On Wednesday, July 29, 2009, the bipartisan leadership of both the Committee on Transportation & Infrastructure and the Subcommittee on Aviation introduced H.R. 3371, the "Aviation Safety Bill" designed to "enhance airline safety by setting new training and service standards for commercial pilots." This bill came primarily as a response to the Senate Commerce Committee’s passage
Both houses of the legislative branch of the U.S federal government were at work yesterday on FAA business. The U.S. House of Representatives passed HR 915, reauthorizing the FAA and the U.S. Senate confirmed Capt. Randy Babbitt as FAA Administrator for a five-year term.
The U.S. House of Representatives passed on a vote of 277-136…
There were two events this past Thursday, May 7, 2009, that may affect H.R. 915, the FAA Reauthorization bill, which is currently pending in the U.S. House of Representatives. First, in the Obama Administration’s budget stated in its budget that starting in 2011, the budget “assumes a scenario where most of the air traffic control system would be paid for by direct charges levied on users of the system. The FAA’s current excise tax system, which generated $12.4 billion in 2008, is largely based on taxes that depend upon the price of customers’ airline tickets, not FAA’s cost for moving flights through the system.“ Then, the House Ways and Means Committee held a hearing on the financial status of the Airport and Airway Trust Fund. At that hearing, Rep. James Oberstar (D.-Minn.), Chairman of the House Committee on Transportation and Infrastructure told Ways and Means that “changes to the current system of excise taxes should be made only if such changes will improve upon [excise taxes’] record of stability, revenue adequacy, and ease of administration.”
Obama Administration Seems to Favor User Taxes
The Obama Administration has been fairly clear about its preference for user taxes to fund the air traffic control system in the United States. The budget framework that the Obama Administration issued in February indicated that it would like to transition some aviation taxes to user fees. Indeed, it was this indication of the Administration’s preference for user fees that caused the Congress to approve another continuing resolution for the FAA instead of passing the 2009 FAA Reauthorization. See, "User Fees Issues Probably Will Force Short-Term Extension of FAA’s Authorization Instead of Full Reauthorization" posted March 16, 2009. While the budget released this past week ruled out user fees for fiscal year 2010, the administration indicated that “the FAA should move toward a model whereby FAA’s funding is related to its costs, the financing burden is distributed more equitably, and funds are used to pay directly for services the users need.” But the Budget stopped short of endorsing user fees. It continued: “the Administration recognizes that there are alternative ways to achieve these objectives. Accordingly, the Administration will work with stakeholders and the Congress to enact legislation that moves toward such a system.”
User fees are not only on the White House’s wish list. The Department of Transportation confirmed that the longer-range reauthorization plan for the FAA will include “cost-based user charges for air traffic services starting in 2011.” Although, DOT added that the specifics “are under development and some time will be needed to implement the charges once approved.” The Congressional Budget Office seemed to support a move away from excise taxes, too, although indirectly. Robert A. Sunshine, Deputy Director, Congressional Budget Office stated that “the current financing system provides limited incentives to air carriers and general aviation flyers to use the system efficiently in congested areas – but structured differently, by linking the taxes paid by users of the system to the cost of providing air traffic control services, the financing system could help to reduce the potential for increasing congestion and delays.”
Strong Support in Congress for Current System
The House Ways and Means Committee took up H.R. 915, the FAA Reauthorization bill of 2009, to consider the financing provisions. H.R. 915 has been approved by the Transportation and Infrastructure Committee, but the financial provisions need to be approved by Ways and Means before it can go to the full House. Rep. Charles Rangel (D.-N.Y.), Chairman of the Ways and Means Committee stated that the Committee intends “to act on this matter so that we can avoid the need for yet another temporary measure.” All of the witnesses stressed the need to move the legislation along. Rep. Oberstar commented that “we are already almost two years behind schedule in reauthorizing these programs. Airport development capital projects and key NextGen programs need the stability that a multi-year authorization bill provides.” FAA programs can be funded by aviation excise taxes, a reasonable General Fund contribution and a modest increase in General Aviation fuel taxes: an increase from 21.8 cents per gallon to 35.9 cents per gallon for noncommercial jet fuel, and an increase from 19.3 cents per gallon to 21.4 cents per gallon for avgas. This increase is identical to legislation reported by Ways and Means in 2007 and was passed by the House on September 20, 2007.
