[Senate Report 108-41]
[From the U.S. Government Publishing Office]

108th Congress                                                   Report
 1st Session                                                     108-41


                                                        Calendar No. 83



                              R E P O R T

                                 of the



                                 S. 824


                  May 2, 2003.--Ordered to be printed

    Filed under authority of the order of the Senate of May 1, 2003
                      one hundred eighth congress
                             first session

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois        RON WYDEN, Oregon
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
                                     FRANK LAUTENBERG, New Jersey
           Jeanne Bumpus, Staff Director and General Counsel
                   Ann Begeman, Deputy Staff Director
                  Robert W. Chamberlin, Chief Counsel
               Kevin D. Kayes, Democratic Staff Director
                Gregg Elias, Democratic General Counsel
                                                        Calendar No. 83
108th Congress                                                   Report
 1st Session                                                     108-41




                  May 2, 2003.--Ordered to be printed

    Filed under authority of the order of the Senate of May 1, 2003


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

                              R E P O R T

                         [To accompany S. 824]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 824) ``A bill to reauthorize 
the Federal Aviation Administration, and for other purposes'', 
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. 824 is to reauthorize the Federal Aviation 
Administration (FAA) for three years; strengthen FAA 
management; provide funding for the Airport Improvement Program 
(AIP); authorize funding for the FAA's Operations, Facilities 
and Equipment, and Research, Engineering, and Development 
accounts; provide funding for security capital costs at 
airports and streamline the process for approving and 
constructing airport capacity projects.

                          Background and Needs


  A little more than two decades after Wilbur and Orville 
Wright took flight on December 17, 1903 over Kill Devil Hills, 
North Carolina, the United States Congress passed the Air 
Commerce Act of 1926. The Act, which established an Aeronautics 
Branch within the Department of Commerce, was the beginning of 
the Federal government's involvement in the regulation and 
development of civil aviation. This landmark legislation was 
passed at the urging of the aviation community, which was 
concerned that aviation could not reach its full commercial 
potential without Federal action to improve and maintain safety 
standards. In 1938, Congress passed the Civil Aeronautics Act 
to create an independent agency, the Civil Aeronautics 
Authority, with expanded authority to issue air carrier route 
certificates and regulate airfares. The Civil Aeronautics 
Authority was comprised of the Department of Commerce's Bureau 
of Air Commerce and the Bureau of Air Mail from the Interstate 
Commerce Commission, combining safety and economic regulatory 
authority in one federal agency.
  The introduction of jet airliners, and a series of midair 
collisions, spurred passage of the Federal Aviation Act of 1958 
(Aviation Act). This legislation established two independent 
bodies, the Federal Aviation Agency, which had broader 
authority to enforce safety regulations, and the Civil 
Aeronautics Board (CAB), which oversaw the economic regulation 
of air carriers. The Aviation Act entrusted safety rulemaking 
to the Federal Aviation Agency and gave it sole responsibility 
for developing and maintaining a common civil-military system 
of air navigation and air traffic control. In 1967, the Federal 
Aviation Agency was incorporated into the newly created 
Department of Transportation (DOT) and was renamed the Federal 
Aviation Administration (FAA). In 1978, Congress passed the 
Airline Deregulation Act which phased-out the CAB's authority 
over fares and phased-out the CAB itself by 1985.
  The Aviation and Transportation Security Act, enacted on 
November 19, 2002, established the Transportation Security 
Administration (TSA) to be responsible for the security of all 
modes of transportation. On February 13, 2002, responsibility 
for aviation security was transferred from FAA to TSA.


  Today, the FAA has almost 50,000 employees at its 
headquarters in Washington, DC, in regional offices, and at 
facilities around the country and world. The FAA fulfills its 
mission through ``lines of business'' that work together to 
create and maintain the nation's aviation system. The primary 
lines of business are:
          Air Traffic Services: Manages civil and military air 
        traffic by developing and recommending national 
        policies and establishing national programs, 
        regulations, standards, and procedures for management 
        of the National airspace; operates air navigation and 
        communications systems and facilities; maintains 
        separation and control of aircraft; and provides flight 
        assistance to aircraft.
          Regulation and Certification: Oversees the safety of 
        aircraft and the credentials and competency of pilots 
        and mechanics, develops mandatory safety rules, and 
        sets the standards that have helped make air travel 
        among the safest modes of transportation in history.
          Airports: Provides oversight of planning and 
        development of a safe, secure, and efficient airport 
        system; manages the environmental review process for 
        airport projects; and develops standards for the design 
        and construction of facilities that enhance the safety 
        of aircraft operations and security of airline 
          Research and Acquisition: Supports and conducts 
        research to meet increasing demands for higher levels 
        of system safety, security, capacity, and efficiency; 
        and plans, monitors, controls, schedules, and 
        implements the acquisition of materials, equipment, and 
        services for the national airspace system and for 
        interagency and international programs.
          Commercial Space Transportation: Oversees the safety 
        of commercial space launches and regulates the 
        commercial space industry.


  There are approximately 19,300 airports in the United States, 
of which about 5,300 are open for public use, and the remainder 
are for private or special use. The FAA included 3,364 airports 
in its 2001 National Plan of Integrated Airport Systems 
(NPIAS). The NPIAS is a statutorily required planning document 
and must be published every two years. It estimates the costs 
associated with establishing a system of airports adequate to 
meet the needs of civil aviation. All airports with scheduled 
commercial air service are automatically included in the NPIAS. 
Furthermore, general aviation airports that meet certain 
criteria are also incorporated in the plan. An airport must be 
included in the NPIAS in order to be eligible for Federal 
  The FAA further categorizes the NPIAS airports by size. The 
table below shows airports categorized by size and the amount 
of traffic each category handles (an enplanement is defined as 
a passenger leaving on a flight).

                    TYPES AND NUMBER OF AIRPORTS \1\
                                  Number of    Percentage    of general
         Airport type             airports       of all       aviation
                                              enplanements    aircraft
Large-hub primary.............            31          69.6           1.3
Medium-hub primary............            37          19.3           2.9
Small-hub primary.............            74           7.7           4.7
Non-hub primary...............           280           3.2          11.3
Other commercial service......           124           0.1           2.0
Relievers.....................           260           0.0          27.1
General aviation..............         2,558           0.0          37.2
      Total NPIAS airports....         3,364         100.0          86.4
Non-NPIAS airports............        15,942           0.0         13.6
\1\ Figures provided by FAA.

  The FAA estimates that 98 percent of the United States 
population lives within 20 miles of a NPIAS airport and 67 
percent live within 20 miles of a NPIAS airport that is served 
by commercial air service.

                      A. CAPITAL NEEDS OF AIRPORTS

  For 2001 through 2005, the FAA has estimated annual planned 
capital development costs of about $9 billion, while the 
Airports Council International (ACI), an organization 
representing large airports, has estimated annual costs of 
about $15 billion for airports for 2002 through 2006. FAA's 
estimate included only projects that are eligible for Federal 
funding, whereas ACI's estimate includes projects that are both 
eligible and ineligible for Federal funding. Generally, Federal 
funding for improvements are related to aircraft operations, 
typically for planning and construction of projects such as 
runways, taxiways, aprons, noise abatement, and land purchase, 
as well as security, safety, or emergency equipment. Commercial 
revenue producing portions of terminals (such as shop 
concessions or commercial maintenance hangars), automobile 
parking garages, and off-airport road construction are examples 
of improvements that generally are not eligible for Federal 
  Neither FAA's nor ACI's estimates cover the airport terminal 
modifications needed to fully integrate the new explosives 
detection systems (EDS) required to screen checked baggage. 
According to Congressional testimony by TSA and the DOT 
Inspector General, these modifications could cost $3 billion to 
$5 billion over the next five years, but it has not been 
determined how the modifications will be funded. The bill 
creates a funding mechanism to ensure that these modifications 
have adequate funding.
  If airports continue to receive about $12 billion a year from 
all sources for capital projects (this is the average amount 
they received from 1999 through 2001), they would be able to 
fund all of the projects included in the FAA's estimate. They 
would fall short, however, of the ACI estimate by about $3 
billion per year.
  According to FAA's analysis, 61 percent of capital needs at 
airports are for capacity enhancement, reconstruction, and 
modifications to bring the facilities up to the agency's design 
standards and 39 percent of the needs are related to safety, 
security, and environmental projects.

                           B. FUNDING SOURCES

  As noted above, from 1999 to 2001, the 3,364 NPIAS airports 
received an average of $12 billion per year for capital 
development. The largest source of funds was bonds, followed by 
AIP grants and passenger facility charges (PFCs). The table 
below shows the amount and distribution of funding for NPIAS 

                     SOURCES OF AIRPORT FUNDING \1\
                          [Dollars in billions]
                  Funding source                     average    Percent
                                                     funding    of total
Airport bonds.....................................       $6.9         59
AIP grants........................................        2.4         21
PFCs..............................................        1.6         13
State and local funds.............................        0.4          4
Airport revenue...................................        0.4  .........
      Total.......................................       11.8        100
\1\ Figures provided by GAO.

