[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Notices]
[Pages 70107-70112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32172]
[[Page 70107]]
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DEPARTMENT OF TRANSPORTATION
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)
AGENCY: Federal Aviation Administration; Department of Transportation.
ACTION: Notice of Modification of Policy; Comments and Responses, Final
Guidance.
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SUMMARY: On June 24, 1997, the FAA issued an interim policy notice
requiring airport sponsors to submit BCAs when requesting AIP grants or
LOIs to be awarded for capacity projects at the discretion of the
Secretary of Transportation. The FAA now is (1) Providing a more
precise definition of airport capacity projects, (2) Issuing the final
policy, and (3) Responding to comments requested on June 24, 1997, on
(a) Dollar thresholds for requiring BCA, (b) The interim guidance for
preparing BCAs, and (c) Preparation of FAA forecasts of operations and
enplanements.
Definition of airport capacity projects. For the purpose of this
BCA policy, airport capacity projects are those projects that (1)
Preserve an infrastructure, (2) Improve upon an existing
infrastructure, or (3) Create new infrastructure. Capacity projects
include airside projects such as runways, taxiways, and aprons but may
also include terminal buildings, ground transportation, and other
landside projects. Normally, airport capacity projects are located at
large air carrier airports where there is existing or projected
airfield capacity delay. However, there are also cases they will be
located at smaller airports. For the purpose of this BCA policy,
airport capacity projects include those projects that significantly
change the character of a runway such that the runway is capable of
being used by larger or heavier aircraft or such that approach minima
are lowered. The BCA policy also covers those projects which will
upgrade airport facilities to meet higher design standards and which
will allow new classes or aircraft to use the airport. The BCA policy
is not applicable to those projects undertaken solely for the objective
of safety, security, conformance with FAA standards, or environmental
mitigation.
Modification of Policy. The policy for AIP grants, issued on June
24, 1997, was that, for all capacity projects for which an airport
sponsor seeks $5 million or more in AIP discretionary funds, commencing
in Fiscal Year 1998, a completed BCA must accompany the grant
application. The policy for LOIs was that a BCA must be completed for
any request for a LOI to be issued in Fiscal Year 1997 and thereafter.
FAA, in the modifications of policy issued in this Federal Register
Notice, has modified the previous policy to: (1) Exempt certain
reconstruction projects, (2) Provide supporting guidance that will
assist sponsors in identifying exempt projects, and (3) Clarify the
applicability of the BCA guidance to general aviation airports.
Responses to Comments Requested on June 24, 1997. On June 24, 1997,
the FAA established a docket and invited airport sponsors and other
interested parties to comment on: (1) The dollar threshold for AIP
grants and LOIs above which a BCA must be performed, (2) The interim
BCA guidance issued on June 24, 1997, and (3) Generation of FAA
forecasts of enplanements and operations. The docket was open for one
year and closed on June 24, 1998. The comments and FAA's responses can
be found below under the heading ``Supplemental Information.'' The FAA
has modified its interim guidance based on comments received and is now
issuing its final guidance for conducting AIP BCAs.
DATE: Effective date of the modified policy is December 15, 1999
ADDRESSES: Copies of the final guidance for conducting BCAs can be
obtained from two offices in the Federal Aviation Administration, 800
Independence Avenue, SW., Washington, DC 20591. These are the Office of
Airport Planning and Programming, Airports Financial Assistance
Division (AAP-500); or the Office of Aviation Policy and Plans, Systems
and Policy Analysis Division (APO-200). An electronic copy of the
guidance will be posed on the FAA's Airport Division website at http://
www.faa.gov/arp/arphon.htm as well as the Office of Aviation Policy and
Plan's website at http://api/hq.faa.gov/apo__home.htm within 14 days of
publication of this notice.
FOR FURTHER INFORMATION CONTACT: Barry Molar, Manager, Financial
Assistance Division (APP-500), Office of Airport Planning and
Programming, Federal Aviation Administration, 800 Independence Avenue,
SW., Washington DC 20591, (202) 267-3831; or Ward Keech, Manager,
Policy and Systems Analysis Division (APO-200), Office of Aviation
Policy and Plans, Federal Aviation Administration, 800 Independence
Avenue, SW., Washington, DC 20591, (202) 267-3312.
