oversight

General Aviation Airports: Oversight and Funding

Published by the Government Accountability Office on 1999-06-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    United States General Accounting Office

GAO                 Testimony
                    Before the Subcommittee on Aviation, Committee on
                    Transportation and Infrastructure, House of
                    Representatives


For Release
on Delivery
Expected at
                    GENERAL AVIATION
10:00 a.m. EDT
Wednesday           AIRPORTS
June 9, 1999



                    Oversight and Funding
                    Statement of John H. Anderson, Jr., Director,
                    Transportation Issues,
                    Resources, Community, and Economic
                    Development Division




GAO/T-RCED-99-214
    Mr. Chairman and Members of the Subcommittee:

    We are here today to discuss the Federal Aviation Administration’s (FAA)
    oversight of and the funding for capital development at general aviation
    airports. The federal government has made financial grants or transferred
    federal land to about 2,000 general aviation airports.1 For many
    communities, a general aviation airport is their primary access to air
    transportation, and general aviation airports can provide economic
    benefits to communities by attracting new employers to the area. Like
    commercial service airports, general aviation airports are subject to FAA’s
    oversight and must compete with commercial airports for federal funding
    from FAA’s Airport Improvement Program. Over the last few years, we have
    issued several reports and testimonies on commercial and general aviation
    airports’ planned capital development and funding sources.2 Just last
    month, we reported on FAA’s oversight and enforcement of land use at
    general aviation airports.3

    To receive federal assistance, airports must agree to abide by certain
    requirements designed to ensure that the public interest is served. Among
    other things, airports must obtain approval from FAA before altering the
    use or ownership of airport land and must use airport revenues only for
    their operation, maintenance, or development. FAA is responsible for
    monitoring and enforcing compliance with these requirements. My
    testimony today focuses on two questions important to general aviation
    airports: (1) How adequate is FAA’s oversight and enforcement of general
    aviation airports’ compliance with federal requirements related to the use
    of their land? and (2) How do general aviation airports’ planned capital
    development costs compare with current funding levels?

    In summary:

•   All FAA field offices rely primarily on third-party complaints to identify
    airports’ noncompliance with allowable uses. Only 4 of FAA’s 23 field


    1
     While commercial service airports handle regularly scheduled commercial airline traffic, general
    aviation airports support noncommercial aviation traffic.
    2
     Airport Development Needs: Estimating Future Costs (GAO/RCED-97-99, Apr. 7, 1997); Airport
    Financing: Funding Sources for Airport Development (GAO/RCED-98-71, Mar. 12, 1998); Airfield
    Pavement: Keeping Nation’s Runways in Good Condition Could Require Substantially Higher Spending
    (GAO/RCED-98-226, July 31, 1998); Airport Financing: Annual Funding As Much As $3 Billion Less
    Than Planned Development (GAO/T-RCED-99-84, Feb. 10, 1999); and Airport Financing: Smaller
    Airports Face Future Funding Shortfalls (GAO/T-RCED-99-96, Feb. 22, 1999).
    3
    General Aviation Airports: Unauthorized Land Use Highlights Need for Improved Oversight and
    Enforcement (GAO/RCED-99-109, May 7, 1999).