  It should be pointed out, however, the amount and type of 
funding varies dramatically by size of airport. Larger airports 
are much more dependent on bond financing and PFCs for their 
capital needs. Smaller airports are disproportionally dependent 
on AIP funds and state and local contributions. Changes to the 
Federal statute governing the PFC will therefore generally be 
of more interest to larger airports, while changes to the AIP 
distribution formula will have a larger impact on the smaller 


  The current authorization for the AIP program expires at the 
end of FY 2003. Unlike most Federal programs, simply passing an 
appropriations bill is not sufficient to allow AIP funds from 
the Airport and Airway Trust Fund (AATF) to be released because 
AIP is funded by contract authority which is mandatory spending 
that must be included in an authorization Act. AATF funds are 
derived from a variety of aviation user fees and fuel taxes. A 
new authorization must be enacted by October 1, 2003, for funds 
to flow from the trust fund for this program.
  The FY 2003 enacted funding level for the program, as 
authorized by the Aviation Investment and Reform Act for the 
21st Century (AIR 21), is $3.4 billion. The President's budget 
proposal for FY 2004 simply flat lines the program into the out 
years at $3.4 billion--there is no proposed increase for 
inflation. The Administration's budget proposal directed more 
AIP funds toward medium and small airports, since they are most 
dependent on AIP grants. This targeting would come at the 
expense of the larger hub airports.
  The funding for the AIP program is generally distributed 
either by formula or as discretionary grants by the FAA. These 
formulas and eligibility rules are set in statute and vary by 
the type and size of airport. The following table shows how 
funding is distributed by size of airport under current law and 
how it would be distributed under the President's budget 
request for FY 2004:

                                DISTRIBUTION OF AIP FUNDS BY TYPE OF AIRPORT \1\
                                              [Dollars in millions]
                     Airport category                         Formula    Discretionary     Total       Percent
                                                   Current law
Large (66)................................................         $656          $488        $1,444          35%
Small (3423)..............................................       $1,522          $647        $2,169          65%
      Total...............................................       $2,178        $1,135        $3,313         100%
                                                                    66%           34%
                                               President's budget
Large (66)................................................         $286          $837        $1,123          34%
Small (3423)..............................................       $1,508          $682        $2,190          66%
      Total...............................................       $1,795        $1,518        $3,313         100%
                                                                    54%           46%
\1\ Figures provided by GAO.

  The table shows that the President's budget proposal would 
shift formula grants even further from the larger airport 
towards smaller ones. It also would increase the amount of 
funds that would be available for discretionary distribution by 
the FAA from the current 34 percent to 46 percent. The stated 
purpose of this proposal is to concentrate the funding on those 
airports that are most dependent on AIP funding, while 
increasing the discretionary funding available to fund major 
projects at large airports. In recent years, AIP discretionary 
funds have been earmarked in the reports accompanying the 
annual Transportation Appropriations bills for airports of all 
sizes, leaving less discretion for the program.
  In order to allow airports to proceed without having the full 
Federal AIP contribution in hand, the FAA issues Letters of 
Intent (LOIs). The LOI represents a nonbinding commitment from 
the FAA to provide multi-year funding to an airport beyond the 
current AIP authorization period. The airport can proceed on 
the project without waiting for a future AIP grant because the 
airport and investors know that allowable costs are likely to 
be reimbursed. The FAA has 64 outstanding letters of intent 
with a total commitment of about $3 billion; large and medium-
hub airports account for the majority of the total. In any 
given year, the amount of AIP discretionary funds that are 
committed under LOIs does not exceed 50 percent of the total 
available for discretionary grants.
  As a general rule, the Federal share of an AIP project's cost 
is 90 percent. However, at medium and large hub airports, the 
Federal share is 75 percent. In the case of a project involving 
an airport terminal building, the Federal share is 85 percent 
at non-hubs, and 75 percent at hubs.
  During FY 2002, the FAA awarded a total of $561 million in 
AIP grant funds to airports for security projects (17 percent 
of the $3.3 billion available). This is almost an 800 percent 
increase in security funding from AIP compared to prior years 
and is the largest amount awarded to airports for security 
projects in a single year since the program began in 1982. 
Based on data provided by the FAA, all of the security projects 
funded with AIP grants since the events of September 11, 2001, 
met the legislative and program eligibility requirements. The 
increase in funding for security projects came, however, at the 
expense of more traditional projects like airport 

                   2. PASSENGER FACILITY CHARGE (PFC)

  During the late 1960's, a number of airports began collecting 
a local ``head tax'' (the precursor of the PFC) on each paying 
passenger boarding an aircraft. In 1973, the Airport 
Development Acceleration Act banned the imposition of state and 
local passenger charges.
  In 1990, pressure on the Federal budget resulting from a 
deficit led to a reconsideration of head taxes. Concerns that 
the Aviation Trust Fund and other existing sources of funds for 
airport development would be insufficient to meet national 
airport needs led to the enactment of legislation that 
authorized the PFC. The PFC is a local tax imposed, with 
federal approval, by an airport on each boarding passenger. PFC 
revenues can be used for a somewhat broader range of projects 
than AIP grants and are more likely to be used for ``ground 
side'' projects such as passenger terminal and ground access 
improvements. PFCs can also be used for bond repayments.
  The PFC was seen as being complementary to AIP funding, and 
the Aviation Safety and Capacity Expansion Act of 1990 allowed 
the Secretary of Transportation to authorize public agencies 
that control commercial airports to impose a passenger facility 
fee of $1, $2, or $3 on each paying passenger boarding an 
aircraft at the airports. The money was limited to be used to 
finance eligible airport-related capital projects defined in 
law and, unlike AIP funds, could be used to make payments for 
debt service or indebtedness incurred to carry out the 
projects. There was a $3 cap on each airport's PFC and there 
was a $12 limit on the total PFCs that a passenger could be 
charged per round-trip.
  AIR 21 increased the PFC ceiling to $4.50. However, to impose 
a PFC over the $3 level, an airport has to show that the funded 
projects will make significant improvements in air safety, 
increase competition, reduce congestion or noise impacts on 
communities, and that these projects could not be funded with 
only AIP funds. Large and medium hub airports imposing PFCs 
above the $3 level forego 75 percent of their AIP formula 
funds. Beginning in FY 2001, PFCs at large and medium hub 
airports may not be approved unless they have submitted a 
written competition plan to the FAA. The competition plans are 
to include information such as, the availability of gates, 
leasing arrangements, gate-use requirements, patterns of air 
service, controls over-air and ground-side capacity, intentions 
to build gates that could be used as common facilities, and 
airfare levels compared to other large airports.
  FAA has approved PFCs at 332 airports and 308 are currently 
collecting such charges. Last year, $2 billion was collected 
and a comparable amount is expected to be collected this year. 
As of December 2002, 28 large hub and 30 medium hub airports 
had PFCs in place.
  If a medium or large hub airport charges a $3 PFC, it must 
forego up to 50 percent of its AIP passenger entitlement. If it 
charges more than $3, it must forego 75 percent of its AIP 
passenger entitlement. The foregone entitlements are directed 
into a special small airport fund to be redistributed.
  Because of the complementary relationship between AIP and 
PFCs, PFC legislation is generally folded into the AIP 
provisions of FAA reauthorization legislation.

                      IV. AIRPORTS SECURITY COSTS

  The airport community is concerned about the cost of 
complying with new Federal security requirements, especially 
the costs associated with terminal modifications required to 
accommodate explosive detection equipment.
  The airports are requesting that new Federal resources 
accompany Federal requirements. According to them, airport 
operators can no longer absorb additional security costs 
without serious consequences to capital improvement programs 
and other airport operations. They contend that airports are 
already stretched thin trying to deal with a number of unfunded 
mandates imposed on them by the Federal government. In 
addition, the AIP has already been tapped heavily for security-
related items, with more than $560 million in FY 2002 devoted 
for security, up from $57 million the previous year. The 
airports argue that without Federal assistance, they will have 
no choice but to pass costs on to the airline industry.
  Many of the mandates issued by the FAA and TSA to provide 
additional law enforcement personnel, enhance airport 
surveillance, and revalidate all airport-issued identification, 
for example, remain unfunded. In FY 2002, Congress appropriated 
$175 million to reimburse airports for a portion of these 
costs. As part of the process of applying for those funds, 
airports collectively submitted requests for $444 million in 
expenses that the FAA deemed eligible expenditures for 
reimbursement, leaving a roughly $270 million gap that airports 
have been forced to absorb. An additional $150 million was 
provided for reimbursement as part of the FY 2002 Supplemental 
Appropriations Act, but those funds did not materialize because 
the President rejected the ``contingent emergency'' portions of 
the law.
  At a February 5, 2003, Commerce Committee hearing, DOT 
Inspector General Kenneth Mead stated the he believed that 
``facility modifications (for security projects enhancements) 
at airports could cost up to $5 billion.'' He added, ``if I was 
the Congress, I would consider establishing a capital revolving 
fund that would have private-sector and public-sector 
representatives on the governing board. It would probably only 
last for three, four, or five years. I would take a small 
percentage of the AIP and send it to this revolving fund, and 
that percentage would be calculated according to what the 
historical spending patterns have been out of the AIP for 
security. And I would take a certain percent of the passenger 
fee that's already law, and I would drive that money into a 
capital fund. Because you are going to need lots of capital 
money when you go into these large airport terminals and start 
taking apart the baggage systems. And I think you need a stable 
funding source, for everybody's sake.''