SUPPLEMENTARY INFORMATION: The Secretary of Transportation and the
Administrator of the FAA are charged with 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.
A. Background to the Policy
AIP was first authorized in the Airport and Airway Improvement Act
of 1982 (the AAIA) and was recodified as Title 49, United States Code,
chapter 471, subchapter I, sections 47101 et seq., (Recodification), in
1994. The Recodification provides authority and direction for the award
of formula and discretionary grants-in-aid for airport improvement and
planning by the Secretary. Section 47115 of the Recodification
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 47110(e) establishes authority for the
Secretary to issue LOIs. Section 47115(d) specifies that, in selecting
projects for discretionary grants or LOIs to preserve and enhance
capacity at airports, the Secretary must consider the benefits and
costs of the projects.
The FAA revised the prior award process in 1994 to include the
preparation of a BCA for capacity projects that were expected to exceed
$10 million in AIP discretionary spending. Those analyses were
frequently prepared by FAA staff in consultation with project sponsors.
Factors leading to the requirement for BCA included: the need to
improve the effectiveness of Federal airport infrastructure investments
in light of a decline 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.
Under the 1994 criteria, the FAA required the application of BCA to
projects intended to preserve or enhance capacity for which sponsors
sought large amounts of AIP discretionary funds. Projects to add new
capacity or reconstruct existing capacity were included under the
policy. LOIs and discretionary grant awards over $10 million became
contingent on
[[Page 70108]]
demonstrating that a project's benefits exceeded its costs.
In the Federal Register, Vol. 59, No. 209, October 31, 1994, the
FAA issued two notices of policy. The first, ``Policy for Letter of
Intent Approvals Under the Airport Improvement Program'' [59 FR 54482],
clarified the FAA's policies on reviewing and analyzing requests for
LOIs under the AIP or successor programs. The notice stated that 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 to the project. The notice further stated that the project
must have present value benefits that exceed present value costs for
LOI consideration. The policy was applicable to any request for LOI
under AIP at primary or reliever airports for airside development
projects with significant capacity benefits. It was intended to
maximize the system-wide impact of capacity projects.
The other notice, ``Policy Regarding Revision of Selection Criteria
for Discretionary Airport Improvement Program Grant Awards'' [59 FR
54484], stated that a BCA would be required for any discretionary grant
application for a capacity project which was expected to equal or
exceed $10 million over the life of the project. The policy was
undertaken to implement Executive Order 12893, ``Principles for Federal
Infrastructure Investments,'' [59 FR 4233] and guidance provided in
Congressional hearings regarding the use of economic analysis in
evaluating Federal investment in airport infrastructure. The new policy
was applicable to all new projects to be considered for AIP
discretionary grant awards in FY 1995 and subsequent years.
Application of a BCA for discretionary AIP grants was limited to
those capacity projects for which the total value of requested
discretionary capacity grants was expected to equal or exceed $10
million over the life of the project. This limit was intended to assure
that costs likely to be incurred in preparing a BCA were reasonable
with respect to the value of the applications being evaluated. The $10
million threshold was also the same value at which the FAA must notify
Congress prior to the issuance of LOI awards.
In the Federal Register, Vol. 62, No. 121, June 24, 1997, the FAA
issued a notice of policy, ``Policy and Guidance Regarding Benefit Cost
Analysis for Airport Capacity Projects Requesting Discretionary Airport
Improvement Program Grant Awards and Letters of Intent'' (62 FR 34108).
This policy lowered the dollar threshold requirement to $5 million for
AIP discretionary grants and continued the existing policy of
subjecting all LOIs to the BCA regardless of dollar value.
The policy also transferred responsibility for performing the BCA
from the FAA to the sponsor. Initially, FAA staff conducted the BCA to
ensure the consistent application of BCA methodologies among different
projects, but experience with airport capacity project BCAs since
October 31, 1994, showed that the BCA is most effective if accomplished
early in the airport planning process by the airport sponsor. This
change in timing and responsibility enables the airport sponsor to use
the BCA in the alternatives selection process at a time when the BCA
still has value. If the BCA is delayed until just before the airport
sponsor requests discretionary AIP funds, many alternatives may not be
considered because the planning process will have progressed to the
point of excluding previously feasible options.
