Reauthorization of the Federal Aviation Administration

Order Code IB10121

CRS Issue Brief for Congress

Received through the CRS Web

Reauthorization of the

Federal Aviation Administration

Updated September 26, 2003

Bartholomew Elias, John Fischer, and Robert Kirk

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

State of the Aviation Industry

Competition and Delay Issues

Reagan National Airport Slots

War Risk Insurance

Improving Air Service to Isolated Communities

Airport and Airway Trust Fund (Aviation Trust Fund) Issues

Airport Development

Reauthorization Proposals and Issues

Apportionment and Eligibility Changes: Relief and Support to Small Airports

Discretionary Fund Changes

Airport Noise Issues

Passenger Facility Charge Issues

Privatization

Airport Security Project Eligibility

Runway Safety Areas

Environmental Streamlining

Airway Facilities Improvements and Air Traffic Modernization

Cost Sharing for Air Traffic Modernization Projects

Wake Vortex Advisory System

Ground-Based Precision Navigation Aids

Gulf of Mexico

Enhancing the Safety and Security of the Aviation System

Security Enhancements at Airports

FAA Oversight of Operators and Maintenance Facilities

Aviation Maintenance Training and Manuals

Flight Attendant Certification

Cabin Air Quality

Investing in the Future of Aviation

Coordination of Research and Development Efforts

Aviation and Aerospace Education

Identified Research Programs

FAA Organizational Issues

Chief Operating Officer (COO)

Air Traffic Control Privatization

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

FOR ADDITIONAL READING

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Reauthorization of the Federal Aviation Administration

SUMMARY

The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century

(FAIR21 or AIR21; P.L. 106-181), which

currently provides authorization for the Federal Aviation Administration (FAA) and

related aviation programs, expires at the end

of FY2003. Consequently, the 108th Congress

has been engaged in the process of drafting

and debating legislation to reauthorize the

FAA and related aviation programs for future

years.

A number of issues have risen to prominence in the reauthorization debate. The condition of the airline industry, while not directly

addressed in the bills, has had an impact on

the debate because the aviation industry's

recessionary environment has constrained the

trust fund revenues that support most of the

FAA budget. Increasing capacity and reducing

future congestion and delay are issues that are

addressed in both airport development proposals as well as proposals concerning air traffic

modernization. "Environmental streamlining"

is also a major element of the reauthorization

debate, involving proposals to expedite

environmental reviews potentially affecting

the completion of airport capacity capital

projects. Funding security enhancements at

airports without depleting the Airport and

Airway Trust Fund of funds needed to support

the national system’s other needs has become

a significant issue in the debate. Subsidizing

air service to isolated communities is a perennial issue in FAA reauthorization as are other

issues such as federal aid for airport noise

mitigation, aviation safety, and air traffic

control privatization.

On June 11, 2003, H.R. 2115, Flight 100

Congressional Research Service

– Century of Aviation Reauthorization Act,

was passed by the House of Representatives

(Roll Call 264). The House bill proposes a

total budget of $58.2 billion over 4 years, for

airport improvements, facilities and equipment, and FAA operations and maintenance.

Legislation to reauthorize the FAA’s research,

engineering and development functions was

never considered during House floor action.

Parts of House introduced legislation, H.R.

2734 and H.R. 2271, are part of the conference agreement discussed below.

On June 12, 2003, the Senate passed its

version of H.R. 2115, striking out the House

language and substituting the amended language of S. 824. The Senate proposal is for a

three-year reauthorization totaling $43.5

billion, for airport improvements, facilities

and equipment, FAA operations and maintenance, and research, engineering and development. While the Senate proposal provides

somewhat lower funding levels than the

House, both the Senate and the House bills

would provide more funding than the administration’s request of $57.3 billion over four

years.

On July 25, 2003, Vision 100 - Century

of Aviation Reauthorization Act (H.Rept. 108240) was reported out of conference. The

conference bill would provide $59.2 billion

over 4 years for FAA activities Several provisions of the conference bill are controversial,

however, and have so far prevented the bill

from being considered in either the House or

the Senate. Most notable of these is a provision that would prevent privatization of certain air traffic control functions, but allow

privatization of designated airport towers.

˜ The Library of Congress

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MOST RECENT DEVELOPMENTS

On June 11, 2003, H.R. 2115, Flight 100 – Century of Aviation Reauthorization Act,

was passed by the House of Representatives (Roll Call 264). On June 12, 2003, the Senate

passed a version of H.R. 2115 striking out the House language and substituting the amended

language of S. 824 (Record Vote Number 225). On July 25, 2003, Vision 100 - Century of

Aviation Reauthorization Act (H.Rept. 108-240) was reported out of conference.

BACKGROUND AND ANALYSIS

The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century

(FAIR21 or AIR21; P.L. 106-181), which currently provides authorization for the Federal

Aviation Administration (FAA) and related aviation programs, expires at the end of fiscal

year 2003. Consequently, the 108th Congress has been engaged in the process of drafting and

debating legislation to reauthorize the FAA and related aviation programs for future years.

The Senate proposal for FAA reauthorization, the Aviation Investment and Revitalization

Vision Act (AIR-V, S. 824), was reported in the Senate and proposed a three-year

reauthorization for FY2004-FY2006 totaling $43.5 billion. The House proposal, H.R. 2115,

dubbed Flight-100 in commemoration of the 100th anniversary of powered flight, would have

reauthorized the agency’s operations, facilities and equipment, and airport planning budgets

for four years at funding levels slightly higher than those proposed in the Senate bill, totaling

$58.2 billion over 4 years. The Federal Aviation Administration Research and Development

Reauthorization Act (H.R. 2734)(not considered on the House Floor) proposed spending of

about $200 million per year over 3 years for FAA’s research, engineering, and development

program, while the Second Century of Flight Act (H.R. 2271), an alternative introduced in

the House, proposed a three-year funding plan at levels identical to the Senate bill.

