Kirk K. Van Tine
Department of Transportation
400 Seventh Street S.W.
Washington, D.C. 20590
Dear Mr. Van
On October 19, 2001, the Office of Management and Budget (OMB) completed
review of a Federal Aviation Administration (FAA) draft proposed
rule, titled "Traffic Alert and Collision Avoidance Systems" (TCAS)
under Executive Order 12866. The rule would require Part 121 and
125 operators, primarily operators of cargo airplanes, to install
and use an advanced collision avoidance system by November 2003.
The expected benefit of the rule is a reduction in the risk of a
midair collision (MAC) involving at least one airplane primarily
used to transport cargo.
We recognize the progress that has been made over more than a decade
in the utilization of such equipment in eliminating mid-air collisions.
Whereas Congress had initially exempted cargo aircraft from mandatory
use of such equipment, legislation enacted in April 2000 directed
the FAA to require all cargo planes of more than 33,000 pounds be
equipped with advanced collision avoidance equipment by December
30, 2002. FAA has provided 60 days for comment on the rule, which
would give approximately one year for final action consistent with
the statutory requirements.
During our review, our primary concern has been to encourage FAA
to develop a sound and more transparent analysis of the benefits
of the proposal. FAA has, in our view, accomplished much in developing
reasonable measures of risks of midair collisions and responded
to our suggestion that the regulatory analysis also quantify or
"monetize" benefits based on these risk measures over the 20 year
period of analysis. The FAA's regulatory analysis shows that the
benefits may be small in comparison to the costs (approximately
$176 million in present value) that FAA expects will be incurred.
In the regulatory analysis, for example, FAA shows (under one set
of assumptions) that there is a risk of approximately .5 of a midair
collision over the 20 year period. When the risks are apportioned
among three representative types of accidents (a MAC between two
cargo planes for example), FAA derives a measure of approximately
$26 million (undiscounted) in quantifiable benefits. When compared
with most FAA regulations that we have evaluated (where FAA has
attempted to quantify benefits in a comparable fashion), the costs
appear to be disproportionate to the benefits.
We recognize that FAA has limited alternatives available under the
statute. In light of recent events, however, we encourage FAA to
even more carefully assess the impacts on smaller entities and look
at the collision avoidance and other safety rules in terms of the
cumulative impact of these rules in relation to the financial health
of the industry. In the present circumstances, it is reasonable
to expect that that most rules pass a reasonable cost-benefit test.
If not, the rules may warrant serious reexamination.
We also anticipate, based on the rulemaking record, that the Department
and FAA will share with the Congress any information made available
by the public that bears on the reasonableness of implementing the
statute. In addition, we anticipate working with your staff to further
refine the regulatory evaluation at the final rule stage and to
working affirmatively and effectively with you to implement this
John D. Graham
Office of Information and Regulatory Affairs