Pilot Program To Permit Cost-Sharing of Air Traffic Modernization Projects

AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Notice and request for comments on proposed program guidance; request for sponsors' expressions of interest for air traffic modernization cost-sharing projects for fiscal years 2001, 2002, and 2003.

SUMMARY:

This notice provides FAA's proposed program guidance on Section 304 of the Wendell H. Ford Aviation and Investment Reform Act for the 21st Century (FAIR-21), which authorizes a pilot program for cost-sharing of air traffic modernization projects. The purpose of Section 304 is to improve aviation safety and enhance mobility by encouraging non-Federal investment on a pilot program basis in critical air traffic control facilities and equipment. Under the pilot program, the Secretary of Transportation may make grants to eligible project sponsors for not more than ten eligible projects, with each project limited to Federal funding of $15,000,000 and a 33 percent Federal cost share. A project sponsor may be a public-use airport (or a group of public-use airports), or a joint venture between a public-use airport (or a group of public-use airports) and one or more U.S. air carriers. In addition to requesting comments on the proposed program guidance, this notice requests sponsors' expressions of interest for cost-sharing projects for fiscal years 2001, 2002, and 2003.

DATES:

Comments on the proposed program guidance should be received at the U.S. Department of Transportation Dockets Room on or before September 29, 2000. Initial sponsors' expressions of interest should be received by the FAA's Air Traffic System Requirements Service on or before December 15, 2000.

ADDRESSES:

Comments on the proposed program guidance should be mailed or delivered, in duplicate, to U.S. Department of Transportation Dockets Room, Docket No. FAA-2000-7758, Room Plaza 401, 400 Seventh Street, SW., Washington, DC 20590. Comments may also be sent electronically to the following internet address: 9-NPRM-CMTS@faa.gov. Comments may be filed and/or examined in Room Plaza 401 between 10 a.m. and 5 p.m. weekdays, except Federal holidays. Sponsors' expressions of interest should be mailed or delivered, in duplicate, to the Federal Aviation Administration, Air Traffic System Requirements Service (ARS-1), Room 8206, 400 7th Street, SW., Washington, DC 20590. Electronic submissions of expressions of interests will not be accepted. Deliveries may be made between 8:30 a.m. and 5 p.m. weekdays, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Ward Keech (202-267-3312) or Charles Monico (202-267-9527), Office of Aviation Policy and Plans (APO), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

1. Comments Invited

Interested parties are invited to submit written comments, data, views, or arguments on the proposed program guidance. Comments on possible environmental, economic, and federalism- or energy-related impacts of this proposal are welcomed. Comments concerning the proposed application and selection processes are also welcomed.

Comments should carry the docket or notice number and should be submitted in duplicate to the Rules Docket address specified above. All comments received and a report summarizing any substantive public contact with FAA personnel on this matter will be filed in the docket. The docket is available for inspection both before and after the closing date for receiving comments.

Before taking any final action on this notice, the Administrator will consider the comments made on or before the closing date for comments, and the proposed guidance may be changed in light of the comments received.

The FAA will acknowledge receipt of comments if the commenter includes a self-addressed, stamped postcard with the comments. The postcard should be marked “Comments to Docket No. FAA-2000-7758.” When the FAA receives the comments, the FAA will date, time stamp, and return the postcard to the commenter.

An electronic copy of this document may be downloaded using a modem and suitable communications software from the FAA regulations section of the FedWorld electronic bulletin board service (telephone: 703-321-3339) or the Government Printing Office's electronic bulletin board service (telephone: 202-512-1661).

2. Background

In performing its mission of providing a safe and efficient air transportation system, the FAA operates and maintains a complex air traffic control system infrastructure. Section 304 of the Wendell H. Ford Aviation and Investment Reform Act for the 21st Century (FAIR-21) authorizes a pilot program to permit cost-sharing of air traffic modernization projects, under which airports and airport/airline joint ventures may procure and install facilities and equipment in cooperation with the FAA. The purpose of Section 304 is to improve aviation safety and enhance mobility of the air transportation system by encouraging non-Federal investment on a pilot program basis in critical air traffic control facilities and equipment. The pilot program is intended to allow project sponsors to achieve accelerated deployment of eligible facilities or equipment, and to help expand aviation infrastructure.

