FAA Proposes More Flexible Eligibility Criteria For Expenditure Of Passenger Facility Charge Funds On Airport Rail Projects

The Federal Aviation Administration (FAA) proposes to amend (81 Fed. Reg. at 26611) (May 3, 2016) a 2004 rule, restricting expenditure of proceeds from passenger facility charges (PFC) funds to airport access infrastructure used only by airport patrons and workers, in order to allow more flexibility on the use of PFCs on airport rail projects. The proposed PFC policy change could provide additional funding and finance options for airports and transit systems working to improve intermodal connections and give the public better access to the nation's airports.

PFCs are airline ticket excise taxes and airport fees assessed to fund airport improvements and services. The PFC expenditure limitation (81 Fed. Reg. at 26611) prevents PFC proceeds from subsidizing roads and rail facilities also utilized by the general public.

However, the FAA says strictly applying the rule might not adequately promote the agency's statutory mission to expand intermodal links at the nation's airports," (81 Fed. Reg. at 26613) produce financially and practically inefficient outcomes (81 Fed. Reg. at 26611) and may not be in … the public interest (81 Fed. Reg. at 26612). The inefficiency arises in the context of rail airport access projects, because airports are not always located at the logical endpoint of a rail transit line; in these cases, rail riders will happen to travel through the airport to destinations beyond the airport.

This is an outgrowth of urban and suburban expansion around some airports.  Many airports that were originally constructed on the periphery of population centers, now find themselves ensconced as suburban growth has extended to and beyond the airport. As such, it may no longer make sense for a ‘downtown’ rail or transit line to terminate at the airport, as there now exists a pool of potential users beyond the airport. (81 Fed. Reg. at 26612).

For example, in March 2014, the FAA received a request from the Metropolitan Washington Airports Authority (MWAA) to use PFCs to help fund a portion of the Dulles on-airport tracks of the Washington, DC Metro system.  The on-airport tracks would not be exclusively used by airport patrons and employees because the Metro line would run to other destinations beyond Dulles airport. The FAA has approved parts of the MWAA request, but deferred consideration of the track portions of this project (beyond the Airport station footprint). (81 Fed. Reg. at 26613).

The FAA notes that when it comes to usage there are fundamental differences (81 Fed. Reg. at 26612) (between rail transit systems and roads. Without a very strict exclusive use requirement, users of access roads could take advantage of that infrastructure, and make a choice to [not use] the airport itself. Users of rail, however, have little choice of route and … are not taking advantage of the airport portions of track by choice, but are more likely to be passing through the airport because they cannot use rail travel to their destination without doing so. (81 Fed. Reg. at 26612).

The FAA has identified three proposed means by which an airport could demonstrate eligible costs of on-airport rail trackage to be funded through PFC revenues. The first proposal would measure and allow PFC funding of the incremental cost (81 Fed. Reg. at 26613) of incorporating an airport station to a transit system; the second proposal (81 Fed. Reg, at 26614) would allow PFC funding if the through-track rail system was less expensive than a stand-alone people-mover bringing passengers in from an off-airport station; and the third proposal (81 Fed. Reg. at 26615) would allow PFC funding if the proportion of the rail system to be funded through PFC revenues would be no more than the prorated costs of the trackage on airport property, based on ridership forecasts and the percentage of airport-bound passengers and employees.

Comments must be received on or before June 2, 2016. Comments that are received after that date will be considered only to the extent practical.

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