  Congress has long been concerned about airline service to 
small and rural communities. When Congress deregulated the 
airlines in the late 1970's, it also created the Essential Air 
Service (EAS) program to ensure that communities that had been 
receiving service before deregulation would continue to receive 
service. In AIR 21, Congress created another program, the Small 
Community Air Service Development Pilot Program, to experiment 
with different approaches for attracting and retaining service.
  Small communities are facing increasingly difficult 
challenges not only in attracting new air service, but also in 
retaining their current service. Many network air carriers 
experiencing unprecedented financial losses are taking steps to 
minimize losses such as cutting unprofitable service. As the 
financial problems continue, and because service to small 
communities is often relatively unprofitable, these communities 
may be the hardest hit. In turn, this could place further 
pressure on the EAS program as additional communities qualify 
for Federally-subsidized air service. It could also increase 
the demand for grants under the Small Community Air Service 
Development Pilot Program, which in FY 2002, already had 
requests far in excess of available funds.


  Over two decades ago, the Congress deregulated the airline 
industry, phasing out the Federal government's control over 
domestic fares and routes served, and allowing market forces to 
determine the price, quantity, and quality of service. 
Concerned that air service to some small communities would 
suffer in a deregulated environment, Congress established the 
EAS program as part of the Airline Deregulation Act of 1978. 
The Act guaranteed that communities served by air carriers 
before deregulation would continue to receive a certain level 
of scheduled air service.
  In general, the Act guaranteed continued service by 
authorizing the CAB, whose duties were later transferred to the 
DOT, to require carriers to continue providing service at these 
small communities. If an air carrier could not continue that 
service without incurring a loss, DOT could then use EAS funds 
to award that carrier, or another carrier willing to provide 
service, a subsidy. These subsidies are intended to cover the 
difference between a carrier's projected revenues and expenses, 
and provide a minimum amount of profit.
  As of February 1, 2003, the EAS program provided subsidies to 
air carriers to serve 125 communities, 88 in the continental 
United States and another 37 in Alaska, Hawaii, and Puerto 
Rico. That number is expected to increase further, as 
financially extended air carriers now providing unsubsidized 
service to certain communities are likely to discontinue 
service to cut costs.
  To be eligible for subsidized service, communities must meet 
three general requirements. They must have received scheduled 
commercial passenger service as of October 1978; they must be 
no closer than 70 highway miles to a medium- or large-hub 
airport; and they must not require a subsidy of more than $200 
per person (unless the community is more than 210 highway miles 
from the nearest medium- or large-hub airport, in which case no 
average per-passenger dollar limit applies).
  Federal funding for the EAS program has more than tripled 
since 1995, rising from $37 million to $113 million in FY 2002. 
Over the same period, the average subsidy per community served 
in the continental United States rose from nearly $424,000 in 
1995, to an estimated $828,000 in 2002. For communities in 
Alaska, Hawaii, and Puerto Rico, the average subsidy per 
community served rose from just over $90,000, to an estimated 
$251,000 in 2002.
  Total passenger traffic at EAS-subsidized communities 
decreased by 20 percent since 1995, and the median number of 
passenger enplanements fell to an estimated 10 per day (an 
average of just over 3 passengers per flight).
  Several factors, including increasing carrier costs, limited 
passenger revenue, and increasing numbers of eligible 
communities requiring subsidized service, are likely to affect 
potential future subsidy requirements of the EAS program. 
Carriers' operating costs have increased over time, in part 
because of costs associated with meeting Federal regulatory 
requirements regarding safety in small aircraft. Carrier costs 
may increase further if trends in the retirement of smaller 
turboprop aircraft continue and carriers begin to use larger 
aircraft on these routes. In contrast, carrier revenues have 
been limited because many individuals traveling to or from EAS-
subsidized communities choose not to fly from the local 
airport, but rather to use other, larger nearby airports, which 
generally offer more service at lower airfares. Lastly, the 
number of communities eligible for subsidies has increased, and 
is likely to continue to grow in the near term.


  Congress first authorized the Small Community Air Service 
Development Pilot Program as part of AIR 21 to help small 
communities enhance their air service. Under this program, DOT 
is authorized to award grants to 40 communities served by small 
hub or nonhub airports that have demonstrated air service 
deficiencies or higher than average airfares. Priority is given 
to communities that provide local matching funds. AIR 21 also 
contained provisions to allow DOT to work with and coordinate 
efforts with other federal, state, and local agencies to 
increase the viability of service to small communities, which 
could include disseminating information on ``best practices'' 
identified by the program.
  Congress appropriated $20 million for FY 2002 for this 
program. While DOT had $20 million available for grants to 40 
small communities under its Pilot Program, demand for the funds 
far exceeded this amount. In all, DOT received 180 applications 
from communities in 47 states, and the applications totaled 
over $142.5 million, or more than seven times the amount 
available. By December 2002, DOT had awarded grants totaling 
about $20 million to 40 communities (or consortia of 
communities). The grants, which ranged in size from $44,000 to 
$1,557,500, were applied to such purposes as studies, marketing 
programs, financial incentives, and other transportation 
  The expectation in awarding such grants is that the 
communities that receive them will be able to parlay such 
grants into an ongoing program that can be self-sustaining. For 
example, in a community that is trying to enhance its existing 
service, the grant might help to provide a revenue guarantee to 
the airline for the first months of the expanded operation, 
with the expectation that the expanded service will stimulate 
the market, creating a sustainable base of passengers. The 
grants are not designed to be renewable. DOT received another 
$20 million for the program in FY 2003 that has not yet been 


  In the FY 2004 Budget Submission, released in February 2003, 
the Administration requested only $50 million for EAS and no 
funding for the small community grant program. The EAS proposal 
also would require a 25 percent local match, except for 
communities that were more than 210 miles from the nearest 
large or medium hub, in which case a 10 percent match would be 
required. The Secretary would distribute the funds beginning 
with the most isolated community willing to provide the match 
and continue with the next most isolated, and so forth, until 
the $50 million was exhausted. There also would no longer be a 
minimum service requirement. In other words, the requirement 
that communities be served at least twice a day could be 
dropped in favor of air taxi, charter service, or even ground 

                         Summary of Provisions

                           VISION ACT (AIR-V)

                               A. FUNDING

  The bill authorizes funding for the FAA for FY 2004 through 
FY 2006. The major programs authorized are FAA operations, 
facilities and equipment (which funds FAA air traffic control 
modernization and replacement), the airport improvement 
program, and research engineering and development. The table 
below shows the funding levels:

                           FAA FUNDING SUMMARY
                          [Dollars in billions]
                                        2004     2005     2006    Total
FAA operations......................      7.6      7.7      7.9     23.2
Facilities and equipment............      2.9      3.0      3.0      8.9
Airport improv. program.............      3.4      3.5      3.6     10.5
Research............................      0.3      0.3      0.3      0.9
      Total.........................     14.2     14.5     14.8     43.5

    The funding levels for FAA operations and for the 
facilities and equipment account are at the levels requested in 
the Administration proposal. The funding level for the AIP 
would be increased by $100 million per year in FY 2005 and in 
FY 2006. The Administration proposal would keep the funding 
levels flat at the FY 2003 level of $3.4 billion. The research 
levels are based on the authorized funding levels in S. 788, 
the Second Century of Flight Act, introduced by Senators 
Hollings, Brownback, Rockefeller, Inouye, Cantwell, and Kerry 
on April 3, 2003.
    AIR-V would extend through FY 2006, the AIR 21 spending 
provisions requiring appropriations from the Airport and Airway 
Trust Fund for FAA programs to be equal to receipts plus 
interest credited to fund. The bill also extends through FY 
2006 the AIR 21 provision giving priority and protections for 
funding from the trust fund for the FAA capital programs. Any 
funds above the taxes and interest that are required to fund 
the operations account are derived from the general fund. The 
AIR 21 funding ``guarantees'' that are enforced through points 
of order in the Senate and in the House of Representatives, are 
also continued.


    AIR-V contains provisions designed to expedite the process 
for construction of airport capacity and safety projects. The 
environmental streamlining provisions in the bill would allow 
DOT to designate certain airport expansion proposals as 
National Capacity Projects, which would receive dedicated 
resources and expedited procedures for environmental reviews. 
In addition, these projects would receive priority 
consideration for review and clearance by other federal 
agencies. The bill also includes a pilot program intended to 
allow airports to contribute to a fund that can be used by the 
FAA to hire more personnel to handle the complex and time-
consuming work associated with current environmental reviews. 
Many of these provisions were included in S. 633, the Aviation 
Delay Prevention Act, which was reported out favorably by the 
Committee during the last Congress.