Both the Senate and House bills provided for slight increases in funding across all

program areas over the next three and four years respectively. By comparison, an earlier

Administration’s four-year proposal, also called Flight-100, proposed flat funding for airport

development, held fixed at $3.4 billion per year, minor increases for other programs and

significantly reduced funding for Research, Engineering, and Development.

The recently completed conference bill (H. Rept 108-240) adopts the Senate plan for

airport improvements funding levels starting at $3.4 billion in 2004 and providing $100

million annual increases thereafter. The conference report also provides increased

authorization levels for facilities and equipment in 2004, and significantly higher

authorization levels for research, engineering, and development. The conference report

otherwise mirrors the House version of H.R. 2115 with regard to program funding

authorizations. A summary of the proposed funding authorizations in the House, Senate, and

Administration bills and the Conference Report is provided in Table 1.

This issue brief discusses major elements of the proposed legislation and significant

issues that may be considered during remaining debate over FAA reauthorization including:

the economic outlook for the aviation industry and its impact on aviation program funds;

initiatives to promote and ensure air service for isolated communities; funding for airport

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development; initiatives to improve aviation safety and security; initiatives to promote

aviation and aerospace research and technology; and FAA organizational issues.

Table 1. Reauthorization Funding Levels by Program ($ Billion).

Program

FY 2004

FY 2005

FY 2006

FY 2007

Airport Improvement Program

(AIP)

Admin:

Senate:

House:

Conference:

3.400

3.400

3.400

3.400

3.400

3.500

3.600

3.500

3.400

3.600

3.800

3.600

3.400

-4.000

3.700

Facilities and Equipment

(F&E)

Admin:

Senate:

House:

Conference:

2.916

2.916

2.938

3.138

2.971

2.971

2.993

2.993

3.031

3.030

3.053

3.053

3.098

-3.110

3.110

FAA Operations and

Maintenance (O&M)

Admin:

Senate:

House:

Conference:

7.591

7.591

7.591

7.591

7.732

7.732

7.732

7.732

7.889

7.889

7.889

7.889

8.064

-8.064

8.064

Research, Engineering, and

Development (RE&D)

Admin:

Senate:

House*:

Conference:

0.100

0.289

0.190

0.346

0.102

0.304

0.207

0.356

0.104

0.317

0.228

0.352

0.107

--0.356

14.205

14.507

14.325

14.581

14.423

14.836

14.742

14.894

14.669

-15.174

15.230

Admin:

14.007

Senate:

14.196

House**:

13.929

Conference:

14.475

*House RE&D provisions introduced in H.R. 2734.

**House totals do not include RE&D provisions in H.R. 2734.

TOTAL

State of the Aviation Industry

Reauthorization of the FAA is occurring against the backdrop of the effects of the war

in Iraq, Severe Acute Respiratory Syndrome (SARS) and lingering concerns about terrorism

dating back to September 11. All facets of the aviation industry are operating in a

recessionary environment, even though the official recession as defined by the Treasury has

ended. According to the FAA's Aerospace Forecasts for Fiscal Years 2003 - 2014 (issued

March 2003), any recovery in the demand for aviation services was "stalled" even before the

Iraq war started. There was an expectation, now realized, that the demand for aviation

services would decrease if a war took place. In the first quarter of 2003, United Airlines

alone had losses of $1.3 billion and most other U.S. air carriers, with the notable exceptions

of Southwest and some other newly emergent air carriers, lost equally impressive sums. The

economic pain of the current situation is not limited to the airlines, but extends across the

broad spectrum of aviation industry activities.

Reauthorization is not normally viewed as a vehicle for addressing the overall financial

health of the aviation industry. During consideration of AIR21, the focus was on making

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sure that there would be enough air traffic control and airport capacity to facilitate the rapid

growth occurring in all sectors of the industry at that time. This imperative was particularly

important to the authors of AIR21, who raised funding for many FAA programs, but

especially the airport improvement program (AIP).

Although aviation growth is currently "stalled" it is believed that this situation is

temporary. The same FAA forecast mentioned above expected that industry growth would

resume later this year, albeit at lower levels then those experienced at the end of the 1990s.

It is hoped, barring further destabilizing incidents, that this industry will return to its

historical growth patterns. When growth does recur many of the same concerns about

overtaxed infrastructure will return.

Competition and Delay Issues. The Senate bill addresses a number of longstanding concerns about competition and delay in the overall aviation system and at key

airports. A provision of the Senate bill allows the Secretary of Transportation to call for

meetings between the FAA and airlines if it is deemed necessary to consider flight

reductions/rescheduling at an airport. These meetings are to be held using procedures

developed by the Secretary. At the moment, specific airport flight delays are not an issue,

but prior to September 11 these issues arose at a number of congested airports including, for

example, New York LaGuardia and Chicago O'Hare. Without this process a meeting

between airlines to discuss schedules would run afoul of antitrust concerns. Another

provision in the Senate bill requires that hub airports denying airline requests for facilities

must notify the Secretary as why the request was denied and also identify when they expect

to be able to fulfill the airline request.

The House bill also has provisions that allow for scheduling meetings during "capacity

reduction events." The House plan creates a demonstration or pilot program that allows

"collaborative decision making" at three airports during congested periods, in the interest of

improving efficiency. There are a number of conditions that must be met for a scheduling

meeting to take place and the Secretary of Transportation can offer limited immunity from

antitrust law. The program is to run for two years, but can be extended for an additional two

years and expanded to include up to seven additional airports.

All of the provisions discussed above are now part of the conference bill, although some

aspects of each proposal have been modified. For example, the pilot program only allows

for two airport participants during the first two years instead of three and the denial of

facilities provision is now a biannual reporting requirement. All of these provisions while

seemingly straight forward, potentially raise issues about DOT intrusion into the business

decisions of airlines and local airport operators and may become controversial in the future.