    Page 1                                                                         GAO/T-RCED-99-214
                 offices monitor general aviation airports to ensure that they comply with
                 federal requirements to use airport land only for airport purposes. To do
                 this, these four field offices rely on the airports’ self-certifications that they
                 are in compliance. Relying on airports’ self-certifications and third-party
                 complaints is not sufficient. Without monitoring, airports’ unauthorized
                 use of land has gone uncorrected—in some cases for over a decade. For
                 example, airport land has been inappropriately used for mobile home
                 parks; little league baseball fields; dog pounds; duck-hunting blinds; and
                 city police, fire, and vehicle maintenance facilities. Unauthorized land use
                 has resulted in the loss or diversion of millions of dollars in airport
                 revenues from general aviation airports, which are typically owned by
                 local governments. In some cases, increased risks to aviation safety also
                 resulted. For example, FAA determined that birds attracted by an
                 unauthorized landfill on an airport posed a possible danger to aircraft. If
                 and when FAA becomes aware that an airport is not complying, it has a
                 variety of statutory and administrative alternatives. However, FAA has
                 generally chosen not to use them, preferring to address noncompliance
                 through negotiation and settlement, an approach that has not always been
                 effective in resolving airports’ noncompliance. Our report included
                 recommendations designed to address these problems.
             •   We reported that the $10 billion in annual planned capital development for
                 all the nation’s airports that are eligible for federal funding exceeded their
                 1996 funding by $3 billion. For general aviation airports, which depend
                 more heavily on federal grants for their capital development than
                 commercial airports, the proportional shortfall is even greater. We
                 reported that general aviation airports’ annual planned development of
                 nearly $1.5 billion was more than twice as much as their 1996 funding.
                 While federal grants for airports, including general aviation, increased in
                 1998, federal funding for general aviation capital development still
                 represents only about 35 percent of these airports’ planned capital
                 development that is eligible for federal funding.


                 Of the more than 18,000 general aviation airports in the United States, only
Background       2,806 qualify for federal Airport Improvement Program (AIP) grants. These
                 grants are awarded by FAA and funded through the Airport and Airway
                 Trust Fund, which is financed by taxes on domestic airline tickets,
                 international air travel from the United States, domestic cargo transported
                 by air, and noncommercial aviation fuel. General aviation airports range
                 from small rural facilities that have only a few resident aircraft to large
                 general aviation airports that accommodate hundreds of corporate aircraft
                 and thousands of tons of cargo. These airports rely on grants from federal



                 Page 2                                                         GAO/T-RCED-99-214
                        and state governments as well as tax-exempt bonds and revenue from
                        operations to fund their capital development projects.

                        Since 1982, FAA has provided $4.7 billion in AIP grants to general aviation
                        airports and has historically provided federal land to some general
                        aviation airports to develop and expand the nation’s aviation
                        infrastructure. In exchange for this federal assistance, airports must agree
                        to abide by a number of requirements, such as obtaining approval from FAA
                        before altering the use or ownership of airport land and using airport
                        revenues only for the airports’ operating expenses and other nonoperating
                        expenditures, such as capital development.4 The purpose of the restriction
                        on revenue uses is to make airports as self-sustaining as possible and to
                        minimize the need for federal assistance.

                        FAA’s Office of Airports, through its network of 23 field offices, administers
                        AIP and is responsible for overseeing airports’ compliance with federal
                        grant and land transfer requirements. These offices are also responsible
                        for taking enforcement actions, when necessary.


                        FAA’s oversight of general aviation airports is inadequate to ensure
FAA’s General           compliance with land use requirements. When airports have not complied
Aviation Oversight Is   with federal requirements for the use of airport land, FAA’s preference for
Inadequate to Ensure    negotiation over enforcement has not always been effective in resolving
                        the noncompliance.
Land-Use Compliance
Internal Controls Are   Although FAA policy clearly calls for compliance monitoring, only 4 of the
Inadequate to Ensure    23 FAA field offices regularly monitor general aviation airports’ compliance
Compliance              with land-use requirements. Combined, these four offices are responsible
                        for only about 20 percent of the general aviation airports that have
                        received grant funds or land from the federal government. These four
                        offices meet FAA’s monitoring requirement by periodically obtaining
                        airport’s self-certifications. All FAA field offices rely primarily on
                        third-party complaints to identify airports’ noncompliance.

                        Relying on airports’ self-certifications and third-party complaints is not
                        sufficient for ensuring compliance with federal requirements. For

                        4
                         With the consent of FAA, airport land not needed for aviation purposes may be sold or leased so that
                        the airport can use the resulting revenues to support airport development, improvement, maintenance,
                        and operations. Generally, if an airport sells or leases land for less than its fair market value, the
                        revenues are considered to be lost, or forgone. In addition, if an airport owner uses airport land for
                        nonairport purposes, such as for city police or fire departments, and does not pay rent to the airport,
                        the revenues are considered to be diverted from the airport.



