[Senate Report 104-251]
[From the U.S. Government Publishing Office]




104th Congress                                                   Report
                                SENATE 
 2d Session                                                     104-251
_______________________________________________________________________


                                                       Calendar No. 363


 
   AIR TRAFFIC MANAGEMENT SYSTEM PERFORMANCE IMPROVEMENT ACT OF 1996

                               __________

                              R E P O R T

                                 OF THE

                  COMMITTEE ON COMMERCE, SCIENCE, AND
                             TRANSPORTATION

                             together with

                            ADDITIONAL VIEWS

                                   on

                                S. 1239



                 April 10, 1996.--Ordered to be printed

  Filed, under authority of the order of the Senate of March 29, 1996


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    one hundred fourth congress

                         second session

               LARRY PRESSLER, South Dakota, Chairman

ERNEST F. HOLLINGS, South Carolina     TED STEVENS, Alaska
DANIEL K. INOUYE, Hawaii               JOHN McCAIN, Arizona
WENDELL H. FORD, Kentucky              CONRAD BURNS, Montana
J. JAMES EXON, Nebraska                SLADE GORTON, Washington
JOHN D. ROCKEFELLER IV, West Virginia  TRENT LOTT, Mississippi
JOHN F. KERRY, Massachusetts           KAY BAILEY HUTCHISON, Texas
JOHN B. BREAUX, Louisiana              OLYMPIA SNOWE, Maine
RICHARD H. BRYAN, Nevada               JOHN ASHCROFT, Missouri
BYRON L. DORGAN, North Dakota          BILL FRIST, Tennessee
                 Patric G. Link, Chief of Staff
    Kevin G. Curtin, Democratic Chief Counsel and Staff Director


                                                       Calendar No. 363
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-251
_______________________________________________________________________


   AIR TRAFFIC MANAGEMENT SYSTEM PERFORMANCE IMPROVEMENT ACT OF 1996
                                _______


                 April 10, 1996.--Ordered to be printed

  Filed, under authority of the order of the Senate of March 29, 1996

      Mr. Pressler, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 1239]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1239) the ``Air Traffic 
Management System Performance Improvement Act of 1996'', having 
considered the same, reports favorably thereon with an 
amendment in the nature of a substitute and recommends that the 
bill (as amended) do pass.

                          Purpose of the Bill

    The purpose of S. 1239, as reported, is to reform the 
Federal Aviation Administration (FAA) and make it a more 
efficient and effective organization by significantly improving 
how the FAA operates in the following areas: governance, 
funding, rulemaking, procurement management, and personnel 
management. The Committee believes that reform in these areas 
will create incentives for the agency to make necessary 
improvements in the performance of the nation's air traffic 
control (ATC) system.

   Background and Needs Assessment of Federal Aviation Administration

                             FAA's Problems

    For 38 years, the FAA has consistently assured the 
traveling public that the nation's air transportation system is 
safe and reliable. At present, the FAA is involved in every 
aspect of ensuring the safety of the system. The agency 
provides licenses to those who work in the industry, certifies 
what can be used within the system, determines the scope of 
airport development, and decides when and where aircraft can 
fly. In the past, the FAA has had significant resources to meet 
its primary objective of providing a safe and efficient air 
transportation system. As a general matter, the resources 
needed have been provided by the Congress, and, particularly 
during the 1980s, the FAA saw its budget increase 
significantly.
    The future, however, may be considerably different, 
particularly given the trend of a decreasing federal role in 
maintaining and developing the nation's infrastructure. 
According to testimony before the Committee, the demand for air 
transportation services will increase dramatically over the 
next several years, while available resources will not be 
adequate to meet demand. Without substantial, comprehensive 
reform of the FAA, the United States is facing the undesirable 
prospect of continued reliance upon an outdated, inefficient 
ATC system. In the continental United States, as well as in 
unique states that are highly dependent on air service, such as 
Alaska and Hawaii, the adverse effects on safety and efficiency 
could be substantial.
    Over the years, particularly following airline deregulation 
and the subsequent expansion of the air transportation system, 
the demand for a more efficient ATC system has increased. This 
demand undoubtedly will continue to increase in the future. Air 
carriers, which historically have covered most of the costs of 
this increased demand, can no longer assume the added costs of 
an inefficient system. Indeed, over the years, the commercial 
airline industry has reduced costs in every conceivable way. 
One carrier, for example, now spends only 12 cents per 
passenger on food. Today, the industry is a far different one 
than it was prior to deregulation because air carriers 
themselves have become much more efficient and operate in a 
more cost-effective way. Accordingly, the focus must now be on 
enacting legislation to make comprehensive changes in how the 
FAA conducts its business and to remedy inefficiencies within 
the organization and its ATC system.
    For many years, the U.S. ATC system, which carries more 
than 50 percent of the world's air traffic, has remained the 
world's safest air transportation system. Moreover, despite 
maintaining an excellent safety record and low accident rate, 
the Administration and industry have continued to work to 
achieve a ``zero accident'' standard. However, maintaining the 
world's safest system and achieving even greater safety margins 
may not be possible in the future without meaningful reform of 
the entire FAA, including significant improvements in the areas 
of funding, governance, more efficient equipment procurement, 
and staffing.
    The ATC system also has consistently been the most 
efficient in the world. The current ATC system consists of more 
than 30,000 pieces of equipment, including 402 towers, 167 
radar approach controls (TRACONs), 21 air traffic control 
centers, and 61 flight service stations. Radars, computers, and 
navigation and landing aids are placed throughout the entire 
country to provide the best system possible. As the largest ATC 
system in the world, it handles two operations every second of 
every hour of every day. In effect, the FAA, which operates the 
ATC system 365 days per year, 24 hours per day, is running the 
production line for commercial airlines and all other segments 
of the aviation system. Such a complex ATC system, however, 
tends to function much less efficiently than it should in the 
heavily bureaucratic environment of the existing FAA.
    The general inefficiencies of our nation's ATC system have 
had an enormous, detrimental economic impact. Delays in the 
system are estimated to cost $3.5 to $5 billion per year, 
according to the Air Transport Association. One air carrier, 
when testifying before the Committee, indicated its annual 
delay costs exceed $250 million. Another carrier told the 
Committee a single ATC power outage at Dallas-Fort Worth 
International Airport in 1995 was estimated to result in more 
than $730,000 in direct costs. Although approximately two-
thirds of ATC system delays may be weather-related, the 
Committee believes the ATC system itself is far from operating 
as efficiently as it should.
    From January 1, 1995 through November 9, 1995, this complex 
system experienced 292 significant outages or failures of 
equipment and systems. The outages ranged from breakdowns of 
the Display Channel Complex (DCC) to power source problems. The 
Committee recognizes that none of the outages compromised 
safety, although there was one operational error attributable 
to an outage. The Committee also knows the FAA plans to replace 
the DCC at the five centers that rely on that system.
    Despite this plan and the hard work of the air traffic 
controllers, technicians, and FAA management, the Committee 
firmly believes the outages and equipment failures must be 
addressed in the near term to improve the overall performance 
of the ATC system. This bill will put the FAA on the path of 
being better able to address all ATC system inefficiencies in a 
coordinated and comprehensive manner. At the same time, this 
bill acknowledges that our nation's ATC system always will 
require some government oversight because of its nature as a 
monopoly/public utility, and the FAA's need to ensure the 
highest level of safety for the traveling public.
    The future of our nation's air transportation system is 
critical to helping our economy expand. Without a safe, 
efficient, and reliable system, many U.S. businesses and the 
U.S. travel and tourism industry will not be able to function 
or grow effectively. The Committee believes the need for reform 
of the air transportation system, which includes making 
significant changes within the FAA, requires more than simply 
modifying a particular program or programs. If reform does not 
provide the FAA with the ability to meet future demand, make 
the ATC system more efficient, and to modernize, then the 
safety and the efficiency of the entire U.S. air transportation 
network are at risk and dependent U.S. industries will be 
detrimentally affected. This bill seeks to enable the FAA to 
implement comprehensive reform to address all of these areas.

                Future Demand and Supply of ATC Services

    The FAA faces two interrelated problems that highlight the 
urgent need to reform the FAA. First, there will be a much 
greater demand for ATC services over the next several years. 
Second, at the same time, when the system must be adequately 
funded and provided with sufficient resources to meet this 
demand, the federal government's contribution to the FAA will 
decrease. If the FAA continues to be funded as it is currently, 
funding for ATC services will not be adequate to meet future 
demand.
    Every day, the FAA provides about 600,000 ATC services to 
commercial airlines, business jets, general aviation pilots, 
and the military. Approximately 519 million people flew on 
commercial airlines in 1994, according to the Department of 
Transportation (DOT). By 2002, the number of passengers is 
expected to grow by 300 million, a 35 percent increase. Over 
the same period, the number of ATC system user operations is 
expected to rise by 18 percent. This projected growth clearly 
requires that the ATC system must be modernized and capacity 
expanded. In turn, airport infrastructure deficiencies must be 
addressed to accommodate demand.
    As demand for ATC system services increases steadily, the 
FAA will face ever increasing belt tightening, primarily 
because of efforts to balance the federal budget. In the past, 
and particularly during the 1980s, the FAA's budget grew 
significantly. According to FAA data included in General 
Accounting Office (GAO) testimony, the FAA's budget needs have 
generally been accommodated by Congress until very recently.

                                              TABLE 1.--FAA APPROPRIATIONS AND TRUST FUND REVENUES, 1986-95                                             
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Trust fund       Trust fund  
                                                                                        General fund      Trust fund        revenues          ending    
                            Fiscal year                                FAA approp.        approp.          approp.       (receipts plus    uncommitted  
                                                                                                                           interest)         balance    
--------------------------------------------------------------------------------------------------------------------------------------------------------
1986...............................................................              4.8              2.4              2.4              3.6              4.3
1987...............................................................              5.0              2.4              2.6              3.9              5.6
1988...............................................................              5.7              2.4              3.4              4.1              5.8
1989...............................................................              6.4              3.0              3.4              4.7              6.9
1990...............................................................              7.1              3.0              4.1              4.9              7.4
1991...............................................................              8.1              2.0              6.1              6.2              7.7
1992...............................................................              8.9              2.3              6.6              5.9              6.9
1993...............................................................              8.9              2.3              6.6              6.1              4.3
1994...............................................................              8.6              2.3              6.3              6.0              3.7
1995 (est.)........................................................              8.3              2.1              6.2              6.4              3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not add because of rounding.                                                                                                          
                                                                                                                                                        
Source: FAA; included in GAO testimony.                                                                                                                 

    Over the last few years, however, the FAA's budget has been 
cut by a total of $600 million. In addition, the FAA has 
reduced its workforce by 5,000, and eliminated many programs. 
As discussed in more detail below, FAA funding likely will 
further decrease over the next several years because of 
spending reductions in transportation programs proposed in the 
recent balanced budget resolution.


    Without meaningful and coordinated reform, particularly in 
the area of FAA funding, the FAA's ability to meet growing 
demand and provide services to all segments of the aviation 
community will be compromised.
    The Committee is well aware of the need for meaningful 
reform of the FAA. Over the last 10 years, the Committee and 
the aviation community have examined many options designed to 
make the FAA a more effective organization, without imposing 
unnecessary and burdensome restrictions on its operations. 
Those efforts occurred at a time when FAA was not facing such a 
serious situation regarding its funding. Today, in large part 
because of the ramifications of the balanced budget resolution, 
FAA's situation requires urgent attention.

                        ATC System Modernization

    The Committee, the FAA, and the entire aviation community 
want to see the ATC system modernized quickly and efficiently. 
In fact, as noted above, over the last several years, the FAA 
has significantly reduced its workforce, worked directly with 
the system users to reduce delays, taken action to incorporate 
satellite technology as quickly as possible, restructured its 
acquisition process, restructured and reduced the cost of the 
Display System Replacement, and worked with the general 
aviation industry to create a more effective certification 
process. Despite these considerable efforts, however, the 
nation's ATC system is nowhere near to being as efficient as it 
should be. Moreover, it is not based, for the most part, on 
current technology, much less state-of-the-art technology.
    Given the extent of the FAA's problems, particularly with 
regard to modernization of the ATC system, the Committee and 
the aviation community strongly believe that the agency must be 
fundamentally reformed, both to improve its administrative 
efficiency and to stimulate improved performance of the ATC 
system. During several hearings in 1995, the Committee heard 
testimony on many different proposals to reform the FAA. In 
addition to examining specific reform proposals, much of the 
discussion on reform focused on federal laws and regulations 
that inhibit timely implementation of technological 
improvements. The Committee believes the installation of new 
technology is a critical mission the FAA must fulfill. 
Unnecessary regulatory or legal hurdles must not stand in the 
way.
    Frequent turnover in FAA upper management and a lack of 
budgetary stability have been cited as causes for the FAA's 
tendency toward reactionary operations. In addition, observers 
believe that in the past, there has been little or no long-term 
managerial accountability within the organization. The 
Committee believes, however, that simply liberating the FAA 
from current restrictions in the areas of personnel and 
procurement or making it an independent agency are not 
sufficient to solve all of its problems. Moreover, the 
Committee believes that changes to procurement laws, while 
essential, must be accomplished in the context of an overall 
change in the way the FAA conducts its business.
    The FAA's procurement problems, such as modernization 
delays, are attributed in great part to the 10,500 pages of 
statutes and regulations under which the FAA and other 
government agencies acquire goods and services. These laws and 
regulations, despite well-intentioned drafting, have resulted 
in a procurement process that is too rigid, takes too long, and 
results in the inefficient use of time, people, and money. The 
Committee, however, recognizes acquisition delays are not 
solely caused by burdensome rules and regulations; the GAO and 
even the FAA have cited mismanagement as a factor that has led 
to modernization delays. Although Congress already has voted to 
allow the FAA to develop its own personnel and procurement 
systems as part of the FY 1996 DOT Appropriations bill (P.L. 
104-50), broad-based reform of the FAA must accompany 
procurement and personnel reform. Moreover, since consideration 
of the FY 1996 DOT appropriations bill, the Committee has 
worked diligently with the DOT and FAA to develop a more 
comprehensive change to the personnel and procurement laws.
    The substantial number of federal requirements governing 
personnel also place a significant burden on FAA's ability to 
effectively manage its workforce. FAA managers and employees 
must work with 47,200 pages of federal personnel laws and 
regulations. According to the DOT, the restrictions contained 
in these laws and regulations create an environment lacking 
flexible recruiting, flexible salary setting, and performance-
based rewards. A more flexible and innovative personnel program 
or structure, such as that envisioned by this bill, could 
provide incentives for increased productivity, compensate 
employees based on performance, facilitate moving employees 
based on changes in the demand for ATC services, and improve 
overall management of the FAA's workforce.

                          Current FAA Funding

    At present, nearly all FAA funding is derived from the 
users of the nation's air transportation system. Aviation 
system users currently pay taxes into the Airport and Airway 
Trust Fund (a/k/a Aviation Trust Fund).\1\  These taxes include 
a 10 percent passenger ticket tax, a 6.25 percent cargo waybill 
tax, a $6 international departure tax, a 15 cents per gallon 
tax on gasoline for piston-engine aircraft, and a 17.5 cents 
per gallon tax on general aviation jet fuel. These taxes bring 
in approximately $5-6 billion annually. \2\  The Aviation Trust 
Fund currently has about $14 billion in assets, comprised of 
U.S. Treasury certificates. Most of those assets are already 
committed for FAA expenditures, such as airport-related 
projects and ATC facilities and equipment. The remaining 
approximately $5 billion are uncommitted funds (often referred 
to as a ``surplus'').
---------------------------------------------------------------------------
    \1\ Subsequent to the date on which this bill was ordered reported 
by the Committee, the Aviation Trust Fund excise taxes lapsed as of 
January 1, 1996.
    \2\ See Table #1 from FAA.
---------------------------------------------------------------------------
    The FAA's $8.3 billion budget for FY 1995 was comprised of 
approximately $6.2 billion in tax revenues from the Aviation 
Trust Fund. The remaining $2.1 billion was appropriated out of 
the General Fund. The General Fund contributes to the FAA's 
budget in part because of the various services the FAA provides 
to the Department of Defense (DoD), including national security 
services. In addition, the activities of the FAA and the ATC 
system provide benefits to the whole nation, and not only to 
airspace users. For example, the FAA's actions affect air cargo 
and mail transportation as well as the safety of those on the 
ground.

                      Need for FAA Funding Reform

    Although the FAA's budget grew significantly in the 1980s, 
the years of growth in FAA funding appear unlikely to continue. 
As noted above, the FAA's budget has been cut by $600 million 
over the last few years. The FAA also has substantially reduced 
the number of its employees and eliminated many technology 
programs. Moreover, funding for FAA is expected to continue to 
decline in the foreseeable future because of spending 
reductions in transportation programs proposed in the recent 
balanced budget resolution.
    Testimony before the Committee clearly confirmed that, 
because of efforts to balance the Federal budget, future 
funding will fall far short of what the FAA will need to 
provide even the current level of services, and that drastic 
cuts in services will need to be made if new revenue is not 
found. The Administration, for example, projects an aggregate 
$12 billion shortfall in FAA funding over the time period from 
fiscal year 1997 to fiscal year 2002. This projected funding 
shortfall represents the difference between FAA's stated need 
of $59 billion during that period and an estimated budget cap 
of $47 billion on FAA spending over those same six fiscal 
years. Aviation Trust Fund revenues, including interest, are 
expected to total about $47 billion during that same period. 
Clearly, this implies that the General Fund contribution to FAA 
is likely to decrease significantly over that period.
    The Committee agrees that a substantial FAA funding 
shortfall is looming. An independent study required by this 
bill will verify the accuracy of the FAA's projected needs over 
the next several years. Regardless of whether the specific 
number is higher or lower than the Administration now projects, 
a very substantial shortfall in the FAA's budget is anticipated 
if steps are not taken by Congress to provide a secure funding 
stream for the FAA.
    The aviation community also recognizes the dire situation 
regarding FAA's funding needs. In July 1995, the National 
Aviation Associations Coalition (NAAC), which includes 30 
organizations representing all segments of the aviation 
community, issued a consensus statement on FAA reform that 
stated, ``funding reform . . . is the most critical element of 
FAA reform.'' The Committee concurs with this position, 
particularly in light of the anticipated budgetary constraints 
that will affect future spending on transportation programs. On 
October 31, 1995, the NAAC issued another consensus statement 
reiterating its belief ``that achieving budget and funding 
reform, including means for dedicating aviation resources, is 
critical.''
    Many in the aviation community also believe the year-to-
year appropriations process makes it difficult for the FAA to 
operate under a long-term capital investment plan. This leads 
to reactive, near-term investment decisions by the FAA based on 
an artificially imposed federal budget process, rather than on 
the basis of need or sound business practices.
    If the projected shortfall in the FAA's budget is not 
remedied in the near term, there will be a detrimental impact 
on all segments of the aviation community. With respect to the 
impact on general aviation, the FAA has advised the Committee 
it would have to eliminate the general aviation safety program, 
which would make it more difficult for private pilots to get 
important information on aviation programs. The FAA's Office of 
Aviation Medicine would likely have to reduce funding for the 
annual processing of aviation medical certificates, which would 
create delays in processing medical certification for pilots' 
licenses. The number of FAA inspectors and field facilities 
would decrease, which would create delays for those in the 
general aviation community who need certification and 
additional ratings processed. In addition, the FAA may need to 
close many if not all flight service stations and Level I and 
Level II towers, which provide important weather and safety 
information to general aviation pilots. In fact, over the last 
few months alone, the FAA has closed nearly 20 control towers. 
Without a predictable funding stream, the FAA will continue to 
cut services, which more often than not, would have a 
disproportionate impact on small and rural communities.
    The funding provisions in this bill (particularly those in 
Title III) are critical because they provide a means for 
funding reform at the FAA, which should help alleviate the 
agency's projected funding problems and ensure aviation dollars 
will be dedicated for aviation purposes. The bill as reported 
is designed to ensure the funding reform called for is coupled 
with incentives necessary to ensure a far greater interest by 
the FAA and the aviation community in the efficiency of the ATC 
system, without jeopardizing safety. Indeed, as these reforms 
are implemented and the ATC system is able to handle 
efficiently the projected increase in demand for air traffic 
services, the system's safety should be protected. The 
Committee's vote on the bill supports the FAA funding reform, 
as contained in S. 1239, accompanied by long-needed 
improvements in the areas of governance, rulemaking, personnel 
management, and procurement management, will enable the FAA and 
the nation's ATC system to meet the needs of the aviation 
community and perform at the most efficient level.

          Development of Comprehensive FAA Reform Legislation

    Throughout 1995, many different groups reviewed several 
distinct proposals to make the FAA more efficient, while 
enhancing its safety function and the performance of the 
nation's ATC system. For example, certain FAA reform proposals 
have focused on either making the FAA an independent agency, 
creating a government-owned corporation to run the ATC system, 
or privatizing the agency.
    On August 2, 1995, the Aviation Subcommittee held a hearing 
on the various FAA and ATC reform proposals. The Subcommittee 
heard testimony from many distinguished witnesses on these 
proposals and current problems facing FAA. Testimony by DOT 
Secretary Federico Pena, FAA Administrator David Hinson, 
Kenneth Mead (then Director of Transportation issues at GAO), 
and others emphasized their strong belief that any feasible 
reform bill must address the future funding requirements of the 
FAA. Other testimony concentrated on the merits of making the 
FAA an independent agency.
    Until the August 2, 1995 hearing, the DOT and FAA remained 
adamant in their support for the Administration's proposal to 
create a government corporation to handle the nation's ATC 
services. Although the ATC corporation proposal lacked 
considerable Congressional support, it nonetheless contributed 
to a serious and comprehensive examination of how best to 
address the future needs of FAA and the aviation community. 
Moreover, during the August 2, 1995 hearing, Secretary Pena 
indicated that the DOT would be willing to work with Congress 
to craft a mutually acceptable proposal for meaningful FAA 
reform. Over several weeks following that hearing, the 
Administration and members of the Aviation Subcommittee met 
frequently to develop a comprehensive FAA reform proposal.

                          Legislative History

    On September 13, 1995, Senators McCain, Ford and Hollings 
introduced S. 1239, the ``Air Traffic Management System 
Performance Improvement Act of 1996.'' The bill was referred to 
the Committee on Commerce, Science, and Transportation.
    Following the August 2, 1995 hearing on various FAA reform 
proposals, the Aviation Subcommittee held the first of two 
hearings on S. 1239 on September 27, 1995. Secretary Pena, 
Administrator Hinson and Deputy Administrator Linda Hall 
Daschle testified at that time regarding the Administration's 
support of the bill. Testimony also was heard from an aviation 
expert and representatives from the aviation community, 
including FAA labor, business aircraft, and manufacturers.
    On October 12, 1995, the Subcommittee held its second 
hearing on the bill. Testimony was heard from representatives 
of the air carrier industry, including major air carriers, low-
cost carriers, and a cargo carrier, and a representative of a 
flight attendants union.
    On November 9, 1995, the Committee met in open executive 
session to consider an amendment in the nature of a substitute 
to S. 1239 offered by Senators McCain and Ford. Senator Stevens 
offered a substitute to the McCain-Ford substitute, but the 
Stevens substitute was defeated by a rollcall vote. Senators 
Gorton (aircraft manufacturing certification fees), Exon 
(agricultural aircraft), Dorgan (EAS program and rural air 
service study), Breaux (Brooks Architect-Engineer Act), and 
Bryan (business jets) each offered separate amendments to the 
McCain-Ford substitute, all of which were adopted by voice 
vote. By voice vote, S. 1239, as amended, was ordered to be 
reported, without objection.

