[Federal Register Volume 59, Number 209 (Monday, October 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26925]
[[Page Unknown]]
[Federal Register: October 31, 1994]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
[Docket No. 27955]
Policy for Letter of Intent Approvals Under the Airport
Improvement Program
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of policy; request for comments.
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SUMMARY: The FAA is clarifying its policies on reviewing and analyzing
requests for Letters of Intent (LOIs) under the Airport Improvement
Program (AIP) or successor programs. The FAA will consider three
factors in reviewing requests for LOIs: the project's effect on overall
national air transportation system capacity; project benefit and cost;
and the airport sponsor's financial commitment, including project
timing. The FAA also solicits comments on the new policy. Following
review of the comments, the FAA may revise this policy.
DATES: The comment closing date is November 30, 1994.
ADDRESSES: Comments may be mailed or delivered in duplicate to: Federal
Aviation Administration, Office of Airport Planning and Programming,
Attn: Mr. Stan Lou (APP-520), room 614, 800 Independence Avenue, SW,
Washington, DC 20591. Comments must be marked: Policy for Letter of
Intent Approvals Under Airport Improvement Program.
FOR FURTHER INFORMATION: Contact Stan Lou, FAA, Programming Branch,
APP-520, room 614, 800 Independence Avenue, SW, Washington, DC 20591,
telephone (202) 267-8809.
SUPPLEMENTARY INFORMATION:
Request for Comments
Comments are invited on this notice of policy and all
communications received on or before the closing date for comments will
be considered by the FAA. FAA may subsequently issue a change to this
policy after considering the comments.
Background
In 1987, legislation was enacted authorizing the issuance of LOI's.
The Codification of Certain U.S. Transportation Laws as Title 49,
United States Code, Public Law No. 103-272, (July 5, 1994), section
47110(e)(2)(C) states:
The provisions of this subsection applies to a project the
Secretary decides will enhance system-wide airport capacity
significantly and meets the criteria of section 47115(d) of this title.
Section 47115(d) states:
In selecting a project for a grant to preserve and enhance capacity
as described in subsection (c)(1) of this section, the Secretary shall
consider--(1) the effect the project will have on the overall national
air transportation system capacity; (2) the project benefit and cost;
and (3) the financial commitment from non-United States Government
sources to preserve or enhance airport capacity.
General
The FAA is authorized to issue an LOI for certain airport
development projects when current obligating authority is not timely or
adequate to meet a sponsor's desired timing for a project. Under this
provision, a sponsor may notify the FAA of an intention to carry out a
project without Federal funds and request that the FAA issue an LOI.
The FAA evaluates the proposal and, if approved, issues a letter
stating that reimbursement will be made according to a given schedule,
as funds become available. A sponsor who has received an LOI,
therefore, may proceed with a project without waiting for an AIP grant,
is assured that all allowable costs related to the approved project
remain eligible for reimbursement, and may receive more favorable
financing to pay related costs on the basis of announced Federal
support for the project.
Discussion
Since FY 1987, the FAA has issued 48 LOI's (43 at primary airports
and 5 at reliever airports). The total payments contemplated in these
LOI's total nearly $2 billion ($1.5 billion of discretionary and $0.5
billion of entitlements). Of this, $0.9 billion has been granted to
airports. The balance of $1.1 billion would be granted to airports
through the year 2005. These LOIs include $0.8 billion discretionary
and $0.3 billion entitlements. The following chart summarizes this
information.
LOI Payment Schedule
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Entitlement Discretionary Total
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(2) FY 1988-1994
Primary....................................... $244,630,376 $549,608,584 $794,238,960
Reliever...................................... 173,053 88,540,096 88,713,149
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Subtotal................................ 244,803,429 638,148,680 882,952,109
(2) FY 1994-2005
Primary....................................... 277,208,862 719,185,089 996,393,951
Reliever...................................... 0 112,000,000 112,000,000
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Subtotal................................ 277,208,862 831,185,089 1,108,393,951
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Total................................. 522,012,291 1,469,333,769 1,991,346,060
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At the beginning of each fiscal year, the FAA, in its
administration of the AIP, sets aside the amounts of discretionary
funds to ``cover'' the LOI payment schedules. For the primary airports,
the main sources of the discretionary funds are the ``capacity, safety,
security, noise (CSSN)'' set aside and the remaining discretionary. For
reliever airports, the source is the 5 percent ``reliever'' set aside.