                        Page 3                                                                          GAO/T-RCED-99-214
                      example, the Department of Transportation’s Inspector General reported
                      that 14 of the 15 general aviation airports it had identified as not
                      complying with revenue use requirements had previously certified they
                      were in compliance, and third-party complaints had been filed against only
                      2 of the 15 airports.5

                      Because FAA does not monitor general aviation airports’ compliance,
                      neither FAA nor we know the extent of noncompliance. However, using the
                      limited information we obtained from some FAA field offices, we identified
                      24 airports where unauthorized land use has occurred since 1990.
                      Transportation’s Inspector General found that for five of these airports,
                      almost $6.8 million in revenues had been lost or diverted. The 24 cases
                      involved airports in 15 states under the oversight of 12 different FAA field
                      offices. The seriousness of the land use violations ranged from minor,
                      isolated infractions to periods of repeated unauthorized use spanning
                      more than two decades without correction. For example, airport land has
                      been inappropriately used for mobile home parks; little league baseball
                      fields; dog pounds; duck-hunting blinds; and city police, fire, and vehicle
                      maintenance facilities. Safety problems can also result from the
                      unauthorized use of airport land, and 4 of the 24 cases we identified
                      involved safety issues. For example, at one airport, an unauthorized
                      landfill attracted birds, creating a risk to landing and departing aircraft. At
                      another airport, the unauthorized use of airport land to promote hunting
                      activities attracted birds, and one aircraft suffered $20,000 in damage
                      because of a “birdstrike.” Unauthorized construction at another airport
                      led to an aircraft accident—while taxiing at the airport at night, a plane hit
                      an unmarked and unlighted excavation hole for a sports facility. No
                      injuries occurred.


FAA Emphasizes        FAA has a variety of administrative and statutory enforcement tools for
Negotiation Over      resolving noncompliance but has generally chosen not to use them. If an
Enforcement Actions   airport does not voluntarily make corrections, FAA’s policy is to formally
                      notify the airport of its noncompliance as the first step toward appropriate
                      sanctions or penalties. We found, however, that FAA field offices very
                      rarely take this first step. For example, out of the 24 cases of unauthorized
                      land use we reviewed, FAA had only formally notified 2 airports about their
                      noncompliance. However, in both cases, FAA reached an agreement with
                      the airport to resolve the noncompliance without using enforcement tools.



                      5
                      Interim Summary Report on the Audit of Monitoring Airport Revenue; Federal Aviation
                      Administration, R9-FA-4-004 (Mar. 7, 1994).



                      Page 4                                                                     GAO/T-RCED-99-214
When agreements cannot be negotiated, FAA field offices may take
administrative actions such as denying requests to use airport property for
nonairport purposes. In cases of egregious or persistent noncompliance,
FAA may assess civil penalties, pursue legal action through the courts, and
ultimately, reclaim title to donated land. In addition, the Congress has
strengthened FAA’s enforcement powers to resolve revenue diversion cases
by including restrictive language in appropriations and transportation
laws. For example, the Airport Revenue Protection Act of 1996 gives the
Secretary of Transportation the authority to withhold federal aviation,
transit, and rail funds from local governments that fail to reimburse
airports for illegally diverted funds.6 FAA has never used these more
aggressive enforcement tools.

FAA prefers to address noncompliance through negotiation and settlement,
exhausting all avenues of voluntary corrective action before undertaking
enforcement actions. FAA officials told us that airports are generally willing
to take corrective action and that a confrontational approach using its
enforcement authority would be justified only if it resulted in a higher
level of compliance than maintaining a cooperative relationship with
airports.

