```

[Senate Report 107-161]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 414
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-161

======================================================================

 
            NATIONAL AVIATION CAPACITY EXPANSION ACT OF 2002

                                _______
                                

                 June 11, 2002.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2039]

  The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 2039), to expand aviation 
capacity in the Chicago area, 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 the bill is to end an impass over airport 
expansion efforts in the Chicago area. The bill legislates a 
process to provide that O'Hare International Airport expansion 
plans and the efforts to move forward with the planning of a 
new airport south of the City of Chicago proceed. The bill 
ensures that all environmental processes, safety and efficiency 
reviews, and all other relevant Federal analyses are conducted. 
The bill further leaves untouched the Federal Aviation 
Administration's (FAA) ability to exercise its authority in 
determining the future of the projects. Finally, the bill seeks 
to ensure that once Federal funds are expended to begin the 
O'Hare redesign project, the State will not exercise its 
authority to stop the project. The plan has the support of the 
Governor of Illinois and the Mayor of Chicago.

                          Background and Needs

  The dispute over airport expansion in Illinois has been 
stalled for many years as various governors and mayors could 
not come to a consensus regarding the prospects for a new 
airport in the Chicago area. Many proposals were put forward 
over the past 30 years, but no progress was made. Under 
Illinois law, no airport construction in the State can proceed 
without the approval of the governor. Recent efforts by Chicago 
Mayor Richard Daley to expand O'Hare International Airport 
(O'Hare) and efforts by Illinois Governor George Ryan to move 
forward with plans for a new airport south of Chicago were 
continually at an impasse.
  The bill seeks to end that stalemate by ensuring that the 
O'Hare reconfiguration plans and the plans to build a new south 
suburban airport are fully reviewed by the FAA. In addition, 
the bill provides that once Federal funds are provided, the 
State will not exercise its rights to block the proposed O'Hare 
expansion plan. It also requires that all environmental 
processes be complied with, but does not guarantee or provide 
any funding to either Chicago-area project or to a project for 
the airport in Gary, Indiana.
  With airport expansion in the Chicago region seemingly 
deadlocked, Senators Harkin and Grassley, as well as Senator 
Durbin, began to push for a Federal solution. Flight delays and 
the lack of capacity at O'Hare were beginning to limit access 
to Chicago for many small towns, and were affecting interstate 
commerce in many parts of the country. This led the Commerce 
Committee to hold a field hearing in Chicago on June 15, 2001, 
to urge local factions to develop a solution that would expand 
airport capacity in the Chicago region. At the time, nationwide 
delays, including at O'Hare, were inhibiting interstate air 
transportation. Witnesses at the June hearing included 
representatives from the City of Chicago, the State of 
Illinois, the Suburban O'Hare Commission, Chicago business 
leaders, and the Chair of the Illinois House of Representatives 
Aviation Subcommittee.
  On December 5, 2001, Mayor Daley and Governor Ryan reached a 
compromise to reconfigure O'Hare while proceeding with planning 
for a new airport (termed ``South Suburban'' or ``Peotone''), 
south of Chicago. The agreement to modernize and expand O'Hare 
International Airport and to allow construction of a third 
airport provides for:
          (1) Expanding and reconfiguring O'Hare to eight 
        runways, with six parallel runways (see Appendix A);
          (2) Planning a south suburban airport near Peotone;
          (3) Improving ground infrastructure to address 
        traffic congestion, including western access to O'Hare; 
        and
          (4) Continuing the operation of Chicago's Meigs Field 
        (a general aviation airport in Chicago).
  The legislation will recognize the agreement between the City 
and the State, facilitate interstate commerce, and provide some 
certainty to the people of Illinois, the traveling public, the 
passenger and cargo airlines using O'Hare, and general aviation 
pilots that use Meigs Field. Testimony by Mayor Daley at the 
Commerce Committee's second hearing on this matter held March 
21, 2002, noted that the City did not want to commit funds to 
the project only to have a subsequent governor overturn the 
agreement. The Committee does not want to see Federal dollars 
similarly misused. By supporting Federal legislation, Governor 
Ryan, Mayor Daley and the Committee are seeking to avert 
wasting local and Federal dollars.
  O'Hare expansion will provide a significant boost for 
business interests across the country, and the agreement has 
earned the strong endorsement of many national organizations 
such as the AFL-CIO and the U.S. Chamber of Commerce. The 
aviation industry is also in agreement. Air traffic 
controllers, the airlines represented by the Air Transport 
Association, airports represented by Airports Council 
International-North America and the American Association of 
Airport Executives, the Aircraft Owners and Pilots Association, 
and business leaders throughout the State of Illinois, all have 
expressed their support for legislation to expedite modernizing 
O'Hare. Congressmen Hyde and Jackson, both from Illinois, 
testified against the plan and the legislation.
