The Senate tonight voted 75–20 to pass long-delayed legislation providing funding levels and reauthorizing programs for the Federal Aviation Administration (FAA). The Senate vote comes after the House of the Representatives passed the bill 248-169 on Friday, February 3. The bill now goes to the President, who is expected to sign it into law.

The FAA Modernization and Reform Act of 2012 (H.R. 658), provides $15.9 billion annually for the agency through 2015 for operations, facilities, airport projects, air traffic control modernization, research and development, and other programs and priorities. This annual funding level is nearly identical to the FAA’s 2012 budget.

The previous FAA reauthorization bill, enacted in 2003, has been extended 23 times since it expired in 2007 before House and Senate negotiators reached a final agreement on disputed issues on January 31 during a formal conference meeting.

Overview and Analysis
The conference agreement is the result of more than five years of work to settle major differences between multiple House and Senate versions of the bill. Traditionally a bi-partisan bill, the reauthorization process that began in 2007 was delayed by partisan differences over several controversial labor proposals and by the difficulty of passing new spending-related measures, among other issues.

Despite the delay in passing an FAA bill, the conference agreement is in many respects a better product than previous versions of the bill because it reflects substantial input from stakeholders ironed out over a long period of time. For instance, the bill addresses a major concern about leadership over the FAA’s air traffic control modernization program, known as NextGen, by establishing a Chief NextGen Officer position which would coordinate and oversee various NextGen projects and report directly to the FAA Administrator and to Congress. The bill also attempts to accelerate deployment of NextGen technologies and establishes performance metrics for NextGen operations.

The bill also resolves concerns over the safety of maintenance at FAA-certificated foreign repair stations by establishing a risk-based assessment system and setting minimum inspection requirements. Notably, the bill allows the FAA to accept inspection audits conducted by foreign aviation authorities operating under a bilateral maintenance agreement. This provision was included to recognize the 2008 E.U. – U.S. Bilateral Aviation Safety Agreement, which was ratified in 2011 and allows more than 1,200 U.S. repair stations to perform maintenance on European-registered aircraft. The U.S. enjoys a trade surplus with the E.U. in maintenance, and previous versions of the bill included language that would have effectively nullified this agreement and undermined the FAA’s global leadership on safety issues.

In response to the explosive growth of Unmanned Aircraft Systems (UAS), the bill requires the FAA for the first time to develop a plan to integrate UAS into the National Airspace System (NAS). This plan would address ways to overcome major impediments to integration including the development of sense and avoid capabilities (to prevent collisions) and standards for pilots and operators. It requires the FAA to set a timeframe for integrating UAS into the NAS, and to initiate an integration rulemaking no later than 18 months after submitting its report to Congress. The UAS community has been pushing the FAA to take these steps to accommodate the demand for UAS services from law enforcement and other constituencies. At the same time, other sectors of the aviation industry have expressed concerns about sharing airspace with UAS and how they can be integrated safely. The plan required by the bill seeks to speed up the process to integrate UAS while ensuring the safety of all users of the NAS.

One of the key sticking points that delayed completion of the bill was how to address funding levels. Past FAA reauthorizations increased funding for the FAA to address the increased cost of operating a major agency and to move forward on major programs like NextGen. However, the federal budget cuts approved in 2011 and the focus on debt reduction means that the FAA cannot expect annual increases in its budget. This is a major concern to the aviation community given the FAA’s responsibility to move air traffic safely and to certify new aircraft to keep the U.S. aerospace industry competitive. In the end, the middle ground approved by the conferees extends current funding levels to 2015. This does not guarantee that Congress won't appropriate less than what is authorized in the bill, but it is an acknowledgement by the conferees that funding is tight and agencies will have to do more with less until the economy improves and the deficit is under control.

Notably, the bill contains compromise language concerning union elections under the Railway Labor Act that would require at least 50 percent of a bargaining unit to petition for an election. Currently, elections can be called after 35 percent of a bargaining unit has signed a petition. This compromise was cut by Sen. Reid in order to remove language in the House version of the bill that would have nullified a rule issued by the Obama Administration stating that absent voters do not count as “no” votes for purposes of forming a union. Although the Airline Pilots Association and the National Air Traffic Controllers Association have supported the deal, almost all aviation sector unions are opposed to it and claim it is a significant setback for worker’s rights. As a result, more than a dozen prominent Democrats in the Senate and all but 24 Democrats in the House voted against the bill.

