Aviation and Airport Development Law : Aviation Lawyer & Attorney : Chevalier Allen & Lichman Law Firm : Airport Development, Environmental Law

A summary review of Aviation and Airport Development related news and information that was made public during the past week.  These were all first posted, in abbreviated form, on http://twitter.com/smtaber. Trisha Ton-Nu also contributed to this post.

FAA Bill Could Pass This Year. --- Adrian Schofield, Aviation Week, October 7, 2009

A staff member from the Senate aviation subcommittee believes that the Federal Aviation Administration reauthorization bill can be finished this year, though the Senate must have its bill approved by November to leave enough time for a House/Senate conference on the bill. The Commerce Committee has approved the bulk of the bill, but the Finance Committee has yet to contribute its proposals on tax changes, despite “tremendous pressure” from both lobbyists and Senate leadership to complete its work. There are some big differences to be resolved between the House and Senate bills, but none involve FAA funding and the houses are “basically aligned” on the aviation measures.

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The Department of Transportation issued a safety advisory targeting shippers and carriers responsible for compliance with hazardous materials regulations covering both passenger and cargo aircraft. The advisory highlighted recent aviation incidents involving lithium batteries and outlined the current regulatory requirements for their safe transportation. It also included an announcement that both the Pipeline and Hazardous Materials Safety Administration and Federal Aviation Administration would be stepping up enforcement of safety standards. Since 1991 more than 40 air transport-related incidents involving lithium batteries and devices powered by lithium batteries have been identified, many directly related to the lack of awareness of the regulations, risks, and required safety measures applicable to the shipment of lithium batteries.

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The Federal Aviation Administration’s new computer system was unsuccessfully deployed at a Salt Lake City regional air traffic control center, raising doubts about whether it can be operational 15 months from now when the current computers must be replaced. The new ERAM (En Route Automation Modernization) system is based on satellite technology, whereas the current HOST system uses World War II-era radar technology and is a unique computer language that fewer technicians today can understand. In Salt Lake City the new system misidentified planes several times and managers in SaltLake refused to deploy it again, choosing to safely transition back to the HOST system instead.

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Report Warns Airline Delays Will Increase. --- Bruce Siceloff, Charlotte Observer, October 8, 2009

In a newly released report, the Brookings Institution warns that there will be more delayed flights and longer delays as the U.S. economy recovers and airports get busier in the coming months. The report suggested that federal airport spending would be more beneficial for travelers if it were focused on increasing capacity at the most congested metropolitan airports instead of being scattered across the U.S., and that the Obama administration’s planned high-speed rail network could cut heavy traffic on air corridors of less than 500 miles, which account for half of the nation’s flights.

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FAA Announces Serious Runway Incursions Down by 50 Percent. --- FAA Press Release, October 8, 2009

Federal Aviation Administration Administrator Randy Babbitt announced that serious runway incursions were down 50 percent for the most recent 12-month period, compared to the previous year. There were only 12 serious incursions in fiscal year 2009 with only 2 involving commercial carriers, while there were 25 such events in fiscal year 2008 with 9 involving commercial carriers. Administrator Babbitt praised the progress made since the FAA’s Runway Safety “Call to Action” meeting two years ago, but stated that there is still much work to be done to continue reducing the potential risk of collisions on runways.

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Federal Aviation Administration officials fear that a wildlife restoration project in the Richard P. Kane Natural Area could create a threat to public safety at nearby TeterboroAirport in New Jersey. TeterboroAirport averaged five bird strikes per 10,000 landings and departures last year, more than double the rate at Newark Liberty International and LaGuardiaAirports, but an airport wildlife biologist for the U.S. Agriculture Department says a busy airport and abundant bird population can coexist if properly managed.

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Delays and inefficiencies in air travel are largely due to an outdated traffic-control system that relies on slow, ground-based radar stations and repetitive communication, and the inefficiencies also mean fuel is wasted and unnecessary carbon dioxide emitted at a time when the air-travel industry is coming under scrutiny for its role in climate change. The air-travel industry will be under increasing pressure to cut its emissions or pay a carbon tax, and while the best immediate opportunity may be to improve fuel efficiency, the best way to increase fuel efficiency is to update the current air-traffic control system using NextGen, the Federal Aviation Administration’s long-term plan to replace the current system with one using satellites and a global positioning system.

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Airlines Set Own Emission Targets...but is fuel efficiency enough? --- Associated Press, October 10, 2009 and Steven Taber, Aviation & Airport Development Law, September 24, 2009

Members of the International Air Transport Association pledged to improve fuel efficiency by 1.5 percent a year until 2020 and called on governments worldwide to provide incentives to speed biofuel development.

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In the short run, however, technological innovations like those that would reduce emissions will not be available for implementation in the near future.

