LEGISLATIVE BULLETIN | April 28, 2008

S. 1300, the Aviation Investment and Modernization Act of 2008

Note: S. 1300, which was reported out of the Senate Commerce Committee in May 2007, will be combined with parts of S. 2345, the Senate Finance Committee package, and offered as a substitute amendment to H.R. 2881. At 4:30 p.m. on April 28, the Senate will resume consideration of the motion to proceed to H.R. 2881. A cloture vote on the motion to proceed to H.R. 2811 will occur at 5:30 p.m.

 

 

Summary and Background

The Federal Aviation Administration (FAA) regulates nearly every aspect of our nation's aviation industry including its safety, manufacturing, and licensing. Recently, the FAA has faced difficulties in keeping pace with the growing demands of air travel and overseeing the safety of aviation. Nearly 25 million more passengers flew on U.S. commercial air carriers last year than they did in the previous year; a record 769.4 million passengers flew on U.S. commercial air carriers in 2007, which was nearly double the level of passengers (395 million) in 1985. 

As the number of airline passengers has grown, so has the amount of passengers who have been stranded and inconvenienced by groundings and delayed flights. These problems show little sign of abating as FAA forecasts indicate the aviation system will transport more than one billion airline passengers annually before 2020, and recent news reports on FAA's safety oversight highlight the agency's shortcomings regarding proper completion of mandatory safety inspections of aircraft. 

These passenger increases have pushed the FAA's infrastructure, particularly its air traffic control (ATC) system, past its operational limits. The Bureau of Transportation Statistics reports that since 2001 the number of late arriving planes has increased by 700,000, the number of late departing planes has increased by 620,000, and the percentage of on-time arrivals has dropped by 4 percent. In 2000, before the current spikes in delays and congestion, delay costs totaled $9.4 billion to the national economy and hundreds of millions of dollars in additional delay costs accrued to general aviation and commercial cargo operators. Meanwhile, the Airport and Airway Trust Fund (Trust Fund) created by the Airport and Airway Revenue Act of 1970 may not provide sufficient funding for modernization due. 

In 2004, former Transportation Secretary Norman Minetaannounced the creation of the Next Generation Air Transportation System (NextGen). Unfortunately, the process of bringing the system online has generally lagged in its planning phases and has unnecessarily cast doubt on the on-time completion of NextGen. This is important because the FAA projects that by 2022 the failure to implement NextGen would cost the U.S. economy $22 billion annually in lost annual economic activity and $40 billion by 2033.

In order to help meet those and other aviation challenges, Senators Inouye, Rockefeller, Stevens, and former Senator Lott introduced S. 1300 on May 2, 2007.S. 1300 would provide nearly $12 billion for FAA modernization over the next four years. Approximately $400 million would be dedicated annually for modernizing the air traffic control system through the establishment of the Air Traffic Modernization Fund, which would be supported through a surcharge of $25 per flight on commercial and high-end (typically private) general aviation jet flights. The legislation would also provide $15.8 billion for airport infrastructure over the next four years.

 

Major Provisions

Title I-Authorizations and Financing

Reauthorizations. Title I reauthorizes the FAA's operations, facilities and equipment, research engineering and development, and airport improvement program accounts (See table 1). These authorized levels are consistent with the Administration's stated needs for these accounts. While the airport improvement program is set at higher levels it is consistent with funding levels, authorized in Vision 100-Century of Aviation Reauthorization Act.