The proposed raises in the fuel taxes and other funding mechanisms were the results of years of negotiating, with industry expressing support for the increases in return for the promise of no user fees. Rep. Jerry Costello (D.- Ill.), Chairman of the Aviation Subcommittee indicated that the proposed increase in fuel taxes has the support of the General Aviation groups over the imposition of a user fee system. It is the support of the General Aviation groups that seems to be issue here. As Rep. Tom Petri (R. – Wis.), Ranking Member on the Aviation Subcommittee told the Ways and Means Committee, he continues to support the structure of the funding recommendations which were developed in a bipartisan fashion, adding that “General Aviation is strong in the United States compared to other countries and unique. Of all the world’s licensed and active aviation pilots, 62 percent reside here in the U.S.”
Result: Excise Taxes, At Least For Now
Since the leadership of both parties on Transportation and Infrastructure Committee support continuation of the excise taxes, it seems unlikely that H.R. 915 will be amended to include user fees, even in 2011. The feeling among all involved is that the FAA reauthorization needs to be accomplished now and now is not the time for a discussion about the viability of user fees over excise fees. However, fiscal year 2011 is another story. Once Capt. Randy Babbitt has been confirmed as FAA Administrator, excise taxes and user fees can be examined a little more closely.
On March 4, 2009, Rep. James Oberstar (D. Minn.), the Chairman of the House Transportation and Infrastructure Committee offered several amendments to H.R. 915, The “FAA Reauthorization Act of 2009." The following summary of the changes was provided:
Funding of FAA Programs
Revises sections 101, 102, and 104 of H.R. 915 to better align the Federal Aviation Administration’s (“FAA”) Airport Improvement Program (“AIP”) and Facilities & Equipment (“F&E”) funding provisions with the account structure outlined in the FAA’s National Aviation Research Plan. The manager’s amendment moves the Airport Cooperative Research Program and Airports Technology Research funding from the Research, Engineering and Development (“RE&D”) account to the AIP. Similarly, the manager’s amendment shifts funding for the Center for Advanced Aviation System Development from the RE&D account to the F&E account. The manager’s amendment also reduces total funding for RE&D by the same amount as the programs shifted to AIP and F&E.
Revises section 106(k) to improve safety for medical helicopters by reauthorizing funding for the development and maintenance of approach procedures for heliports that support all-weather, emergency services. This provision was originally included in Title 49 by AIR 21 (P.L. 106-181).
Revises section 106(k) to reauthorize funding for the Alaska aviation safety project with respect to three-dimensional terrain mapping of Alaska’s main aviation corridors for pilot training. This program was originally included in Title 49 by Vision 100 (P.L. 108-176).
Funding for Aviation Programs
Revises section 105 to change the amount initially made available from the Airport and Airway Trust Fund (“Trust Fund”) to support FAA’s budget from 95 percent of the estimated Trust Fund revenues, to 90 percent. This change would provide greater room for error in revenue estimates until the actual level of revenues received for that year is known, and an adjustment is made to reconcile actual amounts deposited to the Trust Fund with actual amounts appropriated from it. Given recent revenue estimates, a 10 percent margin of error is necessary. A year ago, fiscal year (“FY”) 2009 revenues were estimated to be $13.04 billion, but are now estimated to be $11.68 billion, a decrease of approximately 10 percent.
New section 113 requires Qualifications Based Selection (“QBS”) to be used to select planning, architectural and engineering contracts for any airside project funded by Passenger Facility Charges (“PFC”). QBS is an open, competitive procurement process where firms compete on the basis of qualifications, past experience, and the specific expertise they can bring to the project. QBS is currently applicable to planning, architectural, and engineering contracts that utilize AIP funding. Many airports use a mixture of PFC and AIP funds for airside projects.
