Congestion Management Rule for LaGuardia Airport, 60574-60601 [E8-24048]

Agencies

• Federal Aviation Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 198 (Friday, October 10, 2008)]
[Rules and Regulations]
[Pages 60574-60601]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24048]



[[Page 60573]]

-----------------------------------------------------------------------

Part VIII





Department of Transportation





-----------------------------------------------------------------------



Federal Aviation Administration



-----------------------------------------------------------------------



14 CFR Part 93



Congestion Management Rule for LaGuardia Airport; Final Rule

Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / 
Rules and Regulations

[[Page 60574]]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 93

[Docket No. FAA-2006-25709; Amendment No. 93-87]
RIN 2120-AI70


Congestion Management Rule for LaGuardia Airport

AGENCY: Federal Aviation Administration (FAA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Today the FAA is publishing a final rule to address congestion 
at New York's LaGuardia Airport (LaGuardia). The rule grandfathers the 
majority of operations at the airport and will develop a robust 
secondary market by annually auctioning off a limited number of slots; 
the FAA plans to use the proceeds from the auctions to mitigate 
congestion and delay in the New York City area. In addition, the hourly 
cap on scheduled operations will be reduced to 71 per hour during the 
regulated hours. This reduction will lead to an estimated 41 percent 
reduction in modeled delay at the airport. This rule also contains 
provisions for use-or-lose, unscheduled operations, and withdrawal for 
operational need. The rule will sunset in ten years.

DATES: This rule becomes effective December 9, 2008.

FOR FURTHER INFORMATION CONTACT: For technical questions regarding this 
rulemaking, contact: Nan Shellabarger, Office of Aviation Policy and 
Plans, APO-200, Federal Aviation Administration, 800 Independence 
Avenue, SW., Washington, DC 20591; telephone (202) 267-7294; e-mail 
nan.shellabarger@faa.gov. For legal questions concerning this 
rulemaking, contact: Rebecca MacPherson, FAA Office of the Chief 
Counsel, 800 Independence Ave., SW., Washington, DC 20591; telephone 
(202) 267-3073; e-mail rebecca.macpherson@faa.gov.

SUPPLEMENTARY INFORMATION:

Authority for this Rulemaking

    The FAA has broad authority under 49 U.S.C. 40103 to regulate the 
use of the navigable airspace of the United States. This section 
authorizes the FAA to develop plans and policy for the use of navigable 
airspace and to assign the use that the FAA deems necessary for its 
safe and efficient utilization. It further directs the FAA to prescribe 
air traffic rules and regulations governing the efficient utilization 
of the navigable airspace.

Table of Contents

I. Background
II. Summary of the Final Rule
III. Authority To Retire and Reallocate Capacity
    A. The FAA Is Legally Authorized To Allocate Slots Through an 
Auction Mechanism
    1. Slots Are a Form of Property That May Be Leased by the FAA to 
Others
    2. FAA Leases Are Not Covered by IOAA and This Rule Is Not in 
Violation of Any Current Appropriations Restrictions
    3. Leases Are Not Taxes
    4. The FAA's Authority To Give Slots to Air Carriers Through 
Cooperative Agreements
    5. Leases That Terminate by Their Own Terms Are Not a ``Taking'' 
of Property
    6. The Draft Lease Terms Included in the NPRM Were for 
Illustrative Rather Than Probative Purposes
    B. The FAA Has Authority To Retain the Amounts Received From the 
Lease and Disposal of Property and To Use Those Proceeds for 
Congressionally Authorized Purposes
    C. The Auction of Slots Does Not Affect the Proprietary Rights 
of the Port Authority
    D. The FAA Has Complied With the Administrative Procedure Act
    1. The Docket Contained Adequate Information for Meaningful 
Comment on the Rulemaking Proposal
    2. The Discussion of the Auction Process Provided Sufficient 
Detail for Meaningful Comment on the Rulemaking Proposal
    3. The FAA Adequately Considered Alternatives
IV. Discussion of the Final Rule
    A. Allocation of Slots at LaGuardia
    1. Proposed Options
    2. Categories of Slots
    3. Initial Allocation of Slots
    4. Retirement of Slots
    5. Market-Based Reallocation of Slots
    a. Network Effects of Auctions
    b. Impacts of Auctions on Competition
    c. Alternatives to Reallocation
    B. Secondary Trading
    C. Usage Requirements
    D. Unscheduled Operations
    E. Sunset Provision
    F. Other Issues
    1. Withdrawal for Operational Need and for Future Reductions in 
the Cap
    2. Limit on Arrivals and Departures
    3. Common Ownership
    4. Impact of the Final Rule on the Port Authority's Ability To 
Run Its Airport
    V. Potential Loss of Service to Small Communities
    VI. Regulatory Notices and Analyses
    VII. Regulatory Text

I. Background

    This final rule is the latest action in a long history of 
congestion management at one of the most delayed airports in the United 
States. Although service at LaGuardia is almost exclusively domestic, 
access to the airport is highly sought after. These two factors have 
forced the FAA to address a dilemma: how can the agency reduce delays 
while providing some measure of access to carriers wishing to operate 
at the airport, thus ensuring competition? While there are many factors 
contributing to the delays and congestion at LaGuardia, demand for the 
associated airspace has long out-stripped capacity.
    The FAA managed congestion at LaGuardia under the High Density Rule 
(HDR) from 1969 through 2006. 14 CFR part 93 subparts K and S. However, 
not until deregulation of the airline industry did the FAA need to step 
in and provide for air carrier access to the airspace immediately 
surrounding the airport. Prior to 1985 the carriers at the airport, 
operating under antitrust immunity, determined who would be allowed to 
operate and when. The FAA's role was limited to determining how many 
operations air traffic control could reasonably handle during congested 
periods and enforcing operator compliance with the rules. The HDR 
divided the allowable operation (slots) by categories of users (i.e., 
air carriers other than air taxis, scheduled air taxis, and others). 33 
FR 17896 (December 3, 1968). In 1982, the FAA imposed a minimum usage 
requirement for the first time. 47 FR 7816 (February 22, 1982). Also in 
1982, the FAA implemented an experimental buy-sell rule, under which 
approximately 190 slots were transferred among carriers over six weeks 
of the program. 47 FR 29814 (July 8, 1982).\1\
---------------------------------------------------------------------------

    \1\ This slot program was not implemented under the HDR, but 
rather under SFAR 44 and was related to the limitations on air 
traffic control services resulting from the controller's strike.
---------------------------------------------------------------------------

    The FAA established more permanent allocation procedures for slots 
under the HDR in 1985 when it adopted the Buy/Sell Rule. 50 FR 52195, 
December 20, 1985. In a companion rulemaking to the Buy/Sell Rule (SFAR 
88), the FAA provided for the withdrawal of up to five percent of the 
slots at the slot-constrained airports through a reverse lottery so as 
to provide a pool of slots for new entrants and limited incumbents. 
SFAR 88, 51 FR 8630 (March 12, 1986). \2\ The Buy/Sell Rule included 
use-or-lose provisions and, while explicitly stating that the slots 
were not the carriers' property and did not constitute a proprietary 
right, the FAA allowed carriers to buy, sell or lease the slots on the 
secondary market.