                      Summary of Major Provisions

    The bill as reported would provide for a comprehensive 
overhaul of the entire FAA by giving the FAA much more 
autonomy, while at the same time keeping it within the DOT. The 
FAA would have authority to develop new, innovative personnel 
and procurement systems, and be able to waive many federal laws 
and regulations in the areas of personnel and procurement that 
inhibit the effectiveness of FAA. The bill also would provide 
for direct aviation community input to FAA through a Management 
Advisory Council (MAC).
    In cooperation with the MAC, the FAA would develop user fee 
systems for the services it provides, such as air traffic 
control, certification, and licensing. The bill would change 
the manner in which the FAA handles its rulemaking and 
regulatory functions. The FAA would retain an outside entity to 
prepare independent, objective studies of: (1) the FAA's budget 
needs and assumptions, and (2) the allocation of FAA costs 
among various segments of the aviation community, including 
public entity users such as the DoD.
    The bill would provide the FAA with a three-year 
appropriations cycle and adjust the caps on the spending of 
Airport and Airway Trust Fund monies for FAA operations. In 
addition, the Essential Air Service (EAS) program would receive 
adequate funding and be transferred from the DOT to FAA. The 
DOT also would conduct a study on rural air service and air 
fares. Further, the bill conveys a sense of the Senate that 
Congress should spend the Trust Fund ``surplus''.

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office (CBO):

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, December 22, 1995.
Hon. Larry Pressler,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1239, the Air 
Traffic Management System Performance Act of 1995.
    Enacting S. 1239 would affect direct spending. Therefore, 
pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                             James L. Blum,
                                   (For June E. O'Neill, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    1. Bill number: S. 1239.
    2. Bill title: Air Traffic Management System Performance 
Improvement Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on Commerce, Science, and Transportation on November 9, 1995.
    4. Bill purpose: S. 1239 would make a number of changes in 
the regulatory, personnel, procurement, and financial practices 
of the Federal Aviation Administration (FAA). In particular, 
the bill would:
          Establish deadlines for carrying out rulemaking 
        proceedings and require the FAA to review regulations 
        with annual compliance costs of greater than $25 
        million;
          Direct the FAA to develop and run new personnel and 
        procurement systems that would be exempted from many 
        federal regulations and requirements;
          Create a Management Advisory Committee to provide 
        advice and counsel to the FAA on management issues;
          Establish a select panel to review and report on 
        possible innovative funding mechanisms for the FAA, 
        including loan guarantees, financial partnerships with 
        private entities, and government-sponsored enterprises;
          Establish new fees for various FAA services, 
        including training, licensing, regulatory proceedings, 
        certification, assistance to foreign governments, and 
        air traffic control for overflights;
          Require the Department of Defense (DoD) to reimburse 
        the FAA for the net cost of air traffic control 
        services the FAA provides DoD;
          Require the FAA to develop user fees for air traffic 
        control services that would only be imposed on a 
        segment of the aviation community if the current excise 
        taxes for the Airport and Airway Trust Fund are 
        terminated for that segment;
          Make immediately available for expenditure all fees 
        collected by the FAA, whether established by this act 
        or not;
          Appropriate $50 million a year, starting in fiscal 
        year 1997, for the essential air service program from 
        fees collected by the FAA or other funds provided to 
        the FAA (i.e., appropriated funds); and
          Require the FAA to carry out various studies, 
        including an analysis of the costs that each segment of 
        the aviation community places on the FAA and the air 
        traffic control system.
    5. Estimated cost to the Federal Government: Enacting S. 
1239 would affect both direct spending and spending subject to 
appropriations. The bill could transform the FAA from an agency 
financed largely by excise taxes and funded through the 
appropriations process to an agency that charges user fees and 
has the authority to spend the proceeds without appropriations 
action. The fees could total $4.5 billion to $6.5 billion a 
year. ($50 million to $250 million from the general fees, $4 
billion to $6 billion from air traffic control fees, and $0 to 
$500 million from DoD). If the FAA were to maintain its current 
$8 billion budget, $1.5 billion to $3.5 billion would have to 
be appropriated from the general fund or the remaining trust 
fund balances. (For fiscal year 1996, $5.7 billion has been 
appropriated from the trust fund and $2.5 billion from the 
general fund.) If S. 1239 is enacted and the trust fund taxes 
are terminated, the FAA's appropriation could be reduced by 
$4.5 billion to $6.5 billion, with new direct spending 
replacing the previously appropriated funds. However, this bill 
would allow the FAA to collect about $100 million a year (no 
more than $50 million from the general fees and a little more 
than $50 million from the air traffic control fees) without 
various contingencies being met. In addition, the FAA would 
receive between $0 and $500 million from DoD, but this would be 
an intragovernmental transfer and would have no net budgetary 
impact.
    Both the change in fee collections and the resulting 
expenditures would affect direct spending in each year, but the 
effects would be offsetting and there would be no net impact on 
aggregate direct spending over time. CBO has no basis for 
projecting the year-by-year effects on direct spending, because 
they would depend, to a large degree, on future legislative 
actions and on future FAA decisions as to what fees it would 
charge and how it would spend the proceeds. Initially the FAA 
would be able to collect less than $100 million a year from 
non-DoD sources. The rest would be contingent on future 
Congressional actions. The following table shows the estimated 
budgetary impact of the fees that would result directly from 
this bill.

----------------------------------------------------------------------------------------------------------------
                                                              1996       1997       1998       1999       2000  
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Estimated budget authority:                                                                                     
    Offsetting receipts..................................  .........        -50       -100       -100       -100
    FAA spending.........................................  .........         50        100        100        100
                                                          ------------------------------------------------------
      Total budgetary authority..........................  .........          0          0          0          0
                                                          ======================================================
Estimated outlays:                                                                                              
    Offsetting receipts..................................  .........        -50       -100       -100       -100
    FAA spending.........................................  .........         44         94        100        100
                                                          ------------------------------------------------------
      Total outlays......................................  .........         -6         -6          0          0
----------------------------------------------------------------------------------------------------------------

    Some provisions of the bill would add to the FAA's 
administrative costs, while others would diminish them. As the 
new fees are collected and available for expenditure, the FAA 
would require a smaller appropriation in order to maintain its 
current budget of $8.2 billion. But if S. 1239 is enacted, the 
FAA would face additional costs of about $30 million in the 
first year or two and long-term annual costs of about $10 
million to carry out the administrative requirements of the 
bill. The FAA also may incur added costs by paying higher wages 
than permitted under the current personnel system, but could 
achieve some savings from procurement reforms. Because the 
potential impact of these provisions is very uncertain and some 
of the changes would occur under current law, CBO cannot 
estimate the overall impact of the bill on discretionary 
spending by the FAA. On balance, the bill is likely to lower 
such spending because a significant portion of the agency's 
current spending would probably be replaced by new direct 
spending.

Direct spending

    S. 1239 would establish two sets of new user fees. 
Establishing and running a system to collect these fees would 
cost the FAA about $25 million in the first year and $5 million 
to $10 million annually thereafter.
    Budgetary Classification of Fees. These fees could be 
classified as either offsetting receipts (on the outlay side of 
the budget) or governmental receipts (shown on the revenue side 
of the budget). The classification could depend, at least in 
part, on how the FAA structures the new fees. Fees that are 
established as charges for business-type services and are based 
on the cost or value of the service being provided are 
generally classified as offsetting receipts or collections. 
Alternatively, fees that have little or no relation to the cost 
or value of the service being provided and reflect the federal 
government's sovereign power to tax are generally classified as 
governmental receipts.
    Sections of S. 1239 indicate that the fees to be 
established are intended to be offsetting receipts; however, 
the bill also directs the FAA to consider factors other than 
the cost or value of the service being provided, such as how 
much parties are currently paying in aviation trust fund taxes 
and the impact the fees would have on regional air carriers. 
Based on the bill's stated intent and the general nature of the 
proposed cost-related fees, CBO assumes for the purposes of 
this estimate that fees established under S. 1239 would be 
categorized as offsetting receipts. It is possible, however, 
that some of the fees would be categorized as governmental 
receipts.
    General Fees. The first set of fees would be imposed for 
training, licensing, regulatory proceedings, certification, and 
overflight services (including services to foreign governments) 
provided by the FAA. It would be difficult for the FAA to 
collect any sizable amounts in fiscal year 1997. S. 1239 would 
prohibit the agency from collecting any fee created by this 
bill until six months after the FAA submits the required cost 
allocation and funding studies to the Congress. The bill would 
require the FAA to complete these studies six months after 
enactment. S. 1239 also would prohibit the FAA from collecting 
fees for certification services provided to aircraft 
manufacturers until it starts collecting the air traffic 
control fees (discussed below), some of which would commence 
thirteen and one-half months after enactment. In addition, 
starting in fiscal year 1998, the FAA would not be able to 
collect any of the fees for training, licensing, regulatory 
proceedings, and certification services provided to domestic 
members of the aviation community if outlays from the aviation 
trust fund for those purposes are less than the tax collections 
of the trust fund in the previous fiscal year.
    CBO estimates that, starting in fiscal year 1998, the FAA 
could collect no more than $50 million annually without regard 
to future appropriations action. However, if all the 
contingencies are met, the FAA would collect between $50 
million and $250 million a year. At this time, the FAA has not 
determined for which specific services it would charge fees and 
how much it would charge. In any case, these fees would have no 
net impact on direct spending over time because the funds 
collected would be immediately available for expenditure.
    Air Traffic Control Fees. Another set of fees would be 
imposed on aircraft operators for air traffic control services. 
These fees could not be imposed on any segment of the aviation 
community that currently pays aviation trust fund taxes until 
the taxes are terminated for that segment. Sport, recreational, 
and agricultural aircraft would be exempted from ever paying 
these fees. To the extent that air traffic control fees are 
imposed, they would have no net effect on direct spending over 
time because the funds would be immediately available for 
expenditure. However, as these funds are collected and 
available for expenditure, the FAA would require a smaller 
appropriation to maintain its current $8.2 billion budget.
    The amount of funds that these fees would generate is 
uncertain. The air traffic control system costs the federal 
government about $6 billion annually. For the purpose of 
setting fees, the FAA may decide to also count as an air 
traffic control service $1.5 billion a year in federal grants 
for airport improvement, because these funds maintain or 
increase the capacity of the air traffic control system. Thus, 
the FAA could collect no more than $7.5 billion if the fees are 
based on the cost of the service being provided. However, the 
military would not pay these fees--it would only pay the 
reimbursement costs discussed below--and a sizable portion of 
the general aviation community--sport, recreational, and 
agricultural aircraft--would be exempted. Therefore, we 
estimate that the most likely level of FAA collections would be 
between $4 billion and $6 billion a year. However, the FAA 
would only be able to collect a little more than $50 million 
until the aviation trust fund taxes are terminated. These funds 
would come from civilian government aircraft operators (this 
segment does not currently pay aviation trust fund taxes) and 
air carriers who operate in U.S. territories (the bill directs 
them to pay the fees immediately).
    Because the bulk of the air traffic control fees would be 
contingent on the termination of current aviation trust fund 
taxes, any future bill that terminates these taxes would be 
scored for the loss of the tax revenues, the receipts from the 
new air traffic control fees, and the resulting new direct 
spending. Because the air traffic control fees and the 
resulting spending would offset each other over time and 
because the aviation trust fund taxes generate about $6 billion 
a year, such future legislation would be scored with increasing 
the deficit by about $6 billion a year.
    Department of Defense Reimbursement. The bill would require 
DoD to reimburse the FAA for the net air traffic control 
services that the FAA provides to DoD. Currently, the FAA 
provides the military with about $1 billion a year of air 
traffic control services, but some of that amount would be 
offset by the value of air traffic control services DoD 
provides. Because there is some disagreement about the value of 
DoD's contributions to the air traffic control system, the size 
of the reimbursement is uncertain. Any reimbursement would come 
from appropriated DoD funds and would be immediately available 
for expenditure by the FAA. Hence, this provision would not 
necessarily change the amount spent for air traffic control, 
but could shift some of the financial burden from the FAA to 
DoD.
    Essential Air Service. Starting in fiscal year 1997, S. 
1239 would annually earmark $50 million for the essential air 
service program from fees collected under this act or any other 
funds provided to the FAA (i.e., appropriated funds). Because 
these funds would have otherwise been spent for other purposes, 
this provision would have no impact on federal spending. 
Finally, the bill directs the FAA to spend on rural air safety 
any of the fees that are not obligated or expended at the end 
of a fiscal year for the essential air service program. It is 
unclear if ``fees'' refers to the $50 million earmarked for 
essential air service or the remaining portion of all the fees 
collected. If the Department of Transportation takes the latter 
interpretation, all of the fee income generated by this act 
would be earmarked for essential air service and rural air 
safety.

Spending subject to appropriations

    Personnel and Procurement Reform. The process of developing 
the new personnel and procurement systems would cost the 
federal government less than $5 million over the next year. In 
addition, exempting the FAA from personnel requirements and 
allowing the agency to offer wages that are competitive in the 
private market, in order to retain its most qualified 
employees, could significantly increase the FAA's personnel 
costs. However, enacting S. 1239 could reduce the FAA's costs 
by streamlining the agency's acquisition process through 
procurement reform. Streamlining the process could lead to 
savings in administrative, operation, and maintenance costs. On 
the other hand, if the procurement system is streamlined, the 
rate at which the facilities and equipment program spends its 
funds could increase. Most of these personnel and procurement 
reforms have already been enacted into law; the 1996 
transportation appropriations bill (Public Law 104-50) includes 
essentially the same reforms as contained in S. 1239. CBO 
cannot estimate the additional budgetary impact of the reforms 
in S. 1239 because it is not clear how they would be carried 
out or if they would achieve their goals. For example, the 
General Accounting Office has reported that the FAA's 
acquisition problems have less to do with the procurement 
process than with the extremely complex systems that it has 
tried to acquire.
    S. 1239 would provide for the development of a personnel 
management system for the FAA, in consultation and negotiation 
with representatives of FAA's employees. The bill would require 
these negotiations to be completed 90 days after enactment. If 
no agreement is reached within 90 days, the bill would require 
the use of the Federal Mediation and Conciliation Service 
(FMCS) to reach an agreement. The FMCS is an independent agency 
of the federal government, which performs mediation, 
arbitration, and alternative dispute resolution services for 
both federal and private disputes. In fiscal year 1995, $31 
million was appropriated to this agency, and the agency 
conducted over 22,000 mediation conferences. CBO estimates that 
the additional mediation required by S. 1239 would cost less 
than $500,000.
    Other Administrative Costs. S. 1239 would require the FAA 
to establish a Management Advisory Committee and an innovative 
financing panel, expedite its rulemaking process, and carry out 
various studies. These requirements would cost less than $2 
million a year, beginning in fiscal year 1996.
    6. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. CBO estimates that enactment 
of S. 1239 would affect direct spending; therefore, pay-as-you-
go procedures would apply to the bill.
    The bill would impose several new user fees. The new fees 
would be immediately available for expenditure, but collections 
would come in faster than money would be spent. The net impact 
would be a small net decrease in outlays in the initial years, 
as shown in the following table.

------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Change in outlays......................         --         -6         -6
Change in receipts.....................      (\1\)      (\1\)      (\1\)
------------------------------------------------------------------------
\1\ For purposes of this estimate, CBO assumes that all fees under S.   
  1239 would be classified as offsetting receipts (negative outlays).   

    7. Estimated cost to State and local governments: S. 1239 
would allow the Federal Aviation Administration (FAA) to impose 
fees on users of air traffic control services, including state 
and local governments, within one year of enactment. CBO cannot 
determine what types of fees the FAA might impose on state and 
local governments or what percentage of costs they would try to 
recover. Based on a cost allocation study undertaken for the 
FAA, CBO estimates that the maximum cost to civilian 
governments (including federal) would be approximately $50 
million a year (assuming full recovery). Our review of aircraft 
registration data suggests that more than half of these costs 
would be borne by state and local governments.
    8. Estimate comparison: None.
    9. Previous CBO estimate: On November 22, 1995, CBO 
transmitted a cost estimate for H.R. 2276, the Federal Aviation 
Administration Revitalization Act of 1995, as ordered reported 
by the House Committee on Transportation and Infrastructure on 
November 1, 1995. S. 1239 and H.R. 2276 contain similar 
reforms. However, H.R. 2276 would make the FAA an independent 
agency and take the Airport and Airway Trust Fund off-budget. 
In addition, H.R. 2276 does not contain the new fees that would 
be established under S. 1239.
    10. Estimate prepared by: Federal Cost Estimate: John 
Patterson, Jeanette Van Winkle, and Christi Hawley. State and 
Local Cost Estimate: Marc Nicole.
    11. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported.

                       Number of Persons Covered

    The user fee systems developed under the bill will require 
a new approach for the determination and collection of the user 
fees. However, the overall number and types of businesses and 
individuals regulated by the FAA is not expected to increase. 
Currently, individuals or businesses flying over the United 
States utilize this country's ATC services without compensating 
the United States for such services. This bill would enable the 
FAA to charge a fee for providing ATC services for those 
overflights. As a result, a new fee system would be required 
and would apply to a new group of individuals and businesses.
    The regulatory and rulemaking reforms contained in the bill 
are expected to reduce the level and nature of current FAA 
regulation of the aviation community.
    The streamlined procurement and personnel systems developed 
pursuant to the bill may lead to fewer regulations and less 
paperwork for potential FAA contractors and suppliers as well 
as new job applicants.

                            Economic Impact

    Unneeded or unduly burdensome regulations ultimately should 
be eliminated or refined because of the regulatory reform 
provisions contained in the bill. The economic impact of 
regulations would decrease for affected individuals or groups.
    When the new user fee systems go into effect, the economic 
impact is somewhat difficult to estimate because the precise 
nature and extent of the fee systems cannot be known until they 
are developed. Nevertheless, such fee systems are expected to 
have some economic impact on the affected segments of the 
aviation community and its related industries. For example, 
manufacturers of aircraft and related products are likely to be 
impacted because they are likely to pay for the first time fees 
related to the certification process. It is significant, 
however, that any such impact would be substantially less than 
the impact on manufacturers that would result from a reduced 
FAA budget that failed to address the need for timely 
certification services. Furthermore, the failure to act on the 
bill may adversely impact the overall profitability of the 
aviation industry if budget constraints force service 
reductions.
    By contrast, if a system of ATC fees is implemented, it 
could have a significant, positive impact on the air carrier 
industry and those who use its services. As discussed in a CBO 
report, if the FAA and users of the ATC system recognize the 
costs of the system in the form of fees and factor them into 
operational decisions, the ATC system can become more efficient 
as a whole. (See, ``Paying for Highways, Airways, and 
Waterways: How Can Users Be Charged?'' Congressional Budget 
Office, May 1992.) The willingness of users to pay fees for ATC 
services also serves as an indication of which additional 
investments should have the greatest benefits and should help 
FAA set priorities for such things as phasing in new 
technologies and equipment. Air carriers estimate that delays 
and inefficiencies in the ATC system cost the industry and its 
customers $3.5 to $5 billion annually. Effective ATC user fees 
could have a tremendously beneficial economic impact if the ATC 
system becomes more efficient.

                                Privacy

    This legislation will not have any adverse impact on the 
personal privacy of the individuals affected.

                               Paperwork

    Although some current paperwork is likely to be reduced 
when the current systems of paying excise taxes are replaced 
with the new user fee systems, any such new systems are likely 
to involve a net increase in paperwork for affected parties. 
Nevertheless, the Committee and those paying the new fees will 
keep pressure on the FAA to reduce the burden of new paperwork 
through development of cost effective methods of fee 
collection. If, as expected, current rules and regulations are 
eliminated or amended due to regulatory reforms contained in 
this bill, affected individuals and businesses may have 
reductions in paperwork.

                      Section-by-Section Analysis

Section 1. Short title and table of sections

    Section 1 cites the short title of the bill as the ``Air 
Traffic Management System Performance Improvement Act of 
1996''. This section also contains a table of sections for the 
entire bill.

Section 2. Definitions

    Section 2 defines the terms ``Administration'', 
``Administrator'', and ``Secretary'' for the purposes of this 
legislation.

Section 3. Effective date

    Section 3 establishes that the provisions of the bill will 
take effect 30 days after enactment of the legislation.

                      TITLE I--GENERAL PROVISIONS

Section 101. Findings

    Section 101 sets forth a series of findings establishing 
the general basis for enactment of the provisions contained in 
the bill. The findings recognize, for example, the unique 
character of the FAA's activities and the need for personnel, 
procurement, and funding reform.

Section 102. Purposes

    Section 102 sets forth six critical purposes underpinning 
the bill.

Section 103. Regulation of civilian air transportation and related 
        services by the Federal Aviation Administration and Department 
        of Transportation

    Section 103 amends section 106 of title 49, United States 
Code, to provide the FAA Administrator express autonomy and 
authority with regard to the internal functioning of the 
agency. As the current law provides, the FAA Administrator 
would be appointed by the President, with the advice and 
consent of the Senate, for a fixed, 5-year term. The Committee 
believes that helping to ensure that future Administrators 
remain in their position for the duration of their terms is of 
the utmost importance, because frequent turnover in the past 
has had a detrimental effect on the agency.
    Some authority previously transferred to the DOT under the 
Department Of Transportation Act (P.L. 89-670) would be 
recommitted to the FAA under this section. Pursuant to this 
section, the Administrator would be the final authority for: 
the appointment and employment of all FAA employees (except for 
political appointees); the acquisition and maintenance of FAA 
property and equipment; the promulgation of all FAA rules and 
regulations (except as otherwise specifically provided in the 
bill); and for any obligation, authority, function, or power 
addressed in the bill.
    This increased autonomy for the Administrator stems from 
concerns that the DOT, on occasion, has unnecessarily involved 
itself with the operations and activities of the FAA. In that 
regard, this section specifically preserves the Administrator's 
existing authority for exercise by the Administrator, 
reaffirming that, as envisioned in the enactment of the 
provisions of existing section 106 of title 49, Congress did 
not intend that the FAA's operational, safety, and technical 
capabilities be duplicated within or exercised by the DOT. This 
section complements and affirms these existing FAA safety 
authorities by providing the Administrator additional autonomy 
and authority to better manage activities of the agency without 
undue second-guessing or interference.
    This section enables the Administrator to delegate his or 
her functions, powers, or duties to other FAA employees. 
Further, the Administrator would not need to seek the approval 
or advice of the DOT on any matter within the authority of the 
Administrator. Nevertheless, the FAA remains within the DOT, 
which would continue to provide general oversight of the agency 
as well as cooperate with the more autonomous FAA. The FAA must 
remain accountable, especially given the considerably enhanced 
authority it is provided in this bill. Although the DOT has 
some role in that regard, it should not interfere in the FAA's 
purely internal workings.
    This section also gives the Administrator some voice in the 
selection of the eight political appointees who serve under him 
or her. The President would consult closely with the 
Administrator when considering FAA appointments to ensure 
harmony and stability within the FAA's leadership. The 
Committee strongly believes the FAA should be a professional, 
service-oriented organization. Political appointees should be 
chosen based on their appropriate skills that will further the 
mission of the FAA, consistent with the Administration's 
policies. The leadership of the FAA should be chosen based on 
the knowledge, expertise, and experience of its members, and 
for their commitment to a safe, effective, and efficient 
national air transportation system.
    This section adds a definition of ``political appointee'' 
to the statute. This section also preserves all authority 
vested in the Administrator (by delegation or by statute) prior 
to enactment of the bill. Nothing in this bill is meant to take 
anything away from any of the current powers, duties, or 
authority resting with the FAA or its Administrator.

