[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: 94-26926]
[[Page Unknown]]
[Federal Register: October 31, 1994]
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DEPARTMENT OF TRANSPORTATION
Policy Regarding Revision of Selection Criteria for Discretionary
Airport Improvement Program Grant Awards
AGENCY: Federal Aviation Administration; Department of Transportation.
ACTION: Notice of policy.
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SUMMARY: The Federal Aviation Administration (FAA) is revising the
process used to evaluate applications for Airport Improvement Program
(AIP) grants awarded at the discretion at the discretion of the
Secretary of Transportation. The new process represents an evolution of
past practice. Airport safety and security projects will continue to be
accorded the highest priority in AIP investments. They will be followed
in order of priority by projects to preserve existing airport
infrastructure; bring airports into compliance with standards
(including noise mitigation); upgrade service; and increase airport
system capacity. The changes described below are intended to assure
uniform levels of airport system safety, quality, and performance for
passengers, shippers, and aircraft operators throughout the Nation and
to improve the effectiveness of AIP investments in meeting critical
needs of the national airport system.
Changes in the AIP grant award selection process are based on
Executive Order 12893, ``Principles for Federal Infrastructure
Investments,'' and guidance provided in Congressional hearings
regarding the use of national priority and economic analysis in
evaluating Federal investment in airport infrastructure. Revised
procedures involve: establishment of national airport investment
objectives; consistent ranking of grant applications among FAA regions
by type of project; use of national threshold Priority System scores
for award consideration; and application of benefit-cost analysis to
any project intended to preserve or enhance capacity for which the
total value of requested discretionary capacity grants is expected to
equal or exceed $10 million over the life of the project. All
procedural changes are consistent with existing statutory requirements
for program administration and will be incorporated into FAA Order
5100.38A, ``Airport Improvement Program (AIP) Handbook.'' Applications
of the procedures will be described by the FAA each year in its
``Annual Report of Accomplishments Under the Airport Improvement
Program.'' The new criteria described in this policy apply to all new
projects to be considered for AIP grant awards in FY 1995 and
subsequent years. On a case-by-case basis, the FAA may apply the new
criteria to ongoing projects approved for AIP grant awards in prior
years.
In addition to improvements in the discretionary AIP grant award
selection process described herein, the effectiveness of Federal AIP
investments will also be reinforced by implementation of a new policy
on the issuance of Letters of Intent (LOI's). The FAA recognizes that,
as experience is gained by using these procedures, additional
improvements may be needed in the criteria used to evaluate
applications for discretionary AIP grants.
FOR FURTHER INFORMATION CONTACT: John Rodgers, Director, Office of
Aviation Policy, Plans, and Management Analysis, Federal Aviation
Administration, 800 Independence Avenue, S.W., Washington, DC 20591,
(202) 267-3274; Paul Galis, Director, Office of Airport Planning and
Programming, Federal Aviation Administration, 800 Independence Avenue,
S.W., Washington, DC 20591, (202) 267-8775.
SUPPLEMENTARY INFORMATION: The Secretary of Transportation and the
Administrator of the FAA are charged with promoting and maintaining a
national aviation system that operates safely and efficiently. The
Federal Government pursues this objective in part by investing Federal
funds, via AIP grants-in-aid, in modern airport facilities sufficient
to handle current and future air traffic and by facilitating local
investment in such facilities.
The AIP was first authorized by the Airport and Airway Improvement
Act of 1982 (the AAIA). On July 5, 1994, the President signed Public
Law 103-272, Codification of Certain U.S. Transportation Laws as Title
49, United States Code (the Codification), which now contains the
statutory authority for the AIP (the AIAA was repealed by enactment of
the Codification). The Codification provides guidance for the award of
grants-in-aid by formula and by discretionary authority granted the
Secretary. Section 47115 of the Codification authorizes the Secretary
to make AIP discretionary funds available in a manner that the
Secretary considers most appropriate for carrying out the purposes of
chapter 471, subchapter 1, of the Codification (i.e., Airport
Improvement). Section 47115(d) specifies that in selecting projects for
discretionary grants to preserve and enhance capacity at airports,
``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.''
