Document of the Week: 1994 Clinton White House Memos on Air Traffic Control Spinoff

May 27, 2016

Here at the Eno Center, one of our jobs is to remind people that very few of the issues relating to federal transportation policy are truly new, and that the outcome of past debates can often shed some light on current debates. Case in point:

House Transportation chairman Bill Shuster’s (R-PA) ambitious legislation to break up the Federal Aviation Administration and turn responsibility for air traffic control (ATC) over to a private, non-profit corporation (H.R. 4441) has been stalled since its approval in committee over three months ago. Next month, House leaders will have to decide whether to move ahead with some version of the House bill or extend current aviation policies and funding from their July 15 expiration through the end of the year.

The issues relating to a possible spinoff of ATC (full disclosure: a similar policy was recommended, after due consideration, by Eno’s Aviation Working Group of stakeholders in its final report) are complicated – but they are not new.

This week’s Eno Transportation Library Document of the Week is a PDF file containing a series of White House staff memos from March and April 1994, under the Clinton Administration, discussing the fine points of how to reform air traffic control, most of the options for which involved breaking up the FAA and turning air traffic control over to some other entity.

A little background: in August 1993, the blue-ribbon National Commission to Ensure a Strong Competitive Airline Industry released its final report, which recommended, among other things, “Creation of an independent federal corporate entity within the DOT to manage and fund air traffic control functions, including system development, procurement and maintenance.” The corporate entity would have to have the ability “to create and use a predictable, stable source of revenue,” would have the ability “to issue long-term bonds for capital purchases,” and would not be part of the federal budget.

The following month, Vice President Gore released the initial results of his National Performance Review (a.k.a. “reinventing government initiative”). That report built on the Commission’s report and recommended that “We should restructure the ATC into a government-owned corporation, supported by user fees and governed by a board of directors that represents the system’s customers…Relieved of its operational rule, the FAA would focus on regulating safety. With better, safer service, we all would benefit.”

But it was one thing for the Vice President to include a few paragraphs on FAA reform in a much larger report on reinventing the entire federal government. It was quite another to turn that idea into a formal legislative proposal.

The memos in our Document of the Week show that in March and April 1994, the Clinton Administration was considering four different options for air traffic control reform:

  • Option 1: Promulgate more flexible personnel and procurement rules for ATC.
  • Option 2: Create a government corporation financed by a mandatory revolving fund but without borrowing authority.
  • Option 3: Create a government corporation with borrowing authority. This was the preferred option of USDOT, and most closely resembled the Gore Re-Go recommendation.
  • Option 4: Create a non-government corporation with government oversight. This was the preferred option of White House economic advisers.

So many of the quotes from the 1994 memos could just as well apply to today’s debate, 22 years later:

“Whatever the need for increased funding of ATC modernization, the Congress might be hard pressed to find additional resources within the discretionary caps set out under [the latest budget law].”

“ATC customers – commercial airlines, general aviation, and the traveling public – do not have sufficient input into the FAA”s investment plan. Greater user input could make ATC services more responsible to user needs.”

“Critics will argue that a nongovernment corporation would jeopardize the public interest, such as safety.”

“CBO may contend, however, that the corporation is ‘inherently governmental’.”

One of the most interesting items brought to light in the 1994 memos is that the chairmen of the House and Senate transportation authorizing committees, and the air traffic controllers union, strongly opposed Option 4. Whereas today, the chairman of the House authorizing committee and the ATC controller union are the ones pushing legislation that most resembles Option 4.

The Clinton Administration decided to go with Option 3 – a government-owned corporation that would be exempt from the regular budget process. Gore and Pena held a press conference on May 3, 1994 to announce the plan (video is here). Legislation was not actually sent to Capitol Hill until April 1995 (see the transmittal letter, the bill text, and the section-by-section summary). However, the resistance from the authorizing committees was too strong, and Congress ignored ATC corporatization in the eventual 1996 FAA reauthorization law.

In 1999, the Clinton Administration changed tracks and proposed a version of Option 1, a performance-based organization for ATC within the FAA with more flexible rules. This was adopted in the 2000 FAA reauthorization law.

Reminder: Eno’s FAA Reform Reference Page has links to every available resource on the pending FAA legislation, analyses of ATC issues, and the legislative history of all past efforts to reform the FAA. Bookmark it and keep checking back, as we are always adding material.

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