Section 104. Regulations

    Section 104 affirms the Administrator's authority to issue, 
rescind and revise such regulations as necessary to carry out 
the functions of the FAA. The Administrator would be required 
to act upon a petition for rulemaking within six months by 
dismissing the petition, by informing the petitioner of an 
intention to dismiss, or by issuing a notice of proposed 
rulemaking (NPRM) or advanced notice of proposed rulemaking 
(ANPRM). This provision is meant to address concerns the FAA is 
not sufficiently responsive to rulemaking petitions filed by 
interested parties.
    This section also requires the Administrator to issue a 
final regulation, or take other final action, on an NPRM within 
18 months of the date it is published in the Federal Register 
(or within 24 months in the case of an ANPRM). This section is 
intended to address criticism by some in the aviation community 
that the FAA's current rulemaking process often takes too long. 
This section also recognizes that, because very few rules will 
be submitted to the DOT under the new provisions, the FAA can 
be held more accountable for timely performance in its 
rulemaking.
    Under this section, the DOT's authority to review FAA rules 
is limited. In specified, limited circumstances, the FAA could 
not issue certain regulations without the prior approval by the 
DOT. The DOT Secretary would have 45 days to review, for 
approval or disapproval, any FAA regulation likely to result in 
an annual, aggregate cost of $50 million or more to state, 
local, and tribal governments, or to the private sector. The 
DOT Secretary would also have 45 days to review ``significant'' 
regulations, which subsection (b)(1) specifies are rules that, 
in the judgment of the Administrator (in consultation with the 
Secretary, as appropriate), are likely to: have an annual 
effect on the economy of $100 million or adversely affect in a 
material way other parts of the society; be inconsistent or 
otherwise interfere with an action taken or planned by another 
agency; materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or raise novel legal or 
policy issues arising out of legal mandates. The criteria for 
determining a ``significant'' regulation are modeled on 
Executive Order 12866 as printed in the Federal Register on 
October 4, 1993 (Vol. 58, No. 190).
    This section also provides that in an emergency, the 
Administrator may issue regulations that require DOT approval 
without obtaining such prior approval. Such regulations, 
however, are subject to DOT ratification, and would be 
rescinded within 5 business days without such ratification.
    Under this section, the Administrator also would issue non-
significant regulations or other actions that are routine, 
frequent or procedural in nature, without review or approval by 
the DOT. Examples of routine or frequent actions that are non-
significant include standard instrument approach procedure 
regulations, en route altitude regulations, most airspace 
actions, and airworthiness directives. The DOT also would not 
be authorized to review ``rules of particular applicability,'' 
such as exemptions, operations specifications, and special 
conditions, all of which apply to one individual or entity, 
unless such exemptions met the definition of significant in 
this section.
    Finally, this section requires the FAA (three years after 
the bill is enacted) to review ``unusually burdensome'' 
regulations that are at least three years old. ``Unusually 
burdensome'' regulations are defined as those that result in 
the annual, aggregate expenditure of $25 million or more by 
State, local, and tribal governments, or by the private sector. 
Such regulations are to be reviewed to determine: the accuracy 
of the original cost assumptions; the overall benefit of the 
regulations; and the need to continue such regulations in their 
present form. This section also provides that the Administrator 
may review immediately any three-year-old regulation in force 
prior to enactment of the bill, such as rules issued in 1988 
regarding certification of foreign maintenance facilities used 
to repair or maintain U.S. aircraft. The Committee expects the 
FAA to use the MAC and the Aviation Rules Advisory Committee 
(ARAC), as appropriate, in the process of any of these reviews. 
Of course, with regard to any reviewed regulations, FAA should 
eliminate those that are truly harmful or burdensome, revise or 
modify those with some overall value, and retain those that are 
truly worthwhile and promote a safe and healthy ATC system and 
aviation industry.

Section 105. Personnel and services

    Section 105 provides that the Administrator may appoint and 
fix the compensation of necessary employees and officers of FAA 
and fix their compensation. This section also provides that, in 
fixing the compensation and benefits of employees, the 
Administrator may not engage in any type of collective 
bargaining, except as provided for under section 203(c). 
Further, this section provides that the Administrator shall not 
be bound by any requirement to establish compensation or 
benefits at particular levels.
    This section also provides other personnel authority to the 
Administrator, including, for example, the authority to hire 
experts and consultants and to use the services of personnel 
from any other Federal agency.
    This section represents one more element of the bill that 
defines the Administrator's authority over internal FAA 
matters. It provides the Administrator with powers and 
authority similar to those given to the head of an independent 
agency.
    This section also provides that officers and employees 
shall be appointed in accordance with civil service laws and 
compensated in accordance with title 5, United States Code, 
except as otherwise provided by law. This particular provision 
applies only to the time period between the effective date of 
the bill and the effective date of the new personnel system 
implemented under section 203.

Section 106. Contracts

    This section provides broad, general authority for the 
Administrator to enter into contracts, leases, cooperative 
agreements, and other transactions, as necessary to carry out 
the functions of the FAA.
    The Committee encourages the use of authority granted under 
this section to contract with foreign governments for services 
the FAA can provide civil aviation authorities in other 
countries as a means of generating revenue. The FAA has 
indicated that significant revenue may be generated from such 
arrangements. The FAA should provide an annual summary of such 
revenue to the Committee. In addition, the term ``cooperative 
agreements'' is included in this section to ensure that the FAA 
can receive in-kind goods or services from an individual, 
business, or government. Such goods or services may be used to 
offset any relevant or applicable fees one may be required to 
pay the FAA.
    The Committee also encourages the FAA to examine the 
possibility of using authority under this section to enter into 
lease arrangements for the facilities and equipment needs of 
the FAA. Leasing arrangements may lead to substantial cost 
savings and efficiency gains at the agency.

Section 107. Budget

    Section 107 establishes a requirement for the Administrator 
to prepare a budget for the FAA, beginning with the fiscal year 
following the first fiscal year in which the FAA is funded 
entirely by user fees. The Administrator would be required to 
consider recommendations of the Secretary concerning 
modifications to the budget, and may modify the FAA's budget to 
adopt any recommendation made by the Secretary. This section 
also establishes a process for notifying the Congress of budget 
and legislative actions the Administrator has submitted to the 
Office of Management and Budget or the President. 
Significantly, the section requires that the Administrator 
include with any report or request for an increase in the 
budget established under this section, or for an increase in 
user fees, an explanation of the need for the increase and a 
statement of the steps taken by the FAA to reduce costs and 
improve efficiency.
    If the FAA eventually becomes entirely user funded, the FAA 
will be able to spend its funds without appropriations actions. 
The Committee, however, does not expect this to occur prior to 
FY 2003. The Committee also recognizes the need for the 
Congress to continue appropriations from the General Fund, 
particularly for those segments of the aviation community that 
are not required to pay all the costs of the government 
services and benefits they receive and for general FAA 
functions, including inspections and administrative and 
overhead costs not directly related to service activities.

Section 108. Facilities

    This section provides the Administrator with authority to 
use or accept, with or without reimbursement, services, 
equipment, personnel, and facilities of any other Federal 
agency or public or private institution. Such acceptance would 
not constitute an augmentation of the Administration's budget. 
Heads of other Federal agencies would be asked to cooperate 
with the Administrator.

Section 109. Property

    This section provides broad authority to the Administrator 
to acquire, construct, improve, repair, operate, and maintain 
air traffic control and research facilities and equipment, as 
well as other real and personal property. Further, the 
Administrator is authorized to lease such real and personal 
property to others.

Section 110. Select panel to review innovative funding mechanisms

    Section 110 directs the Administrator to establish a select 
panel to review and report to Congress (within 9 months after 
the last member is appointed to the panel) on limited 
innovative funding mechanisms, including government sponsored 
enterprises, to ensure adequate funding for specific aviation 
infrastructure needs, including airport capacity and safety 
development and ATC facilities and equipment. Panel members 
would include Federal government officials and representatives 
of the aviation industry, FAA employees, the financial 
community, and State and local governments. The entire panel 
should be appointed in a manner timely enough after the date of 
enactment of the bill to allow the panel to quickly begin its 
work and provide policy makers with funding options before 
fiscal year 1997, if at all possible.
    The Committee strongly urges the panel to consult with the 
Congressional Budget Office (CBO) and the Office of Management 
and Budget (OMB) during its consideration of various funding 
mechanisms. In addition, the panel should work closely with the 
Committee throughout its deliberations. It is important for the 
panel's report to take into account the complexities of the 
Federal budget process, including the rules governing it. By 
consulting with CBO, OMB, and the Committee, the panel will 
make recommendations that are both feasible and reasonable.
    The Committee, by this section of the bill, is looking for 
a limited funding prototype to demonstrate that it is possible 
to use innovative techniques to make improvements in the system 
more quickly. The Committee attempted to work out a limited and 
specific plan with the Administration for an innovative 
financing mechanism to facilitate the implementation of 
modernization programs prior to the Committee's consideration 
of the bill. Because of the complexity of such a plan, however, 
an agreement could not be reached in the limited amount of time 
available.
    Funding options will be developed by taking into account 
the independent studies required under section 305. However, 
the panel should begin exploring options and ideas before such 
reports are completed so that options can be selected based 
upon the results of the studies.

Section 111. Transfers of funds from other Federal agencies

    Section 111 permits the Administrator to accept the 
transfer of unobligated balances and unexpended funds from 
other agencies to carry out functions assigned to FAA by this 
or other Acts.

Section 112. Management Advisory Council

    Section 112 establishes a 15-member Management Advisory 
Council (MAC) to provide the Administrator with input from the 
aviation industry and community. The MAC would be comprised of 
designees of the Secretaries of Transportation and Defense (one 
each) and representatives from various segments of the aviation 
community who would be appointed by the President after 
consulting with the Senate. Members of the MAC should be 
selected from among individuals who are experts in disciplines 
relevant to the aviation community and who are collectively 
able to represent a balanced view of the issues before the FAA.
    This section specifically provides that six of the MAC 
members must represent commercial air carriers, whose 
businesses generate the largest proportion (estimated to be 
more than 90 percent) of revenues flowing into the current 
trust fund system. Among these six air carrier representatives, 
at least one must represent cargo carriers, one must represent 
regional carriers, and two must represent major carriers 
earning less than $4 billion annually in gross revenues.
    The Committee believes the President should choose the 
members of the MAC from names provided by this Committee and 
the House Transportation and Infrastructure Committee. The 
consent of the Senate was not mandated with regard to MAC 
appointees because of the requirement to choose members in 
consultation with the Senate, and because it was determined 
that the formal consent process was not needed here and could 
add significantly more time to organizing the MAC and 
initiating its work. The MAC members also should not be 
selected based on political or partisan considerations.
    The Committee does not consider the MAC to be a ``paper 
tiger''. The MAC is to be taken seriously by the FAA and the 
Congress. All views of each member should be taken into account 
so that even minority views can be adopted by the FAA if the 
Administrator regards such views as proper given the 
circumstances. In other words, this is an advisory council, not 
a board of directors for which a majority vote constitutes FAA 
policy. The Administrator must maintain objectivity and keep 
overriding goals and objectives, such as ensuring ATC system 
safety and efficiency, above the infighting that frequently 
occurs within the aviation community.
    The MAC also would be provided authority to review the 
FAA's regulatory cost-benefit process and the process through 
which the FAA issues advisory circulars and service bulletins.
    Two other particular areas on which the MAC should focus 
its oversight are ATC modernization and FAA acquisition 
management. The past problems of the FAA in these areas are 
well known. The Committee does not want the FAA to be free from 
federal procurement rules so that it can simply acquire the 
wrong items more quickly. The Committee therefore believes the 
MAC can be a valuable resource in ensuring the FAA's Capital 
Investment Program emphasizes improving ATC system performance.
    The Administrator would consult with the MAC on many issues 
including the development of user-fee systems to fund the FAA 
as set forth in sections 303 and 304 of the bill. In fact, the 
MAC Chair will set up panels or working groups (from among MAC 
members) that will specifically focus on user fee development.
    The MAC also would provide advice and counsel to the 
Administrator on a regular basis. Although this section only 
provides that the MAC shall meet on a regular and periodic 
basis, or at the call of the Administrator or MAC Chair, the 
MAC should, at a minimum, meet on a quarterly basis.
    To facilitate its advisory function, the MAC must be given 
reasonable access to internal FAA documents and materials. Such 
access, however, must be given with due consideration for 
privacy and proprietary concerns. This section, therefore, 
would subject MAC members to criminal penalties for 
unauthorized disclosure of commercial or other proprietary 
information.

Section 113. Aircraft engine standards

    Section 113 vests the Administrator with new authority 
(currently under the Environmental Protection Agency (EPA)) to 
prescribe standards applicable to the emission of air 
pollutants from aircraft engines. Currently, the FAA only has 
authority over noise emission standards for aircraft engines. 
The Committee believes it is important for one agency to be 
responsible for regulating all aircraft engine emission 
standards so that there is consistency. Nevertheless, the FAA 
should work with the EPA to ensure regulations are consistent 
with national environmental policy, objectives, and efforts. In 
the past, differences between the FAA and the EPA have impeded 
a unified U.S. approach to consideration of international 
emissions standards.
    This section is not meant to alter or eliminate any 
existing federal regulations or standards regarding aircraft 
engine emissions until and unless modified or amended by the 
Administrator.

Section 114. Rural air fare study

    This section requires the DOT Secretary to conduct a study 
of rural air fares, and to provide a report to the Committee 
within 60 days after enactment of this bill. The study would 
encompass an analysis of the types of air service provided to 
rural communities as well as competitive aspects of such air 
service. The requirement to conduct this study stems from 
concerns over any detrimental effects of deregulation of the 
air carrier industry on small communities throughout the 
nation.

    TITLE II--FEDERAL AVIATION ADMINISTRATION STREAMLINING PROGRAMS

Section 201. Innovative program for air traffic control modernization

    Section 201 directs the Administrator, in consultation with 
government and non-government experts, to develop within 180 
days after enactment of the bill a new acquisition management 
system for procurement of all goods and services for the FAA. 
This section of the bill is designed to free the FAA from 
burdensome procurement requirements and to permit the agency to 
operate in a more business-like manner. In developing the 
system, the Administrator would be allowed to waive many 
federal procurement laws. The plan for the new system would be 
submitted to Congress for review, and would go into effect 30 
days thereafter. The FAA is strongly urged to use the authority 
granted in this section to hire experts to assist in the 
development of the system. The FAA is allowed to sole source 
the contract to retain such experts so that the reform of the 
system is not held up by the system itself.
    Any innovative system should consider opportunities for 
small businesses and small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals. Outreach to these businesses will be necessary, 
and the FAA should also encourage its contractors to make 
timely payments to its small business subcontractors.
    Any significant modification to the acquisition management 
system must be submitted to Congress for review prior to 
implementation, in the same manner as required for the initial 
acquisition management system. Incidental or clerical changes, 
however, need not be submitted for review. After the 
procurement system has been in effect for three years, it must 
be reviewed by outside experts to determine whether the system 
has been streamlined without creating waste, fraud, or abuse.
    The DoD would operate under the same procurement system 
when it is engaged in joint acquisitions with the FAA related 
to the national air traffic control system, in which the DoD 
plays an integral part.
    This section and section 203 (personnel system reforms) are 
similar to provisions in the FY 1996 DOT Appropriations bill 
(P.L. 104-50) that give the FAA authority to implement new 
procurement and personnel systems as of April 1, 1996. Title II 
of this bill builds upon those provisions in many ways, 
including a required review of the new systems by Congress. 
During Senate debate of the FY 1996 DOT Appropriations bill, an 
amendment was offered that would have removed the provisions on 
FAA personnel and procurement reform. It was tabled, however, 
in a rollcall vote of 59 to 40. By enacting the personnel and 
procurement reforms in the FY 1996 DOT Appropriations bill, it 
is clear that Congress recognizes the critical need for such 
reforms. The Committee, however, strongly believes even more 
must be done in this area and that this bill fully addresses 
that concern.
    Congress plays an important role in this reform process 
because the FAA is given such wide latitude in most reform 
proposals. It is not intended that Congress should micromanage 
the process of development, but it must ensure industry 
competition, agency fairness, and the right to challenge FAA 
decisions. Because the FAA is rather unique, it needs these 
Title II reforms to streamline its operations and be able to 
meet its unique requirements for such things as modern 
equipment and software. These procurement and personnel 
reforms, therefore, are not intended to be prototypes for 
reform of other parts of the Federal government, but rather as 
modifications required to meet the special needs of the FAA for 
its equipment modernization and safety function.

Section 202. Air traffic control modernization reviews

    Section 202 establishes a safeguard, built into the 
procurement system, that would require the FAA to terminate 
facilities and equipment programs that are 50 percent or more: 
(1) over cost, (2) below performance goals, or (3) behind 
schedule. The Administrator could waive the termination 
requirement if a termination would be inconsistent with the 
safe and efficient operation of the national air transportation 
system. Also, the FAA would be required to consider terminating 
any program that is 10 percent or more: (1) over cost, (2) 
below performance goals, or (3) behind schedule. This section, 
in effect, requires the FAA to set realistic goals and 
standards for major acquisitions, which FAA has had problems 
doing in the past.

Section 203. Innovative program for Federal Aviation Administration 
        services

    Section 203 directs the Administrator to develop within 180 
days after enactment of the bill a new personnel system for the 
management, compensation, and advancement of FAA employees. The 
Administrator must develop the system in consultation with FAA 
employees and in negotiations with the exclusive bargaining 
representatives of employees. If the Administrator fails to 
reach agreement with such bargaining units within 90 days after 
enactment of the bill, the parties will engage the services of 
the Federal Mediation and Conciliation Service. If agreement is 
not reached following mediation, the Administrator must include 
in the plan submitted to the Congress the objections of the 
exclusive bargaining representatives and the reasons for the 
objections. In negotiating the new personnel system, the 
Administrator and the exclusive bargaining representatives 
would be required to use every reasonable effort to find cost 
savings and to increase productivity within each of the 
affected bargaining units as well as within the FAA as a whole. 
Nothing in this bill, therefore, prohibits the exclusive 
bargaining representatives from assisting in identifying cost 
savings in the procurement system as well as the new personnel 
system.
    The overriding goal of FAA reform is the enhancement of 
aviation safety. In this regard, the cost-saving efforts of the 
FAA and the exclusive bargaining representatives in the 
development of a new personnel system is not intended to, nor 
should it, adversely impact aviation safety. Any cost-saving 
effort that adversely affects aviation safety should be deemed 
contrary to the public interest and not be developed or 
implemented. Further, in the annual meeting mandated by this 
section between the FAA and the exclusive bargaining 
representatives to identify additional cost savings within the 
agency, no such cost savings should be contrary to the public 
interest and any identified costs savings that have an adverse 
effect on aviation safety should not be acted upon by the FAA. 
Reasonable discovery and inspection of FAA documents pertaining 
to costs associated with personnel, procurement, and other 
operational budgets should be made available for the above 
cost-saving purposes.
    The plan for the new personnel system would be submitted to 
Congress for review, and would go into effect not earlier than 
30 days thereafter. Although the new system would be exempt 
from many Federal personnel laws and regulations, certain key 
Federal laws protecting workers' rights and benefits would 
still apply to the FAA and its employees, including retirement, 
health and life insurance benefits, and veterans preference.
    The FAA is strongly urged to use authority granted in this 
section to hire experts to assist in the development of the new 
personnel system. The FAA is allowed to sole source the 
contract for retaining such experts so that the reform of the 
system is not delayed by existing burdensome Federal 
regulations.
    The new personnel system would be evaluated after three 
years by outside experts to ensure it has been effective. In 
addition, any significant modification must be submitted for 
Congressional review prior to implementation in the same manner 
as required for the initial personnel management system. 
Incidental or clerical changes, however, need not be submitted 
for such review. The basic rate of pay for any FAA employee, 
however, is capped by the basic rate of pay for the 
Administrator, as set by statute.

   TITLE III--SYSTEM TO FUND CERTAIN FEDERAL AVIATION ADMINISTRATION 
                               FUNCTIONS

Section 301. Findings

    Section 301 sets forth fifteen findings establishing the 
general basis for the provisions in the bill related to FAA 
funding. These findings concern the important services provided 
by the FAA in a variety of critical areas that benefit the 
users of the air transportation system.

Section 302. Purposes

    Section 302 sets forth eight critical purposes underlying 
the enactment of Title III of the bill. Those purposes include 
providing a financial structure for the FAA that would enable 
it to support the future growth in the national aviation, ATC, 
and airport system, and ensuring that funding obtained by user 
fees established under this title would be dedicated solely for 
the use of the FAA.

