[Federal Register Volume 59, Number 196 (Wednesday, October 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25310]
[[Page Unknown]]
[Federal Register: October 12, 1994]
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Part VIII
Department of Transportation
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Federal Aviation Administration
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Proposed Policy Regarding Airport Rates and Charges; Notice
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
[Docket No. 27782]
Proposed Policy Regarding Airport Rates and Charges
AGENCY: Department of Transportation (DOT), Federal Aviation
Administration (FAA).
ACTION: Supplemental notice of proposed policy, extension of comment
period.
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SUMMARY: This document announces modifications to a recent Notice of
Proposed Policy Regarding Airport Rates and Charges. The modifications
are intended to reflect statutory provisions governing airport rates
and charges included in the Federal Aviation Administration
Authorization Act of 1994, Public Law 103-305 (August 23, 1994). The
DOT/FAA previously extended the comment period on the notice until
October 15, 1994. The comment period is being extended until 14 days
after publication of this supplemental notice in the Federal Register.
DATES: Comments must be received by October 26, 1994.
ADDRESSES: Comments should be mailed, in quadruplicate, to: Federal
Aviation Administration, Office of Chief Counsel, Attention: Rules
Docket (AGC-10), Docket No. 27782, 800 Independence Avenue, SW.,
Washington, DC 20591. All comments must be marked: ``Docket No.
27782.'' Commenters wishing the FAA to acknowledge receipt of their
comments must include a preaddressed, stamped postcard on which the
following statement is made; ``Comments to Docket No. 27782.'' The
postcard will be date stamped and mailed to the commenter.
Comments on this Notice may be examined in room 915G on weekdays,
except on Federal holidays, between 8:30 a.m. and 5 p.m.
FOR FURTHER INFORMATION CONTACT: John Rodgers, Director, Office of
Aviation Policy, Plans and Management Analysis, Federal Aviation
Administration, 800 Independence Ave. SW., Washington, DC 20591,
telephone (202) 267-3274; Mr. Barry Molar, Manager, Airports Law
Branch, Office of the Chief Counsel, Federal Aviation Administration,
800 Independence Avenue, SW., Washington, DC 20591, telephone (202)
267-3473.
SUPPLEMENTARY INFORMATION: On June 9, 1994, the Office of the Secretary
of Transportation (OST) and the FAA issued two related notices on the
subject of Federal policy on airport rates and charges. A notice of
proposed policy entitled ``Proposed Policy Regarding Airport Rates and
Charges,'' listed and explained the principles that the OST and the FAA
believes define Federal policy on the rates and fees that an airport
proprietor can charge to aeronautical users of the airport. Docket No.
27782 (59 FR 29874, June 9, 1994). Notice 94-18, a notice of proposed
rulemaking entitled ``Rules of Practice for Federally Assisted
Airports,'' proposed detailed procedures for the filing, investigation,
and adjudication of complaints against airports for alleged violation
of Federal requirements involving rates and charges and other airport-
related requirements (59 FR 29880, June 9, 1994).
The FAA Authorization Act of 1994, Public Law 103-305 (1994
Authorization Act) was signed into law on August 23, 1994. The 1994
Authorization Act includes provisions that specifically address airport
rates and charges. This supplemental notice is intended to assure that
the proposed policy statement reflects relevant provisions of the 1994
Authorization Act.
Summary of Proposed Policy Statement
The proposed policy statement includes five principles with
supporting guidance for each. In brief, the first principle would
establish the continued reliance on direct local negotiation between
airports and aeronautical users. DOT/FAA would be available to resolve
the issues raised in a dispute when the airport and aeronautical users
are unable to resolve disputes directly.
