THE FAA MODERNIZATION AND REFORM ACT OF 2012

THE FAA MODERNIZATION AND REFORM ACT OF 2012

A. Introduction... 1 A.1 Structure of the 2012 Reform Act... 1 B. AIP Funding... 2 B.1 Level and Duration of Funding Authority... 2 B.2 Apportionment Formulas and Allocation of Funds... 2 B.3 Federal Share... 3 B.4 Contract Tower Funding... 3 C. AIP Eligibility... 3 C.1 Glycol Recovery Vehicles... 3 C.2 Mobile Refueler Parking... 3 C.3 Relocation of Airport-Owned Facilities... 3 C.4 Project Costs in Cold Weather Climates... 4 C.5 Expanded Participation in the Military Airport Program (MAP)... 4 C.6 Pacific Island... 4 C.7 Measures to Improve the Efficiency of Airport Buildings... 4 C.8 Airport Recycling Plans... 4 D. Grant Assurances, Other Requirements and Administrative Provisions... 5 D.1 Noise Land Disposal Requirement... 5 D.2 Competitive Access Reports... 5 D.3 Disadvantaged Business Enterprise Program Modifications... 5 D.4 Residential Through-The-Fence Agreements... 6 D.5 Airport Privatization Pilot Program... 6 D.6 Use of Mineral Revenue at General Aviation... 7 D.7 Priority Review of Projects in Cold Weather States... 7 D.8 Liability Protection for Safety Management Systems... 7 E. PFC Modifications... 8 F. Environmental Provisions... 8 F.1 Environmental Review in State Block Grant Program... 8 F.2 Funding of Special Environmental Studies or Reviews... 9 F.3 Redevelopment of Airport Properties... 9 F.4 Funding of Assessment of Flight Procedures in Part 150 NCPs... 9

F.5 Phase-out of Small Stage 2 Aircraft... 9 F.6 Aviation Noise Complaints... 9 F.7 Pilot Program for Zero-Emission Airport Vehicles... 9 F.8 Increasing Energy Efficiency of Airport Power Sources... 10 G. Air Service Provisions Affecting and Their Communities... 10 G.1 Contingency Plans for Long Tarmac Delays... 10 G.2 Small Community Air Service Development Program... 11 G.3 Essential Air Service Revisions... 11 H. Security Provisions Affecting... 11 I. Appendix Detailed Analysis of Bill Provisions... I-1

After 23 short-term extensions, Congress enacted and the President signed into law the FAA Modernization and Reform Act of 2012, Pub. L. 112-95 (February 14, 2012) ( 2012 Reform Act ). In this white paper, Unison Consulting, Inc. provides a comprehensive summary of the provisions of the 2012 Reform Act and compares them with the prior law. The focus of the white paper is on provisions that will or may have a direct impact on our airport clients and the communities they serve. The major provisions with the most interest to airports are discussed in the succeeding chapters. The Appendix provides section-by-section details through a series of tables. Following passage of separate FAA authorization bills by the House of Representatives and Senate in 2011, Unison prepared a White Paper summarizing the provisions of each bill. To facilitate comprehension of the 2012 Reform Act, and comparisons of the legislation with the House and Senate bills, this paper follows the structure of the earlier paper. The tables in the Appendix likewise follow the structure of those included in the prior white paper. The source of the 2012 Reform Act provision (House bill or Senate bill) is also discussed. Section II addresses issues relating to funding levels for AIP and funding formulas. Section III discusses changes to AIP eligibility criteria, including modifications to the provisions defining allowable costs. Section IV explains modifications to grant assurances and administrative requirements. Section V discusses PFC modifications. Section VI addresses the numerous provisions in the legislation relating to environmental stewardship. The legislation also contains provisions on air service and consumer protection that may be of interest to airports. These are discussed in section VII. Section VIII discusses security provisions that may be of interest to airports. A.1 Structure of the 2012 Reform Act The 2012 Reform Act is divided into 12 major subdivisions or Titles, as follows: Title I Authorizations Title II NextGen Air Transportation System and Air Traffic Control Modernization Title III Safety Title IV Air Service Improvements Title V Environmental Streamlining Title VI FAA Employees and Organization Title VII Aviation Insurance Title VIII Miscellaneous Title IX Federal Aviation Research and Development Title X National Mediation Board Title XI Airport and Airway Trust Fund Provisions and Related Taxes Title XII Compliance with Statutory Pay-As-You-Go-Act of 2010 The organization of the 2012 Reform Act largely follows the organization of the House bill.

