REGULATIONS OF VARIOUS FEDERAL REGULATORY AGENCIES AND THEIR EFFECT ON SMALL BUSINESS

(Part 4)

WEDNESDAY, JULY 28, 1976

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ACTIVITIES OF REGULATORY AGENCIES

OF THE COMMITTEE ON SMALL BUSINESS,

Washington, D.C.

The subcommittee met, pursuant to notice, at 9:40 a.m., in room 2359, Rayburn House Office Building, Hon. William L. Hungate (chairman of the subcommittee) presiding.

OPENING STATEMENT OF CHAIRMAN HUNGATE

Mr. HUNGATE. The subcommittee will be in order.

This morning the subcommittee is pleased to welcome representatives of the Federal Aviation Administration. The Administration is here this morning to discuss nine areas of concern submitted to the subcommittee over the last year by small businesses in the air transportation field.

As chairman of the Subcommittee on Activities of Regulatory Agencies, I would like to commend the Administration for the cooperation they have displayed in the entire 13 months in which we have conducted hearings. First, there has been nothing but cooperation from all FAA representatives with whom we have dealt. In fact, at the beginning of the hearings the FAA went so far as to conduct an agency briefing for the members of this subcommittee; this cooperation has continued through this hour.

Of all the witnesses we have heard in the 13 months, we were able to pinpoint nine areas of concern to the subcommittee.

The representatives of the FAA will now present a short regulatory statement addressed to the nine areas of concern.

We are pleased to welcome Mr. Richard P. Skully, Director of Flight Standards Service; William V. Vitale, Director of FAA's Airports Service, and the other gentleman

Mr. RANDALL. My name is Albert Randall, sir.

Mr. HUNGATE. Albert Randall. We are pleased to have you. The subcommittee believes that this is an effective way to work out problems that exist. We have taken testimony from those who have had complaints and suggestions. We have submitted this information to1 you. In our experience, it would be unusual if some of the complaints (261) '

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were not justified, and it would be equally unusual if they were all justified. This offers us an opportunity to hammer out the areas where frictions and problems exist; where they may be changed or corrected through administrative procedures, or where perhaps congressional legislation is necessary. We do appreciate your cooperation.

Mrs. Fenwick, do you have an opening statement?

Mrs. FENWICK. No. I just would like to welcome you all, thank you. Mr. HUNGATE. If you gentlemen will please rise, raise your right hands, and be sworn.

Do you solemnly swear the testimony you are about to give is the truth, the whole truth and nothing but the truth, so help you God? Mr. SKULLY. I do.

Mr. VITALE. I do.

Mr. RANDALL. I do.

Mr. HUNGATE, Please, be seated. If you will, we will start with your name and address.

Mr. VITALE. William Vitale, Director of Airports Service, 800 Independence Avenue, SW.

Mr. RANDALL. Albert B. Randall, Chief Counsel's Office, 800 Independence Avenue, SW.

Mr. SKULLY. Richard P. Skully, Director of Flight Standards, 800 Independence Avenue, SW.

Mr. HUNGATE. You gentlemen have a prepared statement, without objection, Mr. Skully, it will be made part of the record, and you may proceed as you see fit. Let me mention, before you proceed, don't worry about these bells too much. The House goes in at 10 o'clock today. It will be the procedure of the Chair, when the bells ring we will proceed for 10 minutes, and then break and return.

Please proceed, sir.

TESTIMONY OF RICHARD P. SKULLY, DIRECTOR OF FLIGHT STANDARDS, ACCOMPANIED BY WILLIAM V. VITALE, DIRECTOR OF AIRPORTS SERVICE, AND ALBERT B. RANDALL, ATTORNEY, CHIEF COUNSEL'S OFFICE, FEDERAL AVIATION ADMINISTRATION

Mr. SKULLY. Thank you, Mr. Chairman. I would like to express our appreciation for your kind opening remarks. I do think the past year has been quite beneficial to both groups.