[[Page 60575]]

For the next 15 years the agency relied primarily on the secondary 
market authorized by the Buy/Sell Rule to address access issues at the 
airport. However, the Buy/Sell Rule created market distortions by 
creating categories of carriers entitled to preferential treatment 
under an administrative reallocation mechanism which severely limited 
these carriers' access to slot-controlled airports other than on the 
open market. Affected carriers complained to the FAA that by 
grandfathering 95 percent of the slots at the slot-controlled airports 
to incumbent carriers, there was insufficient capacity available for 
reallocation. The Buy/Sell Rule also failed to foster a robust 
secondary market because it did not require any transparency. 
Accordingly, carriers were able to keep out competitors by arranging 
private transactions. This resulted in carriers interested in 
initiating or expanding service at the airports often being unaware 
that slots were potentially available for sale or lease. Some carriers 
also complained that they were effectively being denied access to the 
airport because their competitors refused to sell slots or provide 
meaningful lease terms.
---------------------------------------------------------------------------

    \2\ Commenters appear to have forgotten this rulemaking action 
when arguing that the withdrawal of slots for reallocation is 
unprecedented.
---------------------------------------------------------------------------

    On April 5, 2000, Congress enacted the Wendell H. Ford Aviation and 
Investment Reform Act of the 21st Century (AIR-21 or the Act). The Act 
phased out the HDR at LaGuardia effective January 1, 2007. In addition 
to phasing out the HDR, AIR-21 directed the Secretary of Transportation 
to grant two types of exemption from the HDR's flight restrictions. The 
first type of exemption was designed to promote more competition at 
slot-constrained airports and required the Secretary to grant 
exemptions to a new entrant or limited incumbent for 20 flights per 
carrier. The second type of exemption was aimed at improving service to 
small communities and required the Secretary to grant exemptions to a 
carrier operating an aircraft with less than 71 seats to Small-Hub or 
Non-Hub airports for an unrestricted number of flights. The Act also 
preserved the FAA's authority to impose flight restrictions by stating 
that ``[n]othing in this section * * * shall be construed * * * as 
affecting the Federal Aviation Administration's authority for safety 
and the movement of air traffic.'' 49 U.S.C. 41715(b).
    Although the slot exemptions mandated by Congress under AIR-21 
opened up access to LaGuardia; they also resulted in a significant 
increase in delays at the airport as the number of small community 
exempted operations soared throughout 2000. Using its authority in 49 
U.S.C. 40103, the FAA capped AIR-21 slot exemptions at LaGuardia. While 
the number of allowable scheduled operations under the HDR remained 
constant at 62 per hour, the actual number of scheduled operations rose 
to 75 per hour \3\ even though there were no significant increases in 
the airspace or airport capacity. Thus, Congress' actions to improve 
access resulted in significantly higher delays at LaGuardia than there 
were before 2000.
---------------------------------------------------------------------------

    \3\ There are two hours during the day when scheduled operations 
exceed 75. At 9 a.m. there are a total of 76 scheduled operations, 
and at 5 p.m. there are a total of 77.
---------------------------------------------------------------------------

    Slots allocated under the HDR at LaGuardia were scheduled to expire 
on January 1, 2007. Based on its experience in 2000, the FAA determined 
that simply lifting the HDR at LaGuardia would result in a significant 
increase in delays and adversely impact the airspace around New York 
City and on the National Airspace System (NAS) as a whole. Accordingly, 
on August 29, 2006, the FAA published a notice of proposed rulemaking 
(NPRM) proposing continuation of the existing cap of 75 scheduled and 
six unscheduled hourly operations as well as a new method of allocating 
capacity (71 FR 51360). In addition to retaining the existing cap, the 
FAA proposed to impose an average minimum aircraft size requirement for 
much of the fleet serving the airport. By incentivizing carriers to use 
larger aircraft, the proposal would have maximized passenger throughput 
consistent with the airport's physical constraints. The FAA also 
proposed to implement a limit on the duration of the slots that would 
assure ten percent of the capacity at the airport would be available 
annually for reallocation based on an undetermined market mechanism 
that the FAA intended to administer via regulation.
    The FAA recognized that it did not have clear statutory authority 
to implement a wide array of market-based mechanisms and that, absent 
authority beyond that contained in 49 U.S.C. 40103, any reallocation 
via a market-based mechanism could lead to a challenge that the FAA had 
violated the ``user fee prohibition'' attached to the agency's annual 
appropriations legislation since 1998. The FAA did not address the 
agency's authority to dispose of interests in property, as provided in 
the Air Traffic Management System Performance Improvement Act of 1996. 
Public Law No. 104-264, codified at 49 U.S.C. 106(l)(6). However, it 
did refer to its statutory reauthorization proposal, which was part of 
a comprehensive change to how the FAA would be financed. The FAA's 
proposed reauthorization package, the Next Generation Air 
Transportation System Financing Reform Act of 2007, would substitute 
new user fees for passenger ticket taxes, would permit the airport 
operators (such as the Port Authority of New York and New Jersey (Port 
Authority)) at constrained and delayed airports to assess market-based 
fees, and would also allow the FAA, under certain circumstances, to 
impose market-based mechanisms. This legislative proposal, in giving 
authority directly to airport proprietors to assess and use market-
based fees, was profoundly different from the terms of this final rule. 
Rather, this rule recognizes the property interest the FAA acquires or 
constructs in the navigable airspace for scheduled flight operation and 
provides for the assignment of this property interest through lease 
agreements with the carriers. The FAA's reauthorization legislation has 
been held up for reasons unrelated to this rulemaking, and the proposed 
legislation was never adopted.
    The FAA recognized that it would be unable to complete its 
rulemaking by January 1, 2007, when the HDR was scheduled to expire. 
Indeed, since the agency had extended the comment period at the request 
of several interested parties, the comment period for the NPRM did not 
close until December 29, 2006. On December 27, 2006, after providing 
for notice and comment, the agency published an FAA Order Operating 
Limitations at New York LaGuardia Airport (LaGuardia Order) (71FR 
77854).\4\ The LaGuardia Order retained the existing cap at the airport 
of 75 scheduled operations and imposed a reservation system for 
unscheduled operations that permitted six unscheduled operations per 
hour. The LaGuardia Order did not distinguish between operations 
conducted pursuant to HDR slots and AIR-21 slot exemptions; rather, 
flights conducted pursuant to the exemptions were rolled into the 
hourly cap without restriction. The slots and exemptions were 
grandfathered to the current holder as ``Operating Authorizations''. 
The Order also explicitly linked its duration to the publication of a 
final rule and noted that no rights to Operating Authorizations 
allocated under the Order would survive beyond the Order. No one 
challenged the FAA's authority to re-impose caps at the airport