Solid Waste Recycling Plans
New section 150 requires that airport master plans address the feasibility of solid waste recycling. The Secretary of Transportation may approve a grant for an airport project only if he is satisfied that the airport has a master plan that addresses the feasibility of solid waste recycling at the airport and minimizing the generation of solid waste at the airport. This provision also clarifies that solid waste recycling plans at airports are AIP-eligible by broadening the definition of airport planning.
Personal Net Worth Test for Disadvantage Business Enterprise Programs
New section 137 adjusts the personal net worth (“PNW”) cap for the Disadvantaged Business Enterprise (“DBE”) program as it relates to airport construction projects and airport concessions. To be certified as a DBE (for airport contracting) or an airport concession DBE (“ACDBE”) an individual business owner must be economically disadvantaged. Currently, to be considered economically disadvantaged, a business owner must, among other requirements, have a PNW that does not exceed $750,000, excluding the equity in the individual’s primary residence and the value of their ownership interest in the firm seeking certification. Individuals seeking an ACDBE certification may exclude other assets that the individual can document, which are necessary to obtain financing or a franchise agreement for the initiation or expansion of his or her ACDBE firm (or have in fact been encumbered to support existing financing for the individual’s ACDBE business), up to a maximum of $3 million. This provision would adjust the personal net worth cap for inflation for both programs, making an initial adjustment to correct for the impact of inflation since the cap was originally imposed by the Small Business Administration in 1989, and then making annual adjustments thereafter.
Airport Security Program
Revises section 144 of H.R. 915. The manager’s amendment amends 49 U.S.C. 47137 to allow FAA more flexibility to award contracts, cooperative or other agreements in addition to grants, to a consortium composed of public and private persons including an airport sponsor. The provision also reiterates the DOT’s and other agencies’ obligation to cooperate and provide technical expertise as needed to administer the program, while the DOT retains overall program oversight and funding responsibility. The provision specifies that the award designee be a nonprofit consortium with at least ten years of demonstrated experience in testing and evaluating anti-terrorist technologies at airports. The annual authorization for this program is increased from $5 million to $8.5 million. This provision was originally included in Title 49 by AIR 21 (P.L. 106-181) and amended by Vision 100 (P.L. 108-176).
Airport Master Plans
New section 151 requires the Secretary of Transportation (“Secretary”) to encourage airports to consider customer convenience, airport ground access, and access to airport facilities in airport master plans.
The U.S. House Committee on Transportation and Infrastructure has proposed H.R. 915, the FAA Reauthorization Act of 2009. Since funding authorization for aviation programs and authorization for taxes and fees that provide revenue for the FAA expired at the end of fiscal year 2007 and revenue collections and FAA programs have been extended several times (until March 31, 2009), this bill is a priority item for the FAA. What follows is a summary of the provisions of the Reauthorization Bill.
Funding & Financing
- Taxes on aviation users will be increased – Passenger flight segment tax increased to $3.60; International departure and arrival taxes increased to $16.10; Alaska Hawaii facilities tax increased to $8.00.
- Provides historic funding levels for the FAA’s programs between 2009 and 2012, including $16.2 billion for AIP; $13.4 billion for Facilities and Equipment; $38.9 billion for operations; and $1.35 billion for Research, Engineering and Development.
- Makes several modifications to the current AIP distribution formula that provide significant increases in AIP funding for smaller airports, which are particularly reliant on AIP for capital financing, as well as more AIP discretionary funding.
- Increases Passenger Facility Charge from $4.50 to $7.00. This provision was strongly supported by Jim Elwood, representing the American Association of Airport Executives.
ATC Modernization and NextGen
- Provides $13.4 billion for the FAA’s Facilities and Equipment account.
- Increases the authority and visibility of the Joint Planning and Development Office.
- Requires the JPDO to develop a work plan that details, on a year-by-year basis, specific NextGen-related deliverables and milestones.
- FAA wants to emphasize "infrastructure" improvements at the nations’ airports, which includes a full roll-out of NextGen.
- Includes several safety provisions, such as authorizing additional funds for runway incursion reduction programs and the acquisition and installation of runway status lights.