 

Table 1: Proposed authorized amounts for FAA accounts

(dollars in millions)

-----------------------------------------------------------------------------------------------

2008200920102011

-----------------------------------------------------------------------------------------------

Operations8,7268,9789,3059,590

Facilities & Equipment 2,5722,9233,0793,317

Research Engineering & Development140191 191194

Airport Improvement Program3,8003,9004,0004,100

Total15,23815,99216,57517,201

-----------------------------------------------------------------------------------------------

 

Air traffic modernization fund.Title I creates an Air Traffic Modernization Fund (modernization fund) to ensure sufficient funding for the modernization of the Air Traffic Control (ATC) system. The modernization fund would be supported through a surcharge of $25 per flight on commercial and general aviation jet and turboprop flights, which access airspace controlled by FAA. The estimated $400 million raised annually from the surcharge would be specifically dedicated to modernization costs approved by the Air Traffic Control Modernization Oversight Board (Modernization Board). The Commerce Committee, in consultation with the FAA, expects that more than $350 million of the total, while General Aviation jet and turboprop flights would make up the difference.

 

S. 1300would exempt government, military, agricultural, air ambulance, and training flights (at the discretion of the FAA Administrator) from the surcharge. The surcharge would also exempt about 90 percent of the general aviation fleet because it is it is comprised primarily of piston-powered aircraft. S. 1300 also exempts all intrastate flights in Alaska and Hawaii from the surcharge except those flights that both originate and terminate in airspace controlled by a terminal radar approach control facility (TRACON) or a Combined Center/Radar Approach Control facility. The exemption would ensure that only intrastate flights that fully utilize air traffic services would be subject to the $25-per-flight surcharge.

 

Title II-Airport Improvements

 

S. 1300focuses on improving the Airport Improvement Program (AIP) as well as streamlining the passenger facility charge (PFC). The current authority governing PFCs authorizes the collection of revenue for FAA-approved projects from every enplaned passenger at commercial airports controlled by public agencies. The AIP generally provides grants to public agencies for the planning and development of public-use airports that are significant to national air transportation.

 

Specifically, Title II would:

 

• Streamline the PFC process by simplifying approval requirements for imposing or amending PFC's. These changes do not remove the FAA's audit control or limit its oversight of projects and expenditures. These new proposals are based on the successful pilot program in the Vision 100-Century of Aviation Reauthorization Act for small airports;

 

• Require the Secretary of Transportation to establish and conduct a pilot program for six airports to impose a PFC without regard to dollar amount limitations if the participating airports collect the charge from a passenger at the airport, via the Internet, or in any other reasonable manner;

 

• Improve the required grant assurances for AIP projects to provide a limited exception airport owner to use AIP entitlement funds to move or replace a facility when the need to relocate or replace it is beyond the owner's control. S. 1300 would also amend the disposition of proceeds from the sale of land that an airport previously acquired for a noise compatibility purpose but no longer needs for that purpose. Currently, the proceeds from these sales, in an amount that is proportional to the federal government's share of the land acquisition cost, be returned to the Trust Fund. This section would allow the Secretary to permit the government's share of these proceeds to be used at the airport;

 

• Retain the AIP 90 percent (rather than 75 percent) grant availability for two years for small hub airports that are experiencing increased operations, and therefore might be reclassified as medium hub airports;

 

• Make the relocation of airport-owned facilities an allowable cost if the sponsor must move a facility because of design standards beyond the sponsor's control;

 

• Make it easier to sell a private airport to a public entity such as a state or local government that has previously received;

 

• Authorize a pilot program for up to 10 airports for the FAA to transfer terminal area air navigation equipment, such as instrument landing systems and approach lighting systems to airports. In turn, the airport would commit to operate and maintain all of the covered equipment at the airport in accordance with FAA standards, allow for periodic FAA inspections, and replace the equipment when needed;

 

• Extend a provision included in Vision 100-Century of Aviation Reauthorization Act that sets the federal share for certain projects at small airports at 95 percent;

 

• Make numerous airport improvement technical changes;

 

• Codify the AIP State Block Grant program responsibility and authority to comply with applicable environmental requirements for projects at non-commercial service airports;

 

• Broaden the ability for the FAA to enter into voluntary agreements with airports that request FAA support in conducting special environmental studies;

 

• Encourage environmentally-beneficial aircraft flight procedures at airports by making the environmental review of airport-proposed procedures eligible under the AIP if they are approved by the FAA;

 

• Make current or former military airports eligible to be considered for a grants if they are critical to the safety of trans-oceanic air traffic;

 

• Expand the PFC eligibility criteria to include noise mitigation; and

 

• Fund environmental research pilot projects as well as allow AIP eligible projects begun that may have been damaged prior by severe weather prior to their receipt of funding to remain eligible for AIP funding.