The FAA implemented guidance for administering the AIP in its Order
5100.38A, ``Airport Improvement Program (AIP) Handbook'' (October 24,
1989). Order 5100.38A defines a structured local airport planning
process from which projects are identified and entered into the
National Plan of Integrated Airport Systems (NPIAS). The NPIAS is the
national airport system plan (submitted to Congress on a biennial
basis) that identifies potential public-use airport development
projects in the United States which are eligible for AIP assistance.
The FAA uses a ranking process, titled the Priority System, to award
discretionary grants to sponsors of eligible NPIAS projects for which
AIP monies are sought. The Priority System assigns numerical values to
airport projects based on the type of project and the size and role of
the airport. Grants-in-aid are awarded to high priority projects,
subject to funding availability (established in annual obligation
limitations and program authorizations) and consideration of sponsor
financial commitment.
The process defined in Order 5100.38A has been used successfully to
evaluate several thousand AIP grant requests each year and annually
award as many as 1,500 grants-in-aid. Most of these grants-in-aid are
for amounts of less than one million dollars. However, recent
developments have led the FAA to revise the existing award process.
These developments include: the need to improve the effectiveness of
Federal airport infrastructure investments in light of an expected lack
of growth in Federal AIP budgets; issuance of Executive Order 12893,
``Principles for Federal Infrastructure Investments'' (January 26,
1994); and guidance from Congress citing the need for economic airport
investment criteria.
After steady growth in the late 1980's and early 1990's, Federal
AIP budgets are projected to remain at or near current levels for the
next several years. At the same time, the cost and number of major
airport capacity projects is expected to increase significantly to
accommodate forecast growth in the volume of aircraft operations.
Effective Federal investment of discretionary AIP funds will become
increasingly important.
Executive Order 12893 is intended to promote more effective
infrastructure investments. The Order instructs agencies to conduct
systematic economic analysis of these investments. The Order permits
consideration of market and non-market benefits and costs in the
economic analysis. In addition, it directs that benefits and costs be
quantified and monetized to the maximum extent practicable and
appropriately discounted over the full life-cycle of each project.
In May 1993, the House Appropriations Subcommittee on
Transportation released a report identifying investment criteria that
the subcommittee believes should be established for evaluating the
merits of infrastructure investments in transportation. The report
recommended analysis of project life-cycle costs and benefits. One set
of criteria was formulated for each transportation mode, including air
transportation. Similarly, the General Accounting Office (GAO) has
testified to Congress that the FAA needs to better target AIP funds to
the needs of the system.
To improve the effectiveness of AIP investment decisions, the FAA
will immediately implement a number of revisions to the project
selection criteria identified in Order 5100.38A. These changes are
limited to the evaluation of applications for discretionary AIP grants.
They are designed to strengthen those features of the current award
process that enable the prompt and fair evaluation of large numbers of
grant applications, but at the same time permit the FAA to establish
investment priorities and conduct economic evaluations of projects that
require disproportionately large amounts of discretionary capacity
funds. The new criteria described in this policy apply to all new
projects to be considered for AIP grant awards in FY 1995 and
subsequent years. On a case-by-case basis, the FAA may apply the new
criteria to ongoing projects approved for AIP grant awards in prior
years.
Several of the changes that the FAA is implementing are
administrative, designed to ensure accountable and consistent
applications of the Priority System to all competing airport project
proposals. The FAA will establish specific national performance goals
at the beginning of each fiscal year. In FY 1995, the goals relate to
five factors of the airport system: safety; security; infrastructure
preservation; capacity; and environmental compatibility. Performance
targets with regard to capacity-enhancing development at congested
airports, good pavement conditions at airports, and relocation or
insulation of homes and public buildings currently located in 75 DNL
noise zones are now under development. Specific time frames for
accomplishing these and other goals will be established in conjunction
with an evaluation of the current airport system now being conducted.