This notice responds to congressional direction that the FAA issue advisory guidelines on implementation of the pilot program.

3. Proposed Program Guidance

This section restates the statutory language of FAIR-21 Section 304 and outlines proposed supplementary threshold criteria that the FAA proposes for the pilot program. FAA's proposed evaluation and screening criteria are outlined in Section 5 of this notice. Commenters are reminded that FAA has no authority to change the statutory provisions.

3.1 Eligible Project Sponsors

3.1.1 Statutory Provisions for Sponsor Eligibility

The term ‘project sponsor’ means a public-use airport or a joint venture between a public-use airport and one or more air carriers.

3.1.2 Supplementary FAA Criteria for Sponsor Eligibility

An eligible project sponsor is a public-use airport (or group of airports), either publicly or privately owned, acting on its own or in a joint venture with one or more U.S. air carriers. In the case of a joint venture, either the airport(s) or the air carrier(s) may serve as the key principal. All landing facilities meeting these criteria are eligible, including but not limited to commercial service airports, reliever airports, general aviation airports, heliports, etc. All eligible sponsors are encouraged to participate.

3.2 Eligible Projects

3.2.1 Statutory Provisions for Project Eligibility

The term ‘eligible project’ means a critical project relating to the Nation's air traffic control system that is certified or approved by the Administrator and that promotes safety, efficiency, or mobility. Such projects may include:

a. airport-specific air traffic facilities and equipment, including local area augmentation systems, instrument landings systems, weather and wind shear detection equipment, lighting improvements, and control towers;

b. automation tools to effect improvements in airport capacity, including passive final approach spacing tools and traffic management advisory equipment; and

c. facilities and equipment that enhance airspace control procedures, including consolidation of terminal radar control facilities and equipment, or assist in en route surveillance, including oceanic and offshore flight tracking.

The statute limits the pilot program to 10 eligible projects.

3.2.2 Supplementary FAA Threshold Criteria for Project Eligibility

a. The project must be consistent with FAA's air traffic equipment/systems infrastructure and architecture and must be a validated project of an FAA program. The project must be initiated within two years of project approval and completed/commissioned within five years of project approval (allowing for an environmental impact study (if necessary), acquisition, supply support, training programs, etc.).

b. Equipment and facilities must meet applicable FAA advisory circulars and specifications. New or modified computer software is eligible if it meets all other criteria. Software source code, data rights, and support tools must be provided to the FAA at no additional cost to the FAA.

c. The project must serve the general welfare of the flying public; it cannot be used for the exclusive interest of a for-profit entity.

d. Any facility/equipment acquired under the project must be a new asset, not an asset that the sponsor has already acquired or committed to acquiring. Either the FAA or the sponsor may perform and manage the acquisition. Unless otherwise stipulated in the agreement executed between the sponsor and the FAA, liability for cost over-runs will be shared between the FAA and the sponsor in accordance with their project cost shares (however, the FAA's total cost share is limited by statute to $15,000,000 per project). Equipment in FAA's inventory, that has not been previously deployed, qualifies as eligible equipment.

e. Project software must have a useful and expected life of more than two years. Project hardware must have a useful and expected life of ten years or more.

f. If a sponsor submits more than one project nomination, each project must form part or all of an integrated system.

g. A project may not be co-mingled with other FAA cost-sharing programs (e.g., the provisions of FAIR-21 Section 131 that authorize cost-sharing programs for airport traffic control tower operations and construction).

h. All equipment and structures must meet OSHA standards for employee safety and fire protection. Where land is involved, the property must meet all environmental compliance requirements, including noise, hazardous material, property access, and zoning rights.

i. A project may not create an increase in the controller or airways facility workforces during the pre-transfer period.

