# Federal Aviation Administration Reauthorization: An Overview of Selected Provisions in Proposed Legislation Considered by the 110th Congress > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3ARL33920 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** January 27, 2009 - **Citation:** RL33920 ## Text ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱ ŽŠž‘˜›’£Š’˜—DZȱ—ȱŸŽ›Ÿ’Ž ȱ˜ȱŽ•ŽŒŽȱ ›˜Ÿ’œ’˜—œȱ’—ȱ›˜™˜œŽȱŽ’œ•Š’˜—ȱ ˜—œ’Ž›Žȱ‹¢ȱ‘ŽȱŗŗŖ‘ȱ˜—›Žœœȱ Š›ȱ•’Šœǰȱ˜˜›’—Š˜›ȱ ™ŽŒ’Š•’œȱ’—ȱŸ’Š’˜—ȱ˜•’Œ¢ȱ Š—žŠ›¢ȱŘŝǰȱŘŖŖşȱ ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŝȬśŝŖŖȱ ǯŒ›œǯ˜Ÿȱ řřşŘŖȱ ȱŽ™˜›ȱ˜›ȱ˜—›Žœœ Prepared for Members and Committees of Congress ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ž––Š›¢ȱ Funding authorization for aviation programs set forth in Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176) and authorization for taxes and fees that provide revenue for the aviation trust fund expired at the end of FY2007. While Federal Aviation Administration (FAA) reauthorization legislation was considered during the 110th Congress, the only related legislation enacted consisted of several short term extensions for aviation trust fund revenue collections and aviation program authority. The Federal Aviation Administration Extension Act, Part II (P.L. 110-330) extends these authorizations until March 31, 2009, thus carrying the issue of FAA reauthorization over to the 111th Congress. Consideration of FAA reauthorization during the 110th Congress began with the introduction of the FAA’s reauthorization proposal, entitled the Next Generation Air Transportation System Financing Reform Act of 2007 (H.R. 1356/S. 1076, introduced by request), which recommends a new system for financing aviation system costs through direct user fees and increased fuel taxes. The FAA proposal would also allow airports to increase passenger facility charges (PFC), and includes initiatives to simplify the apportionment of airport grants. The proposal also seeks to better integrate development of the Next Generation Air Transportation System (NGATS) into ongoing planning and acquisition activities, and would allow airport and private investment in certain aviation facilities and services. The FAA proposal would authorize funding for research on aviation noise, air emissions, and water quality impacts, and seeks to modify the Essential Air Service Program (EAS). The Aviation Investment and Modernization Act of 2007 (S. 1300; S.Rept. 110-144) proposes a four-year authorization with modest overall budget increases and larger increases specifically for facilities and equipment (F&E) modernization. S. 1300 proposes a $25 surcharge for certain flights and retention of existing taxes and fees. S. 1300 would establish a modernization oversight board and would set up offices at each federal agency supporting NGATS for defining agency resources and budgetary commitments to air traffic modernization. S. 2345, introduced by the Senate Finance Committee, may be considered as the revenue title of the overall bill, and modifies certain aviation taxes and fees as a possible alternative to the $25 surcharge proposal. The FAA Reauthorization Act of 2007 (H.R. 2881) seeks higher spending authorizations for F&E compared to S. 1300. While the bill does not propose any direct user-fee mechanisms, it proposes modest increases to existing aviation fuel taxes. The overall legislation also seeks to increase accountability and coordination of NGATS planning and implementation. An amendment agreed to would create a binding arbitration process to resolve labor negotiations impasses, and would apply this process to settle the current impasse between the FAA and air traffic controllers. This report will not be updated. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ˜—Ž—œȱ Introduction ..................................................................................................................................... 1 Overview of the FAA Proposal........................................................................................................ 2 Overview of S. 1300 and S. 2345.................................................................................................... 3 Overview of H.R. 2881 ................................................................................................................... 5 Funding Authorization Levels ....................................................................................................... 10 FAA Proposal .......................................................................................................................... 10 S. 1300 .....................................................................................................................................11 H.R. 2881 ................................................................................................................................ 12 FAA Finance.................................................................................................................................. 14 FAA Proposal .......................................................................................................................... 14 Proposed Tax and Fee Structure........................................................................................ 15 Air Transportation System Advisory Board (Board) ........................................................ 16 Budget and Structural Provisions...................................................................................... 17 Agency Funding................................................................................................................ 18 S. 1300 .................................................................................................................................... 18 Modernization Surcharge.................................................................................................. 19 Leveraged Financing for Next Generation Air Traffic Control System (Bonding Authority) ...................................................................................................................... 20 Air Traffic Control Modernization Oversight Board (Oversight Board) .......................... 20 S. 2345 .................................................................................................................................... 22 Discussion......................................................................................................................... 23 H.R. 2881 ................................................................................................................................ 23 Registration, Certification, and Related Fees.................................................................... 24 Discussion......................................................................................................................... 24 Airport Financing .......................................................................................................................... 24 AIP Funding ............................................................................................................................ 25 FAA Proposal .................................................................................................................... 25 S. 1300 .............................................................................................................................. 26 H.R. 2881.......................................................................................................................... 26 Formula Funding (Entitlements) ............................................................................................. 26 Elimination of the $3.2 Billion AIP Program Level “Trigger” ......................................... 26 Primary Airport Entitlements............................................................................................ 27 Virtual Primary Airports ................................................................................................... 27 Puerto Rico Minimum Guarantee ..................................................................................... 28 General Aviation Entitlements .......................................................................................... 29 Alaska Supplemental Entitlement..................................................................................... 30 Cargo Service Airport Entitlement.................................................................................... 30 Pilot Program for Redevelopment of Airport Properties .................................................. 30 Discretionary Funds ................................................................................................................ 31 Minimum Discretionary Fund........................................................................................... 31 Noise Set-Aside ................................................................................................................ 32 Small Airport Fund ........................................................................................................... 32 Military Airport Program (MAP) and Reliever Airport Set-Asides.................................. 33 AIP Project Eligibility Changes .............................................................................................. 33 FAA Proposal .................................................................................................................... 33 ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ S. 1300 .............................................................................................................................. 33 H.R. 2881.......................................................................................................................... 34 AIP Grant Assurances ............................................................................................................. 34 FAA Proposal .................................................................................................................... 34 S. 1300 .............................................................................................................................. 34 H.R. 2881.......................................................................................................................... 34 Federal Share........................................................................................................................... 35 FAA Proposal .................................................................................................................... 35 S. 1300 .............................................................................................................................. 35 H.R. 2881.......................................................................................................................... 36 Passenger Facility Charges (PFCs) ......................................................................................... 36 Project Eligibility.............................................................................................................. 36 Increasing the PFC Cap .................................................................................................... 37 Passenger Facility Charge Pilot Program.......................................................................... 38 Competition Plans............................................................................................................. 38 PFC Grant Streamlining.................................................................................................... 39 Other Airport-Related Provisions............................................................................................ 39 Privatization ...................................................................................................................... 39 Airport Development Rights Pilot Program...................................................................... 40 ADS-B Support Pilot Program.......................................................................................... 40 Airline Passenger Rights Issues..................................................................................................... 41 FAA Proposal .......................................................................................................................... 41 S. 1300 .................................................................................................................................... 41 Airline Contingency Service Requirements...................................................................... 42 Posting Consumer Rights on Website ............................................................................... 42 Publication of Customer Service Data and Flight Delay History ..................................... 42 Expansion of DOT Airline Consumer Complaint Investigations...................................... 42 H.R. 2881 ................................................................................................................................ 42 Monthly Air Carrier Reports............................................................................................. 42 DOT Inspector General (IG) Review of Air Carrier Flight Delays, Cancellations, and Associated Causes ................................................................................................... 43 Airline and Airport “Emergency Contingency Plans” ...................................................... 43 Advisory Committee for Aviation Consumer Protection .................................................. 43 Denied Boarding Compensation ....................................................................................... 43 Expansion of DOT Airline Consumer Complaint Investigations...................................... 43 Consumer Complaint Hotline Telephone Number............................................................ 43 Insecticide Use on Passenger Aircraft............................................................................... 44 Spending Guarantee Mechanisms ................................................................................................. 44 FAA Proposal .......................................................................................................................... 44 S. 1300 .................................................................................................................................... 44 H.R. 2881 ................................................................................................................................ 44 FAA Management and Organizational Issues................................................................................ 