Congress passed the FAA Reauthorization Act of 2024 (the Act) yesterday, sending it to the President’s desk to be signed into law this week. Once signed, the Act will reauthorize the Federal Aviation Administration (FAA), the Airport Improvement Program (AIP), and numerous other aviation-related federal programs through September 2028. Several airport-industry organizations have already comprehensively summarized the Act’s major provisions. Rather than repeat those summaries, this Airport Law Alert focuses on several provisions in the Act of particular interest to airport lawyers and which may require further legal analysis. In particular, this Alert discusses the Act’s provisions regarding airport land use oversight, environmental reviews, financial penalties for grant assurance violations and revenue diversion, disputes over airport sponsorship, and AIP eligibility and procedures.
FAA’s Land Use Oversight and Former Section 163
One of the most important provisions of the Act is Section 743, which substantially revises Section 163 of the FAA Reauthorization Act of 2018 (Section 163). Section 163 was intended to substantially limit FAA authority to regulate airport development that is not related to the agency’s core aeronautical expertise. Since 2018, however, sponsors and FAA have often disagreed on the scope of FAA’s remaining authority under the law, and FAA has implemented at times cumbersome procedures to determine whether or not it has authority over particular projects or components thereof. (Our Firm has previously co-authored a guide to Section 163 and prepared an analysis on the FAA’s subsequently released guidance.)
Section 743 aims to resolve some of the ambiguity that resulted from FAA’s interpretation and implementation of Section 163. Not surprisingly, however, the language in Section 743 creates new potential uncertainties.
The new law continues the paradigm established by Section 163, namely that FAA’s authority should be limited in areas outside its core expertise. As under Section 163, Section 743 generally provides that FAA retains authority to regulate activities that: (1) “materially impact the safe and efficient operation of aircraft at, to, or from the airport,” (2) “adversely affect the safety of people or property on the ground as a result of aircraft operations”, or (3) “adversely affect the value of prior Federal investments to a significant extent.”
Section 743 makes several changes to the prior framework. First, while Section 163 was framed in terms of FAA’s authority to regulate certain “uses” of airport property, Section 743 is framed in terms of FAA’s authority to regulate certain “projects.” This change codifies FAA practice as set forth in its guidance. Section 743 also reverses FAA’s prior position that the agency could exercise jurisdiction over an entire project even if only a portion of the project lies on property subject to FAA jurisdiction. Instead, Section 743 provides that, if FAA has land use authority only over a portion of the project, the agency may not extend its authority to any “non-aeronautical portions of the project.” Although not entirely clear, it appears this language presumes that FAA would retain jurisdiction over the aeronautical portions of a project that lies on both regulated and non-regulated land.
Second, Section 743 clarifies that FAA retains jurisdiction over any property that was acquired with federal assistance – without exception. Under Section 163, FAA had taken the position that it lacked approval authority for some projects on land acquired with federal assistance, so long as the proposed land use did not adversely affect the value of the federal investment to a significant extent.
Third, Section 743 eliminates FAA’s so-called “Section 163 determinations,” whereby the agency required airport sponsors to obtain a jurisdictional determination for every FAA approval – even in cases where FAA’s authority (or lack of authority) was clear under Section 163. Section 743 replaces that time-consuming (and sometimes onerous) requirement with a new notice requirement. Now, sponsors need only notify FAA before proceeding with a project outside of FAA jurisdiction. FAA has 45 days to assert jurisdiction, or the agency loses jurisdiction over that project. It is not yet clear what opportunities, if any, airport sponsors may have to challenge FAA’s erroneous assertions of jurisdiction under these new procedures.
Finally, Section 743 introduces substantial uncertainty regarding FAA’s authority to regulate projects over which FAA has no approval authority. Specifically, Section 743 provides that FAA may not “directly or indirectly regulate or place conditions on . . . any project,” for which it lacks ALP approval authority, expressly including exercising jurisdiction “through any grant assurance.” This broad language appears to prohibit FAA from enforcing any grant assurance obligations with respect to a project that falls outside its land use approval authority.
It may be some time before the changes wrought by Section 743 are fully understood. After Congress enacted Section 163, it took FAA almost two years to issue guidance, leading to a period of considerable uncertainty. FAA’s current guidance regarding Section 163 is likely no longer effective, as it no longer reflects the state of the law. Airport sponsors will have to assess how Section 743 affects their specific projects and move forward without the benefit of agency guidance.