[[Page 60576]]

following the expiration of the HDR or the terms of the Order.
---------------------------------------------------------------------------

    \4\ The LaGuardia Order was amended on November 8, 2007 (72 FR 
63224) and again on August 19, 2008 (73 FR 48248).
---------------------------------------------------------------------------

    In 2007 flight delays in the New York City metropolitan area 
soared. Delays impacted all three major commercial airports and 
cascaded throughout the NAS. The summer of 2007 became the second worst 
on record nationally for flight delays. On September 27, 2007, the 
Secretary of Transportation announced the formation of the New York 
Aviation Rulemaking Committee (NYARC) to help the Department of 
Transportation (Department) and the FAA explore available options for 
congestion management and how changes to current policy at all three 
major commercial New York City airports would affect the airlines and 
the airports.
    By design, the NYARC provided ample opportunity for extensive input 
by aviation stakeholders, having members from every major air carrier 
in the United States as well as foreign carriers, passenger groups, and 
the Port Authority. Through the ARC process, these stakeholders played 
a key role in exploring ideas to address congestion and ensuring that 
any actions contemplated by the Department and the FAA would be fully 
informed. In addition to holding weekly meetings of the full NYARC, 
five working groups regularly met to explore ways to address both 
congestion and allocation of the available airspace. The NYARC worked 
throughout the fall and submitted a report to the Secretary, dated 
December 13, 2007, discussing its findings. A copy of the NYARC Report 
may be found at https://www.dot.gov/affairs/FinalARCReport.pdf.
    After evaluating the comments received to the 2006 NPRM and the 
input of the NYARC, the FAA moved forward with its rulemaking action to 
address congestion at LaGuardia. Rather than pursue its earlier 
proposal to require upgauging and reallocate ten percent of the 
existing capacity each year, the FAA published a supplemental notice of 
proposed rulemaking (SNPRM) on April 16, 2008 proposing to lease the 
majority of operations at the airport to the historic operators for 
non-monetary consideration under its cooperative agreement authority. 
The agency also proposed to develop a robust market and induce 
competition by annually auctioning off leases for a limited number of 
slots during the first five years of the rule. The FAA proposed two 
different options. Under the first option, the FAA, after retiring a 
small portion of the slots, would auction off eight percent of the 
slots to any carrier serving or wishing to serve LaGuardia and would 
use the proceeds to mitigate congestion and delay in the New York City 
area (after the FAA recouped the cost of the auction). Under the second 
option, the FAA would not retire any slots and would conduct an auction 
of twenty percent of the slots. The proceeds would go to the carrier 
holding the slot after the FAA recouped the cost of the auction. The 
SNPRM also contained provisions for use-or-lose, unscheduled 
operations, and withdrawal for operational need. The FAA proposed to 
sunset the rule in ten years.
    The comment period for the SNPRM closed June 16, 2008. Despite 
numerous requests, the FAA decided against extending the comment 
period, although it noted that it historically has considered comments 
filed after the end of a comment period as long as such consideration 
did not lead to delay. In denying these requests, the FAA provided 
draft copies of the lease agreements that would result from the initial 
allocation and reallocation of slots in the final rule. The FAA 
reiterated that any auction would be conducted under the agency's 
acquisition authority. The agency also reiterated that interested 
parties to the auction would be afforded the opportunity to comment on 
any proposed auction procedures within the context of the agency's 
Acquisition Management System.
    Twenty-six interested parties filed comments to the docket 
addressing the SNPRM. The majority of comments were consistent in 
rejecting the proposal. Many commenters said that the FAA had failed to 
demonstrate how the proposal would achieve any significant relief from 
congestion. Rather, according to the commenters, the SNPRM would impose 
an untested and unproven auction process on airlines that would not 
address the fundamental airspace congestion issues in the New York 
metro area. While other commenters did not completely object to an 
auction mechanism, they did note that the timing was not right or that 
the auction procedures needed to be fully developed prior to conducting 
any auction.
    Effective August 28, 2008, the FAA reduced the number of 
reservations available for unscheduled operations from six to three. 73 
FR 48428.
    On September 30, 2008 the FAA's Office of Dispute Resolution for 
Acquisition (ODRA) issued a decision responding to protests that had 
been filed by air carriers, the ATA, the Port Authority, and the New 
York Aviation Management Association challenging the FAA's legal 
authority to conduct a proposed auction of two slots at Newark. ODRA 
concluded that the FAA's statutory authority and its Acquisition 
Management System authorized agency disposal of property rights by way 
of a lease as well as the use of a competitive auction process to 
determine who the lessee should be. ODRA did not, however, issue an 
opinion on whether the underlying slots constituted property.
    On the same day the General Accountability Office (GAO) released an 
opinion letter in response to a congressional request that concluded 
that the FAA currently lacks authority to auction slots under either 
its property disposition authority or its user fee authority. The 
issues involved represent novel legal issues upon which reasonable 
people, and agencies, acting in good faith, have disagreed. The FAA 
disagrees with the GAO conclusions because it does not believe the 
auction of a slot constitutes a user fee and because the GAO appeared 
to apply an exceptionally narrow definition of property that ignores 
expansive statutory provisions within the agency's various enabling 
statutes and the fact that carriers have treated slots as property for 
approximately 25 years. Accordingly, the FAA has decided to proceed 
with the adoption of this final rule.

II. Summary of the Final Rule

    Today's rule considers not only the concerns raised by commenters 
in response to the NPRM and SNPRM, but also takes into account the 
extensive discussions and issues raised by members of the NYARC. The 
FAA is imposing a cap on scheduled operations of 71 per hour from 6 
a.m. to 9:59 p.m., effective March 8, 2009. Until that date, the cap on 
scheduled operations will remain at 75 per hour. This reduction in the 
cap represents a five percent retirement of existing slots at the 
airport and should significantly improve delays at the airport. 
Unscheduled operations continue to be capped at three per hour, with 
additional flights authorized when conditions permit.
    In addition, approximately 85 percent \5\ of the total number of 
slots currently in use at the airport will be ``grandfathered'' to 
carriers who hold the corresponding Operating Authorization under the 
LaGuardia Order pursuant to cooperative lease agreements for a period 
of ten years. These slots are called ``Common Slots''.