                          C. AVIATION SECURITY

    AIR-V contains a number of provisions related to aviation 
security. Most importantly, the bill would create a new fund 
which is financed with $500 million annually in security 
service fees which are already being collected by the TSA. The 
fund would be administered by the Secretary of Transportation 
to make grants to airports to assist with capital security 
costs. Estimates of the capital cost of modifying airports to 
accept explosive detection system (EDS) equipment range from $3 
billion to $5 billion. The source of funding for these costs 
has not been clear. Again, in FY 2002, the FAA distributed $561 
million in AIP grants toward these costs. The FAA has indicated 
it is considering taking action to provide a similar amount in 
FY 2003. Due to concern that the diversion of AIP grants to 
security projects threatens to undermine important airport 
capacity and safety projects, the bill tightens AIP eligibility 
rules to prohibit the use of AIP for such purposes.
    The bill also would require the Secretary of Homeland 
Security to reevaluate the entire aviation security system, 
submit a report to Congress on the results of the evaluation, 
and to redeploy resources accordingly.

                          Legislative History

    On April 8, 2003, Senator McCain introduced S.824, a bill 
to reauthorize the FAA and its programs, as well as streamline 
airport capacity projects and improve aviation security. The 
bill was originally co-sponsored by Senators Hollings, Lott, 
and Rockefeller. Sections of the bill regarding the 
streamlining of airport capacity projects largely arose from 
provisions provided in S. 633, the Aviation Delay Prevention 
Act, which was reported favorably out of the Commerce Committee 
in the 107th Congress. A substantial portion of the FAA's 
research and development sections were essentially identical to 
S. 2951, the Federal Aviation Administration Research, 
Engineering, and Development Act of 2002, which also was 
reported favorably out of the Commerce Committee and passed by 
the Senate during the 107th Congress.
    On April 10, 2003, the Commerce Committee held a hearing on 
S. 824.
    On May 1, 2003, the Committee ordered S. 824 to be reported 
favorably with an amendment in the nature of a substitute.

                            Estimated Costs

    In compliance with subsection (a)(3) of paragraph 11 of 
rule XXVI of the Standing Rules of the Senate, the Committee 
states that, in its opinion, it is necessary to dispense with 
the requirements of paragraphs (1) and (2) of that subsection 
in order to expedite the business of the Senate.

                      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:
    S. 824 would create a new program requiring the FAA to 
certify flight attendants. Complying with the requirement is 
expected to have some impact on air carriers. The air carriers, 
however, already have to comply with the FAA's and the TSA's 
requirements for training flight attendants, so the impact 
should be incremental. Other impacts of provisions in the bill 
should be minor.

                       NUMBER OF PERSONS COVERED

    S. 824 would reauthorize FAA programs and is intended to 
improve airport capacity management and reduce airport 
congestion in the United States. The number of persons covered 
should be consistent with current levels of individuals 

                            ECONOMIC IMPACT

    S. 824 would authorize funds for the FAA's programs. These 
programs are intended to sustain and promote aviation safety, 
security, and efficiency. Adequate levels of safety, security, 
and efficiency as well as the promotion of the free flow of 
people and products, are essential to sound air commerce. This 
legislation will work toward ensuring an environment conducive 
to economic opportunity. Other sections of the bill are 
intended to improve the nation's airport capacity needs and 
should have a beneficial impact on the economy of the United 


    S. 824 is not expected to have an adverse effect on the 
personal privacy of any individuals that will be impacted by 
this legislation.


    S. 824 would have a minimal impact on current paperwork 
levels, and seeks to reduce duplication in some areas. The 
legislation requires the DOT to identify reasonable 
alternatives that exist to capacity enhancement projects for 
publication in the Federal Register, and to identify airports 
which cause significant delays to the national air 
transportation system. Airports that are identified as 
contributing considerably to air traffic delays in the United 
States will be required to generate a study on the matter, or 
develop a task force to submit recommendations for capacity 
  Airports also would be required to report to the Secretary of 
Transportation when they deny an air carrier access to a gate.

                      Section-by-Section Analysis

Sec. 1. Short Title; Amendment of Title 49

  This section provides that the Act may be cited as The 
Aviation Investment and Revitalization Vision Act (AIR-V). This 
section provides that, except where otherwise expressly 
provided, any references to sections or provisions are made to 
title 49, United States Code.

Sec. 2. Table of Contents

  This section contains the table of contents.


Sec. 101. Airport Improvement Program

  Section 101 authorizes $3.4 billion in FY 2004; $3.5 billion 
in FY 2005; and $3.6 billion in FY 2006 for the Airport 
Improvement Program. In addition, the Administration may expend 
from these authorized funds for administrative expenses 
provided they do not exceed $69.7 million for FY 2004; $71.8 
million for FY 2005; and $74.0 million for FY 2006.

Sec. 102. Airway Facilities Improvement Program

  This section authorizes $2.9 billion in FY 2004; $2.97 
billion in FY 2005; and $3.0 billion in FY 2006 for the Airway 
Facilities Improvement Program. It also requires a report on 
major FAA modernization programs.

Sec. 103. FAA Operations

  This section authorizes funding for FAA Operations at $7.6 
billion for FY 2004; $7.7 billion for FY 2005; and $7.9 billion 
for FY 2006. The Committee is aware that the FAA, as part of 
its annual Budget Submission, provides information on training 
funds for inspectors. Rather than request a separate report, 
the Committee will continue to review the amounts provided for 
inspector training through the Budget Submission.

Sec. 104. Research, Engineering, and Development

  This section authorizes funding for Research, Engineering, 
and Development at $289 million for FY 2004; $304 million for 
FY 2005; and $317 million for FY 2006.

Sec. 105. Other Programs

  This section extends to FY 2006 the AIR 21 formula 
determining the Airport and Airways Trust Fund share of the FAA 

Sec. 106. Reorganization of the Air Traffic Services Subcommittee.

  This section changes the Air Traffic Subcommittee, created in 
AIR 21, from a subcommittee of the Management Advisory Council 
to a free-standing Committee. The Administrator will serve as 
Chair, with the Secretary of Transportation to appoint the 
additional 4 members of the 5 member board. No appointed 
Committee member may be a United States government employee. 
With the exception of the Committee's current appointees, 
subsequent appointees will have 3 year terms.

Sec. 107. Responsibilities of the COO

  This section clarifies the FAA's Chief Operating Officer 
(COO) responsibilities for managing the FAA's air traffic 
control system. Although the legislation that established the 
position of COO was clear that the position was that of a Chief 
Operating Officer, some of the functions that the statute 
currently bestows upon the position, specifically those related 
to developing (rather than implementing) the agency's strategic 
plan and its budget, are those more in line with the position 
of a Chief Executive Officer (CEO). The amendments clarify that 
the COO would be responsible for the day-to-day operational 
functions of the air traffic control organization.

                     TITLE II--AIRPORT DEVELOPMENT

Sec. 201. National Capacity Projects

  This section adds a new chapter 477 to title 49 entitled 
National Capacity Projects.

Sec. 47701. Capacity Enhancement

  This new section requires the Secretary to identify any large 
hub airports with delays that markedly affect the national air 
transportation system. Any airport that is identified and is 
not currently participating in the runway expansion process or 
has not begun a capacity enhancement study (CES) must perform a 
CES or establish a delay reduction task force to report to the 
Secretary. Any airport that is the subject of a report or study 
recommending construction in response to delays must have the 
planning and environmental review process to address this 
matter completed within 5 years. Any airport that does not take 
recommended expansion action will be ineligible for federal 
planning and expansion funds or approval of passenger facility 
fees during that 5-year period for any projects that are not 
environment, safety, or security-related.

Sec. 47702. Designation of National Capacity Projects

  This new section allows the Secretary to designate projects 
that are determined to have a significant impact on enhancing 
the national air transportation system as national capacity 

Sec. 47703. Expedited Coordinated Environmental Review Process; Project 
                    Coordinators and Environment Impact Teams

  This section requires DOT to develop and implement an 
expedited, coordinated environmental review process that 
encompasses all Federal, state, regional, and local agencies' 
reviews for airport projects. This process would provide for 
concurrent reviews and conclude by a date certain. The 
Secretary also will be required to start a pilot program to be 
funded by airport sponsors to improve environmental review of 
national capacity projects. The pilot program will provide for 
the hiring of full-time staff from outside the United States 
Government with an expertise in environmental policy. The 
Committee is aware that a number of large projects, like Sea-
Tac in Seattle, have gotten caught up in Federal agency 
bureaucratic disputes, causing substantial delay in 
construction of the project. This section seeks to end such 
bureaucratic wrangling.

Sec. 47704. Compatible Land Use Initiative for National Capacity 

  The Secretary is also empowered to make grants to state, 
local government, and airports for land use compatibility plans 
directly related to national capacity projects.

Sec. 47705. Air Traffic Procedures at National Capacity Projects

  This section provides the Secretary the option of prescribing 
air traffic procedures at facilities that are working on 
national capacity projects in an effort to minimize any adverse 
impacts of construction.