The FAA Modernization and Reform Act of 2012 contains many other major provisions, which are summarized below. Former Sen. Byron Dorgan, and former Congressman Phil English, who Co-Chair Arent Fox’s Government Relations practice, and worked on FAA reauthorizations during their time in Congress, made the following statements concerning the FAA bill:

Sen. Dorgan:
“As the former Chairman of the Aviation Subcommittee, I know how important the FAA bill is to the aviation community and I'm glad that Democrats and Republicans were able to work together to resolve the tough issues that had prevented it from passing. Although the work continues, this investment will get us back on track to modernize our antiquated air traffic control system and deliver a 21st century aviation system that we desperately need. The bill also moves us forward on safety issues, not just through NextGen, but with the acknowledgement that we need to work with our bilateral partners in Europe and elsewhere to raise international safety standards. It’s a very good bill overall and the conferees should be proud of their accomplishment.”

Rep. English:
“The FAA bill is critically important legislation that is long overdue but will provide much needed investments for our airports and air traffic control system. After 23 extensions of the last bill, this four-year reauthorization will provide the stability that the FAA needs to make real progress on NextGen and it addresses many of the issues that need to be resolved for constituencies within the aviation community. Notably, it does not include tax increases on jet fuel and aviation gasoline that the general aviation community had supported in previous Congresses to help pay for NextGen, nor does it include any of the proposed fees on both commercial and general aviation flights that President Obama has requested, which the entire aviation industry opposes for being punitive and shortsighted. Although one can never rule out a tax increase being included in another bill, the fact that Congress eschewed raising taxes speaks volumes about how sensitive members are about supporting any kind of tax increase that could hurt a key industry.”

Summaries of Key Provisions
Funding Levels: the bill authorizes $63.4 billion over four years (FY 2012–FY 2015) for the FAA, an average of nearly $15.9 billion annually, which mirrors the FY 2012 spending level. Expenditures remain mostly flat, with temporary reductions in the operations and facilities and equipment accounts. Specific programs are broken down as follows, in billions unless otherwise noted:

Passenger Facility Charges (PFC’s): the bill does not include an increase in the Passenger Facility Charge, which the airport community requested. Rather, the bill makes permanent a pilot program allowing the collection of PFC’s at non-hub airports. It also redefines PFC’s as “charges” instead of “fees."

NextGen: the bill contains numerous provisions aimed at maturing and accelerating NextGen, including -

• Creation of a Chief NextGen Officer position at FAA to oversee all NextGen programs.
• Establishment of performance metrics for NextGen operations.
• A plan to accommodate the increase in certification applications for NextGen technologies.
• A rulemaking identifying the ADS-B In technology that will be required under NextGen.
• Public-private partnerships aimed at accelerating the installation of NextGen avionics on commercial and general aviation aircraft.
• Publication of a report outlining the Required Navigation Performance/Area Navigation (RNP/RNAV) procedures that will maximize fuel efficiency and airspace capacity at the 35 operational evolution partnership airports.

Foreign Repair Stations: the bill establishes a safety assessment system for part 145 repair stations that subjects them to inspections by FAA personnel based on risk, although all repair stations will be inspected at least once a year. The new system will accept inspection results conducted by foreign aviation authorities under a bilateral maintenance agreement, and requires these agreements to allow for unannounced inspections by FAA inspectors. The provision also requires DOT to engage with foreign countries to develop drug and alcohol testing standards for foreign repair station workers that are consistent with the laws of the countries in which FAA certificated repair stations are located.

Regulatory Interpretation: the bill addresses concerns raised by aircraft manufacturers that the FAA’s Aircraft Certification and Flight Standards offices issue inconsistent rulings on agency certification policies by establishing an advisory panel consisting of government and industry representatives who will study the issue and issue a report to Congress with recommendations to improve the certification process and communications between these offices.