Section 303. User fees for various Federal Aviation Administration 
        services

    Section 303 creates a new section 45301 under Chapter 453 
of title 49, United States Code, providing authority, with 
certain limitations, for the FAA to establish a performance-
based system for the collection of fees for various services it 
provides. Proposed fees under new section 45301(a)(1) would be 
submitted by the Administrator to the Congress, not later than 
1 year after the bill's enactment, for FAA services other than 
air traffic control, including training, licensing, regulatory 
proceedings, and activities directly necessary for 
certification. Not later than 6 months after the date of 
enactment, the Administrator would transmit a proposed fee 
system under new section 45301(a)(2) for services (other than 
air traffic control) provided to a foreign government and for 
air traffic control services for foreign carrier overflights, 
which could include trans-oceanic flights that use U.S. ATC 
services. Currently, international overflights receive what 
some call a ``free ride'' through the ATC system because they 
consume services, but contribute nothing in trust fund taxes. 
Furthermore, many, if not most, other countries charge our air 
carriers for overflights.
    The concept of a performance-based fee system is at the 
heart of the bill. By using the term performance-based, the 
legislation seeks to create fee systems that would expose (to 
the MAC and Congress) FAA costs of providing each and every 
service, and provide incentives for the FAA to improve its 
performance, as an agency in general, and the ATC system's 
performance. The existing FAA accounting system masks the costs 
of providing the various services, which in turn allows cross-
subsidies, misallocations, and inefficiencies. By knowing the 
cost of a particular service, there will be a basis from which 
to propose alternate ways of providing that service. Moreover, 
determining the costs of the services provided by the FAA is a 
critical initial step to reforming the FAA. The FAA will need 
this information early in the process to be able to make 
informed decisions as to how best to proceed on reform. A 
subsequent step would be to determine what FAA can charge for 
the services it provides based in part on these cost 
determinations and input from the MAC. One example of how such 
cost information can be helpful was the FAA's determination 
that pre-flight services at FAA flight service stations, which 
had cost approximately $9 per transaction, could be provided by 
private businesses for about $2 per transaction.
    The new fee system would automatically go into effect 45 
days after being submitted to Congress, unless disapproved by 
Congress. (Section 305 also mandates that most fees cannot go 
into effect until 6 months after independent studies are 
completed concerning the FAA's budget needs and cost 
allocations, which may affect the effective date of the new fee 
system.) The disapproval procedure in the bill is similar to 
the one used in the military base closure process (i.e., Base 
Closure and Realignment Act, P.L. 100-526).
    A variety of protections or limitations on the fee 
authority are prescribed. For example, in developing fees, the 
Administrator must consider the impact on segments of the 
aviation industry and the fair value or cost of the service 
provided. The Administrator would be prohibited from charging 
fees for the direct costs of accident investigations, or for 
the costs of inspections of, or enforcement actions initiated 
against, any segment of the aviation industry. Such activities 
or functions are separate from anything that can reasonably be 
regarded as a service. Further, in the express case of aircraft 
manufacturing certification services, the section prescribes a 
series of factors governing the establishment of such fees. In 
addition, the Administrator's otherwise broad fee authority 
would be circumscribed by an express prohibition against 
charging for administrative and overhead costs not directly 
related to aircraft manufacturing certification service 
activities.
    In developing user fees under this section, the 
Administrator also is called upon to consult with the MAC and, 
to the maximum extent feasible, to seek to develop a consensus. 
Any segments of the aviation community affected by the fees, 
but not represented on the MAC, should also be consulted on 
development of fees applicable to such segments.
    This section prohibits the Administrator from implementing 
a fee under new section 45301(a)(1) unless, in the preceding 
fiscal year, the sum of the outlays from the Airport and Airway 
Trust Fund exceeds the receipts of such Trust Fund. Also, a fee 
for aircraft manufacturing certification services could not be 
imposed before a fee is imposed for air traffic control 
services under section 304. This provision ensures that 
aircraft manufacturers will not have fees imposed upon their 
segment alone without other parts of the aviation industry 
being affected at the same time.
    Additionally, fees imposed under new section 45301(a)(1) 
would terminate 3 years after becoming effective. The 
Administrator must submit a proposed replacement fee system to 
the Congress, not less than 6 months before the automatic 
termination date of the existing fee system. Any replacement 
system must be developed in consultation with the MAC. 
Moreover, when proposing a replacement fee system, the 
Administrator must transmit with the proposed system a report, 
conducted by independent experts, of the effectiveness of the 
standards established for the fee system the proposed system is 
intended to replace. The new fee system would be subject to the 
same Congressional disapproval process as the original fee 
system. The legislation does not provide a mechanism by which 
the Administrator can raise or modify user fees established 
pursuant to new section 45301(a)(1) apart from the process 
prescribed in this section.
    Within six months of the bill's enactment, the FAA also 
must enter into an agreement with the DoD setting forth how the 
DoD will reimburse the FAA for ATC services provided to the 
DoD. Currently, the General Fund contribution to the FAA budget 
is, in part, meant to compensate for DoD use of ATC services. 
Although the DoD provides ATC services in conjunction with the 
FAA, the FAA estimates the DoD annually receives a net benefit 
of approximately $400-600 million. FAA use of the global 
positioning system (GPS) should not be a significant factor in 
the reimbursement agreement with the DoD. (GPS was not designed 
for civil aviation usage, and the FAA must spend hundreds of 
millions of dollars on programs such as the Wide Area 
Augmentation System (WAAS) so that GPS can be used effectively 
for navigation of the airways.)
    The Committee expects that any fees and charges developed 
under new section 45301(a)(1) shall not, to the maximum extent 
possible, unreasonably restrain competition by being, for 
example, unfair, unreasonable, unjustly discriminatory among 
current or potential users of the FAA's services, or 
unreasonably disadvantageous to new entrants or entrepreneurs. 
Any proposed fees also should not provide the wrong incentives 
to the FAA. For example, the use of per hour charges only for 
certification activities might encourage the FAA to spend too 
much time performing that service. However, the Committee is 
not prohibiting the FAA from using time as one or more of the 
factors upon which a fee can be based. Such a determination 
will be made following input from affected parts of the 
aviation community and consideration of relevant circumstances.
    The fee systems authorized under this section and section 
304 are not meant to provide a ``blank check'' to the FAA. The 
agency must commit itself, in no uncertain terms, to keeping 
its own costs down rather than increasing fees. The MAC and the 
independent studies on FAA budget needs and cost allocation 
should help keep pressure on the FAA to justify its spending 
and become more efficient. The FAA also must maximize its 
collection of existing fees and utilize existing authority to 
impose fees where it is not currently doing so.
    It is envisioned that the FAA will move as quickly as 
possible to develop these systems. This is particularly 
relevant for the proposed fees on international overflights and 
for non-ATC services provided to foreign governments. The 
sooner that funds can be drawn from those services, the better 
off the FAA will be in the short-term.

Section 304. User fees for air traffic control services

    Section 304 requires that within one year of enactment of 
this legislation, the Administrator submit to Congress a 
proposed performance-based fee system for users of ATC 
services. With limited exceptions (e.g., international 
overflights), such fees could not be imposed on a particular 
segment of the aviation community (e.g., air carriers) unless 
the user taxes applicable to that particular segment have been 
terminated. General aviation sport and recreation aircraft, 
agricultural aircraft, and certain business aircraft would be 
exempt from ATC fees.
    ATC service fees would be developed in consultation with 
ATC system users through the MAC. Any proposed system for ATC 
user fees would be subject to Congressional review and, unless 
disapproved by Congress under the procedure set forth in 
section 305, would go into effect after a 45-day review period.
    The concept of performance-based fees, which is discussed 
above with regard to section 303 fees, is perhaps more 
applicable to this section of the bill and the air traffic 
management (ATM) part of the ATC system. One measure of the 
performance of the current ATM system is the air carriers' 
estimate that ATC/ATM delays and inefficiencies cost them and 
their customers $3.5 to $5 billion per year. FAA and NTSB 
estimates run even higher. As noted previously, approximately 
two-thirds of the delays are attributable to bad weather. The 
costs resulting from these delays add to the price passengers 
pay for tickets, as well as act as a drag on the U.S. economy, 
which increasingly relies upon a growing and efficient air 
transportation system. The FAA's current financing and cost-
accounting structure is rife with disincentives for the agency 
to improve its performance. Without a new way of operating in 
this regard, it will be difficult or impossible for the FAA to 
become the efficient and effective organization the Committee 
expects it to be. The FAA is expected to commit itself to tying 
a level of performance to its fees and services.
    In developing a fee system under this section, the 
Administrator is required to consider the cost of providing 
each service and a number of other factors, such as the impact 
on air fares (including low-fare, high frequency service) and 
competition, the unique circumstances associated with inter-
island air carrier service in Hawaii, the impact on service to 
small communities, and the impact on services provided by 
regional carriers. Moreover, the Chairman of the Aviation 
Subcommittee believes that any new fees developed should not be 
based solely on arrivals and departures. Because of their 
location on our nation's only island State, Hawaii's residents 
and its largest industry, tourism, depend almost exclusively on 
affordable and frequent inter-island air service. Hawaii lacks 
the traditional alternate means of transportation available in 
the contiguous States. Accordingly, the Committee is concerned 
about any fee systems developed pursuant to the bill that 
substantially increase the financial burden of Hawaii's inter-
island passengers or shippers, because of the impact it would 
have on the cost of inter-island service for Hawaii's residents 
and visitors. The Committee expects, to the maximum extent 
possible, that Hawaii's unique situation be fully considered in 
devising any new fee systems.
    For purposes of the bill, it also is intended that 
commercial passenger airlines, including that portion of their 
operations devoted to the carriage of freight, cargo, property, 
etc. (often referred to as ``belly freight carriage''), be 
considered a separate segment of the aviation industry. It is 
further intended that commercial cargo air carriers, which do 
not devote operations to the commercial transportation of 
passengers, are to be considered as constituting a second, 
separate segment.
    Although business jets are sometimes considered a part of 
the general aviation community, this section recognizes their 
unique nature and defines them as a separate segment of the 
aviation community. Business jets, as defined in this section, 
impose a significant impact upon the ATC system that sport and 
recreation type aircraft usually do not. Since business 
aircraft, especially the high-performance turbine-powered 
variety, fly almost exclusively within the ATC system, they 
impose a much heavier burden on the system than do the small, 
piston general aviation aircraft that use the system much less 
intensively. The most recent FAA cost allocation data from 1991 
indicate that business jets effectively receive an annual 
subsidy of as much as $400-700 million for their use of the ATC 
system. These jets impose costs of over $800 million per year 
on the ATC system, while jet fuel taxes paid by business jets 
amount to only about $90 million per year. If it is confirmed 
by independent studies required by this legislation that 
business jets are not paying their ``fair share'' through 
excise taxes on jet fuel, business jets may be required to pay 
new ATC user fees or have their excise taxes increased.
    As with the section 303 fees, this fee system would 
terminate automatically after a three-year period. Six months 
before the first system terminates, a replacement fee system 
would be developed with the MAC and submitted to Congress under 
the same disapproval process as discussed above. Further, when 
proposing a replacement ATC fee system, the Administrator must 
transmit with the proposed system a report, conducted by 
independent experts, of the effectiveness of the standards 
established for the original fee system. The legislation does 
not provide a mechanism by which the Administrator can raise or 
modify ATC user fees (except for international overflights) 
apart from the process prescribed in this section.
    As previously mentioned, sport, recreation, and 
agricultural aircraft are exempted from ATC fees under this 
section. Sport and recreation aircraft are defined as non-
powered aircraft, rotorcraft, and reciprocating piston-engine 
aircraft not used to provide air carrier service. Except for 
aircraft involved in air carrier service, aircraft involved in 
other commercial ventures are exempted from ATC fees so long as 
they meet the other criteria described in this section. In 
other words, to be exempt from ATC fees, an aircraft need not 
be used solely for ``sport and recreational'' purposes. The 
exemption for agricultural aircraft is meant to cover crop-
dusters or similar aircraft used directly for growing crops. 
However, an aircraft is not exempt solely because it is owned 
by an agricultural business or concern. These portions of the 
general aviation community are exempted because of concerns 
they would avoid using the ATC system if such use meant 
incurring a fee. If such members of the general aviation 
community did not use the ATC system, the safety of the entire 
system could be jeopardized. In addition, the administrative 
costs of imposing ATC fees on much of the general aviation 
community could be excessive. It is estimated that this 
exemption would cover 93 percent of all U.S. registered 
aircraft.
    Although the bill exempts most of general aviation from ATC 
fees, it is not necessarily intended general aviation should 
not pay more into the system. The independent cost allocation 
study mandated by section 305 may ultimately confirm the belief 
of many observers (and the results of other studies) that taxes 
generated by general aviation do not cover its allocated share 
of FAA costs. If that is the case, then a means for general 
aviation to pay its ``fair share'' should be considered. As 
mentioned in one of the findings to the bill, to the extent the 
Congress determines that a certain segment of the aviation 
community is not required to pay all of the costs of the 
government services which it requires and benefits which it 
receives, the Congress should appropriate the difference 
between such costs and any receipts received from such segment. 
The general aviation community has expressed its support for 
the current funding structure as an efficient and transparent 
means of collecting money for their usage of the system. In 
fact, representatives of the general aviation community have 
told the Committee they would rather have their taxes increased 
than pay ATC user fees if the FAA's budget needs can be 
demonstrated and justified. These representatives, however, 
have acknowledged that the methods of providing funds to the 
FAA must be changed. The demonstration and justification of the 
FAA's budget needs will occur with the completion of the 
outside, independent, and objective studies ordered in section 
305.
    The Committee expects that any fees and charges developed 
under this section must not, to the maximum extent possible, 
unreasonably restrain competition by being, for example, 
unfair, unreasonable, unjustly discriminatory among current or 
potential users of the FAA's services, or unreasonably 
disadvantageous to new entrants or entrepreneurs. The 
legislation envisions that, unless otherwise specified, ATC 
fees should be broadly based, covering the full range of direct 
and indirect costs of air traffic-related services and 
activities, including, for example, costs of facilities and 
equipment, research and development, and airport infrastructure 
grants.

Section 305. Administrative provisions

    Section 305 creates a separate, dedicated account 
(established in the Treasury) for all new fees and other 
receipts (except for those associated with the Aviation 
Insurance Program) collected by the FAA. The receipts and 
disbursements of this account would be classified as offsetting 
collections and not be subject to budget caps, the 
appropriations process, or sequestration. Expenditure of 
amounts from the account could be used only for Congressionally 
authorized activities of the agency. This Treasury account goes 
very much to the heart of this bill by ensuring that revenues 
from the aviation community go directly to the FAA for the 
needs of the national air transportation system. Amounts 
credited to the account would not include amounts collected by 
the Administrator which, on the effective date of this Act, 
would be required pursuant to law to be credited to the General 
Fund of the Treasury. Such excluded amounts would continue to 
be credited to the General Fund by the Administrator.
    This section also provides that within 6 months after 
enactment of the bill, the Administrator must select persons 
with no direct financial interest in the results of the studies 
to perform independent studies assessing FAA costs attributable 
to each segment of the aviation system and reviewing the 
funding needs and assumptions for operations, capital spending, 
and airport infrastructure of the FAA. Costs attributed to 
users should reflect the full range of FAA expenditures and 
activities associated directly or indirectly with a particular 
aviation segment, including, for example, costs of airport 
infrastructure financed in whole or in part by the FAA. Fees 
developed under sections 303 and 304 of the bill (except those 
fees for international overflights and services provided to 
foreign governments) could not be implemented prior to 6 months 
after the independent studies have been submitted to the 
Congress. These studies are urgently needed by the Congress and 
the aviation community so proper evaluation of the FAA's 
financial picture can be done using a single, objective set of 
numbers and assumptions.
    According to the GAO, since the advent of the National 
Airspace System (NAS) plan in 1982, the FAA has spent more than 
$19.8 billion attempting to fulfill this blueprint for the 
future. Under the more ambitious and recently revised Capital 
Improvement Plan (CIP), it is anticipated that at least another 
$17.5 billion will be spent through the early years of the next 
century. The scope, complexity, and cost of the FAA's 
requirements appear to necessitate a complete, top-to-bottom 
review. The six-month delay between completion of the reports 
and fee implementation allows time for the results of the 
studies to be considered in developing fees.
    This section of the bill directs that the independent 
review of FAA spending, including airport capital 
infrastructure programs and needs, must be conducted prior to 
discussing any airport financing. The Committee believes that 
the report must contain an analysis of current and future 
spending of the entire FAA, including airport capital needs. A 
major premise of this legislation is that old assumptions and 
old ways of doing business must be reevaluated and updated. 
This includes an independent assessment of the FAA's needs and 
the nation's airport capital needs to ensure that capacity is 
able to meet demand. As a result, the Congress and the FAA must 
be in a position to determine which projects expand capacity 
and enhance the safety and security of the national air 
transportation system.
    The review and report should provide assistance to Congress 
as to appropriate reforms, which will allow the FAA and 
airports to more efficiently utilize and maximize Airport 
Improvement Program (AIP) dollars for necessary capacity, 
safety, and security.
    With regard to funding mechanisms, the study also should 
examine all existing funding options available for airport 
development. This is not limited to AIP and Passenger Facility 
Charges (PFCs), but should include airline and concession 
revenues, non-aeronautical revenues, and state and local 
funding sources. The Committee wants the study to evaluate the 
role that existing non-Federal funding sources have played and 
can play in financing airport capital projects. In addition, 
the report should identify specific instances in which airports 
have been unable to accomplish capacity-enhancement, safety or 
security projects because of airline interference or 
``majority-in-interest'' clauses, and the overall magnitude of 
this purported problem.
    The GAO recently issued a report stating that a majority of 
PFC funds were for terminal projects, access roads, and debt 
service. The Committee is concerned this program has not been 
dedicated to the safety, capacity, and security priorities, 
which the Committee identified in 1990. Because reauthorization 
of the AIP program must occur in the near future, the Committee 
will have an opportunity to closely evaluate this program and 
the FAA's administration of the program consistent with 
Congressional intent. In most instances, the carriers and 
airports are able to work together on funding airport projects, 
and the system works. However, the Committee is aware of one 
instance in which an airport has collected in excess of $150 
million through PFCs, but has not spent the money. The right to 
collect PFCs should not be abused by any airport.
    The Committee expects these studies to be performed 
independently of the FAA. No contractor, FAA employee, or other 
person with a financial interest in the result of such studies 
shall be utilized to analyze, comment, or validate those 
aspects of the FAA's financial picture in which such person or 
entity has a proprietary interest.
    The requirement for independence and detachment from the 
results of the studies is not limited to hardware and software 
providers. Consulting firms and other entities that deliver 
specifications, provide rationale, or otherwise were 
compensated by the FAA or the DOT for advice and guidance on 
any aspect of the FAA's needs, should not be put in the 
position to comment, validate, or rationalize previous 
recommendations provided by such contractor. By the same token, 
the importance of the studies' independence is not to be taken 
to such extremes that consulting firms and other entities with 
knowledge of, expertise in, or experience with the affairs of 
the FAA would be excluded from consideration.
    The studies required under this section also must take into 
account the level of the FAA's costs driven by public users, 
particularly the DoD. The DoD claims it does not impose a net 
cost on the FAA in that it provides extensive ATC services to 
civil aviation. The only way for these studies to be complete 
is if they consider the costs that the FAA and the DoD impose 
on each other as well as the benefits each derives from the 
other. Therefore, whoever conducts the studies should be 
allowed access to the DoD's budget records in this area so long 
as such access does not interfere with classified, national 
security matters. The studies should also take into account the 
fact the DoD restricts considerable amounts of the nation's 
airspace and such restrictions impose a financial burden upon 
those who use and manage the airways. If the DoD is indeed 
imposing a net cost on the ATC system, as the FAA and the DOT 
claim, Congress should be made aware of that fact.
    This section also provides that when an air carrier is 
required by the Administrator, pursuant to this legislation, to 
collect a fee imposed on a third party by the FAA (e.g., a 
system based on a per passenger fee), the Administrator shall 
ensure that such air carrier may collect from such third party 
an additional uniform amount reflecting necessary and 
reasonable expenses (net of interest) incurred in collecting 
and handling the fee.
    This section further requires that the Administrator 
provide to the MAC, 60 days before submitting to the Congress a 
proposed user fee schedule, a report justifying the need for 
the proposed user fees and including other specified 
information such as steps the Administrator has taken to reduce 
costs and improve efficiency within FAA.
    This section requires that no segment of the aviation 
community shall pay more than its fully allocated costs under 
any fee systems developed pursuant to sections 303 and 304. The 
cost allocations are determined by the Administrator and must 
be based upon independent studies required in this section.
    This section also sets forth the administrative procedure 
for Congressional disapproval of any user fee system submitted 
by the FAA pursuant to authority granted in the bill.

Section 306. Increase in spending caps under trust fund

    Section 306 provides that for fiscal years 1997 and 1998, 
the authorization to appropriate from the Airport and Airway 
Trust Fund would increase to 80 percent for the FAA's 
Operations account and to 90 percent for the FAA's total 
appropriations. Currently, monies from the trust fund can only 
comprise the lesser of 50 percent of the FAA's Operations 
budget or 70 percent of the total FAA budget. This change in 
the trust fund spending caps will permit and is designed to 
encourage the spending down of the trust fund ``surplus''.

Section 307. Advance appropriations for Airport and Airway Trust Fund 
        activities

    Section 307 prescribes a three-year authorization and 
three-year appropriation cycle for the FAA to provide the 
agency with greater funding stability in planning its programs 
and activities.

Section 308. Sense of the Senate

    Section 308 expresses the Sense of the Senate that the 
Congress must make every effort to expend the unobligated 
balance of the Airport and Airway Trust Fund on FAA activities.

Section 309. Rural Air Service Survival Act

    Pursuant to section 309, authority to administer and 
operate the EAS program would be transferred from the DOT 
Secretary to the Administrator. Although responsibility for 
administering the EAS program is transferred, some language in 
this section refers to the DOT Secretary rather than the 
Administrator so that these amendments remain consistent with 
the provisions of the current statute. The program would be 
established at a $50 million level, with authority for the 
program to be funded by user fees collected under this 
legislation, including those specifically derived from 
overflights. At the end of each fiscal year, if less than $50 
million has been obligated for EAS programs, the Administrator 
shall make those remaining amounts available under the Airport 
Improvement Program for grants to rural airports to improve 
rural air safety. This section also, in effect, repeals a 
provision in the current law sunsetting the EAS program.

                      Rollcall Votes in Committee

    In accordance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following description of the record votes during its 
consideration of S. 1239:
    Senator Stevens offered an amendment in the nature of a 
substitute to the amendment (in the nature of a substitute) 
offered by Senator McCain (for himself and Mr. Ford). By 
rollcall vote of 7 yeas and 12 nays as follows, the amendment 
was defeated:
        YEAS--7--                     NAYS--12
Mr. Pressler                        Mr. Hollings
Mr. Inouye--                        Mr. Ford
Mr. Stevens--                       Mr. Exon
Mr. Lott --                         Mr. Kerry \1\
Mrs. Hutchison-                     Mr. Rockefeller
Mr. Ashcroft-                       Mr. Breaux
Mr. Frist--                         Mr. McCain---
                                    Mr. Gorton---
                                    Mr. Bryan---
                                    Mr. Burns---
                                    Mr. Dorgan---
                                    Ms. Snowe \1\
    \1\ By proxy.

                   ADDITIONAL VIEWS OF SENATOR McCAIN

    The following are summaries of S. 1239 providing the 
Subcommittee Chairman's views of the benefits of the 
legislation for the General Aviation and Commercial Air Carrier 
Industries.

                Summary of Benefits for General Aviation

                      relevant findings (sec. 101)

    Congress must keep its commitment to users of the national 
air transportation system to spend down the trust fund, 
including the surplus.
    The FAA must continue to recognize who its customers are 
and what their needs are.
    For those industry segments that are exempt from any of the 
new fees (e.g., ``mom and pop'' GA are exempt from the new ATC 
fees), the Congress should appropriate funds to cover such 
segments' costs for the FAA and ATC services they use.
    Before any new charges or fees are imposed on any industry 
segment, an independent review assessing the FAA's funding 
needs must be performed.
    Before any new charges or fees are imposed, an independent 
study of the costs to the FAA for each aviation segment's use 
of safety, operational, and ATC services must be performed.
    Without reform in the areas of procurement, personnel, 
funding, and governance, the FAA will continue to experience 
delays and cost overruns.
    All reforms should be designed to help the FAA become more 
responsive to the needs of its customers.

                      relevant purposes (sec. 102)

    Establish an innovative program for procurement reform.
    Establish an innovative program for personnel reform.
    Create a more autonomous and accountable FAA.
    Make a more efficient and effective organization able to 
meet the needs of a dynamic, growing industry and to ensure the 
safety of the traveling public.

 powers of the administrator and faa (secs. 103, 105, 106, 108 and 109)

    In response to concerns about excessive DOT interference in 
the affairs of the FAA, the FAA is given significant autonomy 
and independence, which GA has specifically sought during the 
FAA reform debate.

                     regulatory reforms (sec. 104)

    The FAA's regulatory and rulemaking function is reformed 
and streamlined to address concerns about overregulation of the 
aviation community, including general aviation.

         administrator's control over faa personnel (sec. 105)

      The FAA is given the power to hire, fire, and compensate 
like a business in order to make the agency more efficient and 
effective.

          personnel and procurement reforms (secs. 201 - 203)

    Major reform of the FAA's personnel and procurement systems 
will streamline the agency and speed up much needed 
modernization of the air traffic control (ATC) system.

      independent studies on faa costs and needs (sec. 305(a)(5))

    In response to stated concerns as to whether the FAA really 
needs new fees, the bill now requires the Administrator to 
ensure that within 6 months after enactment, independent 
studies are done assessing the FAA's costs of services provided 
to each aviation industry segment, and reviewing the funding 
needs and assumptions for FAA operations, capital spending, and 
airport infrastructure. The studies must be prepared by 
individuals having no direct financial interest in the studies' 
results. In addition, no new fees developed pursuant to this 
bill could be imposed until, at the earliest, 6 months after 
the studies are completed.

                     funding reform (secs. 303-305)

    Funding reform in the nature of user fees should enable FAA 
to provide General Aviation with the current level of services 
which may otherwise be drastically cut because of constraints 
imposed by the budget balanced budget resolution. Unlike the 
current funding process, the funding system designed under S. 
1239 would actually get aviation revenues directly to the FAA 
for aviation purposes--such monies could no longer be used to 
mask the federal budget deficit as happened with the Aviation 
Trust Fund.