45 Planning and Oversight of Next Generation Air Transportation System Development.......... 45 FAA Proposal .................................................................................................................... 46 S. 1300 .............................................................................................................................. 46 H.R. 2881.......................................................................................................................... 47 Realignment and Consolidation of FAA Facilities and Operations......................................... 48 FAA Proposal .................................................................................................................... 48 S. 1300 .............................................................................................................................. 49 ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ H.R. 2881.......................................................................................................................... 50 Partnerships for Next Generation Technology Deployment.................................................... 50 FAA Proposal .................................................................................................................... 50 S. 1300 .............................................................................................................................. 51 H.R. 2881.......................................................................................................................... 52 FAA Personnel Management................................................................................................... 53 FAA Proposal .................................................................................................................... 55 S. 1300 .............................................................................................................................. 55 H.R. 2881.......................................................................................................................... 55 FAA Technical Training and Staffing...................................................................................... 56 FAA Proposal .................................................................................................................... 56 S. 1300 .............................................................................................................................. 56 H.R. 2881.......................................................................................................................... 56 System Capacity and Safety .......................................................................................................... 57 Controlling Congestion at New York’s LaGuardia Airport..................................................... 58 FAA Proposal .................................................................................................................... 58 S. 1300 .............................................................................................................................. 58 H.R. 2881.......................................................................................................................... 58 Market-Based Strategies for Alleviating Congestion.............................................................. 58 FAA Proposal .................................................................................................................... 59 S. 1300 .............................................................................................................................. 59 H.R. 2881.......................................................................................................................... 59 Washington Reagan National Airport Slot Controls ............................................................... 59 FAA Proposal .................................................................................................................... 60 S. 1300 .............................................................................................................................. 60 H.R. 2881.......................................................................................................................... 60 Runway Safety ........................................................................................................................ 60 FAA Proposal .................................................................................................................... 61 S. 1300 .............................................................................................................................. 61 H.R. 2881.......................................................................................................................... 61 Aircraft Fuel Tank Safety........................................................................................................ 62 FAA Proposal .................................................................................................................... 62 S. 1300 .............................................................................................................................. 62 H.R. 2881.......................................................................................................................... 63 Pilot Fatigue ............................................................................................................................ 63 FAA Proposal .................................................................................................................... 63 S. 1300 .............................................................................................................................. 63 H.R. 2881.......................................................................................................................... 63 Helicopter Emergency Medical Service Safety....................................................................... 64 FAA Proposal .................................................................................................................... 64 S. 1300 .............................................................................................................................. 64 H.R. 2881.......................................................................................................................... 64 Airline Pilot Age Restrictions ................................................................................................. 65 The Fair Treatment for Experienced Pilots Act (P.L. 110-135) ........................................ 65 FAA Proposal .................................................................................................................... 66 S. 1300 .............................................................................................................................. 66 H.R. 2881.......................................................................................................................... 66 Incorporating Unmanned Aircraft Operations......................................................................... 67 FAA Proposal .................................................................................................................... 68 S. 1300 .............................................................................................................................. 68 ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ H.R. 2881.......................................................................................................................... 68 Wake Turbulence Prediction, Detection, and Avoidance ........................................................ 69 FAA Proposal .................................................................................................................... 69 S. 1300 .............................................................................................................................. 69 H.R. 2881.......................................................................................................................... 70 Safety of Airline Maintenance Practices ................................................................................. 70 FAA Proposal .................................................................................................................... 70 S. 1300 .............................................................................................................................. 70 H.R. 2881.......................................................................................................................... 70 Occupational Safety and Health.............................................................................................. 70 FAA Proposal .................................................................................................................... 71 S. 1300 .............................................................................................................................. 71 H.R. 2881.......................................................................................................................... 71 Environmental and Energy Issues ................................................................................................. 72 Research Funding.................................................................................................................... 72 FAA Proposal .................................................................................................................... 72 S. 1300 .............................................................................................................................. 73 H.R. 2881.......................................................................................................................... 74 Mitigation Grants .................................................................................................................... 75 FAA Proposal .................................................................................................................... 75 S. 1300 .............................................................................................................................. 75 H.R. 2881.......................................................................................................................... 75 Grants and Procedural Changes to Assist with Environmental Compliance........................... 75 FAA Proposal .................................................................................................................... 75 S. 1300 .............................................................................................................................. 76 H.R. 2881.......................................................................................................................... 76 Requirements to Address Noise Issues.................................................................................... 77 S. 1300 .............................................................................................................................. 77 H.R. 2881.......................................................................................................................... 78 The Air Tour Management Program ....................................................................................... 78 FAA Proposal .................................................................................................................... 78 S. 1300 .............................................................................................................................. 79 H.R. 2881.......................................................................................................................... 80 Airline Industry Issues................................................................................................................... 80 The Essential Air Service Program ......................................................................................... 81 FAA Proposal .................................................................................................................... 81 S. 1300 .............................................................................................................................. 82 H.R. 2881.......................................................................................................................... 82 Airline Ownership................................................................................................................... 82 H.R. 2881.......................................................................................................................... 83 Railway Labor Act Modifications ........................................................................................... 83 FAA Proposal .................................................................................................................... 84 S. 1300 .............................................................................................................................. 84 H.R. 2881.......................................................................................................................... 84 ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ Š‹•Žœȱ Table 1. Airport and Airway Trust Fund Funding Authorizations and General Fund Limits Proposed Under the FAA Bill......................................................................................................11 Table 2. Reauthorization Funding Levels for FAA Accounts........................................................ 12 Table 3. Proposed Aviation Tax and Fee Changes......................................................................... 22 Table 4. Specific Authorizations in H.R. 2881 for Runway Incursion Mitigation ........................ 62 ˜—ŠŒœȱ Author Contact Information .......................................................................................................... 85 Key Policy Staff ............................................................................................................................ 