FAA’s emphasis on negotiations is not always effective. In our May 1999
report, we identified two cases of long-standing noncompliance at general
aviation airports in which the airports’ lack of willingness to comply with
federal requirements justified greater efforts to enforce compliance. In
fact, in both cases, unauthorized land use and revenue diversion had been
going on for decades without correction. When enforcement actions are
not taken, even in instances of long-standing noncompliance such as these
two cases, the lack of action becomes a de facto policy of permissiveness.
Unauthorized uses of land at the airports included city police, fire, street
maintenance and sports facilities constructed on airport land without FAA’s
approval. At one airport, Transportation’s Inspector General estimated the
revenue diversion caused by the city’s rent-free use of airport property
from 1984 through 1995 at about $2.8 million.

At the time of our review, FAA had not initiated the enforcement process by
formally notifying either airport of its noncompliance, despite a 1997
report by the Inspector General in one case and the city’s disregard of its
promise to stop diverting airport revenues in the other. In fact, one of
these airports was scheduled to receive an AIP grant earlier this year,
before we raised questions about the appropriateness of providing

6
 P.L. 104-264, section 805.



Page 5                                                      GAO/T-RCED-99-214
                            additional AIP funds to a noncompliant airport. At the time we completed
                            our review, FAA officials said they had taken steps to delay the award of
                            the grant.


Recommendations for         Our report contained a number of recommendations for improving FAA’s
Improving FAA’s Oversight   compliance monitoring and enforcement efforts. FAA has not yet reported
of General Aviation         to us what actions it plans to take on these recommendations. We
                            recommended that FAA revise its current compliance policy guidance to
Airports                    require regularly scheduled monitoring methods that provide for periodic
                            on-site visits. There is no substitute for on-site monitoring. Periodic
                            face-to-face contact with airport owners provides FAA with the opportunity
                            to directly observe airport operations and provide continuing education on
                            federal requirements. Such direct contact could also improve the quality of
                            negotiations if a conflict arises.

                            We recognize that FAA’s Airports field office staff have a number of duties
                            other than monitoring and enforcing compliance with federal
                            requirements related to general aviation airports’ land use and that these
                            other duties place limitations on the time available to conduct on-site
                            visits. FAA could take a number of steps to improve its oversight while
                            minimizing any strain on its resources. For example, through a
                            combination of on-site visits and self-certifications, FAA could collect
                            information that would allow it to target its resources on airports that are
                            more likely to have problems with land use compliance. FAA could also
                            involve interested parties to help FAA keep abreast of current activities at
                            general aviation airports. The Aircraft Owners and Pilots Association
                            recently instituted a program to establish general aviation points of
                            contact across the nation at airports to monitor public-use airports.
                            Coordination with this nationwide network could provide FAA with another
                            set of “eyes.”

                            Finally, FAA already has the necessary enforcement tools. FAA could
                            improve enforcement by establishing specific criteria for initiating
                            enforcement actions, applying the variety of enforcement tools already
                            available, and setting reasonable time frames for taking progressively
                            stronger enforcement actions.


                            General aviation airports depend heavily on federal grants for their capital
General Aviation            development, however, their annual planned capital development that is
Airports Face Future        eligible for federal funding is at least $775 million more than the federal
Funding Shortfalls          funding they received in 1998. While federal grants to general aviation


                            Page 6                                                     GAO/T-RCED-99-214
                                       airports have been limited so far this year, current proposals would
                                       increase funding for federal airport grants.


AIP Funding Is Insufficient            Over the last few years, we have reported and testified several times on
to Cover Eligible Projects             future funding shortfalls for the nation’s airports. Overall, we reported
                                       that, for all airports that are eligible for federal funding, planned capital
                                       development for 1997 through 2001 may cost as much as $10 billion per
                                       year, or $3 billion more than their 1996 funding. Of that amount, general
                                       aviation airports’ planned capital development was estimated to be nearly
                                       $1.5 billion per year, or over $750 million per year more than these airports
                                       raised in 1996. Figure 1 compares general aviation airports’ total funding
                                       for capital development in 1996 with the annual cost of their planned
                                       development.