Establishment of specific numerical goals ensures that essential
improvements are being implemented in a systematic and measurable
manner.
Under new guidance, AIP-eligible projects in all FAA regions must
be consistently ranked according to the Priority System and must meet
national threshold scores to be considered for AIP discretionary
funding. These threshold scores will be determined by comparing the
value of total grant applications to the amount of money available for
discretionary grants at the national level (based on annual obligation
limitations and program authorization requirements). These reforms will
assure uniform levels of airport system safety, quality, and
performance for passengers, shippers, and aircraft operators throughout
the Nation.
The FAA will strengthen its selection criteria by the application
of benefit-cost analysis (BCA) to projects intended to preserve or
enhance capacity for which sponsors are seeking large amounts of AIP
discretionary funds. Included would be projects to add new capacity or
reconstruct existing capacity. Grant award will be contingent on
demonstrating that a project's benefits will exceed its costs.
Initially, FAA staff will conduct the BCA to ensure the consistent
application of BCA methodologies among different projects. Until
further notice, application of BCA will be limited to those capacity
projects for which the total value of requested discretionary capacity
grants is expected to equal or exceed $10 million over the life of the
project. This limit assures that costs likely to be incurred in
preparing a BCA are reasonable with respect to the value of the
application(s) being evaluated. The $10 million threshold is also the
same value at which the FAA must notify Congress prior to the issuance
of LOI awards.
The FAA will amend Order 5100.38A to incorporate the criteria
described in this notice of policy. The FAA will also publish summary
information about the application of the grant selection process in its
``Annual Report of Accomplishments Under the Airport Improvement
Program.'' This report will help to keep interested parties informed of
the FAA's progress in implementing the reforms described in this policy
statement.
The FAA is committed to continuous improvement of its selection
criteria. As the FAA gains experience with applying national priorities
and BCA to airport projects, it will consider additional refinements of
its selection criteria. These refinements may include: adjustment of
the $10 million threshold value for BCA (perhaps establishing different
thresholds dependent on type of project or airport size); application
of BCA to discretionary projects other than capacity projects;
publication of detailed guidance on appropriate BCA methodologies; and
assignment of some or all BCA responsibilities to project sponsors
(subject to FAA review).
The FAA's effort to improve the effectiveness of its investments in
the airport system will be reinforced by a new policy in which the FAA
will apply BCA to LOI applications. The FAA will also estimate
anticipated aggregate benefits and costs of AIP authorization requests
beginning with FY 1996.
The FAA will be responsive to concerns of Congress, State and local
governments, airlines, airports, interest groups, and the public as it
improves its selection criteria. To facilitate interaction with these
groups, the FAA has initiated an outreach process to solicit advice
from interested parties and experts in airport investment. At the FAA's
request, the Research, Engineering, and Development Advisory Committee
established a working group on selection criteria. The working group
produced a report which was made available to the FAA in early 1994 and
which influenced the development of this policy. Future outreach
activities will include a conference under the auspices of the
Transportation Research Board (scheduled for October 27, 1994);
informal meetings between the FAA and interested parties; and
systematic assessment of comments received by the FAA in the course of
its administration of the revised selection process.
Policy Regarding Revision of Selection Criteria for Discretionary
Airport Improvement Program Grant Awards
Introduction
The process by which the FAA selects airport projects for Federal
funding is defined in Order 5100.38A, ``Airport Improvement Program
(AIP) Handbook.'' The following developments have contributed to the
need to revise this process with respect to grants awarded at the
discretion of the Secretary of Transportation: the need to improve the
effectiveness of Federal airport infrastructure investments in light of
an expected lack of growth in Federal AIP budgets; issuance of
Executive Order 12893, ``Principles for Federal Infrastructure
Investments'' (January 26, 1994); and guidance from Congress citing the
need for economic investment criteria.