B.1 Level and Duration of Funding Authority The 2012 Reform Act authorizes funding for FAA programs, including the AIP, for four years, through the end of federal fiscal year ( FY ) 2015 ( 101). The AIP is authorized at a constant rate of $3.35 billion through 2015. This figure represents a compromise between the House bill, which would have lowered AIP to $3 billion, and the Senate bill, which would have increased AIP to $4.1 billion in the final year of authorization. The authorized level of $3.35 billion is about $200 million less than the most recently authorized levels of approximately $3.55 billion. This reduction is allocated among apportionment funds and set-asides as follows: Cargo apportionments $ 0.5 million State apportionment by formula $40.0 million Noise set-aside $55.8 million Reliever set-aside $ 1.1 million Military Airport Program $ 6.4 million General discretionary funds $96.2 million It should be noted that the authorized levels for AIP may not define the funds actually available for AIP each year. Actual funding levels are established as obligation limits in annual Department of Transportation appropriations legislation. It is not uncommon for appropriation legislation to provide a lower level of funding for AIP than the authorized level. However, during the period when FAA was authorized through short-term extensions, authorized AIP funding levels were generally consistent with the AIP obligation limit. B.2 Apportionment Formulas and Allocation of Funds The 2012 Reform Act maintains the existing formulas for calculating passenger and cargo apportionments and apportionments to states and to individual non-primary airports. The legislation includes one change in the calculation of set-asides. The Noise Set-Aside is established at 35percent of discretionary funds with a ceiling of $300,000 per year. Previously, the Noise Set-Aside was also calculated at 35percent of discretionary funds, but there was no ceiling. The ceiling will not have an immediate impact on airports because the amount of the Noise Set-Aside under the 35% formula is only $237 million. The 2012 Reform Act also includes a provision to preserve the minimum passenger entitlement level for airports that lost scheduled service or fell below minimum the 10,000 passenger enplanement level to qualify for passenger entitlements ( 141(b)). Eligibility is available only in FY 2012 and 2013. Another provision retains eligibility for the minimum passenger entitlements for airports that lost scheduled service but maintained at least 10,000 enplanements and maintained service by large aircraft ( 141(a)).

B.3 Federal Share The federal share for projects at medium and large hub airports is 75 percent, except for noise projects, with a federal share of 80 percent. The federal share for small airports is reduced from 95 percent to 90 percent, except for (1) airports that are receiving subsidized essential air service and are in economically depressed areas as defined by criteria administered by the Secretary of Commerce ( 137) and (2) small hub airports that transition into medium hubs (for two years). The 95 percent share was a temporary measure adopted after 9/11, when passenger demand and service declined. It was originally scheduled to expire with the expiration of the last long-term FAA authorization, Vision 100; however, it was extended with each temporary extension of the AIP. B.4 Contract Tower Funding Section 147 of the 2012 Reform Act increases the maximum amount of AIP funding available for construction of contract towers from $1.5 million to $2 million. This section also includes an 18 month grace period for contract towers that first fall below the 1.0 benefit cost ratio (BCR) threshold before they must comply with the cost-share requirement to stay in the program. A new requirement for safety assessments of contract towers is included. Table 1 provides more detailed information about the funding provisions included in the legislation. The House and Senate bills included numerous provisions affecting AIP eligibility or the definition of allowable costs. The discussion in this section focuses on the provisions that were included in the final legislation. C.1 Glycol Recovery Vehicles The legislation ( 132(a)(2)) makes the acquisition of glycol recovery vehicles eligible for AIP. Eligibility is tied to the use of the vehicles in aircraft deicing activities. C.2 Mobile Refueler Parking The legislation ( 132(a)(3)) also makes the construction of mobile refueler parking facilities within fuel farms eligible for AIP funding at non-primary airports only. Eligibility is limited to projects constructed to comply with EPA requirements. C.3 Relocation of Airport-Owned Facilities Section 138(c) makes the costs of relocating airport-owned facilities eligible for funding if the relocation is necessitated by a change in FAA design standards. Eligibility is limited to entitlement funds. Previously, only demolition of airport-owned buildings was is eligible for reimbursement, while relocation of third-party owned buildings was eligible.

C.4 Project Costs in Cold Weather Climates Previously, AIP discretionary funds could only be used for project costs incurred after issuance of a grant (except in the case of a letter-of-intent). Section 138(a) permits use of AIP discretionary funds for project costs incurred in the same fiscal year as the grant, but prior to grant award in cold weather climates with short construction seasons. There are a number of conditions and limitations associated with this change. They are described in Table 2. C.5 Expanded Participation in the Military Airport Program (MAP) Section 146(b) of the 2012 Reform Act permits up to three GA airports to be designated as MAP airports. Previously only one GA airport could participate in the MAP in any given fiscal year. The 2012 Reform Act ( 146(a)(3),146(c)) permits MAP funds to be used on projects at federallyowned safety critical airports. The criteria for safety critical airports focus on providing diversionary airports meeting Part 139 airport certification standards for transoceanic flights in areas where other diversionary airports are not available. Federally owned airports are not generally eligible for AIP funding. C.6 Pacific Island Section 144 of the 2012 Reform Act continues AIP discretionary fund eligibility for the Marshall Islands, Micronesia and Palau. Because these islands are no longer U.S. territories, they would not otherwise be eligible for AIP funding. Section 151 extends AIP eligibility for the airport at Midway Atoll, which is federally owned. C.7 Measures to Improve the Efficiency of Airport Buildings Section 138(b) of the 2012 Reform Act makes the costs of measures to improve the efficiency of buildings eligible for AIP funding, if the buildings are otherwise eligible for AIP funding and the incremental costs will be justified by cost-savings over the life cycle of the project. A separate provision ( 512) establishes a program for airports to conduct energy assessments and authorizes AIP grants for projects to improve energy efficiency at airports that perform the assessments. Hydrogen-based projects are specifically identified as eligible. C.8 Airport Recycling Plans Section 132(b) of the 2012 Reform Act amends the definition of AIP eligible airport planning to include the development of solid waste recycling plans. Section 133 requires airport master plans to include recycling plans as a condition of AIP eligibility. Unison understands that the FAA will apply this requirement at the time an airport applies for AIP funding for master plan projects.

