69–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 106–35

COMMERCIAL OPERATION OF SUPERSONIC TRANSPORT

CATEGORY AIRCRAFT

MARCH 2, 1999.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. SHUSTER, from the Committee on Transportation and

Infrastructure, submitted the following

REPORT

[To accompany H.R. 661]

[Including cost estimate of the Congressional Budget Office]

The Committee on Transportation and Infrastructure, to whom

was referred the bill (H.R. 661) to direct the Secretary of Transportation to prohibit the commercial operation of supersonic transport

category aircraft that do not comply with stage 3 noise levels if the

European Union adopts certain aircraft noise regulations, having

considered the same, report favorably thereon without amendment

and recommend that the bill do pass.

BACKGROUND

Aircraft noise has been a significant issue in the aviation industry for many years. Aircraft noise affects communities and people

located near airports. To combat aviation noise, Congress passed

Public Law No. 101–508, 104 Stat. 1388–378, codified at 49 U.S.C.

47524. This law imposes significant noise restrictions on the aviation industry. The most stringent of these restrictions, known as

Stage 3 noise restrictions, have been phased in and require certain

categories of aircraft to be fully Stage 3 compliant by December 31,

1999.

The International Civil Aviation Organization (‘‘ICAO’’), created

by the Chicago Convention, sets and administers international certification standards for aircraft. Once an aircraft is certified as having met ICAO standards, it may be used in any ICAO member

country. ICAO certification gives operators and investors assurances of worldwide marketability for the normal life cycle of an aircraft. ICAO has promulgated international noise restrictions, simi-
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lar to U.S. Stage 3 restrictions, that are known as Chapter 3 noise

restrictions; these restrictions become fully effective in 2002. Chapter 3 and Stage 3 noise restrictions are the most stringent noise restrictions currently in effect and significantly reduce the amount of

noise experienced by people near airports.

An aircraft may meet these noise restrictions by various means.

The most common means are: purchasing new aircraft that are

manufactured to meet the restrictions; modifying an existing Stage

2 engine by essentially placing a device on it that makes the engine

quieter and brings it up to Stage 3 levels, a process known as

‘‘hushkitting;’’ or putting new, quieter Stage 3 engines on an existing Stage 2 aircraft, known as ‘‘re-engining.’’ In addition, aircraft

weight and flap restrictions may be imposed to ensure that noise

levels are at Stage 3 levels.

The European Union (‘‘EU’’) is in the process of adopting a regulation that will severely restrict the use of hushkitted and reengined aircraft in Europe despite the fact that these aircraft meet

all Stage 3 and Chapter 3 requirements. The draft regulation targets ‘‘recertificated’’ aircraft, defined by the EU as aircraft modified

through technical measures—hushkits, engine modifications, or

other technical measures—or indirectly through operational restrictions, such as weight or flap restrictions.

The proposed regulation targets several generally accepted methods for bringing older aircraft in compliance with current noise restrictions. Hushkits have been used for close to 15 years as an appropriate measure to meet existing aircraft noise restrictions. Companies also often elect to re-engine their older aircraft to meet current noise restrictions.

The draft regulation provides that an EU member state cannot

place ‘‘recertificated civil subsonic jet aeroplanes’’ on its register

after April 1, 1999. However, a recertificated aircraft that was on

the register of an EU member state before April 1, 1999 can be

freely transferred to the registry of another EU Member State.

Recertificated aircraft registered in non-EU States can not be operated in the EU after April 1, 2002, unless the operator can prove

that these aircraft were both operated in the EU between April 1,

1995 and April 1, 1999, and have remained on the same register.

In addition, recertificated aircraft already on the register of an EU

Member State cannot operate in the EU after April 1, 2002, unless

they were already operating in the EU before April 1, 1999.

The EU’s proposal does allow the use of some re-engined aircraft.

The proposed regulation uses the bypass ratio of an engine as an

artificial cut off in determining whether an aircraft is a ‘‘recertificated’’ aircraft. The EU’s proposal restricts the use of aircraft that

are re-engined with a new engine having a bypass ratio of less

than 3.0:1. This artificial cut off would, for example, allow the continued operation of aircraft having Rolls Royce engines, which have

a bypass ratio of 3.1:1, but would disallow the use of aircraft reengined with Pratt & Whitney JT8D engines, which have a bypass

ratio of less than 3.0:1. Put another way, only aircraft equipped

with U.S. manufactured engines are being disallowed under the

proposed regulation.
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The proposal would affect U.S. cargo, express package service,

and passenger airlines. Specifically, the regulation would affect

over 1600 aircraft including DC–9s and 727s.