Sec. 47706. Pilot Program for Environmental Review at National Capacity 

  The Secretary also will be required to start a pilot program 
to be funded by airport sponsors to improve environmental 
review of national capacity projects. The pilot program will 
provide for the hiring of full-time staff from outside the 
United States government with an expertise in environmental 

Sec. 47707. Definitions

  This section sets out definitions for ``national capacity 
project,'' and other terms based on existing statutory 

Sec. 202. Categorical Exclusions

  Section 202 requires the Secretary to provide a report on 
recognized and proposed categorical exclusions from an 
environmental assessment or environmental impact statement 
(EIS) on airport projects to the Committee within 30 days of 
enactment of the Act. It does not change existing procedures 
under NEPA.

Sec. 203. Alternative Analysis

  Section 203 requires the Secretary to request public comments 
within 30 days of identifying airport enhancement projects to 
examine potential alternatives. Sixty days will be provided for 
public comment, and within 90 days after that point the 
Secretary will make the determination whether reasonable 
alternatives exist to the proposed project.

Sec. 204. Increase in Apportionment For, and Flexibility of, Noise 
        Compatibility Planning Programs

  Section 204 amends the U.S. Code to ensure that at least 35 
percent of special apportionment grants are used to address 
airport noise compatibility planning issues.

Sec. 205. Secretary of Transportation To Identify Airport Congestion-
        Relief Projects and Forecast Airport Operations Annually

  Section 205 requires the Secretary to provide to the 
Committee within 90 days of enactment of this legislation a 
list of planned projects and a list of options for expanding 
capacity at the 8 airports with the most severe delays.

Sec. 206. Design-Build Contracting

  This section extends the pilot program, contained in AIR 21, 
to allow desion-build contracting for federally assisted 
airport projects. The Administrator may approve a design-build 
contract if (1) the Administrator approves the application 
using criteria established by the Administrator; (2) the 
design-build contract is in a form that is approved by the 
Administrator; (3) the Administrator is satisfied that the 
contract will be executed pursuant to competitive procedures 
and contains schematic designs adequate for the Administrator 
to approve grant; (4) use of a design build contract will be 
cost effective and expedite the project; (5) the Administrator 
is satisfied that there will be no conflict of interest; and 
(6) the Administrator is satisfied the selection process will 
be open, fair, and objective and that at least three or more 
bids will be submitted for each project under the selection 
  (b) The Administrator may reimburse an airport sponsor for 
design and construction costs incurred before a grant is made 
if the project is approved by the Administrator in advance and 
is carried out in accordance with all administrative and 
statutory requirements.
  (c) Design-Build contract is defined as an agreement that 
provides for both design and construction of a project by the 

Sec. 207. Special Rule for Airports in Illinois

  Section 207 retains the power of the Governor of Illinois to 
approve or disapprove airport projects in the State, but 
ensures that the provisions of the Act may be applied to 
projects in Illinois, and that airports in the state would be 
eligible to utilize the expedited process. This provision is 
similar to the provision included in S. 633 from the 107th 

Sec. 208. Elimination of Duplicative Requirements

  Section 208 eliminates redundant requirements in chapter 471 
regarding project grant applications for airport development.

Sec. 209. Streamlining the Passenger Facility Fee Program

  This section would amend current PFC consultation 
requirements with air carriers to require consultation only 
with those carriers whose passengers will be charged a PFC. It 
also would delete the requirement for significant contribution 
tests since previous requirements are deemed adequate and the 
current requirement creates complicated collection schedules. 
This section also establishes a pilot program for smaller 
airports to implement a fee unless Secretary overrules such 

Sec. 210. Quarterly Status Reports

  In the second calender quarter after the date of enactment, 
the Secretary of Transportation shall provide quarterly status 
reports to the Senate Committee on Commerce, Science, and 
Transportation and the House of Representatives Committee on 
Transportation and Infrastructure on the status of construction 
of major runway projects at the 40 largest airports

Sec. 211. Noise Disclosure Requirements

  The purpose of this section is to increase prospective home 
buyers' awareness of areas near airports that are exposed to 
aircraft noise by requiring notice that certain properties are 
subject to noise, as depicted on noise exposure maps. This 
notice is required for approval of a loan by federally 
regulated lenders and Federal agency lenders.
  To assure that noise exposure maps made available for noise 
disclosure are reasonably up to date, this section also would 
amend the requirements for revising noise exposure maps by 
adding a new requirement that noise exposure maps be revised if 
there is any significant reduction in noise contours depicted 
on a previously submitted noise exposure map. Under current 
law, such revisions are required only where an increase in 
noise results in a substantial new incompatible use.

Sec. 212. Prohibition on Requiring Airports To Provide Rent-Free Space 
        for FAA or TSA

  Neither TSA nor FAA may require airport sponsors to provide 
space at airport sponsor-owned buildings to FAA or TSA without 
cost for services relating to air traffic control, air 
navigation, aviation security, or weather reporting. This does 
not prohibit agreements from being made between these parties 
without cost or with below market rates, nor does it prohibit a 
Secretary from requiring an airport sponsor to provide land 
without cost to FAA for air traffic control facilities or space 
without cost to the TSA for necessary security checkpoints.

Sec. 213. Rules for Fiscal Year 2004

  Section 213 increases from 90 percent to 95 percent, the 
federal governments funding share for projects funded by State 
block grant programs for nonhub and small hub projects for FY 
2004. It also holds harmless, for one year, airports whose 
enplanements have dropped due to reduced travel.

Sec. 214. Agreements for Operation of Airport Facilities

  Section 214 authorizes $6.5 million in FY 2004, $7.0 million 
in FY 2005, and $7.5 million in FY 2006 for funding for the 
Control Tower Program.

Sec. 215. Public Agencies

  Section 215 allows the Department of Interior to apply for 
AIP for an airport owned by the Department that is required to 
be maintained for commercial aviation safety at a remote 

Sec. 216. Flexible Funding for Nonprimary Airports to Apportionments

  This section aligns the uses of apportionments to nonprimary 
airports with those permitted for primary airports. It would 
permit these apportionments to be used at any other airport 
owned by the same sponsor; and would allow the sharing of 
apportionments by the transfer of the apportionment to another 
airport within the same state or geographical area.



Sec. 301. Delay Reduction Meetings

  Section 301 allows the Secretary to call for meetings between 
air carriers and the FAA Administrator to consider flight 
reductions at heavily congested airports if the Secretary and 
Administrator determine that conditions necessitate such 
discussions. Any meetings that are called will be chaired by 
the Administrator and will be open to all scheduled air 
carriers only to discuss the conditions that prompted the 
meeting, and the air carriers must be informed of these 
conditions at least two days prior to meeting. Any delay 
reduction proposals are required to be made to the 
Administrator rather than to another carrier. The DOT is 
required to be represented at any meetings, and the 
Administrator must make a transcript of the meeting available 
to the public within three working days.
  This section also mandates that the Secretary develop 
procedures for this program within 30 days, and requests air 
carriers to file a request with the Secretary to participate in 
this program. The Secretary also will have the option of 
developing a program to address the unique situation presented 
by inclement weather. In addition, it provides the same 
immunity afforded under the Clayton Act.

Sec. 302. Small Community Air Service Development Pilot Program

  This section extends the small community air service 
development pilot program, established in AIR 21, until 2006 
with funding of $27.5 million per year for the 3 year 
extension. It also clarifies that 40 communities per year may 
participate and that no community may participate in the 
program twice. It also clarifies eligibility for the programs 
Airport Development Zone; which DOT initially limited to one 
report, contrary to the law's original intent.

Sec. 303. DOT Study of Competition and Access Problems at Large and 
        Medium Hub Airports

  This section instructs the Secretary of Transportation to 
study competition and airline access problems at hub airports. 
Specifically gate usage and availability; and effects of 
pricing of gates and other facilities on competition and access 
should be studied. Within 6 months, the Secretary's findings, 
conclusion, and recommendations are to be submitted to the 
Senate Committee on Commerce, Science, and Transportation and 
the House of Representatives Committee on Transportation and 

Sec. 304. Competition Disclosure Requirements for Large and Medium Hub 

  This section requires that airports which deny applications 
by an air carrier for access to gates or other facilities 
submit to the Secretary notification of the denial and a report 
explaining the reasons for the denial and a time line, if any, 
by which the request will be accommodated.


Sec. 351. Essential Air Service Reauthorization

  This section extends the current funding levels for 3 years.