  O'Hare is one the world's largest airports. As noted 
elsewhere, it also, prior to September 11, was one of the most 
delayed airports. These delays, costing consumers millions of 
dollars in terms of time, also limited the ability to add 
additional flights sought by small communities throughout the 
country. With the advent of regional jets, access to O'Hare has 
become possible for many more communities. Without a 
reconfiguration of the facility, in the long term, such access 
would be effectively cut off. O'Hare is one of the few major 
hubs in the U.S. with two air carriers each operating in excess 
of 35 percent of the flights. These hubs provide gateways to 
hundreds of other communities and international cities.
  In providing a degree of certainty that the agreement reached 
by the Governor and Mayor will proceed, albeit with all 
applicable legal, environmental and safety reviews, the 
Committee is seeking to ensure that once Federal dollars are 
committed, a future decision will not result in a waste of 
those resources. Thus, to facilitate interstate commerce, and 
to avoid wasteful spending, the bill effectively enables the 
agreement to be thoroughly reviewed, and if approved, move 
forward in the normal course of FAA practices.

 O'Hare International Airport--Its Role in the National Aviation System

  During World War II, Douglas Aircraft manufactured C-54 
transport planes for the United States Air Corps on the site 
that is now O'Hare. The City purchased the Douglas facility in 
1945, and built the Orchard Place Airport on the site the 
following year. In 1949, the airport was renamed for Edward 
``Butch'' O'Hare, a Navy fighter ace and Congressional Medal of 
Honor recipient. By 1959, the City began a massive expansion of 
O'Hare, and the airport was redesigned to accommodate 20 
million passengers annually. However, rapid and dramatic 
changes in aviation have again stressed capacity, rendering the 
once-modern enhancements obsolete.
  O'Hare International Airport is a major transportation hub, 
and is a crucial by-way for much of the nation's business and 
travel demands. Despite the shut down of the air traffic 
control system in response to the September 11 attacks, and 
subsequent flight reductions by the air carriers, O'Hare 
handled more flights in 2001 than at any other time in its 
history and is currently the world's busiest airport. Last 
year, more than 67 million passengers passed through O'Hare on 
911,917 flights. O'Hare averages more than 2,500 commercial 
flights each day to 174 non-stop markets, provided by 45 
passenger airlines, as well as cargo flights provided by 19 
cargo carriers. With non-stop flights to 47 of the 50 states 
O'Hare serves more destinations than any other airport in the 
nation, and more than half of those passengers depend on O'Hare 
to connect between flights.
  With so many travelers depending on O'Hare, a steady flow of 
air traffic at the facility is important to locations across 
the country. In a report issued last year, however, the FAA 
determined that scheduled traffic at O'Hare met or exceeded the 
airport's good weather capacity for 3\1/2\ hours per day and 
its bad weather capacity for 8 hours per day. This stress on 
capacity at O'Hare is a major factor leading to flight delays 
at the airport.
  Delays at O'Hare can have a crippling effect on the entire 
U.S. aviation system, and the number of users in the system is 
rapidly growing while O'Hare's current configuration has 
remained unchanged. The FAA's recently announced aerospace 
forecast projections indicate commercial air carrier 
enplanements are expected to increase from 649.9 million in 
2001 to 954.1 million in 2013, which represents a system-wide 
growth rate of 4 percent annually over the next 12 years. 
Demand at O'Hare alone is anticipated to grow by 18 percent 
over the coming decade according to the recent airport capacity 
report, and the imbalance between capacity and demand growth is 
expected to significantly increase delays at O'Hare over this 
time period.
  These delays cost travelers time and money. Moreover, the 
carriers also suffer financial losses due to the costs 
attributed to such delays, including fuel burn and other 
expenses. Delays cost $166.5 million per year to the airlines 
at O'Hare alone, and billions to airlines and travelers across 
the nation (based on an average operation cost of $25.17 per 
minute of delay for the nationwide fleet). Last year, prior to 
September 11, the FAA identified O'Hare as one of the major 
choke points in the national aviation system in its Aviation 
Capacity Benchmark Report when it identified O'Hare as the 
third most delayed airport in the country (after LaGuardia and 
Newark) in 2000.