Reagan National Airport Slots. There are four slot-controlled airports in the

United States. In only one instance, Reagan National Airport, are the slots determined by

federal statute. Reagan National has long operated with limited slots (takeoffs and landings)

and with a perimeter rule that limits flights beyond 1,250 miles. These rules were originally

put in place to move long haul flights to the then underutilized Dulles International Airport,

and legislation that created the Washington Metropolitan Airport Authority in the mid-1980s

reaffirmed them in federal statute. These rules have always been controversial. Many

Washington area residents support the existing slot system and object to additional flights

for noise and other environmental reasons. Some residents of states outside the perimeter

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have been opposed to these rules, protesting their lack of access to the area's most convenient

airport.

AIR21 broke the perimeter barrier for the first time, by allowing a limited number of

additional slots for service beyond the perimeter. The House bill increases the number of

slots at National adding 12 new exemptions to existing slot rules for flights outside the

perimeter and 8 new exemptions for flights within the perimeter. As modified by a managers

floor amendment the slots within the perimeter would not be reserved for new entrant

carriers, but would be competitively available to all airlines. A further addition to the bill

on the House Floor redesignates commuter slots so that they could be used by aircraft with

76 seats or less. This provision accommodates new regional jet aircraft such as those recently

purchased by US Airways.

The Conference bill essentially adopts the House provisions. The bill, however,

suggests that DOT consider the possibility of expanding service to western cities that could

be viewed as gateways as part of its route selection process.

War Risk Insurance. Immediately following the events of September 11th private

market insurance firms stopped offering terrorism coverage as part of their offerings to the

airline industry. This was partially a response to the potentially large costs engendered by

claims resulting from the terrorist actions and partially a concern that the announced "war

on terrorism" might make this an even more risky insurance product in the years ahead.

Although air carriers have traditionally provided at least some degree of insurance self

coverage, they have always been reliant on the larger insurance and reinsurance markets to

provide catastrophic coverage. And they must carry coverage in order to satisfy operating

certificate requirements (all airlines must have an operating certificate issued by DOT), lien

holders, and other interested parties.

Federally offered war risk insurance has been a feature of federal aviation policy since

the cold war era. It is considered an important element in the Civilian Reserve Air Fleet

(CRAF) program that makes civilian aircraft available to the military in times of national

emergency. In light of the lack of a private market for terrorism insurance at what is

considered a reasonable price, Congress has offered the airline industry extended coverage

under the war risk program. This coverage has been extended several times, most recently

by the emergency wartime supplemental appropriations for FY2003 (P.L. 108-11) which

provides coverage until the end of 2004. Reauthorization proposed in the Senate bill would

extend this coverage until the end of 2007, thereby giving U.S. air carriers an extended

period of certainty on the availability of coverage. An amendment adopted in Committee

would extend war risk insurance to aircraft manufacturers for the first time. Eligibility would

be at the discretion of the Secretary and could only apply for loss or damage claims of over

$50 million. The House bill also extends war risk insurance to the end of 2007 for the

domestic market. However, for international flights the House proposes to make federal war

risk insurance availability permanent. The Conference bill is similar to the Senate version,

but extends the program until March 30, 2008. Subject to DOT approval, aircraft

manufacturers will be able to obtain war risk insurance in certain circumstances.

Improving Air Service to Isolated Communities. The Essential Air Service

(EAS) program and the Small Community Air Service Development (SCASD) Pilot Program

were designed to address the difficulties in obtaining and maintaining air service in small,

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isolated communities where access to the national air transportation system is limited. Both

the House and the Senate bills and the conference bill seek to reauthorize these programs and

restructure the EAS program. Additionally the House bill and the Conference bill propose

to establish a National Commission on Small Community Air Service.

The Essential Air Service Program. EAS provides subsidies directly to air

carriers for providing service between selected small communities and hub airports. The

program was originally established in 1978 as part of airline deregulation to ensure a

minimum level of air service at smaller communities that may otherwise lose service because

of economic factors. At present, 125 communities in the United States and its territories

participate in the EAS program and this number is expected to increase given that current

financial conditions may prompt air carriers to discontinue service without subsidies.

However, the effectiveness of the current EAS program has been questioned as total

passenger traffic among EAS communities has declined 20% since 1995.

The Senate seeks to authorize a funding level of $113 million per year for EAS, while

the House bill would authorize funding levels of $115 million per year. The conference bill

would authorize a total of $127 million annually, of which not more than $12 million would

fund the proposed marketing incentive program included from the Senate bill. Several

modifications have been proposed to increase program flexibility and transportation options

to link EAS communities to the national aviation network.

The Senate plan incorporated into the conference bill includes a marketing incentive

program that can provide EAS communities with grants of up to $50,000 for implementing

marketing plans to increase ridership. Communities must be willing to match 25% of the

grant with non-Federal funds, but the proposal includes incentives to offset these costs,

dropping the non-Federal share to 10% the following year if the community realizes a 25

percent gain in ridership, and to zero if the community achieves a 50 percent increase in

ridership. The Senate and Conference bills would authorize up to $12 million each year to

fund this initiative. The Senate and Conference bills also include a proposed community

flexibility plan allowing up to 10 EAS communities to opt out of the program for a 10-year

period in exchange for a grant equivalent to 2 years of EAS.

The House bill contains additional provisions for a community and regional choice

program as an alternate to EAS that were incorporated into the conference bill. The

community and regional choice program would be established an alternative to EAS in which

eligible communities are funded directly and can then use the funds toward a variety of air

transportation options that are not available under the traditional EAS program. Eligible

communities would be able to use funds received to provide subsidies to an air carrier or an

on-demand air taxi service; for scheduled or on-demand surface transportation linking the

community with another airport; to purchase aircraft or fractional ownership in aircraft; or

to pay for other transportation options approved by the DOT. The Conference bill would

delay use of fractionally owned airplanes until the FAA issues specific rules pertaining to

fractional ownership.