 

Title III-FAA Organization and Reform

 

Title III of S. 1300 focuses on improving the FAA's management practices by establishing a Modernization Board that would provide the FAA with specific oversight over its modernization activities. The Modernization Board would specifically provide advice to the FAA on its strategic plan, give approval for modernization expenditures that exceed $100 million, and approve the selections of leaders to the Air Traffic Organization and NextGen's Joint Planning Development Office. This title would also establish a new process for resolving collective bargaining labor disputes at the FAA that are at an impasse.

Specifically, Title III would:

 

• Establish the Modernization Board to provide specific oversight of FAA's modernization activities;

 

• Permit states or local governments to purchase, operate, and maintain advanced runway ground equipment;

 

• Enumerate the factors for the FAA to consider when determining whether to accept air traffic services by non-government providers;

 

• Clarify the ability of the FAA to provide services and personnel to the Transportation Security Administration;

 

• Repeal a grant authority provision that could limit the FAA's procurement policy after a natural disaster or its set aside procurements for small businesses, disabled veteran owned businesses, or small businesses owned and controlled by socially and economically disadvantaged minorities;

 

• Clarify the FAA's authority to provide air traffic services abroad;

 

• End the FAA's restriction from using the Presidential Rank Award Program. The Presidential Rank Award Program is a program that allows the President to commend senior federal executive employees for their work;

 

• Create a process for the FAA to study ways to reduce its reduce capital, operating, maintenance, and administrative costs;

 

• Ensure appropriate coordination and communication between the FAA, Department of Defense, National Aeronautics and Space Administration, Department of Commerce, Homeland Security, and additional agencies that the Department of Transportation may deem necessary to carry out NextGen;

 

• Modify the definition of an "air navigation facility" to ensure that it allows for funding for improving air navigation facilities;

 

• Allow the FAA to retain the funds when its sells property so that the FAA is not retaining property that it does not need due to concerns about the property's disposal costs;

 

• Require the FAA to provide financial support to the Department of Defense for the education of the dependent children of FAA employees in Puerto Rico and Guam;

 

• Reform the process through which FAA resolves labor disputes by:

 

• First requiring that if either the FAA Administrator or an employees' union determines an impasse has been reached to use the mediation services of the Federal Mediation and Conciliation Service. Under mutual agreement, the groups may adopt these procedures for the resolution of disputes or impasses arising during the collective bargaining process.

 

• If resolution is not reached, then the FAA Administrator and the employees' union would be required to submit their unresolved issues to the Federal Service Impasses Panel and order binding arbitration by a private arbitration board consisting of three members.

 

• In the event that theFAA Administrator and the employees' union do not agree on the framing of the issues to be submitted for arbitration, then the arbitration board must frame the issues and shall render its decision within 90 days of appointment.

 

• Require FAA to issue a report and rulemaking on the adoption of ADS-B, a key NextGen technology.

 

Title IV-Airline Service Improvements and Small Community Air Service Improvements

 

Title IV would:

 

• Require an air carrier to develop a contingency plan to handle situations in which the departure of a flight is substantially delayed while passengers are confined to an aircraft;

 

• Require an air carrier to publish on their website, and update monthly, a list of chronically delayed flights operated by the air carrier;

 

• Require up to 10 communities with air carriers providing small community air service and major air carriers serving large hub airports to participate in code-share arrangements;

 

• Specify that airplanes are to use the most commonly used route between the nearest medium hub airport or large hub airport;

 

• Allow the Secretary of Transportation to incorporate financial incentives in Essential Air Service contracts;