The policy left the time at which a BCA is prepared to the
discretion of the sponsor, but encouraged preparation during master
planning, in conjunction with environmental studies, or during project
formulation. Costs attributable t6o preparing the BCA were identified
as allowable costs in airport planning (including environmental
analysis) projects and, like other project formulation costs such as
for engineering and design, may be reimbursed in conjunction with a
grant for the airport development project in which the costs were
incurred.
When not feasible to include BCA during these activities, airport
sponsors are responsible for conducting a BCA on a supplemental basis
and submitting it to the FAA. The FAA is responsible for reviewing the
BCA as part of the evaluation process of the AIP request; the FAA may
request further detail on the BCA; and/or the FAA may perform an
independent BCA of the project.
The interim ``FAA Airport Benefit-Cost Analysis Guidance'' was
designed to enable airport sponsors to apply uniform standards in their
analysis of capacity projects. Also, the shift of responsibility for
the BCA to the sponsor was intended to increase the airport sponsor's
acceptance of the BCA as one of several useful tools, not merely as a
requirement imposed from outside.
This interim BCA guidance followed the standard structure of all
benefit cost analyses. Steps including the following: (1) Defining the
project objective, (2) Specifying assumptions, (3) Identifying a base
case and its alternatives, (4) Determining the evaluation period, (5)
Determining the effort to be expended in the analysis, (6) Assessing
benefits and costs, (7) Comparing results of alternatives performing
sensitivity analyses, and (8) Making an informed recommendation.
The FAA requested that airport sponsors and other interested
parties comment on the interim guidance so that the final guidance will
be as useful as possible to airport sponsors in performing BCA. The FAA
solicited comments on the guidance itself: selection of alternatives,
proposed methodology, use of sensitivity analysis, and similar
technical issues in the guidance. The FAA also invited comments on the
new dollar threshold for the BCA requirement for the project cost above
which a BCA must be performed and comments on FAA forecasts on
enplanements and operations.
The policy stated that there are certain BCA items on which the FAA
is not allowed discretion and, therefore, on which the FAA did not
invite comments, namely, (1) The discount rate, (2) The value of life,
(3) The value of injury, and (4) The value of time.
The revised procedures described in the June 24, 1997, policy
applied to any request for an LOI to be issued in Fiscal Year 1997 and
thereafter and to all new airport capacity projects requesting
discretionary AIP grant awards in excess of $5 million beginning in
Fiscal Year 1998.
B. Modifications of Policy
As a result of experience gained reviewing airport sponsor BCAs,
effective on December 15, 1999, the FAA has modified its policy as
follows:
1. Exemption of Reconstruction Projects at Large and Medium Hub
Airports
Large and medium hub airports are those airports which enplane at
least 0.25% of the national enplanements each year. Reconstruction
projects are defined as projects which preserve, repair, or restore the
functional integrity of airfield pavement areas. The FAA's AIP BCA
policy required BCAs for all airport capacity projects, including
reconstruction projects, for which a sponsor was seeking $5 million or
more in AIP discretionary funds. However, the FAA has determined that
reconstruction or rehabilitation of critical airfield structures, i.e.,
runways and associated facilities, such as taxiways and aprons serving
the runways at large and medium hub airports, is cost-beneficial and
does not require the quantification of benefits (associated with
continued operation of
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existing critical structures) to aid in AIP project selection.
Therefore, the BCA policy is modified to exempt reconstruction projects
at large and medium hub size airports, except as may be required by
paragraph B.3. below. This exemption applies to sponsors requesting a
discretionary grant in excess of $5 million and/or LOI.
The above exemption does not apply to a reconstruction project that
is linked to other capacity projects and which would not have been
undertaken in the absence of the other capacity projects. For example,
a project to construct a new runway or a project to convert an existing
taxiway into a temporary runway would not be exempt if it would not
have been proposed based on its own merits. If the above new runway or
taxiway project meets the AIP discretionary threshold of $5 million, it
will require a BCA. On the other hand, a reconstruction of an
associated taxiway, being done for that reason alone, is strictly a
reconstruction project and is exempt from the BCA requirement.
