Document ID: FAA-2010-1220-0001
Agency: faa
Document Type: Rule
Title: Airport Improvement Program: Proposed Changes to Benefit Cost Analysis (BCA) Threshold
Posted Date: 2010-12-16T05:00Z

[Federal Register Volume 75, Number 241 (Thursday, December 16, 2010)]
[Notices]
[Pages 78798-78799]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31614]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

 [Docket No. FAA-2010-1220]

Airport Improvement Program: Proposed Changes to Benefit Cost 
Analysis (BCA) Threshold

AGENCY: Federal Aviation Administration (FAA), Department of 
Transportation (DOT).

ACTION: Notice of Availability of Draft Guidance and Request for 
Comments.

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SUMMARY: The Federal Aviation Administration (FAA) is issuing this 
Notice to advise that FAA has developed draft guidance modifying its 
policy requiring benefit cost analyses (BCA) for capacity projects when 
applying for Airport Improvement Program (AIP) grants for capacity 
projects at the discretion of the Secretary of Transportation. This 
modification proposes to raise the threshold at which BCAs are 
required, from $5 million to $10 million in AIP Discretionary funds.
    FAA invites airport sponsors and other interested parties to 
comment on the draft guidance. FAA will consider these comments in 
promulgating final BCA guidance for airport sponsors.

DATES: Send your comments on or before January 31, 2011. The FAA will 
consider comments received on the proposed policy guidance. Any 
necessary or appropriate revision to the guidance resulting from the 
comments received will be adopted as of the date of a subsequent 
publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Dennis Walsh, Financial Analysis and 
Passenger Facility Charge Branch (APP-510), Room 619, Federal Aviation 
Administration, 800 Independence Avenue, SW., Washington, DC 20591;

[[Page 78799]]

telephone: (202) 493-4890, e-mail: dennis.walsh@faa.gov. A draft 
Program Guidance Letter is available on-line at http://www.faa.gov/airports/aip/bc_analysis/. In addition, hard copies can be reviewed at 
Room 619, Federal Aviation Administration, 800 Independence Avenue, 
SW., Washington, DC 20591.
    Comments Invited: ADDRESSES: You may send comments [identified by 
Docket Number FAA-2010-1220] using any of the following methods:
     Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your 
comments electronically.
     Mail: Docket Operations, U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, Routing 
Symbol M-30, 1200 New Jersey Avenue, SE., Washington, DC 20590.
     Fax: 1-202-493-2251.
     Hand Delivery: To Docket Operations, Room W12-140 on the 
ground floor of the West Building, 1200 New Jersey Avenue, SE., 
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays.
    Privacy: We will post all comments we receive, without change, to 
http://www.regulations.gov, including any personal information you 
provide. For more information, see the Privacy Act discussion in the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: To read background documents or comments received, go to 
http://www.regulations.gov at any time or to Room W12-140 on the ground 
floor of the West Building, 1200 New Jersey Avenue, SE., Washington, 
DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays.

SUPPLEMENTARY INFORMATION: Title 49 U.S.C. Section 47115(d) specifies 
that, in selecting projects for discretionary grants to preserve and 
enhance capacity at airports, the Secretary must consider the benefits 
and costs of the projects. In 1994, FAA established its policy on 
Benefit Cost Analysis (BCA) requirements for airport capacity projects; 
factors leading to these requirements included:
    a. The need to improve the effectiveness of Federal airport 
infrastructure investments in light of a decline in Federal AIP 
budgets;
    b. Issuance of Executive Order 12893, ``Principles for Federal 
Infrastructure Investments'' (January 26, 1994);
    c. Guidance from Congress citing the need for economic airport 
investment criteria; and
    d. Statutory language from 1994 included in Title 49 U.S.C. Section 
47115(d) specifies that in selecting projects for discretionary grants 
to preserve and enhance capacity at airports, the Secretary shall 
consider the benefits and costs of the projects (See 49 U.S.C. 47115. 
Discretionary Fund).
    The FAA implemented the BCA policy to include this requirement for 
capacity projects at all categories of airports in order to limit FAA's 
risks when investing large amounts of discretionary funds. The FAA uses 
the conclusions reached in the BCA review to determine policy and 
funding decisions on possible future Federal investments.
    In 1997, FAA implemented a new BCA policy which transferred the 
responsibility of preparing the BCA from FAA to the sponsor. In 
addition, the policy lowered the dollar threshold from $10 million in 
AIP Discretionary funds (established in 1994) to $5 million, citing 
three reasons related to Executive Order 12893, technical feasibility 
of lowering the threshold and workload considerations.
    The change to the $5 million threshold was made policy in 1997 and 
formalized in a 1999 Federal Register notice, Federal Aviation 
Administration Policy and Final Guidance Regarding Benefit Cost 
Analysis (BCA) on Airport Capacity Projects for FAA Decisions on 
Airport Improvement Program (AIP) Discretionary Grants and Letters of 
Intent (LOI), 64 FR 70107 (December 15, 1999).
    Since 1997, policy has required sponsors to conduct BCAs for 
capacity projects for which more than $5 million in AIP Discretionary 
funding will be requested. In developing the draft guidance increasing 
the threshold, FAA reviewed the reasons why the BCA threshold amount 
was lowered in 1997 and concluded that the previous reasons do not 
present a sufficient basis to warrant maintaining the $5 million level 
threshold today.
    FAA has gained valuable experience assessing the implementation of 
the policy and the need to further clarify the threshold requirements 
for BCA. The $5 million threshold has remained unchanged for over 13 
years while the cost of construction has risen significantly. A 
construction cost of $5 million in 1997 was equivalent to $9.8 million 
in July 2008. The $5 million threshold has required both FAA and 
sponsors of non-primary and non-hub primary airports to devote 
substantial financial and staff resources in preparing and evaluating 
BCAs for relatively small projects with readily apparent capacity 
benefits.
    Based on the increase in construction costs, FAA has concluded that 
$10 million in AIP Discretionary funds is the appropriate threshold for 
fiscal year 2011 and beyond. Further explanation for this conclusion is 
detailed in the draft PGL. Under the draft guidance, the BCA threshold 
is being increased to $10 million, the FAA would retain the right to 
require a BCA for any capacity project, in order to evaluate the 
reasonableness of project costs relative to project benefits.
    Additionally, FAA is inviting airport sponsors and other interested 
parties to comment on the new $10 million threshold for which a BCA 
must be performed.

    Issued in Washington, DC on December 8, 2010.
Frank San Martin,
Manager, Airports Financial Assistance Division.
[FR Doc. 2010-31614 Filed 12-15-10; 8:45 am]
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