3.3 Funding

3.3.1 Statutory Provisions for Funding

The Federal share of the cost of an eligible project carried out under the pilot program shall not exceed 33 percent. No project may receive more than $15,000,000 in Federal funding under the program. The sponsor's share of the cost of an eligible project shall be provided from non-Federal sources, including revenues collected pursuant to Section 40117 of Title 49, United States Code (passenger facility charges).

The Secretary shall use amounts appropriated under Section 48101(a) of Title 49, United States Code (FAA's Facilities and Equipment appropriation), for fiscal years 2001 through 2003 to carry out the program.

3.3.2 Supplementary FAA Criteria for Funding

FAA is not obligated to fund one-third of the total project costs; rather, FAA's share may not exceed this threshold. The project sponsor must provide two-thirds or more of the total project cost. The Federal and non-Federal shares of project cost may take the form of in-kind contributions. If selected for the pilot program, a sponsor may use PFC revenues to acquire and install eligible facilities and equipment, but not to fund their operation or maintenance. Normal PFC processing procedures under Federal Aviation Regulation 14 CFR Part 158 will be used to approve the imposition of a PFC or the use of PFC revenue as the non-Federal share of a pilot program project.

Project funding may be effected through a grant, a cooperative agreement, or other applicable instrument. The sponsor's costs share may not be met by a non-Federal matching contribution applied to any other Federal project or grant, unless specifically authorized by law. Either the FAA or the sponsor may use its acquisition authority and acquisition vehicles to procure and install facilities and equipment under the pilot program. In the case where the FAA manages the procurement, existing FAA contracts will be used where possible. FAA also may utilize equipment in its inventory that has not been previously deployed.

The following proposed criteria apply to the calculation of the cost-sharing ratio:

a. Project costs are limited to those costs that the FAA would normally incur in conventional facilities and equipment funding (e.g., if land/right-of-way must be acquired or leased for a project, its cost can be included in the cost-sharing ratio only if FAA would otherwise incur it in conventional program funding).

b. Operations and maintenance costs of the project, both before and after transfer of the project to the FAA, will not be considered as part of the cost-share contributions.

c. Non-federal funding may include cash, substantial equipment contributions that are wholly utilized as an integral part of the project, and personnel services dedicated to the proposed project prior to commissioning, as long as such personnel are not otherwise supported with Federal funds. The non-federal cost may include in-kind contributions (e.g., buildings). In-kind contributions will be evaluated as to whether they present a cost that FAA would otherwise incur in conventional facilities and equipment funding.

d. Aside from in-kind contributions, only funds expended by the sponsor after the project approval date will be eligible for inclusion in the cost-sharing ratio.

e. Unless otherwise specified by these criteria, the principles and standards for determining costs should be conducted in accordance with OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments.

f. As with other U.S. DOT cost-sharing grants, it is inappropriate for a management/administrative fee to be included as part of the sponsor's contribution. This does not prohibit appropriate fee payments to vendors or others that may provide goods or services to support the project.

By statute, funding to carry out the Federal share of the program may be available from amounts authorized to be appropriated under 49 U.S.C. 4810(a) (FAA's Facilities and Equipment authorization) for fiscal years 2001 through 2003. FAA funding decisions will be made in concert with the project evaluation and project selection processes discussed later in this notice. FAA may choose to use specifically appropriated funds, to re-program funds from within existing facilities and equipment project appropriations, or to fund from within existing budget line items.

The U.S. Department of Transportation and the comptroller General of the United States have the right to access all documents pertaining to the use of Federal and non-Federal contributions for selected projects. Sponsors must maintain sufficient documentation during negotiations and during the life of the project to substantiate costs.

3.4 Transfer of Facility or Equipment to FAA

3.4.1 Statutory Provisions for Facility or Equipment Transfer

Notwithstanding any other provision of law, project sponsors may transfer, without consideration, to the FAA, facilities, equipment, and automation tools, the purchase of which was assisted by a grant made under this section. The FAA shall accept such facilities, equipment, and automation tools, which shall thereafter be operated and maintained by the FAA in accordance with criteria of the FAA.