Figure 1: 1996 Funding Compared With
Annual Planned Development Costs       1600     Dollars in millions
for General Aviation Airports,                                                                       $1,467
1997–2001
                                                                                                              $247 AIP-ineligible
                                                                                                              projects
                                       1200




                                        800                                                                   $907 Other
                                                $713      $13 Airport bonds (net)                             AIP-eligible projects
                                                          $130 State grants


                                        400               $250 Special facility bonds (net)


                                                                                                              $313 Reconstruction
                                                          $320 AIP                                            and mandates
                                          0

                                              1996                                          1997-2001 (annualized)
                                         Funding source                                      Planned development

                                       Note: Data on general aviation airports' revenue are unavailable.
                                       Special facility bonding was $250 million for one airport.




                                       Funding for 1996, the bar on the left, is shown by source of funding (AIP,
                                       state grants, and bonds). General aviation airports received 45 percent of
                                       their capital development funding from AIP in 1996. State grants accounted




                                       Page 7                                                                               GAO/T-RCED-99-214
                         for another 18 percent, while airport bonds accounted for only 2 percent
                         of general aviation airport capital development funding. In addition, one
                         airport’s issuance of $250 million in special facility bonds accounted for
                         35 percent of all general aviation airports’ funding sources for 1996.

                         Planned development for general aviation airports, the bar on the right,
                         shows FAA’s highest priority projects, other projects that are eligible for
                         AIP, and general aviation airports’ planned development that is not eligible
                         for AIP.7 Reconstruction and mandated projects, FAA’s highest priorities, are
                         for projects to maintain existing infrastructure (reconstruction) or to
                         mitigate noise, or to meet federal mandates, including safety, security, and
                         environmental requirements. Other projects that are eligible for AIP include
                         FAA’s higher-priority projects, such as adding capacity, as well as FAA’s
                         lower-priority projects, such as bringing airports up to FAA’s design
                         standards. Finally, general aviation airports plan for projects that are not
                         eligible for AIP funding, such as general aviation terminals and fuel depots.

                         For this hearing, we updated the amount of AIP funding for fiscal year 1998
                         as well as the planned development that is eligible for AIP funding for the
                         period 1998 through 2002.8 Increases in AIP appropriations in fiscal year
                         1998 led to increased funding for general aviation airports. In fiscal year
                         1998, general aviation airports received about $418 million in AIP grants.
                         Planned development that is eligible for federal funding at general aviation
                         airports from 1998 through 2002 decreased slightly from earlier estimates
                         to almost $1.2 billion annually. Thus, 1998 AIP grants represent about
                         35 percent of the planned projects that are eligible for AIP—leaving the
                         remaining 65 percent of planned projects that will have to be funded by
                         some other means, abandoned, or postponed.


Estimates Do Not Fully   While estimates of future capital development are useful indicators of
Represent Future         future development activity, the actual level and types of development that
Development Costs        ultimately occur are likely to be different for a number of reasons. FAA and
                         other estimates of development are based on airports’ master plans, whose
                         accuracy diminishes beyond 3 to 5 years into the future, and these
                         projections tend to underestimate actual construction costs. In addition,
                         development anticipated by airports’ master plans might not reflect the

                         7
                         Estimates of planned development costs are contained in our report entitled Airport Development
                         Needs: Estimating Future Costs (GAO/RCED-97-99, Apr. 7, 1997).
                         8
                          Other sources of funding during 1998 are not known. Estimates of planned development that are
                         eligible for AIP were drawn from Report of the Secretary of Transportation to the United States
                         Congress Pursuant to Section 47103 of Title 49, United States Code, National Plan of Integrated Airport
                         Systems, 1998-2002. Planned development that is not eligible for AIP is not known.



                         Page 8                                                                          GAO/T-RCED-99-214
                              concurrence of local communities. The availability of and cost to acquire
                              funds also affect actual capital spending. For example, general aviation
                              airports are sensitive to changes in the availability of AIP grants, upon
                              which they especially rely. Finally, airports’ master plans may not
                              anticipate all future costs, such as meeting new regulatory requirements or
                              responding to unanticipated changes in demand for air travel.