2. Exemption of Reconstruction Projects at Small Airports
Small airports (small-hub, non-hub, commercial service, and general
aviation) are those airports which enplane less than 0.25% of the
national enplanements each year. At small airports, the AIP BCA policy
is modified to exempt reconstruction projects for primary runways and
associated facilities, such as taxiways and aprons serving the primary
runway. The FAA has determined that reconstruction or rehabilitation of
these critical airfield structures is cost-beneficial and does not
require the quantification of benefits (associated with continued
operation of existing critical structures) to aid AIP project
selection. This exemption applies to sponsors requesting discretionary
AIP funds in excess of $5 million and/or LOIs.
FAA may require a BCA for reconstruction projects for little used
facilities at small airports, e.g., crosswind runways serving less than
20% of operations. This type of project generally costs much less than
$5 million and, therefore, would not trigger the BCA requirement.
However, in those cases that exceed $5 million, FAA may require that
the sponsor demonstrate in a BCA that the avoidance of loss of air
service for that particular runway generates net benefits relative to
the base case. In determining the $5 million threshold at which a BCA
is required, the airport sponsor would include the AIP-funded costs of
the total project, including paving, drainage, grading, marking, etc.
The base case would assume escalating operating and maintenance costs
for the aged facility followed by the cost of closing the facility at
some point when additional maintenance is no longer cost-effective.
3. Application of the Policy to a Costly or Extraordinary
Reconstruction Project
Notwithstanding paragraphs B.1. and B.2. above, FAA may in some
cases require a BCA on an especially costly or extraordinary
reconstruction project. For instance, if a proposed project's estimated
costs are distinctly high as compared to other typical reconstruction
projects for that area, the FAA may require the sponsor to conduct a
formal BCA for the purposes of establishing that the reconstruction
project is a cost-beneficial means of retaining the capacity benefits
of the facility proposed for reconstruction.
4. Application of the Policy to Facility Upgrade Projects and the
Distinction Between Reconstruction Projects and a Facility Upgrade
Exemption of a reconstruction project from the requirement for a
BCA does not exempt other projects that are associated with the
reconstruction, such as upgrades for runway strengthening or widening.
The following guidelines apply:
a. An upgrade of a runway is defined as any strengthening of the
runway that significantly changes the character of the runway and
results in a 1.5 Day-Night Average Sound Level (DNL) or greater
increase in noise over any noise sensitive area located within the 65
DNL contour. [DNL is the energy-averaged sound level metric used by the
aviation industry to determine the impact of noise.] The definition of
upgrade above is consistent with the National Environmental Policy Act
(NEPA) requirements for an environmental analysis pursuant to FAA Order
5050.4A, Airport Environmental Handbook, para. 22 (1985).
b. Upgrade projects also include capacity projects, such as runway
lengthening or widening, undertaken to bring airport facilities up to
higher design standards which will permit new classes of aircraft to
use the airport.
c. FAA has determined that the AIP portion of total project cost,
not just the AIP cost attributed only to the upgrade portion of the
project, establishes the threshold, above which a BCA is required for a
discretionary grant. Total project cost is defined, in this instance,
as reconstruction cost plus upgrade cost. A BCA is required for an
upgrade project if AIP discretionary funds exceed $5 M for the total
project even if AIP discretionary for the upgrade on a ``stand-alone''
basis is less than $5 M.
5. Clarification of Which Costs Trigger a BCA Requirement
The BCA requirement is triggered when the total AIP request for
discretionary funds for a capacity project is greater than $5 million.
Total costs attributable to the project include, but are not limited
to, land acquisition, site preparation, environmental mitigation
requirements, noise mitigation costs, engineering, and construction.
6. Application of the Policy to General Aviation (GA) Airports
FAA has determined that the BCA has proven useful in assessing the
investment potential of a capacity project at commercial service
airports. FAA has also determined that the BCA is effective in the
evaluation of the potential establishment of commercial service and/or
cargo operations at a GA airport.
However, the FAA has had no experience yet in evaluating the BCA
guidance document's applicability where an airport will continue to
serve only GA operations and where an airport sponsor is seeking $5
million or more for a capacity project. Until and unless experience
shows BCA not to be useful or the BCA guidance document not to be
applicable at airports with only GA operations, FAA will require the
sponsor to fully demonstrate its direct aviation related benefits and
will review them on a case-by-case basis. Benefits must be attributable
to direct aviation-related factors. Benefits must be quantified based
on data that can be easily obtained and certified and that can be
consistently applied, e.g., a reliever airport's contribution to delay
reduction at a primary airport, where delay reduction can be
demonstrated and measured. Benefits that can be ascribed to local
economic improvements, but are not aviation-related benefits, will not
be considered as allowable benefits.