 

• Require the Secretary of Transportation to establish a program to provide General Aviation conversion funding for airports that serve places that no longer qualify for Essential Air Service;

 

• Reform the Essential Air Service Program by requiring the FAA to provide $133 million for the program, an increase of at least $6 million above the previous authorized level;

 

• Require an expedited administrative forum for determining whether significant carrier fees levied by airports are reasonable;

 

• Give priority to multiple communities who cooperate for Small Community Air Service Development Program funding;

 

• Authorize funding for the Air Traffic Control contract program of $8.5 million for Fiscal Year 2008; $9 million for Fiscal Year 2009; $9.5 million for Fiscal Year 2010; and $10 million for Fiscal Year 2011;

 

• Offer all members of the Armed Forces on active duty reduced fares that are comparable to the lowest airfare for ticketed flights and flexible terms to purchase, modify,or cancel tickets without time restrictions, fees, and penalties;

 

• Expand airline customer complaint investigations;

 

• Require airlines that provide Essential Air Service to submit a marketing plan with their Essential Air Service application; and

 

• Provide an additional 12 slots at Washington National Airport for flights beyond the 1,250 mile Perimeter Rule limit and an additional eight slots at the airport for flights within the Perimeter Rule limit.

 

Title V-Aviation Safety

 

Title V would:

 

• Require the FAA to issue a plan to reduce runway incursions in the National Airspace System by December 31, 2008;

 

• Require the FAA to finalize a rule regarding the reduction of fuel tank flammability;

 

• Provide the FAA with the authority to seek judicial review of National Transportation Safety Board decisions involving airman certificate;

 

• Clarify that FAA may release data related to abandoned aircraft type certificates and supplemental aircraft type certificates, without the consent of the owner of record, if the FAA first determines the release meets several decisions;

 

• Extend timeline by one year for the FAA to begin to issue design organization certificate;

 

• Provide the statutory authority for the FAA to continue to access the National Crime Information Center and related State criminal history databases so that the FAA may continue to perform critical safety and security functions;

 

• Require a National Academy of Sciences study of pilot fatigue;

 

• Require all helicopter emergency medical service operators to comply specific safety regulations whether there are patients on board the helicopter;

 

• Prevent an air carrier from using any person as a flight attendant unless that person has the ability to read, speak, and write English. This section does not apply to service as a flight attendant on a flight operated solely between points outside the United States;

 

• Require the FAA to establish a plan to comply with Occupational Safety and Health Administration requirements in aircraft cabins; and

 

• Require the FAA to set a target of achieving a minimum of 200 required navigational performance procedures per year through 2012.

 

Title VI-Aviation Research

 

Specifically, Title VI would:

 

• Provide a permanent authorization for the Airport Cooperative Research Program which was established under the Vision 100-Century of Aviation Reauthorization Act;

 

• Require the FAA Administrator to establish a research to reduce civilian aircraft source noise;

 

• Require the Secretary of Transportation to establish research Centers of Excellence to study the development of jet fuel from clean coal technologies;

 

• Establish a advisory committee to study the best governmental and organizational structures for civil aeronautics Research and Development;

 

• Extend the authorization for pavement research;

 

• Require the FAA to conduct safety research on wake vortexes, volcanic ash, and weather; and

 

• Enable all classes of unmanned aerial systems to be integrated safely into the National Airspace System.