The proposed ban violates universally recognized international

obligations. Article 33 of the Chicago Convention mandates universal recognition of an airline’s airworthiness certificate, where aircraft of the airlines’ flag meet all current ICAO standards.

The proposed regulation also treats domestic and foreign operators differently in violation of the Convention’s nondiscrimination

principle, and potentially violates EU Member States’ bilateral air

service agreements with the U.S. This proposal is a major departure from international standards in the aircraft certification

arena. It unlawfully discriminates against U.S. operators by denying U.S. designated airlines the right to choose Chapter 3 compliant equipment best suited for its fleet.

The Committee finds that the EU’s proposed regulation will adversely affect the fleet value of aircraft that have been modified either by adding hushkits or re-engining to meet ICAO Chapter 3

noise rules. The rule would artificially and dramatically limit the

pool of possible buyers of U.S.-owned hushkitted aircraft because

EU operators can no longer buy these aircraft from non-Europeansonly from other Europeans. Since these aircraft will no longer be

allowed to operate in Europe, the market value of the aircraft will

substantially decline.

The EU’s proposal would also significantly increase the cost of

U.S. operations to, from, and within Europe—any new operations

would have to use aircraft originally manufactured to meet Chapter 3 standards.

Ostensibly, the EU has proposed this regulation for environmental purposes. However, there has been no credible evidence

that the proposal has any environmental basis. The aircraft targeted by the proposed regulation would be banned from some airports where noise has not been an issue. Furthermore, some nonhushkitted Chapter 3 aircraft, which would be allowed to fly under

this proposal, are noisier than the hushkitted aircraft affected by

the proposed regulation

The proposed regulation promotes European commercial interests rather than environmental interests by favoring EU airlines

over U.S. airlines, prohibiting airlines from developing countries,

and favoring EU manufacturers over U.S. and other non-European

manufacturers. The proposed regulation will cost U.S. operators between $1 and $2 billion by disrupting investor expectations and

making certificated aircraft significantly less valuable in the EU

market. The regulation is expected to cost U.S. manufacturers over

$1 billion in spare parts and engines sales. It will shrink the number of potential buyers for those aircraft and drastically reduce the

value of affected aircraft. In addition, it may increase the cost of

aircraft financing significantly, as financial institutions realize that

the certification process can not be relied on to establish aircraft

life expectancy.

The Committee further believes that the EU proposal unfairly

discriminates against hushkit and U.S. aircraft manufacturers. Development of hushkit technology is U.S.-based; essentially all

hushkits are U.S. manufactured and the overwhelming majority of
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the business is conducted by U.S. companies. There are no European manufactured hushkitted aircraft. The proposed regulation

does not affect any European aircraft or aircraft engine manufacturer.

The Committee believes that the EU proposal seriously undermines ICAO’s broad applicability and purpose to set international

aviation standards to which all member countries abide, and will

result in a patchwork of regional regulations that could dramatically disadvantage the U.S. aviation industry. Specifically, by imposing a regional noise standard, the EU severely undercuts

ICAO’s efforts to address environmental issues on a uniform international basis and current ICAO efforts to draft Chapter 4 noise

restrictions could potentially falter. ICAO explicitly rejected this

EU proposal at its September 1998 assembly meeting. Airbus Industries, a European based aircraft manufacturer that could potentially benefit from this regulation, also is on record opposing its implementation for the above reasons.

REPORTED BILL

The Concorde is a civil supersonic transport category aircraft operated by both British Airways and Air France. It does not meet,

and has been exempted from, Stage 3 environmental noise requirements for its U.S. operations. In fact, the Concorde does not even

meet less stringent Stage 2 noise standards.

The reported bill would ban U.S. commercial operations of the

Concorde if the European Union adopts its proposed regulations by

restricting the U.S. commercial operations of civil supersonic transport category aircraft that do not meet current U.S. noise restrictions. In contrast, the EU proposal would restrict U.S. aircraft that

meet current international noise restrictions. Other EU-based aircraft that meet Chapter 3 noise restrictions in the same way are

not restricted by the EU’s proposed regulation. The Committee believes that this bill is a fair and measured response to the EU’s

proposed action.

HEARINGS AND LEGISLATIVE HISTORY

H.R. 661 was introduced on February 9, 1999. The Committee

has not held hearings on the reported legislation.

COMMITTEE CONSIDERATION

On February 11, 1999 the Committee on Transportation and Infrastructure met in open session and ordered the bill reported,

without an amendment, by voice vote with a quorum present.