FAA is considering developing standard guidance for the application
of the BCA requirement to GA airports. In order to do this, we need to
be able to quantify the benefits of GA activity. Accordingly, the FAA
is willing to receive input on developing methodology to identify and
measure these benefits.
C. Responses to Comments Requested on June 24, 1997
The June 24, 1997, policy requested comments on (1) the dollar
threshold for AIP grants above which a BCA must be
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performed; (2) the interim BCA guidance issued on that same date; and
(3) preparation of FAA forecasts of enplanements and operations.
Although the final guidance is not part of this Federal Register
Notice, information pertaining to obtaining this document is listed
under the ADDRESSES Section mentioned earlier in this notice.
1. A Summary of Changes to the BCA Guidance Based on Comments Received
by FAA
a. The comments requested on the June 24, 1997, policy were mixed
regarding the threshold values for requiring BCA for discretionary
funds. The FAA made no changes to the threshold values based on the
comments received. [As part of its own internal review, as discussed in
B.1. through B.6. above, certain exemptions to the BCA policy were
made.] The FAA also received several comments on aspects of the policy
other than the dollar threshold.
b. Although there were few comments on the interim guidance itself,
the FAA has made changes to its final guidance as a result of the
comments and FAA's further experience. The most substantive two changes
are:
i. ``Section 12. Adjustments of Benefits and Costs for Induced
Demand'' has been made an optional analysis. If an airport sponsor
believes that it can credibly accomplish this analysis and doing so
will help its case, then the airport sponsor is encouraged to do the
induced demand analysis. The FAA has moved the section on Induced
Demand from Section 12 to Appendix C in the final guidance.
ii. In ``Section 10.4.1.3. Demand Adjustment for Exponential Delay
Growth,'' the cap on average delay has been increased from 15 minutes
to 20 minutes.
c. There were no comments regarding FAA forecasting of enplanements
and operations.
2. More Detailed Information on Comments Received on the June 24, 1997,
Policy
a. Comments on the Dollar Threshold Above Which BCA Is Required and on
Other Aspects of the Policy
i. One commentor wrote that the BCA policy will improve financial
discipline and should be extended to cover additional projects,
particularly those funded by Passenger Facility Charges (PFCs).
The FAA partially concurs. The FAA agrees that the BCA policy will
improve financial discipline and that a BCA is an effective tool for
assessing those projects currently covered by the policy, i.e.,
discretionary grants for capacity projects and LOIs. While the FAA does
not plan on expanding the use of the BCA to other AIP projects, we will
continue to refine, and as necessary, expand our use of investment
tools.
However, the FAA doe not foresee that the policy will be extended
to PFCs. Executive Order 12893 is the principal basis for applying the
BCA requirement. The principles to which the Executive Order refers
apply only to Federal spending for infrastructure programs, i.e.,
direct spending and grants. PFCs are not considered Federal direct
spending or grants, and are therefore not covered under the Executive
Order to the policy. For a project to be funded by PFC revenues, the
project must be an eligible airport-related project, must accomplish
the PFC objectives established under 49 USC 40117(d)(2), and must be
supported with adequate justification. However, a public agency is not
precluded from submitting a BCA to support its case for adequate
justification.
There is not at this time, nor does the FAA foresee, a regulatory
requirement for the FAA or an applicant to conduct BCA as part of the
PFC application and review process. Consequently, the FAA has not
issued, and does not foresee issuing, a policy requiring BCA for PFC
projects. Such a policy would, most probably, require an amendment to
the PFC regulation including a formal notice and comment period in the
Federal Register.
ii. One commentor indicated that BCA ought to be made a work
element in each new master plan.
The FAA concurs with this concept. The FAA currently recommends use
of a BCA during the alternatives analysis of planning studies for
planned development, the scope and time of which is suitable for BCA.