 

Title VII-Miscellaneous

 

Specifically, Title VII would:

 

• Extend the authority of the Secretary of Transportation to provide war risk insurance and reinsurance until October 1, 2017;

 

• Require the FAA Administrator to develop a Human Intervention Management Study program for cabin crews;

 

• Require the FAA Administrator to establish a certification training program for the airport concessions disadvantaged business enterprise program;

 

• Extend the current Airport Improvement Program eligibility for the Metropolitan Washington Airports Authority, which oversees both Ronald Reagan Washington National Airport and Washington Dulles International Airport, through Fiscal Year 2011;

 

• Permanently require the requirement for air carriers to file competitive access reports;

 

• Sunset the existing rule that forces the retirement of commercial airline pilots once they turn 60 years old;

 

• Direct the FAA to ensure that existing over flight fees are reasonably related to agency costs of providing air traffic services;

 

• Provide technical corrections to ensure that the Merit Systems Protection Board has both the jurisdiction to investigate claims made against the FAA and the same enforcement authority in dealing with the FAA that it does for all other Federal agencies;

 

• Instruct the GAO to conduct a study of the training of FAA systems specialists;

 

• Amend the National Parks Air Tour Management Act, to incorporate GAO recommendations on Commercial air tour operators in national parks;

 

• Prohibit on the operation of aircraft not in compliance with Stage 3 noise levels over a five year period and the FAA from eliminating weight restrictions currently in force at Teterboro airport;

 

• Create protections for workers at airlines that merge; and

 

• Establish a pilot program for airport property redevelopment.

 

S. 2345, Finance Committee Package

 

On September 21, 2007, the Senate Finance Committee favorably reported S. 2345 by a vote of 16 to 5. S. 2345 would:

 

• Increase the General Aviation jet fuel tax from the current 21.8 cents/gallon to 36 cents/gallon. This would provide approximately $203 million per year over the four-year AATF reauthorization;

 

• Classify fractionals as General Aviation jets for fuel tax purposes. At the same time, S. 2345 would repeal the 7.5 percent ticket tax to which fractionals are subject, and replace it with a departure tax of $58 per flight. These proposals will provide approximately $54 million per year over the four-year Airport and Airway Trust Fund reauthorization;

 

• Raise the share for commercial carriers' of NextGen funding by approximately $163 million per year with changes to the international arrival/departure tax. The international arrival/departure tax would be raised from $15.10 to $16.65 each way;

 

• Replenish the highway trust fund with $3.4 billion and discontinue transfers from the highway trust fund into the general fund for six months in order to save $745 million;

 

• Provide strong anti-fraud provisions to improve the taxation of finished gasoline at the refinery gate, the taxable fuels from foreign trade zones, and the treatment of qualified alcohol fuel mixtures as taxable fuel which provides $900 million in savings;

 

• Authorizations for the use of Highway Trust Funds to address the Minnesota I-35W bridge collapse;

 

• An offset of $3.5 billion by increase the oil spill tax from five cents a barrel to 10 cents, effective for the first quarter that begins 60 days after date of enactment and sunset 12/31/2017; and

 

• An offset of $1.2 billion by cracking down on companies who manipulate the tax code by setting up tax havens.

 

Legislative History

 

Senator Rockefeller and former Senator Lott, along with Senators Inouye and Stevens, introduced S. 1300, the Aviation Investment and Modernization Act of 2007, on May 3, 2007. On May 16, 2007, the Committee met in Executive Session during

which S. 1300 was considered and adopted by voice vote.

 

S. 2345was adopted by the Finance Committee on September 21, 2007.

 

Expected Amendments

 

Senators Rockefellerand Baucus have developed a substitute amendment that incorporates S. 1300 and parts of S. 2345.

 

The substitute amendment includes changes to S. 1300 and S. 2345 that would:

 

• Eliminate the $25 surcharge provided for in S. 1300;

 

• Eliminate the $58 departure tax on fractionally owned aircraft;

 

• Eliminate the added commercial carriers' share of NextGen funding which was paid for by increasing international departure and arrival tax by $1.55;;

 

• Incorporates "Truth in Passenger Tax Disclosures" provision that prevents airlines from presenting fuel surcharges as government-imposed taxes.

 

The DPC will also distribute information on amendments as it becomes available.

 

 

Administration Position

 

At the time of publication, the Administration had not released a Statement of Administration Position on S. 1300, S. 2345, or the substitute amendment.

 

DPC