The 2012 Reform Act includes numerous provisions modifying grant assurances, adding or modifying other requirements on airports and providing for new or revised administrative requirements for the AIP. The major provisions are discussed below starting with grant assurances and other requirements. Administrative provisions are then discussed. Table 3 provides a comprehensive discussion of all of these provisions in the bills. With respect to requirements on airports, what is perhaps the most noteworthy is what is absent in the legislation. There is no provision establishing a new ARFF staffing standard at Part 139 airports. Such a provision was included in the reauthorization legislation passed in the House in the 111 th Congress, and it would have resulted in substantial operating cost increases for airports. Neither the House bill nor the Senate bill in the 112 th Congress included such a provision. Therefore its absence in the final legislation was to be expected. It is discussed in this White Paper only because of its importance to the airport community. D.1 Noise Land Disposal Requirement Section 135(b) of the 2012 Reform Act modifies the assurance on the disposal of AIP-funded noise land to permit the Federal share of disposal proceeds to be used on any AIP eligible development or planning project. Priority is to be given to reinvesting in noise compatibility projects. Previously, an airport had to use the federal share for noise compatibility or return it to FAA. Section 135(b) also permits airports to retain noise land as noise buffer. Currently, once the noise compatibility has been addressed, the airport is obligated to dispose of the land. Finally section 135(b) specifies that a long-term lease of noise land is not a disposal under the assurance. However, lease proceeds must be used for an approved AIP eligible project. This provision means that lease revenue from noise land can be used for airport development projects, without regard to the status of an airport s noise compatibility program and is not subject to recapture or refund to the FAA. D.2 Competitive Access Reports Section 404 of the 2012 Reform Act extends until the end of fiscal year 2015 the requirement for medium and large hub airports to submit periodic reports of denial of requests for facilities or access. Section 134 eliminates the requirement to include information on patterns of air service and air fare levels in airport competition plans. D.3 Disadvantaged Business Enterprise Program Modifications Section 140 of the 2012 Reform Act requires FAA to establish a mandatory disadvantaged business enterprise ( DBE ) certification training for airport employees involved in airport concession DBE (ACDBE) certification. This provision also requires the DOT Inspector General to provide an annual

report to Congress on new DBE firms participating in in AIP funded projects and programs. The reporting requirement applies through FY 2015. The Senate bill included provisions requiring the FAA to adjust the maximum personal net worth the DBE status and a prohibition on discriminatory bonding requirements. These provisions were not included in the legislation. D.4 Residential Through-The-Fence Agreements Section 136 of the 2012 Reform Act permits airport operators to enter into agreements granting through-the-fence ( TTF ) access to residential communities adjacent to airports without jeopardizing their ability to receive AIP grants. Qualifying agreements must include the following provisions: Require the residential property owner to: o o o Pay comparable access fees to on-airport users Pay for building and maintaining infrastructure required to provide airport access Maintain the property in residential use Prohibit use of the property to provide access to other properties Prohibit aircraft refueling on the property A recent change to FAA policy permits existing residential TTF arrangements to continue under comparable conditions, but would have preclude new arrangements pending further review. The legislation permits new arrangements meeting the statutory conditions. D.5 Airport Privatization Pilot Program Section 156 of the 2012 Reauthorization Act doubles the number of slots in the pilot program from five to ten. No other modifications to the program are included. Therefore, only one slot is available for a large hub airport and one slot is reserved for a general aviation (GA) airport. Additional GA airports may participate at the discretion of the FAA. Section 156 thus contrasts with the corresponding provision of the House bill that would have included a number of changes to the standards for air carrier coordination and approval. The House bill also would have eliminated the limit on participation in the program to a single large hub airport.

D.6 Use of Mineral Revenue at General Aviation Section 813 of the Reform Act authorizes the FAA to declare revenue from mineral leasing, extraction production or other procedures to be excess to the airport s five year needs. If so, the excess revenue can be used for federal, state or local transportation projects carried out by the airport sponsor or a governing body within the airport sponsor s jurisdiction. The airport sponsor must execute an agreement with the following provisions: Specifies a five-year capital improvement program that complies with FAA standards Waives the sponsor s rights to AIP entitlement and discretionary funds for five years Agrees to comply with restrictions on the use of airport revenue in perpetuity Agrees to continue to operate as a public use airport unless the FAA approves closure Agrees to comply with the grant assurances for 20 years after date of enactment of the 2012 Reauthorization Act. The FAA must decide on a request within 90 days after receipt, and must promulgate implementing regulations within 90 days of enactment. The FAA has published implementing guidance at: http://www.faa.gov/airports/airport_compliance/mineral_revenue D.7 Priority Review of Projects in Cold Weather States Section 154 of the 2012 Reauthorization Act requires the FAA to give priority to early review of construction projects from airports in cold weather climates. D.8 Liability Protection for Safety Management Systems Section 310 of the 2012 Reauthorization Act prohibits the disclosure of reports or data collected to develop a safety management system ( SMS ), unless information identifying the individual or entities submitting the information is removed. The prohibition is limited to information that is voluntarily disclosed. The corresponding provision in the House bill would have protected airports and individuals providing the information from liability for civil damages in federal and state courts. The Senate bill did not address this issue, and 310 represents a compromise.

