The unveiling of the U.S. Senate's FAA reauthorization bill marks a crucial step in resolving policy and funding questions that have been hanging over the aviation industry for years. But the bill also sets up battles with House lawmakers that could once again bog down the reauthorization effort.

While these disagreements are not as severe as in prior rounds of the reauthorization debate, they will not be settled without major concessions. And such compromises have proved elusive in recent years - meaning the FAA has operated under temporary extensions since its last authorization expired in 2007. This lack of certainty has frustrated industry and limited the agency's ability to plan ahead.

The Senate FAA bill is a bipartisan effort authored by Commerce Committee Chairman Jay Rockefeller (D-W.Va.), aviation subcommittee Chairman Byron Dorgan (D-N.D.), and ranking committee Republicans. The House passed its own version in May, and House lawmakers have frequently chided the Senate for lagging behind. The Obama administration is still working on its own reauthorization proposal.

Reauthorization bills contain policy instructions and recommend long-term funding levels. While FAA is typically reauthorized for a four-year period, the House bill covers three years and the Senate only two. Rockefeller said the two-year approach will give the White House "a chance to work out its own aviation program," and will also give the aviation industry some funding certainty in the meantime.

The Senate proposes $17 billion for FAA in Fiscal 2010, and $17.5 billion in Fiscal 2011. The 2010 amount is slightly larger than the administration's budget request of about $16 billion for that year. The operations budget line is the same, but capital spending and airport grant lines are set at higher levels than the White House request, "to ensure modernization needs are met."

Notably, the Senate bill does not contain any user-fee language, even though Rockefeller pushed for a nominal per-flight fee during the reauthorization debate last year. He made it clear last week that he "still feels strongly" that more of the air traffic control (ATC) cost should be spread to general aviation. The House bill also contains no user-fee provision, but the Obama administration has signaled it wants to introduce such a fee from Fiscal 2011 onward.

The Senate has not increased airport passenger facility charges (PFCs) in its reauthorization bill, in contrast to House lawmakers who bumped up the cap on this ticket tax to $7 from $4.50 per passenger. Instead, the Senate bill would introduce a program at six airports where the PFC cap can be removed if an airport finds a way to charge passengers directly instead of via airline tickets.

Another potential clash point between the House and Senate is the airline alliance issue. James Oberstar (D-Minn.), chairman of the Transportation and Infrastructure Committee, insisted on a clause in the House bill that would sunset all alliances, forcing airlines to reapply for approval after a reexamination of the criteria. The Senate bill has no such alliance language, but Oberstar is passionate about the topic and will not back down easily. This will be "one of a number of matters" that will have to be worked out in conference, according to Rockefeller.

The Senate bill does require U.S. inspections of foreign repair stations, a provision in the House bill that has prompted strong opposition from the European Union. However, the Senate bill's authors say they "don't expect we're going to have a problem with Europe" over the bill, and suggested they will exclude regions like this from the inspection requirement. This could indeed make it more palatable to the Europeans than the House version.

On the modernization front, the Senate bill calls for acceleration of various NextGen technologies, including automatic dependent surveillance-broadcast (ADS-B). ADS-B "out" (broadcast) capability would be required on all aircraft by 2015; ADS-B "in" (receiving) capability, by 2018. This would mark a change from the FAA's proposed deadline of 2020 for ADS-B equipage.