85 ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ —›˜žŒ’˜—ȱ The report is intended to provide a brief summary and analysis of major legislative provisions in bills related to reauthorization of the Federal Aviation Administration and related aviation programs that were considered during the 110th Congress. While Federal Aviation Administration (FAA) reauthorization legislation was considered at length during the 110th Congress, and a FAA reauthorization bill (H.R. 2881) was passed by the House, the only related legislation enacted consisted of several short term extensions for aviation trust fund revenue collections and aviation program authority. The Federal Aviation Administration Extension Act, Part II (P.L. 110-330) extends these authorizations until March 31, 2009, thus carrying the issue of FAA reauthorization over to the 111th Congress. This report discusses major provisions in the bills and selected policy issues discussed during the legislative debate over FAA reauthorization that took place during the 110th Congress. The report is organized into six major program areas: aviation system finance; airport finance; FAA management and organizational issues; system capacity and safety; environmental issues; and miscellaneous programs and provisions. In several cases, provisions that appear in various unrelated sections of proposed legislation have been rearranged in this report in an effort to group and discuss related items in an issue-driven or programmatic context. Since this report is primarily written as a means of communicating key legislative provisions under consideration in the ongoing FAA reauthorization process, it does not go into detail regarding the specific policy issues behind these legislative proposals. CRS has prepared two separate reports that provide discussion of the policy context for the current FAA reauthorization debate. For an overview of various selected issues related to the current FAA reauthorization debate, see CRS Report RL33789, Federal Aviation Administration: An Abridged Look at Reauthorization Issues in the 110th Congress; for more detailed background on these issues, see CRS Report RL33698, Reauthorization of the Federal Aviation Administration: Background and Issues for Congress, both by (name redacted), et al. Funding authorization for aviation programs set forth in Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, hereafter referred to as Vision 100) expired at the end of FY2007. Also, authorization of the existing tax and fee structure that provides revenue for the aviation trust fund expired at the end of FY2007. During the first session of the 110th Congress, the House passed the FAA Reauthorization Act of 2007 (H.R. 2881). While H.R. 2881, along with the Aviation Investment and Modernization Act of 2007 (S. 1300) and aviation financing provisions in American Infrastructure Investment and Improvement Act of 2007 ( S. 2345) have all been placed on the Senate legislative calendar, they have not yet been debated on the Senate floor. In early May 2008, the Senate attempted, but failed, to take up consideration of H.R. 2881. Revenue collections and the operation of the FAA and its programs have continued, however, as a result of continuing and consolidated appropriations legislation (P.L. 110-92, P.L. 110-116, and P.L. 110-161). The program was further extended until June 30, 2008, by the Airport and Airway Extension Act of 2008 (P.L. 110-190). On June 30, 2008, the Federal Aviation Administration Extension Act of 2008 (P.L. 110-253) was signed by the President, further extending Airport and Airway Trust Fund (AATF) tax authorization and Airport Improvement Program (AIP) expenditure authority through the end of FY2008. On September 30, 2008, the President signed the Federal Aviation Administration Extension Act of 2008, Part II (P.L. 110-330), which provides a six-month extension for revenue collections, AIP obligation and grant authority, and authorizations for FAA programs. On September 30, 2008, the President also signed the Continuing Appropriations Resolution for FY2009, which provides funding for the FAA and ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ other federal programs through March 6, 2009. The resolution increases funding for FAA operations to an annualized rate of $8,757 million, $17 million above the FY2008 level. The law stipulates that roughly $1,099 million of this must be expended on activities tied to aviation safety. Under the terms of the resolution, FAA’s other programs are limited to spending at an annualized rate equivalent to FY2008 appropriations. ŸŽ›Ÿ’Ž ȱ˜ȱ‘Žȱȱ›˜™˜œŠ•ȱ The legislative process toward reauthorizing the FAA began in February 2007 with the submittal to Congress of a legislative proposal by the Bush Administration and initial congressional hearings regarding FAA reauthorization. On February 14, 2007, the FAA transmitted proposals to reauthorize funding of FAA functions and related aviation programs and reform the financing of the national airspace system. The text of these proposals were introduced as bills in the House (H.R. 1356) and in the Senate (S. 1076) at the FAA’s request. The FAA’s proposed bill (H.R. 1356/S. 1076, hereafter referred to by bill number or as the FAA proposal),1 entitled the Next Generation Air Transportation System Financing Reform Act of 2007, proposes a new system for financing aviation system operations and capital improvements that includes various fee-forservice charges (user fees), directed primarily at commercial system users, and excise taxes (primarily fuel taxes) for general aviation system users. The FAA proposal also includes several modifications to airport revenues, including increases in the maximum passenger facility charges (PFCs) that airports can impose on passengers, and initiatives intended to modify and simplify the apportionment of grants to airports. The FAA proposal also recommends several management and organizational reforms, most notably the proposed establishment of an air transportation system advisory board, and the authority to create a commission, similar to the military’s Base Realignment and Closure (BRAC) commissions, to make independent recommendations regarding the realignment and consolidation of various FAA facilities and services. The proposal also includes proposed statutory language intended to better integrate the work of the Joint Planning and Development Office (JPDO) on the Next Generation Air Transportation System (NGATS) design and implementation into the FAA’s ongoing planning and acquisition activities. Also, the proposal includes language to increase the flexibility in delivering various air traffic services and capabilities to system users by allowing airports and private entities to play a more direct role in acquiring, deploying, and maintaining facilities and services to augment the FAA’s air traffic communications, navigation, and surveillance capabilities. With regard to addressing system and airport capacity and safety, the FAA proposal seeks statutory authority to control congestion at certain airports through market-based mechanisms, such as slot auctions and peak-period pricing. The proposal would direct the Department of Transportation (DOT) to study the appropriateness of a market-based system at New York’s LaGuardia Airport (LGA), and if deemed appropriate, would permit the airport operator to implement a market-based approach to controlling congestion. The FAA proposal also seeks to establish a pilot program to evaluate market-based mechanisms to relieve congestion at up to 15 other airports. 1 Representative Oberstar introduced the FAA proposal (H.R. 1356), by request, on March 6, 2007, and Senator Inouye introduced an identical Senate bill (S. 1076), by request, on March 29, 2007. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Řȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ With regard to addressing the environmental impacts of aviation, the FAA proposal includes language that seeks to provide funding for research into technology or processes that would reduce noise, air emissions, and water quality impacts; provide grants for programs or projects intended to mitigate or minimize regulated environmental impacts; and provide grants or specify regulatory procedures to assist airports in complying with environmental requirements. The FAA proposal also recommends establishing a consortium for fostering innovation to develop cleaner, quieter, and more efficient next-generation aircraft. Further, the FAA proposal seeks to limit the scope of the Air Tour Management Program, designed to mitigate noise and other adverse impacts from air tours over national park units, to those parks where air tour impacts have been identified as a concern or could become a more substantial issue. The FAA proposal also includes language that would significantly modify the existing Essential Air Service Program (EAS) that subsidizes air carrier service to small and isolated communities, primarily by setting more stringent criteria for program eligibility and restricting further expansion of the program. ŸŽ›Ÿ’Ž ȱ˜ȱǯȱŗřŖŖȱŠ—ȱǯȱŘřŚśȱ On May 3, 2007, Senator Rockefeller introduced the Aviation Investment and Modernization Act of 2007 (S. 1300). On May 16, 2007, the Senate Committee on Commerce, Science, and Transportation convened a markup session and ordered that the bill be reported favorably with amendments. The reported bill, along with an accompanying committee report (S.Rept. 110-144), was ordered printed on August 3, 2007 and placed on the Senate Legislative Calendar under General Orders. S. 1300 proposes a four-year reauthorization, including modest increases to the FAA’s authorized spending levels through FY2011. S. 1300, as amended, offers an alternative to the FAA-proposed user fee structure, proposing to create a separate treasury fund, called the Air Traffic Modernization Fund, that would be financed through the collection of $25 surcharges imposed on certain flights for air traffic control costs. The surcharge would be principally collected from airlines and high-performance business jet operators, as all piston-engine powered aircraft would be exempt from paying the surcharge. The bill language specifies that more than $400 million toward the FAA’s Facility and Equipment (F&E) account is to be derived from these surcharges each year from FY2009 through FY2011. The bill gives the FAA specific authority to collect these surcharges and impose sanctions upon those who don’t pay, but leaves it up to the FAA to devise a collection system. The surcharge would be in addition to the existing tax and fee system, although proposals to modify that tax and fee structure may be considered by the Senate through separate legislation considered by the Senate Committee on Finance or possible floor action. To further support the modernization of air traffic facilities and services, S. 1300 authorizes the Department of Transportation to issue obligations, such as bonds, totaling up to $5 billion. These instruments would be repaid, with interest through revenues derived from the collection of the $25 per flight surcharges. Interest yields on these instruments would be set at rates of comparable treasury obligations. S. 1300 includes several provisions for FAA management and organizational reform. The bill includes an alternate to the FAA-proposed board, by creating a smaller seven-member Air Traffic Control Modernization Oversight Board that would have greater oversight authority over FAA’s planning, budgeting, and implementation of facilities and equipment modernization. The ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ řȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ proposed board would have approval authority over large scale acquisition programs (those of $100 million or greater), and would be responsible for approving the FAA’s capital improvement program, operational evolution plan, facilities and equipment budget, and key leadership positions in the Air Traffic Organization (ATO) and Joint Planning and Development Office (JPDO). S. 1300 proposes $100 million annual increases to the Airport Improvement Program (AIP) through FY2011, but does not include any increases to the maximum Passenger Facility Charge (PFC) that can be levied by airports. The bill does, however, propose a pilot program at up to six airports allowing airports to collect PFCs directly from passengers without any statutory ceiling on the amount that could be charged. The bill includes other technical modifications to the AIP program primarily aimed at increasing the eligibility of smaller passenger service airports to qualify as primary airports and extend the 95% federal share of airport project funding for smaller-sized airports. S. 1300 includes several provisions addressing customer service for passenger airlines. These provisions endeavor to provide assurances of adequate food, water, and restroom facilities when flights are substantially delayed. These provisions would also require airlines to provide consumer rights information and airline customer service policies on their Internet websites, and would require airlines to publish customer service and flight delay history information. S. 1300 would also expand DOT’s consumer complaint investigations, subject to the availability of appropriations. With regard to systems planning for next generation air traffic technologies, S. 1300 would require all agencies involved in the NGATS initiative to establish implementation offices and enter into multiagency agreements outlining their respective responsibilities and budgetary commitments to supporting NGATS. Like the FAA proposal, S. 1300 would make the JPDO director a voting member of the FAA’s Joint Resources Council (JRC) and the ATO’s Executive Council. The bill would extend the authorization of $50 million annually to JPDO through FY2011. However, unlike the FAA proposal, S. 1300 would not establish a BRAC-like commission to examine FAA facility and services consolidation and realignment. Rather, under S. 1300, the Air Traffic Control Modernization Oversight Board would be tasked with reviewing the FAA’s recommendations for realignment and proposing alternative recommendations, but gives the Board no specific power to influence the actions related to FAA realignment in the manner proposed in the FAA bill. With regard to the FAA’s personnel management system, S. 1300 includes a provision that would involve the Federal Services Impasses Panel (FSIP) in cases where the FAA and bargaining units cannot reach an agreement during collective bargaining. The provision would allow the FSIP to order binding arbitration in such cases and outlines a specific process for conducting such binding arbitration proceedings. S. 1300 includes numerous provisions related to system capacity and safety including provisions designed to: improve runway safety; expedite progress on rulemaking to improve airliner fuel tank safety and reduce flammability risk; conduct research and improve regulations pertaining to pilot fatigue, flight time, and rest requirements; implement several NTSB recommendations pertaining to the safety of helicopter emergency medical service (HEMS) operations; address unmanned flight operations in the National Airspace System (NAS); and examine ways to improve capacity and safety by improving wake turbulence prediction, detection, and avoidance. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Śȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ The bill also seeks to expand the number of flights operating to and from Washington Reagan National Airport. With regard to environment and energy issues, S. 1300 includes several of the FAA-proposed provisions regarding research and mitigation grants. Additionally, the bill seeks to establish a research grant program and center of excellence to examine the development of synthetic jet fuel from clean coal sources. The bill also includes a provision that would prohibit all aircraft under 75,000 pounds maximum weight that do not conform to Stage 3 noise standards five years after enactment. Heavier aircraft would be required to conform to Stage 3 noise standards by December 31, 1999. S. 1300 also seeks changes to the Air Tour Management Program that include allowing modifications to interim operating authority without further environmental review; allowing transfers of operating authority to conduct commercial air tours over national parks; establishing an annual reporting requirement for commercial air tour operators; and authorizing fee collections from air tour operators tied to the cost of carrying out the Air Tour Management Program. S. 1300 also proposes changes to the Essential Air Service Program (EAS) including a requirement that DOT allow EAS airlines to code share with other carriers, extension of the existing statutory highway mileage criteria for EAS eligibility through FY2011, the creation of financial incentives for improvements to EAS service, and a program to aid the conversion of former EAS airports to general aviation status. The bill would allow additional overflight fee collections in excess of the $50 million level identified in the FAA proposal to be put toward the EAS program. Under S. 1300, the additional amount authorized in addition to the $50 million base, would rise from $77 million to $83 million. On November 13, 2007, the Senate Committee on Finance reported S. 2345, the American Infrastructure Investment and Improvement Act of 2007, incorporating the committee’s recommendations for what is likely to be the revenue title of the Senate FAA reauthorization bill. Its proposal makes some changes to elements of the existing tax and fee structure, but does not create new user fees. As can be seen in Table 3, the committee has increased the general aviation jet fuel tax, increased the international departure/arrival tax, and created a new tax system for a particular segment of the aviation industry—fractionally owned aircraft. The Senate Finance bill provides what is viewed by many as a possible alternative to the surcharge proposal contained in S. 1300. ŸŽ›Ÿ’Ž ȱ˜ȱ ǯǯȱŘŞŞŗȱ Representative Oberstar introduced the FAA Reauthorization Act of 2007 (H.R. 2881) on June 27, 2007. On June 28, 2007 the House Committee on Transportation and Infrastructure held a markup session on the bill and ordered the bill reported favorably with amendments. While the bill was ordered to be reported favorably with amendments by the committee, the amended bill and accompanying committee report has not yet been made publicly available. Also, on June 13, 2007, Representative Udall introduced The Federal Aviation Research and Development Reauthorization Act of 2007 (H.R. 2698), covering research, engineering, and development programs of the FAA which fall under the jurisdiction of the House Committee on Science and Technology. That committee held a markup session on that bill on June 22, 2007, and ordered that it be reported favorably with amendments. Funding authorization levels for FAA Research, Engineering, and Development (RE&D) and selected provisions contained in H.R. 2698 were incorporated into the version of H.R. 2881 considered on the House floor as Title IX of the bill ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ śȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ (see H.Res. 664; H.Rept. 110-335). Also, the text of H.R. 3539 as ordered reported by the House Committee on Ways and Means, providing for the extension and modification of Airport and Airway Trust Fund (AATF) taxes, was adopted and incorporated into the version of H.R. 2881 considered by the House. On September 20, 2007, the House passed H.R. 2881, agreeing to several miscellaneous amendments to the bill. This report discusses H.R. 2881 as passed by the House. H.R. 2881 proposes a boost in F&E spending to support NGATS initiatives. Also, funding authorization levels specified in H.R. 2698, and incorporated into funding authorization levels specified in H.R. 2881, would substantially increase the available funding for FAA Research, Engineering, and Development (RE&D) activities that fall under the jurisdiction of the House Committee on Science and Technology. The House Committee on Ways and Means reported H.R. 3539, the Airport and Airway Trust Fund Financing Act of 2007, on September 18, 2007. Title X of H.R. 2881 as passed by the House, adopted from the Ways and Means bill (H.R. 3539), follows the general intentions communicated by the House Committee on Transportation and Infrastructure (the T&I Committee), which sought a modest increase in federal aviation fuel taxes. Specifically, the T&I Committee called for increasing jet fuel taxes from 21.8 cents per gallon to 30.7 cents per gallon (roughly a 40% increase) and aviation gasoline taxes from 19.3 cents per gallon to 24.1 cents per gallon (about a 25% increase). The House Committee on Ways and Means, however, agreed to raise the jet fuel taxes even further, to 35.9 cents per gallon (roughly a 65% increase), while accepting the gasoline tax proposal at the 24.1-cent-per-gallon level. These levels were included in the House-passed version of H.R. 2881. With regard to airport financing, H.R. 2881 would fund the AIP program at the same levels specified in S. 1300. H.R. 2881 would additionally allow for increased passenger facility charge (PFC) collections, but large hub airports that increase PFCs above the current $4.50 per passenger level would have their AIP apportionments reduced by an amount equal to the projected PFC revenue increases derived from the fee increase. H.R. 2881 would allow for PFCs to increase, up to $7 per passenger and would raise the PFC cap on a round trip ticket from $18 to $28. The bill also calls for a study to assess the impact of proposing different PFC rates for connecting passengers versus origin and destination passengers. H.R. 2881 would set state apportionments for AIP at 10% of total apportioned amounts, with a $300 million minimum provided total AIP funding remains above $3 billion. Apportionments for nonprimary airports would remain at $150,000 or one fifth of the estimated five year development costs. The bill also would raise the required air carrier approval for airport privatization amounts from 65% to 75% and airports participating in the privatization pilot program would not be eligible for AIP funds. Like the FAA proposal and S. 1300, H.R. 2881 would exempt proceeds from the sale of a privatized airport to a public authority from AIP assurances that require all airport revenue be expended for capital and operating costs. H.R. 2881 includes several provisions regarding passenger airline service, including a requirement that DOT review and adjust denied boarding compensation regulations every two years. The bill would establish additional carrier monthly reporting requirements to provide DOT with data on diverted flights and flights cancelled after leaving the gate. H.R. 2881 would also require contingency plans for providing food, safe drinking water, restrooms, cabin ventilation, and medical care to passengers during excessive ground delays to be developed and submitted to DOT. Airports would also be required to devise plans for sharing facilities and making gates available for such situations, and would require DOT to set up a consumer complaints hotline. The bill would also require airlines to inform passengers at the time of ticket purchase of the ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Ŝȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ names of any insecticides it intends to use while passengers are on board. The bill requires DOT to establish an advisory committee for airline passenger consumer protection. The bill also directs the DOT Inspector General to conduct an audit of air carrier flight delays and cancellations, and requires a GAO assessment comparing passenger rights in the United States to those in the European Union. With regard to next generation modernization initiatives, H.R. 2881, like the FAA proposal and S. 1300, would increase the stature of the JPDO director, and would require each JPDO supporting agency to designate a senior official and establish an office to oversee agency efforts supporting the NGATS planning and development initiatives. The bill would also require a multiagency integrated work plan describing annual objectives, milestones, and delineation of responsibility among federal agencies, and to tie these plans to the budgetary process. H.R. 2881 would also require GAO to review the progress and challenges associated with air traffic modernization initiatives under NGATS. The bill also authorizes additional appropriations specifically designated for airspace redesign initiatives to enhance aviation system capacity and reduce delays. H.R. 2881 proposes to establish an FAA working group on facility and service consolidation, consisting of the FAA Administrator and representatives from sectors of the aviation industry as well as labor representatives representing FAA field employees. The working group’s functions, however, would largely be advisory in capacity, and it could not by itself prevent any FAA consolidation actions from moving forward. An amendment agreed to and incorporated into House-passed H.R. 2881 would require that FAA regional office consolidation be included in the scope of the working group’s oversight, and would require that the working group include representation for regional office employees. H.R. 2881 would create a public-private partnership including a university with expertise in air traffic management to serve as an airport-based test facility for NGATS technologies. The bill would also establish a NextGen Research and Development Center of Excellence to provide educational, technical, and analytical assistance regarding NGATS technologies. The bill would also require the FAA to establish a process for including affected employees, such as air traffic controllers and airways system specialists, in the NGATS process and other modernization initiatives. With regard to FAA personnel management, the House Committee on Transportation and Infrastructure adopted an amendment offered by Representative Costello that, like S. 1300, would require binding arbitration to resolve impasses in contract negotiations. H.R. 2881, however, would invalidate FAA contract actions taken after July 10, 2005, thus appearing to have the effect of undoing the FAA contract with air traffic controllers adopted June 5, 2006, and subjecting the prior impasse with controllers to the terms of the binding arbitration provision. Pending the outcome of the binding arbitration, the provision would allow affected employees to receive “back pay” of any additional salary increase that may be included in the negotiated settlement, and it authorizes $20 million for this purpose. H.R. 2881 includes language requiring a GAO study of FAA technical training of system specialists that service air traffic and navigation infrastructure, and a study by the National Academy of Sciences on FAA inspector staffing levels and workload as well as air traffic controller staffing. The bill authorizes increased funding for increasing inspectors, safety technicians, and operational support staffing. H.R. 2881 also calls for an FAA study of front line manager staffing requirements for air traffic control facilities, and would establish a university ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŝȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ center of excellence for aviation employment. The bill also seeks to create a 12-member task force to conduct a study assessing the conditions of FAA air traffic control facilities and recommend steps for rehabilitation, remediation, and programmatic changes to prevent unsafe building conditions. H.R. 2881 provides for 10 additional beyond perimeter slots from Washington Reagan National Airport (DCA), but would reduce within perimeter slots by an equal amount. The bill does not specifically address slot issues at New York’s LaGuardia Airport where statutory slot controls have expired, nor at any other congested airports besides DCA. However, the bill includes a general provision that would allow the FAA to hold meetings among air carriers to voluntarily negotiate schedule reductions at any airport experiencing arrival and departure rates exceeding maximum hourly rates that is likely to have a significant adverse effect on a regional or national level. If air carriers were unwilling to voluntarily agree to schedule reductions, then the provision would authorize the FAA administrator to take appropriate action to reduce arrivals and departures to reflect available airport capacity. Also, an amendment agreed to by the House would require GAO to assess the use of market-based strategies for reducing airspace congestion, such as peak-period pricing, slots, or quotas, and compare the effects of such initiatives to the improvements in congestion attainable through airspace redesign initiatives. H.R. 2881 contains language similar to S. 1300 requiring the FAA to report on its progress to install systems to mitigate runway incursions. H.R. 2881 would authorize dedicated funds for runway incursion reduction programs and runway status lights. Additionally, H.R. 2881 would require the FAA to develop a strategic runway safety plan. H.R. 2881 includes language identical to S. 1300 calling on the FAA to finalize rulemaking regarding fuel tank flammability reduction on large transport aircraft. H.R. 2881, like S. 1300, also directs the National Academy of Sciences to carry out a study of pilot fatigue and requires the FAA to implement recommendations of an FAA study on flight attendant fatigue. The bill would also require the FAA to rewrite current flight and duty time regulations for air carrier, commuter airline, and charter pilots to count flight time accumulated conducting non-revenue flight assignments for the operator toward pilot flight and duty time totals. The bill would also require the FAA to establish occupational safety and health standards for flight attendants, and would require flight attendants, as well as gate agents, to receive specific training in serving alcohol, recognizing intoxicated individuals, and handling disruptive passengers. With regard to airline maintenance, H.R. 2881 includes a provision that would restrict the use of non-certified maintenance providers, allowing only airline employees or employees of FAAcertified repair stations to carry out substantial and routine maintenance and complete required inspections of aircraft used in airline service. Air carriers would also be required to provide complete lists of their non-certificated maintenance providers, whose activities would be restricted to non-routine, non-substantial maintenance and repair work under this provision. The bill also adopts an amendment agreed to by the House that would extend the requirement for drug and alcohol testing programs to safety-critical positions at foreign repair stations working on air carrier aircraft or components. With regard to unmanned aircraft, H.R. 2881 would require the FAA to develop a comprehensive plan to safely integrate commercial unmanned aircraft in the national airspace system as soon as possible but not later than the end of FY2012. It also calls for expediting authorization of publicuse unmanned aircraft, and implementing interim regulations to allow certain commercial unmanned aircraft to have access to airspace prior to completion of the comprehensive plan. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Şȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ H.R. 2881 also would authorize funding for wake vortex mitigation technologies, including advisory systems. The bill identifies specific funding amounts totaling more than $45 million over the four year reauthorization period for wake turbulence-related research and development. An amendment agreed to by the House would also require the FAA to study the feasability of creating a publicly-searchable Internet database of acceptable height and distance from aviation sites for the installation of wind turbines. The bill would also require the FAA to update standards for aircraft rescue and firefighting (ARFF) personnel and equipment at commercial airports based on national voluntary consensus standards, but does not specifically expand the scope of these standards to all-cargo operations as some aviation safety experts have argued for. H.R. 2881 includes a provision, similar to that in the FAA proposal, to establish a consortium to develop Continuous Low Energy, Emissions and Noise (CLEEN) engine and airframe technology. The bill includes proposed sense of Congress language asserting that the European Union’s proposed emissions trading scheme is inconsistent with International Civil Aviation Authority (ICAO) practices of establishing consensus-based international standards and recommended practices, and urges the European Union and others to work cooperatively through ICAO to develop “a consensual approach to addressing aircraft greenhouse gas emissions.”2 The bill also calls for research to promote development of alterative jet fuels and calls for the JPDO to establish environmental standards for NextGen technologies. Like the FAA proposal and S. 1300, the H.R. 2881 also includes a provision to fund environmental mitigation grants under a proposed pilot program. Unique to H.R. 2881 is a provision for a pilot program for aircraft departure queue management to decrease fuel consumption and emissions, and a provision requiring the FAA and the EPA to examine how engine noise and emissions standards development could be better integrated across the two agencies. Similar to S. 1300, H.R. 2881 includes a provision that would prohibit operations of non-Stage 3 compliant jets under 75,000 pounds after 2012. An amendment agreed to by the House also adds language stating that it is the sense of the House of Representatives that the Port Authority of New York and New Jersey should conduct noise compatibility planning studies (referred to as Part 150 studies) at John F. Kennedy International Airport and LaGuardia Airport in New York and Newark Liberty and Teterboro Airports in New Jersey. Additionally, the bill would increase funding for the Airport Cooperative Research Program (ACRP) to examine airport environmental issues and calls for an interagency study on the effects of aviation on climate change. The bill would also require the FAA to study the use of lead-free fuels for piston aircraft. With regard to the Air Tour Management Program and curtailing aircraft noise in national parks, the modifications proposed in H.R. 2881 are similar to the FAA proposal initiatives to streamline and expedite agency actions. H.R. 2881 reserves $50 million in overflight fees for funding the Essential Air Service (EAS) program and increases the authorization for additional EAS funds to $83 million. The bill encourages financial incentives and long-term contracts for EAS, but would eliminate the local participation program created by Vision 100. The bill would also create an Office of Rural Aviation within DOT to monitor and improve air service to small communities. The bill also includes language allowing state and local governments to restore an airport’s EAS eligibility status by offering proposals, developed in cooperation with the air carrier, to reduce subsidies to below statutory per passenger maximums and allows DOT to increase negotiated EAS subsidies to adjust for any significant increases in air carrier fuel costs. The bill also seeks to clarify the statutory definitions related to the actual control of the operations of U.S. airlines that are owned 2 H.R. 2881, §512, p. 178. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ şȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ in part by foreign entities. The House Committee on Transportation and Infrastructure has also agreed to an amendment offered by Representative Oberstar to limit express carrier employees covered under the Railway Labor Act (RLA) to those performing certain aviation-related functions, leaving other express carrier employees, like delivery truck drivers, to be covered under provisions of the more broadly defined National Labor Relations Act (NLRA), which allow them to organize and collectively bargain at the local level and according to less formal standards for affiliation. The measure is supported by labor unions and United Parcel Service (UPS) whose employees are already primarily covered under the NLRA, but is opposed by FedEx, whose employees fall under the RLA guidelines.3 ž—’—ȱž‘˜›’£Š’˜—ȱŽŸŽ•œȱ Funding authorization levels for the FAA have been historically split among four principal accounts: Operations and Maintenance (O&M); the Airport Improvement Program (AIP) or Grants in Aid for Airports; Facilities and Equipment (F&E); and Research, Engineering, and Development (RE&D). However, beginning in FY2008, the FAA proposes a restructuring of these accounts, largely to separate operational activities carried out by the Air Traffic Organization (ATO) from FAA’s regulatory functions in the FAA’s accounting structure. S. 1300, however, proposes to reauthorize the four existing FAA accounts. Therefore, the bills are not directly comparable with regard to funding authorizations. The FAA also proposes new user-fee funding mechanisms, under which much of the revenue to be used for air traffic services and regulatory functions would be determined through fee-setting activities carried out by the FAA Administrator, rather than through traditional congressional funding authorizations. This further complicates any effort to make comparisons among the bills with regard to funding levels. Funding mechanisms and levels identified in the bills are generally described below, and more detailed treatment of the FAA-proposed revenue system is provided later in the section titled “Proposed Tax and Fee Structure.” ȱ›˜™˜œŠ•ȱ Funding authorization levels in the FAA proposal cannot be compared to historical funding in the FAA’s four accounts—O&M, AIP, F&E, and RE&D. This is because the FAA has proposed to restructure these accounts, and also because the FAA proposes to establish a user fee collection authority under which the FAA Administrator would set fees that would be deposited into separate Treasury accounts as offsetting collections. The proposed new accounts under the FAA plan include the Air Traffic Organization (ATO) account and the Safety and Operations account. These would replace the current O&M and F&E accounts, but there is not a one-to-one relationship between the current accounts and the proposed accounts. Specifically, some O&M and F&E functions would map into the Safety and Operations account while others would map into the Air Traffic Organization account. One goal of this new accounting structure is to fully separate the FAA regulatory responsibilities from its operational functions on the books as has been done organizationally with the creation of the Air Traffic Organization (ATO). Under the FAA plan, the proposed Safety and Operations and ATO accounts would be funded primarily through user fee collections, while RE&D would continue to be funded through a combination of 3 Ian Swanson, “UPS Works to Hobble Its Rival, FedEx,” The Hill, July 11, 2007. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŖȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ Airport and Airway Trust Fund (AATF) and General Fund contributions. The AIP program would continue to be funded by the AATF. Table 1 Shows the FAA proposed funding authorizations coming out of the existing Airport and Airways Trust Fund (AATF) and the proposed limits or caps on General Fund contributions over the proposed three-year authorization period. Because the proposed fee collection authority would not fully take effect until FY2009, larger contributions from the AATF would be required in FY2008 during the transition to the user fee based system. For FY2009 and FY2010, the proposal assumes that these user fees would cover a large part, but not all, of the FAA’s costs for the ATO and Safety and Operations accounts. The AIP program account would continue to receive its revenue from the AATF, and the FAA’s RE&D account would still rely primarily on the AATF for its revenue source, with additional funding coming from the General Fund contribution. Maximum General Fund contributions would remain flat at around $2.5 billion under the FAA proposal. This level of General Fund contribution is particularly troubling to critics of the FAA proposal because it is lower than contribution levels from recent years, which have already been declining. Also, because the proposed maximum General Fund contribution is flat across the proposed three-year authorization period, it will comprise a smaller percentage contribution to the FAA’s total budget if costs continue to rise. These increased costs would be covered instead by user fees under the FAA proposal. However, because the FAA proposal would give the FAA administrator fee setting authority, the anticipated revenue generated from fee collections is not discussed in the bill or supporting documentation provided by the FAA. This proposal is discussed in further detail in the section titled “Proposed Tax and Fee Structure.” . Airport and Airway Trust Fund Funding Authorizations and General Fund Limits Proposed Under the FAA Bill Table 1 ($ in millions) Account FY2008 FY2009 FY2010 Air Traffic Organization (AATF) Safety and Operations (AATF) Research and Development (AATF) Airport Planning and Development General Fund Contribution (Maximum) 7,916 672 123 2,750 2,618 1,130 69 174 2,900 2,532 1,126 69 174 3,050 2,532 Source: H.R. 1356/S. 1076. Unlike historic tables which show the total revenues for each FAA account, this table only provides revenues for these accounts coming solely from the AATF. Note: ǯȱŗřŖŖȱ Under S. 1300, the FAA’s O&M account would see an increase of about 7.7% in authorized levels for FY2008 compared to FY2007 appropriated amounts. This is notable because FY2007 appropriated amounts for O&M already slightly exceed authorized amounts, a situation largely attributed to unanticipated increases in labor costs within the FAA. Beyond FY2008, increases to the O&M account are more modest, averaging slightly above a 3% annual rate, which tracks closely with inflation and employment cost index projections for the broader economy. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŗȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ Under S. 1300, the authorized levels for the Airport Improvement Program (AIP) would continue the trend of $100 million annual increases through FY2011. Perhaps the most notable increase in S. 1300 would be for the Facilities and Equipment (F&E) account. While this account would only see about a 3.7% increase in authorized funding levels in FY2008 compared to FY2007 appropriations, the authorization would then be increased by slightly more than 13% for FY2009. This would be the largest percentage increase on an annual basis for this account, and would be followed by more modest percentage increases to F&E of slightly more than 5% for FY2010, followed by a larger increase of almost 8% for FY2011. This schedule likely reflects the Senate committee’s views on the needed spending schedule to keep the acquisition of next generation technologies to modernize the national airspace system on track to meet stated objectives of fully implementing the next generation or NextGen air traffic system by 2025. S. 1300 also proposes a substantial increase to FAA Research, Engineering, and Development (RE&D) authorized funding levels starting in FY2009. Authorized funding for RE&D would increase by 36% in FY2009 compared to both the FY2008 request and the proposed FY2008 authorized amount in the bill. Under S. 1300, this would be followed by essentially flat funding of about $190 million annually for RE&D through FY2011. Like the proposed increase to the F&E account authorized levels, this proposed increase to RE&D likely reflects the Senate committee’s views on the increased funding for research and development needed to support progress on NextGen development efforts. ǯǯȱŘŞŞŗȱ H.R. 2881 would provide funding for the FAA’s O&M account and the AIP program at the same levels specified in S. 1300. With regard to the F&E account, however, H.R. 2881 proposes to set higher funding levels than specified in S. 1300. H.R. 2881 proposes an increase of almost 25% in FY2008 authorizations for F&E spending compared to FY2007 appropriated amounts. This would be followed by smaller annual increases from FY2009 through FY2011. The House Committee on Science and Technology, which has jurisdiction over the FAA’s research functions and components, has proposed substantial increases to available funding for the FAA’s RE&D account. Specifically, H.R. 2881 would triple the available funding for RE&D activities in FY2008 compared to FY2007 appropriated amounts. Available funding for RE&D would be further increased by 44% in FY2009. Authorized funding levels for RE&D would increase over the proposed authorization period to $515 million