Ms. Rosalind A.
Deputy General Counsel
Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Dear Ms. Knapp:
For the reasons described below and in accordance with Executive
Order. No. 12866, section 6, we are returning to you for reconsideration
a draft proposed rule from the Department of Transportation's (DOT)
Federal Aviation Administration (FAA) entitled, "Certification of
Pilots, Aircraft, and Repairmen, for the Operation of Light Sport
Aircraft", submitted to the Office of Management and Budget (OMB)
on July 6, 2001. This proposed rule would establish new certification
requirements for pilots, aircraft and repairmen to operate and maintain
light sport aircraft. In addition, the FAA is proposing a new category
of special airworthiness certificate for light-sport aircraft that
meet an industry-developed consensus airworthiness standard.
Under Executive Order No. 12866, agencies should "propose or adopt
a regulation only upon a reasoned determination that the benefits
of the regulation justify its costs" (Section 1 (b) (6)). While
we fully support the objectives of the draft proposed rule, we are
concerned that the regulatory analysis to support the rule does
not present information adequate to support such a reasoned determination.
Specifically, the FAA has adopted a "baseline" with which to compare
the rule which adopts (among the "baseline" assumptions) an assumption
that, in the absence of the rule, FAA would propose a more stringent
set of standards than in the proposal.
While we have no objection to analyzing an alternative that is more
stringent than the proposal, we believe that the cost and benefits
of the proposal itself should be compared with a status quo that
does not include the artificial "baseline" assumptions of increased
stringency. An attachment to this memorandum describes the problems
encountered with the approach that was adopted in FAA's preliminary
analysis as compared with the approach we suggest.
As part of an improved analysis of alternatives, the FAA could also
consider means of improved compliance and enforcement of regulations
currently in place. This may be particularly appropriate where the
proposal as drafted yields negative net benefits compared with the
status quo and, as some have argued there are substantial violations
of current rules and potential safety benefits to be derived from
improved enforcement. This is one reason we have suggested to the
Department that they publish an advance notice (ANPRM) before publishing
the specific proposal.
We recognize that the proposal was based in large part on an industry-consensus
document and that FAA seeks to receive public comment on the consensus
product as it has been modified by the FAA. On the other hand, an
ANPRM could achieve the same result while also permitting focused
consideration on modest improvements to current regulations that
could conceivably yield higher net benefits to society as a whole.
Due to the concerns identified above, we are returning this rule
for your reconsideration. Our staff is available for further discussion
with you on these issues. We look forward to working with you to
improve this important rulemaking effort.
John D. Graham
Office of Information and Regulatory Affairs
OF PROBLEMS WITH THE FAA ANALYSIS
The FAA analysis of the Sport's Pilots rule presents the following
In Appendix A to its regulatory evaluation, entitled "Net Cost Saving
Benefit Methodology", FAA presents "status quo" costs, including
costs of obtaining a private pilot certificate. FAA argues that
in the absence of the proposed rule, FAA would require that recreational
pilots meet this more stringent requirement. This leads FAA to estimate
cost-savings benefits of approximately $41 million ($37 million
discounted) , which measure the difference between costs that would
be incurred under the status quo ($46 million) and the rule that
FAA wishes to propose ($5 million). FAA adopts elements of an alternative
which is more stringent than the status quo, rationalizing this
as reflecting what would be required through regulation in the future
if their proposal was not adopted.
We believe that this approach can lead reviewers and the general
public to seriously misunderstand FAA's proposal. It would be much
clearer to first compare the "actual status quo" with $31 million
in discounted compliance costs and $5 million in monetized safety
benefits. This yields negative net benefits of - $26 million.
The consequences of the more stringent alternative could then be
factored in which may or may not increase the negative net benefits,
even though the more stringent proposal would enjoy "cost savings"
relative to the FAA proposal.
Further analysis could also lead FAA to consider less stringent
alternatives that would improve societal benefits. A further analysis
is given in our staff comment and evaluation of the proposal as
well as in supplemental comment on alternatives which might be considered.