There were no recorded votes taken during Committee consideration of H.R. 661.

ROLLCALL VOTES

Clause 3(b) of rule XIII of the House of Representatives requires

each committee report to include the total number of votes cast for

and against on each roll call vote on a motion to report and on any

amendment offered to the measure or matter, and the names of

those members voting for and against. There were no recorded

votes taken in connection with ordering H.R. 661 reported. A mo-
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tion by Mr. Duncan to order H.R. 661 favorably reported to the

House, without amendment, was agreed to by voice vote, a quorum

being present.

COMMITTEE OVERSIGHT FINDINGS

With respect to the requirements of clause 3(c)(1) of rule XIII of

the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in this report.

COST OF THE LEGISLATION

Clause 3(d)2 of rule XIII of the Rules of the House of Representatives does not apply where a cost estimate and comparison prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974 has been timely

submitted prior to the filing of the report and is included in the report. Such a cost estimate is included in this report.

COMPLIANCE WITH HOUSE RULE XIII

1. With respect to the requirement of clause 3(c)(2) of rule XIII

of the Rules of the House of Representatives, and section 308(a) of

the Congressional Budget Act of 1974, the Committee references

the report of the Congressional Budget Office included below.

2. With respect to the requirement of clause 3(c)(4) of rule XIII

of the Rules of the House of Representatives, the Committee has

received no report of oversight findings and recommendations from

the Committee on Government Reform and Oversight on the subject of H.R. 661.

3. With respect to the requirement of clause 3(c)(3) of rule XIII

of the Rules of the House of Representatives and section 402 of the

Congressional Budget Act of 1974, the Committee has received the

following cost estimate for H.R. 661 from the Director of the Congressional Budget Office.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, February 25, 1999.

Hon. BUD SHUSTER,

Chairman, Committee on Transportation and Infrastructure, House

of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 661, a bill to direct the

Secretary of Transportation to prohibit the commercial operation of

supersonic transport category aircraft that do not comply with

stage 3 noise levels if the European Union adopts certain aircraft

noise regulations.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contacts are Deborah Reis (for federal costs), and Lesley Frymier (for the private-sector impact).

Sincerely,

DAN L. CRIPPEN, Director.

Enclosure.
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CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 661—A bill to direct the Secretary of Transportation to prohibit the commercial operation of supersonic transport category

aircraft that do not comply with stage 3 noise levels if the European Union adopts certain aircraft noise regulations

H.R. 661 would require the Secretary of Transportation to prohibit the operation of civil supersonic aircraft to or from U.S. airports if the European Union adopts a final regulation affecting the

use and sale of certain airline equipment retrofitted for noise control by American companies.

CBO estimates that enacting H.R. 661 would have no immediate

impact on the federal budget, but the government could incur costs

as the result of arbitration, litigation, or other efforts at dispute

resolution in an international forum. It is possible that the federal

government could be liable for damages, but CBO has no basis for

predicting the likelihood or outcome of such proceedings. Pay-asyou-go procedures would apply because the bill could affect direct

spending—if the United States has to pay damages and if it uses

the permanent judgment fund appropriation for that purpose.

H.R. 661 contains no intergovernmental mandates as defined in

the Unfunded Mandates Reform Act (UMRA) and would not affect

the budgets of state, local, or tribal governments. By effectively

banning the operation of Concorde aircraft at U.S. airports, H.R.

661 would impose a new private-sector mandate on British Airways

and Air France, the operators of the Concorde. Based on information provided by the Department of Transportation, the Congressional Research Service, and industry sources, CBO estimates that

the direct cost of the new private-sector mandate would not exceed

the statutory threshold established in UMRA ($100 million in 1996,

adjusted annually for inflation).

The CBO staff contacts are Deborah Reis (for federal costs), and

Lesley Frymier (for the private-sector impact). This estimate was

approved by Robert A. Sunshine, Deputy Assistant Director for

Budget Analysis.

APPLICABILITY TO THE LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the

terms and conditions of employment or access to public services or

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act (Public Law 104–1).

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of the Federal

mandates prepared by the Director of the Congressional Budget Office pursuant to section 423 of the Unfunded Mandates Reform Act

(Public Law 104–4).

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House

of Representatives, committee reports on a bill or joint resolution

of a public character shall include a statement citing the specific

powers granted to the Congress in the Constitution to enact the
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measure. The Committee on Transportation and Infrastructure

finds that Congress has the authority to enact this measure pursuant to its powers granted under Article I, Section 8 of the Constitution.

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the

Federal Advisory Committee Act were created by this legislation.

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