[[Page 60577]]

Carriers will not pay any monetary consideration for these slots. Of 
the remaining 15 percent of slots, one-third (or five percent of 
existing capacity) will be retired at the end of the winter scheduling 
season. These slots are called ``Limited Slots'', as are the remaining 
approximately ten percent of the slots, which will be terminated and 
reallocated over a five year period, commencing March 8, 2009. The FAA 
intends to conduct the first auction of these slots in January 2009, 
and the affected carrier will be permitted to use the slot until the 
successful bidder acquires it in March. The reallocated slots, called 
``Unrestricted Slots'' after reallocation, will be awarded to the 
successful bidder(s) via lease agreements that will last until this 
rule expires, March 9, 2019.
---------------------------------------------------------------------------

    \5\ This rule will withdraw 16.5 percent of carriers' existing 
Operating Authorizations above the base of operations. Currently 
unallocated capacity will also be available for auction or 
retirement. This represents approximately 15 percent of the total 
number of slots at the airport.
---------------------------------------------------------------------------

    All slots may be transferred via a secondary market. Carriers may 
continue to engage in direct negotiations. To facilitate opportunities 
for participation in the secondary market, however, all available slot 
sub-leases must be advertised on an FAA-run bulletin board, and the 
Department will monitor transactions for anti-competitive behavior.
    As proposed, Limited and Common Slots will be subject to an 80 
percent usage requirement and may be withdrawn for operational need. In 
addition, Common Slots may be subject to reversion, following notice 
and an opportunity to comment, should the FAA determine the cap at the 
airport is too high.

III. Authority To Retire and Reallocate Capacity

    The Air Transport Association of America (ATA), the Port Authority, 
American Airlines, Delta Airlines and United Airlines asserted that the 
FAA's proposed methods of allocating slots are not lawful for several 
reasons including: Prior statements by Government officials indicating 
that the FAA would need additional legislation to be able to auction 
slots; the FAA cannot create property by exercising its regulatory 
power to regulate the use of navigable airspace; slots are not property 
when created and held by the Government but only become property when 
transferred to an air carrier; the proposed lease of slots for fair 
market value would be a new user fee in violation of an appropriations 
restriction on using a particular appropriation to finalize or 
implement a regulation to establish a new user fee and in violation of 
the Independent Offices Appropriations Act (IOAA) (the latter of which 
it is asserted is the FAA's only authority to charge for the lease of 
slots); the leases would be an unconstitutional usurpation of Congress' 
authority to levy taxes; the return of slots to the Government at the 
end of the term of their leases would constitute an unconstitutional 
taking of property; the Federal Grants and Cooperative Agreements Act 
does not provide authority for the FAA to give slots to air carriers 
through cooperative agreements; and the FAA lacks authority to retain 
the proceeds from the lease of slots and use those proceeds to improve 
capacity in the New York airspace area.
    The FAA has the authority to dispose of property interests under 49 
U.S.C. 40110(a)(2). The FAA also has the authority to ``enter into and 
perform such contracts, leases, cooperative agreements, or other 
transactions as may be necessary to carry out the functions of the 
Administrator and the Administration.'' 49 U.S.C. 106(l)(6).\6\ The FAA 
has determined that the allocation of a relatively small number of 
slots via the auction of a leasehold best effectuates the efficient 
allocation of slots, both through the initial allocation and through 
the development of a robust secondary market.
---------------------------------------------------------------------------

    \6\ A federal agency's power to dispose of property includes the 
power to lease that property, even without express Congressional 
authority. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 
331 (1936).
---------------------------------------------------------------------------

    An auction is intended simply to distribute slots to the air 
carriers who value them the most, thus encouraging their most efficient 
use. An auction also satisfies the direction of Congress to ``place 
maximum reliance on competitive market forces and on actual and 
potential competition * * * to provide the needed air transportation 
system * * * '' 49 U.S.C. 40101(a)(6)(A).\7\ This section of law 
describes the policies that the Department must take into consideration 
when issuing economic regulations. This rule is not an economic 
regulation. However, the statutory provision is a clear statement by 
Congress of a valid public policy aim that the FAA is permitted to take 
into consideration when issuing regulations under section 40103. The 
FAA does not intend to set a reserve price on slots so as to assure 
itself that it recovers its costs associated with either the auction or 
with providing air traffic services. The FAA instead aims to allocate 
all of the slots put up for auction, thus allowing for possible new 
entrants to compete with the incumbent air carriers at LaGuardia and to 
accommodate changes in the business strategies of air carriers using 
LaGuardia airport.
---------------------------------------------------------------------------

    \7\ This section of law describes the policies that the 
Department of Transportation must take into consideration when 
carrying out its economic regulaory authority over the aviation 
industry. This section also is a clear statement by Congress of a 
valid public policy aim the FAA is permitted to take into 
consideration.
---------------------------------------------------------------------------

A. The FAA Is Legally Authorized To Allocate Slots Through an Auction 
Mechanism

    Several commenters quote a statement made in 1985 that the FAA did 
not propose an auction mechanism because legislation would be required 
for the collection and disposition of the proceeds (50 FR 52183 
(December 20, 1985)), and a more recent statement in the NPRM that the 
FAA ``currently does not have the statutory authority to assess market-
clearing charges for a landing or departure authorization''. 71 FR 
51360, 51362, 51363 (August 29, 2006).
    In 1985, the FAA lacked clear authority to collect and dispose of 
the proceeds from an auction. Rather, any amounts collected by the 
agency would need to be deposited into the General Receipts account in 
accordance with 31 U.S.C. 3302. Additionally, while the FAA had 
authority to dispose of an interest in property, it was not clear that 
such interests included leaseholds.
    In the Air Traffic Management System Performance Improvement Act of 
1996, Public Law 104-264, the FAA gained express authority to lease 
property to others. 49 U.S.C. 106(l)(6), 106(n). The same law also gave 
the FAA an exemption from 31 U.S.C. 3302, and an account was 
established specifically for all amounts the FAA collects other than 
the insurance premiums and fees that it is required to deposit into the 
Aviation Insurance Revolving Fund. 49 U.S.C. 45303(c). This account is 
available not just for fees assessed under chapter 453, but for ``all 
amounts'' other than insurance premiums and fees.\8\ Thus, the 
statement made in 1985 is no longer correct.
---------------------------------------------------------------------------

    \8\ The fact that Congress excluded insurance premiums and fees, 
which are not amounts assessed under chapter 453 of title 49, 
expresses Congress' plain and unambiguous intent for the FAA to 
deposit all amounts it collects into this account, not just the 
amounts assessed under the user fee provisions of chapter 453.
---------------------------------------------------------------------------

    The circumstances surrounding the statement made in 2006,\9\ did 
not address the authorities conferred on the FAA by the Acquisition 
Management System Act. The FAA has authority to lease property to 
others, and to receive adequate compensation for this temporary 
disposal of property,

[[Page 60578]]

including the authority to lease the slots at LaGuardia.
---------------------------------------------------------------------------