in FY2011, compared to current appropriated levels of $131 million. Table 2. Reauthorization Funding Levels for FAA Accounts ($ in millions) Account Operations and Maintenance (O&M) Administration Senate (S. 1300) House (H.R. 2881) ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ FY2007 FY2008 FY2009 FY2010 FY2011 8,064 See Note See Note See Note See Note NS 8,726 8,978 9,305 9,590 8,064 8,726 8,978 9,305 9,590 ŗŘȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ Account FY2007 FY2008 FY2009 FY2010 FY2011 Conference Enacted Authorization Appropriated (FY2007) 8,064 8,084 8,104 Administration Senate (S. 1300) House (H.R. 2881) Conference Enacted Authorization Appropriated (FY2007) 3,400 NS 4,000 3,700 3,700 3,515 2,750 3,800 3,800 See Note 3,900 3,900 See Note 4,000 4,000 See Note 4,100 4,100 Administration Senate (S. 1300) House (H.R. 2881) Conference Enacted Authorization Appropriated (FY2007) 3,098 NS 3,110 3,110 3,110 2,481 See Note 2,572 3,120 See Note 2,923 3,246 See Note 3,079 3,259 See Note 3,317 3,353 Administration Senate (S. 1300) House (H.R. 2881) Conference Enacted Authorization Appropriated (FY2007) 107 NS NS 356 356 131 140 140 335 +174 191 482 +174 191 487 NS 194 515 Administration Senate (S. 1300) House (H.R. 2881) Conference Enacted Authorization Appropriated (FY2007) 14,007 14,196 13,929 14,475 14,475 14,231 See Note 15,238 15,981 See Note 15,992 16,606 See Note 16,575 17,051 See Note 17,201 17,558 Airport Improvement Program (AIP) Facilities and Equipment (F&E) Research, Engineering, & Development (RE&D) TOTALS Sources: P.L. 108-176; S. 1300; CRS Report RL32498, P.L. 108-176, by name redacted, name redacted, and name r edacted; and Federal Aviation Administration, Budget in Brief: Fiscal Year 2008. Note: Beginning in FY2008, the Administration has proposed to restructure its accounts creating a new Safety and Operations account and an Air Traffic Organization account and abandoning the O&M and F&E accounts. Without detailed analysis, these newly proposed accounts are not comparable to authorization and funding levels under the historic account structure. Administration requests for AIP and RE&D reflect amounts requested in the Administration’s FY2008 budget. However, the FAA proposal does not contain specific authorization requests for these accounts. For RE&D the authorization specifies amounts that may be appropriated from the aviation trust fund in addition to any general fund amounts set by future year appropriations. These amounts are ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗřȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ designated with a preceding plus sign (+) in this table, to indicate that this activity may receive additional general fund contributions above these proposed authorization levels. For FY2008, the Administration requested an authorization of $123 million in addition to general fund contributions for RE&D. However, the appropriations request of $140 million, presented in the President’s Budget, is reflected in the table. This table provides overall funding levels for the four main FAA accounts as specified in the respective bills. It does not, however, include miscellaneous additional, specifically designated appropriations included in separate provisions of the bills. ȱ’—Š—ŒŽȱ Over the last reauthorization period there has been considerable discussion about the long term health of the existing trust fund based FAA financing system. The FAA, and others, believe the existing system will have difficulty providing the funding that the agency will need in the years ahead and that a new funding system more closely tied to aviation industry activity should be adopted. Other aviation interests, especially those representing the GA portion of the industry believe the existing funding system is adequate at least for the next reauthorization cycle. As Congress considers reauthorization it will likely need to weigh these opposing viewpoints. For a detailed examination of the existing aviation finance system and the proposed changes to this system see CRS Report RL33913, Aviation Finance: Federal Aviation Administration (FAA) Reauthorization and Related Issues, by (name redacted). ȱ›˜™˜œŠ•ȱ The Next Generation Air Transportation System Financing Reform Act of 2007 (H.R. 1356/S. 1076), proposes the most significant change in FAA aviation finance since the federal program was created by the 1970 Act. The FAA proposal provides for a three year authorization period (FY2008-FY2010) during which the FAA would transition from its existing trust fund/general fund based financing system to a system based on new direct fees and existing excise taxes, as well as general fund monies. Although the trust fund would be continued, its overall role in funding the agency is significantly reduced. The proposal uses a mix of direct fees (referred to as user fees by the FAA and throughout this section), excise taxes, and general funds, to pay for the FAA’s ATO related activities. The proposal funds the FAA’s safety activities primarily from general funds, but also allows the FAA to collect user fees related to its registration and certification activities for this purpose. Excise taxes would be used to support the continued aviation trust fund which is dedicated primarily toward funding AIP, but also supports part of RE&D and Essential Air Service (EAS) programs. The FAA proposal does not set new user fee rates for ATO services. Rather it enunciates a framework for how fees can be set and creates an Air Transportation System Advisory Board (Board) to assist the FAA Administrator in establishing appropriate fee levels and mechanisms. Ultimately, however, the Administrator would be the sole decision maker on fee setting issues. The proposal adopts a new financial structure for the FAA that would correspond to the new program funding regime. To facilitate this structure: it would create two new accounts in the Treasury to receive the newly imposed user fees; allows for the establishment of a reserve fund; and allows the FAA to issue bonds to speed-up F&E equipment acquisition. Agency funding would still be subject to annual congressional appropriations. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŚȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ The FAA proposal is controversial, and several aviation interest groups came out against it almost as soon as it was introduced.4 The proposal, however, has supporters, especially the Air Transport Association (ATA), which views it as a positive step forward.5 Congressional hearings on H.R. 1356/S. 1076, which embodies the FAA proposal, have been held in both the House and the Senate. ›˜™˜œŽȱŠ¡ȱŠ—ȱŽŽȱ›žŒž›Žȱ As mentioned above, the principal feature of the FAA proposal is the creation of a direct user fee system to pay for the majority of the Agency’s costs associated with its ATO activities. The FAA proposal, however, does not recommend a specific user fee structure. Instead, it lists the criteria that must be considered in setting fee levels and leaves it to the Board and ultimately the FAA Administrator to actually set the fees. The proposal requires that the Administrator consult with affected parties prior to establishing a fee structure, but gives the affected parties no further role in the process.6 ȱœŽ›ȱŽŽœȱ Specific ATO user fees can be set for enroute, oceanic, and terminal area flight activity. Enroute and oceanic fees can be based on “distance traveled or any other method that is consistent with the treaties and international agreements to which the United States is a party.” Since much of the rest of the world uses aircraft weight and the distance flown as part of its fee setting process, it would appear that a similar fee setting regime could be implemented here.7 Overflight fees (for aircraft transiting U.S. airspace) would be eliminated and these flights would be subject to the enroute and oceanic fee system. Fee setting for terminal area activities could be somewhat more complicated because the proposal would allow for fees to be differentiated at various locations and at different times of the day. Factors that could be included in the terminal fee structure can include aircraft takeoffs/landings (at airports with over 100,000 passenger boardings per year), aircraft weight, operations at a large hub airport (1% of total U.S. enplanements), time of day or day of week at congested large hubs, and different fees for daytime and nighttime operations. User fees would be imposed on all commercial users of ATO services irrespective of aircraft type. For the purposes of determining which tax certain aircraft might pay, the applicability of IRS regulations would delineate between commercial and noncommercial users. Although GA aircraft operate outside of the ATO user fee system most of the time, they would be subject to terminalrelated fees at congested large hub airports. The FAA proposal would require that fees be set in relation to the costs incurred for providing ATO services. In setting the fees mentioned above the FAA would be prohibited from using flight 4 Wolfe, Kathryn. “FAA’s Funding Proposal Doesn’t Fly With Entire Aviation Industry, Lawmakers.” CQ Today— Transportation and Infrastructure. February 16, 2007. 5 http://www.airlines.org/news/releases/2007/statement_12-14-07.htm?PF=true. 6 It would appear that the Board, with wide industry representation, is supposed to be part of the consultation process, although this is unstated in the bill. 7 The airline industry, and groups such as the air cargo industry, have traditionally opposed weight-based tax structures. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗśȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ altitude as a fee setting factor. Under the proposal, it could offer incentives, by way of reduced fees, for the purchase and use of equipment that enhances an aircraft’s safe and efficient operation in the air traffic system. In addition, it could seek sufficient user fee revenues to establish a reserve fund to be available if system revenues fail to reach projected levels. The ATO would also receive funding from excise taxes. The proposal suggests that a 70-cent-pergallon fuel tax be imposed on all GA users (kerojet or aviation gasoline). Of this, 56.4 cents per gallon is dedicated to ATO activities and 13.6 cents is reserved for the aviation trust fund. These fees are to be indexed to inflation beginning in 2009 and can be modified by the Administrator in future years. The FAA believes that it is no longer necessary to differentiate the tax rate for turbine (avgas) and piston (aviation gasoline) aircraft users because of the much higher fuel use rates of turbine aircraft. ŠŽ¢ȱŠ—ȱ™Ž›Š’˜—œȱœŽ›ȱŽŽœȱ Safety and non-ATO operations activities would be primarily funded by Treasury general funds. In addition, however, the FAA is to impose registration fees for specified services at rates detailed in the proposed legislation. By way of example, aircraft registration would be subject to a $130 fee and issuing an airman medical certificate would cost $42. Many of the activities listed here were previously provided at nominal fee levels. Fees are also to be imposed for FAA certification activities. Specific fees for activities such as certification of a large foreign repair station or a maintenance technical school are not enumerated in the legislation. Rather, the Administrator is to set fees at levels that correspond to the costs imposed on the FAA for providing the certification service in question. ›žœȱž—ȱ¡Œ’œŽȱŠ¡Žœȱ The largest source of revenues for the trust fund would come from a 13.6-cent-per-gallon tax on all aircraft irrespective of fuel type. These taxes are to be adjusted for inflation and can also be adjusted, up or down, if the FAA cost allocation process so dictates. The other principal source of funding for the trust fund is by continuation of the international arrivals/departure fee which is set at $6.39 per event. This tax can also be adjusted for inflation and/or cost allocation reasons. Although the FAA proposal is based primarily on direct user fees, there is a transition period during which the trust fund would continue to provide some funding for ATO and all other FAA activities, albeit at a diminishing level. ’›ȱ›Š—œ™˜›Š’˜—ȱ¢œŽ–ȱŸ’œ˜›¢ȱ˜Š›ȱǻ˜Š›Ǽȱ The FAA proposal would create a 13 member Board charged with advising the Administrator on user fee and other issues at his or her request. The Board’s membership would include the Administrator, a Department of Defense representative, three members representing “the public interest,” an airport member, three airline members representing different size air carriers, a cargo airline member, a GA member, a business aviation member, and a representative of the aviation manufacturing industry. Appointment of all members is made by the Secretary of Transportation. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŜȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ In addition, the proposal would prescribe the Board members’ terms and provides guidance on its administrative functioning. The Board can advise the Administrator on a wide range of FAA programs and activities. At the outset, however, it would appear that the Board’s principal duty is to help with the creation of the new user fee system. According to provisions of the FAA proposal, “prior to establishing or modifying fees ... the Administrator shall consult with and seek the recommendations of the type and level of such fees.” A procedure is established whereby the Administrator, who has ultimate fee setting responsibility, can disagree with the Board’s recommendations and establish fees by publishing the reasons for disagreement in the Federal Register. It would be up to the Administrator to determine how, and how much, they might wish to use the Board’s expertise. There is nothing in the legislation as proposed that automatically gives the Board any power to exercise its advisory role, especially in a public forum. This is because the Board’s actions would not be subject to the public meeting and other administrative provisions of Title 5 U.S.C. Further, it is not clear that the Board would have access to information about cost allocation and other subjects, except to the extent that the Administrator wishes to make this material available to the Board. žŽȱŠ—ȱ›žŒž›Š•ȱ›˜Ÿ’œ’˜—œȱ As suggested by the new tax and fee proposal, the FAA would be reorganized from a budgetary perspective. ATO assessed user fees are to be deposited into a newly created Treasury ATO account. Similarly, registration and certification fees are to be deposited in a newly created Treasury safety and operations account. The trust fund, however, remains intact. The new user fees would require a new collection system to insure that they are deposited in the appropriate account. The Administrator would be charged with developing this system, perhaps with the help of the Board. The FAA proposal would give the Administrator some enforcement powers to assist in the collection effort long term. FAA spending would still require annual appropriation by Congress. The relationship between the FAA and congressional appropriations committees would apparently be unchanged. From a budgetary standpoint, however, it appears that the offsetting collections process created by the proposal would remove FAA spending from the discretionary part of the budget. At least one outside source has suggested that the new funding arrangement could run afoul of the newly created pay-as-you-go rules adopted by the House of Representatives.8 In short, it is unclear at this point how the new funding arrangement proposed here would play out as part of the congressional budget and appropriations process. Congressional finance committees (House Ways and Means and Senate Finance) could lose their existing jurisdiction over some aspects of the FAA tax and fee setting. These committees would likely retain their jurisdiction over the excise taxes to be deposited in the aviation trust fund, but could have no role or oversight over the newly established user fees. Authorizing committees normally have jurisdiction over offsetting collection programs of the type that would be created for the ATO, and for safety and operations. As proposed, however, all fee-setting powers would 8 Transportation Weekly. “Administration FAA Bill Likely Violates House Pay-As-You-Go Budget Rule.” February 28, 2007, p. 13. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŝȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ reside with the Administrator, meaning that a specific oversight role for the authorizing committees is not defined in the legislation. ˜—’—ȱž‘˜›’¢ȱ The Secretary of Transportation would have the ability to issue Treasury bonds to facilitate a rapid implementation of the NGATS program. Up to $5 billion could be issued at interest rates established by the Treasury. To finance the bonding the Secretary could increase user fees by an amount needed to repay the bonds with interest. These additional revenues would not go into the new Treasury accounts mentioned earlier, but would flow directly to the Treasury. Full repayment would be required by the end of FY2017. The concept of using bonds to speed up the acquisition of F&E capital items has been discussed for years. The dedicated revenue stream to the ATO account would make bonding possible as part of the FAA’s program for the first time. It has been argued that having this authority would allow the FAA to better program its acquisition requirements over an extended period of time, as opposed to the potential uncertainty of the annual appropriations process. In addition, access to additional funds should give the Agency the ability to pursue a number of technology and equipment upgrades at the same time. The main argument against bonding is that the interest payments make it a more expensive way to pay for infrastructure than direct appropriations would be. Ž—Œ¢ȱž—’—ȱ The FAA proposal provides overall authorization levels for the FY2008-FY2010 period of nearly $28 billion. This number, however, cannot be meaningfully compared to previous legislation because it excludes much of the funding required by the prospectively user-fee funded ATO, and safety and operations activities. These activities would now be linked to actual system costs which cannot be determined this far in advance. To the extent that the authorized levels can be compared they suggest a significant cut in AIP and EAS funding. ǯȱŗřŖŖȱ S. 1300 as reported by the Senate Committee on Commerce, largely ignores the Bush Administration proposal and maintains the existing funding structure for the FAA with a couple of important caveats. First, the Commerce Committee lacks jurisdiction over taxes and fees which are in the domain of the Senate Committee on Finance. This being the case, Commerce Committee-reported bill does not include tax and fee provisions though, as will be discussed subsequently, it does include a significant revenue raising element. In addition, the committee has proposed an oversight Board and provided for bonding authority. In each instance S. 1300 differs from provisions in the FAA proposal. On September 21, 2007 the Senate Committee on Finance ordered an original bill to be reported that makes some changes to the existing aviation tax and fee structure. The Finance Committee proposal declines to adopt a user fee system for aviation system finance. It is expected that the differing views of the two committees will be reconciled before or during floor consideration of S. 1300 in the weeks ahead. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗŞȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ ˜Ž›—’£Š’˜—ȱž›Œ‘Š›Žȱ The most contentious element of S. 1300 is a proposal to levy a $25 surcharge on flights9 operating in the national airspace system. The surcharge is designed to pay for a significant portion of FAA costs associated with the NGATS modernization program. Revenues collected by the surcharge are to be treated as “offsetting collections” for congressional budgetary purposes and are to be deposited in a new Treasury created air traffic modernization fund. As an offsetting collection the surcharge is under the jurisdiction of the authorizing committee, in this case Senate Commerce. Spending of these funds is subject to authorization and to subsequent annual appropriation. Although the bill provides for broad industry collection of the surcharge, it exempts a large segment of annual flight activity from the fee. The major exemptions are for all piston powered aircraft, and for all turboprop and turbojet aircraft operating outside of controlled airspace. Other exemptions are provided for certain intrastate flights (Alaska and Hawaii) where neither a terminal radar approach control (TRACON) or other FAA ATC facility is involved in servicing the flight. Other exemptions apply to military and public aircraft (U.S. and foreign), air ambulance aircraft, agricultural aircraft, and Canada-to-Canada flights. The surcharge is to be payable to the Administrator of the FAA. The Administrator is also charged with implementing the surcharge collection process. Limited guidance is provided in the bill as to how the collection process might work leaving it largely to the Administrator and Treasury to establish a workable process. The bill provides for penalties for non-payment of the surcharge. As reported the provision would provide a portion of the annual F&E budget beginning in FY2009 at a level of $412 million. Funding for the subsequent two years of the authorization period is provided at $423 million and $436 million respectively. A related provision in the bill requires that all aircraft filing flight plans with the FAA, including those exempt from the surcharge, include information as to whether or not the flight is being operated for commercial purposes (for compensation or for hire). Collecting this information is apparently directed toward filling what many industry observers see as a large gap in existing industry data (i.e., determining what portion of GA flights is for commercial rather than personal purposes). ž›Œ‘Š›Žȱ œœžŽœȱ The surcharge is viewed by the GA community as a user fee and is opposed for the same reasons that GA opposes the user fee portions of the Administration proposal (i.e., GA believes that it creates marginal demands on the ATC system and that its contribution to funding the FAA is best handled by the already existing fuel tax system). Conversely, the airline industry generally supports the surcharge proposal and views it as a positive move toward getting all system users, and especially corporate aviation, to pay for their fair share of ATC system costs. Within the Senate Commerce Committee support for the surcharge proposal was closely split. An attempt to strike the surcharge from the reported version of the bill failed on a vote of 12 to 11. Senator Ted Stevens, having voted initially to abstain on the amendment, later changed his vote in 9 The bill defines a “flight” as a takeoff and landing by an aircraft. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŗşȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ order to provide a majority for moving the surcharge provision for future consideration on the Floor.10 In addition to the philosophical questions about the desirability of user fees the question can also be raised about whether a $25 surcharge would be sufficient in and of itself to provide the amount of designated modernization funding authorized in S. 1300. The answer, based on a simple analysis of industry data is that this might not be the case.11 As a result, supplemental revenues for the modernization fund may be considered by the Senate Committee on Finance. There has already been an open discussion in industry circles about the need to consider possible fuel tax and/or other fee increases in order to meet both modernization needs and additional funding needs for other FAA activities. ŽŸŽ›ŠŽȱ’—Š—Œ’—ȱ˜›ȱŽ¡ȱ Ž—Ž›Š’˜—ȱ’›ȱ›Š’Œȱ˜—›˜•ȱ¢œŽ–ȱǻ˜—’—ȱ ž‘˜›’¢Ǽȱ S. 1300, like the FAA proposal, would provide the FAA with up to $5 billion in bonding authority to facilitate expedited spending for NGATS-related capital projects. Other administrative aspects of the bonding proposal differ, however. For example, funds would be available for the period FY2009 through FY2025, instead of FY2009 through FY2017. Bonds could be used to pay for NGATS projects listed as part of the FAA’s Capital Improvement Program (CIP) at the discretion of the Secretary of Transportation, with the approval of the Office of Management and Budget (OMB). Interest rates would be set by the Treasury. Repayment would be made from the surcharges deposited in the modernization fund, on which repayment would have priority over other types of modernization spending. Bonding, for capital improvements, as opposed to using appropriated funds, remains a controversial concept for the same reasons enunciated in the earlier discussion of the Bush Administration’s proposal. ’›ȱ›Š’Œȱ˜—›˜•ȱ˜Ž›—’£Š’˜—ȱŸŽ›œ’‘ȱ˜Š›ȱǻŸŽ›œ’‘ȱ˜Š›Ǽȱ The Oversight Board that would be created by this bill, unlike the Board proposed by the Administration, has real power and, some might argue, some unusual powers as well. S. 1300 creates a seven member Oversight Board appointed by the President and confirmed by the Senate. Membership consists of: the Administrator of the FAA, a representative of DOD, a representative of the “public interest,” the chief executive officer (CEO) of an airport, the CEO of an airline, a representative from one of the FAA’s labor organizations, and a representative of the GA segment of the industry. The Oversight Board is assigned a number of functions, some advisory in nature and some that give the Oversight Board approval authority over FAA actions. As stated in the bill these functions are as follows: • Review and advise on FAA modernization, budget, and cost accounting activities. 10 “Senate Committee Approves FAA Reauthorization,” Transportation Weekly, Legislative Services Group, Vol. 8, Issue 22, May 23, 2007, p. 6. 11 According to the FAA there were over 18 million total flights in the U.S. in 2005. If each of these flights were to be taxed, which would not be the case since a large segment of these flights would be exempted from the surcharge, $450 million might be raised. In addition to paying for the modernization fund contribution to F&E, the surcharge would also be used to pay for up to $5 billion in bonds, plus interest, issued in accordance with another provision of the bill. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŘŖȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ • Review the FAA strategic plan. Provide recommendations on non-safety elements and advice on safety elements. • Review ATC efficiency and make recommendations based on its performance. • Approve all capital expenditures of over $100 million related to the ATC system modernization. • Approve the FAA’s F&E budget prior to its submission to OMB. • Approve the CIP prior to its submission to Congress. • Annually approve the Operational Evolution Plan (OEP). • Approve the Administrator’s choice of a chief operating officer (COO) for the Air Traffic Organization (ATO). • Approve the selection of the Head of the Joint Planning Development Office (JPDO). The bill requires that Oversight Board members have certain types of expertise in aviation and organizational subject areas. They also must not have a pecuniary or financial interest (defined by the provision), and not be a member of a group that lobbies on aviation-related legislation. From an administrative perspective the bill allows the Oversight Board to choose its own chairman and vice chairman, makes a simple majority of members a quorum, and allows a majority vote of members present to be sufficient for Oversight Board action. Also, Oversight Board members are exempt from personal liability laws as concerns their official activities. ’œŒžœœ’˜—ȱ The proposed make-up of the Oversight Board and its role in the NGATS implementation process are likely to raise several questions during further congressional consideration of this reauthorization proposal. One very notable provision here is that the bill gives equal status vis-avis Oversight Board activity to the FAA Administrator and to the representative of FAA’s labor unions. This arrangement certainly raises questions about executive branch authority. Given the proposed structure of the Oversight Board, given its ability to choose its own Chairman, it is not out of the realm of possibility that the FAA labor representative could have certain powers that are normally associated with the executive branch, especially as regards budget issues. Another unusual provision is the requirement that the Administrator seek Oversight Board approval before submitting the F&E portion of the annual FAA budget to OMB. This provision can be viewed as an extra step that could potentially slow down the annual agency budget approval process. Hence, the Oversight Board sign-off is likely to require certain accommodations in terms of deadlines, etc. Questions can be raised about the desirability/likelihood of certain of the conditions to be met by potential Oversight Board members. For example, it seems unlikely that the CEO of an airline would not have a disqualifying financial interest in his/her airline. The same type of question could certainly be raised for the airport CEO member and potentially for the GA member. Further, the member representing the public interest is to have a “fiduciary responsibility” to represent the public, although how this charge is defined is not detailed in the proposed legislation. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Řŗȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ The bill allows the Administrator to withhold certain information and documents from the Oversight Board if they reveal proprietary or commercial information. The members of the Oversight Board, having gone through the congressional confirmation process, would normally be viewed as officers of the United States in the same manner as other FAA employees. Certain FAA, and other designated federal employees, routinely deal with this type of information in the normal performance of their duties. It, therefore, seems unusual that such an exclusion of information, especially if it provided substantive information relevant to capital improvement projects, could be denied to the Oversight Board. ǯȱŘřŚśȱ On November 13, 2007 , the Senate Committee on Finance reported an original bill, S. 2345, the American Infrastructure Investment and Improvement Act of 2007, incorporating the committee’s recommendations for what is likely to be the revenue title of the Senate FAA reauthorization bill. Its proposal makes some changes to elements of the existing tax and fee structure, but does not create new user fees. As can be seen in Table 3 the committee has increased the general aviation jet fuel tax, increased the international departure/arrival tax, and created a new tax system for a particular segment of the aviation industry—fractionally owned aircraft. At the moment, passengers on fractionally owned aircraft are treated by the tax code in the same manner as airline passengers, subject to the airline ticket tax, the segment fee, and international departure/arrival tax. The Committee bill would instead treat this industry segment as if it were part of the general aviation industry for the purposes of the aviation jet fuel tax, but would also impose a flat fee departure tax on the aircraft, rather than on the passenger. All of the additional revenues collected by the changes in taxation would be deposited in a newly created account within the Treasury and reserved for NGATS related activities. Table 3. Proposed Aviation Tax and Fee Changes S. 1300— Senate Commerce Existing Tax or Fee Rate Tax or Fee (2007) H.R. 2881 S. 2345— Senate Finance General Aviation Gasolinea General Aviation Jet Fuel (Kerosene)a 19.3 cents/gallon 24.1 cents/gallon NA no change 21.8 cents/gallon 35.9 cents/gallon NA Commercial Jet Fuel (Kerosene)a International Departure/ Arrival Tax 4.3 cents/gallon no change NA 35.9 cents/gallon Applies to fractional ownership aircraft no change $15.10 international departure tax (indexed to CPI)(prorated Alaska/Hawaii to mainland) No change NA $15.10 International Arrivals Tax (indexed to CPI)(prorated Alaska/Hawaii from mainland) ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ $16.65 (indexed to CPI) ŘŘȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ Tax or Fee Surcharge Existing Tax or Fee Rate (2007) No provision H.R. 2881 No provision S. 1300— Senate Commerce $25 per departure for non-exempt aircraft NA S. 2345— Senate Finance No provision Fractional Aircraft No provision No provision $58 Ownership per Departure Tax a. Does not include 0.1 cents/gallon for the Leaking Underground Storage Tank (LUST) trust fund. The Finance Committee bill does not deal exclusively with airline financial issues. Provisions in the bill seek to remedy an expected FY2009 shortfall in the highway trust fund and creates a new bonding authority program for intercity passenger rail service. It remains to be seen whether the Senate will consider these provisions as part of the FAA reauthorization bill or consider them separately. ’œŒžœœ’˜—ȱ There is a difference of opinion as to the need for a surcharge between Members of the Finance Committee and the Commerce Committee that will need to be resolved before work on the FAA reauthorization bill is completed in the Senate. The two bills can be viewed as competing proposals on how additional financing of the FAA should be accomplished. The leadership of Commerce’s Aviation Subcommittee strongly favors the surcharge approach to increasing FAA modernization financing and is opposed to the idea of stripping this provision out of the final bill, which is the position favored by several Members of the Finance Committee.12 In effect, the Finance Committee has largely taken the GA industry position against user fees. The full Senate, therefore, will decide the ultimate fate of the surcharge proposal. ǯǯȱŘŞŞŗȱ Like the Senate Commerce and Finance Committees, the House bill rejects the Bush Administration’s financing proposal outright. H.R. 2881, as reported by the House, increases the general aviation gasoline tax to 24.1 cents-per-gallon and the general aviation jet fuel tax to 35.9 cents-per-gallon, Table 3. The existing 4.3-cent-per-gallon tax on commercial jet fuel is unchanged by the bill, as are all other existing aviation taxes and fees. The bill also reserves the increased revenue to be collected by the fuel tax increases for funding of NGATS-related programs. The bill also includes a provision calling for the adjustment of existing overflight fees (flights that do not take off or land in the U.S.) (these fees are currently used primarily to fund a portion of the EAS program). The FAA is to adjust these fees by expedited rulemaking to insure that the fees are reasonably related to the cost of providing air traffic services for overflights. The bill, however, specifically excludes altitude as a factor that can be used in the adjustment of the overflight fees. 12 National Journal’s Congress Daily AM. Senate Standoff Prompts Move to Extend Aviation Taxes. September 26, 2007. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Řřȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ Ž’œ›Š’˜—ǰȱŽ›’’ŒŠ’˜—ǰȱŠ—ȱŽ•ŠŽȱŽŽœȱ The bill includes fees for aircraft registration, airman certificates, and other types of FAA provided documentation at the same levels proposed by the Administration. It also provides that these fees may be adjusted over time if the FAA’s cost accounting system indicates that the cost of providing these services to the aviation sector are higher/lower than the fee levels established in the bill. The House bill does not, however, follow the lead of the Administration bill and impose a new fee structure for FAA’s new large aircraft certification programs and for other activities such as certification of foreign repair stations. ’œŒžœœ’˜—ȱ Unlike the FAA proposal and S. 1300, H.R. 2881 is notable primarily for what it does not do. The House ultimately decided not to recommend major tax and fee changes to the existing aviation finance system. The modest increases in fuel taxes suggested by the bill, indicates that a majority of the House Members believe that the existing tax system needs only minor tweaking in order to support more robust FAA spending in the years ahead. This view is largely shared by the GA industry, but not by other sectors of the industry, especially the airlines and airports. ’›™˜›ȱ’—Š—Œ’—ȱ 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 are generally not eligible for AIP funding. AIP money cannot usually be used for airport operational expenses or bond repayments. AIP funds are distributed either as formula grants or as discretionary grants. Small airports are much more dependent on AIP grants than large and medium hub airports. The larger airports can more easily generate revenue from user fees and have historically had the financial wherewithal to successfully access the bond market. For background and legislative history of federal aid to airports, including a description of the AIP program, as well as an overall discussion of AIP issues, see CRS Report RL33891, Airport Improvement Program: Issues for Congress, by (name redacted). 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. The AIP and PFC programs are the sources of funds for airport capital development that have the most federal involvement. Other sources are bonds, state and local grants, and airport revenue. The FAA proposal (H.R. 1356/ S. 1076), would make major changes in both the AIP and PFC programs. In effect, the proposal would reduce the size and scope of the AIP program, while increasing the role of PFCs in airport finance. The proposal would broaden allowable costs under both programs. The distribution of AIP grants would undergo major changes and the local matching share for AIP grants would be changed for some airports. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŘŚȱ ȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ S. 1300, as reported, retains the basic AIP program size, structure, and funding distribution. It would increase the program’s overall year-over-year authorization level by $100 million for each of the four years covered by the bill. S. 1300 does not raise the PFC cap. Consequently, under S. 1300, the significance of the AIP and PFC programs relative to each other’s role in airport finance would remain roughly the same as it is under current law. H.R. 2881 also retains the basic AIP program size, structure, and funding distribution. As does S. 1300, it would increase the program’s overall year-over-year authorization level by $100 million for each of the four fiscal years covered by the bill. Unlike S. 1300, however, H.R. 2881 would raise the PFC cap to $7. Consequently, the bill would raise the significance of the role of the PFC relative to that of AIP within the context of airport finance. Neither S. 1300, as reported, nor H.R. 2881, as passed, restructure the AIP or PFC programs substantially but they do make a significant number of what may be seen as perfecting changes.  ȱž—’—ȱ The authorization for FY2007, the final year of funding under Vision 100 was $3.7 billion, the amount actually made available through the appropriations process (i.e., the obligation limitation under P.L. 110-5) for AIP was $3.515 billion. ȱ›˜™˜œŠ•ȱ The funding levels for AIP, under the FAA proposal, reflect a reduction of AIP’s role in airport finance. The proposal recommends $2.75 billion for FY2008, $2.9 billion for FY2009, and $3.05 billion for FY2010. The FAA’s section-by-section analysis suggests that the recommended increase in the PFC ceiling and the elimination of the AIP entitlements for large and medium airports (discussed later in this report) reduces the need for AIP funding. In recent years, the George W. Bush Administration annual budget proposals have consistently recommended reduced spending on AIP only to have it just as consistently restored to near its authorized level by Congress. Some observers in the transportation community have suggested that cutting the popular AIP program is also a way of keeping down the annual totals set forth in the FAA’s reauthorization proposal. Given that the Administration’s financing proposal for the Airport and Airway Trust Fund would support AIP spending directly through aviation fuel taxes, the lower spending for AIP, meant that the Administration could propose a smaller increase in their aviation fuel tax proposal than they would have had to if they had supported continuing the funding of AIP at the higher current FY2007 authorized level of $3.7 billion.13 Over time, the link of the AIP spending level to the fuel tax could make it difficult to increase the program’s funding because this could require raising the fuel taxes that support the program. Also, should AIP be authorized at the current authorization level or higher it could change the implications of the programmatic changes in AIP proposed by the Administration, should they be enacted. 13 See FAA, Next Generation Air Transportation System Financing Reform Act of 2007: Section-by-Section Analysis, 37. ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ Řśȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ ǯȱŗřŖŖȱ S. 1300 recommends an increasing authorization for AIP over the life of the bill, as follows: $3.8 billion for FY2008; $3.9 billion for FY2009; $4.0 billion for FY2010; and $4.1 billion for FY2011. The $100 million per year growth in the program extends the pattern of funding growth in Vision 100. Over the four-year life of the bill’s authorization this would provide an aggregate additional authorization of $1 billion for AIP (i.e., compared to freezing the AIP authorization for FY2008-FY2011 at the $3.7 billion level authorized for FY2007, the final year of Vision 100). ǯǯȱŘŞŞŗȱ H.R. 2881, as passed, would provide the same amounts as recommended in S. 1300. ˜›–ž•Šȱž—’—ȱǻ—’•Ž–Ž—œǼȱ The FAA proposal would make a number of changes in the distribution of AIP funds that airports are entitled (hence the term entitlements) to based on administrative formulas. S. 1300 would make few changes to the AIP entitlements. •’–’—Š’˜—ȱ˜ȱ‘ŽȱǞřǯŘȱ’••’˜—ȱ ȱ›˜›Š–ȱŽŸŽ•ȱȃ›’Ž›Ȅȱ Under current law the formula apportionments (also referred to as entitlements) fund two levels of entitlements: a lower entitlement level when the overall AIP funding is below $3.2 billion and a higher level when the program is funded at $3.2 billion or more. ȱ›˜™˜œŠ•ȱ Basically the FAA proposal eliminates the lower entitlement level in favor of the higher formula distribution levels and higher minimum and maximums (the general aviation apportionment is treated somewhat differently, see below). The proposal would also eliminate the $3.2 billion trigger itself. The trigger mechanism was designed, in part, to encourage funding of AIP above the $3.2 billion level. Since the FAA proposes funding AIP below the $3.2 billion level, not making this change would, in effect, cut most primary airports’ entitlement funding in half and would reduce general aviation entitlements also. During the life of the trigger, AIP funding has always been above $3.2 billion, making the lower entitlement formulas existence a moot point since FY2001. ǯȱŗřŖŖȱ S. 1300 does not include a provision to eliminate the $3.2 billion trigger. Given that the bill’s recommended authorization levels would be from $600 to $900 million above the trigger, some would argue that the trigger would continue to be a moot issue. On the other hand, the increasing gap between the recommended authorizations and the trigger provides more room for possible AIP reductions during the appropriations process (i.e., reductions that would not trigger the distribution of entitlements based on the lower below-trigger formula levels). ˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ ŘŜȱ ŽŽ›Š•ȱŸ’Š’˜—ȱ–’—’œ›Š’˜—ȱŽŠž‘˜›’£Š’˜—ȱ ȱ ǯǯȱŘŞŞŗȱ As is true with S. 1300, H.R. 2881 does not include a general provision to eliminate the $3.2 billion trigger. ›’–Š›¢ȱ’›™˜›ȱ—’•Ž–Ž—œȱ ȱ›˜™˜œŠ•ȱ The FAA proposal would phase out the formula funding that is provided for large and medium hub airports under current law by FY2010. [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3ARL33920. Public record. Not legal advice.