Federal Aviation Administration==Authority To Auction Airport Arrival and Departure Slots and To Retain and Use Auction Proceeds
| Decision Date | 30 September 2008 |
| Docket Number | B-316796 |
| Parties | Federal Aviation Administration--Authority to Auction Airport Arrival and Departure Slots and to Retain and Use Auction Proceeds |
| Court | Comptroller General of the United States |
The Honor able James L. Oberstar Chairman Committee on Transportation and Infrastructure House of Representatives.
The Honor able Patty Murray Chairman Subcommittee on Transportation, Housing, and Urban Development, and Re lated Agencies Committee on Appropr iations United States Senate.
The Honor able Christopher S. Bond Ranking Minority Member Subcommittee on Transportation, Housing, and Urban Development, and Re lated Agencies Committee on Appropr iations United States Senate.
The Honor able Frank R. Lautenberg The Honor able Robert Menendez The Honor able Charles E. Schumer The Honor able Hillary Rodham Cl inton United States Senate.
This responds to your request for our legal opinion regarding the authority of the Federal Aviation Administration (FAA) to auction airport arrival and departure slots. As part of its efforts to reduce congestion in the national airspace, in April and May 2008, FAA issued proposed regulations to conduct such auctions at three New York-area airports- LaGuardia Airport (LaGuardia), John F. Kennedy International Airport (JFK), and Newark Liberty International Airport (Newark)-at some time in the future. [1] In August 2008, FAA announced that it was proceeding to auction two specific slots at Newark on September 3, an action that has since been administratively stayed. [2] On September 16, 2008, FAA announced that "[i]n accordance with rulemaking activity that is not yet complete" and "if the rule is adopted, " it May auction slots at Newark, LaGuardia and JFK starting on January 12, 2009 . [3] As agreed with your staff, this opinion addresses whether FAA has authority to auction slots and if it does, whether it May retain and use funds obtained through such auctions. [4]
We conclude that FAA currently lacks authority to auction arrival and departure slots, and thus also lacks authority to retain and use auction proceeds. [5] For the first time since it began regulating U.S. navigable airspace nearly 40 years ago, FAA now asserts that it May assign the use of that airspace using its general property management authority. According to FAA, slots are intangible "property" that it "constructs, " owns, and May "lease" for "adequate compensation" under 49 U.S.C. sections 106 (l)(6) and (n) and 40110(a)(2). An examination of those statutes read as a whole, however, makes clear that Congress was using the term "property" to refer to traditional forms of property. It was not referring to FAA's regulatory authority to assign airspace slots, no matter how valuable those slots May be in the hands of the regulated community. Related case law confirms our conclusion. The only other source of authority for FAA to raise funds in connection with its slot assignments is the Independent Offices Appropriations Act (IOAA), 31 U.S.C. sect. 9701, commonly referred to as the "user fee statute, " but that authority is currently unavailable. Since 1998, Congress has through annual appropriations restrictions, specifically prohibited FAA from imposing "new aviation user fees " and we conclude that proceeds from FAA's proposed auctions would constitute such a fee. Accordingly, in our opinion, FAA lacks a legal basis to go forward with the Newark auction or any other auction, and if FAA were to go forward with auctioning slots without obtaining the necessary authority and retained and used the proceeds, GAO would raise exceptions under its account settlement authority for violations of the "purpose statute, " 31 U.S.C sect. 1301(a), and the Antideficiency Act, 31 U.S.C. sect 1341(a)(1)(A). [6]
FAA's control of congestion in the national airspace by use of a "reservation" or "slot" system is not new. What is new is FAA's proposal to assign the slots by auction. FAA first instituted a slot control system nearly 40 years ago, in 1968, in the so-called High Density Rule. See 33 Fed. Reg. 17896, 17898 (Dec. 3, 1968); 14 C.F.R. sections 93.121-93.129 (1969). Supplementing the traditional first-come, first-served traffic control system the High Density Rule capped the number of hourly arrivals and departures permitted at five designated "high density traffic airports"-LaGuardia, JFK, Newark, Washington National Airport (Washington National), [7] and Chicago O'Hare International Airport - and required air carriers to obtain a "reservation" for these operations from Air Traffic Control (ATC). The number of reservations available for assignment varied by airport, time of day, and class of user.