Sec. 352. Incentive Program

  This section establishes a ``Marketing Incentive Program'' as 
part of the EAS program, aimed at increasing ridership, 
reducing subsidy costs, and developing opportunities to improve 
the service to EAS communities.
  The section directs the Secretary of the Transportation to 
establish a program though which eligible EAS communities may 
receive grants of up to $50,000 from the Department to develop 
and implement a plan to increase passenger use and boardings at 
their airport. Under the grant program, at least 25 percent of 
the public costs associated with a community's plan must come 
from non-Federal sources which may be financed through in-kind 
contributions or with proceeds from the sale of bonds, but may 
not come, directly or indirectly, from other forms of Federal 
funding. If the Secretary determines that a community 
participating in the marketing program has increased average 
monthly boardings or the level of passenger usage at their 
airport by at least 25 percent over any one-year period while 
the program has been in effect, then only 10 percent of the 
costs associated with the marketing plan must come from non-
Federal sources for the following year. If the Secretary 
determines that a community participating in the marketing 
program has increased average monthly boardings or the level of 
passenger usage at their airport by at least 50 percent over 
any one-year period while the program has been in effect, then 
none of the publicly financed costs associated with the 
marketing plan must come from non-Federal sources for the 
following year.
  The section allows the Secretary to provide any State with an 
eligible EAS community up to $50,000 to assist the State and 
associated communities in improving their ability to increase 
passenger boardings at these locales, with the requirement that 
at least 10 percent of the costs associated with this effort 
are from non-Federal sources, including in-kind contributions.
  The section authorizes $12,000,000 for each of fiscal years 
2004 through 2007 to fund the Marketing Incentive Program with 
the requirement that not more than $200,000 be used for 
administrative costs in any given year. The section also 
defines four terms for use in the sub-chapter.

Sec. 353. Pilot Programs

  Section 353 directs the Secretary of Transportation to create 
a number of pilot programs for improving service at EAS 
communities. The programs that must be developed include:
  A Community Flexibility program for up to 10 communities 
under which a locale may decide to opt-out of the EAS program 
for a period of 10 years in exchange for a grant equivalent to 
2 years of EAS assistance for such locales to improve their 
existing aviation facility;
  An Equipment Changes program for up to 10 communities through 
which a locale may request the use of smaller equipment to 
improve service as long as such a change does not compromise 
  An Alternative Services program for any three airport 
sponsors under which the Secretary can provide a locale 100 
percent of the funding necessary to establish a reasonable 
amount of alternative transportation from the participating 
facility to the closest hub or small-hub airport with the 
airport sponsor authorized to use its EAS funding for any 
project that would improve the existing facility, and the 
option of exiting the pilot program at any time after one-year 
of participation;
  A Cost-Sharing program under which the airport sponsors of 
EAS locales may share in the cost of improved service above the 
basic EAS subsidy they are provided; and,
  A Local Participation program under which the Secretary 
selects 10 EAS communities that are within 100 miles of a hub 
airport that must pay a 10 percent share for three year period. 
Any of the communities selected are automatically eligible for 
the other pilot programs. Travel time may be considered in 
determining which communities will participate. In addition, no 
more than one community per state may be designated, and chosen 
communities may appeal that designation. Participating 
communities may use in-kind contributions when providing their 
share, and are not precluded in participating in any other 
pilot programs in this section. The section permits a Code-
Sharing program under which the Secretary may require air 
carriers providing service to EAS communities, along with major 
air carriers serving larger destinations, to participate in 
multiple code-sharing arrangements that would improve air 
transportation service. It also mandates that the Secretary 
require EAS providers to track changes in service, and that 
communities seeking to participate in any of these programs 
submit an application as determined by the Department of 

Sec. 354. EAS Program Authority Changes

  Section 354 permits the Secretary of Transportation to 
increase the current rate of compensation to EAS providers that 
have experienced an average monthly cost increase of ten 
percent or more. In addition, any funds that are reimbursed to 
the Department as a result of decreased subsidy needs will be 
provided to the Secretary and may be used to increase flights 
at that airport.

                      TITLE IV--AVIATION SECURITY

Sec. 401. Study of Effectiveness of Transportation Security System

  The section instructs the Secretary of the Department of 
Homeland Security to study the effectiveness of the aviation 
security system. Within 6 months the Secretary's findings, 
conclusions and recommendations will be submitted to the Senate 
Committee on Commerce, Science, and Transportation and the 
House of Representatives Committee on Transportation and 
Infrastructure. The Secretary is directed to redeploy resources 
based on the results of the study.

Sec. 402. Aviation Security Capital Fund

  This section establishes the Aviation Security Capital Fund 
which is financed with $500 million annually in security 
service fees which are already collected by the Transportation 
Security Administration (TSA). The Fund is administered by the 
Secretary of Transportation and will make grants to airports to 
assist with capital security costs. The Fund will allocate 40 
percent to hub airports; 20 percent to medium hub airports; 15 
percent to small hub airports; and 25 percent distributed at 
the Secretary's discretion to address security risks. Airport 
apportionment is based on a formula based on the ratio of 
passenger enplanements at each airport bears to total passenger 
enplanements. The funds should enable DOT to reimburse and fund 
actions taken since September 11, 2001, to improve security.

Sec. 403. Modification of Security-Related Airport Development 

  This section modifies the definition of ``Airport 
Development'' to remove the eligibility for airport capital 
costs associated with installing explosive detection system 
equipment. Such costs would be funded from the Aviation 
Security Capital Fund.

Sec. 404. Armed Forces Charter

  This section provides that the Armed Forces are not subject 
to the same security rules as commercial charters.

                         TITLE V--MISCELLANEOUS

Sec. 501. Extension of War Risk Insurance Authority

  This section extends the Secretary of Transportation's 
underlying authority to issue war-risk insurance through 
calendar year 2006. This authority currently expires at the end 
of calendar year 2004.

Sec. 502. Cost-Sharing of Air Traffic Modernization Projects

  This section would provide permanent authorization for a 
successful pilot program that was enacted as part of AIR 21 
(see section 304 of Pub.L. 106-181, Apr. 8, 2000) to encourage 
non-Federal investment in critical air traffic facilities and 
equipment. The 3-year pilot program allowed for cost sharing 
between FAA and airports or joint ventures of airports and air 
carriers, of not more than 10 air traffic modernization 
projects. In FY 2001, 5 cost-sharing projects were awarded and 
5 more were awarded in FY 2002. The program allowed FAA to 
facilitate the modernization of the national airspace system 
(NAS) in areas where Federal funds were not available to meet 
all needs. Given the success of the program, section 203 would 
make the AIR-21 provision a permanent program under chapter 445 
of title 49, and propose several changes to its terms: limit 
the Federal share for each project to $5 million instead of $15 
million; expand the eligibility of those who may participate to 
any major user of the NAS (e.g. air carriers would not have to 
be in a joint venture with an airport in order to participate); 
permit the funding of up to 10 projects per fiscal year; and 
clarify that any facilities or equipment funded by the program 
that may be transferred to the FAA are transferred with the 
FAA's consent and meet FAA standards.

Sec. 503. Counterfeit or Fraudulently Represented Parts

  This section would direct the FAA Administrator to deny the 
certification of a person who knowingly, and with the intent to 
defraud, carried out or facilitated an activity relating to 
counterfeit or fraudulently represented aviation parts or 
materials, and otherwise punishable by law. The person denied 
certification could be an individual or entity that carried out 
or facilitated such activity, or an entity subject to a 
controlling or ownership interest of an individual who carried 
out or facilitated such activity. This section also would 
direct the FAA Administrator to deny the certification of a 
person whose certificate had been previously revoked for 
involvement in an activity relating to counterfeit or 
fraudulent parts. With this modification, the basis for 
certificate denial would be expanded to include those that are 
the basis for certificate revocation.

Sec. 504. Clarifications to Procurement Authority

  Subsection (a)(1) removes obsolete references in current law 
by deleting subparagraphs granting the Administrator authority 
under certain statutes (the Office of Federal Procurement 
Policy Act (41 U.S.C. 414(3)) and the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 253)), that, 
because of procurement reform, no longer apply to FAA 
acquisitions. In addition, the amendment clarifies that the 
acquisition management system used by FAA must provide for more 
timely and cost-effective acquisitions of services as well as 
equipment and materials. The amendment also deletes the 
compliance date of January 1, 1996, which is now obsolete since 
the FAA has implemented the system.

Sec. 505. Judicial Review

  Section 505 would amend the judicial review provision in 
chapter 461 of title 49 to clarify that decisions to take 
actions authorizing airport development projects are reviewable 
in the circuit courts of appeals under section 46110, 
notwithstanding the nature of the petitioner's objections to 
the decision. This provision also would clarify that FAA orders 
pertaining to airport compliance are exclusively reviewable in 
the Circuit Courts of Appeals, like other orders issued under 
similar provision in Part B of subtitle VII of title 49. The 
modification is necessary because of a recent court decision 
that, in FAA's view, wrongly interpreted current law. It also 
would clarify that orders of the Transportation Security 
Administration under 49 U.S.C. 114(s) (relating to 
nondisclosure of security activities) are similarly treated.
  Section 505 would resolve the jurisdictional issue in City of 
Alameda v. FAA, 285 F.3d 1143 (9th Cir. 2002) to reflect the 
holding in Suburban O'Hare Comm'n v. Dole, 787 F.2d 186 (7th 
Cir. 1986) and its progeny. Until City of Los Angeles v. FAA, 
239 F.3d 1033 (9th Cir. 2001) and City of Alameda, it was 
settled law that FAA decisions that included approval of 
airport layout plans were exclusively reviewable in the Circuit 
Courts of Appeals. The leading case in this area, Suburban 
O'Hare, held that the circuit court of appeals had exclusive 
jurisdiction under 46110 to review FAA's decision authorizing 
approval of the airport layout plan and other actions to 
support new runways and related development at Chicago's O'Hare 

