Emerging Issues: Advanced Air Mobility
Over the past several months, the concept of Advanced Air Mobility (AAM) has increasingly captured the attention of the aviation industry, including private investors, state and local governments, airport operators, federal regulators, and Congress.
AAM is an umbrella term encompassing new modes of transporting passengers and cargo by air, enabled by recent advances in aircraft technology such as electric vertical takeoff and landing (eVTOL) capability. There are a number of proposed business cases for AAM, including transportation between busy urban areas and airports in lieu of congested roadways (often referred to as Urban Air Mobility or UAM), enhanced connectivity to rural or other remote areas, intraregional transportation between major cities, and just-in-time on-demand cargo and delivery. In each business case, AAM promises to deliver a mode of transportation that is more environmentally conscious, both in terms of no- or low-emissions and reduced noise impacts, as well as less expensive than traditional forms of air transportation. While many AAM concepts would eventually transition to fully autonomous operations, most contemplate single-pilot operations in the first several years of operation. None of the next-generation aircraft intended for AAM has yet achieved certification in the United States; however, several companies are completing advanced stages of design and actively working with FAA to achieve this milestone within the next few years. As this milestone nears, many companies are now focused on ensuring that the infrastructure necessary to support AAM is in place by the time operations are approved.
In addition to myriad technical and operational challenges arising from the development and ultimate integration of AAM into the National Airspace System, developing the infrastructure necessary to support AAM presents a host of complex regulatory challenges for state and local governments and airport operators. Many proposed AAM business models contemplate the construction of new “vertiports” at off-airport locations or, even where located on-airport, from landside facilities such as parking or intermodal transfer facilities. These operations raise important questions regarding appropriate design standards and methods of certifying vertiports that will support AAM operations, passenger screening and security, and the eligibility of AAM infrastructure (or components thereof) for funding under the Airport Improvement Program, among other matters. Additionally, it will be increasingly important to define appropriate boundaries between federal and state/local authority with respect to the siting of take-off and landing facilities and regulation of low-altitude operations – still very much an open issue in the context of unmanned aerial systems. Electric aircraft may also require changes in state laws; for example, some state prohibitions on the resale of public utilities raise questions as to how the owners of vertiport infrastructure may generate revenue in exchange for supplying eVTOL with their power and recharging requirements. These and other issues will no doubt be the subject of substantial policymaking and legislation in the months and years to come, which we look forward to detailing in future issues of the Airport Law Digest.
In the interim, there has been very little guidance for state and local governments and airport operators considering the development of AAM infrastructure. It is therefore prudent to carefully coordinate any requests with your local Airports District Office. Additionally, airports should closely coordinate with state and regional planning agencies, many of which have started to plan for AAM in long-range transportation planning efforts, to ensure that AAM-related initiatives are complimentary to and do not conflict with traditional aviation modes.
For more information about AAM, contact Steven Osit.
Industry Groups Look Towards Recovery and Protecting Against Next Crisis
Earlier this year, as airports worldwide were struggling with the financial and operational impacts of the pandemic, the American Association of Airport Executives established a program specifically designed to be a resource for airport sponsors as they planned for both handling the pandemic and recovering from its effects. The Airport Consortium on Customer Trust (ACT) has coordinated the efforts of the nation’s leading airports and consultants to share innovative solutions as sponsors prepared for return of travelers. Kaplan Kirsch & Rockwell is a member of this ad hoc group.
The recent report issued by ACT, Finance and Revenue Generating Innovations, provides a comprehensive resource for the latest thinking in financing options and new ways to generate revenue that are not inextricably tied to passenger enplanements. The report concluded that airport sponsors find themselves at an inflection point where it is appropriate to reevaluate their dependence on legacy sources of revenue (e.g., airline rates and charges; in-terminal and passenger-related concessions). The authors recommend that airports examine a broader scope of revenue approaches (and strategies for partnering with the private sector) to reduce the volatility of cash flow, to mitigate risks, and to better weather the next unanticipated crisis. The report discusses the value in reassessing the relationship with concessionaires and seeking more diversified revenue that is not directly tied to passenger counts. For lawyers, the report suggests reassessing the contractual arrangements for many airport users to better spread the risk for unanticipated crises.
The report is available for download at no charge from the AAAE website. Kaplan Kirsch & Rockwell partners Dave Bannard and Peter Kirsch helped co-author the white paper.
Frequently Asked Questions: ARPA
The American Rescue Plan Act of 2021 (ARPA) provides for approximately $8 billion of grants to airports. This third round of federal COVID relief funds is in addition to the money designated for airports under the CARES Act (~$10 billion) and CRRSAA (~$2 billion). The FAA, which is tasked with administering all of these grant programs, recently released its written guidance expanding upon how the ARPA money will be distributed and conditioned. While providing much-needed information related to this new and expansive program, the guidance raises issues that airports should carefully consider when applying for, administering, and using their grant funding.