3.4.2 Supplementary FAA Criteria for Facility or Equipment Transfer

Project transfers to the FAA must comply with FAA Order 6700.20, Non-Federal Navigational Aids and Air Traffic Control Facilities. At the time of transfer, the project must be operable and maintainable by the FAA.

3.5 Application Requirements

The FAA proposes a two-phased application process because it is uncertain about the degree and extent of interest in the program on the part of potential sponsors. At one extreme, the program could generate intense interest and a large number of immediate applications; at the other extreme, the program may serve only limited needs. Given this uncertainty, the FAA proposes to first solicit input from potential sponsors through initial expressions of interest (Phase 1). The purpose of Phase 1 is to allow the FAA to gauge the level of interest, to provide preliminary responses to potential sponsors without causing applicant sponsors to expend excessive resources on project applications that have very limited chances of acceptance because of need or cost, and to plan for subsequent program implementation. In Phase 2, sponsors would provide more detailed applications, and FAA evaluations/project selections would be completed.

3.5.1 Sponsor's Expression of Interest

A Phase 1 expression of interest should not be submitted by a potential sponsor as a placeholder, but rather should reflect meaningful interest. The Phase 1 submission is not binding but it should reflect accurate estimates of project cost and sponsor contributions. Sponsors should submit written expressions of interest in accordance with the sections captioned ADDRESSES and DATES in this notice. Electronic submissions will not be accepted. A sponsor's initial expression of interest should include the following:

a. Identity of sponsor (including point-of-contact's name, mailing address, telephone number, fax number, and e-mail address) and all participating authorities or entities in the case of joint ventures.

b. Description and location of the proposed project.

c. Statement of need for the project, including a brief assessment of the projected benefits—site-specific, regional, and the national airspace system.

d. Preferred project schedule, including start date, completion date, and any other significant interim milestones.

e. Statement of intent or non-intent to transfer project to the FAA, including envisioned date.

f. Schedule of estimated project costs, including: (1) Up-front costs divided into proposed shares between the sponsor and the FAA, and (2) annual and life-cycle operations and maintenance costs (before and after transfer to the FAA).

g. Self-assessment of the ability to acquire and commit the non-Federal share of funding.

The FAA will review and evaluate the expressions of interest submitted during Phase 1, using a panel of technical program experts. The FAA will contact the sponsor if it has questions or has suggestions on how the sponsor may improve its proposal. Following its evaluations and preliminary selections, the review panel will recommend to the Director of FAA's Airway Facilities Service and the Director of FAA's Office of System Architecture and Investment Analysis those applicant sponsors who should be invited to participate in Phase 2, as described below. These officials will notify and invite selected sponsors to participate in Phase 2.

3.5.2 Phase 2: Formal Application and Selection of Projects

During Phase 2 each sponsor that has been invited to participate should submit an expanded application with the following elements: Project Description, Economic Analysis, Schedule, Financial Plan, Letter of Commitment, and a Letter of Acknowledgment/Support from the applicable State Department of Transportation and/or other appropriate jurisdiction. The following subsections describe the information needed by the FAA to evaluate the merits of each application.

a. Project Description: The project description should contain: (1) The identity of the submitting sponsor (including point-of-contact's name, mailing address, telephone number, fax number, and e-mail address) and all participating authorities or entities in the case of joint ventures; (2) project name and location; and (3) a detailed project description.

b. Economic Analysis: All applications should describe the need for the project and demonstrate its safety, efficiency, capacity, productivity, and other benefits, as applicable, at the airport, regional, and system-wide levels. The sponsor may conduct its own analysis, may opt to summarize existing analyses from FAA's acquisition management system, and/or may use the investment criteria in FAA Order 7031.2C, Airway Planning Standard Number One. The analysis should include a schedule of project costs, including: (1) Up-front costs broken down into proposed shares between the sponsor and the FAA; and (2) annual and life-cycle operations and maintenance costs before and after transfer to the FAA. The level of effort devoted to the analyses should be tailored to the scope and cost of the project. The economic analyses should be consistent with FAA economic analysis guidance contained in Report FAA-APO-98-4, Economic Analysis of Investment and Regulatory Programs—Revised Guide, and Report FAA-APO-98-8, Economic Values for Evaluation of Federal Aviation Administration Investment and Regulatory Programs.

