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Federal Register / Vol. 86, No. 137 / Wednesday, July 21, 2021 / Proposed Rules
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predominantly distributional and not expected to generate significant net economic costs or benefits. For baggage fees, the estimated size of the transfer or redistribution is between $10.71
million and $11.43 million annually.
This estimate, based on a Department analysis of baggage fee refunds available in this rulemaking docket, is an upperbound estimate which assumes that passengers pay fees for all delayed bags.
For ancillary fees, it is generally current practice for airlines to give refunds when passengers do not receive ancillary services on flights, as described in Section III.A. Some airlines have codified this practice in their published refund policies as well. Given current practice, the Department does not expect that the requirement to refund ancillary service fees would have significant distributional impacts.
The baggage fee refund requirement in the proposed rule could have some administrative costs, which are economic costs, because airlines may need to hire additional staff to process refunds. The requirement has an estimated annual cost between $4.18
million and $4.41 million, assuming that staff process refunds manually. If refunds are processed electronically, as is expected in at least some cases, this cost could decrease. Airlines should not incur significant administrative costs due to the ancillary service fee refund requirement, to the extent that the refunds are part of current practice.
This conclusion could change if the proposed rule induces more passengers to seek refunds from carriers. In that case, the ancillary service fee refund requirement could add administrative costs and have distributional implications.
The Department seeks comment and additional data to quantify the effects of the proposed rule on baggage fee and ancillary service fee refunds, as well as information on potential impacts on passenger behavior.
B. Regulatory Flexibility Act The Regulatory Flexibility Act of 1980
RFA 5 U.S.C. 601 et seq. requires Federal agencies to consider the effects of their regulatory actions on small businesses and other small entities, and to minimize any significant economic impact. When an agency issues a rulemaking proposal, the RFA requires the agency to prepare and make available for public comment an initial regulatory flexibility analysis which will describe the impact of the proposed rule on small entities 5
U.S.C. 603a. Section 605 of the RFA
allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed
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rulemaking is not expected to have a significant economic impact on a substantial number of small entities.
The entities that would be directly regulated by this proposed rule are U.S.
and foreign air carriers that charge baggage fees and other ancillary fees in scheduled air transportation. Under 14
CFR 399.73, for the purposes of the Departments implementation of the RFA, a carrier is a small business if it provides air transportation exclusively with small aircraft, defined as any aircraft originally designed to have a maximum passenger capacity of 60 seats or less or a maximum payload capacity of 18,000 pounds or less.
The Department does not expect that this rule would have a significant economic impact on a substantial number of small entities. Some small carriers that qualify as small businesses operate flights as part of a code-share arrangement with a larger carrier. In these cases, the larger carrier collects the baggage fees and other ancillary service fees and would be responsible for the refunds under the proposal. At least five small carriers operating in 2018 had code-share arrangements with larger carriers covering some portion of their flights. For other flights, the estimated economic effects for carriers are small. As described in the baggage fee refund analysis, the estimated annual refund payments $10.71 million to $11.43 million and administrative costs for carriers $4.18 million to $4.41
million would account for less than 0.5
percent of their annual baggage fee revenues $3.8 billion in 2015, the year used in the analysis due to data availability. As baggage handling and tracking technologies improve, we expect that the percentage of delayed bags affected by the rule and resulting economic effects would decrease further.
Accordingly, the Department certifies that the proposed rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. The Department invites comment on this certification and on the analysis presented in support of it.
C. Executive Order 13132 Federalism This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 Federalism. This document does not propose any provision that: 1
Has substantial direct effects on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of government; 2 imposes substantial direct compliance costs on
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State and local governments; or 3
preempts State law. States are already preempted from regulating in this area by the Airline Deregulation Act, 49
U.S.C. 41713. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
D. Executive Order 13084
This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13084 Consultation and Coordination with Indian Tribal Governments.
Because none of the options on which the Department is seeking comment would significantly or uniquely affect the communities of the Indian tribal governments or impose substantial direct compliance costs on them, the funding and consultation requirements of Executive Order 13084 do not apply.
E. Paperwork Reduction Act This NPRM does not proposes a new collection of information that would require approval by the Office of Management and Budget OMB under the Paperwork Reduction Act of 1995
Pub. L. 10413, 49 U.S.C. 3501 et seq..
F. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 UMRA requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more adjusted annually for inflation in any one year. As described elsewhere in the preamble, this proposed rule would have no such effect on State, local, and tribal governments or on the private sector. Therefore, the Department has determined that no assessment is required pursuant to UMRA.
G. National Environmental Policy Act The Department has analyzed the environmental impacts of this proposed action pursuant to the National Environmental Policy Act of 1969
NEPA 42 U.S.C. 4321 et seq. and has determined that it is categorically excluded pursuant to DOT Order 5610.1D, Procedures for Considering Environmental Impacts 81 FR 92966, Dec. 15, 2016. Categorical exclusions are actions identified in an agencys NEPA implementing procedures that do not normally have a significant impact on the environment and therefore do not require either an environmental assessment EA or environmental impact statement EIS. See 40 CFR
1508.4. In analyzing the applicability of
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