Congressional Stalemate Persists over Air Traffic Control Privatization as FAA Reauthorization Deadline Approaches

The integration of cutting-edge aviation technology such as commercial drones and the modernization of our national airspace system are just a couple of the pressing aviation issues hanging in the balance this summer as Congress seeks common ground on FAA Reauthorization legislation.  

With the July 15, 2016 expiration of the current Federal Aviation Administration (FAA) authorization legislation rapidly approaching, congressional disagreement over a plan to privatize Air Traffic Control is preventing bicameral endorsement of a path forward.  
 
On April 19, 2016, the Senate passed its Federal Aviation Administration (FAA) Reauthorization legislation by an overwhelming margin of 95-3 (initially introduced as S. 2658 and later merged into H.R. 636). The Senate’s FAA legislation would reauthorize FAA programs through September 2017, and would focus billions of dollars and government resources on some of the most pressing aviation issues including the promotion of widespread commercial drone operations, bolstering airport security, and adding new safety systems in private aircraft. However, the Senate’s FAA Reauthorization legislation is arguably more notable for what it would not do than for what it would do. 
 

Namely, it would not privatize Air Traffic Control.  In the House of Representatives, the pending Aviation Innovation, Reform, and Reauthorization Act of 2016 would completely overhaul domestic Air Traffic Control operations by moving the operations out of the FAA to a non-profit corporation. If successful, the House bill would place approximately 38,000 Air Traffic Control employees, and the management of the safest national airspace system in the world, in the hands of a private corporation.  

Though the Senate and House bills share many commonalities, each passing day without congressional consensus brings mounting fears that the current efforts to modernize American aviation will devolve into an endless string of short-term extensions. The July 15 deadline has industry insiders calling for the House to adopt the Senate’s more measured approach to reauthorization and to table the Air Traffic Control overhaul until 2017.  

Privatization of the United States Air Traffic Control System Hits Roadblock in the U.S. Senate

Less than a month ago, it seemed clear that privatization was the wave of the future for the United States Air Traffic Control System (“ATC System”).  On February 19, 2016, the United States House of Representatives Transportation and Infrastructure Committee approved the Aviation Innovation, Reform and Reauthorization Act (“H.R. 4441” or “FAA Reauthorization Act”), the centerpiece of which was the establishment of an independent, nonprofit, private corporation to modernize the U.S. ATC System and provide ongoing ATC services.  The benefits of such “privatization” were seen to include less expense, less backlog in the implementation of air traffic control revisions, in essence, greater efficiency in the development, implementation, and long-term operation of the ATC System.  Central questions still remain, however, concerning the synergy of a private corporation’s management of the ATC System with the overarching statutory regime by which it is currently governed.  

H.R. 4441 does not directly address the issues of: (1) whether the Federal Aviation Administration (“FAA”) still have the final determination as to whether a change in the ATC System recommended by the corporation is “safe,” or will that determination also be left in private hands; (2) will the National Environmental Policy Act, 42 U.S.C. § 4321, et seq. (“NEPA”), applicable to the analysis of the environmental impacts of projects sponsored by a federal agency, still apply to changes in the ATC System effectuated by a private corporation; and (3) will federal preemption of local airport noise and access restrictions, conclusively established in the Airport Noise and Capacity Act of 1990, 49 U.S.C. § 47521, et seq. (“ANCA”), apply to determinations by a private corporation?  While many questions are left to be clarified, H.R. 4441 does explicitly answer at least one – it provides that federal preemption of local regulation of airline “prices, routes, and service,” originally established in the Airline Deregulation Act of 1978, 49 U.S.C. 41713(b), will remain in place.  Finally, judicial review under the Act is applied differentially, depending on whether a challenge is to FAA’s grant of a proposal, or its denial.  FAA’s approval of a proposal made by the corporation would be subject to the “abuse of discretion” standard, and the deference normally accorded to a governmental entity charged with the administration of a program established by Congress, which is difficult to overcome.  FAA’s denial of such a proposal, however, likely to be challenged only by the corporation, would not be subject to such deference, making the path to a reversal and ultimate approval of the corporation’s recommendations smoother.  

