AIN Blog: The Year In Washington–Much Ado About Nothing

 - December 27, 2015, 10:51 AM

The year 2015 began with promise of a busy one in Washington with U.S. FAA reauthorization coming to the forefront, new resolve to address tax policy and lawmakers ready to move quickly on funding bills. Also, a Part 23 rewrite was widely anticipated in the year and hope remained for resolution on the aircraft management fee tax assessments.

But as 2015 came to its conclusion, the year ended like many before it, with the U.S. Congress scrambling to finish work on federal funding and hammer out an agreement on tax policy. FAA reauthorization was already in stopgap mode. Personnel turnover at the Internal Revenue Service pushed back resolution of the management fee issue, and while progress on Part 23 was being made behind the scenes, the FAA failed to produce a notice of proposed rulemaking by the middle of December.

With the FAA’s authorization originally set to expire on September 30, lawmakers got out of the gate early on the issue with the first hearing held in January last year. That hearing showed consensus: the focus was on delays with the FAA’s certification projects and inconsistency in the way it interprets regulations. But reauthorization debate quickly heated up with talks turning to the air traffic control organization. This resurrected a decades-old debate over ATC privatization-corporatization-non-profitization and user fees. It also once again pitted the business and general aviation community against the airlines.

While the Senate remained largely quiet about the debate, the intentions of Rep. Bill Shuster (R-Pa.), the chairman of the House Transportation and Infrastructure Committee, became clear during a June speech before the Aero Club of Washington, where he outlined his vision for authorization. The centerpiece was an independent, not-for-profit organization, funded by user fees, to run ATC. But Shuster’s own committee lacked agreement on the issue, along with lawmakers outside the committee and the industry. Also, debate about a sweeping highway bill began to consume the attention of the committee.

While no one had an appetite for a repeat of the 23 extensions of the FAA’s authority that occurred during the last reauthorization cycle, a comprehensive FAA bill was not ready as the September 30 deadline loomed. Shortly before the FAA’s authority expired, Congress was forced to adopt its first extension, pushing consideration and the debate about ATC and user fees into early 2016.

This is giving the opposing parties time to fortify their front lines on ATC organization. As the year closed, Airlines for America rolled out its chief board members to outline a case for independent ATC. NBAA president and CEO Ed Bolen responded with this message to members: “the airlines are readying for the coming battle over ATC privatization funded by user fees, and we must do likewise. The business aviation community must once again band together in active opposition.”

Many hold out hope that the reauthorization will be finalized before the end of March, when the first extension is set to expire. Even though the ATC provision is controversial, the bill is a possible vehicle for a laundry list of aviation measures that have strong industry backing. These include the Pilot’s Bill of Rights, certification efficiencies and the consistency of regulatory interpretation, and possibly a permanent fix to the IRS tax treatment of aircraft management fees.

As with reauthorization, Congress was unable to finalize appropriations bills that fund most government agencies, including the FAA, before the fiscal year ended on October 1. This led to another stopgap measure to keep the government running until December 11. Stopgap measures keep funding flat for agencies and can prevent the start of certain new projects, which can present a problem for efforts such as NextGen.

On the positive side, lawmakers were able to reach agreement on a multi-year budget that establishes funding thresholds for each agency. Theoretically this should make the appropriations process smoother since there is an overarching agreement on funding levels. But highly controversial issues (such as Planned Parenthood funding or healthcare) tend to pop up to stall progress on appropriations bills and very well could keep government appropriations mired in partisan politics in the future.

Also on the plate in December were a bevy of tax incentives that appeared on a seemingly endless cycle of one- or two-year renewals. Industry has been following three of those incentives in particular: the research and development tax credit, bonus depreciation and Section 179 expensing. Talks of making those three incentives permanent appeared encouraging, but lawmakers were engaged in a major horse-trade that appeared tenuous in early December. This could extend the existing renewal cycle, and tax talk could emerge again this year.

Congress did complete work on a couple of major issues: while the U.S. Export-Import Bank appeared to be on life support, staunch backers used a little-known parliamentary procedure to bring it to the forefront, clearing the way for its renewal. And the National Air Transportation Association was able to draw attention to the diversion of noncommercial jet fuel taxes to the highway trust fund, with Congress backing a study of the issue.

Outside Capitol Hill, manufacturers were anxiously awaiting release of the Part 23 rewrite. GAMA president Pete Bunce warned a year ago that if the rewrite was not released soon, its progress could be delayed by the upcoming change in administration. The FAA indicated it hoped to release a proposal by the end of last month, and lawmakers in December urged the Office of Management and Budget to complete a quick review to get the proposal out expeditiously. But there was no sign of the proposal early in December. Once released, the NPRM will need a comment period before the FAA can begin work on the final rulemaking. Europe, meanwhile, is forging ahead, having already released an advance proposal on the rewrite.

The ADS-B equipage deadline (midnight Dec. 31, 2019) and small unmanned aircraft systems (sUAS) also became hot topics last year that will continue into the New Year. The rate of ADS-B equipage sped up, particularly in the business aviation community, and a working group formed in late 2014, Equip 2020, submitted a report on the stumbling blocks to equipage. The group spawned further discussion on a key concern of the business aviation community, privacy, and the FAA is reviewing possible solutions. The agency repeatedly made clear it has no intention of moving the 2020 equipage deadline, but debate will continue as the deadline becomes one year closer.

Small UAS drew intense media attention on sightings and so-called “near misses.” Calls escalated for the FAA to release rules to govern sUAS. The FAA issued the much anticipated notice of proposed rulemaking on regulation of sUAS in February and the comment period ended in April. A final rule is anticipated this year. The FAA also established a task force to develop recommendations on a registry for small UAS. That task force delivered its recommendations for the registry in November, and late last year the FAA said it was working quickly to move on those recommendations.

Beyond the FAA, the Environmental Protection Agency issued an advance notice that sets the stage for regulation of aircraft greenhouse-gas emissions. This notice was predicated on the outcome of the International Civil Aviation Organization effort to establish a CO2 standard. That standard, expected next month, will kick off debate on how to regulate the standard and what market measures will be used.

As 2016 unrolls, Washington faces most of the same aviation issues it did a year ago. The wrinkle will be the elections, which can trump the most controversial issues on Capitol Hill. In past elections, the business aviation industry has had to grapple with two issues: a proliferation of TFRs and populist themes that smear the industry as a symbol of excess. But an active outreach by the business aviation community and a strong General Aviation Caucus, which in the House is now the largest ever thanks to the stewardship of Rep. Sam Graves (R-Mo.), might help quiet some of those political charges. The number of TFRs likely will climb, but since an incumbent is not running for the presidency, the rate of increase might not be the same as it was four years ago.

All of this points to a busy year for industry advocates, even if 2016 turns out to be another year of politics inaction rather than in action.