ARPA funds are available until and must be obligated by September 30, 2024. Sponsors must apply for ARPA grants by November 30, 2021, and the FAA has indicated that it intends to expedite the award of these funds. ARPA funds can be used for operational expenses incurred on or after January 20, 2020, and debt service payments due on or after March 11, 2021 (the date that ARPA was enacted). If ARPA funds are spent on new airport development, the development-related costs must be associated with combating the spread of pathogens at the airport (i.e., reconfiguring a terminal for social distancing, replacing or upgrading ventilation systems, etc.). The allocations for ARPA grants can be found here, with more general information also available on the FAA’s website. Note that the ARPA grant agreement will include a new special condition that the airport sponsor must implement a policy requiring all persons to wear a mask, in accordance with the TSA SD and CDC guidelines, at all times while in all public areas of the airport, except to the extent exempted. Failure to comply with this condition may result in suspension of payments or termination of a grant.
While much of the General Airport Rescue Grant conditions will look similar to airports who have received CARES and CRRSAA money, ARPA also provides separate funding to airports that must be used for concessions-related relief in the form of a separate Concessions Rent Relief Airport Rescue Grant. The pool of concessions relief funding is $800 million, to be allocated to primary commercial service airports based on number of annual boardings. As with CRRSAA’s concessions relief program, airports may provide relief from rent and minimum annual guarantee (MAG) obligations for eligible concessionaires, but there are several new and different features in ARPA’s program.
Significantly, the eligible pool of concessionaires has changed: in the newer ARPA grants, relief must be provided to eligible small concessions (i.e., an in-terminal concession that is either (1) a small business that has maximum gross receipts, averaged over the previous 3 fiscal years, of less than $56,420,000 or (2) a joint venture as defined in 49 CFR § 23.3) and eligible large concessions (i.e., an in-terminal concession that has maximum gross receipts, averaged over the previous 3 fiscal years, of more than $56,420,000), whereas under CRRSAA, relief was to be provided to on-airport car rental, on-airport parking, and in-terminal airport concessions (as defined in 49 CFR Part 23). In practice, this means, for example, that some airports may have provided relief to on-airport rental car companies under CRRSAA that now may not be eligible for ARPA relief.
Also notable is that, while airports could retain up to 2% of its funding allocation to cover the costs of administering the relief under CRRSAA, there is no such similar provision in ARPA – meaning that airports must administer the funds at their own expense and distribute 100% of their allotted ARPA concessions rent relief funding.
Requirements for allocating the concessions relief will otherwise look similar to CRRSAA in that airports must administer the relief based on proportionality according to rent paid by eligible concessions in the relevant baseline time period; must only provide relief to concessions that remain ready, able, and available to provide services; and must again obtain certifications from participating concessionaires that they have not received a second draw or assistance for a covered loan under section 7(a)(37) of the Small Business Act (15 U.S.C. 636(a)(37)) that has been applied toward rent or MAG costs. The last requirement stems from the general principle that federal money may not be used for the same purposes or expenses that have already been covered by another federal program (e.g., CARES, CRRSAA, ARPA).
For more information about ARPA or the new FAQ, contact Sarah Wilbanks.
FAA Welcomes New Associate Administrator for Airports
In early June, President Biden appointed Shannetta Griffin, P.E., as the new Associate Administrator for Airports. An experienced airport professional, Ms. Griffin joins the FAA from the Columbus Regional Airport Authority, where she served as the Chief Commercial Officer. Earlier in her career, Ms. Griffin also worked for the Indianapolis Airport Authority and the Hartsfield-Jackson International Airport, as well as CDM Smith. With Ms. Griffin’s appointment, Acting Associate Administrator Winsome Lenfert returns to her former role as Deputy.
PFAS Bill Moves Forward, Future Uncertain
On June 23, 2021, the House Energy and Commerce Committee approved H.R. 2467, the PFAS Action Act. This legislation requires the EPA to designate PFOA and PFOS as a hazardous substance under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) within one year and gives the EPA an additional five years to determine whether to designate all PFAS as a hazardous substance under CERCLA. Importantly, the legislation includes a specific airport liability exemption from CERCLA. The future of this legislation – both in the full House and the Senate – is unclear. Nonetheless, PFAS will continue to be an extremely important issue for airports moving forward. For more information, please contact Thomas Bloomfield, Sara Mogharabi, or Nicholas Clabbers.
FAA Issues Draft Land Use Compatibility Guidance, Invites Comments
On June 22, 2021, the FAA released Draft Advisory Circular 150/5190-4B, Airport Compatible Land Use Planning. For airport sponsors, the draft is primarily a consolidation and clarification of existing policy and guidance on obligations to maintain compatible land uses on and near the airport. However, there is new material directed at other stakeholder that will also apply to airports, so sponsors should review the draft in detail. FAA is accepting comments on the draft until August 6, 2021. For more information or to discuss submitting comments, please contact Catherine van Heuven or Nicholas Clabbers.