In the first 5 years of administering the LOI component of the AIP,
the overall level of the AIP increased from $1.2687 billion in FY 1988
to $1.9 billion in FY 1992, and then decreased to $1.8 billion in FY
1993, $1.69 billion in FY 1994, and $1.45 billion in FY 1995. The
amount of CSSN and remaining discretionary likewise increased from
$205.1 million to $524.8 million in FY 1992, and decreased to $299.9
million in FY 1993 but has now stabilized at $325 million annually in
current legislation. During these years, the FAA initially established
an administrative policy that no more than 50 percent of the available
CSSN discretionary would be committed to LOI's. In FY 1992, this policy
was amended to include both CSSN and remaining discretionary. The FAA
worked closely with airport sponsors to develop work programs and LOI
payout schedules which maintained the 50 percent rule. We expect to
maintain this policy. Reliever LOI's were not routinely used as a
funding vehicle since most reliever sponsors cannot ``up front'' the
construction costs.
The convergence of growing demand and reduced availability of AIP
discretionary funds dictates a new strategy for approval of LOI's. For
the foreseeable future, the overall level of the AIP may not increase.
This is primarily the result of budgetary pressures. Secondly, the
amount of available discretionary funds has diminished from the level
available in FY 1992 to the current level of no less than $325 million
annually. Against this discretionary level, numerous airport sponsors
are requesting LOI's for many important projects. The FAA, therefore,
has developed this policy to consider competing LOI requests.
Policy--The FAA intends to consider requests for Letters of Intent
(LOI) under the Airport Improvement Program (AIP) (or successor
programs) at primary or reliever airports only for airside development
projects with significant capacity benefits. This focus is intended to
maximize the systemwide impact of capacity projects, especially given
the limited amounts of funds available for LOI projects. The FAA will
use this policy in considering all future LOI requests.
The FAA's decision to approve an LOI will be made based primarily
on a benefit-cost analysis. This analysis will consider local and
systemwide benefits in terms of annual aircraft delay savings, measured
as the avoided costs of operating delayed aircraft and the value of
passenger time associated with avoided delays. In addition, the net
value to airlines, the airport, and the public from additional air
transportation service will be considered. Project costs will be
apportioned among Federal AIP discretionary funds, Federal AIP
entitlement funds, and nonfederal funds. Financially sound projects
will be selected for LOI approval in a manner that leverages Federal
AIP discretionary funds to the maximum extent feasible, consistent with
rational investment decisionmaking.
The best candidates for approval will be those projects for a new
airport, new runway, or major runway extension at cities or
metropolitan areas where the primary airport exceeds or is expected to
exceed 20,000 hours of annual air carrier delay. Apron development in
support of terminal work is considered airside development. Federal
environmental findings must be complete and the project work must be
imminent.
Starting in fiscal year (FY) 1995, applications for LOI's are to be
submitted to the local FAA office no later than March 1 of the current
FY for FAA decisionmaking during that FY. Applications received after
March 1 may not be decided upon until the following FY.
This policy does not apply to outstanding LOI's already issued to
airport sponsors. The FAA will apply this policy to all other LOI
requests.
FAA Review of LOI Requests
The FAA will consider each proposed project in accordance with the
following selection criteria. Each of the following three items will be
reviewed for an LOI request.