For questions regarding the changes to Section 163, and the new provisions of Section 743, please contact Katie van Heuven or Peter Kirsch.
Environmental Reviews
Section 783 amends 49 U.S.C. § 47171, which addresses expedited and coordinated environmental reviews of airport projects under the National Environmental Policy Act (NEPA). The new law expands the streamlined environmental review requirements to include a broader set of airport projects, adding terminal development projects and all airport capacity enhancement projects, not just those at congested airports. It also adds a new process for determining aviation safety projects that should receive priority streamlined reviews. Although most of the new language is procedural and largely restates provisions already codified in the NEPA statute and its regulations, one change that is noteworthy is the requirement (with some exceptions) to include the final EIS and Record of Decision in one document.
By far the most significant change to environmental reviews is Section 788, which establishes two new NEPA categorical exclusions. These categorical exclusions are available for projects approved, permitted, financed, or authorized by FAA that: (1) receive less than $6 million of federal funds; or (2) are for the repair or reconstruction of any airport facility, runway, taxiway, or other similar structure that is damaged in connection with a declared disaster or emergency. The Act provides that these actions are presumed to be covered by a categorical exclusion, unless there are “extraordinary circumstances” with respect to the action – i.e., the project is known or expected to have potentially significant environmental impacts. What is important here is that the eligibility for a NEPA categorical exclusion is based upon the level of federal investment, rather than on other FAA approvals, as was the prior law. The new law will require FAA to update its list of categorical exclusions and perhaps provide more guidance on what constitute extraordinary circumstances.
For questions regarding the changes to the environmental review process under NEPA, please contact Katie van Heuven.
New Grant Assurance and Monetary Penalties
The Act increases the potential penalty for airport sponsors who unlawfully divert airport revenue. Under preexisting law, FAA could order a sponsor to reimburse the airport enterprise account for unlawfully diverted revenue and, if the sponsor failed to do, FAA could withhold grants from the airport sponsor equal to the diverted amount. If the sponsor failed to reimburse the airport enterprise account and FAA could not withhold a sufficient amount, FAA could seek judicially to recover the illegally diverted amount, plus interest. Section 703 of the Act now allows FAA to seek twice the value of the illegally diverted revenue if judicial action is required. However, Section 703 will only apply to funds illegally diverted after the enactment of the Act. (Separately, 49 U.S.C. § 46301(a)(3) permits the FAA to seek civil penalties of three times the amount of illegally diverted revenue within the statute of limitations.)
Section 770 of the Act requires FAA to establish a new grant assurance regarding leaded aviation gasoline, or “avgas.” Under this new assurance, if 100-octane low lead (100LL) avgas was available at a given airport at any time in 2022, whether through the sponsor or an FBO or other fuel provider, that sponsor may not restrict the sale or self-fueling of 100LL avgas until the earlier of: (a) Dec. 31, 2030 or (b) the date on which the sponsor, or any retail fueler at the airport, begins selling a form of unleaded avgas that FAA has approved as a replacement for 100LL and that FAA has deemed to meet industry standards. Crucially, Section 770 imposes a steep monetary penalty for noncompliance: Airport sponsors who violate this new grant assurance will face penalties of up to $5,000 per day.
Section 770 marks the first time that Congress has authorized a financial penalty for a violation of grant assurance obligations (aside from revenue diversion, which is subject to independent statutory requirements). While earlier versions of the bill proposed financial penalties for other grant assurance violations, Section 770 establishes a precedent that renders future financial penalties for grant noncompliance more palatable in future legislative proposals.
For questions regarding the new grant assurance and potential penalties, please contact Eric Pilsk.
Disputes Over Airport Sponsorship
Section 757 codifies existing FAA policy regarding which entity to recognize as an airport’s sponsor when two or more entities dispute who is the sponsor. Per Section 757, FAA “shall have the sole legal authority to approve any [disputed] change in the sponsorship” or “operational responsibility” of a publicly owned airport. Section 757 permits FAA to approve any disputed change in sponsorship only when the existing sponsor consents to the change or a court issues a final, non-reviewable order requiring such a change, and requires FAA to independently confirm that the new sponsor is able to satisfy all pertinent federal requirements. FAA may not “evaluate or approve” a disputed change in sponsorship while a legal dispute over the change is pending.