                        atc user fees (sec. 304)

    GA is explicitly exempt from the new ATC user fees. In 
addition, certain business aircraft also are exempt (i.e., 
rotorcraft or piston engine aircraft not used exclusively in 
air carrier service).

                 other fees for faa services (sec. 303)

    No section 303 fees could be imposed until 6 months after 
the FAA costs and needs studies are completed, and no earlier 
than 1 year after enactment. The new fees imposed pursuant to 
this section could only be for training, licensing, regulatory 
proceedings, and activities directly necessary for 
certification.

                aviation trust fund spending (sec. 306)

    The current limits on the way money can be spent out of the 
Aviation Trust Fund are changed. Currently, only 50 percent of 
FAA's Operations budget come from the Trust Fund--the bill 
would change the limit to 80 percent. This significant change 
greatly facilitates spending down of the $5 billion ``surplus'' 
in the Trust Fund, which the General Aviation community has 
strongly advocated.

      three-year appropriations and authorization cycle (sec. 307)

      Giving the FAA a three-year appropriations and 
authorization cycle (rather than the current one-year) would 
provide tremendous budget stability for the FAA so that it can 
plan for more than one year at time.

 sense of the senate on spending down the trust fund surplus (sec. 308)

    The Sense of the Senate provision urges Congress to make 
every effort to spend down the Aviation Trust Fund as the 
General Aviation community has been advocating.

                       mac membership (sec. 112)

    GA could be represented on the Management Advisory Council 
(MAC), which performs important oversight and advisory 
functions on management, policy, spending, and regulatory 
matters under the FAA's jurisdiction.

                          Summary of Benefits

    General Aviation will benefit considerably from this bill 
because of the streamlined procurement and personnel systems, 
and its specific exemption from new ATC user fees imposed 
pursuant to section 304.
    GA also would have the opportunity to be represented on the 
MAC. As a result, GA would participate in the development of 
any other fees (particularly those under section 303) that 
could be imposed only after FAA needs and costs studies are 
completed. In addition, the bill does not preclude a continuing 
General Fund contribution for the FAA.
    Finally, the governance provisions in S. 1239 would ensure 
that GA could maintain open lines of communication and positive 
relationships with the Congress, the Secretary of 
Transportation, and the FAA Administrator on all matters 
relating to aviation.

            Summary of Benefits for Commercial Air Carriers

                                 Title

    The title of the bill, the ``Air Traffic Management System 
Performance Act,'' reflects a recognition of the need to 
improve air traffic management, which is critical to carriers 
as they are concerned about the delays caused by current ATC 
system undercapacity.

                      Relevant Findings (Sec. 101)

    Congress must keep its commitment to users of the national 
air transportation system to spend down the trust fund, 
including the surplus.
    The FAA must continue to recognize who its customers are 
and what their needs are. This helps to correct the existing 
``disconnect'' between the ATC system users and operators 
(i.e., the FAA).
    For those industry segments that are exempt from any of the 
new fees, the Congress should appropriate funds to cover such 
segments' costs for the FAA and ATC services they use. This 
helps alleviate the carriers' concerns about cross-
subsidization.
    Before any new charges or fees are imposed on any industry 
segment, an independent review assessing the FAA's funding 
needs must be performed.
    Before any new charges or fees are imposed, an independent 
study of the costs to the FAA for each aviation segment's use 
of safety, operational, and ATC services must be performed.
    All reforms should be designed to help the FAA become more 
responsive to the needs of its customers. This also helps to 
correct the ``disconnect'' between the FAA and its customers.

                      Relevant Purposes (Sec. 102)

    Permit the FAA, with Congressional review, to establish a 
program to improve ATC system performance, and establish 
appropriate levels of cost accountability for ATC services 
provided by the FAA.
    Permit the FAA, with Congressional review, to establish a 
new program of incentive-based fees for FAA and ATC services to 
improve air traffic management system performance and to 
establish appropriate levels of cost accountability for 
services provided by the FAA.

              Create a more autonomous and accountable FAA

    Make the FAA a more efficient and effective organization 
able to meet the needs of a dynamic, growing industry and to 
ensure the safety of the traveling public.

                      Regulatory Reform (Sec. 104)

    The FAA must act within a certain period of time on all 
petitions for rulemaking, NPRMs, and ANPRMs. In addition, the 
MAC (which would have several air carrier representatives) 
could perform periodic review of regulations, and could review 
and make recommendations on the FAA's rulemaking cost-benefit 
analysis and its advisory circular and service bulletin 
procedures. Finally, the threshold for DOT review of proposed 
or final regulations was lowered to $50 million, from $100 
million, at the request of the air carriers.

                       MAC Membership (Sec. 112)

    The Management Advisory Council (MAC), which performs 
important oversight and advisory functions on management, 
policy, spending, and regulatory matters under the FAA's 
jurisdiction, was originally inserted in the bill at the 
request of the carriers. The MAC would review and make 
recommendations on the FAA's rulemaking and cost-benefit 
analysis and its advisory circular and service bulletin 
procedures. The MAC would also have access to the FAA's cost 
data associated with ATC system acquisitions and operations, 
and would assist with the development of the new fee systems 
established by the bill.
    The 15-member MAC would include designees of the DOT and 
DoD Secretaries (1 each), and 13 others representing various 
aviation interests who are appointed by the President with the 
advise of the Senate. Significantly, 6 members of the MAC must 
represent air carriers' interests; of those 6, there must be 1 
representative of small commercial carriers (i.e., regionals), 
1 representative of cargo carriers, and 2 representatives of 
small commercial carriers with annual revenues of $4 billion or 
less. In addition, no FAA employees could be directly 
represented on the MAC.

      Independent Studies on FAA Costs and Needs (Sec. 305(a)(5))

    In response to stated concerns about the need for new fees, 
the bill now requires the Administrator to ensure that within 6 
months after enactment, independent studies are done assessing 
the FAA's costs of services provided to each aviation industry 
segment, and reviewing the funding needs and assumptions for 
FAA operations, capital spending, and airport infrastructure. 
The studies must be prepared by individuals having no direct 
financial interest in the studies' results. In addition, no new 
fees developed pursuant to this bill could be imposed until, at 
the earliest, 6 months after the studies are completed. It is 
important to note that the commercial air carriers proposed 
such independent studies during recent hearings in the Senate 
Aviation Subcommittee on FAA reform.

                Fees for Non-ATC FAA Services (Sec. 303)

    No section 303 fees could be imposed until 6 months after 
the FAA costs and needs studies are completed, and no earlier 
than 1 year after enactment. The new fees imposed pursuant to 
this section could only be for training, licensing, regulatory 
proceedings, and activities directly necessary for 
certification.

                        ATC User Fees (Sec. 304)

    The bill contemplates conversion to an almost entirely 
user-supported FAA by 2003, and envisions that the new ATC fee 
system will replace the current excise tax system. To ensure 
that no cross-subsidization by the carriers takes place, the 
bill notes that if Congress determines that certain industry 
segments ultimately will not be required to cover the costs of 
the FAA/ATC services they receive, Congress should appropriate 
the funds to cover that deficiency. In addition, the bill does 
not preclude a continuing General Fund contribution for the 
FAA.
    The new ATC fee system, which would be developed with the 
assistance of outside experts and carrier representatives on 
the MAC, would not be subject to a cap on the total amount of 
new ATC fees that could be imposed. Many carriers believed that 
a cap, which was included in the original bill, would give the 
FAA the ability and opportunity to immediately increase fees 
over current excise tax levels. When developing this new ATC 
fee system, the Administrator must consider the impact on 
airfares (including low-fare, high frequency service) and 
competition (including inter-island Hawaiian air service), the 
impact on service to small communities and service provided by 
regional carriers, and several alternative methods for 
calculating fees.
    To ensure that there is additional, critical review of the 
new ATC fee system, Congress has 45 days to disapprove of the 
proposed system after it is submitted to Congress. In addition, 
if the 45-day review period has expired and Congress did not 
reject the new system, but the trust fund taxes are still in 
effect, the new ATC fees would not be imposed on those aviation 
industry segments still paying trust fund taxes until those 
taxes terminate. This ensures that no aviation industry segment 
pays both trust fund taxes and fees imposed under the new ATC 
fee system. It is particularly important for commercial air 
carriers that they are not subject to the trust fund taxes and 
the new fees simultaneously as they are currently the largest 
contributor to the trust fund. Finally, as with section 303 
fees, no section 304 fees could be imposed until 6 months after 
the FAA costs and needs studies are completed, and no earlier 
than 1 year after enactment.

                  Aviation Trust Fund (Secs. 307-308)

    The spending caps under the trust fund would be increased 
for FY'98 and FY'99 to facilitate spending down the trust fund. 
Moreover, additional ``Findings'' language and a new ``Sense of 
the Senate'' section also make clear that the unobligated 
surplus in the trust fund must be spent down.

                       New Dedicated FAA Account

    The bill creates a separate, dedicated Treasury account for 
all new fees collected by the FAA. To ensure that all of the 
funds going into this account are spent, the receipts and 
disbursements of this account would be off-setting collections 
and, therefore, not scored in the budget process. Moreover, the 
funds in the account would be available only to the 
Administrator, which means they would not be subject to the 
appropriations process or sequestrations.

     Costs Incurred in Collecting and Handling Fees (Sec. 305(a)(6)

    This provision requires the FAA to prescribe regulations to 
ensure that air carriers that collect new fees from third 
parties may collect an additional amount reflecting the costs 
incurred in collecting and handling the fees.
                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
material is printed in italic, existing law in which no change 
is proposed is shown in roman):

                        TITLE 49. TRANSPORTATION

                Subtitle I. Department of Transportation

                        CHAPTER 1. ORGANIZATION

Sec. 106. Federal Aviation Administration

    (a) The Federal Aviation Administration is an 
administration in the Department of Transportation.
    (b) The head of the Administration is the Administrator. 
The Administration has a Deputy Administrator. They are 
appointed by the President, by and with the advice and consent 
of the Senate. When making an appointment, the President shall 
consider the fitness of the individual to carry out efficiently 
the duties and powers of the office. [The Administrator] Except 
as provided in subsection (f) of this section or in other 
provisions of law, the Administrator reports directly to the 
Secretary of Transportation. The term of office for any 
individual appointed as Administrator after the date of the 
enactment of this sentence shall be 5 years.
    (c) The Administrator must--
          (1) be a citizen of the United States;
          (2) be a civilian; and
          (3) have experience in a field directly related to 
        aviation.
    (d)(1) The Deputy Administrator must be a citizen of the 
United States and have experience in a field directly related 
to aviation. An officer on active duty in an armed force may be 
appointed as Deputy Administrator. However, if the 
Administrator is a former regular officer of an armed force, 
the Deputy Administrator may not be an officer on active duty 
in an armed force, a retired regular officer of an armed force, 
or a former regular officer of an armed force.
    (2) An officer on active duty or a retired officer serving 
as Deputy Administrator is entitled to hold a rank and grade 
not lower than that held when appointed as Deputy 
Administrator. The Deputy Administrator may elect to receive 
(A) the pay provided by law for the Deputy Administrator, or 
(B) the pay and allowances or the retired pay of the military 
grade held. If the Deputy Administrator elects to receive the 
military pay and allowances or retired pay, the Administration 
shall reimburse the appropriate military department from funds 
available for the expenses of the Administration.
    (3) The appointment and service of a member of the armed 
forces as a Deputy Administrator does not affect the status, 
office, rank, or grade held by that member, or a right or 
benefit arising from the status, office, rank, or grade. The 
Secretary of a military department does not control the member 
when the member is carrying out duties and powers of the Deputy 
Administrator.
    (e) The Administrator and the Deputy Administrator may not 
have a pecuniary interest in, or own stock in or bonds of, an 
aeronautical enterprise, or engage in another business, 
vocation, or employment.
    [(f) The Secretary of Transportation shall carry out the 
duties and powers, and controls the personnel and activities, 
of the Administration. The Secretary may not submit decisions 
for the approval of, nor be bound by the decisions or 
recommendations of, a committee, board, or organization 
established by executive order.]
    (f) Authority of the Secretary and the Administrator.--
          (1) Authority of the secretary.--Except as provided 
        in paragraph (2), the Secretary of Transportation shall 
        carry out the duties and powers of the Administration.
          (2) Authority of the administrator.--The 
        Administrator--
                  (A) is the final authority for carrying out 
                all functions, powers, and duties of the 
                Administration relating to--
                          (i) the appointment and employment of 
                        all officers and employees of the 
                        Administration (other than Presidential 
                        and political appointees);
                          (ii) the acquisition, operation, and 
                        maintenance of property and equipment 
                        of the Administration;
                          (iii) except as otherwise provided in 
                        paragraph (3), the promulgation of 
                        regulations, rules, orders, circulars, 
                        bulletins, and other official 
                        publications of the Administration; and
                          (iv) any obligation imposed on the 
                        Administrator, or power conferred on 
                        the Administrator, by the Air Traffic 
                        Management System Performance 
                        Improvement Act of 1996 (or any 
                        amendment made by that Act);
                  (B) shall offer advice and counsel to the 
                President with respect to the appointment and 
                qualifications of any officer or employee of 
                the Administration to be appointed by the 
                President or as a political appointee;
                  (C) may delegate, and authorize successive 
                redelegations of, to an officer or employee of 
                the Administration any function, power, or duty 
                conferred upon the Administrator, unless such 
                delegation is prohibited by law; and
                  (D) except as otherwise provided for in this 
                title, and notwithstanding any other provision 
                of law to the contrary, shall not be required 
                to coordinate, submit for approval or 
                concurrence, or seek the advice or views of the 
                Secretary or any other officer or employee of 
                the Department of Transportation on any matter 
                with respect to which the Administrator is the 
                final authority.
          (3) Regulations.--
                  (A) In general.--In the performance of the 
                functions of the Administrator and the 
                Administration, the Administrator is authorized 
                to issue, rescind, and revise such regulations 
                as are necessary to carry out those functions. 
                The issuance of such regulations shall be 
                governed by the provisions of chapter 5 of 
                title 5. The Administrator shall act upon all 
                petitions for rulemaking no later than 6 months 
                after the date such petitions are filed by 
                dismissing such petitions, by informing the 
                petitioner of an intention to dismiss, or by 
                issuing a notice of proposed rulemaking or 
                advanced notice of proposed rulemaking. The 
                Administrator shall issue a final regulation, 
                or take other final action, not later than 18 
                months after the date of publication in the 
                Federal Register of a notice of proposed 
                rulemaking or, in the case of an advanced 
                notice of proposed rulemaking, if issued, not 
                later than 24 months after that date.
                  (B) Approval of secretary of 
                transportation.--(i) The Administrator may not 
                issue a proposed regulation or final regulation 
                that is likely to result in the expenditure by 
                State, local, and tribal governments in the 
                aggregate, or by the private sector, of 
                $50,000,000 or more (adjusted annually for 
                inflation beginning with the year following the 
                date of enactment of this Act) in any 1 year, 
                or any regulation which is significant, unless 
                the Secretary of Transportation approves the 
                issuance of the regulation in advance. For 
                purposes of this paragraph, a regulation is 
                significant if it is likely to--
                          (I) have an annual effect on the 
                        economy of $100 million or more or 
                        adversely affect in a material way the 
                        economy, a sector of the economy, 
                        productivity, competition, jobs, the 
                        environment, public health or safety, 
                        or State, local, or tribal governments 
                        or communities;
                          (II) create a serious inconsistency 
                        or otherwise interfere with an action 
                        taken or planned by another agency;
                          (III) materially alter the budgetary 
                        impact of entitlements, grants, user 
                        fees, or loan programs or the rights 
                        and obligations of recipients thereof; 
                        or
                          (IV) raise novel legal or policy 
                        issues arising out of legal mandates.
                  (ii) In an emergency, the Administrator may 
                issue a regulation described in clause (i) 
                without prior approval by the Secretary, but 
                any such emergency regulation is subject to 
                ratification by the Secretary after it is 
                issued and shall be rescinded by the 
                Administrator within 5 days (excluding 
                Saturdays, Sundays, and legal public holidays) 
                after issuance if the Secretary fails to ratify 
                its issuance.
                  (iii) Any regulation that does not meet the 
                criteria of clause (i), and any regulation or 
                other action that is a routine or frequent 
                action or a procedural action, may be issued by 
                the Administrator without review or approval by 
                the Secretary.
                  (iv) The Administrator shall submit a copy of 
                any regulation requiring approval by the 
                Secretary under clause (i) to the Secretary, 
                who shall either approve it or return it to the 
                Administrator with comments within 45 days 
                after receiving it.
                  (C) Periodic review.--(i) Beginning on the 
                date which is 3 years after the date of 
                enactment of the Air Traffic Management System 
                Performance Act of 1996, the Administrator 
                shall review any unusually burdensome 
                regulation issued by the Administrator after 
                the date of enactment of the Air Traffic 
                Management System Performance Act of 1996 
                beginning not later than 3 years after the 
                effective date of the regulation to determine 
                if the cost assumptions were accurate, the 
                benefit of the regulations, and the need to 
                continue such regulations in force in their 
                present form.
                  (ii) The Administrator may identify for 
                review under the criteria set forth in clause 
                (i) unusually burdensome regulations that were 
                issued before the date of enactment of the Air 
                Traffic Management System Performance Act of 
                1996 and that have been in force for more than 
                3 years.
                  (iii) For purposes of this subparagraph, the 
                term ``unusually burdensome regulation'' means 
                any regulation that results in the annual 
                expenditure by State, local, and tribal 
                governments in the aggregate, or by the private 
                sector, of $25,000,000 or more (adjusted 
                annually for inflation beginning with the year 
                following the date of enactment of the Air 
                Traffic Management System Performance Act of 
                1996) in any year.
                  (iv) The periodic review of regulations may 
                be performed by advisory committees and the 
                Management Advisory Council established under 
                subsection (p).
          (4) Definition of political appointee.--For purposes 
        of this subsection, the term ``political appointee'' 
        means any individual who--
                  (A) is employed in a position on the 
                Executive Schedule under sections 5312 through 
                5316 of title 5;
                  (B) is a limited term appointee, limited 
                emergency appointee, or noncareer appointee in 
                the Senior Executive Service as defined under 
                section 3132(a) (5), (6), and (7) of title 5, 
                respectively; or
                  (C) is employed in a position in the 
                executive branch of the Government of a 
                confidential or policy-determining character 
                under Schedule C of subpart C of part 213 of 
                title 5 of the Code of Federal Regulations.
    (g) Duties and Powers of Administrator.--
          (1) Except as provided in paragraph (2) of this 
        subsection, the Administrator shall carry out--
                  (A) duties and powers of the Secretary of 
                Transportation under subsection (f) of this 
                section related to aviation safety (except 
                those related to transportation, packaging, 
                marking, or description of hazardous material) 
                and stated in sections 308(b), 1132(c) and (d), 
                40101(c), 40103(b), 40106(a), 40108, 40109(b), 
                40113(a), (c), and (d), 40114(a), 40119, 
                44501(a) and (c), 44502(a)(1), (b), and (c), 
                44504, 44505, 44507, 44508, 44511-44513, 44701-
                44716, 44718(c), 44721(a), 44901, 44902, 
                44903(a)-(c) and (e), 44906, 44912, 44935-
                44937, and 44938(a) and (b), chapter 451 [49 
                U.S.C. 45101 et seq.],sections 45302, 45303, 
                46104, 46301(d) and (h)(2), 46303(c), 46304-
                46308, 46310, 46311, and 46313-46316, chapter 
                465 [49 U.S.C. 46501 et seq.], and sections 
                47504(b) (related to flight procedures), 
                47508(a), and 48107 of this title; and
                  (B) additional duties and powers prescribed 
                by the Secretary of Transportation.
          (2) In carrying out sections 40119, 44901, 44903(a)-
        (c) and (e), 44906, 44912, 44935-44937, 44938(a) and 
        (b), and 48107 of this title, paragraph (1)(A) of this 
        subsection does not apply to duties and powers vested 
        in the Director of Intelligence and Security by section 
        44931 of this title.
    (h) Section 40101(d) of this title applies to duties and 
powers specified in subsection (g)(1) of this section. Any of 
those duties and powers may be transferred to another part of 
the Department only when specifically provided by law or a 
reorganization plan submitted under chapter 9 of title 5 [5 
U.S.C. 901 et seq.]. A decision of the Administrator in 
carrying out those duties or powers is administratively final.
    (i) The Deputy Administrator shall carry out duties and 
powers prescribed by the Administrator. The Deputy 
Administrator acts for the Administrator when the Administrator 
is absent or unable to serve, or when the office of the 
Administrator is vacant.
    (j) There is established within the Federal Aviation 
Administration an institute to conduct civil aeromedical 
research under section 44507 of this title. Such institute 
shall be known as the ``Civil Aeromedical Institute''. Research 
conducted by the institute should take appropriate advantage of 
capabilities of other government agencies, universities, or the 
private sector.
    (k) Authorization of appropriations for operations.--There 
is authorized to be appropriated to the Secretary of 
Transportation for operations of the Administration 
$4,088,000,000 for fiscal year 1991, $4,412,600,000 for fiscal 
year 1992, $4,716,500,000 for fiscal year 1993, $4,576,000,000 
for fiscal year 1994, $4,674,000,000 for fiscal year 1995, and 
$4,810,000,000 for fiscal year 1996.
    (l) Personnel and Services.--
          (1) Officers and employees.--Upon development of a 
        personnel management system under section 40122(c), the 
        Administrator is authorized, in the performance of the 
        functions of the Administrator, to appoint, transfer, 
        and fix the compensation of such officers and 
        employees, including attorneys, as may be necessary to 
        carry out the functions of the Administrator and the 
        Administration. Except as otherwise provided by law, 
        such officers and employees shall be appointed in 
        accordance with the civil service laws and compensated 
        in accordance with title 5. In fixing compensation and 
        benefits of officers and employees, the Administrator 
        shall not engage in any type of bargaining, except to 
        the extent provided for in section 40122(c), nor shall 
        the Administrator be bound by any requirement to 
        establish such compensation or benefits at particular 
        levels.
          (2) Experts and consultants.--The Administrator is 
        authorized to obtain the services of experts and 
        consultants in accordance with section 3109 of title 5.
          (3) Transportation and per diem expenses.--The 
        Administrator is authorized to pay transportation 
        expenses, and per diem in lieu of subsistence expenses, 
        in accordance with chapter 57 of title 5.
          (4) Use of personnel from other agencies.--The 
        Administrator is authorized to utilize the services of 
        personnel of any other Federal agency (as such term is 
        defined under section 551(1) of title 5).
          (5) Voluntary services.--
                  (A) In general.--(i) In exercising the 
                authority to accept gifts and voluntary 
                services under section 326 of this title, and 
                without regard to section 1342 of title 31, the 
                Administrator may not accept voluntary and 
                uncompensated services if such services are 
                used to displace Federal employees employed on 
                a full-time, part-time, or seasonal basis.
                  (ii) The Administrator is authorized to 
                provide for incidental expenses, including 
                transportation, lodging, and subsistence for 
                volunteers who provide voluntary services under 
                this subsection.
                  (iii) An individual who provides voluntary 
                services under this subsection shall not be 
                considered a Federal employee for any purpose 
                other than for purposes of chapter 81 of title 
                5, relating to compensation for work injuries, 
                and chapter 171 of title 28, relating to tort 
                claims.
          (6) Contracts.--The Administrator is authorized to 
        enter into and perform such contracts, leases, 
        cooperative agreements, or other transactions as may be 
        necessary to carry out the functions of the 
        Administrator and the Administration. The Administrator 
        may enter into such contracts, leases, cooperative 
        agreements, and other transactions with any Federal 
        agency (as such term is defined in section 551(1) of 
        title 5) or any instrumentality of the United States, 
        any State, territory, or possession, or political 
        subdivision thereof, any other governmental entity, or 
        any person, firm, association, corporation, or 
        educational institution, on such terms and conditions 
        as the Administrator may consider appropriate.
    (m) Cooperation by Administrator.--With the consent of 
appropriate officials, the Administrator may, with or without 
reimbursement, use or accept the services, equipment, 
personnel, and facilities of any other Federal agency (as such 
term is defined in section 551(1) of title 5) and any other 
public or private entity. The Administrator may also cooperate 
with appropriate officials of other public and private agencies 
and instrumentalities concerning the use of services, 
equipment, personnel, and facilities. The head of each Federal 
agency shall cooperate with the Administrator in making the 
services, equipment, personnel, and facilities of the Federal 
agency available to the Administrator. The head of a Federal 
agency is authorized, notwithstanding any other provision of 
law, to transfer to or to receive from the Administration, 
without reimbursement, supplies and equipment other than 
administrative supplies or equipment.
    (n) Acquisition.--
          (1) In general.--The Administrator is authorized--
                  (A) to acquire (by purchase, lease, 
                condemnation, or otherwise), construct, 
                improve, repair, operate, and maintain--
                          (i) air traffic control facilities 
                        and equipment;
                          (ii) research and testing sites and 
                        facilities; and
                          (iii) such other real and personal 
                        property (including office space and 
                        patents), or any interest therein, 
                        within and outside the continental 
                        United States as the Administrator 
                        considers necessary;
                  (B) to lease to others such real and personal 
                property; and
                  (C) to provide by contract or otherwise for 
                eating facilities and other necessary 
                facilities for the welfare of employees of the 
                Administration at the installations of the 
                Administration, and to acquire, operate, and 
                maintain equipment for these facilities.
          (2) Title.--Title to any property or interest therein 
        acquired pursuant to this subsection shall be held by 
        the Government of the United States.
    (o) Transfers of Funds.--The Administrator is authorized to 
accept transfers of unobligated balances and unexpended 
balances of funds appropriated to other Federal agencies (as 
such term is defined in section 551(1) of title 5) to carry out 
functions transferred by this Act to the Administrator or 
functions transferred pursuant to law to the Administrator on 
or after the date of the enactment of the Air Traffic 
Management System Performance Improvement Act of 1996.
    (p) Management Advisory Council.--
          (1) Establishment.--Within 3 months after the date of 
        enactment of the Air Traffic Management System 
        Performance Improvement Act of 1996, the Administrator 
        shall establish an advisory council which shall be 
        known as the Federal Aviation Management Advisory 
        Council (in this subsection referred to as the 
        ``Council''). With respect to Federal Aviation 
        Administration management, policy, spending, user fees, 
        and regulatory matters affecting the aviation industry, 
        the Council may submit comments, recommended 
        modifications, and dissenting views to the 
        Administrator. The Administrator shall include in any 
        submission to Congress, the Secretary, or the general 
        public, and in any submission for publication in the 
        Federal Register, a description of the comments, 
        recommended modifications, and dissenting views 
        received from the Council, together with the reasons 
        for any differences between the views of the Council 
        and the views or actions of the Administrator.
          (2) Membership.--The Council shall consist of 15 
        members, who shall consist of--
                  (A) a designee of the Secretary of 
                Transportation;
                  (B) a designee of the Secretary of Defense; 
                and
                  (C) 13 members appointed by the President by 
                and with the advice and consent of the Senate, 
                representing aviation interests, at least 6 of 
                whom shall represent the interests of the air 
                carrier industry (of which at least 2 of whom 
                shall represent major air carriers with gross 
                revenues under $4,000,000,000, at least 1 of 
                whom shall represent the interests of cargo 
                carriers, and at least 1 of whom shall 
                represent the interests of regional air 
                carriers).
          (3) Qualifications.--No member appointed under 
        paragraph (2)(C) may serve as an officer or employee of 
        the United States Government while serving as a member 
        of the Council.
          (4) Functions.--
                  (A) In general.--(i) The Council shall 
                provide advice and counsel to the Administrator 
                on issues which affect or are affected by the 
                operations of the Administrator. The Council 
                shall function as an oversight resource for 
                management, policy, spending, and regulatory 
                matters under the jurisdiction of the 
                Administration.
                  (ii) The Council shall review the rulemaking 
                cost-benefit analysis process and develop 
                recommendations to improve the analysis and 
                ensure that the public interest is fully 
                protected.
                  (iii) The Council shall review the process 
                through which the Administration determines to 
                use advisory circulars and service bulletins.
                  (B) Panels and working groups.--The chairman 
                of the Council shall establish a panel or 
                working group, from among the members of the 
                Council, on the development of all fees under 
                sections 45301 and 45302, and may establish 
                such additional panels and working groups, 
                consisting of members of the Council, as may be 
                necessary to carry out the functions of the 
                Council.
                  (C) Meetings.--The Council shall meet on a 
                regular and periodic basis or at the call of 
                the chairman or of the Administrator.
                  (D) Access to documents and staff.--The 
                Administration may give the Council appropriate 
                access to relevant documents and personnel of 
                the Administration, and the Administrator shall 
                make available, consistent with the authority 
                to withhold commercial and other proprietary 
                information under section 552 of title 5 
                (commonly known as the ``Freedom of Information 
                Act''), cost data associated with the 
                acquisition and operation of air traffic 
                service systems. Any member of the Council who 
                receives commercial or other proprietary data 
                from the Administrator shall be subject to the 
                provisions of section 1905 of title 18, 
                pertaining to unauthorized disclosure of such 
                information.
          (5) Federal advisory committee act not to apply.--The 
        Federal Advisory Committee Act (5 U.S.C. App.) does not 
        apply to the Council.
          (6) Administrative matters.--
                  (A) Terms of members.--(i) Except as provided 
                in subparagraph (B), members of the Council 
                appointed by the President under paragraph 
                (2)(C) shall be appointed for a term of 3 
                years.
                  (ii) Of the members first appointed by the 
                President--
                          (I) 4 shall be appointed for terms of 
                        1 year;
                          (II) 5 shall be appointed for terms 
                        of 2 years; and
                          (III) 4 shall be appointed for terms 
                        of 3 years.
                  (iii) An individual chosen to fill a vacancy 
                shall be appointed for the unexpired term of 
                the member replaced.
                  (iv) A member whose term expires shall 
                continue to serve until the date on which the 
                member's successor takes office.
                  (B) Chairman; vice chairman.--The Council 
                shall elect a chair and a vice chair from among 
                the members appointed under paragraph (2)(C), 
                each of whom shall serve for a term of 1 year. 
                The vice chair shall perform the duties of the 
                chairman in the absence of the chairman.
                  (C) Travel and per diem.--Each member of the 
                Council shall be paid actual travel expenses, 
                and per diem in lieu of subsistence expenses 
                when away from his or her usual place of 
                residence, in accordance with section 5703 of 
                title 5.
                  (D) Detail of personnel from the 
                administration.--The Administrator shall make 
                available to the Council such staff, 
                information, and administrative services and 
                assistance as may reasonably be required to 
                enable the Council to carry out its 
                responsibilities under this subsection.