An amendment to the House bill that was incorporated into the Conference bill would

require the DOT to establish a consistent standard for calculating milage and to consult with

state officials when calculating the most commonly used highway distance to a hub airport

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when determining EAS eligibility. The Senate version contains a similar provision that

would only apply to Lancaster, Pennsylvania.

Small Community Air Service Development Program. Both the House and

Senate bills contain provisions to reauthorize the Small Community Air Service

Development (SCASD) Pilot Program. The program was established under AIR 21 to

develop solutions for improving air carrier service to communities that are experiencing

insufficient access to the national air transportation system. The funding provides direct

grants to selected communities for implementing strategies to improve the availability and

pricing of air service. The General Accounting Office (GAO) has cautioned that it is still too

early to assess the long term impact of this program and has noted that many of the programs

receiving grants appear similar to prior programs tried by communities using state, local, and

private funds and may not be sustainable beyond the period of subsidized funding. The

Senate bill specifies $27.5 million per year for the program, whereas the House bill and the

conference bill would authorize $35 million per year. While the House bill sought to remove

the per state limit on grants, the conference bill would set a limit on grants recipients to 4 per

state each fiscal year. The conference bill would remove the designation of the program as

a ‘pilot’ program.

Airport and Airway Trust Fund (Aviation Trust Fund) Issues

The airport and airway trust fund, also known as the aviation trust fund, provides all

funding for three of the FAA's four major programs; the Airport Improvement Program

(AIP), Facilities and Equipment (F&E), and Research, Engineering, and Development

(RE&D). It also provides significant funding for the Operations and Maintenance Program

(O&M). O&M, however, as a result of long standing agreements, also receives funding from

U.S. Treasury General Funds. The split between trust fund and general fund monies on

O&M has always been somewhat controversial and could again become an issue in this

reauthorization cycle.

The poor economic condition of the aviation industry is having a negative effect on trust

fund revenues. Trust fund revenues more than doubled between FY1990 ($4.9 billion) and

FY2000 ($10.7 billion). The trend, however, changed dramatically in the new century. In

FY2001, revenues fell slightly to $10.2 billion. In FY2002 they dropped slightly again to

$10.1 billion. Predictions made prior to the Iraq War, which now might be optimistic,

foresaw a slight increase in FY2003 to $10.2 billion, followed by a recovery in more typical

growth to an FY2004 level of $11.1 billion. Because aviation spending has remained

constant, as required by AIR21, there has been a steady decline in the uncommited balance

in the trust fund, which stood at $4.8 billion at the end of FY2002.

AIR21 created a budgetary regime for aviation programs that was closely linked to the

availability of funds in the trust fund. In simple terms, appropriators were required to fully

fund AIP and F&E at authorized levels, and must further account for all trust fund revenues

prior to determining the general fund share that would be provided for O&M in a fiscal year.

This is a part of the so-called funding "guarantee" that is designed to insure that all trust fund

income is spent on aviation and not other transportation activities. Both the House and

Senate bills continue this process as does the Conference bill.

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The Senate, House, and Administration reauthorization proposals call for only modest

growth in the FAA budget (just over $14.0 billion in FY2004). The House, however,

provides somewhat more funding over four years, primarily for the AIP program. The

Conference bill is a compromise. It adopts the House’s four year structure, but reduces its

AIP funding amounts slightly in favor of increases in other FAA program areas. By

maintaining the growth in spending at a modest level the fill seems to side step any trust fund

solvency concerns.

Airport Development

The Airport Improvement Program (AIP) provides federal grants for airport

development and planning. AIP funding is usually limited to capital improvements related

to aircraft operations. Commercial revenue producing portions of airports and airport

terminals are improvements that generally are not eligible for AIP funding. AIP money

cannot be used for airport operational expenses or bond repayments. AIP funds are

distributed either as formula grants or as discretionary grants. Under AIR21, roughly

two-thirds of AIP funding was distributed by formula and the remaining third as

discretionary grants. Small airports are much more dependent on AIP grants than large and

medium hub airports. These airports can more easily generate revenue from user fees and

have historically had the financial wherewithal to successfully access the bond market.

The Passenger Facility Charge (PFC) program provides a source of non-federal funds

intended to complement AIP spending. The PFC is a local tax imposed, with federal

approval, by an airport on each boarding passenger. PFC funds can be used for a broader

range of projects than AIP grants and are more likely to be used for "ground side" projects.

PFCs can also be used for bond repayments (a more detailed description of airport funding

can be found in CRS Issue Brief IB10026).

Reauthorization Proposals and Issues. Both the House and Senate bills include

provisions that would impact the AIP program's long standing priorities and objectives.

Although the bills include a number of similar provisions their core proposals are focused

on different goals. As shown in the earlier table, both bills provide modest increases in AIP

funding. Much of the Senate bill’s legislative attention is directed toward facilitating

capacity enhancing projects, especially toward the major airports included in the FAA's 2001

Airport Capacity Benchmark study. The House bill redirects some funds from large airports

to smaller airports and cargo airports. The bill attempts to address a broad range of concerns

about the operation of the AIP program and make perfecting rather than major changes. The

Conference agreement includes a blend of the House and Senate proposals.

Apportionment and Eligibility Changes: Relief and Support to Small

Airports. The conference agreement includes provisions that protect small airports from

having their apportionments reduced in FY2004 because of reduced traffic levels. Cargo

airports formula percentage would be raised to 3.5%. Non primary airports would be

allowed to use their entitlements for revenue generating areas if the Secretary of DOT

determines that the sponsor has made adequate provisions for the airside needs of the airport.