The following selection criteria for discretionary AIP grant awards
comply with statutory requirements. They retain the basic processes of
FAA Order 5100.38A while implementing new requirements designed to
improve performance and effectiveness. The new criteria described in
this policy apply to all new projects to be considered for AIP grant
awards in FY 1995 and subsequent years. On a case-by-case basis, the
FAA may apply the new criteria to ongoing projects approved for AIP
grant awards in prior years. As appropriate, the FAA will make
additional adjustments to the selection process.
Preliminary Project Selection Screen
1. Projects must conform to several basic eligibility requirements
before they will be considered for AIP funding.
1.1 A sponsor of a public use airport is eligible to apply for AIP
grants if the airport meets at least one of the criteria for inclusion
in the National Plan of Integrated Airport systems (NPIAS). These
criteria are specified in Order 5090.3B, ``Field Formulation of the
National Plan of Integrated Airport Systems (NPIAS)'' (September 9,
1985), and are summarized as follows:
1.1.1 The airport enplanes (or is forecast to enplane within 10
years) 2,500 or more revenue passengers per year and receives scheduled
passenger service;
1.1.2 The airport handles at least 25,000 itinerant operations, or
35,000 local operations, of general aviation aircraft per year and
relieves a congested airport with at least 250,000 annual enplaned
passengers;
1.1.3 The airport has (or is forecast to have within 5 years) at
least 10 based aircraft, is publicly owned, and is located 30 minutes
or more (average ground travel time) from the nearest alternative
airport eligible for AIP funds (special conditions apply to heliports);
1.1.4 The airport serves as a scheduled mail stop of an air
carrier transporting mail pursuant to a contract with the U.S. Postal
Service;
1.1.5 The airport serves as a permanent base for the Air National
Guard or a reserve component of the U.S. Armed Forces; or
1.1.6 The airport meets a significant national interest
(established by special written justification or by a benefit-cost
analysis).
1.2 Airport sponsors must also satisfy statutory and
administrative application and grant condition requirements, including
environmental review, public hearings where applicable, airport layout
plan and airspace approval, and financial capability. Proposed airport
projects should be supported by comprehensive master planning studies.
A full exposition of these and other requirements is provided in
Chapter 3, ``Project Eligibility, Allowable Costs, and Donations,'' of
Order 5100.38A.
1.3 Airports meeting the above criteria are eligible and their
sponsors may apply for AIP discretionary grants. AIP funds apportioned
to sponsors by formula in accordance with statutory criteria will be
granted for eligible work.
Prioritization of Projects Seeking Discretionary Grants
2. Projects meeting the eligibility requirements in section 1 above
are ranked for funding priority.
2.1 FAA regional offices rank all grant applications according to
the Priority System defined in Chapter 3 or Order 5100.38A. Projects
are scored and ranked in the Priority System based on type of project
and airport size (lowest overall scores have highest priority).
Development project types include (in descending order of priority):
Special Programs (safety and security items required by regulation or
congressional mandate); reconstruction (infrastructure preservation);
standards (including noise mitigation); upgrade; new capacity; and new
airport construction. Airport size classes include (in descending order
of priority): primary airports and relievers in large and medium hubs;
primary airports and relievers outside of large and medium hubs;
commercial service airports other than primary airports; and
noncommercial airports. Priority System scores by project type and
airport role and size are shown in Figure 1.
2.2 On an annual basis, the FAA will establish performance goals
for the AIP. In FY 1995, goals will be related to five factors of the
airport system: Safety; security; infrastructure preservation;
capacity; and environmental compatibility.
2.3 The FAA will ensure consistent application of current and
future selection criteria at the regional FAA office level.
2.4 FAA headquarters will use threshold Priority System scores to
ensure that only the highest priority projects from a national
perspective are funded.