  Unlike New York's LaGuardia Airport and some of the nation's 
other delay-plagued airports, O'Hare has an opportunity to 
expand primarily using the existing airport area and provide 
needed aviation apacity for many years. According to testimony 
by proponents, O'Hare's antiquated runway layout is the primary 
cause of these delays. Although it is at the center of the 
national aviation system, O'Hare struggles with an old-
fashioned, inefficient airfield design.
  Modern runway design employs parallel approaches in 
instrument flight rule conditions. Proponents of the redesign 
plan assert that by modernizing O'Hare's airfield by 
constructing one new runway and relocating three existing 
runways, delays and congestion are projected to be reduced 
dramatically. An up-to-date configuration, according to 
testimony by the City of Chicago, will reduce bad weather 
delays by 95 percent, and overall delays by 79 percent. With a 
broader layout, O'Hare could be far more efficient, and the 
whole national air transportation system would benefit. Under 
the legislation, the FAA will review the benefits of the 
redesign pursuant to existing guidelines.
  While the need to increase aviation capacity in the Chicago 
region is clear, taking the necessary action to address this 
need has been difficult. In the early 1970s, the City took 
action to plan for regional aviation development, and began to 
prepare a Master Plan Study for O'Hare which represented the 
first attempt to formulate a systematic plan of growth in the 
area. While the Master Plan Study was in the preparation stage, 
opponents of continued growth at O'Hare filed suit against the 
FAA in 1974. Since this time, no expansion has occurred and no 
consensus has been achieved on how to increase capacity for the 
Chicago region until the agreement between Governor Ryan and 
Mayor Daley was reached.

                      Summary of Major Provisions

  The bill does the following:
          Lays out in precise detail the Chicago-area aviation 
        agreement reached by Governor Ryan and Mayor Daley on 
        December 5, 2001, providing for the reconstruction and 
        expansion of O'Hare and allowing for the construction 
        of a third Chicago-area airport at Peotone, Illinois. 
        Nothing in the bill guarantees any funding for the 
        O'Hare or Peotone project, or mandates that a specific 
        set of runway configurations be approved, as the FAA 
        retains all its existing discretion to analyze, review, 
        and, if all relevant tests are met, approve the O'Hare 
        project. For example, the bill requires that any new 
        runway redesign increase capacity in both instrument 
        and visual flight conditions and that the percentage of 
        runway incursions not increase.
          Seeks to ensure that the deal to expand O'Hare made 
        by the Governor and the Mayor is not broken, but is 
        thoroughly reviewed and is consistent with the safety 
        and efficiency of the air traffic control system. Under 
        Illinois law, the City of Chicago cannot build new 
        runways or reconfigure existing runways without the 
        approval of the governor. The bill seeks to prohibit a 
        future governor from disapproving the decision to move 
        forward once Federal funds are expended.
          Directs the FAA, while retaining FAA's existing 
        authority, to implement the agreement reached between 
        the Governor and the Mayor by facilitating the runway 
        redesign plan submitted by O'Hare. This action would be 
        contingent upon the FAA's determination that the plan 
        meets all existing requirements for the project. The 
        FAA has discretion to modify the plan, if necessary, 
        for efficiency, safety, or other concerns. The bill 
        also gives priority consideration for an application 
        for a letter of intent (LOI) for a new south suburban 
        airport and also for an LOI for Gary, Indiana.
          Requires any redesign plan to conform with the Clean 
        Air Act and to conform to all other environmental 
        mandates to the maximum extent possible,while requiring 
        that the State use its customary practices to analyze 
        any Clean Air Act requirements.
          Requires that before a plan is approved for O'Hare, 
        soundproofing of residential property and schools is 
        included in the plan.
          Requires the continued operation of Meigs Field under 
        the control of the City of Chicago.
          Provides no priority for federal funding of any 
        O'Hare projects, including the runway redesign plan.
          Recognizes the importance of utilizing Gary/Chicago 
        Airport, Rockford, IL Airport, and other existing 
        infrastructure to promote capacity and reduce 
        congestion in the region.
          Does not make a determination whether if the proposal 
        is safe, as that is a matter for the FAA to review. The 
        legislation specifically notes that the FAA's safety 
        authority and ability to disapprove the plan is not 
        affected. For example, under the plan, the distance 
        between runway centerlines, whether configured as 
        independent or dependent parallel runways, and how each 
        is used, will be carefully reviewed by the FAA. If the 
        layout of the runways is deemed unsafe, inefficient, or 
        needs adjustments, that decision under the bill, and 
        under existing law, is left to the FAA.