Discretionary Fund Changes. The conference agreement would increase the

discretionary set aside for noise compatibility projects from 34% to 35%. Eligibility would

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be expanded to include noise mitigation projects approved in an environmental record of

decision for projects designated as national capacity projects.

Airport Noise Issues. Airport noise policy is linked to airport development because

airport noise is a major factor in local resistance to airport capacity projects. The conference

agreement includes provisions effecting the availability of AIP grants for state and local

governments land use compatibility plans. The bill, as mentioned earlier, would raise the

noise AIP set-aside to 35%, and includes language to make noise mitigation projects,

approved in an environmental record of decision for a project designated as a national

capacity project, eligible for AIP noise mitigation funding. This appears to provide, under

certain conditions, for AIP funding of projects at airports that have not submitted a noise

compatibility plan, as is now required.

Passenger Facility Charge Issues. The conference agreement includes provisions

to streamline PFC public notice requirements as well as ending the "significant contribution"

project requirement on large and medium hub airports that wish to impose PFCs at the $4

and $4.50 level. The requirement of notice and consultation of air carriers at applicant

airports is limited to carriers that have no less than 1% of the boardings at the airport, 25,000

boardings, or provides scheduled service at the airport. The bill would also establish a pilot

program to test alternative procedures for authorizing small airports to impose PFCs. The

bill also makes conversion of ground support equipment to low emission technology eligible

for PFC funds. The agreement also empowers the Secretary to allow the use of PFCs for

debt service for indebtedness on non-eligible non-airport related projects if the Secretary

finds that such project funding is necessary due to an airports financial need.

Privatization. The conference agreement would amend the Airport Privatization Pilot

Program, dropping, for small and non-hub airports, the requirement that 65% of airlines at

an airport approve of the privatization. Air carrier nonapproval would have to be filed within

60 days or approval would be granted.

Airport Security Project Eligibility. The conference agreement repeals the

authority to use AIP or PFC funds for airport security purposes. These costs are to be paid

for from a proposed Aviation Security Capital Fund (see "Security Enhancements at

Airports", below).

Runway Safety Areas. The House bill contains a provision that would make runway

improvement grant approvals contingent on assurances that the sponsor will, to the

maximum extent possible, improve the runway’s safety area to meet FAA standards for

passenger airports. However, the bill also contains a provision that would prohibit the FAA

from reducing an airport’s runway length or declaring a runway less than the actual pavement

length to meet runway safety area criteria for passenger airports. The Conference bill limits

the applicability of this provision to airports in Alaska and directs the DOT to study the

potential impact of applying these runway safety area standards at airports in other states.

Reducing runway length may limit access by larger aircraft at certain airports and may

limit future expansion of air service. The NTSB recently recommended that runways at

passenger airports be upgraded immediately to meet FAA’s runway safety area criteria

following the March 5, 2000 mishap at Burbank, CA, where a Southwest Boeing 737 overran

the runway.

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Environmental Streamlining. The House and the Senate both include provisions

that can be described as proposals to accelerate the completion of major airport safety and

capacity projects by streamlining the environmental review process.

The conference agreement designates the DOT as the lead agency in the project review

process and directs the Secretary to develop a coordinated process for major airport capacity

projects that will assure simultaneous review by all government agencies. The agreement

adopted much from the House bill which included the most extensive environmental

streamlining provisions. The bill provides detailed information on how environmental

reviews are to be conducted to reduce the amount of time and number of reviews required

for new airport project approval.

Airway Facilities Improvements and Air Traffic Modernization

Airway Facilities consist of elements that comprise the infrastructure of the national

airspace system and include navigational aids, communications equipment, radar equipment,

weather equipment, air traffic management systems, and so on. Funding for the acquisition,

operation, and maintenance of airway facilities is derived from the Airport and Airway Trust

Fund and comprises about 20% of FAA’s spending. FAA programs to improve the

accessibility, capacity, and safety of the national airspace system have been the subject of

Congressional scrutiny and frequent criticism over the past 20 years as the result of numerous

cost overruns, schedule delays, and failures to meet program objectives. While current

economic conditions have decreased the demand on the aviation system, FAA faces a critical

challenge in the next 5 to 10 years to enhance the performance of the national airspace

system to meet anticipated growth in demand. An amendment to the House bill would

authorize $200 million for exploring new, innovative procurement techniques for

modernizing air traffic control systems.

Cost Sharing for Air Traffic Modernization Projects. The Senate bill contains

provisions to foster non-federal investment in critical air traffic control facilities and

equipment, such as airport navigation capabilities, weather sensing, runway lighting, and air

traffic control towers, by providing permanent authorization to carry out up to 10 costsharing air traffic modernization projects each fiscal year. Under the plan, cost-sharing

arrangements between the FAA and non-federal sponsors such as an airport, an air carrier,

or a joint venture between an airport and one or more air carriers, can be made to fund

airport-specific air traffic facilities and equipment. This concept was demonstrated in a

three-year pilot program, enacted as part of AIR21, that funded 10 air traffic modernization

projects where sufficient federal funds were unavailable. However, under the program

proposed in the Senate bill federal funds for a project would be limited to the lesser of onethird of the total program cost or $5 million, as compared to a $15 million cap in the pilot

program. The proposed changes will allow more flexibility in the composition of nonfederal project sponsors, allowing airlines to participate without establishing a partnership

with an airport. However, the current economic status of the airlines makes it unlikely that

they will provide a significant near-term source of non-federal funding for air traffic

modernization projects. Also, the smaller cap on federal funds may mean that smaller scale

projects may be undertaken in the future. This program is most likely to benefit those

airports that derive larger revenues from PFCs and commercial activity and, consequently,

are capable of funding larger scale air traffic modernization projects with more limited

federal funding.