                    Subtitle VII. Aviation Programs

                    PART A. AIR COMMERCE AND SAFETY

                           Subpart I. General

                    CHAPTER 401. GENERAL PROVISIONS

Sec. 40120. Innovative program for air traffic control modernization

    (a) Innovative Program.--The Administrator of the Federal 
Aviation Administration (hereafter in this section referred to 
as the ``Administrator'') shall develop and implement an 
innovative program under which an acquisition management system 
is used to procure goods and services by the Federal Aviation 
Administration (hereafter in this section referred to as the 
``Administration'').
    (b) Exemption From Procurement Laws.--
          (1) In general.--Subject to paragraph (2), in 
        carrying out the acquisition management system used 
        under the innovative program, the Administrator may 
        waive all or any part of--
                  (A) section 3709 of the Revised Statutes (41 
                U.S.C. 5);
                  (B) title III of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 
                251 through 266);
                  (C) the Office of Federal Procurement Policy 
                Act (41 U.S.C. 401 et seq.);
                  (D) sections 8, 9, and 15 of the Small 
                Business Act (15 U.S.C. 637, 638, and 644), but 
                the Administrator shall provide resources for 
                the development and implementation of a program 
                that presents the maximum opportunities, to the 
                extent possible, for small business concerns 
                and small business concerns owned and 
                controlled by socially and economically 
                disadvantaged individuals to participate in the 
                performance of contracts awarded by the 
                Administration;
                  (E) any provision of law that, pursuant to 
                section 34 of the Office of Federal Procurement 
                Policy Act (41 U.S.C. 430), is listed in the 
                Federal Acquisition Regulation as being 
                inapplicable--
                          (i) to contracts for the procurement 
                        of commercial items; or
                          (ii) in the case of a subcontract 
                        under the innovative program, to 
                        subcontracts for the procurement of 
                        commercial items;
                  (F) the Federal Acquisition Streamlining Act 
                of 1994 (Public Law 103-355);
                  (G) subchapter V of chapter 35 of title 31, 
                United States Code, relating to the procurement 
                protest system;
                  (H) the Brooks Automatic Data Processing Act 
                (section 111 of the Federal Property and 
                Administrative Services Act of 1949; 40 U.S.C. 
                759);
                  (I) the Federal Acquisition Regulation and 
                any law that is not listed in subparagraphs (A) 
                through (G) providing authority to promulgate 
                regulations in the Federal Acquisition 
                Regulation.
          (2) Exemptions for the department of defense.--The 
        Department of Defense shall have the same exemptions 
        from acquisition laws as are waived by the 
        Administrator under paragraph (1) when engaged in joint 
        actions to improve or replenish the national air 
        traffic control system. The Administration may acquire 
        real property, goods, and services through the 
        Department of Defense, or other appropriate agencies, 
        but is bound by the acquisition laws and regulations 
        governing those cases.
          (3) Effective date.--The Administrator may not waive 
        the laws referred to in paragraph (1) until the 
        expiration of the 30-day period referred to in 
        subsection (d)(2).
    (c) Development of Acquisition Management System.--
          (1) In general.--Not later than 180 days after the 
        date of enactment of the Air Traffic Management System 
        Performance Improvement Act of 1996, the Administrator, 
        in consultation with such governmental and 
        nongovernmental experts in acquisition management 
        systems as the Administrator may employ, shall develop 
        an acquisition management system for the 
        Administration. Notwithstanding any other provision of 
        law to the contrary, the Administrator may, for 
        purposes of this section, retain such experts under a 
        contract awarded on a basis other than a competitive 
        basis and without regard to any such provisions 
        requiring competitive bidding or precluding sole source 
        contract authority. In developing the system, the 
        Administrator may utilize the services of experts and 
        consultants under section 3109 of title 5, without 
        regard to the limitation imposed by the last sentence 
        of section 3109(b) of such title, and may contract on a 
        sole source basis, notwithstanding any other provision 
        of law to the contrary.
          (2) Requirements.--The acquisition management system 
        to be developed by the Administrator under paragraph 
        (1) shall be--
                  (A) designed to ensure that new equipment is 
                installed and certified as quickly as possible 
                without sacrificing safety, principles of 
                fairness, and protection against waste, fraud, 
                and abuse;
                  (B) designed to ensure the best practicable 
                acquisitions in terms of best value; and
                  (C) designed to ensure that services are 
                acquired in the most effective and efficient 
                manner.
    (d) Notice to Congress.--
          (1) In general.--Upon completion of the development 
        of the acquisition management system, the Administrator 
        shall submit a comprehensive plan describing the 
        acquisition management system to the Congress. The 
        Administrator shall also transmit with the plan a copy 
        of all suggestions and comments provided to the 
        Administration by the Department of Transportation, and 
        by outside experts (if any), on the acquisition 
        management system.
          (2) Date of implementation.--The Administrator may 
        begin to implement the acquisition management system 
        only after the expiration of the 30-day period that 
        begins on the date on which the plan is submitted to 
        the Congress under paragraph (1).
    (e) Expert Evaluation.--On the date which is 3 years after 
the acquisition management system is implemented, the 
Administration shall employ outside experts to provide an 
independent evaluation of the effectiveness of the system 
within 3 months after such date. The Administrator shall 
transmit a copy of the evaluation to the Committee on Commerce, 
Science, and Transportation of the Senate, and the Committee on 
Transportation and Infrastructure of the House of 
Representatives.
    (f) Modifications to System.--The Administrator may 
periodically make modifications to the acquisition management 
system. Any such modifications shall be submitted to the 
Congress under subsection (d) in the same manner as the 
acquisition management system plan and may not be implemented 
until after the expiration of the 30-day period beginning on 
the date of submission.

Sec. 40121. Air traffic control modernization reviews

    (a) Required Terminations of Acquisitions.--The 
Administrator of the Federal Aviation Administration (hereafter 
referred to in this section as the ``Administrator'') shall 
terminate any program initiated after the date of enactment of 
the Air Traffic Management System Performance Improvement Act 
of 1996 and funded under the Facilities and Equipment account 
that--
          (1) is more than 50 percent over the cost goal 
        established for the program;
          (2) fails to achieve at least 50 percent of the 
        performance goals established for the program; or
          (3) is more than 50 percent behind schedule as 
        determined in accordance with the schedule goal 
        established for the program.
    (b) Authorized Terminations of Acquisitions.--The 
Administrator shall consider terminating, under the authority 
of subsection (a), any substantial acquisition that--
          (1) is more than 10 percent over the cost goal 
        established for the program;
          (2) fails to achieve at least 90 percent of the 
        performance goals established for the program; or
          (3) is more than 10 percent behind schedule as 
        determined in accordance with the schedule goal 
        established for the program.
    (c) Exception and Report.--
          (1) Continuance of program, etc.--Notwithstanding 
        subsection (a), the Administrator may continue an 
        acquisitions program required to be terminated under 
        subsection (a) if the Administrator determines that 
        termination would be inconsistent with the development 
        or operation of the national air transportation system 
        in a safe and efficient manner.
          (2) Report.--If the Administrator makes a 
        determination under paragraph (1), the Administrator 
        shall transmit a copy of the determination, together 
        with a statement of the basis for the determination, to 
        the Committees on Appropriations of the Senate and the 
        House of Representatives, the Committee on Commerce, 
        Science, and Transportation of the Senate, and the 
        Committee on Transportation and Infrastructure of the 
        House of Representatives.

Sec. 40122. Innovative program for Federal Aviation Administration 
                    services

    (a) Innovative Program.--The Administrator of the Federal 
Aviation Administration (hereafter in this section referred to 
as the ``Administrator'') shall develop and implement an 
innovative program under which a personnel management system is 
used for the management, compensation, and advancement of 
Federal Aviation Administration (hereafter in this section 
referred to as the ``Administration'') employees.
  (b) Exemption From Certain Provisions of Title 5.--
          (1) In general.--Except as otherwise provided in this 
        section, under the innovative program, the 
        Administration shall be exempt from parts II and III of 
        title 5.
          (2) Effective date.--The exemption provided by 
        paragraph (1) shall not take effect until the 
        expiration of the 30-day period specified in subsection 
        (d)(2).
    (c) Development of Personnel Management System.--
          (1) In general.--Not later than 180 days after the 
        date of enactment of the Air Traffic Management System 
        Performance Improvement Act of 1996, the Administrator 
        shall develop a personnel management system for the 
        Administration. Notwithstanding any other provision of 
        law to the contrary, the Administrator may, for 
        purposes of this section, retain such experts under a 
        contract awarded on a basis other than a competitive 
        basis and without regard to any such provisions 
        requiring competitive bidding or precluding sole source 
        contract authority. In developing the system, the 
        Administrator may utilize the services of experts and 
        consultants under section 3109 of title 5 without 
        regard to the limitation imposed by the last sentence 
        of section 3109(b) of such title. In developing the 
        system, the Administrator shall ensure that it responds 
        to the needs of and is consistent with the innovative 
        acquisition management system developed pursuant to 
        section 40120.
          (2) Goal.--The goal of the personnel management 
        system to be developed by the Administrator under this 
        section is to provide, consistent with the requirements 
        of this section, the Administration with the ability--
                  (A) to hire, promote, and fire employees as 
                in the private sector;
                  (B) to establish a pay structure as needed to 
                conduct the business of the Administration in 
                an efficient and effective manner within 
                available resources;
                  (C) to provide salaries designed to attract 
                the best qualified employees within available 
                resources;
                  (D) to staff facilities that are difficult to 
                staff;
                  (E) to move personnel to those facilities 
                where they are most needed; and
                  (F) to continue to provide an appropriate 
                framework for labor-management relations 
                concerning terms and conditions of employment.
          (3) Consultation and negotiation.--In developing the 
        personnel management system, the Administrator shall 
        negotiate with the exclusive bargaining representatives 
        of employees of the Administration certified under 
        section 7111 of title 5 and consult with other 
        employees of the Administration. The negotiation with 
        the exclusive bargaining representatives shall be 
        completed on or before the 90th day after the date of 
        enactment of the Air Traffic Management System 
        Performance Improvement Act of 1996.
          (4) Mediation.--If the Administrator does not reach 
        an agreement under paragraph (3) with the exclusive 
        bargaining representatives on any provision of the 
        personnel management system, the services of the 
        Federal Mediation and Conciliation Service shall be 
        used to attempt to reach such agreement. If the 
        services of the Federal Mediation and Conciliation 
        Service do not lead to an agreement, the Administrator 
        shall include in the plan to be submitted to Congress 
        under subsection (d) the objections of the exclusive 
        bargaining representatives and the reasons for the 
        objections.
          (5) Cost savings and productivity goals.--In 
        negotiating a new personnel system, the Administration 
        and the exclusive bargaining representatives of the 
        employees shall use every reasonable effort to find 
        cost savings and to increase productivity within each 
        of the affected bargaining units.
          (6) Annual budget discussions.--The Administration 
        and the exclusive bargaining representatives of the 
        employees shall meet annually for the purpose of 
        finding additional cost savings within the 
        Administration's annual budget as it applies to each of 
        the affected bargaining units and throughout the 
        agency.
    (d) Notice to Congress.--
          (1) In general.--Upon development of the personnel 
        management system under this section, the Administrator 
        shall submit a comprehensive plan describing the 
        personnel management system to the Congress. The 
        Administrator shall also transmit with the plan a copy 
        of all suggestions and comments provided to the 
        Administration by the Department of Transportation, and 
        by outside experts (if any), on the personnel 
        management system.
          (2) Implementation.--The Administration may begin to 
        implement the personnel management system only after 
        the expiration of the 30-day period that begins on the 
        date the plan is submitted to the Congress.
  (e) Expert Evaluation.--On the date which is 3 years after 
the personnel management system is implemented, the 
Administration shall employ outside experts to provide an 
independent evaluation of the effectiveness of the system 
within 3 months after such date. For this purpose, the 
Administrator may utilize the services of experts and 
consultants under section 3109 of title 5 without regard to the 
limitation imposed by the last sentence of section 3109(b) of 
such title, and may contract on a sole source basis, 
notwithstanding any other provision of law to the contrary.
  (f) Employee Rights and Benefits.--The enactment of this 
section shall not result in the exemption of employees of the 
Administration from any of the following provisions of title 5:
          (1) Section 2302(b) (relating to whistleblower 
        protection).
          (2) Sections 3308-3320 (relating to veterans' 
        preference).
          (3) Section 7116(b)(7) (relating to prohibition of 
        the right to strike).
          (4) Section 7204 (relating to antidiscrimination).
          (5) Chapter 63 (relating to leave).
          (6) Chapter 71 (relating to labor-management 
        relations).
          (7) Chapter 73 (relating to suitability, security, 
        and conduct).
          (8) Chapter 81 (relating to compensation for work 
        injuries).
          (9) Chapter 83 (relating to retirement).
          (10) Chapter 84 (relating to the Federal Employees' 
        Retirement System).
          (11) Chapter 85 (relating to unemployment 
        compensation).
          (12) Chapter 87 (relating to life insurance).
          (13) Chapter 89 (relating to health insurance).
          (14) Subchapter II of chapter 53 (with respect to the 
        pay of the Administrator).
    (g) Pay Restriction.--No officer or employee of the 
Administration may receive an annual rate of basic pay in 
excess of the annual rate of basic pay payable to the 
Administrator.
    (h) Ethics.--The Administration shall be subject to 
Executive Order 12674 and regulations and opinions promulgated 
by the Office of Government Ethics, including those set forth 
in section 2635 of title 5 of the Code of Federal Regulations.
    (i) Employee Protections.--Employment rights, wages, and 
benefits of employees of the Administration shall not be 
adversely affected by reason of the enactment of this section, 
except for unacceptable performance or by reason of a reduction 
in force or reorganization, during the period commencing on the 
effective date of the Air Traffic Management System Performance 
Improvement Act of 1996 and ending on the date determined under 
subsection (d)(2).
    (j) Labor-Management Agreements.--Except as otherwise 
provided by this title and the Air Traffic Management System 
Performance Improvement Act of 1996, all labor-management 
agreements covering employees of the Administration that are in 
effect on the effective date of the Air Traffic Management 
System Performance Improvement Act of 1996 shall remain in 
effect until their normal expiration date, unless the 
Administrator and the exclusive bargaining representative agree 
to the contrary.
    (k) Modifications to System.--The Administrator may 
periodically make modifications to the personnel management 
system. Any such modifications shall be submitted to the 
Congress under subsection (d) in the same manner as the 
personnel management system plan and may not be implemented 
until after the expiration of the 30-day period beginning on 
the date of submission.

Sec.  [40120.] 40123. Relationship to other laws

                    Subpart II. Economic Regulation

                  CHAPTER 417. OPERATIONS OF CARRIERS

               Subchapter II. Small Community Air Service

Sec. 41737. Compensation guidelines, limitations, and claims

    (a) Compensation Guidelines.--
          (1) The Secretary of Transportation shall prescribe 
        guidelines governing the rate of compensation payable 
        under this subchapter [49 U.S.C. 41731 et seq.].The 
        guidelines shall be used to determine the reasonable 
        amount of compensation required to ensure the 
        continuation of air service or air transportation under 
        this subchapter [49 U.S.C. 41731 et seq.]. The 
        guidelines shall--
                  (A) provide for a reduction in compensation 
                when an air carrier does not provide service or 
                transportation agreed to be provided;
                  (B) consider amounts needed by an air carrier 
                to promote public use of the service or 
                transportation for which compensation is being 
                paid; and
                  (C) include expense elements based on 
                representative costs of air carriers providing 
                scheduled air transportation of passengers, 
                property, and mail on aircraft of the type the 
                Secretary decides is appropriate for providing 
                the service or transportation for which 
                compensation is being provided.
          (2) Promotional amounts described in paragraph (1)(B) 
        of this subsection shall be a special, segregated 
        element of the compensation provided to a carrier under 
        this subchapter [49 U.S.C. 41731 et seq.].
    (b) Required Finding.--The Secretary may pay compensation 
to an air carrier for providing air service or air 
transportation under this subchapter [49 U.S.C. 41731 et seq.] 
only if the Secretary finds the carrier is able to provide the 
service or transportation in a reliable way.
    (c) Claims.--Not later than 15 days after receiving a 
written claim from an air carrier for compensation under this 
subchapter [49 U.S.C. 41731 et seq.], the Secretary shall--
          (1) pay or deny the United States Government's share 
        of a claim; and
          (2) if denying the claim, notify the carrier of the 
        denial and the reasons for the denial.
    (d) Authority To Make Agreements and Incur Obligations.--
          (1) The Secretary may make agreements and incur 
        obligations from the Airport and Airway Trust Fund 
        established under section 9502 of the Internal Revenue 
        Code of 1986 (26 U.S.C. 9502) to pay compensation under 
        this subchapter [49 U.S.C. 41731 et seq.]. An agreement 
        by the Secretary under this subsection is a contractual 
        obligation of the Government to pay the Government's 
        share of the compensation.
          (2) Not more than $38,600,000 is available to the 
        Secretary out of the Fund for each of the fiscal years 
        ending September 30, 1993-1998, to incur obligations 
        under this section. Amounts made available under this 
        section remain available until expended.
    (e) Matching Funds.--No earlier than 2 years after the 
effective date of section 309 of the Air Traffic Management 
System Performance Improvement Act of 1996, the Secretary may 
require an eligible agency, as defined in section 40117(a)(2) 
of this title, to provide matching funds of up to 10 percent 
for any payments it receives under this subchapter.