          Ensures, with respect to access to O'Hare, that all 
        carriers benefit from the expansion plans, not just the 
        two major carriers, United and American. Access is 
        facilitated by requiring, as part of any grant 
        provided, that the FAA receive appropriate assurances 
        that ``have-not'' or new entrant carriers be provided 
        reasonable access to gates and facilities. Also, the 
        bill does not adversely affect the property rights of 
        those incumbent carriers.

                          Legislative History

  On March 20, 2002, Senator Durbin introduced S. 2039, the 
National Aviation Capacity Act of 2002.
  On March 21, 2002, the Committee held a hearing to consider 
the agreement reached between Governor Ryan and Mayor Daley to 
expand airport capacity in the Chicago area. The hearing 
focused on the agreement and also on the legislation that was 
introduced by Senator Durbin to help implement the agreement. 
The Mayor and Governor both testified in support of the bill.
  On April 18, 2002, the Commerce Committee ordered S. 2039 to 
be reported with an amendment in the nature of a substitute. 
The Committee adopted: a manager's amendment; an amendment by 
Senator Dorgan to protect existing property holders at O'Hare; 
compromise language offered by Senator McCain on behalf of 
Senator Fitzgerald that notes that the FAA Administrator is not 
required to approve the O'Hare runway redesign plan; an 
amendment offered by Senator Fitzgerald on runway incursions; 
and an amendment offered by Senator Fitzgerald clarifying noise 
mitigation requirements. The Committee rejected amendments 
offered by Senator Fitzgerald that sought to limit the area of 
O'Hare expansion and to have the Federal government regulate 
contracting at O'Hare, which would have required all contract 
services to be reviewed.
  The agreement reached by Governor Ryan and Mayor Daley was 
spurred by the June 15, 2001, Commerce Committee field hearing 
in Chicago which looked at proposals to improve air service to 
the region. At the field hearing, the State and Mayor's 
representatives were told to try to work out a plan by 
September 1, 2001. While this deadline was not met, a plan was 
offered on December 5, 2001, when the Mayor and Governor agreed 
to reconfigure O'Hare and proceed with planning for a new 
airport (Peotone), south of Chicago.
  The agreement between Mayor Daley and Governor Ryan is a 
compromise that has taken years to reach. In an effort to make 
certain that the State of Illinois moves forward on expanding 
air service in the Chicago region, the agreement by the State 
and City was encompassed in legislation that was introduced in 
both the House and Senate. In the Senate, Senator Durbin first 
introduced S. 1786, and later introduced S. 2039, to ensure 
that O'Hare expansion plans continue. In the House, H.R. 3479 
was introduced by Rep. Lipinski, and has more than 100 
cosponsors.
  On December 7, 2001, Senator Durbin attempted to add S. 1786 
to the Department of Defense Appropriations Act of 2002. 
Senator Fitzgerald objected and debated the issue for several 
hours. He argued that only Peotone should be built and that 
O'Hare expansion will not add any new capacity, will create 
unsafe conditions, and will contribute to noise and other 
environmental degradations. Senator Durbin subsequently 
withdrew the amendment.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:
                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 7, 2002.
Hon. Ernest F. Hollings,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2039, the National 
Aviation Capacity Expansion Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs) and Susan Sieg Tompkins (for the state and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 2039--National Aviation Capacity Expansion Act of 2002

    S. 2039 would direct the Administrator of the Federal 
Aviation Administration (FAA) to assist in redesigning and 
reconstructing Chicago O'Hare International Airport in Cook and 
Dupage Counties, Illinois, in accordance with a specified 
runway design plan. FAA also would be directed to assist in 
developing a south suburban airport in the Chicago metropolitan 
region. The bill would require an implementation plan to be 
prepared by the state of Illinois under the Clean Air Act for 
regulating emissions associated with activities at commercial 
service airports.
    CBO estimates that S. 2039 would have no significant impact 
on federal spending. The bill could affect which projects the 
FAA chooses to support, but based on information from the 
agency, CBO estimates that S. 2039 would have no net effect on 
total spending for such projects. Because S. 2039 would not 
affect direct spending or receipts, pay-as-you-go-procedures 
would not apply.
    The bill would preempt the state of Illinois' authority to 
regulate certain activities of the owners of O'Hare airport. 
Specifically, the bill would preempt the state's authority to 
control or regulate the owner of O'Hare airport as it applies 
for federal grant funds to pay for the airport expansion. In 
addition, the bill would limit the state's authority to impose 
regulations on aviation safety with respect to the development 
of a runway redesign plan for O'Hare. These preemptions would 
be intergovernmental mandates as defined in the Unfunded 
Mandates Reform Act (UMRA).