c. Schedule: The Schedule should list all significant proposed project dates, including the start date, completion date, date of project transfer to the FAA, and key interim milestone dates.

d. Financial Plan: The Financial Plan should contain: (1) The proposed local and Federal cost shares, (2) evidence of the sponsor's ability to provide funds for its cost share (e.g., approved local appropriation or Memorandum of Agreement); and (3) any commitment the sponsor might choose to offer for the assumption and liability of cost overruns aside from the liability criterion provided in section 3.2.2 of this notice.

e. Letter of Commitment: Sponsors should demonstrate a commitment to the project, as evidenced by a Letter of Commitment signed by all project participants (including any participating air carriers). The letter should, at a minimum, include a list of the participating agencies and organizations in the proposed project; the roles, responsibilities and relationship of each participant; and the name, address, and telephone number of the individual representing the sponsor.

f. Letter of Acknowledgement/Support: The application should include a letter of acknowledgment/support from the applicable State Department of Transportation and/or other appropriate jurisdiction (to avoid circumventing State and metropolitan planning processes).

The FAA will review and evaluate the Phase 2 applications using a panel of technical program experts, based on the criteria outlined below in Section 4. Following its evaluations, the review panel will prioritize and recommend to the FAA's Associate Administrator for Air Traffic Services and the Associate Administrator for Research and Acquisition those applications that it believes should be accepted. If the FAA selects a project for inclusion in the pilot program, an agreement will be executed between the sponsor and the FAA.

3.5.3 Subsequent Application and Selection Cycles (If Any)

If fewer than the statutorily-limited ten projects have been approved following the initial round of Phase 1 and 2 applications, FAA will repeat the Phase 1 and 2 application processes on an annual basis, until the earlier of: May 15, 2003, or that point in time when the ten project limit is reached (see Schedule Summary in Section 5 below). The May 15, 2003, cutoff date is based on an allowance of time for FAA to process Phase 2 applications and make selections prior to the statutory authorization expiring at the end of fiscal year 2003. FAA cannot and does not extend any assurance or implication that any residual authority will remain following the first round of Phase 1 and 2 applications.

4. Application Evaluation and Screening Criteria

This section explains how FAA proposes to evaluate and screen applications. FAA solicits comments on these proposed evaluation and screening criteria. In addition, the FAA asks whether additional evaluation criteria should be added.

a. Compliance with statutory criteria, FAA's supplemental criteria, and application procedures.

b. Degree to which the project relates to FAA's strategic goals for safety, efficiency and mobility, as well as the national airspace system architecture.

c. Impact on the airport, region, and national airspace system.

d. Likelihood of project success.

e. Availability of FAA resources.

f. Ease of administration (acquisition, installation, etc.).

g. Ability of sponsor to provide its cost share.

h. Evidence that the project can be implemented in a timely manner.

i. Equity and diversity with respect to project type, geography, and population served.

j. Degree of Federal leveraging (degree to which the proposal minimizes the ratio of federal costs to total project costs).

k. Cost to the FAA: (1) up-front cost-share; and (2) post-transfer life-cycle operating and maintenance costs.

5.0 Schedule Summary

6. Project Implementation Information

During the life of the project, the FAA may collect data from the sponsor and conduct (with non-project funds) independent evaluations of the project's impact on safety, efficiency, and mobility objectives. This will allow the FAA to ascertain the success of the pilot program. The life of the program is currently limited by FAIR-21 to the end of fiscal year 2003.

7. Impact of Proposed Guidelines

Potential costs and benefits of the proposed guidelines have been reviewed consistent with the intent of Executive Order 12866 (Regulatory Planning and Review), the Regulatory Flexibility Act of 1980, Executive Order 13132 (Federalism), Office of Management and Budget direction on evaluation of international trade impacts, and the Unfunded Mandates Reform Act of 1995.