Section 757 is a response to several efforts by state legislators over the past decade to essentially seize control of major airports from local governments. In several states, including Georgia, North Carolina, Mississippi, and Tennessee, state lawmakers have attempted to shift control of their states’ busiest airports from the cities or local bodies that run them. By codifying FAA’s existing policy, the Act makes it more difficult for new administrations to modify the approach toward disputed changes in airport sponsorship, and may further dissuade states from attempt to take over locally controlled airports.
For questions regarding the changes to airport sponsorship disputes, please contact Peter Kirsch.
Advanced Air Mobility
The Act contains several provisions that would facilitate the adoption of advanced air mobility (AAM) in the United States, including by extending a pilot program to fund aircraft charging infrastructure, permitting AIP funding for other airside energy projects, and requiring FAA to accelerate its AAM rulemaking. Among other provisions, the Act, at Section 953, directs the Department of Transportation to work with the federal Council on Environmental Quality to develop “appropriate” new categorical exclusions under NEPA for on-airport vertiport projects. Section 955 requires FAA to finalize its proposed rule, issued last June, regarding pilot certification for, and operation of, powered-lift aircraft; Section 955 also requires the finalized version of that rule to include content intended to facilitate the qualification of powered-lift pilots. Section 957 gives FAA 40 months to revise air traffic control policies to allow powered-lift aircraft to use existing air traffic procedures, to the extent FAA deems it safe to do so, and to develop any necessary airport, heliport, and vertiport procedures for powered-lift aircraft. And Section 960 extends, by two years, a pilot program that grants up to $12.5 million per year to airports to develop vertiport and other AAM infrastructure, and expands the AAM infrastructure eligible for those grants.
For questions regarding these provisions or AAM matters generally, please contact Steven Osit.
AIP Eligibility and Project Requirements
Several sections of the Act expand the scope of projects eligible for AIP funding. Among other projects, Section 702 adds projects to promote airport sustainability and environmental resiliency, certain cybersecurity projects, fuel storage and systems for unleaded and hydrogen fuels, and certain runway and taxiway rehabilitation projects as eligible airport development projects. Section 702 also expands the categories of commercial service airports eligible to use AIP funds to acquire low-emission vehicles, develop low-emission fuel systems, electrify gates, and undertake related air-quality improvements. Several sections of the Act alter AIP funding criteria for various project types and airport categories, including, among other sections:
- Section 708, which increases the federal share of allowable AIP-funded project costs at non-hub and non-primary airports to 95 percent for fiscal years 2025 and 2026;
- Section 710, which requires FAA to issue AIP letters of intent to non-hub and non-primary airports (currently, only larger airports are eligible for such letters);
- Section 712, which revises various AIP apportionment formulas and creates a sliding scale of funding for certain smaller commercial service airports;
- Section 713, which reduces, from 75 to 60 percent, the share of AIP funding that a large or medium hub must return to FAA if it collects a $4.50 passenger facility charge; and
- Section 716, which simplifies the distribution formula for FAA’s small airport fund.
Title VII of the Act contains numerous, sometimes-technical changes to AIP formulas and eligibility; airport sponsors are encouraged to review those provisions of the law carefully. Generally, however, the changes expand airport sponsors’ eligibility for AIP funding and could prove especially beneficial to smaller commercial service airports.
For questions regarding AIP eligibility, please contact Nick Clabbers.
Further Reading
In addition to reviewing this Alert, airport sponsors are encouraged to review the text of the bill (available here) to understand the Act’s various airport-related provisions, including those concerning air traffic control staffing, contract tower programs and Essential Air Service. The House Committee summary is also a useful tool, available here. Many, but not all, of the key provisions for airport sponsors are included within Title VII of the Act. Both ACI-NA and AAAE have prepared helpful summaries of near-final draft versions of the Act (available for their members on their respective websites), and both of those organizations have released statements explaining the airport industry’s position on several of the Act’s provisions.
For additional information about provisions of the new law and how they may affect your airport, please contact the Firm attorney with whom you generally work.