule adjusts for inflation only, as required by the Federal Civil Penalties Inflation Adjustment Act of 1990. Therefore, as FAA Administrator, I certify that this rule will not have a significant economic impact on a substantial number of small entities.
The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.
The FAA has assessed the potential effect of this final rule and determined that it would impose identical inflation adjusted civil penalties on domestic and international entities that violate 14 CFR part 406, and thus would have a neutral trade impact. Furthermore, the inflationary adjustment is a legitimate domestic objective preserving the existing deterrent impact of 49 U.S.C. subtitle IX, chapter 701. Therefore, we have determined that this rule will result in a neutral impact on international trade.
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $143.1 million in lieu of $100 million.
Because this final rule only increases a civil penalty by $10,000, as required by FCPIAA, it does not contain a mandate that meets this threshold amount. Therefore, the requirements of Title II of the act do not apply.
The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The FAA determined that this action would not have a substantial direct effect on the States, or the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, the FAA has determined that this final rule does not have federalism implications.
FAA Order 1050.1E defines FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act (NEPA) in the absence of extraordinary circumstances. The FAA has determined this final rule qualifies for the categorical exclusion identified in Chapter 3, paragraph 312d, and involves no extraordinary circumstances.
The FAA has analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). We have determined that it is not a “significant energy action” under the executive order because it is not a “significant regulatory action” under Executive Order 12866, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
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1. Searching the Federal eRulemaking Portal (
2. Visiting the FAA's Regulations and Policies Web page at
3. Accessing the Government Printing Office's Web page at
You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make sure to identify the amendment number or docket number of this rulemaking.
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The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. If you are a small entity and you have a question regarding this document, you may contact your local FAA official, or the person listed under the
Administrative procedure and review, Commercial space transportation, Enforcement, Investigations, Penalties, Rules of adjudication.
49 U.S.C. 70101-70121.