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Tuesday, August 23, 2011

Federal Aviation Administration (FAA) Reauthorization: An Overview of Legislative Action in the 112th Congress


Bart Elias, Coordinator
Specialist in Aviation Policy

Reauthorization of Federal Aviation Administration (FAA) programs has been an issue of considerable interest during the first session of the 112th Congress. The previous FAA authorization, Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, hereinafter referred to as “Vision 100”) expired at the end of FY2007. Attempts to enact a successor law failed in the 110th and 111th Congresses. As a result, aviation trust fund revenue collections and aviation program authority continued under a series of short-term extensions. Most recently, following a two-week lapse in aviation trust fund revenue collections and expenditure authority, the Airport and Airway Extension Act of 2011, Part IV (P.L. 112-27) was enacted on August 5, 2011 extending FAA authorization through September 16, 2011.

The House and Senate have passed separate versions of multiyear FAA reauthorization legislation (see S. 223 and H.R. 658), and the Senate has requested a conference to resolve the differences between the House-passed and Senate-passed bills. Whereas the Senate bill only covers FY2010 and FY2011, the House bill would authorize FAA programs through FY2014. For FY2011, the only year the two bills overlap, the House-passed total authorization level for FAA is $2,082 million less than that specified by the Senate. Moreover, the House-passed bill calls for further reductions in authorized FAA funding for FY2012 through FY2014. While these levels reflect broader government-wide efforts to reduce deficit spending, they could pose considerable challenges to ongoing air traffic modernization efforts, and affect FAA’s ability to address its future needs for controllers and technical specialists to operate and maintain the nation’s air traffic system. The Senate bill proposes an increase in jet fuel tax for general aviation and a new jet fuel surcharge for fractionally owned aircraft, while the House bill does not include any changes to existing aviation taxes and fees. Neither bill includes proposals to increase the cap on passenger facility charges, and the House bill does not include the controversial provision passed by the House in the 111th Congress to bring non-aviation employees of express carriers under the National Labor Relations Act instead of the Railway Labor Act.

Key issues addressed in the FAA reauthorization bills include provisions intended to improve the management of and accelerate progress on the Next Generation Air Transportation System (NextGen); address FAA workforce and facility consolidation issues; improve the safety of air ambulance operations; improve runway safety; increase oversight of air carriers and foreign repair stations; integrate unmanned aircraft into the national airspace system; and address aircraft and airport noise and emissions. While there are many similarities in language between the House-passed and Senate-passed bills, particularly with respect to major issues affecting FAA, several important differences remain to be reconciled. Provisions that may be of particular interest during this process include 

         significant differences in authorized funding levels and aviation fuel taxes between House and Senate versions; 
         a labor provision in the House bill that would overturn recent regulations that make it easier for certain employees covered under the Railway Labor Act to unionize; 
         provisions regarding the allocation of takeoff and departure slots at Reagan National Airport; and 
         provisions in the House bill to end the Essential Air Service (EAS) program, which subsidizes air carrier service to small and isolated communities.

Date of Report: August 9, 2011
Number of Pages: 51
Order Number: R41798
Price: $29.95

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Friday, August 12, 2011

Railroad Retirement Board: Trust Fund Investment Practices


Scott Szymendera
Analyst in Disability Policy

Beginning in 2002, a significant portion of the assets of the Railroad Retirement Board (RRB) have been invested in private stocks, bonds, and other investments. Prior to the Railroad Retirement and Survivors’ Improvement Act of 2001 (P.L. 107-90), surplus railroad retirement assets could only be invested in U.S. government securities—just as the Social Security trust funds must be invested. The 2001 act established the National Railroad Retirement Investment Trust (NRRIT; hereafter, the Trust) to manage and invest part of the RRB’s assets in the same way that the assets of private-sector and most state and local government pension plans are invested. The remainder of RRB’s assets continue to be invested solely in U.S. government securities.

Congress structured the Trust to assure independence of investment decisions and limit political interference. It also aimed to increase railroad retirement system funding, add enhanced benefits, potentially reduce taxes, and protect system financing in case of market downturns. The Trust’s assets are invested in a diversified portfolio, both to minimize investment risk and to avoid disproportionate influence over an industry or firm. Since the Trust is a nongovernmental agency, it is not subject to the same oversight as federal agencies. However, the act requires an annual management report to Congress.

The Trust’s investments have generally followed the markets’ recent performance. From FY2003 to FY2010, the Trust’s annual returns averaged 8.1%. This matches the expectations of the bill’s drafters, who assumed nominal annual returns of 8.0%. The recent economic downturn did not spare the Trust, which lost 19.1% in FY2008 and 0.7% in FY2009. However, the trust rebounded with a 11.2% rate of return in FY2010. As the Trust’s investment portfolio has diversified over time, its administrative expenses have steadily increased, to 33 basis points in FY2010, but remain low compared with industry standards.