In promulgating the High Density Rule, FAA acknowledged that it was acting pursuant to its regulatory authority to ensure the efficient use of the national airspace under sections 307(a) and (c) of the Federal Aviation Act of 1958. 33 Fed. Reg. at 17897, 17898. That act created FAA (as the Federal Aviation Agency) and directed the FAA Administrator to:
Federal Aviation Act of 1958, Pub. L. No. 85-726, sections 307(a), (c), 72 Stat. 731, 749-50, 49 U.S.C. sections 1348 (a), (c) (1968) (emphasis added). See generally Northwest Airlines, Inc. v. Goldschmidt, 645 F.2d 1309 (8 th Cir. 1981) (upholding 1980 amendment to High Density Rule as exercise of FAA's section 307(a) and (c) authority to regulate efficient use of airspace).
Reservations under the High Density Rule initially were allocated by agreements between the airlines (acting through airport scheduling committees) and ATC and by rule, the vast majority of reservations were set aside for assignment to scheduled air carriers. See 14 C.F.R. sect. 93.123(a) (1969). Because only a few carriers held certificates of public convenience and necessity for these airports, as required prior to deregulation of the airline industry in the early 1980's, there was only limited competition for the reservations. [8] With deregulation, however, any licensed carrier could service any high density airport, with the result that airport scheduling committees could no longer reach agreements acceptable to prospective new entrants and incumbent airlines wishing to expand their operations.
To accommodate the resulting demand for reservations while ensuring continuity of operations for carriers providing regularly scheduled service, FAA amended the High Density Rule effective in 1986. See 50 Fed. Reg. 52180 (Dec. 20, 1985). It again acknowledged that it was acting pursuant to its regulatory authority under sections 307(a) and (c) of the Federal Aviation Act to ensure the efficient use of the national airspace. Id. at 52181. Under a "grandfather" policy, FAA initially assigned most reservations-now called "slots" [9] -to the carriers who already held them under scheduling committee agreements. For the first time, FAA also authorized carriers to sell, lease, or otherwise transfer the slots among themselves, subject to confirmation by FAA and to a determination by the Secretary of Transportation that transfer "will not be injurious to the essential air service program." [10] Slots could be withdrawn at any time for FAA operational needs, and under a "use-or-lose" provision, slots not used 65 percent of the time would be recalled. FAA made clear that "[s]lots do not represent a property right but represent an operating privilege subject to absolute FAA control." [11]
In issuing the 1986 amendments, FAA noted that it had decided not to pursue a proposal it had made in 1980, to assign slots by means of an auction. It explained this was because "legislation would be required for the collection and disposition of the proceeds." Id. at 52183. FAA noted that "several unresolved legal questions" had been raised by the Department of Justice which DOJ believed would make an auction "impractical, " citing the Independent Offices Appropriations Act (IOAA), 31 U.S.C. sect. 9701, commonly referred to as the "user fee statute." IOAA could be problematic, FAA noted, "if these proceeds were to be applied for airport improvements...." Id. As FAA had explained in its earlier proposal, this is because 45 Fed. Reg. 71236, 71240, 71241 (Oct. 27, 1980).
Over time, Congress became concerned that the High Density Rule particularly the 1986 amendments, hurt competition, unfairly favored incumbent airlines, and was not the best means to reduce congestion. [12] After enacting several measures in the 1980's and 1990's requiring greater access for certain service providers, [13] in 2000, Congress directed FAA to phase out the High Density Rule altogether, at LaGuardia, JFK, and O'Hare, no later than January 1, 2007. [14] At about this same time, Congress also began to enact annual appropriations restrictions prohibiting FAA from promulgating any "new aviation user fees" unless specifically authorized by statute. The first of these restrictions was enacted in 1997 for...
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