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The Federal Aviation Administration officially rescinded its plan to enact mandatory slot auctions on LaGuardia, John F. Kennedy, and Newark airports. In 2008 final rules were published that established procedures to address congestion in the New York City area by assigning slots at the airports, assigning the majority of slots to existing operators, and creating a market by annually auctioning off a limited number of slots in each of the first five years of the rule. The rules were the subject of much litigation and controversy ever since they were first proposed by the Bush Administration, but have now been rescinded partly because of the Omnibus Appropriations Act, and the state of the economy in general.

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A Wall Street Journal story criticizing ChicagoRockfordInternationalAirport and other airports for receiving Federal Aviation Administration grants for low-priority projects is being slammed itself. Rockford International Airport Authority Chairman Mike Dunn retorts that Rockford International is a world-class facility that helps relieve congestion at O’Hare International Airport, and is one of just three airports in Illinois authorized to land flights from foreign countries. It is the port of re-entry for thousands of U.S. military personnel en route from the Iraq and Afghanistan wars to their home bases in the U.S., and will likely see the number of passengers it serves grow as the economy improves. Freight and passenger service improvements at the airport have helped generate economic development and will prepare Rockford International for its future role as a “vital part” of the Chicagoland aviation system.

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Passenger traffic at Philadelphia International Airport grew 45 percent in the last decade, nearly three times the national average for the 100 largest U.S. metropolitan areas, but 73.4 percent of flights arrived on time during fiscal year 2009, below the national average of 78.4 percent. The combined Philadelphia-New York airspace contributes to 75 percent of delays nationally and affects business travelers everywhere.

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A new system monitoring air traffic above the Rockies was recently implemented in Colorado. Using 20 sensors clustered around four airports within the Rockies, the sensors monitor radio broadcasts from planes and computers can determine the plane’s location by measuring minute differences in the time it takes for broadcasts to reach the various sensors. The system uses similar technology to the satellite-based system the Federal Aviation Administration is installing nationwide to replace radar, and is a sign that the technology underpinning the satellite system can work.

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House aviation subcommittee chairman Jerry Costello and Thomas Petri have begun a lobbying effort against potential aviation user fee proposals for the fiscal year 2011 budget. In a letter being circulated within the House, Costello and Petri state that they believe user fees will place an undue administrative burden and associated costs on system users and cited previous House opposition in both the 110th and 111th Congresses to proposals of using user fees to finance the Federal Aviation Administration.

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The Civil Air Navigation Services Organization commended the achievements of the International Civil Aviation Organization’s High Level Meeting on International Aviation but expressed disappointment that no actions were recommended for member states to undertake themselves to assist the aviation industry in meeting its environmental goals. CANSO Secretary General Alexander ter Kuile identified four steps that ICAO nations could immediately take to deliver an extra 0.5% of fuel efficiency improvement, on top of ICAO’s recommended target of 1.5% improvement through 2020 with carbon-neutral growth thereafter.

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SFO Fuel, Chevron, and the Environmental Protection Agency entered into agreements to resolve violations of the Clean Water Act at a large jet fuel storage facility located at San FranciscoInternationalAirport. SFO Fuel representatives self-reported inadequate secondary containment capacity--which could result in a catastrophic spill into San FranciscoBay--and the EPA investigated and agreed. SFO Fuel, which leases the facility, and Chevron, which operates the facility, have adjusted their operations at the tank farm with alarms and automatic shut-off valves to reduce the volume that is present in the tanks until the facility is able to increase the size of the secondary containment area. The agreements require the facility to come into full compliance by next year, and SFO Fuel and Chevron agreed to pay a penalty of $177,500.

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The Federal Aviation Administration is proposing a $3.8 million penalty against United Airlines for allegedly operating one of its Boeing 737 aircraft on more than 200 flights after the carrier violated its own maintenance procedures on one of the plane’s engines. Between February 10 and April 28, 2008 the aircraft was flown on more than 200 revenue flights in a less-than-airworthy condition.

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The Federal Aviation Administration proposed a $5.4 million penalty against US Airways, Inc. for allegedly operating 8 aircraft on a total of 1,647 flights between October 2008 and January 2009 that were not in compliance with certain Airworthiness Directives or the airline’s maintenance program.

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US Airways issued a statement that it experienced challenges during the integration of maintenance systems and processes on flights that occurred in that time period, and is working with the FAA to investigate and correct any discrepancies and achieve a resolution of the FAA’s civil penalty proposal.

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The U.S. Court of Appeals for the District of Columbia Circuit granted a stay of the slot auctions that were scheduled to take place on January 12, 2009, pending arguments on whether the FAA has the legal authority to auction the slots.

Although the court's order does not go into any details as to why it is granting the Motion for Stay beyond stating that the Petitioners "have satisfied the stringent standards required for a stay pending court review," this is a significant victory for the Petitioners.  First, in order to obtain a stay one must show, among other things, "irreparable injury" and "likelihood of success on the merits."  This standard is a high one that is rarely surmounted.  Thus, it is an indication that the court is looking favorably upon the Petitioners' case.