    \9\ Statements were also made in environmental assessments in 
2005 and 2007 that indicated that legislation might be needed to 
implement market-based approaches to congestion management. These 
statements are too vague to determine whether they are correct with 
respect to the issue at hand.
---------------------------------------------------------------------------

    As briefly discussed in the SNPRM, the FAA initially believed that 
imposing a market-based reallocation mechanism as part of the 
regulation could be problematic. However, as delays soared in the 
region in 2007 and Congress failed to pass long-term reauthorization 
legislation, the FAA reevaluated its options. One option was to simply 
extend the existing LaGuardia Order indefinitely. The agency rejected 
this option because the Order was never intended to be a long-term 
solution and it perpetuates the inefficiencies contained within the 
HDR. Likewise, the FAA could have pursued a final rule that would 
establish an administrative reallocation mechanism, but the agency 
concluded that approach also failed to resolve the inefficiencies 
contained within the HDR. Finally, the FAA could revisit all of its 
statutory authorities and determine whether it had the ability to 
allocate slots under its existing legal authorities.
    This final approach was the one the agency pursued because the FAA 
believes it is both legal and best represents the interests of 
passengers flying in and out of the airport. The FAA also believes this 
approach best effectuates the FAA's mandate to provide for the 
efficient use of the NAS, coupled with the Department's mandate to 
consider competitive effects. The agency can either foster a market-
based allocation mechanism and develop a robust secondary market, or it 
can walk away from the airport after imposing a cap and providing for a 
very limited administrative reallocation mechanism. It has decided to 
follow the more free market approach.
    The commenters also refer to the fact that the FAA sought 
additional legislative authority to conduct auctions which it is has 
not yet received. The authority sought by the FAA was part of a 
comprehensive change to how the FAA would be financed and how market-
based mechanisms would be used by both the FAA and congested airports. 
This rule, however, relies on the FAA's Acquisition Management System 
authorities and does not require the FAA to use any of the proposed 
legislative provisions it sought.
1. Slots Are a Form of Property That May Be Leased by the FAA to Others
    Both the Port Authority and the ATA submit that the FAA has no 
property rights in the slots the FAA proposes to auction.\10\ While the 
ATA does not question that the slots are property (it disputes 
ownership), the Port Authority states that the slots are ``neither 
physical property, real property, intellectual property, nor an 
intangible property recognized in common law.'' \11\
---------------------------------------------------------------------------

    \10\ The Regional Airline Association (RAA) makes a similar 
argument. In addition, RAA states that the FAA lacks the authority 
to regulate the types of aircraft and routes to be served in air 
transportation. The FAA disagrees with the premise of RAA's 
position, since the FAA may rely on a rational basis to allocate the 
use of navigable airspace under 49 U.S.C. 40103. Nevertheless, this 
rule does not attempt to regulate the type of aircraft or the routes 
served in any manner.
    \11\ The Port Authority also uses the language in the preamble 
to the SNPRM as evidence that the slots are not property because the 
FAA states that there was no Fifth Amendment Takings issue with the 
proposed slot auction. The FAA's statement, in context, went to the 
fact that the air carrieres have no property interests in the slots 
after expiration of the current Order until FAA provides them with 
new slots. It did not imply that the slots were not property; just 
that the air carriers possess no property interests beyond those 
accorded them under the Order.
---------------------------------------------------------------------------

    The Port Authority is incorrect; slots are an intangible form of 
property that may be leased. On December 27, 2006, the FAA issued an 
Order limiting operations at LaGuardia pursuant to its broad authority 
to regulate the use of navigable airspace under 49 U.S.C. 40103(b). 71 
FR 77854 (December 27, 2006). That Order defines an Operating 
Authorization \12\ as ``the operation authority assigned by the FAA to 
a carrier to conduct a scheduled arrival or departure operation. * * * 
.'' Id. at 77859. The Order expressly allows the trading and leasing of 
Operating Authorizations. Id. at 77860. Although the Order does not 
permit the permanent sale or purchase of Operating Authorizations, it 
permits any form of consideration to be used in the lease or trade of 
these Operating Authorizations. Id. at 7857. In addition, the Order 
states that it ``is not intended to prohibit an air carrier from 
contractually arranging to pledge an interest in an Operating 
Authorization to a person, for use as collateral or otherwise, for the 
duration of the Order.'' Id.
---------------------------------------------------------------------------

    \12\ As the preamble to the current SNPRM states, the earlier 
Order and NPRM used the ``Operating Authorizations'' to describe 
what are called slots under the SNPRM. Both Operating Authorizations 
and slots represent property interests, but the FAA has deferred to 
common usage by reverting to the term ``slots.''
---------------------------------------------------------------------------

    This Order reflects the FAA Administrator's determination that 
Operating Authorizations are a form of property that may be leased or 
traded for consideration, and used as collateral. Indeed, the ATA's own 
members have treated Operating Authorizations, and the HDR slots that 
predated them, as a form of at least intangible property: leasing and 
trading them for consideration; using them as a form of collateral; and 
disclosing them as assets on their balance sheets. Bankruptcy courts 
have held that slots are property.
    The Port Authority cites Executive Order 13132 for the proposition 
that the FAA is ignoring the traditional role of States as sovereigns 
that can create property and has not closely examined the effect the 
rulemaking would have on the State instrumentality. The creation of 
property rights, however, is not the sole responsibility of the states. 
Federal law determines what constitutes property for the purpose of 
applying federal statutes. Ross L. Blair, et al. v. United States, 
Docket 2007-5049 (Fed. Cir. 2008), citing United States v. Kimbell 
Foods, Inc., 440 U.S. 715, 726 (1979) and United States v. Craft, 535 
U.S. 274, 278-79 (2002). The United States Government, pursuant to 49 
U.S.C. 40103, has exclusive sovereignty over the navigable airspace, 
and the FAA exercises plenary powers over that airspace.
    Unlike the Port Authority, the ATA does not dispute that the slots 
constitute a property interest; rather it argues that the property 
interest is not the FAA's, because it is created at or after the 
transfer to an air carrier.\13\ Section 40110(a)(2) does not speak to 
whether the FAA actually owns property that is being disposed of. It 
only speaks to the disposal of a property interest. Only the FAA has 
authority to assign the use of navigable airspace under section 40103. 
Even assuming that the property interest is created at the time of 
transference, it is still a property interest that falls within the 
FAA's authority to dispose of under section 40110(a)(2).
---------------------------------------------------------------------------

    \13\ The airline commenters agree with ATA's assessment that the 
slots are property of the airlines not of the FAA. See, Comments of 
U.S. Airways Group, Inc. at 24. But see, Comments of American 
Airlines at 7 stating that the Port Authority holds the property 
interest.
---------------------------------------------------------------------------