Both the House and Senate bills each included significant changes to the PFC program that were not included in the 2012 Reauthorization Act. They are outlined below. Also missing from the legislation was an increase in the current PFC cap of $4.50, which has been in place since 2000. Considering that neither the House nor the Senate bill proposed an increase in the PFC cap, it would have been highly unexpected for the cap to be raised in the final legislation. Section 111(b) of the legislation makes permanent the pilot program for streamlining the application process for non-hub airports. This program was originally adopted in Vision 100 as a temporary measure; the program has been extended with each short term extension of FAA authorization. Section 113 states a sense of Congress that airports should use qualifications-based selection on PFC funded projects. The provision is written broadly to cover all PFC projects, including construction projects. Construction projects are typically awarded on a low bid basis, and this bidding method is mandated for many airport sponsors. However, a sense of Congress is not a mandate. Other PFC modifications included in the 2012 Reauthorization Act are technical in nature. Table 4 describes this provision and other PFC amendments included in the legislation Provisions in either the House or Senate bills that were not included in the 2012 Reauthorization Act include the following: Pilot program for direct collection of PFCs by airports. PFC level could be set by the airport, without regard to the $4.50 cap so long as there was no involvement by carriers in collection, even on a voluntary basis Pilot program to allow PFCs to finance a proportional share of shared-use airport ground access systems. Current law limits PFCs to systems that are for exclusive airport use. Program to streamline PFC application process for all categories of airports. The 2012 Reauthorization Act includes many environmental initiatives. The most significant provisions are summarized below. Additional environmental provisions are summarized in Table 5. F.1 Environmental Review in State Block Grant Program Section 502 requires federal agencies involved in permitting or approving projects funded under the State Block Grant Program to accept state environmental analyses, if they are adequate, or to supplement them. Currently, some federal agencies require the FAA to conduct environmental analyses. A pilot program with similar environmental coordination requirements for up to three non-block grant states that was part of the Senate bill was not included in the legislation.

F.2 Funding of Special Environmental Studies or Reviews Section 503 of the 2012 Reform Act permits airports to fund with their own resources, including entitlement funds, FAA staff or FAA consultants engaged in conducting special studies to support implementation of noise compatibility measures in Part 150 Noise Compatibility Programs. Currently this funding option is limited to NEPA review of projects being considered for AIP funding. F.3 Redevelopment of Airport Properties Section 822 of the 2012 Reform Act establishes a pilot program to support redevelopment of airport properties. Grants from the noise set aside are made available to support cooperation between an airport and neighboring jurisdictions to support airport compatible redevelopment. Grant funds are limited to projects affecting property acquired with grants or PFCs. Participation is limited to four airports with approved Part 150 NCPs. Grant funds must be used in partnership with neighboring local jurisdictions and the neighboring jurisdiction with land-use authority over the property must maintain in place land-use regulations assuring airport compatible land-use. Additional details about the program are included in Table 5. F.4 Funding of Assessment of Flight Procedures in Part 150 NCPs Section 504 of the 2012 Reform Act permits AIP funds from the noise set aside to be used to finance environmental review of flight procedure modifications included in approved Part 150 NCPs. Under current law, the use of AIP funds for this purpose would be considered an impermissible supplementation of the FAA s Air Traffic Organization budget. F.5 Phase-out of Small Stage 2 Aircraft Section 506 of the legislation prohibits operations in the continental United States by small (under 75,000 pound) Stage 2 aircraft after December 31, 2015. The provision includes exceptions for emergency flights, diversions, flights associated with sale or lease of aircraft, and aircraft maintenance or conversion of Stage 2 aircraft to Stage 3. The Senate bill had included a provision allowing individual airports to opt out and accept continued Stage 2 operations. This provision is not included in section 506. Instead, 506 specifies that violation of the prohibition is not to be considered a violation of the AIP grant assurances. F.6 Aviation Noise Complaints Section 510 of the 2012 Reform Act requires large hub airports to post on their web-sites a telephone number to receive aviation noise complaints. Many large hub airports were posting contact information for noise complaints at the time of enactment. Therefore, the impact is limited to those large hub airports that were not already providing noise complaint contact information. F.7 Pilot Program for Zero-Emission Airport Vehicles Section 511 of the legislation establishes a pilot program for AIP funding of zero-emission airport vehicles and supporting infrastructure (including fuel delivery). Eligibility is limited to airports in Clean Air Act non-attainment areas, unless there are insufficient applicants. The federal share of grants under