    In implementing the runway redesign plan at O'Hare, the 
city of Chicago would have to take steps to mitigate noise in 
residential units and schools around the airport. The city also 
would be prohibited from using the Clean Air Act to interfere 
with runway construction at O'Hare or development of another 
airport south of Chicago. These requirements also would be 
intergovernmental mandates as defined in UMRA.
    Based on information from FAA and the city of Chicago, CBO 
estimates that the preemptions of state authority and the 
requirements placed on the city would not impose significant 
costs. Thus, the costs of the bill's mandates would not exceed 
the threshold established by UMRA ($58 million in 2002, 
adjusted annually for inflation). The bill contains no new 
private-sector mandates as defined in UMRA.
    The CBO staff contacts for this estimate are Mark Hadley 
(for federal costs) and Susan Sieg Tompkins (for the state and 
local impact). This estimate was approved by Peter H. Fontaine, 
Deputy Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:
  Because S. 2039 does not create any new programs, the 
legislation will have no additional regulatory impact, and will 
result in no additional reporting requirements. The legislation 
will have no further effect on the number or types of 
individuals and businesses regulated, the economic impact of 
such regulation, the personal privacy of affected individuals, 
or the paperwork required from such individuals and businesses. 
A number of provisions in the bill require the FAA and other 
agencies to participate in reviewing the redesign plan, which 
includes a western access road system, to ensure that an 
existing airport remain open, and to consider expeditiously 
applications for letters of intent for airport infrastructure 
projects. All of these types of requirements are actions that 
the Federal government routinely participates in and the burden 
on the government is not increased by the legislation. In 
addition, while the bill effectively directs the City of 
Chicago and State of Illinois to submit their plans and 
proposals, each has agreed voluntarily to do so, and there are 
no additional requirements imposed upon them.

                       number of persons covered

  The bill affects entities already subject to FAA rules and 
regulations, and the number of persons covered is unchanged by 
the legislation. The process to review the application by the 
City of Chicago to expand O'Hare will be subject to all 
regulatory and environmental reviews in the normal course of 
business, and persons affected by any such expansion, should it 
ultimately be approved, under existing regulatory procedures 
will have ample opportunity to raise issues and concerns with 
the FAA. The same is true if, and when, plans to expand the 
airport at Gary, Indiana, are put forward and if plans to build 
the new south suburban airport proceed.

                            economic impact

  As noted above, O'Hare International Airport is one of the 
nation's largest airports, channeling more than 67 million 
passengers per year to destinations around the globe. O'Hare 
generated employment creates jobs for more than 365,000 
individuals, and according to reports, the airport is the 
impetus for more than $30 billion in economic activity 
annually. The proposed plan to expand capacity from some 
900,000 operations to approximately 1.6 million operations a 
year is expected to generate 195,000 more jobs and is projected 
to reduce delays at the airport by 79 percent overall, cutting 
costs in terms of travel time, fuel burn and other factors by a 
significant amount.
  The priority designation for letters of intent, an instrument 
delineating the FAA's long term funding commitment to an 
airport construction project, if ultimately granted, will 
provide benefits to Gary and the new South Suburban Airport, as 
each of those projects move forward. At this point, those 
benefits--delay reductions, jobs, and other factors--have not 
been clearly identified, but it is anticipated that each will 
have positive economic impacts for their respective areas and 
the region.

                                privacy

  Nothing in the bill affects the privacy rights of any 
individuals.

                               Paperwork

  Nothing in the bill increases the paperwork burden on the 
private sector or the Federal government as the existing means 
for processing grant applications for airport expansion 
projects, and conducting the environmental review process are 
unchanged. In one respect, paperwork requirements may be 
reduced as the State of Illinois, having already agreed to the 
O'Hare project and the Peotone concept, will not have to go 
through the review in the out years of the need for the project 
and the analysis of the funding requests from the airport, both 
of which exist under current law. The bill requires that the 
FAA submit a report to Congress if necessary criteria to begin 
construction on the O'Hare redesign plan have not been met 
December 31, 2004.

                      Section-by-Section Analysis

Section 1. Short title

  Section 1 designates the short title of the bill as the 
``National Aviation Capacity Expansion Act of 2002.''

Section 2. Findings

  Section 2 presents a dozen findings of Congress to explain 
the purpose of the bill.