1. Project Effect on Overall National Air Transportation System
Capacity
The FAA will analyze the project(s) effect on overall national air
transportation system capacity in accordance with agency methodology
and modeling capabilities. To do this, FAA will analyze the airport for
which the LOI is requested and estimate the current hours of annual
flight delay. The FAA will then determine the systemwide impact of the
project(s) in terms of reduced annual aircraft and passenger delays at
current and future airport activity levels. The FAA may request
information from sources at the airport or may visit the site to
collect data needed to model the proposed airport improvement. The FAA
will also review any capacity analysis conducted by the airport and
submitted with the application.
The data requirements will be airport/terminal airspace specific
and will be collected by the FAA. The data required will include, but
are not limited to: The approved airport layout plan; type of
operations; fleet mix; peak hour airfield mix by class; runway
occupancy times; taxiway exit percentages; noise, obstruction, terrain,
aircraft departure, and aircraft arrival constraints; air traffic
arrival and departure streams; minimum vectoring altitudes; aircraft
separation by aircraft type; length of and approach speeds on common
approach by aircraft type and weather; converging and/or parallel
runway dependencies; aircraft arrival and departure dependencies; and
the different runway use configurations in the various wind and weather
conditions. The data available or to be collected are very similar to
those data assembled for FAA Airport Capacity Task Force and Capacity
Design Teams studies.
Many of the proposed capacity improvements have already been
modeled and calibrated during FAA Airport Capacity Design Team studies
and would only require updating. The updating would include any new
national air traffic approach procedures, separation standards, and
capacity initiatives implemented by the specific airport traffic
control tower or airport authority.
2. Project Benefit and Cost
Analysis will involve a detailed review of future benefits and
costs for each year of the project's expected life, discounted to
present value at an appropriate discount rate. The FAA will measure
benefits in terms of annual cost savings attributable to reduced
delays, to be measured as the avoided costs of operating delayed
aircraft (e.g., fuel and oil, crew, and maintenance savings) and the
monetary value of saved passenger time. In addition, the net value to
airlines, the airport, and the public from additional air
transportation service made possible by the capacity project will be
considered. Costs will be estimated for planning, construction,
operation, and maintenance of the project, and will be apportioned
according to origin of funding--Federal AIP discretionary funds,
Federal AIP entitlement funds, and nonfederal funds.
To be eligible for further consideration, the proposed project must
have present value benefits that exceed present value costs and must
have appropriate sponsor financial commitment (see section 3 below).
The FAA will select among eligible projects with the object that
Federal AIP discretionary funds will attract funding from other sources
to the maximum extent feasible, consistent with rational investment
decisionmaking. To accomplish this objective, the FAA will consider
various measures of project financial viability (e.g., net present
values, benefit-cost ratios, and rates of return) relative to the
amount of Federal AIP discretionary funds requested. Eligible projects
to be funded entirely with Federal AIP entitlement funds will be
approved for LOI's if FAA concludes that entitlement funds will be
available.
3. Financial Commitment, Including Project Timing
The FAA will determine the airport sponsor's financial commitment
in terms of the airport capital improvement plan and associated
financial plan over the lesser of the life of the LOI of 5 years. The
plan should include by FY a list of the projects to be implemented,
both LOI and non-LOI; and, for each project, the total project cost
with a cost breakdown by source of funds (AIP entitlement, AIP
discretionary, passenger facility charges (PFC), sponsor, State, and
other, including available cash reserve accounts). The amount of funds
to be obtained through selling bonds should also be indicated along
with the bond rating, if available, and status of issuance.
In making its determination, the FAA will consider the sponsor's
commitment of entitlement funds to the proposed project or to higher
priority projects, whether PFC's are being applied, the contribution of
nonfederal funding sources, diversion of airport revenue off the
airport, and whether the sponsor plans to proceed with the project in
accordance with all applicable statutory and administrative
requirements, with the LOI payments to be used as reimbursements for
advance expenditures.
Issued in Washington, D.C. on October 26, 1994.
Cynthia Rich,
Assistant Administrator for Airports.
[FR Doc. 94-26925 Filed 10-26-94; 2:23 pm]
BILLING CODE 4910-13-M