                    Subpart II. Economic Regulation

                  CHAPTER 417. OPERATIONS OF CARRIERS

               Subchapter II. Small Community Air Service

[Sec.  41742. Ending effective date

    [This subchapter [49 U.S.C. 41731 et seq.] is not effective 
after September 30, 1998.]

Sec. 41742. Essential air service authorization

    (a) In General.--Out of the amounts received by the 
Administration from the fees authorized by sections 45301 
through 45303 or otherwise provided to the Administration, the 
sum of $50,000,000 is authorized and shall be made available 
immediately for obligation and expenditure to carry out the 
essential air service program under this subchapter for each 
fiscal year.
    (b) Funding for Small Community Air Service.--
Notwithstanding any other provision of law, fees imposed under 
the authority contained in sections 45301 through 45303, 
including the authority contained in section 45302(a)(2), shall 
be used to carry out the essential air service program under 
this subchapter. Any amounts from those fees that are not 
obligated or expended at the end of the fiscal year for the 
purpose of funding the essential air service program under this 
subchapter shall be made available to the Federal Aviation 
Administration for use in improving rural air safety under 
subchapter I of chapter 471 of this title and shall be used 
exclusively for projects at rural airports under this 
subchapter.

                    Subtitle VII. Aviation Programs

                    PART A. AIR COMMERCE AND SAFETY

                          Subpart III. Safety

                     CHAPTER 447. SAFETY REGULATION

Sec.  44715. Controlling aircraft noise and sonic boom

    [(a) Standards and Regulations.--
          [(1) To relieve and protect the public health and 
        welfare from aircraft noise and sonic boom, the 
        Administrator of the Federal Aviation Administration 
        shall prescribe--
                  [(A) standards to measure aircraft noise and 
                sonic boom; and
                  [(B) regulations to control and abate 
                aircraft noise and sonic boom.]
    (a) Standards and Regulations.--(1) To relieve and protect 
the public health and welfare from aircraft noise, sonic boom, 
and aircraft engine emissions, the Administrator of the Federal 
Aviation Administration, as he deems necessary, shall 
prescribe--
          (A) standards to measure aircraft noise and sonic 
        boom;
          (B) regulations to control and abate aircraft noise 
        and sonic boom; and
          (C) emission standards applicable to the emission of 
        any air pollutant from any class or classes of aircraft 
        engines which, in the judgment of the Administrator, 
        causes, or contributes to, air pollution which may 
        reasonably be anticipated to endanger public health or 
        welfare.
          (2) The Administrator of the Federal Aviation 
        Administration may prescribe standards and regulations 
        under this subsection only after consulting with the 
        Administrator of the Environmental Protection Agency. 
        The standards and regulations shall be applied when 
        issuing, amending, modifying, suspending, or revoking a 
        certificate authorized under this chapter [49 U.S.C. 
        44701 et seq.].
          (3) An original type certificate may be issued under 
        section 44704(a) of this title for an aircraft for 
        which substantial noise abatement can be achieved only 
        after the Administrator of the Federal Aviation 
        Administration prescribes standards and regulations 
        under this section that apply to that aircraft.
    (b) Considerations and Consultation.--When prescribing a 
standard or regulation under this section, the Administrator of 
the Federal Aviation Administration shall--
          (1) consider relevant information related to aircraft 
        noise and sonic boom;
          (2) consult with appropriate departments, agencies, 
        and instrumentalities of the United States Government 
        and State and interstate authorities;
          (3) consider whether the standard or regulation is 
        consistent with the highest degree of safety in air 
        transportation or air commerce in the public interest;
          (4) consider whether the standard or regulation is 
        economically reasonable,technologically practicable, 
        and appropriate for the applicable aircraft, aircraft 
        engine, appliance, or certificate; and
          (5) consider the extent to which the standard or 
        regulation will carry out the purposes of this section.
    (c) Proposed Regulations of Administrator of Environmental 
Protection Agency.--The Administrator of the Environmental 
Protection Agency shall submit to the Administrator of the 
Federal Aviation Administration proposed regulations to control 
and abate aircraft noise and sonic boom (including control and 
abatement through the use of the authority of the Administrator 
of the Federal Aviation Administration) that the Administrator 
of the Environmental Protection Agency considers necessary to 
protect the public health and welfare. The Administrator of the 
Federal Aviation Administration shall consider those proposed 
regulations and shall publish them in a notice of proposed 
regulations not later than 30days after they are received. Not 
later than 60 days after publication, the Administrator of the 
Federal Aviation Administration shall begin a hearing at which 
interested persons are given an opportunity for oral and 
written presentations. Not later than 90 days after the hearing 
is completed and after consulting with the Administrator of the 
Environmental Protection Agency, the Administrator of the 
Federal Aviation Administration shall--
          (1) prescribe regulations as provided by this 
        section--
                  (A) substantially the same as the proposed 
                regulations submitted by the Administrator of 
                the Environmental Protection Agency; or
                  (B) that amend the proposed regulations; or
          (2) publish in the Federal Register--
                  (A) a notice that no regulation is being 
                prescribed in response to the proposed 
                regulations of the Administrator of the 
                Environmental Protection Agency;
                  (B) a detailed analysis of, and response to, 
                all information the Administrator of the 
                Environmental Protection Agency submitted with 
                the proposed regulations; and
                  (C) a detailed explanation of why no 
                regulation is being prescribed.
    (d) Consultation and Reports.--
          (1) If the Administrator of the Environmental 
        Protection Agency believes that the action of the 
        Administrator of the Federal Aviation Administration 
        under subsection (c)(1)(B) or (2) of this section does 
        not protect the public health and welfare from aircraft 
        noise or sonic boom, consistent with the considerations 
        in subsection (b) of this section, the Administrator of 
        the Environmental Protection Agency shall consult with 
        the Administrator of the Federal Aviation 
        Administration and may request a report on the 
        advisability of prescribing the regulation as 
        originally proposed. The request, including a detailed 
        statement of the information on which the request is 
        based, shall be published in the Federal Register.
          (2) The Administrator of the Federal Aviation 
        Administration shall report to the Administrator of the 
        Environmental Protection Agency within the time, if 
        any, specified in the request. However, the time 
        specified must be at least 90 days after the date of 
        the request. The report shall--
                  (A) be accompanied by a detailed statement of 
                the findings of the Administrator of the 
                Federal Aviation Administration and the reasons 
                for the findings;
                  (B) identify any statement related to an 
                action under subsection (c) of this section 
                filed under section 102(2)(C) of the National 
                Environmental Policy Act of 1969 (42 U.S.C. 
                4332(2)(C));
                  (C) specify whether and where that statement 
                is available for public inspection; and
                  (D) be published in the Federal Register 
                unless the request proposes specification by 
                the Administrator of the Federal Aviation 
                Administration and the report indicates that 
                action will be taken.
    (e) Supplemental Reports.--The Administrator of the 
Environmental Protection Agency may request the Administrator 
of the Federal Aviation Administration to file a supplemental 
report if the report under subsection (d) of this section 
indicates that the proposed regulations under subsection (c) of 
this section, for which a statement under section 102(2)(C) of 
the Act (42 U.S.C. 4332(2)(C)) is not required, should not be 
prescribed. The supplemental report shall be published in the 
Federal Register within the time the Administrator of the 
Environmental Protection Agency specifies. However, the time 
specified must be at least 90 days after the date of the 
request. The supplemental report shall contain a comparison of 
the environmental effects, including those that cannot be 
avoided, of the action of the Administrator of the Federal 
Aviation Administration and the proposed regulations of the 
Administrator of the Environmental Protection Agency.
    (f) Exemptions. An exemption from a standard or regulation 
prescribed under this section may be granted only if, before 
granting the exemption, the Administrator of the Federal 
Aviation Administration consults with the Administrator of the 
Environmental Protection Agency. However, if the Administrator 
of the Federal Aviation Administration finds that safety in air 
transportation or air commerce requires an exemption before the 
Administrator of the Environmental Protection Agency can be 
consulted, the exemption may be granted. The Administrator of 
the Federal Aviation Administration shall consult with the 
Administrator of the Environmental Protection Agency as soon as 
practicable after the exemption is granted.

                    Subtitle VII. Aviation Programs

                    PART A. AIR COMMERCE AND SAFETY

                          Subpart III. Safety

                           CHAPTER 453. FEES

[Sec.  45301. Authority to impose fees

    (a) General Authority.--The Secretary of Transportation may 
impose a fee for an approval, test, authorization, certificate, 
permit, registration, transfer,or rating related to aviation 
that has not been approved by Congress only when the fee--
          [(1) (A) was in effect on January 1, 1973; and
          [(B) is not more than the fee in effect on January 1, 
        1973, adjusted proportion to changes in the Consumer 
        Price Index of All Urban Consumers published by the 
        Secretary of Labor between January 1, 1973, and the 
        date the fee is imposed; or
          [(2) is imposed under section 45302 of this title.
    [(b) Nonapplication.--Subsection (a) does not apply to a 
fee for a test, authorization, certificate, permit, or rating 
related to an airman or repair station administered or issued 
outside the United States.
    [(c) Recovery of Cost of Foreign Aviation Services.--
          [(1) Establishment of fees.--The Administrator may 
        establish and collect fees for providing or carrying 
        out the following aviation services outside the United 
        States: any test, authorization, certificate, permit, 
        rating, evaluation, approval, inspection, review.
          [(2) Foreign repair station certification and 
        inspection fees.--The Administrator must establish and 
        collect under this subsection fees for certification 
        and inspection of repair stations outside of the United 
        States.
          [(3) Level of fees.--Fees shall be established under 
        this subsection as necessary to recover the additional 
        cost of providing or carrying out such services outside 
        the United States, as compared to the cost of providing 
        or carrying out such services within the United States; 
        except that the Administrator may for such services as 
        the Administrator designates (and shall for 
        certification and inspection of repair stations outside 
        the United States) establish fees at a level necessary 
        to recover the full cost of providing such services.
          [(4) Effect on other authority.--The provisions of 
        this subsection do not limit the Administrator's 
        authority to establish and collect fees under 
        subsection (a).
          [(5) Crediting of preestablished fees.--Fees 
        described in paragraph (1) that were not established 
        before the date of the enactment of this subsection may 
        be credited in accordance with section 45302(d).]

Sec. 45301. General provisions

    (a) In General.--The Administrator of the Federal Aviation 
Administration (hereafter in this section referred to as the 
``Administrator'') shall submit to the Congress a performance-
based fee system, to the maximum extent possible--
          (1) not later than 1 year after the date of enactment 
        of the Air Traffic Management System Performance 
        Improvement Act of 1996, for services other than air 
        traffic control services, including training, 
        licensing, regulatory proceedings, and activities 
        directly necessary for certification; and
          (2) not later than 6 months after such date of 
        enactment, for--
                  (A) services (other than air traffic control 
                services) provided to a foreign government; and
                  (B) air traffic control services for flights 
                over the United States or its territories by 
                air carriers that neither arrive at nor depart 
                from an airport in the United States or its 
                territories (other than such flights by foreign 
                government aircraft engaged on official 
                business).
    (b) Considerations.--
          (1) In general.--To the maximum extent possible, the 
        Administrator, in developing a fee system, shall 
        consider--
                  (A) the impact on segments of the aviation 
                industry; and
                  (B) the fair value, or cost, of the service 
                provided by the Federal Aviation Administration 
                (hereafter in this section referred to as the 
                ``Administration'').
          (2) Additional standards for aircraft manufacturing 
        certification fees.--In the case of aircraft 
        manufacturing certification services, in establishing 
        fees the Administrator shall--
                  (A) not charge fees for administrative and 
                overhead costs not directly related to service 
                activities;
                  (B) consider the effect, both domestically 
                and internationally, of fees on each industry 
                sector;
                  (C) provide a basis for reducing user fees, 
                in appropriate cases, when manufacturers 
                provide in-kind services, such as training, to 
                the Administration;
                  (D) relate user fees to timeliness of 
                Administration services;
                  (E) create reasonable incentives for the 
                Administration, and for payors, to reduce the 
                amount of Administration costs required to 
                perform services; and
                  (F) avoid cross-subsidization among industry 
                sectors.
    (c) Consultation With Management Advisory Council.--In 
developing proposals under this section, the Administrator 
shall consult with the Management Advisory Council established 
under section 106(p) and, to the maximum extent possible, seek 
to develop a consensus.
    (d) Use of Experts and Consultants.--In developing the 
system, the Administrator may consult with such nongovernmental 
experts as the Administrator may employ and the Administrator 
may utilize the services of experts and consultants under 
section 3109 of title 5 without regard to the limitation 
imposed by the last sentence of section 3109(b) of such title, 
and may contract on a sole source basis, notwithstanding any 
other provision of law to the contrary. Notwithstanding any 
other provision of law to the contrary, the Administrator may 
retain such experts under a contract awarded on a basis other 
than a competitive basis and without regard to any such 
provisions requiring competitive bidding or precluding sole 
source contract authority. The Administrator shall cause a copy 
of the proposed fee system to be printed in the Federal 
Register upon its submission to the Congress.
    (e) Fees Effective 45 Days After Submission.--
          (1) In general.--Unless disapproved by the Congress 
        under section 45303(c), any fees proposed by the 
        Administrator under this section shall take effect 45 
        days after the date on which the proposal is submitted 
        to the Congress, or on such later date as the 
        Administrator may propose. If a fee proposal is 
        submitted to the Congress less than 45 days before the 
        date on which the Congress adjourns sine die, or less 
        than 45 days before any 30-day period in which neither 
        House of the Congress is in session, then the fees so 
        proposed shall not take effect unless resubmitted under 
        this section. Any proposal resubmitted shall be 
        considered a new submission for applying the first 
        sentence of this paragraph to the resubmitted proposal.
          (2) Implementation delayed if trust fund amounts 
        adequate.--Beginning with fiscal year 1998, no fee 
        proposed by the Administrator may be imposed under 
        subsection (a)(1) unless, for the preceding fiscal 
        year, the sum of the outlays from the Airport and 
        Airway Trust Fund exceeds the receipts of the Fund 
        derived from Federal taxes, amounts equivalent to the 
        receipts from which are credited to the Airport and 
        Airway Trust Fund established under section 9502 of the 
        Internal Revenue Code of 1986 (hereafter in this 
        chapter referred to as the ``trust fund taxes'').
          (3) Aircraft manufacturing certification fees not 
        implemented before air traffic control fees.--
        Notwithstanding any other provision of this Act, the 
        Administrator may not impose a fee under this section 
        for aircraft manufacturing certification services 
        before imposing a fee for air traffic control services 
        under section 45302.
    (f) Agreement With Department of Defense.--Within 6 months 
after the date of enactment of the Air Traffic Management 
System Performance Improvement Act of 1996, the Administration 
shall enter into an agreement with the Department of Defense 
under which the Administration will be reimbursed for the net 
cost of air traffic control services provided to the Department 
of Defense.
    (g) Termination.--Fees imposed under subsection (a)(1) 
shall terminate 3 years after going into effect, but any 
amounts collected shall remain available until expended.
    (h) Additional System Proposals.--Not later than 6 months 
before the date on which any fee system imposed under this 
section terminates, the Administrator shall submit to the 
Congress a proposal for a fee system to replace the terminating 
system. Any replacement fee system proposed under this 
subsection shall be developed in consultation with the 
Management Advisory Council established under section 106(p) in 
the same manner as under subsection (c). The Administrator 
shall submit to the Congress at the same time as the proposal 
is submitted, a review of the effectiveness of the standards 
established for the fee system the proposed fee system is 
intended to replace, conducted by independent experts. The 
proposed replacement fee system shall take effect upon the 
termination of the fee system it replaces unless disapproved by 
the Congress under section 45303(c), and shall terminate 3 
years after going into effect.
    (i) Certain Fees Prohibited.--The Administration may not 
impose fees under subsection (a)(1) for the direct cost of 
accident investigations, or the costs of inspections of or 
enforcement actions initiated against any segment of the 
aviation industry.

[Sec.  45302. Fees involving aircraft not providing air transportation

    [(a) Application.--This section applies only to aircraft 
not used to provide air transportation.
    [(b) General Authority and Maximum Fees.--The Administrator 
of the Federal Aviation Administration may impose fees to pay 
for the costs of issuing airman certificates to pilots and 
certificates of registration of aircraft and processing forms 
for major repairs and alterations of fuel tanks and fuel 
systems of aircraft. The following fees may not be more than 
the amounts specified:
          [(1) $12 for issuing an airman's certificate to a 
        pilot.
          [(2) $25 for registering an aircraft after the 
        transfer of ownership.
          [(3) $15 for renewing an aircraft registration.
          [(4) $7.50 for processing a form for a major repair 
        or alteration of a fuel tank or fuel system of an 
        aircraft.
    [(c) Adjustments.--The Administrator shall adjust the 
maximum fees established by subsection (b) of this section for 
changes in the Consumer Price Index of AllUrban Consumers 
published by the Secretary of Labor.
    [(d) Credit to Account and Availability.--Money collected 
from fees imposed under this section shall be credited to the 
account in the Treasury from which the Administrator incurs 
expenses in carrying out chapter 441 [49 U.S.C. 44101 et seq.] 
and sections 44701-44716 of this title (except sections 
44701(c), 44703(f)(2), and 44713(d)(2)). The money is available 
to the Administrator to pay expenses for which the fees are 
collected.
    (e) Effective Date.--A fee may not be imposed under this 
section before the date on which the regulations prescribed 
under sections 44111(d), 44703(f)(2), and 44713(d)(2) of this 
title take effect.]

Sec. 45302. User fees for air traffic control services

    (a) In General.--Not later than 1 year after the date of 
enactment of the Air Traffic Management System Performance 
Improvement Act of 1996, the Administrator of the Federal 
Aviation Administration (hereafter in this section referred to 
as the ``Administrator'') shall submit to the Congress a 
proposed fee system for air traffic control services. In 
developing the proposal, the Administrator may utilize the 
services of experts and consultants under section 3109 of title 
5 without regard to the limitation imposed by the last sentence 
of section 3109(b) of such title, and may contract on a sole 
source basis, notwithstanding any other provision of law to the 
contrary, to develop air traffic control user fees based on 
improved system performance. The Administrator shall cause a 
copy of the proposed fee system to be printed in the Federal 
Register upon its submission to the Congress.
    (b) Considerations.--To the maximum extent feasible, in 
developing a fee system under this section, the Administrator 
shall consider--
          (1) the impact on air fares (including low-fare, 
        high-frequency service) and competition;
          (2) the existing contributions provided by individual 
        air carriers toward funding of the Federal Aviation 
        Administration and the air traffic control system 
        (through contributions to the Airport and Airway Trust 
        Fund);
          (3) the continuation of promoting fair and 
        competitive practices;
          (4) the unique circumstances associated with inter 
        island air carrier service in Hawaii;
          (5) the impact on service to small communities;
          (6) the impact on services provided by regional air 
        carriers; and
          (7) several alternative methodologies for calculating 
        fees so as to achieve a fair and reasonable 
        distribution of the costs of service among users.
  (c) Limitations.--
          (1) Trust fund payors.--Fees imposed under this 
        section on any segment of the aviation industry (other 
        than on flights operated by air carriers within United 
        States territories or between such territories and 
        foreign countries) subject to Federal taxes, amounts 
        equivalent to the receipts of which are credited to the 
        Airport and Airway Trust Fund established under section 
        9502 of the Internal Revenue Code of 1986 (hereafter in 
        this section referred to as ``trust fund taxes'') shall 
        take effect on the later of--
                  (A) the date established under subsection (d) 
                of this section, or
                  (B) the date immediately following the date 
                on which the trust fund taxes paid by that 
                segment terminate.
          (2) Other users.--Notwithstanding paragraph (1), fees 
        imposed under this section may be imposed on any user 
        of air traffic control services not subject to trust 
        fund taxes, so long as any such fees are consistent 
        with international agreements.
          (3) Exemption for certain aircraft.--No fee may be 
        imposed under this section on sport and recreation 
        aircraft or on agricultural aircraft.
    (d) Fees Effective 45 Days After Submission.--Unless 
disapproved by the Congress under section 45303(c), fees 
proposed by the Administrator under this section take effect 45 
days after the date on which the proposal is submitted to the 
Congress, or on such later date as the Administrator may 
propose.
    (e) Definitions.--For the purposes of this section the 
following definitions shall apply:
          (1) Segment.--The term ``segment'' refers to--
                  (A) commercial airlines;
                  (B) commercial cargo air carriers;
                  (C) business jets;
                  (D) general aviation; and
                  (E) public use.
          (2) Business jets.--The term ``business jets'' means 
        turbine engine aircraft other than rotorcraft and 
        aircraft used exclusively in air carrier service.
          (3) Sport and recreation aircraft.--The term ``sport 
        and recreation aircraft'' means non-powered aircraft, 
        rotorcraft, and reciprocating piston engine aircraft 
        not used to provide air carrier service.
    (f) Consultation With Management Advisory Council.--In 
developing proposals under subsection (a) of this section, the 
Administrator shall consult with the Management Advisory 
Council established under section 106(p) and, to the maximum 
extent possible, seek to develop a consensus.
    (g) Termination.--Fees imposed under this section shall 
terminate 3 years after going into effect, but any amounts 
collected shall remain available until expended.
    (h) Additional System Proposals.--Not later than 6 months 
before the date on which any fee system imposed under this 
section terminates, the Administrator shall submit to the 
Congress a proposal for a fee system to replace the terminating 
system. Any replacement fee system proposed under this 
subsection shall be developed in consultation with the 
Management Advisory Council established under section 106(p) in 
the same manner as under subsection (f). The Administrator 
shall submit to the Congress at the same time as the proposal 
is submitted, a review of the effectiveness of the standards 
established for the fee system the proposed fee system is 
intended to replace, conducted by independent experts. The 
proposed replacement fee system shall take effect upon the 
termination of the fee system it replaces unless disapproved by 
the Congress under section 45303(c), and shall terminate 3 
years after going into effect.

