### BEFORE THE DEPARTMENT OFTRANSPORTATION OFFICE OFTHE SECRETARY WASHINGTON, D.C.

In the matter ofthe cancellation ofthe AirTaxi authority issued to: Docket DOT-OST-2012-0022 VIH COUGARHELICOPTERS, INC.
VIH COUGAR'S MOTION TO DISMISS THE SHOW CAUSE PROCEEDING

Communications with respect to this document should be sent to:

David M. Nadler David Y. Yang Andrew E. Smith DICKSTEIN SHAPIRO LLP 1825 Eye Street, NW Washington, DC 20006 Telephone: (202) 420-2200 Facsimile: (202) 420-2201 nadlerd@dicksteinshapiro.com yangd@dicksteinshapiro.com smitha@dicksteinshapiro.com Counsel to VIHCougar Helicopters, Inc.
Dated: July 6, 2012

DSMDB-3076898vI

### BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

In the matter ofthe cancellation ofthe Air Taxi authority issued to: Docket DOT-OST-2012-0022 VIH COUGAR HELICOPTERS, INC.
VIH COUGAR'S MOTION TO DISMISS THE SHOW CAUSE PROCEEDING

Pursuant to Rule II oftheRules ofPractice (14 C.F.R. §

### 302.1I) ofthe Department of Transportation ("Department"), VIH Cougar Helicopters, Inc. ("VIH Cougar"), by and through the undersigned counsel, respectfully submits this Motion to Dismiss the Show Cause proceeding initiated by the Department on March I2, 20I2 with the issuance ofits Order to Show Cause (Order 2012-3-7) ("Show Cause Order"). As described below, VIH Cougar has completed its restructuring efforts, thus fully resolving the ownership and operational concerns identified by the Department. Accordingly, because the proceedings are now moot, VIH Cougar respectfully requests the Department dismiss the Show Cause Order. I. FACTUAL BACKGROUND In April 2008, the Departmentinitiated a review ofVIH Cougar's operations. After
numerous submissions and letters, on October 6, 2011, the Department asserted for the first time its tentative conclusion that VIH Cougar was underthe actual control ofMr. Kenneth Norie, a Canadian citizen and, therefore, not a U.S. citizen eligible for an air-taxi exemption under the Federal Aviation Act. The Department stated that the relationship between Mr. Norie and Mr. William Steeper, a U.S. citizen who was 

### VIH Cougar's President and sole Director, led it to believe that VIH Cougar was under foreign control.

OSMDB-3076898vlUpon receiving the October 6, 2011 letter, VIH Cougarrequested a meeting with the Departmentto better understand the Department's position and to determine howbest to resolve the matter. Notwithstanding the appropriate legal structure ofVIH Cougar and evidence presented by VIH Cougar, during a November 8, 2011 meeting the Department reiterated its
concernthat that Mr. Norie may have undue foreign influence over Mr. Steeper, and that Mr. Norie was in control ofVIH Cougar. Accordingly, the Department recommended that VIH Cougar severthat relationship by removing Mr. Steeper from VIH Cougar and replacing him with an independent U.S. citizen. On March 12, 2012, the Department issued a Show Cause Order which tentatively concludedthatVIH Cougaris not a U.S. citizen as defined in 49 U.S.C. § 40102(a)(l5) and consequentlyproposingthat it may, at some future date, issue a final order canceling VIH Cougar's air taxi authority under 49 U.S.C. § 40109(£) and 14 C.F.R. Part 298. See Show Cause Order at 1, 3, 8. The Show Cause Order, similar to the October 6, 2011 letter, focused on the alleged affiliations and relationship between Messrs. Steeper and Norie. !d. at 4-6. In numerous filings and letters subsequent to the Show Cause Order, VIH Cougarhas denied (and continues to deny) that Mr. Steeper, a U.S. citizen, is under foreign influence. Indeed, VIH Cougarhas adduced uncontroverted evidence demonstrating that Mr. Steeper owns and operates VIH Cougar underhis direction and control. To date, the Department has not identified any evidence (as opposedto speculation, innuendo, and unfounded credibility concerns) ofan undue control relationship. Nevertheless, inthe interests ofbringingthis matterto a close, VIH Cougar advised the Department in its**.A~pri!** 2, 2012 Response and Objections to the Department's ShowCause Order and concurrentMotion to Stay that VIH Cougar was proceeding with restructuring effotis, that