This will help ensure that all project requirements are completed
concurrently so as to facilitate timely project approvals. The FAA is
looking at ways to institutionalize BCA in master planning, including
making the BCA a required work item in any appropriate master plan
funded with AIP grants.
iii. Three commentors wrote that the BCA policy is, or could be
construed to be, inappropriate, too extensive, or will not, or may not,
return value at least equal to the effort involved.
The FAA non-concurs.
There were several aspects to this comment.
(1) BCA should be limited to short term projects. BCA should be
applied to any capacity project that exceeds the dollar thresholds,
whether that project is short term or long term. The FAA agrees that
there are more unknowns associated with long term projects just because
of the longer time horizon. However, this uncertainty potentially
enhances the value of applying an analytical tools such as a BCA to
help in making decisions.
Furthermore, the FAA believes that a BCA should be done early
enough in the alternatives selection process so that no feasible
alternative has been included or excluded without considering its
economic impact. However, the FAA also believes that it does not make
sense to complete a BCA on projects for which there is no serious
commitment for implementation. As stated in FAA's response to Comment
C.2.a.ii. above, the FAA is examining ways to institutionalize early
BCA within the master planning process, and currently is recommending
early BCA for projects that are within five years of requesting AIP
discretionary funds from FAA.
The FAA also believes that, even if the project falls within this
five year window, the father away it is from the implementation date,
the less precise and detailed the BCA has to be. The BCA guidance
document makes provision for BCAs of different levels of generality in
``Section 9: Level of Effort.'' However, the FAA notes that, when a
project is submitted to the FAA for AIP discretionary funding, it must
be accompanied by a valid BCA that has addressed a full range of
alternatives.
(2) The required scope of the BCA implied by the interim guidance
document is excessive. The interim guidance document has an extensive
list of possible work elements and these should be honed to a practical
minimum in specific airport BCAs.
The FAA believes that ``Section 9: Level of Effort'' in the
guidance already provides that the BCA scope should be consistent with
factors such as the complexity of project, its projected timing, and
the consequences of an incorrect decision.
(3) The policy itself is excessive and inappropriate. The FAA
believes a BCA prepared in conjunction with a master plan or
environmental analysis is neither excessive nore inappropriate because
it provides the FAA with the information necessary to justify and
defend allocating limited AIP discretionary funds on capacity projects.
The FAA has designed the policy to apply only to AIP discretionary
funding for capacity projects over which FAA has discretion as to
whether it will or will not fund the projects. The FAA believes that it
requires knowledge of a project's alternatives and its benefits and
costs before AIP discretionary funds
[[Page 70111]]
are awarded for a project. Given that no specific airport is entitled
to these funds, it is entirely reasonable that airport sponsors, if
they wish to request these funds, provide FAA with the information it
needs to assure itself that it has made a good decision.
Additionally, the selection criteria for capacity projects
requesting AIP discretionary funding require a project level BCA per
Executive Order 12893, Sec. 2(a)(2) which states ``Benefits and costs
should be measured and appropriately discounted over the full life
cycle of each project.''
(4) The dollar threshold for discretionary grants for capacity
projects and LOIs is too low. The FAA disagrees. The dollar threshold
has been examined and set to capture those projects that are likely to
be capacity enhancing. The dollar threshold is consistent with the
types of projects that raised the greatest congressional concerns over
how FAA selected projects for AIP funding, which led to the BCA
requirement. The FAA has already refined the requirement to exempt
projects undertaken solely for the objective of safety, security,
conformance with FAA standards, or environmental mitigation. FAA has
further narrowed the application to exempt certain reconstruction
projects. The FAA notes that no dollar value was established in
Executive Order 12893 for the project level requirements. At present,
the FAA is satisfied with the threshold and has no intention to raise
or lower the level.
(5) The policy is burdensome. There is no reason the policy will be
burdensome if the airport sponsor tailors the scope of the BCA to the
project. The FAA expects airport sponsors to make only that case which
is necessary to convince the FAA that an FAA decision to fund a
specific capacity project at an airport will produce aviation benefits
greater than the costs invested in the project and that the manner used
to achieve the development objective is the most economically
efficient. We encourage sponsors to contact FAA in advance of
initiating a BCA to obtain guidance and assistance, if necessary, in
applying the appropriate level of effort to this guidance.