    As with certain other valuable public property not expressly owned 
in fee by the U.S. Government, the Government may allow the use of 
public property and frequently does so using leases. In fact, the 
Government routinely ``licenses'' and ``permits'' the use of property 
over which it exercises exclusive sovereignty. In doing so, unless 
otherwise specified by law, the Government charges market rates in 
accordance with OMB Circular A-25. For example, under 36 CFR 251.53--
Authorities, the Chief of the Forest Service (USDA) issues special use 
authorizations (e.g., permits, term permits, leases) for National 
Forest System land. The USDA also issues grazing permits under the 
Taylor Grazing Act (TGA) of 1934 to allow the permit/lease holder to 
use publicly owned forage. The Federal

[[Page 60579]]

Communications Commission licenses portions of the broadcast spectrum, 
and since 1993 (four years before Congress mandated the use of 
auctions) has frequently done so using auctions.\14\ The General 
Services Administration issues licenses and permits for the use of its 
buildings and property, see, e.g., 41 CFR 101-47.901, 101-47.309; see 
also, GSA form 1582, ``Revocable License for Non-federal Use of Real 
Property.'' The FAA similarly uses ``licenses'' to, in effect, lease 
its real property to non-federal users. See, 1.3.7 of the FAA's Real 
Estate Guidance, https://fast.faa.gov/realestate/index.htm.
---------------------------------------------------------------------------

    \14\ The FCC, like the FAA, had a statutory preference for 
competition prior to the requirement that it conduct auctions.
---------------------------------------------------------------------------

    In short, licenses frequently are used to provide non-federal 
parties access to public property regardless of whether that property 
be real or personal (including intangible) \15\ and whether the 
Government owns the property in the traditional sense or is simply its 
guardian. The FAA selected the word ``lease'' rather than ``license'' 
to describe the documents that will transfer slots to air carriers 
because the FAA is conveying a longer term interest, with fewer rights 
by the Government to terminate that interest, than is usually done when 
the Government licenses a non-federal entity to use public property 
(licenses of property are usually terminable at will).
---------------------------------------------------------------------------

    \15\ Such as authorized access to particular radio frequencies 
and authorized use of intellectual property.
---------------------------------------------------------------------------

2. FAA Leases Are Not Covered by IOAA and This Rule Is Not in Violation 
of Any Current Appropriations Restriction
    The ATA argues that the only authority by which the FAA may charge 
for the lease of slots is as a user fee under the Independent Offices 
Appropriations Act (IOAA) and that the only amount that could be 
charged is the cost of administering the lease. The ATA is incorrect on 
both points, but the issue is not relevant because the FAA does not 
rely on IOAA authority to conduct auctions but on its other 
authorities.
    The ATA similarly argues that this regulation falls within the 
parameters of an appropriation provision that prohibits the FAA from 
using funds from its operations appropriation to finalize or implement 
a regulation that establishes a new user fee not specifically 
authorized by law.\16\ Consolidated Appropriations Act, 2008, Public 
Law 110-161. The ATA also suggests that the wording of 49 U.S.C. 
106(l)(6) \17\ means this authority may not be used because the FAA may 
only enter into leases using this authority if the leases ``may be 
necessary to carry out the functions of the Administrator and the 
Administration.'' 49 U.S.C. 106(l)(6). The ATA argues that the only 
necessary function is a regulatory function to assign airspace under 49 
U.S.C. 40103. However, there are several other statutory functions, 
such as using procedures that provide for an efficient air traffic 
system, 49 U.S.C. 44505, and the desirability of placing maximum 
reliance on competitive market forces and on actual and potential 
competition to provide the needed air transportation system, 49 U.S.C. 
40101(a)(6), that make the use of the FAA's commercial authority to 
lease property to others appropriate. See also, the legislative history 
and findings of Congress when it granted the FAA the authority to lease 
property to others in Public Law 104-264. Having created slots, and 
determined the number of available slots should be limited because of 
the resulting strain on the NAS from the scheduling of more flights per 
hour than can be handled under current conditions at LaGuardia, the 
function of disposing of its interest in the slots becomes applicable.
---------------------------------------------------------------------------

    \16\ ATA also suggests that by finalizing or implementing this 
rule, the FAA would violate the Anti-Deficiency Act. The Anti-
Deficiency Act would only be violated if the FAA obligated or 
expended funds in excess or in advance of an available 
appropriation, fund, apportionment or other applicable 
administrative subdivision of funds. 31 U.S.C. 1341, 1517. The FAA 
may not use its operations appropriation to finalize or implement a 
rule to promulgate a new user fee not specifically authorized by 
law, but this rule simply reduces the number of slots (lowers the 
cap) at LaGuardia, defines the different types of slots, establishes 
a reversion of 15% of the slots, and discusses the FAA's intent to 
auction new or returned slots. This rule does not require or impose 
on any entity a requirement to pay the FAA to obtain a service or 
even a slot. If the FAA does conduct an auction as contemplated by 
this rule, it will do so using its pre-existing authorities and 
regulation. The use of its operations appropriation to finalize and 
implement this rule therefore does not violate the Anti-Deficiency 
Act.
    \17\ American Airlines reads 49 U.S.C. 106 as more limited in 
scope regarding the types of property that fall under its purview. 
The statute does not limit its scope to any particular type(s) of 
property that fall under its purview. The FAA has for years, without 
challenge, interpreted its authority broadly under the statute in 
support of Congress' intention of allowing the Administrator to 
acquire, lease, enter into cooperative agreements and other 
transactions as may be necessary to carry out the Agency's 
functions. This interpretation is known to Congress, which has 
repeatedly reauthorized the FAA without making a change to this 
section. Another commenter raised the fact that the heading of 
section 106(l) refers to ``Personnel and Services'' which the 
commenter says means that subparagraph (6) of that section does not 
provide the FAA any contracting or leasing authority. It has been 
long recognized by the courts, however, that the headings of 
statutes have little if any weight in statutory interpretation. As 
other paragraphs of this section deal with personnel matters, the 
heading is not erroneous, but it does not in any way dilute the 
broad grant of contracting, leasing, cooperative and other 
transaction agreement authority Congress gave the FAA in paragraph 
(6).
---------------------------------------------------------------------------

