The GAO, in a legal opinion issued September 30, 2008, declared that “FAA currently lacks the authority to auction arrival and departure slots, and thus also lacks authority to retain and use auction proceeds.” This legal opinion came as a result of a Congressional request.
In April and May, 2008, the FAA issued proposed regulations to conduct auctions of the airport arrival and departure slots at LaGuardia, JFK and Newark airports. (See, FAA Proposes Congestion Management Rule for JFK and Newark Liberty). Since then, the FAA indicated in August that that it was proceeding with an auction of two specific slots at Newark airport on September 3, 2008. Although that action was administratively stayed (See, FAA Suspends Auction of Flight Slot at Newark Airport), the stay (issued by the FAA’s Office of Dispute Resolution for Acquisition) was subsequently lifted on September 30, 2008. Moreover, the FAA, on September 16, 2008, announced that it “may” auction slots at Newark, LaGuardia and JFK starting on January 12, 2009.
An examination of those statutes read as a whole, however, makes clear that Congress was using the term “property” to refer to traditional forms of property. It was not referring to FAA’s regulatory authority to assign airspace slots, no matter how valuable those slots may be in the hands of the regulated community. Related case law confirms our conclusion.
The GAO concluded that if the auctions were to go ahead, and the FAA retained the proceeds that the the GAO “would raise exceptions under its account settlement authority for violations of the ‘purpose statute,’ 31 U.S.C. 1301(a), and the Antideficiency Act, 31 U.S.C. 1341(a)(1)(A).”
Needless to say the Department of Transportation was not too pleased with the outcome, stating that the GAO did not have time to do a thorough review given the “complexities of aviation law.” If the GAO had the opportunity to reflect, the DOT was “confident that GAO will better understand both the validity and the effectiveness of [the FAA’s] approach.”
On the other side of the fence, both the Air Transport Association and the Port Authority of New York and New Jersey issued press releases applauded the GAO’s legal opinion. Rep. James Oberstar (D-Minn.), the Chairman of the U.S. House Transportation and Infrastructure Committee, said in a press release that the “FAA should now reconsider its plan to auction slots in light of the GAO finding.”
(For my commentary on the situation, see the blog post The “Tragedy of the Commons” and Airport Congestion Management)