The Trust is designed to maintain four to six years’ worth of benefits in case of lower-thanexpected returns. In order to maintain this balance, the tier II tax is set to automatically adjust to maintain the fund balance at four to six years. This tax adjustment would not require congressional action. No tax increase is scheduled at the time of this writing.

The goal of this report is to inform readers about the Trust, which is of particular interest to policymakers exploring the option of collective investment of the Social Security trust funds or establishing other private investment funds within the federal government.



Date of Report: August 2, 2011
Number of Pages: 11
Order Number: RS22782
Price: $29.95

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Monday, August 8, 2011

Accelerating Highway and Transit Project Delivery: Issues and Options for Congress

William J. Mallett
Specialist in Transportation Policy

Linda Luther
Analyst in Environmental Policy


Major highway and transit facilities can take somewhere on the order of 10 to 15 years to plan and build. The environmental review process required by the National Environmental Policy Act (NEPA) and other federal environmental laws and regulations is often cited as the main culprit for long delivery times. Available data and research, however, show that environmental review is typically not the greatest source of delay in surface transportation projects. Developing a community consensus on what to do, securing the funding, and dealing with affected residents and businesses, including utilities and railroads, also contribute to the long timelines required to complete certain projects.

Project delay can occur during any of the five main phases in delivering major highway and transit projects: planning; preliminary design and environmental review; final design; right-ofway acquisition and utility relocation; and construction. If it wishes to address project delay in the pending reauthorization of surface transportation projects, Congress has several options that might broadly affect all phases of project delivery in both highway and transit projects. Other possible options are targeted to specific issues that affect just one or two phases of a highway or transit project.

Broad options that Congress might consider for accelerating project delivery are: 

·         devolving federal surface transportation funding and the associated federal requirements back to the states; 
·         creating an office within the Department of Transportation responsible for expediting project delivery; 7
·         new initiatives for encouraging and rewarding collaboration between federal, state, and local agencies, such as a requirement in law for partnering plans, funding an awards program for outstanding collaboration, or creation of a special research and technical training center devoted to transportation project delivery. 
More narrowly tailored options for specific phases or modes include: 
·         certifying states to use their own procedures to protect dislocated property owners and tenants; 
·         reducing the number of steps in the public transit New Starts program and the elimination of the alternatives analysis that is often seen as a duplication of the requirements in NEPA; 
·         providing the Federal Transit Administration with the ability to “fast-track” New Starts projects that are low-risk; 
·         creation of an Integrated Planning Pilot Project, under the Special Experiment Program authority that currently exists for the Federal Highway Administration; 
·         making permanent the Surface Transportation Project Delivery Pilot Program and expanding it to allow delegation of NEPA authority for highway projects to any state.


Date of Report: August 3, 2011
Number of Pages: 31
Order Number: R41947
Price: $29.95

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Challenge to the Boeing-Airbus Duopoly in Civil Aircraft: Issues for Competitiveness


Glennon J. Harrison
Specialist in Industry Policy

The importance of a successful aerospace industry to the United States economy has been repeatedly acknowledged by President Obama and members of his Cabinet, many Members of Congress, and by all concerned with the competitive fortunes of the U.S. aircraft manufacturing industry. The U.S. aerospace industry is highly competitive and global in scope. U.S. firms manufacture a wide range of products for civil and defense purposes and, in 2010, the value of aerospace industry shipments was estimated at $171 billion, of which civil aircraft and aircraft parts accounted for over half of all U.S. aerospace shipments. In 2010, the U.S. aerospace industry exported nearly $78 billion in products, of which $67 billion (or 86% of total exports) were civil aircraft, engines, equipment, and parts. The U.S. trade surplus (net exports) in aerospace products in 2010 was $43.6 billion—higher than for any other manufacturing industry. Aerospace employment totaled 477,000 workers, of which 228,400 were engaged in the manufacture of aircraft, 76,400 in the manufacture of engines and engine parts, and 97,600 in the manufacture of other parts and equipment. According to the International Trade Administration, “more jobs in the United States were supported by exports of U.S. aerospace products than of any other manufacturing or service industry.”

Boeing is the only U.S. manufacturer of large civil aircraft. Civil aircraft engines are manufactured by General Electric (GE), in partnership with Safran (of France), and by Pratt & Whitney. Numerous firms manufacture sections and parts of the airframe, as well as original equipment for both domestic and foreign airframe manufacturers. The civil and military aerospace sectors are complementary in that many firms manufacture products for both. Although the products tend to be dissimilar, workforce skills are transferable, so a decline in military aerospace budgets or private sector spending on civil aircraft have significant economic and competitive effects for the United States.