    Even if the only ``necessary function of the Administrator or 
Administration'' were a regulatory one, the FAA has not violated the 
appropriations restriction. Simply put, a lease is not a user fee. A 
user fee is imposed for a particular service the Government provides to 
a particular party. A lease on the other hand, is a transfer of a 
possessory interest in real, personal or intangible property that 
allows the lessee the use of that property to the exclusion of others 
including the lessor. In transferring slots to air carriers for defined 
periods of time, the FAA is not providing any air traffic or other 
service to the recipients. To the contrary, the FAA's air traffic 
controllers will not be policing or otherwise cognizant of which air 
carrier owns which slot and will provide their services in accordance 
with the FAA's Orders and policies (predominantly first come, first 
served). In transferring slots to air carriers, the FAA is allowing 
that air carrier to schedule or reserve access to that segment of 
navigable airspace that is necessary to take off or land an aircraft at 
LaGuardia during a particular half hour of time. In short, the FAA is 
leasing rather than providing a service to air carriers when it 
transfers slots to them.
    A user fee is calibrated to recover the cost to the government of 
providing a service or specific benefit to an identifiable recipient. 
See, e.g., United States v. Sperry Corp., 493 U.S. 52, 60 (1989); 
Seafarers International Union of North America v. Coast Guard, 81 F. 3d 
179, 182-83 (DC Cir., 1996). The assignment of a use of navigable 
airspace for scheduled flight operations is not a ``user fee'' under 
the principles articulated in those cases.\18\ The cost associated with 
purchasing a particular slot does not constitute a user fee. First, the 
cost associated with procuring a slot at auction is not associated with 
the cost of providing air traffic services for that particular take off 
or landing. Rather, air traffic services are paid for already through 
the Airport and Airway Trust Fund receipts. Second, the FAA is not 
creating assignments of the use of navigable airspace for scheduled 
flight operations (slots) for the purpose of raising revenue by leasing 
them to air

[[Page 60580]]

carriers. More precisely, the FAA has imposed a cap and designated 
slots for the purpose of allocating the efficient use of navigable 
airspace. Most of these slots will be awarded to current operators to 
prevent disruption of air services into and out of LaGuardia. The FAA 
is leasing a relatively small number of them, by means of an auction, 
to air carriers in order to draw in new entrant carriers and provide an 
opportunity for expansion by carriers already at the airport, thereby 
inducing airline competition at LaGuardia and ensuring that airlines 
winning the slots make the highest and best use of them. The auction is 
also designed to assure that air carriers will rationalize the use of 
their slots in accordance with the value attached to them in the 
auctions, and ultimately, in the secondary market. In the end, the 
travelling public will benefit.
---------------------------------------------------------------------------

    \18\ The FAA implemented its regulation to lease its property to 
others on April 1, 1996, well prior to the first time a restriction 
was included in the FAA's appropriation concerning the FAA's ability 
to use the operations funds appropriated to develop or implement a 
new user fee.
---------------------------------------------------------------------------

3. Leases Are Not Taxes
    A tax is generally defined as an enforced obligation to support the 
government. See United States v. La Franca, 282 U.S. 568 (1931); see 
also United States v. Butler, 297 U.S. 1, 61 (1937); Head Money Cases, 
112 U.S. 580, 596 (1884); Rural Telephone Coalition v. FCC, 8388 F. 2d 
1307, 1313 (DC Cir., 1988); United States v. City of Huntington, 999 F. 
2d 71, 73 (4th Cir., 1993). A lease acquired through a slot auction, 
however, is not a tax. It is not an amount being levied on all members 
of the industry nor is it a mandatory payment as a tax would be. 
Further, the lease is not ``imposed'' as a tax is, and is not designed 
for revenue-raising purposes.
    The auction of a limited number of slots at the airport was never 
designed to provide the FAA with a new source of revenue. Indeed, in 
the SNPRM, one of the options proposed by the FAA was to allow the 
carriers to keep all revenue after covering the FAA's costs in 
conducting the auction. Rather, the auction mechanism is intended to 
use market forces to best allocate this limited asset to those carriers 
who value it the most, placing the asset to its best and highest use. 
The FAA believes the slots auctions will inform the airlines of the 
market value of their LaGuardia slots so that slot utilization can be 
rationalized. While it is true that under today's rule, that the FAA 
may realize some revenue from the auction, the agency has also 
committed to putting that revenue back into aviation capacity 
enhancement and delay mitigation projects in the New York metropolitan 
area.
    Unlike a tax, which imposes an obligation on affected citizens or 
consumers to pay money to the state, the slot auction imposes no burden 
on a carrier based on its citizenship or use of the airport. The slot 
auction lease payments are voluntary: the FAA does not require a 
carrier to participate in an auction in order to serve LaGuardia. 
Carriers serving LaGuardia presently will be given slots through 
cooperative agreements and slightly less than ten percent of the total 
number of slots at the airport will be auctioned. Only the carriers 
winning the bids at the slot auctions will pay for the lease, and that 
amount of money will have been determined by the free market. The FAA 
will not have pre-determined a lease amount and will not attempt to 
cover its costs in conducting the auction by setting a reserve 
price.\19\
---------------------------------------------------------------------------

    \19\ As discussed in the general discussion of the auction 
procedures posted under the FAA's Acquisition Management System, the 
FAA will set a reserve price to assure that, in the event only a 
single bid is received for a particular slot, the bidding carrier 
does not actually pay the bid price. In that instance, the winning 
bidder would pay only the reserve price.
---------------------------------------------------------------------------

4. The FAA's Authority To Give Slots to Air Carriers Through 
Cooperative Agreements
    A few commenters stated that the Federal Grants and Cooperative 
Agreements Act does not provide the FAA authority to give slots as 
cooperative agreements. The Federal Grants and Cooperative Agreements 
Act defines when a cooperative agreement is to be used. The FAA's broad 
authority to award cooperative agreements, was given to the FAA in the 
Air Traffic Management System Performance Improvement Act of 1996, and 
codified as 49 U.S.C. 106(l)(6). This Act expressly confers on the FAA 
Administrator the authority to ``enter into and perform such * * * 
cooperative agreements, and other transactions as may be necessary to 
carry out functions of the Administrator and Administration. The 
Administrator may enter into such * * * cooperative agreements, and 
other transactions with * * * any person, firm, association, 
corporation * * * on such terms and conditions as the Administrator may 
consider appropriate.'' 49 U.S.C. 106(l)(6). There are several 
functions of the Administrator for which it may be ``necessary'' to 
enter into a cooperative agreement. One such function is to encourage 
the development of civil aeronautics. 49 U.S.C. 40104. By giving up to 
20 slots to all air carriers currently operating at the airport, and 85 
percent of the remaining slots to the air carriers currently operating 
at LaGuardia in proportion to their current operations, the FAA is 
encouraging those air carriers to continue their development of civil 
aeronautics at the airport and in the routes served to and from that 
airport. As several commenters noted, there is substantial economic 
value both to New York and the communities served by flights from 
LaGuardia.
    American Airlines raised an additional concern about the use of 
cooperative agreements, based upon the language in 49 U.S.C. 
40110(a)(2) that requires the FAA to receive ``adequate compensation'' 
for the disposal of property interests. The FAA finds that it is 
receiving ``adequate compensation'' through the minimum slot usage 
requirements. In addition, the slots are being given in order to 
promote civil aeronautics.
5. Leases That Terminate by Their Own Terms Are Not a ``Taking'' of 
Property
    The ATA and the air carriers argue that the proposed auctions 
constitute a taking by the government and that the taking is prohibited 
for several reasons including that it is not for a legitimate purpose, 
it lacks due process, and fair value is completely absent in the 
proposed option 1 and inadequate in option 2. The FAA strongly 
disagrees with the contention that the slot auctions contemplated in 
this rule are in any way an impermissible taking.\20\ First and 
foremost, in order to be a taking, the air carriers would need to have 
a possessory interest in the slots and they do not. For bankruptcy 
purposes, air carriers may have acquired a property interest in slots, 
as discussed above, but as also cited in those cases, if that interest 
expires under the terms under which it was granted, then there has been 
no property right to be taken. The Order establishing Operating 
Authorizations at LaGuardia was of a fixed duration and any rights the 
air carriers may have had in those operating authorizations will 
automatically terminate when this rule becomes final.
---------------------------------------------------------------------------