I am Richard P. Skully, Director, Flight Standards Service. Appearing with me today is William V. Vitale, Director of FAA's Airports Service. We appreciate having the opportunity to discuss with you the areas of interest outlined in your letter of June 10th of this year to Dr. McLucas.

As you are no doubt aware from the testimony last year of FAA's Associate Administrator for Administration, Charles E. Weithoner, the FAA cannot be directly compared with many agencies such as the CAB, Federal Trade Commission, and Securities Exchange Commission which are commonly thought of as "regulatory agencies." While the thrust of many of these agencies is of an economic nature, the FAA's primary and overriding mission, as mandated by the Federal Aviation Act of 1958, is aviation safety. Consequently, when eco

nomic considerations and the enhancement of aviation safety conflict, our decisions must be made in the interest of safety.

Although safety is our primary concern-as it must be-this does not mean that we are blind to the economic consequences of our regulatory actions as they may affect the aviation community. On the contrary, to the extent we are able, we carefully evaluate and weigh in our decisionmaking processes the economic impact of our prospective actions.

Regarding the impact of our safety regulations on small business, I would like to briefly discuss our consideration of economic factors in the rulemaking process. The probable economic consequences as well as the overall impact of a proposed regulation are carefully evaluated at several levels within the FAA. When a regulatory project is initiated, the potential economic effects are considered by the staff that prepares the proposal. Top-level FAA officials then review the predicted economic impact, and other anticipated consequences, as does the Administrator, before the issuance of a notice of proposed rulemaking. If the notice of proposed rulemaking is believed to be costly or controversial, the FAA Administrator advises the Secretary of Transportation of the proposal at least 30 days before publication of the notice of proposed rulemaking in accordance with the Department's regulatory reform policy.

When a notice is published in the Federal Register, interested persons are invited to furnish their comments to the FAA. Before adopting a rule based on the notice, the FAA carefully considers all comments received. This provides an opportunity for those being regulated to express their concerns about any potential impact of the rule upon them, including economic consequences. Additionally, under our regulatory reform policy, at least 30 days before the issuance of a costly or controversial final rule, the Administrator advises the Secretary of Transportation of the impending action.

Regulated persons are also afforded the opportunity of seeking relief from FAA regulations under the exemption process outlined in part 11 of our regulations. Under this procedure, the FAA Administrator or his delegate may exempt persons from the requirements of a rule upon a finding that the exemption would be in the public interest and that safety would not be adversely affected. Procedures are also available for interested persons to petition the FAA to adopt, modify, or revoke a rule.

In short, although we will not put a pricetag on human life, we believe that FAA rulemaking procedures are fair and take into account, to the extent feasible, the potential burdens of our regulations upon affected parties.

I would like to turn now to a discussion of the nine areas of concern to the subcommittee as described in your letter of June 10. I will start with question 1 and give the essence of the question.

Question 1: The FAA safety regulations are not in accord with CAB economic regulations. The FAA's Notice of Proposed Rulemaking 76-7 proposed that aircraft weighing more than 12,500 pounds and having a maximum passenger capacity of 10 seats or less be permitted to operate under FAR 135. Commuter airlines want the notice amended to include aircraft having maximum passenger capacity of

30 seats or less. They say this would bring your safety regulations in accord with CAB economic regulations governing the operations of commuter air carriers.

Our response is that notice 76-7 was intended as an interim measure to permit the FAA to gain operational experience with coverage of certain large aircraft under the provisions of part 135 of the Federal Aviation Regulations. The FAA considered that this interim measure would provide the desired experience without adversely affecting safety, and that knowledge gained from these operations could be beneficially applied in subsequent rulemaking actions.

It was envisioned that this experience would be considered in conjunction with regulatory projects underway to upgrade part 135. As conceived, this comprehensive upgrading will include provisions for the operation of aircraft with a seating capacity of up to 30 passengers, with up to a 7,500-pound payload, and a zero fuel weight of 35,000 pounds or less. If promulgated, these regulations would be in lieu of the present requirement that all large aircraft operations under part 135 be conducted in accordance with certain part 121 rules.