Second, it pushes the date for the first slot auctions beyond the change of administrations.  The opponents of the slot auctions fervently hope that the Obama Administration will be more receptive to their pleas that slots auctions will not solve the problems at the New York/New Jersey airports.  With the change of administrations, there is hope among the opponents of the slot auctions that "a new, workable plan to reduce flight delays and give New York's airspace and airports the upgrade they need and deserve."

Petitioners' statements regarding the court's ruling:

• Port Authority of New York and New Jersey
• Air Transport Association of America

Neither the Department of Transportation nor the FAA have any press release or statement on their websites regarding the court's ruling.  However, the wire services and newspapers are reporting that Sarah Echols, a spokeswoman for the Department of Transportation, said:  "Today's court decision is bad news for travelers seeking a better flying experience in and out of the New York region.  We are committed to our goal of protecting travelers, giving passengers more options and improving the air travel experience, and will continue to assess our options to provide relief."

Previous blog posts regarding slot auctions:

• FAA Proposes Congestion Management Rule for JFK and Newark (May 21, 2008)
• FAA Issues Order Limiting Scheduled Operations at Newark Liberty (May 21, 2008)
• FAA Suspends Auction of Flight Slots at Newark (August 29, 2008)
• GAO Declares that the FAA Does Not Have Legal Authority to Auction Slots (October 1, 2008)
• Despite GAO Ruling FAA Issues Congestion Management Rules for JFK, LaGuardia and Newark (October 12, 2008)
• Legal Analysis of FAA's Slot Auction Rule for JFK and Newark, Part 1 (October 26, 2008)
• Legal Analysis of FAA's Slot Auction Rule for JFK and Newark, Part 2 (October 28, 2008)

Other news articles:

• The New York Times, Court Order Delays Auction of Landing Slots at Airports
• Business Week, Court blocks FAA plan to auction NYC-area slots
• The Dallas Morning News, Court blocks auction of NY airport slots
• The Associated Press, Court blocks FAA auction of airport slots
• The Wall Street Journal, Court Blocks Plan to Auction Landing Slots at New York Airports

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Analysis of Legal Issues Regarding Slot Auctions, Part Two.

Having established previously that the FAA does not have specific authority to lease or otherwise dispose of slots, FAA turns to its general power to dispose of property in order to justify its auctioning of the slots.  Under 49 U.S.C. 106 FAA is authorized to:

acquire, construct, improve, repair, operate, and maintain . . . real and personal property . . . and to lease to others such real and personal property . . .” as well as to enter into “such contracts, leases, cooperative agreements, or other transactions as may be necessary to carry out the functions of FAA.

49 U.S.C. 106(l).  In addition 49 U.S.C. 40110 authorizes FAA “[to] dispose of an interest in property for adequate compensation . . .”  Thus, the FAA theorizes, if a slot is “property,” then by virtue of these three provisions it has all the authority it needs to dispose of the “property.”  

Leaving aside the statutory construction arguments that the FAA’s property disposition authority does not extend to such evanescent and intangible property rights as “slots,” the real legal question comes down to this:  Are slots a property right owned by the FAA?  

The controversy turns an interpretation of Cleveland v. United States, 531 U.S. 12 (2000), which was mentioned in the GAO Legal Opinion, IATA’s comments and ATA’s comments.  Cleveland stands for the proposition that the government’s regulatory powers to issue licenses to do something which otherwise would not be permitted does not create a property right for the government.  It only becomes a property right to the licensee after the issuance of the license.  In Cleveland, Louisiana claimed that licenses it issued to run video poker devices were its “property.”  The U.S. Supreme Court saw it a little differently:

Without doubt, Louisiana has a substantial economic stake in the video poker industry.  The State collects an upfront “processing fee” for each new license application . . ., a separate “processing fee” for each renewal application . . ., an “annual fee” from each device owner . . ., an additional “device operation” fee . . ., and, most importantly, a fixed percentage of net revenue from each video poker device . . . It is hardly evident, however, why these tolls should make video poker licenses “property” in the hands of the State.  The State receives the lion share of its expected revenue not while the licenses remain in its own hands, but only after they have been issued to licensees.  Licenses pre-issuance do not generate an ongoing stream of revenue.  At most, they entitle the State to collect a processing fee from applicants for new licenses.  Were an entitlement of this order sufficient to establish a state property right, one could scarcely avoid the conclusion that States have property rights in any license or permit requiring an up front fee, including drivers’ licenses, medical licenses, and fishing and hunting licenses.  Such licenses, as the Government itself concedes, are “purely regulatory.”

