Regulatory Alert: FAA Releases Proposed Rule to Update Passenger Facility Charge Program Regulations

The Federal Aviation Administration (FAA) on September 27 published a proposed rule that would make a series of changes to the regulations governing the passenger facility charge (PFC) program. Most of the proposed changes would codify into 14 C.F.R. Part 158 policies that FAA has already implemented through existing guidance, including the 'PFC Updates' the agency has published previously as interim guidance.

Based on our review, FAA's most significant proposed change is to codify interim guidance that the agency published in 2020 to implement the PFC streamlining provisions from the FAA Reauthorization Act of 2018. In that bill, Congress expanded a streamlined PFC application process-that previously only applied to non-hubs-to include small, medium, and large hubs. Despite clear direction from Congress and over our objections, FAA issued interim guidance in 2020 that only applied the expedited process to a narrow range of projects. In response, one of AAAE and ACI-NA's priorities for this year's FAA reauthorization bill is to ensure Congress makes it clear to FAA that the agency needs to apply the streamlined process to all projects for airports of all sizes. We will be making similar arguments in our comments to FAA in response to the proposal.

FAA's notice of proposed rulemaking (NPRM) on the PFC program was published in the Federal Register on September 27, triggering a 60-day comment period that will end on Monday, November 27. AAAE will be working with our members to develop and submit comments to the agency before the deadline.

Background. During consideration of the 2018 FAA reauthorization bill, AAAE, ACI-NA and airports from around the country successfully convinced Congress to adopt language calling on FAA to streamline the PFC application process for all hub sizes. The final bill, which Congress passed in October 2018, expanded the streamlined process already in place for non-hubs to small-, medium-, and large-hub airports. Instead of requiring airports to submit an application and wait 120 days for a decision, Congress required FAA to allow airports of all sizes to use an alternative process that only requires filing a notice of intent and waiting for an FAA acknowledgement within 30 days.

FAA's 2020 Interim Guidance on Streamlined PFC Procedures. In January 2020, FAA issued interim, internal guidance-known as PFC Update 73-20-that implemented the streamlined procedures for reviewing applications received from small-, medium-, or large-hub airports to impose and/or use PFCs. FAA's guidance outlined the process for these airports to submit a PFC application through the expedited process, which reduced the review time from 120 to 30 days. Unfortunately, the agency also outlined many notable projects that FAA indicated are not eligible for streamlining. These 'exemptions' were developed solely by FAA, not Congress. We have previously raised concerns with FAA that the agency has failed to properly implement the PFC streamlining provisions through the 2020 interim guidance.

Summary of FAA's Proposed Rule. FAA's proposed changes to the regulations governing the PFC program fall into three general categories: (1) implementing PFC-related provisions from the 2018 FAA reauthorization bill (i.e., streamlining PFC applications and project eligibility for PFC levels above $3); (2) improving PFC program oversight; and (3) miscellaneous amendments.

A summary of the proposed changes is provided as follows:

• Streamlining PFC Applications: FAA's proposed changes on PFC applications largely mirror the 2020 interim guidance that exempted a large scope of projects from the streamlined 'notice of intent' process. In the proposed rule, FAA indicated that projects involving the following are 'ineligible' for the streamlined procedures: (1) significant policy precedent; (2) significant legal issues; (3) significant controversy; (4) multimodal projects; (5) significant airport noise, access, or revenue diversion issues; (6) debt service on otherwise ineligible projects; (7) blending of two or more PFC decisions to obtain a uniform collection level; and (8) terminal building projects in excess of $25 million, except stand-alone passenger boarding bridges.  

• Project Eligibility for PFC Levels Above $3: Up until 2018, FAA provided that an airport project was only eligible for PFC funding at levels of $4 or $4.50 if, among other things, the project could not be paid for from funds reasonably expected to be available under the Airport Improvement Program (AIP). In addition, a project at a medium- or large-hub airport was only eligible for PFC funding at these levels if the project would make a 'significant contribution' to safety and security; increase carrier competition; reduce congestion; or reduce noise impacts. While the 2018 FAA reauthorization bill eliminated both these conditions, FAA's proposed rule would formally remove the requirements from Part 158. 

• Improving PFC Program Oversight: FAA's proposed changes formalize existing guidance and policies that require airports to submit timely audit reports and include a schedule of PFC revenues and expenditures in their audit. FAA also proposed to provide itself with additional authority to take 'further action' in response to an audit of an airport's imposition and use of PFC revenue, such as initiating informal resolution of any issues identified, termination, or other action that may be appropriate. 

• Miscellaneous Amendments: FAA proposed a series of miscellaneous amendments to 15 different sections in Part 158, which include the regulations governing the PFC program. We will be carefully reviewing each of these proposed changes to ensure they are simply procedural or technical in nature. FAA included a table in the proposal comparing the current and proposed Part 158 regulations. 

AAAE's Position. As part of AAAE and ACI-NA's joint priorities for the FAA reauthorization bill, we have been urging Congress to fully implement the PFC streamlining provision that was included in the FAA Reauthorization Act of 2018 to provide to airports of all sizes a streamlined process for imposing and using PFC revenue. The House and Senate versions of the current FAA reauthorization bill contain different proposals to address our request. The Senate bill would help by prohibiting DOT from objecting to streamlining procedures for terminal projects and projects that airports had already received federal funds. But it would codify some of the same exemptions that we oppose. The House-passed bill, on the other hand, would allow all airports to file a notice of intent to impose and use PFC revenue instead of filing an application.

In addition to our continued advocacy efforts on the Hill, we will be opposing the proposed change and urging FAA to implement the PFC streamlining provisions as Congress originally intended in the 2018 FAA reauthorization bill.

What's Next? FAA's proposed rule was published in the Federal Register on September 29, triggering a 60-day comment period. Comments from airports and the public will be due to the agency on or before Monday, November 27. Airport staff that are responsible for managing PFCs are highly encouraged to review the proposal. AAAE will be working with members to ensure we communicate the airport community's perspectives on the NPRM to FAA.