  It also explains the background for the legislation, which 
includes noting how important airport expansion nationwide is 
to addressing longer term capacity needs. The Committee last 
year favorably reported legislation S. 633, the Aviation Delay 
Prevention Act, designed to streamline the entire airport 
construction review process for all airports. This bill focuses 
on the particular details of the Chicago metropolitan area and 
the need to expand capacity.

Section 3. Airport construction and redesign

  Section 3 reiterates the importance of the Chicago region to 
the national air transportation system, and directs the FAA 
Administrator to pursue both an expansion of O'Hare 
International Airport and a review of plans for a south 
suburban airport. Any action taken by the FAA regarding these 
efforts are required to be consistent with existing 
environmental and safety requirements. The approved runway 
redesign plan must be able to demonstrate improved capacity 
regardless of weather conditions, and the existing property 
rights of airport users must not be affected by these 
provisions. Approval of the runway redesign plan is conditioned 
on meeting the requirements of the Clean Air Act, the use of 
best management practices, and maintaining existing levels of 
airport safety.
  Section 3 also prohibits the State of Illinois from 
interfering with the O'Hare runway redesign plan. Furthermore, 
the State is required to develop an implementation plan 
according to the normal process to account for emissions at the 
State's commercial service airports without intentionally 
interfering with airport capacity efforts.
  The legislation before the Committee presented a unique set 
of circumstances because of an unusual set of provisions under 
Illinois State law to which airports in other States, are not 
subject. Under Illinois law, the Governor, through his 
Transportation Department, must issue a certificate approving 
authorization for runway construction (Section 47), and no 
local government can apply for Federal airport grants without 
State approval (Section 38.01--Also referred to as a 
``Channeling Act''). Thus, without Federal legislation, it is 
possible that a future governor may put a halt to O'Hare's 
expansion after it has already begun, which would waste federal 
dollars and adversely affect interstate commerce.
  As noted above, Illinois is one of only a few states that 
provides airport approval power to State Executive authority. 
Even if O'Hare does not receive any State money, the Governor 
maintains the power to deny new or relocated runways at O'Hare. 
Of those states that have executive approval, according to 
testimony by Mayor Daley, only O'Hare has been prevented from 
implementing a runway plan because of State opposition.
  O'Hare serves as a gateway to hundreds of domestic and 
international markets for small- and medium-sized communities. 
Increased capacity at O'Hare would allow communities throughout 
the U.S. additional access to many cities, both here and 
abroad. Given local agreement, and unique Illinois laws, the 
bill seeks to ensure that, consistent with all applicable laws, 
the review process moves forward, funding for planning and 
analysis is made available through the normal FAA grant 
process, without any priority for O'Hare, and that once begun 
and once approved, the Federal, State, and local resources are 
not wasted, merely due to a future change in political 
position.
  Section 3 also requires that any approved airport plan is 
phased to ensure that the construction of an east-west runway 
which conforms to certain stated conditions does not begin 
prior to January 1, 2011. Any plan must include public roadway 
access through the existing western boundary of O'Hare, and is 
required to provide noise mitigation for local communities. The 
FAA Administrator is prohibited from moving forward with O'Hare 
redesign until a satisfactory noise mitigation plan is offered 
by the City of Chicago which provides a continual lessening of 
noise impact for surrounding communities in each successive 
calendar year. With respect to environmental concerns, the bill 
specifically requires that as part of any plan approval for the 
runway redesign, the City must include acoustical treatment of 
residences and schools within the 65 DNL noise contour. The 
Committee understands that the agreement between the Mayor and 
Governor includes about $450 million for soundproofing. The 
Committee notes that as the U.S. commercial fleet has phased 
out noisier, older aircraft, the number of people nationwide 
inside of the 65 DNL area has been substantially reduced, and 
that for the Chicago area, the reduction represents more than 
20,000 homes since 1997. The Federal government will have no 
financial responsibility for the O'Hare project if these 
conditions are not met.
  The debate over the costs of the O'Hare expansion project is 
not settled by the legislation and the plan includes a number 
of items that are not eligible for FAA airport grant monies or 
Passenger Facility Charges (PFC) funding. According to the 
Illinois Department of Transportation, the cost of the proposed 
O'Hare expansion is estimated at between $5.65 billion and 
$6.75 billion for the airfield changes, terminal development, 
road improvements, land acquisition and noise mitigation. 