2 DSMDB-3076898vIonce completed, would fully address the Department's concerns consistent with the Department'sNovember 8, 2011 recommendations. As we previously advised, VIH Cougarmaintained two business lines: (1) VFR operations based in Boise, Idaho which support U.S. Forest Service firefighting contracts and (2) IFR operations based in Galliano, Louisiana supporting off-shore oil platform customers in the GulfofMexico and one Alaskacustomer. In a May 7, 2012letter, VIH Cougar informed the Department that VIH Cougarwas in the final stages ofconsummating an agreement to sell its VFR business to a licensed U.S. commercial air carrier based in is also a helicopter service providerto the U.S. Forest Service and the Department ofDefense. -Presidentand
owner IS a U.S. military veteran, experienced helicopter pilot, and commercial helicopter owner/operator. Mr. -hasowned and managed as its President for the past 17 years. Neither norMr. is affiliated with VIHAG, VIH Helicopters USA, Inc., VIH Western, its affiliates, subsidiaries, orprincipals, including Messrs. Steeper and Norie. In a June I, 2012 letter, VIH Cougar advisedthe Departmentthat the transaction described in the May 7, 2012 letter, which would sell the VFRbusiness to had closed on April24, 2012. VIH Cougar also informed the Department on June 1, 2012 and June 15,2012 that it was continuing good faith negotiationsto reorganize its remaining IFRbusiness. VIH Cougarnoted that onMay 25, 2012, ithad entered into a Letteroflntentwith an unrelated and unaffiliated U.S. purchaser for the business and which would also result in the separation ofMr. Steeper from the company. VIH Cougar stated in its June I, 2012 letter that it anticipated that

3 DSMDB-3076898vlthe transaction would be finalized on or before June 30, 2012, and that it would advise the Department once this transaction related to the IFR business had closed. Effective June 27, 2012, a Share Purchase and Sale Agreement concerning the remaining IFR business has been executed between Mr. Steeper's company, VIH Western LLC anda holding company controlled by Per the agreement, VIH Western LLC sold all its 76% interest in VIH Cougar to Similarto ., is not affiliated with VIHAG, VIH Helicopters USA, Inc., VIH Western, its affiliates, subsidiaries, orprincipals, including Messrs. Steeper andNorie. Nor is Mr. or .. related to any entity that is affiliated with those individuals or companies. In addition, Mr. Steeperresigned from VIH Cougar and is no longer its President and sole Director. Withthe resignation ofMr. Steeper, Mr.- has been appointed President, and Secretary ofVIH Cougar. With Mr. Steeper's resignation as sole Director, VIH Cougarhas formed a four-person Board ofDirectors including Mr. -andtwo senior managers from his organization, both ofwhom are U.S. citizens who reside in and who are unaffiliated with VIHAG, VIH Helicopters USA, Inc., VIH Western, its affiliates, subsidiaries, orprincipals, including Messrs. Steeper and Norie. Mr. Norie, in proportion with his 24% ownership ofthe company, will also be a member ofthe board. The FAA Flight District Standards Offices (Seattle) for VIH Cougaris being notified of the ownership changes in VIH Cougar. Because ofMr.-'slong affiliation withFlight District Standards Offices inthe because ofthe location ofhis headquarters in (-FSDO)and Mr.

- will be contacting the FSDO regarding his acquisition ofVIH Cougar and the relocation ofVTH Cougar'sprincipal base ofoperations and FSDO in due course.

4 DSMDB-3076898vI

### II. ARGUMENT The purpose ofthe Department's ShowCause proceedings is remedial and intended to direct the air carrier to take corrective action to ensure that it is under the control ofU.S. citizens. 

### See e.g.,Air-EvacAirAmbulanceInc. Concerning US. Citizenship, Order 96-6-13, at 1-2 (June 7, 1996). 1 Where an air carriermakes good faith restructuring efforts to address concerns articulated by a Show Cause Order, the Departmenthas not hesitated to withdraw the order, dismiss the proceedings, and find that the carriernowmeets the formal citizenship requirements of49 U.S.C. § 40102(a)(l5). 

### I d. at 2-3 (indicating that the subsequent sale ofstock under foreign control to U.S. citizens along with other changes made after the issuance ofa formal ShowCause Order cured the Department's concerns). Even before the Department issued its ShowCause Orderon March 12, 2012, VIH Cougarhad already begun steps to implement the Department's earlierNovember 8, 2011 recommendation, and has nowaccomplished those efforts by selling its VFRbusiness to and both ofwhich are companies and by VIH Western LLC selling its controlling 76% interest in VIH Cougarto and