Figure 1--Priority System Matrix
Primary in large Primary outside
or medium hub large or medium Commercial
and its hub and its service other Noncommercial
relievers or relievers or than primary or less than 20
noncommercial noncommercial 50- noncommercial 20- based aircraft
100 or more 100 based 50 based or less than
based aircraft aircraft or 20- aircraft or 8- 8,000 itinerant
or 40,000 or 40,000 itinerant 20,000 itinerant operations
more itinerant operations operations
operations
(W) (X) (Y) (Z)
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Planning Categories:
Initial Study for Existing Airport.. 1 2 3 4
Study for New Airport............... 1 2 3 4
Complete/Continue Phased Projects... 1 2 3 3
Periodic Update..................... 2 3 4 4
Supplemental Grant for Ongoing Study 2 2 2 2
Development Categories:
Special Programs (e.g., Safety)..... 1 1 1 1
Reconstruction...................... 2 2 3 7
Standards (includes Noise
Mitigation)........................ 2 3 4 9
Upgrade............................. 3 4 5 10
New Capacity........................ 3 4 5 12
New Airport Capacity................ 3 5 7 12
New Airport Community............... 5 6 7 12
Add-on Factors (No Add-on Factors for Special Programs):
+1=Primary landing surface and associated taxiway, approaches.
+2=Aprons, secondary landing surface and associated taxiway, approaches.
+3=Fundamental configuration or for noise compatibility in DNL 75 dB.
+4=CFR maintenance facilities, electronic navaids, AWOS, snow removal equipment/storage buildings.
+5=Primary access roads, noise compatibility (DNL 65-74), terminal buildings.
+6=Snow abrasive/chemical storage buildings.
+7=Other (such as service roads, secondary access roads, noise compatibility projects outside DNL 65 dB,
fencing, etc.).
Note: The Priority System conforms to the following hierarchy of general goals:
(1) Support airport safety and security;
(2) Carry out statutory policy and regulatory direction;
(3) Encourage airport/planning agencies to plan for improvements;
(4) Preserve existing infrastructure;
(5) Bring airports into compliance with FAA design criteria; and
(6) Add new capacity.
Benefit-Cost Analysis of Discretionary Capacity Projects
3. To ensure that AIP monies are invested wisely, the FAA will
apply benefit-cost analysis (BCA) to eligible high priority projects
intended to preserve or enhance capacity for which the total value of
requested discretionary capacity grants is expected to equal or exceed
$10 million over the life of the project. Included would be projects to
add new capacity or reconstruct existing capacity.
3.1 For each such project at or above the $10 million threshold,
the FAA will simulate traffic flow at the existing airport to determine
the hours of annual flight delay that would be prevented by the
capacity project in question. Most reductions in delay attributable to
capacity projects can be measured at the project airport level.
3.2 The FAA may utilize assessments of broader system delay
reduction when investments at an airport are intended to relieve
congestion at neighboring airports or when there is the likelihood that
capacity improvements at a project airport will contribute
significantly to delay reductions elsewhere in the regional or national
system. The FAA will continue to improve its modeling procedures and
capabilities to capture more fully the effects of projects on the
national air transportation system.
3.3 Capacity benefits expected to result from the proposed project
will be quantified using methodology developed for the FAA's Airport
Capacity Design Team studies. Annual delay savings will be modeled for
three airport activity levels: current operations levels; intermediate-
term operations levels (5 to 10 years out); and long-term operations
levels (10 to 20 years out). Delay savings will be measured in hours
and converted to monetary terms using aircraft operating costs and the
value of air passenger time. Benefits for years in which activity
levels fall between these three reference levels will be estimated
through interpolation. Data on future activity levels will be taken
from the FAA Terminal Area Forecast or an FAA-approved forecast in the
Airport Master Plan or Draft/Final Environmental Impact Statement
(whichever is most recent).
3.4 The FAA will collect data specific to airport/terminal
airspace. Required data will include (but will not be limited to): the
approved Airport Layout Plan; type of aircraft operations; fleet mix;
peak-hour airfield mix by class; runway occupancy times; percentages of
aircraft exiting at each taxiway; noise, obstruction, terrain,
departure, and arrival constraints; air traffic arrival and departure
streams; minimum vectoring altitudes; aircraft separation by aircraft
type; length of and approach speeds on common approaches by aircraft
type and weather; converging and/or parallel runway arrival and
departure dependencies; and the different runway use configurations in
the various wind and weather conditions.
