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AUGUST 30, 1989.-Ordered to be printed

Filed under authority of the order of the Senate of August 2 (legislative day, January 3), 1989

29-010

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1989

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RALPH B. EVERETT, Chief Counsel and Staff Director

WALTER B. McCORMICK, Jr., Minority Chief Counsel and Staff Director

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Filed under authority of the order of the Senate of August 2 (legislative day, January 3), 1989

Mr. HOLLINGS, from the Committee on Commerce, Science, and Transportation, submitted the following

REPORT

[To accompany H.R. 838]

The Committee on Commerce, Science, and Transportation, to which was referred the bill (H.R. 838) to authorize the Secretary of Transportation to release restrictions on the use of certain property conveyed to the Peninsula Airport Commission for airport purposes, having considered the same, reports favorably thereon with an amendment and recommends that the bill do pass.

PURPOSE OF THE BILL

The purpose of H.R. 838, as reported, is to authorize the Secretary of Transportation to release restrictions on the use of certain airport properties conveyed to the Peninsula Airport Commission in Newport News, VA. The bill also authorizes the State of Hawaii to use certain funds generated at an off-airport duty-free facility for other transportation purposes in that State.

BACKGROUND AND NEEDS

PENINSULA AIRPORT COMMISSION

The Federal Aid to Airports Act of 1946 ceded federally-owned airports to civilian sponsors. The 1946 Act stipulated that the land must be used only for aeronautical purposes. The Act did not authorize the granting of releases from these restrictions in the deed of conveyance.

In 1986, Public Law 99-618 was enacted, authorizing limited release of deed restrictions on property originally conveyed to the Peninsula Airport Commission, which operates the Patrick Henry Airport in Newport News, VA. The Commission is now seeking releases on three additional parcels of land totalling 13 acres. Legislation is needed because this property has already been conveyed by the Commission to the City of Newport News, VA, and two private entities are under the impression that the land in question was not restricted. Attorneys for the Peninsula Airport Commission have stated that these parcels of land were not needed for airport purposes and that the proceeds from their sale were used for the development, improvement, operation, and maintenance of the airport.

H.R. 838 would amend Public Law 99-618 by allowing the limited release of deed restrictions on the 13 acres of real property in question, provided the Federal Aviation Administration determines that the use of the property involved will not affect the operation or development of the airport. The bill would also eliminate the current restriction limiting the conveyance of that property to the City of Newport News, VA.

HAWAII TRANSPORTATION FUND

In 1987, the State of Hawaii awarded a contract, through a competitive bidding process, for the operation of an off-airport dutyfree facility. Based on revenue projections, the State has estimated that the combined operation of the on-airport and off-airport dutyfree facilities will generate $1.15 billion over a five year period. Current law requires that these funds be deposited into the Airport Revenue Fund for operations and capital development at the Honolulu International Airport and other air transportation facilities in Hawaii. Given the funding needs for Hawaii's system of airports, the revenues derived from the off-airport duty-free facility are expected to create a substantial surplus in the State's Airport Revenue Fund.

In an effort to secure a portion of these funds for other transportation projects in the State, the Hawaii Legislature recently adopted legislation to require a diversion of such funds for highway construction, harbor development, and other transportation needs. However, on June 19, 1989, the Department of Transportation (DOT) concluded that such a proposal would place the State in violation of its Federal grant obligations under section 511(a)(12) of the Airport and Airway Improvement Act of 1982. Under the 1982 Act, funds generated at an airport must be used in a manner that directly and substantially relates to the air transportation of passengers or property. DOT has interpreted this requirement to mean that funds generated at the off-airport duty-free facility were essentially revenues "generated by the airport" and cannot be diverted for non-air transportation needs.

H.R. 838 would resolve this situation by permitting the use of certain revenues generated by the off-airport duty-free facility in Hawaii for any transportation purpose, including, but not limited to, airports, harbors, and highways. The non-airport transportation projects, for which these funds will be used, will enhance tourism

in Hawaii, which is the State's largest business. Given Hawaii's geography, this will ultimately benefit the airline industry which serves the State.

LEGISLATIVE HISTORY

H.R. 838 was introduced by Representative Bateman on February 6, 1989. It is similar to legislation (S. 2247) passed by the Senate during the 100th Congress.

H.R. 838 was amended and reported by the House Committee on Public Works and Transportation, and passed by the House by voice vote on May 16, 1989. After referral to the Senate Committee on Commerce, Science, and Transportation, the bill was considered in open executive session on August 1, 1989. During consideration of the bill, Senator Inouye offered an amendment relating to the use of off-airport duty-free funds in the State of Hawaii. After agreeing to the amendment, the Committee, without objection, ordered the bill reported.

ESTIMATED COSTS

In accordance with paragraph 11(a) of rule XXVI of the Standing Rules of the Senate and section 403 of the Congressional Budget Act of 1974, the Committee provides the following cost estimate, prepared by the Congressional Budget Office:

U.S. CONGRESS,
CONGRESSIONAL BUDGET OFFICE,
Washington, DC, August 3, 1989.

Hon. ERNEST F. HOLLINGS,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has reviewed H.R. 838, an act to authorize the Secretary of Transportation to release restrictions on the use of certain property conveyed to the Peninsula Airport Commission for airport purposes, as ordered reported by the Senate Committee on Commerce, Science, and Transportation, August 1, 1989. We estimate that no cost to the federal government or to state or local governments would result from enactment of this legislation.

In 1947, the United States conveyed certain property in Newport News and York County, Virginia, to the Peninsula Airport Commission for airport purposes. H.R. 838 would modify certain restrictions contained in Public Law 99-618 that limit the commission's ability to lease or convey portions of the property to others. In addition, the legislation would allow certain revenues from off-airport duty-free stores in Hawaii to be used by the state for any transportation purpose, and not just for air transportation purposes, through calendar year 1995.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Mitchell Rosenfeld.

Sincerely,

ROBERT D. REISCHAUER,

Director.

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