The second principle would restate the legal requirement that
rates, fees and charges to aeronautical users must be fair and
reasonable, with more detailed guidance on the practices and
restrictions that define ``fair and reasonable.'' Among other things,
the DOT/FAA proposed to provide airport proprietors with some
flexibility to deviate from the proposed policy guidance based on
agreement with aeronautical users. In addition, the proposed policy
statement would recognize the legitimacy of either the compensatory or
residual pricing approach and of combinations of both. DOT/FAA did not
propose to establish standards for rates and charges for
nonaeronautical users (nonaeronautical rates and charges) nor to limit
the amount of revenues generated by nonaeronautical rates and charges.
The third principle would restate the legal prohibition on unjustly
discriminatory rates and charges.
The fourth principle would restate the legal obligation of the
airport sponsor to maintain a fee and rental structure that makes the
airport as self-sustaining as possible. Supplemental guidance
encouraged the sponsor of an airport that is not currently self-
sustaining to establish long-term goal and targets to make the airport
financially self-sustaining.
The fifth principle would restate legal requirements for the
application and use of airport revenues. Supplemental guidance would
advise that airport revenue generated by nonaeronautical sources is
subject to the same statutory requirements governing use as
aeronautical revenue. In addition, supplemental guidance would provide
that progressive accumulation of substantial amounts of airport
revenues may warrant an FAA inquiry into the airport proprietor's
application of revenues to the local airport system.
Summary of Applicable 1994 Authorization Act Provisions
Section 110 of the 1994 Authorization Act amends the statement of
policy for airport improvement, 49 U.S.C. 47101, by adding statements
``that airport fees, rates, and charges must be reasonable'' and that
``in establishing new fees, rates, and charges, and generating revenues
from all sources, airport owners and operators should not seek to
create revenue surpluses that exceed the amounts to be used for airport
system purposes and for other purposes for which airport revenues may
be spent under section 47107(b)(1) of this title, including reasonable
reserves and other funds to facilitate financing and cover
contingencies.''
Section 113 of the 1994 Authorization Act adds a new section 47129
titled ``Resolution of airport-air carrier disputes concerning airport
fees.'' Section 47129 authorizes the Secretary of Transportation
(Secretary) to issue a determination on the reasonableness of an
airport rate or fee imposed on an air carrier if the airport owner
requests a determination or if a complaint is filed by an affected air
carrier. Section 47129 further provides that a fee may be calculated
pursuant to either a compensatory or residual fee methodology or any
combination thereof, and section 47129 specifically prohibits the
Secretary from setting the level of the fee. Section 47129 further
directs the Secretary to issue within 90 days after enactment final
regulations or policy statements establishing (1) administrative
procedures for processing cases under section 47129 and (2) standards
or guidelines to be used in determining the reasonableness of a fee.
Section 112 of the Authorization Act strengthens existing
requirements for the use of airport revenues by grant-obligated airport
sponsors. Section 112 of the Authorization Act amends 49 U.S.C. 47107
by adding a new subsection ``(l).'' Among other things, subsection (l)
directs the Secretary to establish within 90 days after enactment
policies and procedures to assure prompt and effective enforcement of
subsections (a)(13) and (b) of section 47107.
Subsection 47107(a)(13) in turn requires an airport sponsor to give
written assurances that it will maintain a schedule of charges at the
airport that will make the airport as self-sustaining as possible under
the circumstances existing at the airport. Subsection 47107(b) requires
the airport sponsor to give written assurances that revenue generated
by the airport will be used for the capital and operating costs of the
obligated airport, the sponsor's local airport system or other
facilities owned or operated by the sponsor and directly and
substantially related to the air transportation of persons or property.
Certain other uses of airport revenue mandated by statutes or
assurances in debt obligations in effect before September 2, 1982 are
expressly excluded from this requirement. Uses of airport revenue not
in accordance with section 47107(b) are referred to as airport revenue
diversion.
New subsection 47107(l) further directs the Secretary to prohibit,
at a minimum, four specific practices as diversion of airport revenue.
