Impact of Regulatory Compliance Costs on Small Airports (2013)

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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 90 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2013 www.TRB.org Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation • Economics • Policy Impact of Regulatory Compliance Costs on Small Airports Unison Consulting, Inc. Chicago, IL Gresham Smith and Partners Columbus, OH Charlotte Bryan Solutions Vienna, VA Safex Westerville, OH

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans­ portation of people and goods and in regional, national, and inter­ national commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal respon­ sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera­ tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near­term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon­ sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera­ tive Highway Research Program and Transit Cooperative Research Pro­ gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte­ nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera­ tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100­Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International­North America (ACI­NA), the American Associa­ tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga­ nizations. Each of these participants has different interests and respon­ sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden­ tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro­ fessionals, the intended users of the research products. The panels pre­ pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper­ ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended end­users of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work­ shops, training aids, field visits, and other activities to ensure that results are implemented by airport­industry practitioners. ACRP REPORT 90 Project 03­25 ISSN 1935­9802 ISBN 978­0­309­28336­6 Library of Congress Control Number 2013942591 © 2013 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not­for­profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not­for­profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national­academies.org/trb/bookstore Printed in the United States of America

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR ACRP REPORT 90 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Theresia H. Schatz, Senior Program Officer Terri Baker, Senior Program Assistant Eileen P. Delaney, Director of Publications Natalie Barnes, Senior Editor ACRP PROJECT 03-25 PANEL Field of Policy and Planning Michael J. Landguth, Raleigh-Durham Airport Authority, RDU Airport, NC (Chair) Lorena de Rodriguez, SSI, Inc., Tucson, AZ Stanley M. Herrin, Crawford, Murphy & Tilly, Inc., Springfield, IL Gabor Kovacs, Volga-Dnepr Unique Air Cargo, Circleville, NY Derek V. Martin, The Port Authority of New York & New Jersey, New Windsor, NY Fred C. McCosby, Savannah Airport Commission, Savannah, GA John L. Wheeler, Bridgestone Americas Tire Operations, Des Moines, IA Kelly Slusarski, FAA Liaison Paul James Eubanks, Airports Council International–North America Liaison Christine Gerencher, TRB Liaison

F O R E W O R D By Theresia H. Schatz Staff Officer Transportation Research Board ACRP Report 90: Impact of Regulatory Compliance Costs on Small Airports identifies and quantifies the cumulative costs of complying with regulatory and other federal requirements at small hub and non­hub airports. The report is intended to provide airport operators and others with an understanding of the cumulative effects of federal requirements. The research analyzed aviation transportation, environmental, security, and occupational safety and health requirements from initial implementation through ongoing maintenance, and estimated its associated costs for the period 2000–2010. The report identifies funding sources (if any) associated with the federal requirements and reviews the actual uses of these sources by small hub and non­hub airports to cover the cost of regulatory compliance. Over time, federal, state, and local governments have gradually increased regulatory requirements on U.S. airports. The costs associated with incorporating ongoing requirements in a wide array of subject areas have steadily added to airport capital and operating costs. This is a growing concern for small hub and non­hub airports that have limited staff and financial resources with which to fulfill their compliance responsibilities. For many small hub and non­hub airports, lower passenger enplanements limit their ability to raise revenue or cut costs significantly to make up for the costs of increased requirements. With budgets already stretched by operating costs and capital expenditures, many small hub and non­hub airports are struggling to absorb compliance costs associated with the cumulative require­ ments. While government agencies provide some funding for new regulatory initiatives, costs attributed to ongoing compliance remain unfunded. This research was conducted under ACRP Project 03­25 by Unison Consulting in association with Gresham Smith and Partners, Charlotte Bryan Solutions, and Safex using multiple approaches including a review of regulatory documents, an extensive two­phase survey, and conduct of five case studies to obtain a detailed understanding of the cost impact of regulatory actions. Appendixes A through C—which provide summaries of federal actions and published cost data, Phase 1 and Phase 2 survey results, and case studies—are available as Volume 1 of ACRP Web-Only Document 15: Data Supporting the Impact of Regulatory Compliance Costs on Small Airports (www.trb.org/Main/Blurbs/168946.aspx). Technical Appendixes 1 through 6—which provide the research methodology; analysis of aviation transportation, environmental, security, and occupational safety and health requirements; and an estimate of industry costs—are available as Volume 2 of ACRP Web-Only Document 15 (www.trb.org/Main/Blurbs/168947.aspx). A presentation that summarizes this research can be found on the ACRP Report 90 summary page (www.trb.org/Main/Blurbs/168945.aspx). The presentation can be used as a template by individual airports in discussion with federal agencies.

