U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

19–010

" SENATE ! 108TH CONGRESS

1st Session 

REPORT

2003

108–41

Calendar No. 83

AVIATION INVESTMENT AND 

REVITALIZATION VISION ACT

REPORT

OF THE

COMMITTEE ON COMMERCE, SCIENCE, AND 

TRANSPORTATION

ON

S. 824

MAY 2, 2003.—Ordered to be printed

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


congress.#13
(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

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 " SENATE ! 1st Session 108–41

AVIATION INVESTMENT AND REVITALIZATION VISION ACT

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

I. OVERVIEW OF FEDERAL INVOLVEMENT IN CIVIL AVIATION

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 

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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. 

II. OVERVIEW OF THE FAA’S FUNCTIONS

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 

passengers. 

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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. 

III. OVERVIEW OF AIRPORTS IN THE UNITED STATES

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 funding. 

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

Airport type Number of airports 

Percentage of 

all enplanements 

Percentage of 

general aviation 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. 

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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 funding. 

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 airports:

SOURCES OF AIRPORT FUNDING 1

[Dollars in billions] 

Funding source 

1999–2001 

average 

funding 

Percent 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 airports. 

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1. THE AIRPORT IMPROVEMENT PROGRAM (AIP)

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. 

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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 nonhubs, 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 rehabilitation.

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 airportrelated 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 airVerDate Jan 31 2003 23:57 May 05, 2003 Jkt 019010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR041.XXX SR041
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port’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 

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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.’’

V. SERVICE TO SMALL AND RURAL COMMUNITIES

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. 

A. THE ESSENTIAL AIR SERVICE PROGRAM (EAS)

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 commuVerDate Jan 31 2003 23:57 May 05, 2003 Jkt 019010 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\SR041.XXX SR041
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nities. 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. 

B. THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PILOT

PROGRAM

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 

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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 options. 

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 distributed. 

C. THE ADMINISTRATION PROPOSAL

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 transportation. 

SUMMARY OF PROVISIONS

MAJOR PROVISIONS OF S. 824, THE AVIATION INVESTMENT 

AND REVITALIZATION 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:

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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. 

B. STREAMLINING OF AIRPORT PROJECTS

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 timeconsuming 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 

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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 effected. 

13

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 States. 

PRIVACY

S. 824 is not expected to have an adverse effect on the personal 

privacy of any individuals that will be impacted by this legislation. 

PAPERWORK

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 enhancement. 

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. 

TITLE I—REAUTHORIZATIONS; FAA MANAGEMENT 

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 

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provement 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 budget. 

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 dayto-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. 

§ 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 estabVerDate Jan 31 2003 23:57 May 05, 2003 Jkt 019010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR041.XXX SR041
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lish 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. 

§ 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 projects. 

§ 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. 

§ 47704. Compatible Land Use Initiative for National Capacity Projects 

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. 

§ 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. 

§ 47706. Pilot Program for Environmental Review at National Capacity Projects 

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. 

§ 47707. Definitions 

This section sets out definitions for ‘‘national capacity project,’’

and other terms based on existing statutory meanings. 

16

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 process. 

(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 contractor. 

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 

17

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 Congress. 

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 action. 

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. 

18

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 location. 

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. 

TITLE III—AIRLINE SERVICE DEVELOPMENT 

SUBTITLE A—PROGRAM ENHANCEMENTS

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 

19

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 Infrastructure. 

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

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. 

SUBTITLE B—SMALL COMMUNITY AND RURAL AIR SERVICE

REVITALIZATION

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 oneyear 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 oneyear period while the program has been in effect, then none of the 

20

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 eli- gible 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 

safety; 

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 inkind 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 

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mit an application as determined by the Department of Transportation. 

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 Definition 

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. 

22

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 

23

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 airport. 

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 violators). 

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 

24

(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 lanVerDate Jan 31 2003 23:57 May 05, 2003 Jkt 019010 PO 00000 Frm 00026 Fmt 6659 Sfmt 6602 E:\HR\OC\SR041.XXX SR041
25

guage, 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 retrofits. 

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.

26

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 manufacturers. 

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. 

TITLE VI—SECOND CENTURY OF FLIGHT 

Sec. 601. Findings 

Section 601 presents fourteen findings of Congress that explain 

the purpose of, and need for title VI. 

SUBTITLE A—THE OFFICE OF AEROSPACE AND AVIATION LIAISON

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. 

27

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. 

SUBTITLE B—TECHNICAL PROGRAMS

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 conVerDate Jan 31 2003 23:57 May 05, 2003 Jkt 019010 PO 00000 Frm 00029 Fmt 6659 Sfmt 6602 E:\HR\OC\SR041.XXX SR041
28

ducting 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. 

SUBTITLE C—FAA RESEARCH, ENGINEERING, AND DEVELOPMENT

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 Program 

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 

Advancements 

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 Technologies 

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 

29

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. Stevens1 Ms. Snowe1

Mr. Burns Mr. Fitzgerald1

Mr. Lott Mr. Allen 

Mrs. Hutchison1 Mr. Hollings 

Mr. Brownback1 Mr. Inouye1

Mr. Smith Mr. Rockefeller 

Mr. Ensign Mr. Kerry1

Mr. Wyden Mr. Breaux1

Mrs. Boxer Mr. Dorgan 

Ms. Cantwell Mr. Nelson 

Mr. McCain Mr. Lautenberg

1By 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 

30

Mr. Hollings Mr. Lott 

Mr. Inouye1 Mrs. Hutchison 

Mr. Rockefeller1 Ms. Snowe1

Mr. Kerry1 Mr. Brownback 

Mr. Breaux1 Mr. Fitzgerald1

Mr. Dorgan1 Mr. Ensign 

Mr. Wyden1 Mr. Allen 

Mrs. Boxer Mr. Sununu 

Mr. Nelson Mr. Lautenberg 

Ms. Cantwell 

Mr. McCain

1By 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 carried:

YEAS—12 NAYS—10

Mr. Stevens1 Ms. Snowe1

Mr. Burns Mr. Fitzgerald1

Mr. Lott Mr. Allen 

Mrs. Hutchison Mr. Inouye1

Mr. Brownback Mr. Rockefeller1

Mr. Smith Mr. Kerry1

Mr. Ensign Mr. Breaux1

Mr. Sununu Mr. Dorgan1

Mr. Hollings Mr. Nelson 

Mr. Wyden1 Mr. Lautenberg 

Mrs. Boxer 

Ms. Cantwell

1By 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. Stevens1 Ms. Snowe1

Mr. Burns Mr. Fitzgerald1

Mr. Lott Mr. Allen 

Mrs. Hutchison Mr. Hollings 

Mr. Brownback Mr. Inouye1

Mr. Smith Mr. Rockefeller 

Mr. Ensign Mr. Kerry1

Mr. Sununu Mr. Breaux1

Mr. Wyden1 Mr. Dorgan1

Mrs. Boxer1 Mr. Nelson 

Ms. Cantwell Mr. Lautenberg 

Mr. McCain

1By 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 

31

is necessary to dispense with the requirements of that paragraph 

in order to expedite the business of the Senate.

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