Sec. 506. Civil Penalties

  This section would amend the general civil penalty provision 
of subtitle VII of title 49, governing the civil penalties for 
violations of aviation law, to make uniform and increase, the 
maximum civil penalty for each violation at $25,000 per 
violation. The section would affect penalties for both safety, 
civil rights, and economic violations.
  Under current law violations of some provisions enforced by 
the FAA are subject to a $1,000 civil penalty (those committed 
by individuals, airports, manufacturers, aircraft maintenance 
facilities, etc.) and others (those committed by air carriers) 
are subject to a $10,000 penalty. The increased level is needed 
to make the penalty for violations more effective and to bring 
it more in line with recent enactments. For example, in AIR 21, 
the penalty for ``air rage'' violations was set at $25,000 (see 
section 511 of Pub. L. 106-181, Apr. 5, 2000). Similarly, the 
penalty for violations of requirements for transportation of 
hazardous materials is now set at $25,000. More recently in the 
Homeland Security Act of 2002 (see section 1602 of Pub. L. 107-
296, Nov. 25, 2002), the maximum penalty for security 
violations by air carriers also was increased to $25,000 (it 
was increased to a maximum of $10,000 for non-air carrier 
  The section also would amend penalties for violations of 
provisions enforced by the Office of the Secretary. This 
section applies generally to the activities of commercial air 
carriers. Among the enforcement responsibilities relating to 
the economic regulation of air carriers are the enforcement of: 
(1) restrictions on the extent of air carrier's operations; (2) 
the reporting of required financial and traffic data; (3) 
prohibitions on unfair and deceptive trade practices; and (4) 
prohibitions of discriminatory treatment by air carriers of 
individuals based on race, ethnicity or disability. Under 
current law, there are a number of different civil penalties 
applicable to these kinds of violations. The general penalty 
provision of $1,000 (raised to $1,100 by regulation to reflect 
inflation) applies to most unauthorized operations and 
reporting violations; a penalty of $2,500 applies to violations 
of 49 U.S.C. 41712 regarding unfair and deceptive trade 
practices; and a $10,000 penalty applies to violations of 49 
U.S.C. section 41705 relating to discriminatory treatment of 
disabled individuals, while a $2,500 penalty applies to other 
forms of discrimination under 49 U.S.C. section 40127. This 
section would apply a uniform civil penalty of $25,000 to all 
violations of economic statutes or rules. The section ensures 
that more serious violations of title 49, such as violations 
involving discriminatory conduct, are not subject to a lower 
maximum penalty than less serious infractions.
  In addition, this section clarifies that violations of 
sections 40127 and 41712 would not be limited to $2,500. An 
additional clarification is needed with respect to current 
section 46301(a)(7).
  Subsection (b) of this section also would alter a cap on the 
FAA's authority to administratively determine a civil penalty. 
Currently, the FAA's authority is limited to $50,000, (i.e. 
cases involving a finding of violations with civil penalties in 
excess of $50,000 must be referred to the United States 
Attorney for prosecution). This section increases the limit to 
$1 million.

Sec. 507. Miscellaneous Amendments

  Subsection (a), (b), and (c) make a number of technical 
changes recommended by the General Accounting Office to clarify 
the FAA's management of funds in the AIP program.
  Subsection (d) permits the use of AIP funds for safety data 
collection and that the recipient of the grant may be a private 
company. The safety data provides information that is useful 
for AIP funding and airport planning decisions. Not all states 
collect such data, and a private entity may be able to fill in 
any gaps that exist.
  Subsection (e) expands a statute of limitation provision 
involving revenue use to other local governments. When a 
sponsor contributes capital or subsidizes airport operations, 
existing law allows the sponsor to claim reimbursement for such 
contributions within 6 years of occurrence. This amendment 
would extend this policy to other governmental entities in 
order to recognize that such entities also contribute capital 
or operating costs to airports.
  Subsection (f) clarifies the review of revenue use through 
the annual audit activities under the Single Audit Act. Current 
law, 49 U.S.C. 47107(m), requires the FAA to regulate in an 
area that has historically been overseen by the Office of 
Management and Budget (OMB). OMB's exclusive authority is 
intended to ensure auditing consistency across all Federal 
agencies. The proposed amendments to 47107(m) will correct this 
situation by replacing language directing FAA to promulgate 
regulations with language referencing FAA's appropriate 
compliance role, while still maintaining Congress's intent that 
Single Audits include a review of the use of airport revenues.
  Subsection (g) updates a provision in the Aviation Safety and 
Noise Abatement Act of 1979, recodified as section 47503, to 
conform language to the original congressional intent of the 
provision that the forecast year for airport noise exposure 
maps should reflect conditions at least five years into the 
future. The current language, stating that ``1985'' is the 
five-year forecast time frame, is outdated.
  Subsection (h) would amend section 40117 to clarify that 
passengers on military charters of commercial aircraft are not 
subject to collection of a passenger facility fee.

Sec. 508. Low Emission Airport Vehicles and Infrastructure

  This section expands the eligibility for AIP and PFC to the 
acquisition of airport-owned vehicles and airport-owned ground 
support equipment, or conversion of such equipment, to low 
emission technology, for infrastructure to support low emission 
airport vehicles, for gate electrification, and other related 
air quality improvements at commercial service airports in 
nonattainment and maintenance air quality areas. The section 
includes a provision for the Secretary to work with the EPA 
Administrator to develop an agreement, with specified 
conditions, on how airports will receive emission credits for 
voluntary emission reductions. The provision would require 
appropriate credits as a condition for AIP funding. Finally, a 
pilot program is proposed at not more than 10 commercial 
service airports to fund the retrofit of conventionally fueled 
airport ground support equipment using emission control 
technologies in order to evaluate the benefit-cost of such 

Sec. 509. Low Emission Airport Vehicles and Ground Support Equipment

  This section permits the use of PFC revenue, but not AIP, for 
the incremental cost of the acquisition or conversion of ground 
support equipment or airport-owned vehicles to low emission 
technology or cleaner burning conventional fuels, at commercial 
service airports in nonattainment or maintenance air quality 
areas. PFC funding would be conditioned on the provision of 
appropriate emission credits to the airport, as in section 508. 
PFC could also be used for conventional fuel retrofitting with 
certified emission control technologies.

Sec. 510. Pacific Emergency Diversion Airport

  This section directs the Secretary of Transportation to reach 
an MOU with the Secretaries of Defense, the Interior, and 
Homeland Security, to facilitate the sale of aircraft fuel on 
Midway Island, so that the revenue from the fuel sales can be 
used to operate Midway Island Airport in accordance with 
Federal Aviation Administration airport standards.

Sec. 511. Gulf of Mexico Aviation Service Improvements

  This section allows the Secretary of Transportation to 
develop a program to expand and improve the safety, efficiency, 
and security of air traffic control and aviation-related 
navigation, low altitude communications, surveillance, and 
weather services in the Gulf of Mexico.

Sec. 512. Air Traffic Control Collegiate Training Initiative

  This section allows the FAA to spend funds to support the Air 
Traffic Control Collegiate Training Initiative.

Sec. 513. Increase in Certain Slots

  This section increases the number of beyond the perimeter 
slots at Ronald Reagan Washington National Airport by 12.

Sec. 514. Air Transportation Oversight System Plan

  This section requires the FAA to submit a plan of action to 
the Congress for addressing identified problems with the Air 
Transportation Oversight System.

Sec. 515. National Small Community Air Service Development Ombudsman

  This section establishes the position of National Small 
Community Air Service Development Ombudsman.

Sec. 516. National Commission on Small Community Air Service

  This section establishes a National Commission on Small 
Community Air Service.

Sec. 517. Training Certification for Cabin Crew

  This section requires the FAA to issue certificates to cabin 
crew members that complete certain training.

Sec. 518. Aircraft Manufacturer Insurance

  This section extends war-risk insurance to certain aircraft 

Sec. 519. Ground-Based Precision Navigational Aids

  This section authorizes a program for ground-based precision 
navigational aids for terrain-challenged airports.

Sec. 520. Stand by Power Efficiency Program

  This section authorizes a program to increase energy 
efficiency and cost-effectiveness, and encourage the use of 
fuel cell technology, in meeting the Federal Aviation 
Administration's standby power needs.


Sec. 601. Findings

  Section 601 presents fourteen findings of Congress that 
explain the purpose of, and need for title VI.


Sec. 621. Office of Aerospace and Aviation Liaison

  This section establishes the Office of Aerospace and Aviation 
Liaison within the Department of Transportation. This office is 
charged with coordinating aviation and aeronautics research 
programs, activities, goals, and priorities within the Federal 
Government, and directed to include private United States 
aviation and aeronautical firms in this effort. Areas of 
responsibility include: air traffic control, technology 
transfer from government programs to the private sector, noise, 
emissions, fuel consumption, and safety. It also requires the 
Office to provide a plan and an annual report to Congress. It 
authorizes $2,000,000 for FY 2004 and FY 2005.

