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The House of Representatives Subcommittee on Highway and Transit is planning to start the transportation reauthorization process on June 24, 2009 at 11:00 a.m. EST by marking up the Surface Transportation Act of 2009 (“Act”). House Transportation and Infrastructure Chairman, James Oberstar, has made a proposal which would fundamentally overhaul surface transportation programs drawing on many of the recommendations by a federally mandated Surface Transportation Policy and Revenue Commission as well as on White House policy priorities. The Obama Administration, however, has a completely different political and legislative strategy in mind, causing a public disconnect between leaders of the legislative and executive branches.

First, on a negative note, the Act would consolidate or eliminate 75 existing Federal highway and transit programs including the “Indian Reservation Road Bridges Program,” and “The Public Transportation Participation Pilot Program.

On the positive side, the Act would create a new rail section to promote President Obama’s proposal of a high speed passenger rail network. Also, at the urging of the Administration, Oberstar would create an Office of Livability in the Transportation Department, to link transportation planning to housing and business development. The Act would also overhaul the Transportation Department’s inner workings by creating a position of Undersecretary of Intermodalism. That Undersecretary would help coordinate planning by agencies responsible for different methods of transportation, including the aviation, railroad, transit, highway and maritime administrations, along with Amtrak, the Coast Guard and the Army Corps of Engineers. “It’s an opportunity to restructure all of transportation,” Oberstar said at a briefing Wednesday. “Those modal administrators have not done so much as what we’re doing here – sat around a table, had coffee together – in 40 years. It’s time to do that.”Continue Reading Trouble in Paradise – Dissension Surrounds the Surface Trasnportation Authorization Act of 2009

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.

Continue Reading User Fees Continue To Be A Sticking Point To FAA Reauthorization

On March 18, 2009, the U.S. House Subcommittee on Aviation held a hearing entitled "Air Traffic Control Modernization and the Next Generation Air Transportation System:  Near-Term Achievable Goals."  The Subcommittee and the FAA are placing much of their hopes and dreams on the viability and success of NextGen and Air Traffic Control Modernization.  In opening comments, it seemed that if ATC Modernization and NextGen are fully implemented all of the current ills of the FAA will be resolved and world peace will be achieved:  safety will be improved, delays will be diminished, air traffic controllers will be able to handle more operations more quickly and more efficiently, pilots will be able to fly better, and, oh, it is good for the environment, too.  While, only being a tad sarcastic, it seems that many dreams have been placed on NexGen’s shoulders.

There can be no doubt that NextGen is needed.  All of the technical witnesses testified that ATC modernization and NextGen are absolutely critical to maintaining the U.S.’s airspace.  Captain Rory Kay, Executive Air Safety Chairman of ALPA, stated that:

NextGen has the potential to revolutionize the National Airspace System and our air transportation system . . . Forecasted increases in air traffic of two to three times today’s traffic cannot be met in today’s NAS.

So what are the problems?  First and foremost, it is a question of funding. As former FAA Administrator Marion Blakey stated, in testimony as President and CEO of Aerospace Industries Association:

Much of what is needed for NextGen falls under the category of "new starts" which, as you well know, are prohibited under funding extensions. A large number of FAA NextGen pre-implementation issues – including development and acquisition decisions, have been adversely affected.

Now that FAA Reauthorization has been put on the back burner with the passage of yet another continuing resolution, do not look for these new NextGen projects to see the light of day any time soon.

Another issue is human resources.  NextGen represents a fundamental shift in the responsibilities and practices of pilots and air traffic controllers.  As Patrick Forrey, President of National Air Traffic Controllers Association, stated:

Under the proposed system, air traffic control would shift to what the FAA is euphemistically referring to as "Trajectory Management."  Essentially, air traffic controllers would discontinue active air traffic control and shift instead to air traffic monitoring and route management.  This could have serious implications for the safety of the NAS.

NATCA worries that "air traffic managers" would rely heavily on an automated system and not how to handle an emergency situation should the automated system go down.

For the airlines and general aviation, the problem with NextGen is the "equipage."  NextGen relies on up-to-date technology not only on the ground, but on the aircraft.  In the early 2000’s, for example, American Airlines retrofitted its fleet to install the Controller Pilot Data Link Communication system only to have FAA abandon its efforts in 2004.  Airlines probably will be reluctant to equip their fleets until the FAA is able to effectively address the legitimate concern that the technology is good investment.  And that is difficult to do when the funding for the programs to develop the technology is not in place and has not been in place for the past 2 years.

All this assumes that the FAA has in place the management infrastructure to effectively manage and implement NextGen.  Although the GAO pulled ATC Modernization off of its "High-Risk" list, NextGen, as soon as its implementation begins will land on the list.  The GAO has found that the JPDO and ATO have made progress in planning for and developing NextGen, but much is left to do.  As Calvin Scovel, the Department of Transportation Inspector General pointed out, the FAA needs to :

(1) establish[ ] priorities and Agency commitments with stakeholders and reflecting them in budget and plans; (2) manage[ ] NextGen initiatives as portfolios and establish[ ] clear lines of responsibility, authority, accountability; (3) acquire[ ] the necessary skill mix for managing and executing NextGen; and (4) examine[ ] what can reasonably be implemented in given time increments.

Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) stated that this was a "foundational" hearing on a topic of importance.  While Congress debates FAA Reauthorization, NextGen and ATC Modernization must move forward.

Lists of Hearing Witnesses and Links to their written testimonies can be found by clicking on the "Continue Reading" link.

Continue Reading U.S. House Subcommittee on Aviation Holds Hearing on FAA’s NextGen and ATC Modernization Efforts

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.

Authorized Expenditures

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.

Qualifications-Based Selection

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.Continue Reading Several Amendments Made to H.R. 915, FAA Reauthorization Act of 2009