this program is limited to 50percent, and no more than 10percent of funds spent under this program may be provided to a single airport. F.8 Increasing Energy Efficiency of Airport Power Sources Section 512 of the 2012 Reform Act requires FAA to establish a program that encourages airport sponsors to assess an airport s energy use to energy efficiency. FAA may issue grants to airports that have completed assessments to acquire or construct equipment and infrastructure, including hydrogen equipment that increases energy efficiency. The 2012 Reform Act includes numerous provisions affecting commercial air service, including Essential Air Service ( EAS ). Aside from the EAS provisions, only one provision directly affects airports. That provision is discussed in subsection A. The bills also include modifications to the Small Community Air Service Development Program, which are discussed in Subsection B. The EAS provisions are discussed in Subsection C. Table 6 provides detailed information about these provisions G.1 Contingency Plans for Long Tarmac Delays Section 415 of the 2012 Reform Act requires airports and air carriers to develop and implement contingency plans to address lengthy flight delays or diversions. This discussion focuses on the requirements imposed on airports. The requirement applies to commercial airports which are defined to include all categories of primary airports (large hub, medium hub, small hub and non-hub). Diversion airports are also subject to the requirement. Section 415 requires airports to develop plans for accommodating the deplaning of passengers following excessive tarmac delays and for sharing gates and other facilities to accommodate deplaning passengers. The Department of Transportation is to determine what constitutes an excessive delay. Plans are subject to Department of Transportation approval, and will be deemed approved after 60 days if the Department has not issued a determination. Airport plans must be updated every five years. Failure to comply with a plan can result in imposition of civil penalties. The DOT already had rules in place establishing requirements for carriers related to excessive tarmac delays. The rules set three hours as the standard for domestic flights and four hours as the standard for international flights. Guidance published by DOT implementing section 415 retained these definitions. In compliance with the terms of the statute, the guidance specified the deadline for submitting airport contingency plans as May 14, 2012. The guidance is currently available at http://airconsumer.ost.dot.gov/whatsnew.htm under the reference P.L. 112-95: Filing tarmac delay contingency plans with DOT.

G.2 Small Community Air Service Development Program Section 429 of the 2012 Reform Act addresses the Small Community Air Service Development Program (SCASDP). Section 429(a) modifies the criteria for awarding grants to encourage multiple communities to submit a proposal for regional air service at a single point. Section 429(b) authorizes funding at $6 million per year, without reference to a source of funds. Since the program s inception, Congress has funded SCASDP out of the AIP appropriation in the annual DOT appropriation bill. The level of funding and funding source will continue to be determined in the annual appropriation process. G.3 Essential Air Service Revisions The House and Senate bills include a number of revisions to the Essential Air Service (EAS) Program. Many of these revisions are intended to make it easier for communities to retain subsidized essential air service threatened by rising subsidy costs. The revisions for the most part address technical provisions in the EAS program and will not be discussed in this subsection or in Table 6. One revision that could adversely affect certain EAS communities is contained in 421. Section 421 requires that airports have at least 10 passenger enplanements per day to qualify for subsidized air service. Communities that are more than 175 driving miles from a medium or large hub airport are excluded from the requirement. In addition, DOT may grant waivers from the requirement to communities demonstrating that the failure to meet the 10 enplanement threshold is due to a temporary decline. Communities in Alaska and Hawaii are excluded from the requirement. Section 826 requires TSA to assure that advanced imaging technology, including back-scatter x-ray devices and millimeter wave detectors, deployed after June 1, 2012 employ automatic target recognition software that produces a generic image of the individual that is the same for all other screened individuals. Section 830 amends the security screening opt-out program to require applications to be processed within 120 days. It also requires the TSA to approve an application if approval would not compromise security or detrimentally affect the cost-effectiveness of the screening programs at the airport. submitting an application must include a recommendation for the private screening company to replace TSA screeners. with opt-out applications pending between January 1 and February 3 2011 may request reconsideration if the TSA had not approved the application by the date of enactment of the 2012 Reform Act. TSA must provide a report to the airport, and to Congress whenever it denies an optout application or request for reconsideration.

The security provisions are not included in any of the tables in the Appendix. Appendix Detailed Analysis of Bill Provisions The Appendix provides a detailed analysis of the House and Senate bills in the form of six Tables, as follows: Table 1 AIP Funding Table 2 AIP Eligibility Table 3 Grant Assurances, Other Requirements and Administrative Provisions Table 4 PFC Provisions Table 5 Environmental Provisions Table 6 Air Service Provisions Each table lists a subject area; the provisions of the 2012 FAA Reform Act; current law, if applicable; and a discussion of the impact of provisions on airports. To assist in comparisons with the discussion of the House and Senate bills in Unison s prior White Paper, the provisions are grouped and ordered to conform to the groupings of the prior White Paper. 1. House and Senate provisions which correspond to each other, generally ordered by House bill section number 2. House bill provisions with no corresponding provision in the Senate bill, generally ordered by House bill section number 3. Senate bill provisions with no corresponding provision in the House bill, generally ordered by Senate bill section number For more information about Unison Consulting or how our team of consultants can find the right solution for you, visit us at www.unison-ucg.com.