With respect to the focus of Executive Order 12296, there are no significant costs imposed by the proposed guidelines. The benefit of the proposed guidelines is efficient communication between the FAA and potential project sponsors about the basis and timing which the FAA will employ in selecting pilot program projects and the type of information needed by the FAA to evaluate proposed projects. Potential pilot program project sponsors will only apply for consideration if they believe that they will benefit from consideration. To minimize the costs of application, the guidelines encourage sponsors to provide information wherever possible from existing studies, plans, and other documents. Further, the proposed guidelines request that initial project proposals provide limited detail about the project. Potential sponsors will be asked for additional information only if the FAA believes that the proposal meets the objective of the pilot program based on the limited initial information submission. Facilities and equipment currently incorporated in the federal airport and airway system architecture and approved for acquisition will be implemented, regardless of whether they are selected as a pilot project. Further, in implementing the pilot program, the FAA will not alter the sequence of implementation of system architecture in a manner that would delay achieving overall safety or efficiency benefits. Therefore, the FAA believes that the benefits of the proposed guidelines exceed their costs.

Airports that are considered small entities may apply to sponsor or participate in pilot projects. Small airports are defined by the Small Business Administration as airports owned by local governments for areas with populations of 200,000 or less. Program participation is voluntary and as explained above, the cost of application is not considered significant. Because, by statute, the majority of project funding must be provided by the sponsor, few small airports or airlines are likely to elect to participate in the pilot program. Therefore, The FAA certifies that the proposed guidelines would not have a significant economic impact on a substantial number of small entities.

The FAA has analyzed the proposed guidelines under the principles and criteria of Executive Order 13132, Federalism. With few exceptions, states do not directly own or operate airports, but public airports are frequently owned and operated by either regional transportation authorities or local governments. The pilot program authorized by Congress which is the subject of these guidelines does not require participation by states, regional transportation authorities, or local governments, but rather permits the formation of voluntary partnerships between the FAA, airports, and airlines on projects considered to be of mutual benefit. These projects will ultimately be paid for by air passengers and shippers, either through fares or freight tariffs, airport charges, or aviation user taxes. FAA facilities and equipment are currently financed by passenger and shippers through aviation user taxes. Program guidelines described in this notice are intended to facilitate communication necessary to implement the pilot projects. By entering into these cooperative relationships, the FAA will not abrogate its responsibilities for the provision and maintenance of air traffic control and airway facilities and equipment, but rather may expedite the implementation of such facilities and equipment. In the absence of the pilot program, the facilities and equipment would ultimately be provided by the federal government and paid for by airline passengers and shippers. Once completed, the projects will be operated and maintained as a part of the federal airway system. The FAA has determined that this action does not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, the FAA has determined that these guidelines do not have federalism implications.

The proposed guidelines would not impose a competitive advantage or disadvantage on either U.S. air carriers operating abroad or on foreign carriers operating to and from the United States. Further, proposed guidelines, per se, would have no effect on the sale of foreign aviation products or services in the United States, nor would it have any effect on the sales of U.S. aviation products in foreign countries. To the extent that pilot program projects improve aviation safety and airport and airway system efficiency, both domestic and foreign commerce will generally be enhanced.

The proposed guidelines do not create a federal mandate. Therefore, the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply.

8. References

The following list outlines references cited above:

OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, revised August 29, 1997.

Report FAA-APO-98-4, Economic Analysis of Investment and Regulatory Programs—Revised Guide. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308. It may also be found on the Internet at: http://api.hq.faa.gov/apo_pubs.htm.

Report FAA-APO-88-0, Economic Values for Evaluation of Federal Aviation Administration Investment and Regulatory Programs. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308. It may also be found on the Internet at: http://api.hq.faa.gov/apo_pubs.htm

FAA Order 7031.2C, Airway Planning Standard Number One, through Change 12. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308.

FAA Order 6700.20, Non-Federal Navigational Aids and Air Traffic Control Facilities. Available upon request from the FAA's NAS Operations Program Office, telephone 202-267-3034.