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Notice

Airport Improvement Program: Proposed Changes to Benefit Cost Analysis (BCA) Threshold

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Information about this document as published in the Federal Register.

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AGENCY:

Federal Aviation Administration (FAA), Department of Transportation (DOT).

ACTION:

Notice of Availability of Draft Guidance and Request for Comments.

SUMMARY:

The Federal Aviation Administration (FAA) is issuing this Notice to advise that FAA has developed draft guidance modifying its policy requiring benefit cost analyses (BCA) for capacity projects when applying for Airport Improvement Program (AIP) grants for capacity projects at the discretion of the Secretary of Transportation. This modification proposes to raise the threshold at which BCAs are required, from $5 million to $10 million in AIP Discretionary funds.

FAA invites airport sponsors and other interested parties to comment on the draft guidance. FAA will consider these comments in promulgating final BCA guidance for airport sponsors.

DATES:

Send your comments on or before January 31, 2011. The FAA will consider comments received on the proposed policy guidance. Any necessary or appropriate revision to the guidance resulting from the comments received will be adopted as of the date of a subsequent publication in the Federal Register.

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FOR FURTHER INFORMATION CONTACT:

Dennis Walsh, Financial Analysis and Passenger Facility Charge Branch (APP-510), Room 619, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591; Start Printed Page 78799 telephone: (202) 493-4890, e-mail: dennis.walsh@faa.gov. A draft Program Guidance Letter is available on-line at http://www.faa.gov/​airports/​aip/​bc_​analysis/​. In addition, hard copies can be reviewed at Room 619, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591.

Comments Invited: ADDRESSES: You may send comments [identified by Docket Number FAA-2010-1220] using any of the following methods:

  • Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your comments electronically.
  • Mail: Docket Operations, U.S. Department of Transportation, West Building, Ground Floor, Room W12-140, Routing Symbol M-30, 1200 New Jersey Avenue, SE., Washington, DC 20590.
  • Fax: 1-202-493-2251.
  • Hand Delivery: To Docket Operations, Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Privacy: We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. For more information, see the Privacy Act discussion in the SUPPLEMENTARY INFORMATION section of this document.

Docket: To read background documents or comments received, go to http://www.regulations.gov at any time or to Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

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SUPPLEMENTARY INFORMATION:

Title 49 U.S.C. Section 47115(d) specifies that, in selecting projects for discretionary grants to preserve and enhance capacity at airports, the Secretary must consider the benefits and costs of the projects. In 1994, FAA established its policy on Benefit Cost Analysis (BCA) requirements for airport capacity projects; factors leading to these requirements included:

a. The need to improve the effectiveness of Federal airport infrastructure investments in light of a decline in Federal AIP budgets;

b. Issuance of Executive Order 12893, “Principles for Federal Infrastructure Investments” (January 26, 1994);

c. Guidance from Congress citing the need for economic airport investment criteria; and

d. Statutory language from 1994 included in Title 49 U.S.C. Section 47115(d) specifies that in selecting projects for discretionary grants to preserve and enhance capacity at airports, the Secretary shall consider the benefits and costs of the projects (See 49 U.S.C. 47115. Discretionary Fund).

The FAA implemented the BCA policy to include this requirement for capacity projects at all categories of airports in order to limit FAA's risks when investing large amounts of discretionary funds. The FAA uses the conclusions reached in the BCA review to determine policy and funding decisions on possible future Federal investments.

In 1997, FAA implemented a new BCA policy which transferred the responsibility of preparing the BCA from FAA to the sponsor. In addition, the policy lowered the dollar threshold from $10 million in AIP Discretionary funds (established in 1994) to $5 million, citing three reasons related to Executive Order 12893, technical feasibility of lowering the threshold and workload considerations.

The change to the $5 million threshold was made policy in 1997 and formalized in a 1999 Federal Register notice, Federal Aviation Administration Policy and Final Guidance Regarding Benefit Cost Analysis (BCA) on Airport Capacity Projects for FAA Decisions on Airport Improvement Program (AIP) Discretionary Grants and Letters of Intent (LOI), 64 FR 70107 (December 15, 1999).

Since 1997, policy has required sponsors to conduct BCAs for capacity projects for which more than $5 million in AIP Discretionary funding will be requested. In developing the draft guidance increasing the threshold, FAA reviewed the reasons why the BCA threshold amount was lowered in 1997 and concluded that the previous reasons do not present a sufficient basis to warrant maintaining the $5 million level threshold today.

FAA has gained valuable experience assessing the implementation of the policy and the need to further clarify the threshold requirements for BCA. The $5 million threshold has remained unchanged for over 13 years while the cost of construction has risen significantly. A construction cost of $5 million in 1997 was equivalent to $9.8 million in July 2008. The $5 million threshold has required both FAA and sponsors of non-primary and non-hub primary airports to devote substantial financial and staff resources in preparing and evaluating BCAs for relatively small projects with readily apparent capacity benefits.

Based on the increase in construction costs, FAA has concluded that $10 million in AIP Discretionary funds is the appropriate threshold for fiscal year 2011 and beyond. Further explanation for this conclusion is detailed in the draft PGL. Under the draft guidance, the BCA threshold is being increased to $10 million, the FAA would retain the right to require a BCA for any capacity project, in order to evaluate the reasonableness of project costs relative to project benefits.

Additionally, FAA is inviting airport sponsors and other interested parties to comment on the new $10 million threshold for which a BCA must be performed.

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Issued in Washington, DC on December 8, 2010.

Frank San Martin,

Manager, Airports Financial Assistance Division.

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[FR Doc. 2010-31614 Filed 12-15-10; 8:45 am]

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