Table 1 AIP Funding... I-2 Table 2 Eligibility And Modifications To Special Programs... I-9 Table 3 Grant Assurances, Miscellaneous Requirements And Administrative Provisions... I-16 Table 4 Passenger Facility Charge (PFC) Provisions... I-35 Table 5 Environmental Provisions Affecting... I-36 Table 6 Air Service Provisions Affecting And Communities... I-45

TABLE 1 AIP FUNDING AIP funding level Pub. L. 112-95 Section No. 101 FY 2012 through FY2015 -- $3.35B per year House or Senate bill Neither. Final provision is a compromise between House bill which was lower and Senate bill which was higher $3.5B authorized for FY 2011 Impact of Pub. L. 112-xxx on Pub. L. 112-95 represents a $150 million reduction in AIP from prior year. Impact will be felt in cargo apportionment, state apportionment by formula, noise set aside, Military Airport Program, reliever set aside and general discretionary funds. Each of these components of AIP are directly or indirectly based on the overall level of AIP. AIP amounts are subject to reduction through appropriations process. Airport Cooperative Research (ACRP) Funding 901, 906 Makes authority for program permanent. Specifically authorizes funding out of accounts identified in the National Research Plan House bill $15 million available for ACRP from funds made available for AIP through FAA appropriation legislation Although ACRP is made permanent and funding is explicitly authorized, there is no guaranteed funding level. Continued guaranteed funding may depend on appropriation legislation.

TABLE 1 AIP FUNDING (CONTINUED) Pub. L. 112-95 Section No. Federal share 137 95% Federal share for small airports receiving subsidized Essential Air Service and located in areas meeting criteria as economically depressed as determined by the Secretary of Commerce 90 percent for other small airports 75% for medium and large hubs, except share for noise projects is 80% Small hubs growing to medium hub retain 90% Federal share for two years House or Senate bill House bill 95% federal share for airports other than large and medium hubs. 75% percent federal share for medium and large hubs, except share for noise projects is 80%. 95% share would revert to 90% with expiration of authorization The legislation returns the federal share for small airports to percentage in effect prior to 9/11, except for EAS subsidized communities in economically depressed areas. Small airports (other than those meeting the exception) will have to pay an additional five percent of project costs on AIP funded projects. The legislation preserves temporarily the higher federal share for small hub airports transitioning to medium hub status

TABLE 1 AIP FUNDING (CONTINUED) Use of prior year s apportionments Pub. L. 112-95 Section No. 141 Permits an airport that previously qualified for passenger apportionment to keep the apportionment if it loses scheduled service, so long as it has certificated large aircraft service and it meets the 10,000 enplanement minimum that had 10,000 enplanements and scheduled service in CY 2007 may retain their FY 2009 passenger apportionments in FYs 2012 & 2013, even if traffic falls below 10,000 House or Senate bill Both House and Senate bills included this provision. The provision was updated in conference to cover current fiscal year and succeeding fiscal year. Airport must have scheduled service and at least 10,000 passenger enplanements to qualify for passenger apportionments Eligibility for passenger apportionments is determined each year based on most recent calendar year enplanement data Section 141 protects small communities that suffered service interruptions or traffic declines due to 2008 fuel spike and recession to continue to qualify for passenger apportionment funds on a temporary basis. Preserving passenger apportionments for these airports will mean less AIP discretionary funds than would otherwise be available.

TABLE 1 AIP FUNDING (CONTINUED) U.S. Territory minimum apportionment guarantee Contract Tower Program Pub. L. 112-95 Section No. 142 Specifies that FAA shall apportion funds to airports in Puerto Rico and U.S. territories in accordance with statutory provisions on apportionments and clarifies that FAA is permitted to award discretionary grants to airports in Puerto Rico and U.S. territories. 147 Provides airports currently in regular Contract Tower Program with 18 month grace period after their benefit cost ratio falls below 1, before they must enter the cost sharing program Allows funds not needed in regular contract tower program to be spent on cost-sharing program and vice-versa Increases funding for costsharing program to $10.35 million per year Maximum AIP grant share for construction of contract tower increased to $2 M House or Senate bill House bill, although section 142 includes references to territories. Original House bill applied only to Puerto Rico. The Senate bill would have guaranteed a minimum of $1.5% of all apportioned funds to Puerto Rico and the territories. Both House and Senate bills had provisions addressing contract towers that were different than the final bill. Both the House and Senate bills included a cap on the local match under the costshare program. The cap is not included in the final legislation. Authorized funding for cost-share program in section 147 is higher than either House or Senate bills. Passenger and cargo apportionments calculated in same way as states. Non-primary airport unassigned apportionment for Puerto Rico is calculated in same way as the 50 states. in the U.S. territory qualify for 0.66% of funds available for unassigned apportionments. Airport can be transferred to cost-sharing program as soon as BC ratio falls below 1 No transfer of unused funds between regular program and cost sharing program Maximum AIP grant share for contract tower construction is $1.5 million Section 142 confirms current practice without change. Therefore, there is no impact. Section 147 potentially reduces cost of participating in the contract tower program for those airports with the lowest level of activity. Increased funding for cost-sharing program, if appropriated, may permit FAA to accept more airports into the program. Increased cap on AIP funding of tower construction could reduce cost to airports for constructing contract towers.