531 U.S. at 22. In other words, absent a statutory provision, so long as the “property” (the license in Cleveland) is the product of the Government’s regulatory power, or its police powers, it is not property while it is in the Government’s hands.  In this case, it would seem, based on Cleveland, that since the FAA derives its authority to assign slots from its regulatory authority over “navigable airspace,” slots are not property rights in the hands of the FAA.

FAA attempts to get around Cleveland by asserting that “Section 40110(a)(2) does not speak to whether the FAA actually owns property that is being disposed of.  It only speaks to the disposal of a property interest.  Only the FAA has authority to assign the use of navigable airspace under section 40103.”  73 Fed.Reg. at 60549.  The FAA concludes that even though the property right is created “at the time of transference” of the slot, it still falls within its property disposition power under 40110(a)(2) since it is “disposing of” a “property right.”  This however, ignores the fact that the FAA has no property interest to “dispose of,” and that in assigning slots it carrying out its regulatory duties with respect to the airspace.

Similar to the FAA, in Cleveland, Louisiana tried to compare its interest in video poker licenses to a patent holder’s interest in a patent that she has not yet licensed.  The court rejected that argument:

Louisiana does not conduct gaming operations itself, it does not hold video poker licenses to reserve that prerogative, and it does not “sell” video poker licenses in the ordinary commercial sense.  Furthermore, while a patent holder may sell her patent . . ., the State may not sell its licensing authority.  Instead of patent holder’s interest in an unlicensed patent, the better analogy is to the Federal Government’s interest in an unissued patent.  That interest, like the State’s interest in licensing video poker operations, surely implicates the Government’s role as sovereign, not as property holder.

531 U.S. at 23-24.  In other words, if it is not a property right until after it is sold or licensed, you do not have a “property right” to “dispose of.”  The FAA’s assigning use of navigable airspace “implicates the Government’s role as sovereign, not as property holder.”  Thus, it seems that since the Supreme Court has spoken on this issue, the FAA will be hard pressed to successfully argue that it can auction slots by virtue of its property disposition authority.

Next Post: Even if slots are FAA property, does the FAA violate the IOAA by accepting money for them?

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Pt. 1: Setting The Stage

When the FAA adopted its slot auction rules for LaGuardia, JFK  and Newark Airports, it did so despite the fact that the GAO had issued a legal opinion stating that it believed that the FAA did not have a legal basis to conduct auctions of slots at the airports. 

Needless to say, the FAA's decision brought some criticism from Congress.  Rep. James Oberstar (D-Minn.) and Rep. Patty Murray (D-Wash.) sent a letter to the FAA Inspector General, Hon. Calvin Scovel, requesting that he look into the matter and assess whether the FAA's actions were "potential willful violations of the Purpose Statute [31 U.S.C. 1301(a)] and the Antideficiency Act [31 U.S.C. 1341(a)(1)(A)]." 

The stakes got higher when, on October 10, 2008, the Port Authority of New York and New Jersey filed a Petition for Review in the U.S. Court of Appeals for the District of Columbia.  That Petition was followed on October 14, 2008, by similar Petitions for Review filed by the International Air Transport Association and the Air Transport Association of America.  All of the Petitions for Review were consolidated by the Court on October 27, 2008.

There seems to be agreement among all of the parties that the FAA has the regulatory authority to impose caps on hourly arrival and departure slots based on its authority under 49 U.S.C. 40103(b)(1) and (2), which allows the FAA to "ensure efficient use of the airspace."  The issue that separates the FAA from GAO, IATA, ATA and PANYNJ is whether the FAA may raise funds in connection with its assignment of slots through a slot auction, imposing a user fee, assessing a tax, or by some other mechanism.

In analyzing this fundamental disagreement some consensus emerges.  It is agreed that Congress has granted FAA explicit statutory authority to collect fees in several different situations, but that FAA has no explicit authority to impose fees related to the assignment of slots.  Indeed, the FAA has long sought such explicit authorization from Congress, which Congress has not yet granted.  See, e.g., 71 Fed.Reg. 51362 (Aug. 29, 2006) ( ". . . the FAA currently does not have the statutory authority to assess market-clearing charges for a landing or departure authorization").  It is FAA's efforts to get around the fact that it lacks explicit authority that is at the heart of the matter.

In order to claim authority to collect funds in connection with its assignment of slots, FAA makes two connected arguments.  First, FAA claims that a "slot" is an "intangible" form of property that it may lease pursuant to its "property disposition" power granted to it by Congress under 49 U.S.C. 106(l)(6) and (n) and 40110(a)(2).  Second, since the slot is a property right being leased, it is not an "user fee" or "tax."  Therefore, it is not subject to the Independent Offices Appropriations Act (IOAA), 31 U.S.C. 9701 et seq.  The opposing parties have claimed that the FAA is wrong on both counts.

Next Post:  Analysis of FAA's claims that it possesses a property interest in slots at airports.

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