(6) The policy constitutes the promulgation of a regulation. The
BCA requirement applies only to capacity projects, and only for those
capacity projects for which discretionary funds or LOIs are sought from
the FAA. The only mandatory requirement is that the BCA adequately
convinces the FAA that awarding an AIP discretionary grant or LOI is a
good investment, i.e., is a cost effective investment for achieving the
project objectives. Because the decisions to award AIP discretionary
grants or LOIs are matters for FAA discretion, the FAA may establish
criteria for their award as policies, and need not follow the
procedures for rulemaking in the Administration Procedures Act.
(7) The policy creates an additional basis for objection to
capacity projects. The FAA believes that most capacity related projects
that meet the criteria for a BCA are likely to generate opposition from
at least one stakeholder or stakeholder group. Therefore, the BCA,
master plan, and environmental documentation must be consistent and
defensible. As discussed above, it is appropriate that the BCA be
prepared in conjunction with other airport planning or environmental
studies. While the BCA data and conclusions may provide project
opponents with additional material on which to comment, the FAA has not
experienced this result since the first BCA requirements were
established in 1994. However, the FAA will track any such activity
resulting from the BCA process and will consider an appropriate
response at that time. See also our response to the comments in
C.2.a.iv. immediately below.
iv. Two commentors indicated that the BCA review process should be
made more visible to the public.
The FAA non-concurs.
There were two aspects to this comment:
(1) There should be public comment on BCAs as part of the funding
approval process. The FAA does not wish to extend the existing review
and evaluation period for awarding project grants and LOIs and is
concerned that a separate public comment process, outside the planning
and environmental process, would do so. The FAA recognizes that there
is merit in evaluating input from knowledgeable groups other than
airport sponsors, but BCA is only one of several requirements which FAA
must consider which are not announced separately for public review and
comment. Inasmuch as there are other opportunities for interested
parties to provide input on the value of projects, including user
consultation on AIP applications, the FAA does not believe it necessary
to require public comment on a sponsor's BCA.
(2) The BCA review process should be identified in the BCA guidance
document. The BCA document should identify whether BCA projects at
different airports will be ranked on the basis of BCA results, whether
BCA results are treated as ``pass-fail'' and what others factors are
taken into account in the FAA review and prioritizing process. Based on
more than five years experience preparing and reviewing BCAs, the FAA
has found that each BCA has to be treated on a case-by-case basis,
often with several rounds of consultation between airport sponsors,
their consultants, and several different FAA offices. These reviews can
extend over several years, or be accomplished within a few weeks,
depending on project complexity and the experience of the airport
sponsor and its consultants with BCA. Thus, except in the broadest
generalities, the FAA is not able to identify a specific review
process.
Nevertheless, the FAA can state that it has no present intention of
ranking different airports' projects on the basis of their benefit-cost
ratios or net present values. However, the FAA will not limit BCA to
``pass-fail'' among alternative projects at a given airport. The FAA is
interested in knowing that AIP discretionary funds are being used in an
optimal way at a given airport, not just that a specific project proves
to have benefits greater than its costs.
The other factors used in deciding LOIs have already been
identified in Federal Register, Vol. 62, No. 121, June 24, 1997 [62 FR
34108]. They are the project's effect on overall national air
transportation system capacity and the airport sponsor's financial
commitment to the project. The FAA prefers not to include in the BCA
guidance these other factors which are used to decide whether a project
seeking an LOI is funded or not because they are not part of the BCA.
Further information on FAA's Priority System describing how FAA ranks
its allocation of AIP funding can be found in four Federal Register
Notices. Two were issued in Vol. 59, No. 209, October 31, 1994,
``Policy for Letter of Intent Approvals Under the Airport Improvement
Program'' (59 FR 54482) and ``Policy Regarding Revision of Selection
Criteria for Discretionary Airport Improvement Program Grant Awards''
(59 FR 54484). The third was issued in Vol. 61, No. 104, May 29, 1996,
``Notice of Airport Capital Improvement Program National Priority
System; Opportunity to Comment'' (61 FR 26947). The fourth was in Vol.
62, No. 164, August 25, 1997, ``Airport Capital Improvement Program;
National Priority System'' (62 FR 45007).
v. One commentor indicated that the docket for comments on the BCA
guidance should be reopened and the policy reviewed in three years.