Study of NPIAS and passenger apportionments Entitlement Turn-back for PFC collections Pub. L. 112-95 Section No. 155 Directs DOT to conduct a study of the NPIAS, including, but not limited to: Criteria for including airports in NPIAS Changes in airport capital needs reported in two earlier NPIAS reports compared with funds apportioned to individual airports Feasibility of apportioning passenger entitlements based on each primary airport s share of passenger traffic in CY 2009. Review of methods that primary airports with 15,000 enplanements or less used to meet 10,000 passenger threshold, including use of subsidies. Report to Congress is due 36 months after study begins 143 Reduces the passenger entitlement turn-back for PFCs collected at Hawaiian airports in proportion to interisland traffic TABLE 1 AIP FUNDING (CONTINUED) House or Senate bill House bill N/A Impact of the provisions depends on the results of the study House bill Amount of PFC turn- back is calculated based on PFCs collected from all passengers Section 143 increases the amount of passenger entitlements for medium and large hub airports in Hawaii imposing a PFC. A corresponding decrease in Small Airport Fund will result.

Noise Set- Aside Orphan aviation earmarks Pub. L. 112-95 Section No. 145 Noise Set-Aside is established at 35% of the discretionary fund with a cap of $300 million. Noise set-aside expanded to cover Water Pollution Control Act mitigation projects required in FAA environmental documents 825 Specifies that an earmark for the FAA is rescinded after nine years if at least 90 percent of the earmark amount is still available for obligation. The FAA may delay the rescission if additional obligations will occur within 12 months. FAA must provide annual reports of unobligated earmark balances to the Office of Management and Budget, which in turn must submit an annual report to Congress TABLE 1 AIP FUNDING (CONTINUED) House or Senate bill Neither House nor Senate Noise-Set Aside is There is no immediate impact to bill. calculated as 35% of airports, because the current formula Senate bill would have discretionary fund, results in a noise-set aside amount established the Noise Set- with no cap. below the $300 million ceiling. Aside funding level at $300 Eligibility limited to Including water projects in eligibility for million, rather than using noise compatibility the set-aside continues the approach of this figure as a ceiling projects and Clean Air expanding eligibility started in Vision Act mitigation projects 100 with inclusion of Clean Air Act projects. Senate bill However, Senate bill applied to federal programs generally No sunset of AIP earmarks written into law Impact is unclear because FAA practice is not to set aside funds for earmarked projects if the project cannot go forward in the year the earmark is established. FAA will fund an earmark from current year AIP in the year the project is ready to move forward.

Airport and Airway Trust Fund Solvency Glycol Recovery Vehicles Pub. L. 112-95 Section No. 104 Limits budget authority from Trust Fund to 90% of the sum of current year receipts plus expenditures in FY 2013. For future years, the budgetary authority is that amount plus any excess of receipts plus interest over expenditures from the second preceding year. 132(a)(2) Amends definition of airport development to include acquisition of glycol recovery vehicles TABLE 1 AIP FUNDING (CONTINUED) House or Senate bill Senate bill, with modifications House and Senate bills 215 Amends definition of airport development to include acquisition of glycol recovery vehicles Budgetary authority is equal to full amount of current year receipts and interest. Prior year surpluses are not available. Eligibility limited to glycol application vehicles Impact depends on the size of any surplus from second preceding year. If surplus is large enough, budget authority may exceed that which would be provided under current law. This provision makes acquisition of glycol recovery vehicles more affordable to airports by allowing them to use AIP funds

TABLE 2 ELIGIBILITY AND MODIFICATIONS TO SPECIAL PROGRAMS Mobile refueler spill containment 132(a)(3) Includes construction fuel truck spill containment (within a fuel farm) at non-primary airports on a stand-alone basis in the definition of airport development To be eligible, the project must meet EPA standards. House or Senate bill House and Senate bills Fuel truck Containment project only eligible as part of a project to construct a fuel farm Fuel farm construction is eligible only at MAP airports or non-primary airports using nonprimary entitlements Permits fuel spill containment project to be funded on a stand-alone basis Permits use of AIP discretionary funds for fuel-truck spill containment Solid waste recycling plans 132(b), 133 Adds development of solid waste recycling plans to the list of activities within the definition of airport planning eligible for AIP funds. Requires any airport with a master plan that is applying for any AIP grant to include the feasibility of a solid waste recycling program in its master plan Both House and Senate bills No specific reference to solid waste recycling in either the definition of a planning project nor in the required elements of an AIP funded master plan Provides federal funding for development of recycling plans. FAA interprets the language requiring consideration of solid waste recycling plans to apply when an airport requests a grant for a master plan project.

TABLE 2 ELIGIBILITY AND MODIFICATIONS TO SPECIAL PROGRAMS (CONTINUED) House or Senate bill Discretionary funding of work done prior to execution of grant agreement in cold weather states 138(a) Allows discretionary funds to be used for work done before issuance of a grant if: Work is done in same fiscal year & is started before grant due to short construction season; All AIP administrative requirements are followed; Airport notifies FAA before work commences; Sponsor has alternative funding source; and Commencement of work does not affect priority 138(b) Amends allowable cost standards to include measures to increase the efficiency of an airport building meeting the following conditions: Measure meets criteria under the Energy Independence and Security Act of 2007 The measure is for an AIP eligible project and building Any initial cost increase is justified by life-cycle cost savings House and Senate bills Discretionary funds may only be used for work done after issuance of the grant, except project formulation costs Provision enables sponsors in cold weather states to expedite project construction of projects funded with discretionary grants (possibly gaining a construction season). Measures to improve efficiency of airport buildings House bill No specific eligibility for such measures Impact is unclear, because provision is limited to projects and buildings that are already eligible. Primary benefit may be to clarify that the incremental costs for efficiency measures are reimbursable with grant funds.