Section 112 of the Authorization Act also amends 49 U.S.C. 47111 by
adding new sanctions for airport revenue diversion. As amended, section
47111 directs the Secretary to withhold approval of new grant
applications for funds and to withhold approval under 49 U.S.C. 40117
of any new passenger facility charge if the Secretary has found an
airport sponsor to be engaged in airport revenue diversion and the
sponsor has failed to take appropriate corrective action. In addition
section 47111 authorizes the Secretary to seek judicial enforcement of
all grant assurances made by a sponsor.
Modifications to Proposed Policy Statement
DOT/FAA are making four modifications to the proposed policy
statement in response to statutory direction. First, the proposed
supplemental guidance on the DOT/FAA role in resolving airport/
aeronautical user disputes is being modified to reflect the statutory
directive to determine the reasonableness of fees charged to air
carriers and foreign air carriers when requested by the airport or upon
complaint of a carrier, if a significant dispute exists.
Second, supplementary guidance on financial self-sufficiency is
being modified to reflect the statutory directive on this subject
contained in section 112 of the 1994 Authorization Act.
Third, the proposed supplemental guidance on the generation and use
of airport revenue is being modified to incorporate the new statutory
policy guidance added by section 110 of the 1994 Authorization Act. As
noted, section 110 provides that ``in establishing new fees, rates, and
charges, and generating revenues from all sources, airport owners and
operators should not seek to create revenue surpluses that exceed the
amounts to be used for airport system purposes. * * *.'' Section 110 is
being implemented in this way, rather than through the guidance on fair
and reasonable rates, because the DOT/FAA do not consider section 110
to require the regulation of the level of total airport revenue or to
establish a standard for reasonableness for nonaeronautical rates and
charges under the grant assurances. This conclusion is based on a
number of considerations.
First, the 1994 Authorization Act explicitly authorizes
compensatory as well as residual pricing arrangements. Under the
compensatory system, air carrier user charges are based on costs of
serving air carriers without regard to the profit or loss generated by
other users of the airport. To construe the reasonableness requirement
of the statute as creating a legally enforceable right to limit the
amount of nonaeronautical generated revenue would be inconsistent with
the express authorization of compensatory pricing.
Furthermore, Congress included the language in question as an
amendment to 49 U.S.C. 47101, which is a statement of the policy of the
United States. Congress chose not to include the provision as an
amendment to 49 U.S.C. 47107, which specifies practices that airport
proprietors must agree to as a condition for receipt of grants. In
addition, section 110 of the 1994 Authorization Act stands in marked
contrast to sections 112 and 113 of the 1994 Authorization Act, in
which Congress directed the Secretary to develop policies and
procedures to address the reasonableness of rates and charges imposed
on airlines and to define airport revenue diversion.
In particular, nowhere in the 1994 Authorization Act is the
Secretary explicitly directed to establish standards of reasonableness
for nonaeronautical rates and charges or total airport revenue. At the
time of enactment, however, the DOT/FAA had already published its
proposed policy, and that policy would not have applied to
nonaeronautical rates and charges. In these circumstances, it is
reasonable to expect that Congress would have included clear and
explicit direction to the Secretary to establish standards of
reasonableness for nonaeronautical rates and charges just as it did for
carrier rates and charges in section 112 had Congress intended to
mandate such a result.
Finally, DOT/FAA have considered the legislative history of this
provision. The Conferees described section 110 of the Authorization Act
as ``[r]eaching a middle ground on this aspect of airport finances * *
*'' H.R. Rep. 103-677 at 68 (August 5, 1994). DOT/FAA consider our
approach to be more in keeping with this view of section 110 than would
an approach that treated section 110 as mandating a cap on total
airport revenue.
Section 110 and the modifications to the proposed policy encouraged
airport proprietors not to ``seek to create revenue surpluses'' in
excess of airport needs. The DOT/FAA recognize that in any given year,
surpluses may exceed projections if traffic exceeds forecast levels or
costs are held below forecast amounts. The existence of a surplus in
any given year is not necessarily evidence that an airport proprietor
is not following this policy guidance. However, as is provided in the
proposed policy statement, the progressive accumulation of substantial
amounts of airport revenues may warrant an FAA inquiry into the airport
proprietor's application of revenues to the local airport system.