3.5 The FAA will consider project capacity and operational
efficiency benefits other than delay reduction. Benefits that cannot be
quantified will be considered in a qualitative sense. In the future,
the FAA may broaden the scope of its capacity benefit measure to
include value of producer and consumer surplus (or another measure of
benefits). Adoption of new measures of capacity benefits will depend on
development of methodologies for accurately quantifying these benefits.
3.6 The FAA will measure total costs of project panning,
construction, land acquisition, and operations and maintenance over a
20 year project life. Where appropriate, the FAA will include costs to
airlines and the public due to operating delays caused by construction
of the project and any costs to the community stemming from
environmental impacts resulting from the project.
3.7 Project benefits and costs will be compared using standard
discounted cash flow techniques as enunciated by the Office of
Management and Budget in Circular No. A-94, ``Guidelines and Discount
Rates for Benefit-Cost Analysis of Federal Programs.'' Circular No. A-
94 currently mandates a discount rate of 7 percent in real terms.
3.8 On an annual basis, the FAA will re-evaluate the threshold
value for total discretionary capacity grants at or above which a
capacity project must subjected to BCA. Greater experience and improved
modeling capabilities may allow the threshold to be reduced to capture
a greater number of discretionary capacity projects. Different
thresholds could be established for airport size categories identified
in the Priority System.
3.9 In the future, the FAA will look to expand the application to
BCA to non-capacity projects funded through discretionary funds. The
FAA will consider the publication of detailed guidance on appropriate
BCA methodologies and the assignment of some or all BCA
responsibilities to project sponsors (subject to FAA review).
Implementation of Selection Criteria
4. The FAA will publish materials describing the implementation of
the revised selection criteria.
4.1 By December 1995, the FAA will issue an amended Order 5100.38A
that will incorporate the selection criteria described in this notice
of policy.
4.2 The FAA will incorporate information describing its AIP grant
award decisions into its ``Annual Report of Accomplishments Under the
Airport Improvement Program.'' The report will explain the application
of project selection criteria. The first annual report including
project selection information will be published by April 1, 1995.
Other AIP Selection Criteria Initiatives
5. The FAA's effort to improve the effectiveness of its investments
in the airport system will be reinforced by other agency initiatives.
5.1 Concurrently with the issuance of this notice, the FAA is
issuing a new policy on Letters of Intent (LOI) which will become
effective in FY 1995. Under this new policy: LOI's will be limited to
airside development projects which significantly enhance systemwide
airport capacity; BCA will be applied to all LOI's; and the FAA will
consider the financial commitment of the project sponsor to the project
to be financed by the LOI.
5.2 Consistent with Executive Order 12893, ``Principles for
Federal Infrastructure Investments,'' the FAA will estimate anticipated
aggregate benefits and costs of AIP authorization requests beginning
with FY 1996.
Outreach Program
6. The FAA has established an outreach program to solicit advice
from Congress, State and local governments, airports, airlines,
interest groups, and the public on how to improve AIP selection
criteria.
6.1 The FAA will arrange for the Transportation Research Board to
host an industry/academia/government symposium to solicit comments on
the FAA's AIP project selection process and the use of BCA. The
symposium will take place in Washington, DC, on October 27, 1994. A
summary of the symposium proceedings will be available to interested
parties upon request to the individuals named under the heading ``For
Further Information Contact:''.
6.2 The FAA will host informal meetings as requested with
interested parties on the application of the new selection criteria to
airport projects.
6.3 The FAA will conduct a systematic assessment of and be
responsive to comments it receives in the course of its administration
of the revised selection process.
Issued in Washington, DC on October 26, 1994.
Cynthia D. Rich,
Assistant Administrator for Airports.
[FR Doc. 94-26926 Filed 10-26-94; 2:23 pm]
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