TABLE 2 ELIGIBILITY AND MODIFICATIONS TO SPECIAL PROGRAMS (CONTINUED) Relocation of sponsor owned facilities Marshall Islands, Micronesia & Palau 138(c) Allows use of entitlement funds to finance relocation or replacement of sponsor owned facilities if: Relocation is required to meet a change in FAA standards; The change in standards is beyond the sponsor s control 144 Extends eligibility for grants from discretionary fund and small airport fund to airports in Marshall Islands, Micronesia and Palau for duration of authorization House or Senate bill House and Senate bills House and Senate bills AIP funds may be used only for demolition of sponsor-owned facilities. Relocation or reconstruction of only third-party owned facilities is eligible for AIP. Eligibility for funding was scheduled to expire with last temporary extension of AIP. Expands AIP eligibility to more closely align with eligibility for relocation of privately owned facilities. However eligibility would be limited to entitlement funds and to projects required due to change in FAA standards Provision was originally proposed by FAA. Limits were based on sponsor s obligation to operate and maintain the airport to FAA standards. The provision maintains the status quo so there is no new impact. However, to extent grants are made to airports under this provision, a lower level of AIP funds will be available to airports within the United States. Military Airport Program (MAP) 146 Modifies MAP criteria as follows: may be included in program to support emergency diversions for transoceanic flights Federally owned airports may be included to meet Part 139 standards for diversion Number of general aviation (GA) airports eligible to participate is increased to three House bill Program limited to airports that reduce delays at an airport with at least 20,000 hours of delays or that enhance capacity in a metropolitan area or reduce flight delays. Only one GA airport may be designated in a fiscal year. Modifications on criteria to add airports supporting emergency diversions may be intended to benefit specific locations, which cannot be determined from legislation. Change in GA airport participation limit will benefit joint-use and former military airfields operating as civil GA airports by increasing the number of MAP slots available.

TABLE 2 ELIGIBILITY AND MODIFICATIONS TO SPECIAL PROGRAMS (CONTINUED) Metropolitan Washington Authority 150 Repeals cut-off dates for FAA s authority to approve new AIP grants or PFC applications for MWAA House or Senate bill House bill FAA s authority to issue new grants or approve new PFC applications for MWAA expires with current AIP authorization Section 150 eliminates unique restrictions on MWAA s ability to apply for and receive AIP grants and PFC approval. MWAA s airports would be treated like any other commercial service airport in the national system. Midway Island Airport 151 Extends eligibility for grants for projects at Midway Island Airport through duration of authorization House and Senate bills Eligibility expires with expiration of current AIP authorization This provision has no impact because it maintains current eligibility Correction to Surplus Property Act Eligible ARFF equipment 152(f) Restores priority for airports to receive surplus real property 132(a)(1) Amends definition of airport development to specify ARFF equipment at airports with scheduled service in 9-seat or larger aircraft. Corrects an oversight in legislative drafting when threshold for part 139 certificates was lowered to 9 seat scheduled aircraft House and Senate bills House bill have priority to receive only surplus personal property Current statute specifies 20-seat or larger aircraft, but FAA applies the lower threshold. This provision makes it easier to obtain surplus Federal real property to support civil airports There is no practical impact because FAA in fact funds ARFF equipment at part 139 airports with service from aircraft with 9-20 aircraft. Provision makes a technical correction

TABLE 2 ELIGIBILITY AND MODIFICATIONS TO SPECIAL PROGRAMS (CONTINUED) Preconditioned air and electrical power units at gates Environmental management systems (EMS) General aviation airports Revenue producing aeronautical support facilities 132(a)(3) Includes projects to provide preconditioned air and electrical power to aircraft parked at terminal gates in definition of airport development 132(b). Adds development of environmental management systems to list of activities within definition of airport planning 132(c) Adds definition of general aviation airport to statute 132(d) Adds a definition of revenue producing aeronautical support facilities to the statute 138(d) Clarifies that only construction of these facilities at non-primary airports may be funded with apportionment funds. House or Senate bill House bill House bill These projects are treated as terminal development, eligible for passenger entitlements at hub airports Projects are eligible for discretionary funds under VALE, which is limited to airports in Clean Air Act nonattainment or maintenance areas No specific reference to EMSs. FAA will consider funding creation of an EMS as an element of a master plan This provision appears to make these projects eligible for discretionary funds as airport development, without the need to qualify for VALE funding. This provision permits development of an EMS to be funded as a standalone project, rather than as a master plan element. House bill Term is not defined This provision has no practical impact, because it reflects current FAA administrative practice. House bill Current law refers to the costs of such facilities, without specifically referencing construction These provisions have no practical impact, because they codify FAA s interpretation. The revisions eliminate an ambiguity in current law.