Apparently, the Senate Commerce Committee recognized H.R. 4441’s many unanswered questions, as did the full House of Representatives which has held up approval and caused the House to enact an extension of the FAA’s funding reauthorization to July 15, 2016.  The Senate reacted by passing its version of H.R. 4441 without the privatization provision.  This means that passage of the FAA Reauthorization must wait first until the issue is resolved internally in the House of Representatives.  Even if H.R. 4441 should emerge from the full House including the privatization provision, unless the full Senate should see fit to agree, a Conference Committee will be required and funding for the FAA could be delayed well past the current July 15, 2016 deadline.  
 

Recent Development in FAA Airport Privatization Program

The Federal Aviation Administration (FAA) has accepted the preliminary application by Gwinnett County Airport Briscoe Field (Airport) to participate in the FAA Airport Privatization Program. The airport sponsor, Gwinnett County, may now negotiate an agreement with a private company to operate the Airport. Gwinnett County may then submit a final application to the FAA for approval. If the final application is approved, the Airport would qualify as the one general aviation airport required by the Pilot Program, and be eligible to receive exemptions from certain Federal statutory and regulatory requirements.

 

The FAA published notice of the preliminary application in the July 7, 2010, Federal Register. The FAA will be required to publish notice of receipt of the final application in the Federal Register and allow a 60-day period for public review and comment.

An update on the Airport Privatization Program was posted by Chevalier, Allen & Lichman, LLP on this Aviation & Airport Development Law Blog on July 6, 2010.

Update on the Federal Aviation Administration Airport Privatization Pilot Program

Many in the aviation community have been monitoring the progress of Chicago's efforts to privatize Midway International Airport (MDW) under the Federal Aviation Administration’s (FAA) Airport Privatization Pilot Program. The City faces a July 31, 2010 deadline to either select a private operator for MDW or seek an extension of the City’s slot in the Program from the FAA. Chicago is the only approved applicant for the Program’s only large-hub slot. If the application is approved, MDW would be the first privatized large-hub airport in the U.S. 

 

The Airport Privatization Pilot Program was established in 1996 by Section 149 of the Federal Aviation Administration Authorization Act, which added a new Section 47134 to Title 49 of the U.S. Code. Section 47134 authorizes the Secretary of Transportation and, through delegation, the FAA Administrator, to exempt a sponsor of a public use airport that has received Federal assistance from certain Federal requirements in connection with the privatization of the airport by sale or lease to a private party.

The Administrator may exempt the sponsor from some or all of the requirements to: (1) use airport revenues only for airport related purposes; (2) pay back a portion of Federal grants upon the sale of the airport; (3) return airport property deeded by the Federal Government upon transfer of the airport. The Administrator is also authorized to exempt the private purchaser or lessee from the requirement to use all airport revenue for airport related purposes, to the extent necessary to permit the purchaser or lessee to realize a profit from operation of the airport.

In establishing the Pilot Program, Congress also placed limitations on the number and types of airports eligible to participate. Section 47134(d)(1) provides that if the applications of five airports are approved, at least one must be a general aviation airport. Section 47134(d)(2) provides that no more than one of the airports approved may be a large-hub airport (an airport with more than one percent of revenue passenger boardings in the U. S. in the prior calendar year on an aircraft in service in air commerce, as defined in 49 U.S.C. section 47102(10)).

FAA final approval of a privatization application is based on a number of conditions, including the private operator’s ability to ensure continued access to the airport on reasonable terms, continued safe operations, ensure continued maintenance and improvements, adequate security, mitigation of noise and environmental impacts, and to provide for the continued operation of the airport in case of the private operator’s bankruptcy or other default. Privatization must be approved by at least 65% of the air carriers serving the airport and air carriers whose aircraft landing at the airport during the preceding calendar year had a total landed weight of at least 65% of the total landed weight of all aircraft landing at the airport during that year.

Since the Pilot Program was implemented, nine airports have applied for privatization. Five have withdrawn or terminated their application. The four active applicants are: MDW; Gwinnett County Briscoe Field (Lawrenceville, GA); Louis Armstrong New Orleans International Airport (LA); and Louis Munoz Marin International Airport (San Juan, PR). With the approval of Chicago’s preliminary application, all applications from other large-hub airports will be placed on a standby list. One slot remains available for a non-large-hub or general aviation airport.