The FAA partially concurs. The FAA will take under consideration
the advisability of reopening the docket and reviewing FAA BCA
implementation in the future.
[[Page 70112]]
b. Comments on the Guidance Itself
i. Two commentors made specific recommendations on methodology in
the BCA guidance regarding the structure of the base case, increasing
the cap on average delay, estimation of landside delay, and explicitly
identifying in the BCA guidance those items which cannot be revised
(i.e., discount rate, values of live, injury, and time)
The FAA partially concurs.
There are four aspects to this comment:
(1) The base case should be realistic and meet project objectives.
The FAA believes that the interim BCA guidance on the role of the base
case should not be changed. The base case represents best practices at
the airport short of a major initiative. As such, the base case may not
accomplish, or fully accomplish, the specific objective(s) of a major
initiative (project), such as to reduce delay from current levels.
Rather, the base case may at best hold average delay at a constant
level per operation or cause it not to worsen as severely as it would
in a ``do nothing'' approach. Similarly, an objective such as
accommodating larger and more efficient aircraft at the airport may not
be possible short of a major pavement initiative. Thus, the base case
should not be held to the standard of ``meeting'' objectives of a major
initiative.
To prevent future confusion, the second sentence of Section 6 in
the interim guidance will be replaced with the following: ``Ideally,
the reference point should be the optimal cause of action compatible
with the specified project objectives that would be pursued in the
absence of a major initiative. However, in most instances, the base
case will not fully meet the objectives specified for the potential
project.''
(2) The cap on average delay should be increased from 15 minutes to
20 minutes and methods should be discussed to assess additional
benefits for those alternatives which do accommodate demand. The FAA
has reviewed actual delay data at one of the nation's largest and most
delayed airports. Based on that data, the FAA agrees that the cap on
average delay should be increased from 15 minutes to 20 minutes and has
changed the BCA guidance to reflect this. Capping delay applies to all
alternatives under consideration which otherwise would exceed the cap.
The BCA guidance is very extensive and considers all benefits for
which the FAA has identified a credible method for measurement.
However, if there are benefits that the BCA guidance does not cover,
the airport sponsor has wide latitude in including them in its BCA. The
FAA is willing to consider any credible methods for assessing
additional aviation related benefits and is willing to consider
modifying the BCA guidance to include these methods.
(3) Methods of estimating landslide delay may lead to suboptimal
decisions. The FAA is willing to consider any reasonable approach for
quantifying landside delay issues, including passenger convenience, and
modifying the BCA guidance to include these methods.
Typically, discretionary funding for terminal buildings is limited
to non-hub primary and non-primary commercial service airports. In all
likelihood, a BCA for a terminal building project at such an airport
would not cover work items such as people-mover systems, consequently
passenger transit time versus passenger walking distances would not be
evaluated. However, in some cases, particularly where an airside
facility such as an apron or taxiway is an integral part of a terminal
improvement, a BCA of integrated terminal facility may be a necessary
component of the BCA to support AIP funding of the apron or taxiway. In
this case, the FAA would be willing to consider any reasonable approach
to quantifying passenger convenience associated with a moving sidewalk
or other facilities to enhance passenger flows.
(4) Those items which cannot be revised (i.e., discount rate,
values of life, injury, and time) should be explicitly identified in
the BCA guidance. A paragraph has been added to ``Section 5:
Assumptions'' identifying those items which cannot be revised.
ii. Two commentors indicated that treatment of ``induced demand''
should be dropped from the guidance or its inclusion made optional.
The FAA concurs. ``Section 12: Adjustment of Benefits and Costs for
Induced Demand'' has been made optional and moved to Appendix C of the
BCA guidance.
c. Comments on FAA Forecasts of Enplanements and Operations
The FAA received no comments on FAA forecasts of enplanements and
operations. However, the FAA notes that sponsors must use consistent
forecast data in all planning and environmental studies of the project,
including the BCA.
Issued in Washington, DC, on November 24, 1999.
Catherine M. Lang,
Director, Office of Airport Planning and Programming.
John M. Rodgers,
Director, Office of Aviation Policy and Plans.
[FR Doc. 99-32172 Filed 12-14-99; 8:45 am]
BILLING CODE 4910-13-M