Sec. 45303. Administrative provisions

    (a) In General.--
          (1) Fees payable to administrator.--All fees imposed 
        and amounts collected under this chapter for services 
        performed, or materials furnished, by the Federal 
        Aviation Administration (hereafter in this section 
        referred to as the ``Administration'') are payable to 
        the Administrator of the Federal Aviation 
        Administration.
          (2) Refunds.--The Administrator may refund any fee 
        paid by mistake or any amount paid in excess of that 
        required.
          (3) Receipts credited to account.--Notwithstanding 
        section 3302 of title 31 all fees and amounts collected 
        by the Administration, except insurance premiums and 
        other fees charged for the provision of insurance and 
        deposited in the Aviation Insurance Revolving Fund and 
        interest earned on investments of such Fund, and except 
        amounts which on the date of enactment of the Air 
        Traffic Management System Performance Improvement Act 
        of 1996 are required to be credited to the General Fund 
        of the Treasury, (whether imposed under this section or 
        not)--
                  (A) shall be credited to a separate account 
                established in the Treasury and made available 
                for Federal Aviation Administration activities 
                as offsetting collections;
                  (B) shall be available immediately for 
                expenditure but only for Congressionally 
                authorized and intended purposes; and
                  (C) shall remain available until expended.
          (4) Annual budget report by administrator.--The 
        Administrator shall, on the same day each year as the 
        President submits the annual budget to the Congress, 
        provide to the Committee on Commerce, Science, and 
        Transportation of the Senate and the Committee on 
        Transportation and Infrastructure of the House of 
        Representatives--
                  (A) a list of fee collections by the 
                Administration during the preceding fiscal 
                year;
                  (B) a list of activities by the 
                Administration during the preceding fiscal year 
                that were supported by fee expenditures and 
                appropriations;
                  (C) budget plans for significant programs, 
                projects, and activities of the Administration, 
                including out-year funding estimates;
                  (D) any proposed disposition of surplus fees 
                by the Administration; and
                  (E) such other information as those 
                committees consider necessary.
          (5) Independent studies.--Within 6 months after the 
        date of enactment of the Air Traffic Management System 
        Performance Improvement Act of 1996, the Administrator 
        shall cause to be prepared by persons having no direct 
        financial interest in the results of such studies, 
        independent studies--
                  (A) assessing the costs to the Administration 
                occasioned by the provision of services to each 
                segment of the aviation system; and
                  (B) reviewing the funding needs and 
                assumptions for operations, capital spending, 
                and airport infrastructure of the 
                Administration, taking into account the degree 
                of funding needed, in view of projected 
                workload increases for the agency, for the 
                Administration to maintain, at a minimum, the 
                current levels and types of operational and 
                safety services it provides, both in terms of 
                quality and timeliness, for the benefit of the 
                aviation community and the traveling public.
          (6) Fees not imposed until 6 months after studies 
        completed.--Notwithstanding any provision of law, no 
        fee prescribed by section 45301 or 45302 shall be 
        implemented prior to the date which is 6 months after 
        the date upon which the studies performed pursuant to 
        paragraph (5) of this subsection have been submitted to 
        the Congress.
          (7) Compensation to carriers for acting as collection 
        agents.--The Administration shall prescribe regulations 
        to ensure that any air carrier required, pursuant to 
        the Air Traffic Management System Performance 
        Improvement Act of 1996 or any amendments made by that 
        Act, to collect a fee imposed on another party by the 
        Administrator may collect from such other party an 
        additional uniform amount that the Administrator 
        determines reflects the necessary and reasonable 
        expenses (net of interest accruing to the carrier after 
        collection and before remittance) incurred in 
        collecting and handling the fee.
          (8) Cost reduction and efficiency report.--
                  (A) In general.--60 days prior to submission 
                by the Administrator to the Congress of a 
                proposal for establishment, implementation, or 
                expansion in fees imposed on the aviation 
                industry, the Administrator shall submit to the 
                Management Advisory Council established under 
                section 106(p) the report prepared under 
                subparagraph (B).
                  (B) Prior to the submission of any proposal 
                for establishment, implementation, or expansion 
                of any fees imposed on the aviation industry, 
                the Administrator shall prepare a report which 
                includes--
                          (i) a justification of the need for 
                        the proposed fees;
                          (ii) a statement of steps taken by 
                        the Administrator to reduce costs and 
                        improve efficiency within the 
                        Administration;
                          (iii) an analysis of the impact of 
                        any fee increase on each sector of the 
                        aviation transportation industry; and
                          (iv) a comparative analysis of any 
                        decrease in taxes amounts equal to the 
                        receipts from which are credited to the 
                        Airport and Airway Trust Fund 
                        established under section 9502 of the 
                        Internal Revenue Code of 1986.
    (b) Fee Allocation.--In the fee systems established under 
sections 45301 and 45302, no segment of the aviation industry 
shall pay more than its fully allocated costs as determined 
under subsection (a)(5)(A).
    (c) Congressional Procedure.--
          (1) In general.--This subsection is enacted by the 
        Congress as an exercise of the rulemaking power of the 
        Senate and the House of Representatives, respectively, 
        and as such these provisions are deemed to be a part of 
        the rules of each House of the Congress, respectively, 
        applicable only to the procedure to be followed in that 
        House for resolutions described in this subsection. 
        These provisions supersede other rules of each House of 
        the Congress only to the extent that they are 
        inconsistent with those other rules, and they are 
        enacted with full recognition of the constitutional 
        right of each House to change them, to the extent that 
        they relate to the procedure of that House, in the same 
        manner and to the same extent as any other rule of that 
        House.
          (2) Resolution.--For purposes of this subsection, the 
        term ``resolution'' means a joint resolution relating 
        to the disapproval of a fee proposal submitted by the 
        Administrator under section 45301 or 45302, the matter 
        after the resolving clause of which is as follows: 
        ``That the Congress disapproves the fee proposal 
        submitted by the Administrator of the Federal Aviation 
        Administration on ---- and identified as ----.'', the 
        first blank space being filled with the date on which 
        the proposal was submitted and the second being filled 
        with the title or other description of the proposal. 
        The term does not include a resolution that relates to 
        more than one proposal.
          (3) Referral.--Upon introduction, a resolution shall 
        be referred to the Committee on Commerce, Science, and 
        Transportation of the Senate or the Committee on 
        Transportation and Infrastructure of the House of 
        Representatives.
          (4) Motion to discharge.--If the committee to which a 
        resolution has been referred has not reported it at the 
        end of 20 calendar days after its introduction, it is 
        in order to move to discharge the committee from 
        further consideration of that resolution.
          (5) Rules for motion to discharge.--A motion to 
        discharge may be made only by an individual favoring 
        the resolution, is highly privileged (except that it 
        may not be made after the committee has reported a 
        resolution with respect to the same proposal), and 
        debate thereon shall be limited to not more than 1 
        hour, with the time divided equally between those 
        favoring and those opposing the motion. An amendment to 
        the motion is not in order, and it is not in order to 
        move to reconsider the vote by which the motion is 
        agreed to or disagreed to. Motions to postpone shall be 
        decided without debate.
          (6) Effect of motion.--If the motion to discharge is 
        agreed to or disagreed to, the motion may not be 
        renewed, nor may another motion to discharge the 
        committee be made with respect to any other resolution 
        with respect to the same proposal.
          (7) Senate procedure.--
                  (A) Motion to proceed.--When the committee of 
                the Senate has reported, or has been discharged 
                from further consideration of, a resolution, it 
                is at any time thereafter in order (even though 
                a previous motion to the same effect has been 
                disagreed to) to move to proceed to the 
                consideration of the resolution. The motion is 
                highly privileged and is not debatable. An 
                amendment to the motion is not in order, and it 
                is not in order to move to reconsider the vote 
                by which the motion is agreed to or disagreed 
                to.
                  (B) Limitation on debate.--Debate in the 
                Senate on the resolution shall be limited to 
                not more than 10 hours, which shall be divided 
                equally between those favoring and those 
                opposing the resolution. A motion further to 
                limit debate is not debatable. An amendment to, 
                or motion to recommit, the resolution is not in 
                order, and it is not in order to move to 
                reconsider the vote by which the resolution is 
                agreed to or disagreed to.
                  (C) No debate on certain motions.--In the 
                Senate, motions to postpone made with respect 
                to the consideration of a resolution and 
                motions to proceed to the consideration of 
                other business shall be decided without debate.
                  (D) Appeals.--Appeals from the decisions of 
                the Chair relating to the application of the 
                rules of the Senate to the procedure relating 
                to a resolution shall be decided without 
                debate.
          (8) Effect of adoption of resolution by other 
        house.--If, before the passage by one House of the 
        Congress of a resolution of that House, it receives 
        from the other House a resolution, then the following 
        procedures apply:
                  (A) The resolution of the other House shall 
                not be referred to a committee and may not be 
                considered in the House receiving it, except in 
                the case of final passage as provided in 
                subparagraph (B)(i).
                  (B) With respect to the resolution described 
                in subparagraph (A) of the House receiving it--
                          (i) the procedure in that House shall 
                        be the same as if no joint resolution 
                        had been received from the other House; 
                        but
                          (ii) the vote on final passage shall 
                        be on the resolution of the other 
                        House.

Sec.  [45303] 45304. Maximum fees for private person services

                    Subtitle VII. Aviation Programs

                           PART C. FINANCING

       CHAPTER 481. AIRPORT AND AIRWAY TRUST FUND AUTHORIZATIONS

Sec.  48104. Certain direct costs and joint air navigation services

    (a) Authorization of Appropriations.--Except as provided in 
this section, the balance of the money available in the Airport 
and Airway Trust Fund established under section 9502 of the 
Internal Revenue Code of 1986 (26 U.S.C. 9502) may be 
appropriated to the Secretary of Transportation out of the Fund 
for--
          (1) direct costs the Secretary incurs to flight 
        check, operate, and maintain air navigation facilities 
        referred to in section 44502(a)(1)(A) of this title 
        safely and efficiently; and
          (2) the costs of services provided under 
        international agreements related to the joint financing 
        of air navigation services assessed against the United 
        States Government.
    (b) Limitation for Fiscal Years 1993.--The amount that may 
be appropriated out of the Fund for fiscal year 1993 may not be 
more than an amount equal to--
          (1) 75 percent of the amount made available under 
        sections 106(k) and 48101-48103 of this title for that 
        fiscal year; less
          (2) the amount made available under sections 48101-
        48103 of this title for that fiscal year.
    (c) Limitation for Fiscal Years 1994-1996.--The amount 
appropriated from the Trust Fund for the purposes of paragraphs 
(1) and (2) of subsection (a) for each of fiscal years 1994, 
1995, and 1996 may not exceed the lesser of--
          (1) 50 percent of the amount of funds made available 
        under sections 48101-48103 of this title for such 
        fiscal year; or
          (2) (A) 70 percent of the amount of funds made 
        available under sections 106(k) and 48101-48103 of this 
        title for such fiscal year; less
          (B) the amount of funds made available under sections 
        48101-48103 of this title for such fiscal year.
This subsection shall be applied for fiscal years 1997 and 1998 
by substituting ``80 percent'' for ``50 percent'' in paragraph 
(1), and by substituting ``90 percent'' for ``70 percent'' in 
paragraph (2).

                    Subtitle VII. Aviation Programs

                           PART C. FINANCING

       CHAPTER 481. AIRPORT AND AIRWAY TRUST FUND AUTHORIZATIONS

[Sec.  48109. Submission of budget information and legislative 
                    recommendations and comments

    [When the Administrator of the Federal Aviation 
Administration submits to the Secretary of Transportation, the 
President, or the Director of the Office of Management and 
Budget any budget information, legislative recommendation, or 
comment on legislation about amounts authorized in section 
48101 or 48102 of this title, the Administrator concurrently 
shall submit a copy of the information, recommendation, or 
comment to the Speaker of the House of Representatives, the 
Committees on Public Works and Transportation and 
Appropriations of the House, the President of the Senate, and 
the Committees on Commerce, Science, and Transportation and 
Appropriations of the Senate.]

Sec. 48109. Budget information and legislative recommendations and 
                    comments

    (a) Preparation.--Beginning with the budget for the first 
fiscal year beginning after the first fiscal year in which the 
Federal Aviation Administration is funded entirely by user 
fees, the Administrator shall prepare a budget for the 
Administration for each fiscal year.
    (b) Submission of Budget to DoT.--At the same time that 
agencies of the Department of Transportation having 
jurisdiction over other modes of transportation are required to 
submit their budgets to the Secretary of Transportation, the 
Administrator shall submit to the Secretary the budget prepared 
by the Administrator. The budget submission shall include a 
statement of income and expenses and analysis of the surplus or 
deficit in the Airport and Airway Trust Fund established under 
section 9502 of the Internal Revenue Code of 1986, and any 
other such supplementary information as is necessary or 
desirable to make known about the financial condition and 
operations of the Administration. The annual budget shall be 
included in the budget submitted by the President pursuant to 
chapter 11 of title 31, United States Code. The Secretary shall 
review the budget and may recommend to the Administrator 
modifications in the budget necessary to ensure that the budget 
is consistent with the needs of the national transportation 
system. The Administrator may modify the budget to adopt any 
recommendation made by the Secretary.
    (c) Submission of Budget to Congress.--
          (1) In general.--When the Administrator submits to 
        the President or the Director of the Office of 
        Management and Budget any budget information, 
        legislative recommendation, or comment on legislation 
        about amounts authorized in section 48101 or 48102, the 
        Administrator concurrently shall submit a copy of the 
        information, recommendation, or comment to the Speaker 
        of the House of Representatives, the Committees on 
        Transportation and Infrastructure and Appropriations of 
        the House of Representatives, the President of the 
        Senate, and the Committees on Commerce, Science, and 
        Transportation and Appropriations of the Senate.
          (2) Special rule with respect to annual budgets.--The 
        annual budget of the Administration submitted to 
        Congress shall include--
                  (A) any modifications made by the 
                Administrator under subsection (b) with respect 
                to the budget; and
                  (B) if the Administrator does not adopt a 
                recommendation made by the Secretary under 
                subsection (b), a description of the 
                recommendation and the reasons for not adopting 
                the recommendation.
    (d) Cost Reduction and Efficiency Report Required.--
Whenever the Administrator submits a report, request, or 
proposal that contains an increase in either the budget of the 
Administration or any of the fees imposed by the 
Administration, the Administrator shall submit, as a part of 
that report, request, or proposal--
          (1) an explanation that states specifically the need 
        for the increase; and
          (2) a statement of any steps taken by the 
        Administration to reduce costs and improve efficiency 
        in order to avoid or limit the increase.

   CHAPTER 482--ADVANCE APPROPRIATIONS FOR AIRPORT AND AIRWAY TRUST 
                               FACILITIES

Sec.
48201. Advance appropriations.

Sec. 48201. Advance appropriations

    (a) Multiyear Authorizations.--Beginning with fiscal year 
1997, any authorization of appropriations for an activity for 
which amounts are to be appropriated from the Airport and 
Airway Trust Fund established under section 9502 of the 
Internal Revenue Code of 1986 shall provide funds for a period 
of not less than 3 fiscal years unless the activity for which 
appropriations are authorized is to be concluded before the end 
of that period.
    (b) Multiyear Appropriations.--Beginning with fiscal year 
1997, amounts appropriated from the Airport and Airway Trust 
Fund shall be appropriated for periods of 3 fiscal years rather 
than annually.

              Subtitle IX. Commercial Space Transportation

            CHAPTER 701. COMMERCIAL SPACE LAUNCH ACTIVITIES

[Sec.  70118. User fees

    [The Secretary of Transportation may collect a user fee for 
a regulatory or other service conducted under this chapter [49 
U.S.C. 70101 et seq.] only if specifically authorized by this 
chapter [49 U.S.C. 70101 et seq.].]
                          A P P E N D I C E S

                              ----------                              


                               Appendix A



                               Appendix B

                      National Transportation Safety Board,
                                  Washington, DC, November 8, 1995.
Hon. John McCain,
Chairman, Subcommittee on Aviation, Committee on Commerce, Science, and 
        Transportation, U.S. Senate, Washington, DC.
    Dear Chairman McCain: It is my understanding that tomorrow 
the Senate Committee on Commerce, Science, and Transportation 
will mark up S. 1239, the Air Traffic Management System 
Performance Improvement Act of 1995. Although the full Board 
has not taken a position on this legislation, I did want to 
share my personal views with you.
    As Chairman of the National Transportation Safety Board, I 
see on a daily basis the immense job the Federal Aviation 
Administration has to accomplish. The competition for funds 
during a period of tighter federal budgets, the need to 
anticipate and justify future staffing requirements annually, 
and the protracted process for procurement of new equipment, 
are all factors that can degrade efficiency and affect the 
ability of the system to respond to new demands and new 
technology. I believe the reforms in S. 1239 remedy this 
deficiency, without taking the aviation trust fund off budget, 
and I hope the Commerce Committee will fully support this bill.
    Many of the safety enhancing actions identified by the 
Board in the past have required research, development, 
procurement and installation programs that span several years. 
Examples are Terminal Doppler Weather Radar, Airborne Collision 
Avoidance Systems, airport surface surveillance and conflict 
detection equipment. Many of these programs have experienced 
development and installation schedule slippages. So, too, has 
the FAA's air traffic control system modernization programs. It 
is difficult for the Board to determine the role of budget 
planning in these slippages; however, it is obvious that the 
need to justify budgets and establish priorities during this 
period when the Federal government must tighten budgets could 
have an impact on significant safety programs. S. 1239 would 
ensure the continuation of that funding in a fiscally 
responsible manner.
    Mr. Chairman, we take pride that America's aviation 
industry is the safest in the World. Without a predictable 
source of funds, there is the potential that new safety-related 
technical systems may be delayed, degrading that safety. The 
FAA, the agency responsible for the implementation and 
administration of these systems, believes that this bill will 
greatly improve the prospects for the acquisition of these 
critically important safety systems. I concur in their 
judgement on this matter.
            Sincerely,
                                                Jim Hall, Chairman.
                                ------                                

                                       U.S. Senate,
                               Committee on Appropriations,
                                  Washington, DC, November 8, 1995.
Hon. John McCain,
Chairman, Subcommittee on Aviation, Committee on Commerce, Science, and 
        Transportation, U.S. Senate, Washington, DC.
    Dear John: I am writing to explain the position taken by 
the Transportation Appropriations conferees on amendment 
numbered 44 of H.R. 2002, regarding user fees. As you know, the 
Senate bill language, which would have required the Federal 
Aviation Administration (FAA) to raise an additional 
$10,000,000 in offsetting collections associated with safety 
and security regulations, was dropped in the appropriations 
conference.
    That position should not be interpreted as meaning that 
additional user fees or new sources of funding are not 
necessary for the FAA. The statement of managers language 
explaining why the Senate bill language was dropped was very 
explicit. It stated that the administration had not 
demonstrated the need for new fees. Recognizing the need for 
additional revenues, the intent of the original Senate language 
was to encourage the FAA to maximize its collection of existing 
fees. As was pointed out in the Senate report language 
accompanying the bill, current fees do not cover the full costs 
of conducting a number of activities. It was felt that FAA was 
not fully utilizing its existing authority in a number of 
areas.
    Unfortunately, the administration and others focused on 
raising new fees, and not examining and better managing 
existing authority. As you know, the granting of authority to 
raise new fees rests with either your committee or, depending 
on the nature of those fees, the Finance Committee. You should 
also know that the House conferees raised the jurisdiction 
issue with me on behalf of the House Ways and Means Committee.
    The Appropriations bill language in amendment numbered 44 
would only have been in effect for fiscal year 1996. The 
decision to drop the Senate bill language does not negate the 
need for FAA to review its existing fee structure; for FAA to 
impose new fees where necessary; nor, the need for FAA to be on 
a more sound financial base, now or in the future.
    It is unfortunate that the confusion over new versus 
existing collections and the question of jurisdiction 
obfuscated the real issue, which is the need for real financial 
reform by the Federal Aviation Administration.
    I am concerned about FAA's cost structure. But the 
inability to maintain the Senate position on raising an 
additional $10,000,000 in offsetting collections, specifically 
in fiscal year 1996, should not detract from your efforts. 
Unfortunately, the appropriations conference position forced us 
to fund FAA operations with a potential transfer of $60,000,000 
from the Cost Guard's operating expenses account. That is no 
way to fund the FAA. It is an unsound financial practice: 
unfair to both the FAA and the Coast Guard, and something I 
would not want to repeat in the fiscal year 1997 bill.
    I support your efforts to find a long-term solution to the 
financing problem. I hope that this letter clarifies the 
reasons and statement of managers language surrounding the 
issue of offsetting collections.
            With kind regards,
                                                  Mark O. Hatfield.
                                ------                                

                               National Air Traffic
                                   Controllers Association,
                                  Washington, DC, November 9, 1995.
Hon. John McCain,
U.S. Senate,
Washington, DC.
    Dear Mr. Chairman: The National Air Traffic Controllers 
Association (NATCA) supports the personnel reform language 
contained within S. 1239. The association believes that 
providing the exclusive bargaining representatives with full 
bargaining rights over the development of a new personnel 
system provides a fair platform that will benefit the agency, 
the employees and ultimately the users of the air traffic 
control system.
    We are aware of other efforts in substitution of S. 1239 
and fear that these attempts, with all good intentions, may 
further delay FAA Reform that is desperately needed at this 
time. The Air Traffic Control system continues to crumble and 
the safety of the system is in the balance. Your bill provides 
the funding stream necessary to modernize the system that is in 
need of repair. We will be working with hope that S. 1239 
succeeds the mark up and are encouraging the committee members 
to assist in this endeavor.
    NATCA applauds your efforts to reform the air traffic 
control system. It has been a long time in coming and it took 
your leadership to finally make it a reality.
    Your bill provides the flexibility the FAA needs to meet 
the demands of the 21st century while protecting the interests 
of the men and women who operate the air traffic control 
system. It provides for continuation of collective bargaining 
agreements, representational status for NATCA and other unions 
and provides for the duty to bargain in good faith. Your bill 
allows the employees who will have to live and work under the 
new system the ability to develop the system.
    Thank you for drafting a bill which will provide the 
necessary reform to modernize the FAA and make it more 
responsive to the users.
            Respectfully,
                            Mike McNally, Executive Vice President.
                                ------                                

                           The Secretary of Transportation,
                                  Washington, DC, November 8, 1995.
Hon. Larry Pressler,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: As your committee takes up S. 1239, the 
``Air Traffic Management System Performance Improvement Act of 
1995,'' I want to stress the urgency of taking action now to 
put Federal Aviation Administration (FAA) financing on a sound 
footing. That is why I urge support for the McCain-Ford 
substitute and oppose efforts to constrain FAA financial 
reform, including any substitute that would replace real 
budgetary reform with a study of user fees.
    By the year 2002, more than 800 million passengers per year 
will be flying the nation's skies--a 35 percent increase over 
today's levels. Yet under the Congressional Budget Resolution 
for fiscal years 1996-2002, FAA's budget could decline by 14 
percent during the same period.
    With cuts of this magnitude, the likely result will be a 
significant increase in flight delays and airline costs, with 
impacts on the whole national economy. Either FAA reduces 
services or finds a different way to finance its operations.
    Subcommittee Chairman McCain and others have developed a 
forward-looking proposal in S. 1239 that would ensure that 
funds raised for aviation purposes will be available for 
unencumbered use by the FAA. User financing is critical to 
budgetary flexibility and the opportunity to make the types of 
air traffic and safety improvements we must make now for the 
future. As stated by Appropriations Committee Chairman Hatfield 
during debate on the Congressional Budget Resolution, without 
financial reform, there would be ``severe and devastating cuts 
in FAA operations, which will have direct impacts on the 
viability of the air traffic control system.''
    A substitute offered to delay or delete some or all of the 
financing reform will remove the primary rationale for S. 1239. 
A study of user-fee issues is unneeded, because the bill 
already assures that the user fees will be thoroughly studied 
and then presented to Congress for review before they take 
effect. Thus, the aviation industry and Congress have the 
opportunity to address issues raised as the proposal is 
developed, and a study phase will only postpone full financing 
of FAA activities. The Administration itself recognizes that 
other financing issues remain to be resolved, including the 
status of Defense Department operations and services under a 
user-fee system. We look forward to meeting with committee 
members to improve and refine the legislation.
    S. 1239 embodies the momentum of sustained efforts by many 
parties over the past two years to achieve real changes for the 
FAA, and any delay now will prevent us from obtaining our 
common goal. S. 1239 and the McCain-Ford substitute deserve the 
full committee's support, and that will be critical to 
maintaining aviation excellence into the next century. The 
Office of Management and Budget advises that, from the 
standpoint of the Administration's program, there is no 
objection to providing these views for the consideration of 
Congress.
            Sincerely,
                                        Mortimer L. Downey,
                                               (For Federico Pena).

                                
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