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Wake Vortex Advisory System. The House bill authorizes $20 million per year

of facilities and equipment expenses for FY2004-FY2007 to demonstrate the operational

benefits of a wake vortex advisory system. The Senate bill, on the other hand, directs the

National Research Council to conduct an assessment of FAA’s wake turbulence research

program. The conference bill authorizes $500,000 for fiscal year 2004 to carry out the

Senate-proposed assessment, and such sums as may be necessary for development and testing

of wake vortex advisory systems.

Wake vortices produced by heavy jet aircraft have been identified as factors in a small

number of aircraft accidents, and the contribution of a wake turbulence encounter in the

November 2001 crash of American Airlines flight 587 at JFK airport, the second deadliest

in U.S. history, is still under investigation. Current air traffic procedures specify separation

standards for aircraft departing behind large and heavy jets to allow their wake vortices to

dissipate. Some view these standards as overly conservative and argue that accurate wake

vortex prediction capabilities could allow for decreased separation thereby increasing airport

capacity in many weather conditions. Others argue that the limited capability of available

technology and the complexities of wake vortex propagation make it difficult to predict wake

turbulence or use such predictions to reduce arrival and departure spacing without

compromising safety.

Ground-Based Precision Navigation Aids. Both the House and Senate bills and

the conference bill contain provisions for the installation, operation, and maintenance of

ground-based precision navigational aids at mountain airports. The House and conference

bills specifically target implementing navigational aids that can also provide curved and

segmented guidance for noise abatement purposes. However, even with funding for precision

navigation systems, currently available ground-based navigational aids are not always viable

options at these airports due to terrain constraints on approach procedures. Accessibility to

many of these mountain airports has improved significantly over recent years and continues

to improve through the use of satellite-based navigation using the Global Positioning System

(GPS). However, this system is not yet capable of providing the needed precision for vertical

guidance. Consequently, the FAA has proposed a plan to develop approach procedures with

vertical guidance that will likely rely on a combination of satellite-based, ground-based, and

on-board navigational sources. Programs to increase precision navigational capabilities at

airports may need to provide sufficient flexibility to accommodate these anticipated changes

in precision approach procedures.

Gulf of Mexico. The House and Senate bills contain provisions for improving air

traffic services in the Gulf of Mexico. These provision will most directly benefit helicopter

operations that support the large offshore oil industry, but may also benefit smaller aircraft

operating below 18,000 feet over the gulf. The conference bill adopts the language in the

House bill that would fund the program with money from the Facilities and Equipment

account.

Enhancing the Safety and Security of the Aviation System

Security Enhancements at Airports. With the passage of the Aviation and

Transportation Security Act (ATSA, P.L. 107-71) following the terrorist attacks of

September 11, 2001, the aviation security function was significantly expanded and passed

from the FAA to the newly formed Transportation Security Administration (TSA).

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Nonetheless, airport security projects, such as expanding and modifying passenger

checkpoints and installing explosive detection systems for checked baggage, have had a

significant impact on AIP funds allocated to airports. The Senate bill contains a provision

to establish an Aviation Security Capital Fund funded by aviation security fees to relieve

some of the demand on AIP funds from airport security projects. The Senate bill also

instructs the Department of Homeland Security to study the effectiveness of the aviation

security systems and redeploy aviation security assets based on the findings of this study.

An amendment to the House bill would require that airports and air carriers be reimbursed

for certain direct and indirect costs, such as the loss of retail space to security checkpoints,

associated with airport passenger screening.

Several airports, especially many of the large hub airports, currently face significant

challenges in funding projects to relocate explosive detection systems for checked baggage

temporarily housed in ticketing and check-in areas and develop in-line systems that

incorporate these machines into baggage handling facilities. Some estimate that the

systemwide costs to complete installations of in-line baggage screening systems may be as

high as $3 billion. The Senate bill would allow DOT to establish an Aviation Security

Capital Fund derived from passenger and air carrier security service fees. The Senate bill

also proposes to authorize funding levels of $500 million per year for FY2004 through

FY2007 for the fund with: 40% to be made available to large hub airports; 20% to medium

hub airports; 15% to small hubs; and the remaining 25% to be distributed at the Secretary of

Transportation’s discretion. Under this plan, hub airports would have to pay for 25% and

non-hubs would have to pay for 10% of a security project’s costs using nonfederal funds.

Federal funds will be apportioned to airports using a formula based on the percentage of

enplanements that each airport experiences within its respective category. The conference

bill retains the Senate bill concept of an aviation security capital fund, but limits use of

security fees for this fund to $250 million of the $500 million total. However, the aviation

security fees designated to fund this program do not cover even the current operating budget

for aviation security. The FY2004 President’s budget indicates estimated receipts of $2.488

billion from aviation security fees that are now identified as offsetting collections for the

Transportation Security Administration’s proposed $4.812 billion budge. Of the TSA's

overall budget, $4.217 billion is designated for aviation security. The roles and

responsibilities of FAA and TSA regarding aviation security projects at airports and funding

sources for these projects may require further clarification.

FAA Oversight of Operators and Maintenance Facilities. U.S. air carriers are

increasingly outsourcing maintenance to third-party repair stations. Outsourced maintenance

accounted for 47% of air carriers’ total maintenance costs in 2001. However, FAA

inspections of domestic repair stations are only required once annually and oversight of many

repair stations located in foreign countries is delegated to inspectors from those foreign

countries. FAA is currently revising the regulations governing the 5,200 FAA-certified repair

stations, about 600 of which are located in foreign countries, to improve bookkeeping,

training, and quality control at these maintenance facilities. FAA currently employs 628

aviation inspectors to oversee these repair stations, however some in Congress have been

concerned over these staffing levels and the degree of FAA oversight at repair stations,

particularly at the 2,800 repair stations that perform maintenance on the air carrier fleet. The

Senate bill and the conference bill contain provisions that would require the FAA to develop

an action plan for providing adequate oversight of repair stations and ensure that repair

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stations in foreign countries are subject to the same level of oversight and quality control as

domestic repair stations.