                              Maintaining airport runway pavement in good condition is an example of
                              how future development costs may exceed estimates of planned
                              development. We recently reported that while the nation’s airport runways
                              are in generally good condition, the costs of maintaining them over the
                              next 10 years will be considerable, especially for general aviation airports.9
                               Delaying maintenance and rehabilitation will only increase the cost of
                              eventual improvements. In examining over 1,000 of the nation’s general
                              aviation airports’ runways, for which detailed data on pavement condition
                              are available, we found that the cost to rehabilitate and maintain these
                              runways in good condition will approach $1 billion over the next 10 years.
                              However, a majority of this spending will be required in the first year to
                              immediately bring runways up to good condition. Conversely, if runway
                              rehabilitation and maintenance are funded at historical levels, necessary
                              rehabilitation and maintenance would have to be deferred. While the
                              10-year cost is comparable to immediately bringing runways up to good
                              condition, approximately $1.9 billion in unmet runway rehabilitation and
                              maintenance needs will remain.


Increasing Total AIP          General aviation airports depend heavily on federal grants for financing
Funding Provides Greater      their capital development. In 1996, general aviation airports obtained
Benefit to General Aviation   45 percent of their total funding from AIP. In contrast, AIP represented only
                              10 percent of the 71 largest airports’ funding. The amount of AIP funds
Airports                      provided to general aviation airports is especially sensitive to changes in
                              total AIP funding. Our prior work has shown that as AIP funding increases,
                              an increasing percentage of total funds are directed to smaller airports.

                              While the Congress increased fiscal year 1999 AIP appropriations by
                              $250 million to $1.95 billion, appropriations limitations have thus far
                              constrained funding, especially for general aviation airports.10 As a result,

                              9
                               Airfield Pavement: Keeping Nation’s Runways in Good Condition Could Require Substantially Higher
                              Spending (GAO/RCED-98-226, July 31, 1998).
                              10
                                AIP appropriations for fiscal year 1999 are $1.95 billion, although AIP was initially authorized only
                              through Mar. 31, 1999, and therefore, not more than $975 million could be obligated. Since then, this
                              limitation has twice been increased and extended, now to $1.66 billion and until Aug. 6 (Sec. 6002 of
                              1999 Emergency Supplemental Appropriations (P.L. 106-31, May 21, 1999)).



                              Page 9                                                                            GAO/T-RCED-99-214
                 only $80 million in grants have been provided to general aviation airports
                 out of the $737 million in total AIP grants made through May of this year.
                 The Congress has twice extended, but not fully funded, AIP for this fiscal
                 year, leading to great uncertainty for general aviation airports. The
                 Congress is currently considering increasing funding for AIP for fiscal year
                 2000 and beyond. Current proposals would increase funding for AIP above
                 current levels—helping general aviation airports better fund their future
                 development plans.11


                 Mr. Chairman, this concludes my prepared statement. I would be happy to
                 respond to any questions that you or Members of the Subcommittee may
                 have.


                 For future contacts regarding this testimony, please contact John H.
Contact and      Anderson at (202) 512-2834. Individuals making key contributions to this
Acknowledgment   testimony included Janet Barbee, Chris Keisling, Mark Lambert, and Paul
                 Aussendorf.




                 11
                   The administration has requested $1.6 billion in funding for AIP for fiscal year 2000 and the House
                 and Senate Appropriations committees proposed funding for AIP in fiscal year 2000 of $2.25 and
                 $2 billion, respectfully. Meanwhile, the House Transportation Committee is considering legislation that
                 would substantially increase funding for AIP, especially beginning in fiscal year 2001 when spending
                 from the Airport and Airway Trust Fund would be linked to trust fund receipts.



(348178)         Page 10                                                                         GAO/T-RCED-99-214
Ordering Information

The first copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office
P.O. Box 37050
Washington, DC 20013

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touchtone phone. A recorded menu will provide information on
how to obtain these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov




PRINTED ON    RECYCLED PAPER
United States                       Bulk Rate
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. G100
Official Business
Penalty for Private Use $300

Address Correction Requested