- Increases the number of aviation safety inspectors and requires safety inspections of foreign repair stations at least twice a year.
- Directs FAA to commence a rulemaking to ensure that covered maintenance work on air carrier aircraft is performed by part 145 repair stations or part 121 air carriers.
- Creates an independent Aviation Safety Whistleblower Investigation Office within the FAA charged with receiving safety complaints and information submitted by both FAA employees and employees of certificated entities.
- Directs FAA to modify its “customer service initiative” to remove air carriers or other entities regulated by the FAA as “customers.”
- Adds a two-year “post-service” cooling off period for FAA inspectors and requires principal maintenance inspectors to rotate between airline oversight offices every five years.
- Increases the total amount authorized for Essential Air Services each year from $127 million to $200 million.
- Requires 50% of over-flight fees collected in excess of $50 million be dedicated to EAS.
- Authorizes the Secretary to enter into long-term EAS contracts that would provide more stability for participating air carriers.
- Reduces local share of AIP projects from 10% to 5% for economically depressed communities.
- Includes several provisions to mitigate the effects of increases in aviation fuel costs by increasing the existing $200 per passenger subsidy cap.
- Extends the Small Community Air Service Development Program through fiscal year 2011, at the current authorized funding level of $35 million per year.
- Includes several provisions to ensure passenger needs are met including a mandate that air carriers and airports submit emergency contingency plans and detail in their plans how they allow passengers to deplane following excessive delays.
- DOT is required to publicize and maintain a hotline for consumer complaints, establish an Advisory Committee for Aviation Consumer Protection, expand consumer complaints investigated, and require air carriers to report diverted and canceled flight information monthly.
- DOT Inspector General is asked to report on the causes of air carrier flight delays and cancellations.
- Includes several provisions related to the environment, noise mitigation and land use initiatives, including:
- An environmental mitigation pilot program;
- The phasing out of noisy Stage II aircraft;
- An aircraft departure queue management pilot program;
- Broadened AIP eligibility to include several energy saving terminal projects; and
- Requirements for the FAA to build sustainable air traffic control facilities.
- Allows airport operators to reinvest the proceeds from the sale of land that an airport acquired for a noise compatibility purpose, but no longer needs for that purpose, giving priority, in descending order to:
- Reinvestment in another noise compatibility project;
- Environmentally-related project
- Another otherwise-eligible AIP project;
- Transfer to another public airport for a noise compatibility project; or
- Payment to the Trust Fund.
- Provides authorization for the Continuous Lower Energy, Emissions and Noise (“CLEEN”) Engine and Airframe Technology partnership to develop, mature and certify CLEEN engine and airframe technology for aircraft over the next 10 years.
- Modifies the dispute resolution process for proposed changes to the FAA personnel management system, and replaces it with a new dispute resolution process.
- Applies the new dispute resolution process to the ongoing dispute between NATCA and the FAA. That is the changes implemented by the FAA on and after July 10, 2005, would be null and void and the parties will be governed by their last mutual agreement.
- Amends the Railway Labor Act to clarify that employees of an “express carrier” shall only be covered by the RLA if they are employed in a position that is eligible for certification under FAA’s rules and they are actually performing that type of work for the express carrier.
- Requires an assessment of training programs for controllers and air traffic technicians.
- Requires that FAA include employee unions as stakeholders in the development and planning for NextGen.
- Requires the establishment of a Task Force on Air Traffic Control Facility Conditions to determine whether employees are exposed to dangerous environmental conditions in their work place.
- Requires the Secretary to establish within the FAA a working group to develop criteria and make recommendations for the realignment and consolidation of services and facilities.
- Extends requirement until September 30, 2012, that the FAA provide U.S. airlines’ aviation insurance from the first dollar of loss at capped premium rates, after which the requirement becomes discretionary until September 30, 2019.
- After December 31, 2019, such insurance must be provided instead by airline industry-sponsored risk-sharing arrangement approved by the Secretary.
Next Article: Summary of Comments regarding Safety Provisions.