A special team of Federal Aviation Administration staffers has begun studying the need for changes to regulations governing cargo holds, agency officials confirmed Wednesday.

The team is focusing only on so-called Class D cargo and baggage compartments on between 3,500 and 4,000 jets, turboprop and piston-powered airliners built under Federal Air Regulation Part 25.The team's mandate is to determine whether the agency should propose rules changes requiring fire warning and extinguishing systems not now listed in the Class D definition.

One agency official conceded that the industry price tag could run beyond the $100 million range.

An agency spokesman said a hazardous chemicals incident last month on an American Airlines jet prompted Administrator Allan McArtor to create the special team.

In that incident, an improperly packaged and mislabeled container of chemicals began leaking in the cargo hold of a McDonnell Douglas MD-80 twin jet in route from Dallas to Nashville.

The chemicals reacted both with each other and with parts of the jet's airframe.

After the flight attendants notified the flight crew that there were noxious fumes in the passenger cabin and that the cabin floor had grown hot, the crew landed the jet, parked on a taxiway and evacuated the passengers.

Because of the configuration of the MD-80's cargo and baggage hold, there was really no way to know what was happening down there, explained a safety investigator familiar with the incident.

Investigation by both the National Transportation Safety Board and the Federal Aviation Administration continue.

The current Class D cargo compartment definition lacks any requirement for remote smoke and fire detection equipment. The regulation also does not mandate remote controlled fire suppression and extinguishing gear.

The definition does require ventilation system controls capable of isolating smoke or fumes from the passenger cabin and flight deck, and to prevent spread of any fire from the cargo compartment elsewhere.

The rule also requires that the compartment be capable of confining any fire and that it be built to isolate critical systems from the effects of heat or flames, according to the agency's regulation.

A spokesman for the Air Transport Association, a trade group representing most of the nation's large airlines, noted that the agency has yet to approach the carriers about the prospective rule change.

Another industry insider said the agency had notified by letter the companies that manufacture airliners, Boeing Commercial Airplane Co., McDonnell Douglas, Lockheed California, the European consortium Airbus Industrie, and a number of smaller foreign manufacturers with customers in the United States.

It appears to us that nothing is going to happen soon on this since the manufacturers have not yet had time to respond to the FAA letter, said the insider.

An official of the Regional Airline Association, whose roughly 80 members operate many of the non-jet aircraft built under Part 25, confirmed that it, too, had not been contacted by the agency.

We heard about it through other channels and in turn notified our members so they could start thinking about responding to any rule proposal, explained the official.

A Federal Aviation Administration official familiar with the special team's study said, They're looking at the broadest range of options right now, including retrofitting the existing fleet with any new equipment which might be required.

Another official said that if there is a rules change, airlines would likely have two years to complete the work, as they had under past rules requiring installation of new equipment on existing aircraft.

Before we decide to move on this, however, we want to finish our own detailed cost analysis, so we can respond to the Office of Management and Budget when they question the cost/benefit equation, said an FAA official.