However, as with all airport projects, the figures are only 
estimates. As the project is vetted, firmer estimates will be 
developed. Under existing FAA procedures, the costs of the 
project will be reviewed to confirm that, for example, 
construction estimates are reasonable. In addition, if 
substantial Airport Improvement Program (AIP) dollars are 
provided, the FAA will conduct a benefit cost analysis of the 
project. With respect to sources of funding, airport projects 
are funded from a multitude of sources--one source is the FAA's 
AIP program, under which the City of Chicago receives 
approximately $6.5 million in entitlement funds for O'Hare each 
year. Another source is passenger facility charges--a $4.50 per 
segment fee imposed on passengers to expand capacity. Other 
sources include bonds (e.g., general aviation revenue bonds) 
that may be backed by airport rates and charges imposed on 
incumbent carriers or that are backed by other sources of 
revenue. Generally, such bond financing is provided through the 
private sector based upon the viability of the project and the 
ability to repay. Thus, the issue of costs is not one that is 
addressed in the bill and the matter will be considered by the 
FAA, the City, the State, the affected carriers, and the 
financial community. The Committee, knowing that this issue was 
not a matter for the Committee to determine, specifically 
included language that nothing in the bill provided any monies 
or a priority for such Federal funds. As a general matter, the 
FAA where it does provide funds for a major project, only pays 
for a small portion of a project's total costs.
  Section 3 requires the FAA Administrator to give priority 
consideration to applications for letters of intent (LOI) 
submitted by the State of Illinois, the State of Indiana, or 
political subdivisions thereof for a south suburban airport or 
an extension of the main runway at Gary/Chicago Airport. The 
only priorities accorded to airports are those for Gary, 
Indiana, and the new south suburban airport, both of which will 
be provided a priority consideration for their LOI, the FAA's 
long-term funding commitment letters. The Committee 
understands, in adding Gary to receive such consideration, that 
the airport has plans to expand its airport and that the plans 
include a de minimus amount of funds for environmental cleanup. 
Nothing in the Act mandates any specific set of criteria for 
approval under the LOI requests, but only that each will be 
considered expeditiously. A report to Congress is mandated if 
necessary criteria to begin construction on O'Hare runway 
redesign plan have not been met by December 31, 2004.
  Section 3 requires Merrill C. Meigs Field to remain open, 
owned and operated by the City of Chicago until January 1, 
2026. The provision enables the City to use revenues from the 
two largest carriers at O'Hare, American and United, to pay for 
the operating and maintenance costs of Meigs. The Committee 
understands that these two carriers have agreed to the 
arrangement and that other carriers are not party to the 
agreement. If circumstances at O'Hare change, the Committee 
anticipates that agreements would need to be reached with other 
carriers. Additionally, Section 3 sets the definition for the 
terms ``runway redesign plan,'' ``south suburban airport,'' 
``Administrator,'' ``State,'' and ``implementation plan.''

Section 4. Application with existing law

  Section 4 requires that no priority is given to Federal 
funding of O'Hare noise mitigation projects or the O'Hare 
runway redesign plan.

Section 5. Competitive access requirements

  Section 5 requires that, in providing funds to expand O'Hare, 
the FAA is required to receive adequate assurances (generally 
referred to as grant assurances) that gates and facilities are 
available, or will be made available on fair and reasonable 
terms to all carriers serving or seeking to serve O'Hare. As 
expansion of runways and redesign occurs, and as new terminals 
are built, the provision ensures that access by carriers other 
than the two dominant carriers, United and American, is 
provided.
  Section 5 seeks grant assurances that existing exclusive use 
gate arrangements are phased out as contracts expire and as, 
and if, new facilities are provided. The City is urged to do so 
as soon as practicable so that other carriers can obtain access 
to the airport. The phase out of exclusive use contracts for 
gates and associated facilities extends to such assets that are 
either relinquished by existing tenants or those assets added 
to the airport. Finally, the section requires the airport to 
conduct a comprehensive study of the existing facilities and 
types of contracts in existence.
  Under Section 5, in providing relief under the bill, the 
Committee is cognizant that access to O'Hare must be provided 
to the ``have not'' carriers as mentioned earlier. O'Hare today 
is dominated by two major U.S. carriers-Chicago-based United 
Airlines and Dallas-Ft. Worth-based American Airlines. Other 
carriers are concerned that as construction ensues, and new 
terminals are constructed, that they be provided reasonable 
access to gates and facilities. Senator Dorgan offered an 
amendment that was accepted that protects existing property 
rights. Senator Dorgan was concerned that the ``have not'' 
carriers might have their terminal space condemned by the City.