Unmanned Aircraft Systems: the bill requires the FAA to develop a plan to integrate UAS into the NAS by 2015 and set performance and operational standards to ensure safety. It also requires the FAA to issue rules governing the use of UAS and to establish six test ranges at locations determined by the Administrator.

Cell Phones: requires the FAA to commence a study examining the in-flight use of cell phones in countries in which it is permitted. The FAA is required to review foreign government and air carrier policies, the extent to which foreign passengers use cell phones during flights, and provide a summary of the impact that cell phones have had on passengers' experiences. The FAA must publish its report for public comment.

Passenger Bill of Rights: includes pro-consumer requirements placed on airlines including developing emergency contingency plans for tarmac delays and ensuring the right of passengers to deplane during excessive delays under certain conditions. Does not codify a recent DOT rule that fines airlines for not allowing passengers to deplane after three hours of delay, but grants authority to DOT to determine what constitutes an excessive tarmac delay.

DCA Slots: establishes 16 new slots at National Airport, split evenly between incumbent carriers and new entrant carriers, for flights beyond 1,250 miles, subject to various requirements and conditions.

Essential Air Service: the bill reduces funding for EAS by $50 million between 2012 and 2015, requires the EAS communities located within 175 miles of a large or medium hub airport have at least 10 enplanements per day, and limits the program to communities currently receiving EAS service.

E.U. Emissions Trading System: the bill states the “Sense of Congress” that the EU should not extend its Emissions Trading System (ETS) proposal to overseas carriers without working through the International Civil Aviation Organization (ICAO), and that the US should use all political and diplomatic tools available to prevent ETS from being applied to US aircraft operators.

Charitable Medical Flights: the bill allows non-profit, volunteer pilot organizations to reimburse volunteer pilots for fuel costs associated with charitable medical flights, subject to certain conditions and standards.

Lithium Batteries: the bill requires regulations governing the air transportation of lithium batteries to be consistent with ICAO’s Technical Instructions for the Safe Transportation of Dangerous Goods by Air, except with respect to transportation on passenger aircraft. The provision also allows for the adoption of a targeted rule that goes beyond ICAO standards if a governmental body determines that lithium batteries were a contributing factor to an onboard fire.

Alternative Fuels: requires the FAA to establish a research program and a center of excellence to help develop jet fuels from alternative sources such as natural gas, biomass, and hydrogen. The program is authorized to issue grants and enter into public-private partnerships.

Union Elections: the conference report amends the rules governing runoff elections under the Railway Labor Act by specifying that in elections where there are three or more options, including the option of not being represented by a union, the National Mediation Board is required to arrange a runoff election between the options receiving the largest and second largest number of votes. It also raises the threshold required to call an election by requiring unionization supporters to secure the support of at least 50 percent of the workers in a bargaining unit.

Fractional Operators: for tax purposes, the bill reclassifies through 2015 fractional operations as noncommercial flights, and subjects them to the noncommercial fuel tax rate with an additional 14.1 cent per gallon surtax.

Major Rulemakings Mandated by the Bill
Automatic Dependent Surveillance Broadcast Services: requires FAA to issue, within a year, a rule that includes guidelines and regulations governing the use of ADS-B In technology. The rule must identify the type of ADS-B technology that will be required under NextGen and the benefits of this technology, and must require, subject to a readiness verification, that all aircraft operating in congested airspace be equipped with ADS-B In technology by 2020.

Unmanned Aircraft Systems: requires FAA to publish a final rule within 18 months governing the operation of small unmanned aircraft systems in the NAS. In addition, the bill requires FAA to issue a Notice of Proposed Rulemaking to implement the Administrator’s plan to integrate UAS in the NAS.

Non-Certified Maintenance Providers: requires the FAA to issue regulations within three years that limit who can perform maintenance on a part 121 commercial aircraft to airline employees, part 145 repair station employees, and contractors who meet part 121 and part 145 requirements.

Helicopter Air Ambulance Operations: requires the FAA to complete an ongoing rulemaking establishing flight crew and equipment standards for air ambulance flights by June 1, 2012.

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