Sec. 622. National Air Traffic Management System Development Office

  This section establishes a National Air Traffic Management 
System Development Office within the FAA with the mission of 
developing a next generation air traffic management system plan 
for the United States. This plan is required to focus on 
transforming the national airspace system to meet air 
transportation mobility, efficiency, and capacity needs beyond 
those currently included in the FAA's Operational Evolution 
Plan (OEP) in an effort to build on existing capabilities while 
improving the security, safety, quality, and affordability of 
the system. In pursuing this mandate, the plan must employ a 
system-of-systems multi-agency approach while developing an 
integrated and secure architecture that ensures as seamless a 
global operation as possible.
  The office is required to include personnel from the various 
Federal agencies, and to consult private industry and other 
interested parties. It authorizes $300,000,000 for FYs 2004 
through 2010.

Sec. 623. Report on Certain Market Development and Government Policies

  This section requires the Office of Aerospace and Aviation 
Liaison to issue a report within 6 months on market 
developments and government policies influencing the 
competitiveness of the United States jet transport aircraft 
industry. Specifically this report should include comparisons 
to the European Union and global market factors affecting the 
jet transport industries in the United States.


Sec. 641. Aerospace Workforce Initiative

  This section directs NASA and the FAA to establish a joint 
program of competitive, merit-based, multi-year grants for 
eligible applicants to increase the number of students studying 
in technical training programs, certificate programs, 
associate, bachelor's, or master's degrees in fields related to 
aerospace and aviation safety. The Director of the joint 
program is required to consider ways to increase the level of 
students participating in these types of aerospace and aviation 
studies when developing the grant programs. It authorizes such 
sums as necessary for NASA and FAA to carry out this section in 
FY 2004, and requires a report to Congress to advise whether 
this program should be extended with a budget and plan for 
conducting the program. The Committee expects to continue to 
review this section to best address ways to encourage people to 
enter the aviation safety and aerospace workforce.

Sec. 642. Scholarships for Service

  This section directs NASA and the FAA to develop a joint 
student loan program for full-time students enrolled in an 
undergraduate or post-graduate program leading to an advanced 
degree in an aerospace related field of endeavor, and allows 
NASA and FAA to provide temporary internships to such students. 
It authorizes such sum as necessary to NASA and FAA to carry 
out this section in FY 2004, and requires a report to Congress 
to advise whether this program should be extended with a budget 
and plan for conducting the program. The Committee expects to 
continue to review this section to best address ways to 
encourage people to enter the aviation safety and aerospace 


Sec. 661. Research Program To Improve Airfield Pavements

  This section directs the FAA to continue the airfield 
pavement research program by which grants, cooperative 
agreements or other incentives may be provided to nonprofit 
concrete and asphalt pavement research foundations that are 
tasked with improving the safety and efficiency of runway 
planning, building and repair.

Sec. 662. Ensuring Appropriate Standards for Airfield Pavements

  This section requires the FAA Administrator to review and 
determine whether FAA's standards regarding airfield pavements 
meet current life-cycle requirements, and if not, FAA must 
provide for the necessary adjustments to achieve these 
standards. Within 1 year of passage of this legislation, the 
FAA must report the results of this review to Congress.

Sec. 663. Assessment of Wake Turbulence Research and Development 

  This section instructs the FAA to enter into an arrangement 
with the National Research Council to assess the FAA's proposed 
wake turbulence research and development program. It authorizes 
$500,000 for FY 2004.

Sec. 664. Cabin Air Quality Research Program

  This section provides the FAA the option of establishing a 
research program to address issues regarding the cabin air 
quality of passenger aircraft, including airborne diseases.

Sec. 665. International Role of the FAA

  This section directs the FAA to bolster its role in 
international aviation safety through working with their 
foreign counterparts and the private sector to improve global 
aviation safety.

Sec. 666. FAA Report on Other Nations' Safety and Technologies 

  This section requires the FAA to issue a report on other 
nations' safety and technological advancements and how these 
advancements might be used in the United States.

Sec. 667. Development of Analytical Tools and Certification

  This section directs the FAA to conduct research to improve 
existing certification methods and to reduce the overall costs 
for the certification of new aviation-related products.

Sec. 668. Pilot Program To Provide Incentives for Development of New 

  This section permits the FAA to conduct a pilot program to 
provide operating incentives to users of the national airspace 
for the deployment of new technologies, including technologies 
to facilitate expedited flight routing and sequencing of take-
offs and landings. It authorizes $500,000 for FY 2004.

Sec. 669. FAA Center for Excellence for Applied Research and Training 
        in the Use of Advanced Materials in Transport Aircraft

  This section requires the FAA to develop a center for 
excellence for applied research and training in the use of 
advanced materials in transport aircraft to promote and 
facilitate collaboration between FAA, academia, and industry. 
It authorizes $500,000 for FY 2004.

Sec. 670. FAA Certification of Design Organization

  This section directs the FAA to submit a plan to Congress for 
the development of a system for certification of aircraft 
design organizations and to implement that plan within 5 years 
of the passage of the bill.

Sec. 671. Report on Long Term Environmental Improvements

  This section requires the FAA, NASA, and the Office of 
Aerospace and Aviation Liaison to submit a study on ways to 
reduce aircraft noise and emissions and to increase aircraft 
fuel efficiency within 1 year after passage of the bill. It 
authorizes $500,000 for FY 2004.

                      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. 2039:
  Senator Ensign offered an amendment, to the amendment (in the 
nature of a substitute) offered by Senator McCain, to increase 
the number of extraperimeter slots at Ronald Reagan Washington 
National Airport. By rollcall vote of 11 yeas and 11 nays as 
follows, the amendment was defeated:
        YEAS--11                      NAYS--11
Mr. Stevens\1\                      Ms. Snowe\1\
Mr. Burns                           Mr. Fitzgerald\1\
Mr. Lott                            Mr. Allen
Mrs. Hutchison\1\                   Mr. Hollings
Mr. Brownback\1\                    Mr. Inouye\1\
Mr. Smith                           Mr. Rockefeller
Mr. Ensign                          Mr. Kerry\1\
Mr. Wyden                           Mr. Breaux\1\
Mrs. Boxer                          Mr. Dorgan
Ms. Cantwell                        Mr. Nelson
Mr. McCain                          Mr. Lautenberg

    \1\By proxy

  Senator Boxer offered an amendment, to the amendment (in the 
nature of a substitute) offered by Senator McCain, to improve 
the training requirements for and require the certification of 
cabin crew members. By rollcall vote of 12 yeas and 10 nays as 
follows, the amendment was adopted:
        YEAS--12                      NAYS--10
Mr. Smith                           Mr. Burns
Mr. Hollings                        Mr. Lott
Mr. Inouye\1\                       Mrs. Hutchison
Mr. Rockefeller\1\                  Ms. Snowe\1\
Mr. Kerry\1\                        Mr. Brownback
Mr. Breaux\1\                       Mr. Fitzgerald\1\
Mr. Dorgan\1\                       Mr. Ensign
Mr. Wyden\1\                        Mr. Allen
Mrs. Boxer                          Mr. Sununu
Mr. Nelson                          Mr. Lautenberg
Ms. Cantwell
Mr. McCain

    \1\By proxy

  Mr. Hollings made a motion to reconsider the vote by which 
the Ensign amendment was defeated. By rollcall vote of 12 yeas 
and 10 nays as follows, Mr. McCain voting present, the motion 
        YEAS--12                      NAYS--10
Mr. Stevens\1\                      Ms. Snowe\1\
Mr. Burns                           Mr. Fitzgerald\1\
Mr. Lott                            Mr. Allen
Mrs. Hutchison                      Mr. Inouye\1\
Mr. Brownback                       Mr. Rockefeller\1\
Mr. Smith                           Mr. Kerry\1\
Mr. Ensign                          Mr. Breaux\1\
Mr. Sununu                          Mr. Dorgan\1\
Mr. Hollings                        Mr. Nelson
Mr. Wyden\1\                        Mr. Lautenberg
Mrs. Boxer
Ms. Cantwell

    \1\By proxy

  The Committee reconsidered the vote by which the Ensign 
amendment was defeated. By rollcall vote of 12 yeas and 11 nays 
as follows, the amendment was adopted:
        YEAS--12                      NAYS--11
Mr. Stevens\1\                      Ms. Snowe\1\
Mr. Burns                           Mr. Fitzgerald\1\
Mr. Lott                            Mr. Allen
Mrs. Hutchison                      Mr. Hollings
Mr. Brownback                       Mr. Inouye\1\
Mr. Smith                           Mr. Rockefeller
Mr. Ensign                          Mr. Kerry\1\
Mr. Sununu                          Mr. Breaux\1\
Mr. Wyden\1\                        Mr. Dorgan\1\
Mrs. Boxer\1\                       Mr. Nelson
Ms. Cantwell                        Mr. Lautenberg
Mr. McCain

    \1\By proxy

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, the Committee states that, in its opinion, 
it is necessary to dispense with the requirements of that 
paragraph in order to expedite the business of the Senate.