  Through Section 5, the Committee recognizes that while 
expansion is critical for all carriers and travelers, access 
for ``have not'' carriers must be provided on fair and 
reasonable terms. The Committee maintains a strong interest in 
promoting a competitive environment among air carriers and does 
not favor arrangements that can have the counter-effect. In 
building its new facilities and new terminals, the Committee 
expects that the City will use funds to build new gates that 
are available for ``have not'' and new entrant carriers. The 
assurances the FAA can seek as part of the funding could 
include the construction of additional gates. The Committee 
believes that the Federal government's oversight should be 
focused and sufficient to help foster the pertinent policy 
objective. Any alterations of existing arrangements between air 
carriers and an airport operator, pursuant to this section, 
should be handled in a balanced manner that recognizes the 
rights that accrue to each party in such previously-negotiated 
business arrangements. The Committee anticipates that, if such 
arrangements are renegotiated, they be conducted in good faith 
between the parties. However, as contracts expire and new 
leases are entered into, the Committee expects that lease 
arrangements, particularly for the dominant carriers, will use 
non-exclusive types of arrangements. The Committee in reviewing 
this issue understands and expects that existing preferential 
use gates and facilities contracts for United and American will 
all become either preferential or common-use, and that as other 
contracts expire or are renegotiated, the City, to the extent 
practicable, will utilize non-exclusive arrangements for the 
``have not'' carriers as well. However, flexibility is provided 
in the bill so that the non-dominant carriers are not 
disadvantaged by such actions, and it is not intended by any of 
the provisions of Section 5 that any existing contract with 
``have not'' carriers be impaired.

                      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 Fitzgerald offered an amendment, to the amendment (in 
the nature of a substitute) offered by Senator Hollings, to 
encourage the FAA to consider alternative proposals for the 
modernization of O'Hare. By rollcall vote of 4 yeas and 19 nays 
as follows, the amendment was defeated:
        YEAS--4                       NAYS--19
Mr. Lott                            Mr. Hollings
Mr. Fitzgerald                      Mr. Inouye\1\
Mr. Ensign\1\                       Mr. Rockefeller\1\
Mr. Allen                           Mr. Kerry\1\
                                    Mr. Breaux
                                    Mr. Dorgan
                                    Mr. Wyden
                                    Mr. Cleland\1\
                                    Mrs. Boxer\1\
                                    Mr. Edwards\1\
                                    Mrs. Carnahan\1\
                                    Mr. Nelson
                                    Mr. McCain
                                    Mr. Stevens\1\
                                    Mr. Burns
                                    Mrs. Hutchison
                                    Ms. Snowe
                                    Mr. Brownback
                                    Mr. Smith

    \1\By proxy

  Senator Fitzgerald offered an amendment, to the amendment (in 
the nature of a substitute) offered by Senator Hollings, to 
require competition in contracting for services and sale of 
goods at O'Hare. By rollcall vote of 8 yeas and 15 nays as 
follows, the amendment was defeated:
        YEAS--8                       NAYS--15
Mr. McCain                          Mr. Hollings
Mr. Lott                            Mr. Inouye\1\
Ms. Snowe                           Mr. Rockefeller\1\
Mr. Brownback                       Mr. Kerry\1\
Mr. Smith                           Mr. Breaux
Mr. Fitzgerald                      Mr. Dorgan
Mr. Ensign\1\                       Mr. Wyden
Mr. Allen\1\                        Mr. Cleland\1\
                                    Mrs. Boxer\1\
                                    Mr. Edwards\1\
                                    Mrs. Carnahan\1\
                                    Mr. Nelson
                                    Mr. Stevens\1\
                                    Mr. Burns
                                    Mrs. Hutchison

    \1\By proxy

    By rollcall vote of 19 yeas and 4 nays as follows, the bill 
was ordered reported with an amendment in the nature of a 
substitute:
        YEAS--19                      NAYS--4
Mr. Hollings                        Mr. Lott
Mr. Inouye\1\                       Mr. Fitzgerald
Mr. Rockefeller\1\                  Mr. Ensign\1\
Mr. Kerry\1\                        Mr. Allen\1\
Mr. Breaux
Mr. Dorgan
Mr. Wyden
Mr. Cleland\1\
Mrs. Boxer\1\
Mr. Edwards\1\
Mrs. Carnahan\1\
Mr. Nelson
Mr. McCain
Mr. Stevens\1\
Mr. Burns
Mrs. Hutchison
Ms. Snowe
Mr. Brownback
Mr. Smith

    \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 the bill as 
reported would make no change to existing law.


```