E7-1101. Domestic Baggage Liability

AGENCY:

Department of Transportation (DOT), Office of the Secretary (OST).

ACTION:

Final Rule.

SUMMARY:

In accordance with the provisions of 14 CFR 254.6, this final rule revises the minimum limit on domestic baggage liability applicable to air carriers to reflect inflation since July 2004, the year of the most recent revision to the liability limit. Section 254.6 requires that the Department periodically revise the limit to reflect changes in the Consumer Price Index. The rule adjusts the minimum limit of liability from the current amount of $2,800, set by the Department in 2004, to $3,000, to take into account the changes in consumer prices since the prior revision.

EFFECTIVE DATE:

This rule is effective on February 28, 2007.

FOR FURTHER INFORMATION CONTACT:

Nicholas Lowry, Senior Attorney, Office of Aviation Enforcement and Proceedings (C-70), Department of Transportation, 400 Seventh St., SW., Washington, DC 20590; [phone].

SUPPLEMENTARY INFORMATION:

I. Supplementary Information

14 CFR Part 254 establishes minimum baggage liability limits applicable to domestic air service, currently $2,800 per passenger (See 69 FR 56693, September 22, 2004). Provisions of 14 CFR 254.6 require that the Department periodically review the minimum limit of liability prescribed in Part 254 in light of changes in the Consumer Price Index for Urban Consumers and directs the Department to revise the limit of liability to reflect changes in the price index that have occurred in the interim. Section 254.6 prescribes the use of a specific formula to calculate the revised minimum liability amount when making these periodic adjustments. Applying the formula to price index changes occurring between July 2004 and July 2006, the appropriate inflation adjustment is $2,500 x 203.5/168.3, or $3022.87. The provision requires us to round the adjustment to the nearest $100, or to $3,000.

II. Waiver of Rulemaking Procedural Requirements

With this final rule, we are waiving the usual notice of proposed rulemaking and public comment procedures set forth in the Administrative Procedure Act (APA) (5 U.S.C. 553). The APA allows agencies to dispense with such procedures on finding of good cause when they are impracticable, unnecessary or contrary to the public interest. We have determined that under 5 U.S.C. 553 (b)(3)(B) good cause exists for dispensing with the notice of proposed rulemaking and public comment procedures for this rule. This rulemaking is required by regulation, based on a formula, and provides for no discretion. Accordingly, we believe comment is unnecessary and contrary to the public interest, and we are issuing this revision as a final rule.

Although this final rule will become effective in 30 days, the Department will defer enforcement of the notice provision in the revised rule, as it pertains to written notice of the new limit, for a reasonable time period to allow carriers to replace or correct their current paper ticket stock and envelopes so as to provide proper written notice of the increased minimum liability limit without imposing an undue burden. Carriers are, however, subject to enforcement action from the effective date of this final rule if they otherwise fail to provide proper notice of the $3,000 liability limit or fail to apply the new limit, as appropriate.

III. Regulatory Impact Statement

Executive Order 12866

This final rule has been evaluated in accordance with the existing policies and procedures and is considered not significant under both Executive Order 12866 and DOT's Regulatory Policies and Procedures. It was not reviewed by the Office of Management and Budget. Based on the limited data available to the Department, the increase in the minimum baggage liability limit from $2,800 to $3,000 per passenger may result in U.S. carriers paying total additional reimbursements to consumers of approximately $2.6 million per year.

Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) does not apply to this rulemaking because we are not required to issue a notice of proposed rulemaking. However, we note that this revision of 14 CFR Part 254 provides for a minimal increase in the amount of the minimum baggage liability limit that air carriers may incur in cases of lost or damaged baggage. It will pose minor additional costs only in those instances in which carriers lose or damage baggage, or delay delivering baggage to the traveler, and it affects only carriers operating large aircraft or those carriers operating small aircraft interlining with such carriers. As a result, many operations of small entities, such as small air taxis and commuter air carriers, are not covered by the rule. Moreover, any additional costs for small entities associated with the rule should be minimal and may be covered by insurance.

Paperwork Reduction Act

This final rule imposes no new reporting or recordkeeping requirements necessitating clearance by OMB.

List of Subjects in 14 CFR Part 254

• Air carriers
• Administrative practice and procedure
• Consumer protection

Accordingly, the Department of Transportation revises 14 CFR Part 254, Domestic Baggage Liability, to read as follows:

PART 254—DOMESTIC BAGGAGE LIABILITY

1. The authority citation for part 254 continues to read:

Authority: 49 U.S.C. 40113, 41501, 41501, 41504, 41510, 41702 and 41707.

2. Section 254.4 is revised to read as set forth below:

§ 254.4

Carrier liability.

On any flight segment using large aircraft, or on any flight segment that is included on the same ticket as another flight segment that uses large aircraft, an air carrier shall not limit its liability for provable direct or consequential damages resulting from the disappearance of, damage to, or delay in delivery of a passenger's personal property, including baggage, in its custody to an amount less than $3,000 for each passenger.

3. Section 254.5 is revised to read as set forth below:

§ 254.5

Notice requirement.

In any flight segment using large aircraft, or on any flight segment that is included on the same ticket as another flight segment that uses large aircraft, an air carrier shall provide to passengers, by conspicuous written material included on or with its ticket, either:

(a) Notice of any monetary limitation on its baggage liability to passengers; or

(b) The following notice: “Federal rules require any limit on an airline's baggage liability to be at least $3,000 per passenger.”

Andrew B. Steinberg,

Assistant Secretary for Aviation and International Affairs.