It was the view of the FAA that permitting aircraft with a seating capacity of up to 30 passengers to operate under part 135 prior to the completion of efforts to upgrade this part, might compromise aviation safety. For this reason, notice 76-7 restricted seating capacity to 10 passengers rather than 30 passengers.

Question 2: What does the FAA plan to do for small community airports served by commuter airlines to insure that these airports get their fair share of F. & E. funds?

Our response is that the FAA no longer classifies airports as “air commerce" or "general aviation" for facilities and equipment purposes. F. & E. candidates are now identified by meeting specific levels. of operations according to aircraft category regardless of community size. While it is true that commuter airlines were formerly included in the "general aviation" category for F. & E. purposes, our new approach recognizes that these airlines are different than general aviation. Current categories include certificated route air carrier; air taxi, which includes commuter airlines, general aviation, and the military. Air taxi aircraft are considered as having benefits substantially higher than general aviation aircraft.

The new system results in operations of commuter airlines receiving greater weight for purposes of establishment criteria for F. & E. than equivalent levels of general aviation activity. Similarly, recognizing that certificated air carriers generally carry more passengers per plane than do commuter airlines, and normally have aircraft which would be more costly to replace, cost-benefit analysis techniques result in certificated air carrier operations being valued higher than equivalent levels of commuter airline operations.

Question 3: What is the FAA doing to fund the development of aircraft and engines that can safely and economically serve small communities?

Our response is, the primary responsibility for the development of new aircraft and engine technology rests with NASA, whether for air carrier aircraft serving primarily large communities or general aviation aircraft serving primarily small communities.

The FAA development effort is carried out in support of its regulatory function and is usually oriented toward test and evaluation of hardware developed by industry or NASA. In this regard, we are working jointly with NASA in a program to: (1) Develop standards which will permit general aviation aircraft to safely meet EPA emission standards for piston and turbine-powered aircraft; (2) develop a means of evaluation and improve the crashworthiness of general aviation aircraft which, through enhancing the safety of general aviation, has a positive effect on small community development; and (3) study means of safely improving the noise characteristics of both turbine and piston engined general aviation aircraft to make them better neighbors in the small community.

Question 4: What is the FAA position on the failure of a commuter airline to have appropriate safety publications on hand at inspection time? Witnesses have told us that at times it takes over 1 year to obtain needed publications from the Government Printing Office.

And our response, a commuter airline conducting operations under FAR part 135 is required by section 135.39 to furnish, among other things, an Airman's Information Manual and FAR parts 91 and 135 to its pilots. Failure to comply subjects the airline to possible enforcement action. Operators may obtain these documents from commercial and other sources if not readily available from the GPO. In recognition of the difficulty experienced by the aviation community in getting safety-critical material from the Superintendent of Documents, the FAA issued order 1720.29, Superintendent of Documents distribution of FAA Safety-Related Publications, on January 28, 1976. This order established a system of monitoring complaints and performing liaison with the Superintendent of Documents to the end that better service to the aviation community may be provided.

Question 5: Witnesses complained that commuter airlines are often given the most undesirable locations at airport terminals. What is being done to correct this?

And our response, we recognize that situations exist at some airports in which commuter airlines are assigned to terminal space less desirable than others. Allocation of airport terminal space is a matter of availability and negotiations between airport management and the individual operators.

While we do not intend to defend the situation as stated, we should point out that the commuter operators frequently are newcomers to the airport and have to be accommodated in whatever space is then available. It is no doubt true that the CAB certificated carriers who have been serving that airport for some time have longstanding leases on the most desirable space.

From the FAA standpoint, federally obligated airports are bound by their sponsors' assurances as incorporated in the grant agreements "to establish such fair, equal, and not unjustly discriminatory conditions to be met by all users of the airport." As such, it is our responsibility to see that the commuter airlines, as a class, are treated fairly. Any complaints of unjust discrimination that fall within the purview of this agency are investigated in an attempt to achieve resolution satisfactory to all parties.

Question 6: Duplicate and unnecessary reports. Rotor Aids, Inc. of California complained that the Bureau of the Census was contracted to