Action
Supplemental notice of proposed rulemaking.
Summary
The Department is seeking additional comments on our proposal to clarify policies that it may use to evaluate air carriers' citizenship during initial and continuing fitness reviews. Our proposal would affect how we determine "actual control" of the carrier in situations where the foreign investor's home country has an open skies air services agreement with the United States, and permits reciprocal investment opportunities in its own national air carriers for U.S. investors. We continue to believe that our proposed policy would remove unnecessary restrictions on U.S. air carriers' access to the global capital market without compromising the statutory requirement that U.S. citizens remain in actual control of such carriers. We are issuing a supplemental notice of proposed rulemaking (SNPRM) because, after reviewing comments submitted on the NPRM and in consultation with other Executive Branch agencies, we have decided to strengthen the proposal in several areas. We have revised the proposed rule further to ensure that U.S. citizens will have actual control of the air carrier. We are also mindful of the strong interest in this proposal expressed by members of Congress. This SNPRM will furnish Congress the opportunity to review the proposal in its refined form, and to undertake a more informed assessment of its likely consequences. Our NPRM proposal would allow for delegation to foreign investors of decision-making authority regarding commercial issues, but in the areas of organizational documents, safety, security, and the Civil Reserve Air Fleet (CRAF) program the NPRM would not permit these delegations. In a key refinement of our original proposal, we now propose in this SNPRM to require that any such delegation of authority to foreign interests by the U.S. citizen majority owners be revocable. We are proposing this change to ensure that, notwithstanding their ability to delegate decision-making authority over certain commercial matters (as described in the NPRM) to foreign investor interests, the U.S. voting shareholders of a U.S. airline will retain actual control of the airline. We originally proposed to reserve exclusively to U.S. citizens decisions relating to organizational documents, safety, security, and CRAF. In another refinement, in keeping with suggestions received from the Departments of Homeland Security and Defense as well as the Federal Aviation Administration, we are now proposing to broaden the scope of the decision-making that must remain under the actual control of U.S. citizens. The aspects of control of safety and security decisions would no longer be limited to those implementing FAA and TSA safety and security regulations, but would cover safety and security decisions generally. Similarly, the proposed control of CRAF decisions would be expanded to cover all national defense airlift commitments. Our proposed expansion of the coverage of these three areas will ensure that all critical elements of a carrier's decision-making that could impact safety, security, and national defense airlift are fully covered, and that our review of a carrier's compliance with these requirements will not be unduly narrow. We tentatively conclude that, as modified, this proposal will eliminate unnecessary and anachronistic limitations on the ability of eligible foreign minority investors to participate in the commercial decision-making at a U.S. airline in which they have made an otherwise statutorily-permitted investment. At the same time, it should eliminate any doubt that the voting stockholders (75 percent of whom are U.S. citizens) and the board of directors (two-thirds of whom are U.S. citizens) will retain full control over decisions regarding safety, security, and contributions to our national defense airlift capability, and that those U.S. citizens also retain "actual control" of the carrier as a whole as required by statute.