.. are completely owned and controlledbyMr. a U.S. citizen who is not affiliated

1 In its June 25, 2012 letterto the Department, Petroleum Helicopters, Inc. ("PHI") claims that VIH Cougar cited

### AirEvac and

### Application ofVirginAmerica, Inc., Final Order, DocketNo. OST-2005-23307 (May 18, 2007) for the propositionthat the Department lacks authority to impose penaltiesfor violations ofthe Federal Aviation Act. VIH Cougarhas never asserted that the Department lacks such authority. Instead, VIH Cougarhas asserted that show cause proceedings are intended to beremedial and are designed by the Departmentto encourage the carrierto achieve corrective action. Here, the Departmenthas not Issued a final order finding that VIH Cougaris in violation oflaw. Further, VIH Cougar, in response to the Show Cause Order, has taken good faith corrective actions to restructure its operations to address the exact concerns stated by the Department, thus obviating the need for such an order. 5 DSMDB-3076898v1

### with Mr. Steeper, Mr. Norie, VIHAG, VIH Helicopters USA, Inc., VIH Western, or their affiliates, subsidiaries, orprincipals. While Mr. Norie will remain a minority shareholder, such an interest does not implicate any actual control by Mr. Norie. Indeed, the Department has never expressed a concern with the fact that Mr. Norie owns 24% ofVIH Cougar. In fact, the Department affirmed in its Show Cause Orderthat a 24% minority foreign ownership interest is consistent with, and indeed expressly allowed under, the statutory requirements of49 U.S.C. §

### 40102(a)(15). 

### See Show Cause Order at 4. Further, the actual control requirement has never been construed by the Departmentto preclude U.S. carriers from maintaining relationships with foreign carriers, firms,
orinvestors. 

### SeeActual Control ofUS. Air Carriers, 2006 WL 4504779 at *3-4 (Dec. 5, 2006). Instead, the requirement only evaluates whether a foreign interest will have a 

### substantial ability to influence the carrier's activities. 

### See In re DHLAirways, Inc. n/k/aASTARAir Cargo, Inc., Order 2004-5-10, DocketNo. OST-2002-13089, 2004 DOT Av. LEXIS 404, at *22 (May 13, 2004). Mr. Norie's 24% minority interest in VIH Cougar does not implicate, let alone trigger, such concerns andthe Department has never claimed that it does. The Department'spositionregarding the potential for foreign control in this case has centered onMr. Steeper'srole as President and sole Director ofVIH Cougar and his relationship with Mr. Norie. That concern, however, has now been fully addressed. Pursuantto the restructurings, Mr. Steeperhas resigned from VIH Cougar as an owner, officer, and director, and is no longer running the company's day-to-day affairs. Further, Mr. Steeper has sold his ownership interest in VIH Cougar. As a result, Mr.-'a U.S. citizen who is unaffiliated v;ith Messrs. Steeper andNorie and their respective companies and a highly-experienced helicopter owner/operatorin his ownright, is nowin control ofVIH Cougar's day-to-day

6 DSMDB-3076898vIoperations. In light ofthe fact that VIH Cougar has voluntarily undertaken the actions recommended by the Department, VIH Cougarhas fully resolved the Department's concerns. The ShowCause proceedings are, therefore, now moot and should be dismissed. 

### III. CONCLUSION As a result ofVIH Cougar'srestructuring efforts, the concernsraised by the Department in the March 12, 2012 Show Cause Orderhave been fully resolved. Accordingly, VIH Cougar respectfully requests that the Department rescindthe Order and dismiss the proceedings.

Dated: July 6, 2012 Respectfully submitted, By:

# D~**)'Y).'()~/AGi**

7 David M. Nadler David Y. Yang Andrew E. Smith DICKSTEIN SHAPIRO LLP 1825 Eye Street, NW Washington, DC 20006 Telephone: (202) 420-2200 Facsimile: (202) 420-2201 nadlerd@dicksteinshapiro.com yangd@dicksteinshapiro.com smitha@dicksteinshapiro.com 

### Counsel to VJHCougarHelicopters, Inc.

DSMDB-3076898vI

### CERTIFICATE OF SERVICE I certify that I have on this 6th day ofJuly 2012 served the foregoing upon the persons listed below:
Susan L. Kurland Office ofthe Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200NewJersey Avenue, SE Room W96-495 Washington, DC 20590 Lauralyn Remo Office ofthe Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200NewJersey Avenue, SE Room W96-495 Washington, DC 20590 Jonathan Blank John Longstreth Timothy Hobbs K&L Gates LLP 1601 K StreetNW Washington, DC 20006-1600 Peter Lynch, AGC-300 Asst. ChiefCounsel for Enforcement Federal Aviation Administration 800 Independence Ave. SW Washington, DC 20591 William J. Weber Certification Section Manager FAA AFS-900 45005 Aviation Drive Suite 131 Dulles, VA 20166 Roy Hardie Aviation Safety Inspector Federal Aviation Administration 1601 Lind Avenue SW, Suite 260 Renton, W A 98057

AndrewE. Smith

8 DSMDB-3076898vl