Oversight of operations and maintenance practices at 10 of the largest passenger air

carriers in the United States is currently conducted under the Air Transportation Oversight

System (ATOS). As compared to more traditional inspection methods that rely heavily on

individual inspector expertise and focus on regulatory compliance issues, ATOS is a datadriven program that relies on risk assessments and analysis to focus inspection activities on

particular areas where safety deficiencies might be expected at a specific air carrier. While

the program’s objectives and principals are generally viewed as a positive change for aviation

safety, reviews of the program have revealed that its effective implementation has been

hindered by a lack of standardization; a lack of adequate tools to help inspectors track safety

deficiencies and corrective actions; insufficient training; and inefficient allocation of human

resources. The Senate bill contains provisions for FAA to develop an action plan to correct

existing problems with the ATOS system and extend the program to oversight at more than

100 smaller air carriers in addition to the major passenger air carriers currently in the

program. These provisions would require the FAA to develop inspection checklists for FAA

inspectors and safety analysts; provide training in systems safety, risk analysis, and auditing

to FAA safety inspectors; ensure that inspectors are physically located where they are most

needed; and establish a strong central leadership for ATOS that will ensure that the system

is consistently implemented and expanded. Given current implementation difficulties with

the ATOS program, further expansion and refinement of the system may present significant

challenges.

Another concern is that FAA maintenance and operations inspectors may lack the

continuing training needed to keep up with current technologies. The House bill contains

a provision, adopted in the conference bill, directing the Comptroller General to study the

training of FAA aviation safety inspectors, expressing a sense that FAA inspectors should

get the most up-to-date initial and recurrent training on job-related aviation technologies.

Congress has also expressed concern over the adequacy of FAA’s inspector workforce,

particularly their ability to adequately oversee the aviation industry, and the increased use of

designees to carry out inspection duties. The House and conference bills also direct the

National Academy of Sciences to study the staffing methods FAA employs for determining

its air safety inspector workforce and suggest improved methods for assessing inspector

staffing needs.

Aviation Maintenance Training and Manuals. The House and conference bills

contain a provision directing the FAA to ensure that training standards and certification of

aviation mechanics are updated to more accurately reflect current technology and

maintenance practices. A recent GAO report found that the current FAA-developed aviation

maintenance curriculum is significantly outdated and is not adequate for training mechanics

to work on the advanced technology and materials commonly found in modern commercial

aircraft. The report recommended that FAA review and revise the curriculum.

Another provision of the House bill would require aircraft manufacturers to provide all

necessary maintenance manuals and related information to owners, operators, and repair

stations at no more that what it costs to prepare and distribute these documents. Neither the

Senate bill nor the Conference bill contain such a provision.

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Flight Attendant Certification. At present, federal regulations specify that cabin

crew are required on passenger flights using aircraft with 10 or more passenger seats. These

regulations identify training requirements; required duties; duty time and rest regulations;

airline drug testing program participation; and airline and FAA oversight, for flight

attendants. However, the FAA does not currently certify flight attendants or establish

specific training program and proficiency requirements for credentialing cabin crew. The

House and Senate bills as well as the conference bill contain provisions that would mandate

the certification of flight attendants. The objective of these measures is to develop industry

harmonization regarding flight attendant training and procedures. Opponents have argued

that this provision could result in a proliferation of unnecessary regulations governing the

certification of flight attendants that will increase the training and regulatory burden on

airlines without a clear benefit to aviation safety. On the other hand, proponents point out

that certification is required for other airline safety-critical personnel besides pilots, such as

aircraft dispatchers, and flight attendant certification would improve airline safety by

establishing industry-wide training and proficiency standards.

Cabin Air Quality. Both the House bill and the Senate bill contain provisions

directing the FAA to conduct a research program on airliner cabin air quality. The provision

in the House version specifically directs FAA to assess ozone levels, pesticide exposure, and

other contaminants to which passengers and crew are exposed on a representative number

of aircraft and flights. An amendment to the Senate bill further specifies the scope of the

study to include an assessment of compliance with existing regulations regarding ozone

levels, pesticide and contaminant exposure, and cabin pressure and altitude. The Senate

version would also establish a cabin air quality incident reporting system. The Conference

bill adopts the language of the Senate bill regarding cabin air quality.

Investing in the Future of Aviation

Much of the direction for FAA’s Research, Engineering, and Development (RD&E)

funding and initiatives for investing in aerospace and aviation safety research and technology

development contained in the Senate bill was adopted from the Second Century of Flight Act

(S. 788). The Senate bill identifies several initiatives to address future needs and challenges

in: aviation system safety and security; aviation system capabilities; aircraft noise, emissions,

and fuel consumption; and efforts to maintain leadership and progress in aviation and

aeronautics. Two separate House bills were under consideration. H.R. 2271, the Second

Century of Flight Act, proposes the same funding levels as the Senate bill and contains

similar language regarding identified research, engineering and development projects and

initiatives. The Federal Aviation Administration Research and Development Reauthorization

Act (H.R. 2734) was reported by the House Science Committee, but not considered on the

House Floor, and contains an alternative plan for FAA research, engineering and

development funding and identifies additional aviation research initiatives. Parts of these

bills appear to be incorporated in the Conference bill.

Coordination of Research and Development Efforts. The Senate bill and H.R.