The fourth modification, new supplemental guidance on generation
and use of airport revenue, is being proposed to reflect the statutory
mandate of section 112 of the Authorization Act to define certain
practices as impermissible revenue diversion.
While DOT/FAA consider these changes to the guidance on generation
and use of airport revenue to be consistent with section 112 of the
1994 Authorization Act, they are not intended to be the sole response
to section 112. Additional policy guidance or regulations implementing
section 112 will be published.
Finally, the mandate of 1994 Authorization Act to adopt procedural
regulations is being addressed in separate rulemaking proceedings.
Accordingly, DOT/FAA revise the proposal published at 59 FR 29874
as follows:
1. Proposed paragraphs 1.2.1 and 1.2.2 are deleted and the
following paragraphs are proposed instead.
``1.2.1 In the case of rates, charges and fees imposed on one or
more air carriers or foreign air carriers, DOT will issue a
determination on the reasonableness of the rate or charge upon the
filing of a written request for a determination by the airport
proprietor or the filing of a complaint by one or more air carriers, if
DOT determines that a significant dispute exists, in accordance with 49
U.S.C. 47129, and implementing regulations.
1.2.2 In the case of rates, charges or fees imposed on other
aeronautical users, DOD/FAA will first offer its good offices to
facilitate parties' reaching a successful outcome in a timely manner.
Prompt resolution of these disputes is always desirable since extensive
delay can lead to uncertainty for the public and a hardening of the
parties' positions.
1.2.3. In the case of rates, charges or fees imposed on other
aeronautical users, where negotiations between the parties are
unsuccessful and a complaint is filed alleging that airport rates and
charges violate an airport proprietor's federal grant obligations, DOT/
FAA will, where warranted, exercise the broad statutory authority to
investigate and review the legality of those rates and charges and to
issue such determinations and take such actions as are appropriate
based on that review. DOT/FAA will remain available to assist in the
negotiated resolution of a dispute even after the filing of a
complaint.''
2. A new paragraph 4.1.1 as set forth below is added to the
proposed policy statement:
``4.1.1 Airport proprietors are encouraged, when entering into new
or revised agreements or otherwise establishing rates, charges, and
fees, to undertake reasonable efforts to make their particular airports
as self-sustaining as possible in the circumstances existing at such
airports.''
3. A new paragraph 5.2 as set forth below is added to the proposed
policy statement. The current paragraph 5.2 is renumbered as paragraph
5.2.1, and paragraph 5.3 is renumbered as paragraph 5.2.2. Paragraphs
5.4 and 5.5 are renumbered as paragraphs 5.3 and 5.4, respectively.
``5.2 In establishing new fees, rates and charges, and generating
revenues from all sources, airport owners and operators should not seek
to create revenue surpluses that exceed the amounts to be used for
airport system purposes and for other purposes for which airport
revenues may be spent under 49 U.S.C. 47107(b)(1), including reasonable
reserves and other funds to facilitate financing and cover
contingencies.''
4. A new paragraph 5.6, as set forth below, is added to the
proposed policy statement:
``5.6 Subject to the provisions of 49 U.S.C. 47107(b)(2), the DOT/
FAA consider the following practices to be impermissible uses of
airport revenue:
(a) Direct payments or indirect payments, other than payments
reflecting the value of services and facilities provided to the
airport;
(b) Use of airport revenues for general economic development,
marketing, and promotional activities unrelated to airports or airport
systems;
(c) Payments in lieu of taxes or other assessments that exceed the
value of services provided; or
(d) Payments to compensate nonsponsoring governmental bodies for
lost tax revenues exceeding stated tax rates.''
Issued in Washington, DC, on October 4, 1994.
Federico Pena,
Secretary of Transportation.
David R. Hinson,
Administrator, Federal Aviation Administration.
[FR Doc. 94-25310 Filed 10-7-94; 11:31 am]
BILLING CODE 4910-13-M