    \20\ The preamble to the SNPRM also addresses this issue and 
provides the Supreme Court decisions supporting the FAA's position.
---------------------------------------------------------------------------

    Slots transferred to air carriers using cooperative agreements or 
leases awarded as the result of auctions will similarly have express 
automatic termination provisions. For slots transferred using 
cooperative agreements, the air carriers' property interest would 
automatically terminate if the specified ``use or lose'' provisions are 
not met or one of the other conditions specified in the cooperative 
agreements arises. If those provisions are satisfied, then most of 
these slots will terminate in 10 years. A few will

[[Page 60581]]

have varying termination dates as agreed upon by the FAA and each 
carrier.\21\ When the termination date arrives, any property interest 
the air carrier may have in the slot similarly automatically ends. 
There is no more a taking of air carrier property than there would be 
in the eleventh year of a ten year lease of FAA real property to an air 
carrier.
---------------------------------------------------------------------------

    \21\ Perhaps more accurately, the determination of which of 
these slots have which of the specified termination dates will 
follow the process described in this rule.
---------------------------------------------------------------------------

    The ATA and the air carriers provide little support for the 
proposition that Operating Authorizations or slots awarded to carriers 
under an order with a fixed duration results in entitlement to those 
slots in perpetuity.\22\ To the extent that these commenters allege 
harm (such as having made investments in airport infrastructure) based 
on the unreasonable assumption that the status quo would remain forever 
even though the Order explicitly said it would expire, that harm is the 
responsibility of the air carriers. These carriers took a risk, for 
which they have received a return on their investment based on their 
use of the Operating Authorizations for the period specified in the 
Order. If these commenters do not wish to incur a significantly smaller 
risk \23\ for a relatively small percentage of the slots that will be 
initially be transferred to them through cooperative agreements, and 
then returned to the FAA as those agreements expire in order to be 
auctioned, the carriers are free not to apply for these cooperative 
agreements.
---------------------------------------------------------------------------

    \22\ U.S. Airways Group's main contention is that the slots are 
property of the airlines because they have held them ``more or less 
continuously'' for 40 years.
    \23\ Unlike the operating authorizations provided under the 
LaGuardia Order, where the date of the termination of the carriers' 
property interest could not be known with absolute certainty other 
than it would be when this final rule becomes effective (it 
admittedly has taken longer than the FAA contemplated to issue this 
final rule) the slots that will be awarded as the result of an 
auction have a firm term of ten years, with little right by the FAA 
to terminate prior to the end of that term. Most of the cooperative 
agreements will similarly have a ten year firm term.
---------------------------------------------------------------------------

    The ATA and the air carriers rely on what they perceive as a three 
pronged test established in Penn Central Transp. Co v. New York City, 
438 U.S. 104 (1978). In Penn Central the Court found that there was no 
compensable taking when the City's Landmarks Preservation Law would not 
allow additional stories to be added to Grand Central Station. Even 
using the three prong test articulated by the commenters, for the 
reasons stated above, the activities described in this rule would not 
constitute a Fifth Amendment taking.
    The ATA also overstates the extent of the alleged harm. Under the 
option selected in this rule, air carriers will get to keep, at a 
minimum, approximately 85 percent of their current slots and for all 
but eight airlines, they will get to keep 100 percent of their current 
slots.
    The Port Authority cites to Air Pegasus of D.C., Inc. v. United 
States, 424 F.3d 1206 (Fed. Cir. 2005), for the proposition that the 
Federal Government's sovereignty over airspace is not ownership in fee, 
but rather navigational servitude. Air Pegasus, however, stands for the 
proposition that there is no private property right of access to 
navigable airspace. If the FAA legitimately exercises this authority to 
prohibit the use of a segment of navigable airspace, there is no 
property taken for Fifth Amendment purposes. In Air Pegasus a heliport 
operator was found to have no private property rights in its facility 
even though it lost all opportunity to generate revenue (and went out 
of business) after the FAA shut down much of the airspace around 
Washington, DC following the attacks of September 11, 2001.
6. The Draft Lease Terms Included in the NPRM Were for Illustrative 
Rather Than Probative Purposes
    The ATA also uses the draft Lease agreement as evidence that the 
FAA does not have the authority to lease the slots. The ATA places far 
too much reliance on an early draft document that was provided to give 
commenters some idea of the type of lease the FAA was considering. For 
example, the standard clauses in the FAA's Acquisition Management 
System (AMS) use the word ``contract'' instead of ``lease'' because 
leases are a form of contract. The AMS, however, by its explicit terms 
applies to the acquisition and lease of property. See, Section 4.2 of 
the Acquisition Management System, and Real Estate Guidance, https://
fast.faa.gov/realestate/index.htm and T3.8.1 of the FAA's Procurement 
Guidance, also located at https://fast.faa.gov. The FAA acknowledges 
that some of the terms in the sample lease that the FAA provided for 
illustration were not appropriate for a lease of slots, and will modify 
any proposed leases accordingly. An additional opportunity to comment 
on these terms will be provided prior to any auction. These sample 
terms, however correct or incorrect, have no bearing on whether the FAA 
has the authority to enter into leases. Similarly, because Attachment A 
was not included in the sample lease, the ATA argues that is evidence 
that there is no property the FAA can lease. Attachment A will be the 
particular slots each carrier receives. Each Attachment A will be 
unique for each particular airline. Before the slots are given or 
auctioned, there is no way to tell what any particular Attachment A 
will look like, therefore no Attachment A was provided. Instead the 
sample lease simply provided notice that there will be an attachment 
that will describe which slots the lessee (or cooperative agreement 
holder) will have.

B. The FAA Has Authority To Retain the Amounts Received From the Lease 
and Disposal of Property and To Use Those Proceeds for Congressionally 
Authorized Purposes

    The commenters assert that the FAA has no authority to retain the 
amounts received from the lease of slots, and that 31 U.S.C. 3302 
requires all amounts received by an agency b