A major issue for policymakers is whether the United States can sustain its preeminent position in aerospace, given the intentions of numerous foreign manufacturers to enter the small commercial jet aircraft segment by 2016. That segment accounts for nearly half of all commercial aircraft revenues and for more than 60% of commercial aircraft deliveries. It is also the gateway to building larger commercial aircraft. Boeing and Airbus are the sole rivals across all segments of large commercial aircraft manufacturing, but during the next decade both will confront a potentially serious challenge in one of the most important segments of their business, small commercial jets (which are also referred to as narrow-body or single-aisle aircraft). The CEOs of Boeing and Airbus have both agreed that their duopoly over small commercial jets is nearly at an end.

Boeing and Airbus will face competition from government-owned and subsidized firms in Russia and China, as well as companies in Canada, Brazil, and Japan. Several factors will determine the outcome of the coming competition in small commercial jets, including the openness of markets to foreign commercial aircraft and aircraft engines and parts; whether state-owned aircraft manufacturers continue to receive substantial government subsidies; whether the challengers to Boeing and Airbus achieve their goal of building innovative, efficient aircraft that establish excellent safety and service records; whether airlines will buy aircraft from companies that have no track record; and the effect of collaborative partnerships with other aircraft manufacturers and suppliers as a strategy for success. Boeing and Airbus are engaged in a struggle to be the world’s preeminent manufacturer of civil aircraft and both have a depth of resources unmatched elsewhere. The competitive stakes for both companies will be very high during the next decade.



Date of Report: July 25, 2011
Number of Pages: 32
Order Number: R41925
Price: $29.95

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Friday, August 5, 2011

Federal Aviation Administration (FAA) Reauthorization: An Overview of Legislative Action in the 112th Congress


Bart Elias, Coordinator
Specialist in Aviation Policy

Reauthorization of Federal Aviation Administration (FAA) programs has been an issue of considerable interest during the first session of the 112th Congress. The previous FAA authorization, Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, hereinafter referred to as “Vision 100”) expired at the end of FY2007. Attempts to enact a successor law failed in the 110th and 111th Congresses. As a result, aviation trust fund revenue collections and aviation program authority continued under a series of short-term extensions. The latest of these, the Airport and Airway Extension Act of 2011, Part III (P.L. 112-21) expired on July 22, 2011, resulting in a lapse in aviation trust fund revenue collections and expenditure authority.

The House and Senate have passed separate versions of multiyear FAA reauthorization legislation (see S. 223 and H.R. 658), and the Senate has requested a conference to resolve the differences between the House-passed and Senate-passed bills. Whereas the Senate bill only covers FY2010 and FY2011, the House bill would authorize FAA programs through FY2014. For FY2011, the only year the two bills overlap, the House-passed total authorization level for FAA is $2,082 million less than that specified by the Senate. Moreover, the House-passed bill calls for further reductions in authorized FAA funding for FY2012 through FY2014. While these levels reflect broader government-wide efforts to reduce deficit spending, they could pose considerable challenges to ongoing air traffic modernization efforts, and affect FAA’s ability to address its future needs for controllers and technical specialists to operate and maintain the nation’s air traffic system. The Senate bill proposes an increase in jet fuel tax for general aviation and a new jet fuel surcharge for fractionally owned aircraft, while the House bill does not include any changes to existing aviation taxes and fees. Neither bill includes proposals to increase the cap on passenger facility charges, and the House bill does not include the controversial provision passed by the House in the 111
th Congress to bring non-aviation employees of express carriers under the National Labor Relations Act instead of the Railway Labor Act.

Key issues addressed in the FAA reauthorization bills include provisions intended to improve the management of and accelerate progress on the Next Generation Air Transportation System (NextGen); address FAA workforce and facility consolidation issues; improve the safety of air ambulance operations; improve runway safety; increase oversight of air carriers and foreign repair stations; integrate unmanned aircraft into the national airspace system; and address aircraft and airport noise and emissions.

While there are many similarities in language between the House-passed and Senate-passed bills, particularly with respect to major issues affecting FAA, several important differences remain to be reconciled. Provisions that may be of particular interest during this process include 

          significant differences in authorized funding levels and aviation fuel taxes between House and Senate versions; 
          a labor provision in the House bill that would overturn recent regulations that make it easier for certain employees covered under the Railway Labor Act to unionize; 
          provisions regarding the allocation of takeoff and departure slots at Reagan National Airport; and 
          provisions in the House bill to end the Essential Air Service (EAS) program, which subsidizes air carrier service to small and isolated communities.

Date of Report: July 26, 2011
Number of Pages: 51
Order Number: R41798
Price: $29.95

Follow us on TWITTER at
http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.