C O N T E N T S 1 Summary 17 Chapter 1 Introduction 17 1.1 Statement of the Problem 17 1.2 Research Objectives 17 1.3 Study Methods 18 1.4 Report Structure 19 Chapter 2 Regulations Applicable to Small Airports 19 2.1 Overview 19 2.2 FAA/DOT Requirements 20 2.3 Environmental Requirements 21 2.4 Security Requirements 22 2.5 Occupational Safety and Health Requirements 23 Chapter 3 Cost Impacts from FAA/DOT Requirements 23 3.1 Published Cost Estimates 24 3.2 Airport Population Affected by Requirements 28 3.3 Unit Cost Estimates from Phase 2 Survey Results 31 3.4 Relationship between Costs and Activity Levels 32 3.5 Industry Cost Estimates 33 3.6 Funding Sources 43 Chapter 4 Cost Impacts from Environmental Requirements 43 4.1 Published Cost Estimates 43 4.2 Airport Population Affected by Requirements 47 4.3 Unit Cost Estimates from Phase 2 Survey Results 48 4.4 Relationship between Costs and Activity Levels 48 4.5 Industry Cost Impacts of Environmental Requirements 49 4.6 Funding Sources 53 Chapter 5 Cost Impacts from Security Requirements 53 5.1 Published Cost Estimates 53 5.2 Airport Population Affected by Requirements 53 5.3 Unit Cost Estimates from Phase 2 Survey Results 55 5.4 Relationship of Costs and Activity Levels 56 5.5 Industry Cost Estimates 56 5.6 Funding Sources 59 Chapter 6 Occupational Safety and Health Requirements 59 6.1 Airport Population Affected by Requirements 59 6.2 Published Cost Projections 60 6.3 Unit Cost Estimates from Phase 2 Survey Results

61 6.4 Relationship of Costs and Activity Levels 61 6.5 Industry Cost Estimates 62 6.6 Funding Sources 63 Chapter 7 Case Studies 63 7.1 Overview of Case Study Airports 63 7.2 Impacts of Federal Requirements 66 7.3 Key Findings and Conclusions 67 Chapter 8 Conclusions 67 8.1 The Cost of Compliance with Federal Requirements Continues to Grow 68 8.2 Small Airports Do Not Have the Revenue­Generating Capacity to Meet the Costs Associated with Increased Regulatory Action 68 8.3 Published Cost Estimates for Regulatory Requirements Understate the Full Cost of Compliance 69 8.4 The Cost of Compliance with Unfunded Requirements Continues to Grow 70 8.5 Limited Staff Resources of Small Airports Exacerbate the Cost of Compliance with Federal Requirements, Especially at Non­hub Airports 71 8.6 The Prohibition on Charging Rent to the TSA Costs Airports Substantial Revenue 71 8.7 The Recent Trend of Applying Uniform Standards to All Airports Results in a Disproportionate Responsibility for Small Airports 71 8.8 Additional Research 71 8.9 Options to Reduce Future Impacts 73 Terms, Abbreviations, and Acronyms 75 Appendixes A–C 76 Appendix D Presentation Template 84 Technical Appendixes Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.