2271 seek o establish an Office of Aerospace and Aviation Liaison within DOT, with an

annual budget of $2 million for FY2004 and FY2005, to coordinate aviation and aeronautics

research programs in an effort to develop more effective and directed research programs by

coordinating goals, priorities, and research activities across the Federal government and with

the aviation industry to facilitate technology transfer. The legislation also proposes to

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establish a National Air Traffic Management Development Office within FAA to develop

a next generation air traffic management system plan for the United States with input from

government and private sector stakeholders representing commercial aviation, general

aviation, and the space industry. Both bills would authorize $300 million over a six-year

period from FY2004 through FY2010 for this function. The conference bill instead adopts

language from H.R. 2734 that seeks to establish a Next Generation Air Transportation

System Joint Planning and Development Office with an annual budget of $10 million

through FY2010.

Aviation and Aerospace Education. The Senate bill, H.R. 2271, and the

conference bill also contain provisions for an initiative that would provide NASA and FAAsponsored merit-based grants, loans, and internship programs for higher education in fields

related to aerospace and aviation safety. The Senate bill provides for such sums as may be

necessary for NASA and FAA to establish and administer the program in FY2004 and

requires the agencies to jointly determine whether such a program should be extended for

additional years, while H.R. 2271 proposes funding levels of $5 million in 2004 and $7

million in 2005 but stipulates that at least 50% of the costs be derived from nonfederal

sources. Both bills also provide for a scholarship for service program. A separate provision

in the Senate bill would authorize such sums as may be necessary to carry out and expand

the Air Traffic Control Collegiate Training Initiative.

Identified Research Programs. In addition to those already mentioned, both the

Senate bill and H.R. 2271 identify airfield pavements and pavement standards as a research

area to be addressed by the FAA. The legislation also directs FAA to establish a center for

excellence in advanced materials, such as composites, for transport category aircraft. Both

bills propose to authorize $500,000 for FY2004 to develop the center. Finally, the legislation

directs FAA to conduct a study on reducing aircraft noise and emissions and increasing

aircraft fuel efficiency. H.R. 2734 seeks to establish an Airport Cooperative Research

Program to identify and fund research on airport issues not adequately addressed by existing

federal research programs, create a research program to study existing certification methods

and reduce the cost of new product certification; and conduct research assessing the impact

of new technologies and procedures on pilot and air traffic controller training. The

conference bill adopts these proposed research areas as part of the overall FAA research,

engineering, and development program.

FAA Organizational Issues

Chief Operating Officer (COO). This position was created by AIR21. The COO

was supposed to allow the FAA to hire someone with experience operating high technology

integrated systems like air traffic control. The COO position, however, has never been filled,

which is a controversy in itself. Several candidates have apparently turned down the position

based on what many considered to be a very difficult job at a pay scale far below what might

be offered for a similar position in private industry. As defined in AIR21 there was a

concern that the job might sound more like a chief executive officer (CEO) position than a

COO position. This would have potentially caused concern about the relationship between

the COO and the FAA Administrator who by statute functions as the Agency's CEO.

Legislation proposed by the House and by the Senate, and now the Conference bill, would

seek to clarify this relationship and does so in their respective bills. The proposals are

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intended to make the COO position itself more desirable and make it more likely that this

position will be filled in the near future.

Air Traffic Control Privatization. The House bill includes a provision that

prohibits privatization of the ATC system. During floor debate, the Senate bill was amended

to include a somewhat broader privatization prohibition. Privatization has often been

discussed as a possible way to increase the efficiency of the ATC system while at the same

time reducing its cost. The idea has been discussed in many contexts during the last decade,

but never acted upon by Congress. Recent action by the Bush Administration, removing

ATC from its definition of inherently governmental functions, was viewed by some as a

precursor to a privatization proposal, though no such proposal has been made.

In Conference a less stringent prohibition on privatization was adopted that precludes

transfer of ATC to a private or public entity prior to October 1, 2007. The provision,

however, allows the contract tower program to expand at certain levels as defined in the bill.

This provision was inserted without support from Minority Conference Committee Members

and represents an agreement reached by the Majority Members of the Conference and the

Bush Administration. This has become the most contentious item in the bill with some

Members vowing to try to defeat the Conference Report unless this provision is eliminated.

The Union representing air traffic controllers has been particularly critical of the provision

and has launched a wide ranging campaign to see that this provision is not adopted.

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

January 9, 2003: The Future of the Airline Industry. Senate Committee on Commerce,

Science and Technology

February 11, 2003: FAA Reauthorization, Senate Committee on Commerce, Science and

Technology.

February 12, 2003:Reauthorization of the Federal Aviation Administration and the Aviation

Programs: Introduction. House Aviation Subcommittee.

February 25, 2003: Airport Improvement Program and Other Airport Financing Issues.

Senate Aviation Subcommittee.

March 5, 2003: FAA Reauthorization - Airport Financing. Senate Aviation Subcommittee

March 6, 2003: Reauthorization of the Federal Aviation Administration and the Aviation

Programs: Airports. House Aviation Subcommittee.

March 11, 2003: FAA Reauthorization - Air Service to Small Communities. Senate Aviation

Subcommittee

March 12, 2003: Reauthorization of the Federal Aviation Administration and the Aviation

Programs: Commercial Aviation. House Aviation Subcommittee.

March 27, 2003: Reauthorization of the Federal Aviation Administration and the Aviation

Programs: Testimony From the FAA Administrator and Witnesses Representing FAA

Employees. House Aviation Subcommittee.

April 9, 2003: Reauthorization of the Federal Aviation Administration and the Aviation

Programs: General Aviation. House Aviation Subcommittee.

April 10, 2003: FAA Reauthorization. Senate Committee on Commerce, Science and

Technology

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FOR ADDITIONAL READING

CRS Issue Brief IB10032. Transportation Issues in the 108th Congress.

CRS Issue Brief IB10026. Airport Improvement Program.

CRS Report RS21321. Aviation Taxes and Fees: Major Issues.

CRS Report RS20914. Aviation Congestion: Proposed Non-Air Traffic Control Remedies.

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