June 8, 2012

The Honorable Susan L. Kurland Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200 New Jersey S.E. Washington, DC 20590 ,; ; . ;.._,I !" :;_

T ?O?.Ti**~.soon** Jonathan Blank D 202.661.6250 F 202.778.9100 jonathan.hlank@klgates.com

Re: 

### VIH CougarHelicopters, Inc, DocketNo. DOT-OST-2012-0022 DearMs. Kurland: The Department currently has before it the Objections ofVIH CougarHelicopters, Inc. ("VIH Cougar") to the March 12, 2012 Order to Show Cause why its existing exemption authority as an air taxi operator should not be revoked for failure to meet U.S citizenshiprequirements, 1 an Answer to those Objections filed by Petroleum Helicopters, Inc. ("PHI''), Northern Pioneer Helicopters LLC and Soloy Helicopters LLC, 2 who are competitors that have been subject to years ofunlawful competition from VIH Cougar, and VIH Cougar's rcply. 3 The matter is now ready for the Department to act. Although invited by the Department to do so, VIH Cougar has notprovided any information that undermines the evidence the Department has amassed, and termed "overwhelming," ofnon-U.S citizencontrol ofVIH Cougar.4 That evidence shows that VIH Cougar is, and has always been, a shell company set up underthe putative ownership ofa foreign air carrier's regular outside lawyer, Richard Steeper, who contributed a nominal sum, ifany, for his ownership interest, and who has purported to "manage" VIH Cougar's day-to-day operations ofthe and to "oversee" its strategic plans while simultaneously maintaining a wide-ranging law practice with hundreds of clients based in British Columbia.5 VlH Cougaris in fact under the control ofMr. Kenneth Norie, a Canadian citizen and helicopter operator who set up Mr. Steeper as the straw ownerof VIH Cougar.

1Response and Objections ofVIH Cougar to the Department ofTransportation's March 12, 2012 Show Cause Order, DOT-OST-2012-0022-0030 (April4, 2012). 2 Answer ofPetroleum Helicopters, Inc. et al., DOT-OST-2012-0022-0050 (May 4, 2012) ("Answer to Show Cause Objections"). 'Reply in Support ofVIH Cougar's Response and Objections to the March 12, 2012 Order to Show Cause, DOTOST-2012-0022-0060 (May 15, 2012) 4 See Department's Oct 6. 2011 Letter to VIR Cougar. at I; Order 2012-03-07 ("Order to Show Cause") at 4-8. 5 See PHI's Answer to Show Cause Objections at 10-15.Susan Kurland June 8, 2012 Page 2 Unable to defend its blatant violation ofthe U.S. control requirements, VIH Cougar's primary goal has been to delay these proceedings long enough to allow it to dispose ofits ill-gotten gains. Its letter to you dated June I., 2012 is the latest such effm1.6
VIH Cougarstates in its June lletterthat it has entered into a Letter ofIntent with an unnamed purchaser to sellMr. Steeper's76% "interest" in the company for an undisclosed price.7 A 24% interest will continue to be held by Mr. Norie. 8 VIH Cougar states that the undisclosed purchaser is not affiliated with orrelated to Mr. Norie, but it has ofcourse consistently made similar representations about Mr. Steeper's supposed independence. VIH Cougar states that the transaction is expected to close on orbefore June 30, 2012, and pronounces that the transaction "will fully resolve this issue and render the Show Cause proceedings moot.''9
PHIhas noted in several ofits filings the need for the Department to have open and transparent proceedings with respect to any efforts byVIH Cougar to avoid the strictures ofthe Order to Show Cause through a purported divestiture orrcstructuring. 10 VIH Cougar's June 1, 2012letter reinforces the need for such an open consideration ofthe resolution ofthis public docket. PHI and other companies that have been subjected to unlawful competition have standing to participate in assessing the bonafide.\' ofa transaction that purports to resolve the Department's concerns without affecting the participating interest ofthe Canadian controllingentity. 11 The Department must also assure itselfthat its regulations and the statute have not been flouted for private gain. As PHI, Northern Pioneer, and Soloy have previously noted in their Answer to the Show Cause Objections, VIH Cougardoes not own aircraft or other substantial assets, Mr. Steeper apparently contributed little ifany money when he acquired his interest, and other interests in VIH Cougar have beentransferred for very little consideration. 12 It is also reasonable to suppose, and VIH has not denied, that a majorpart ofVlH Cougar's value is the IFR certification it pursued from 2006 to 2008- a certification that should neverhave been granted while VIH Cougar was under foreign control. 13 Proper enforcement ofits regulations would require the Department to assess precisely what is being disposed of, where the proceeds will go, and who has ultimatelybenefited from the violations ofthe citizen control requirements that

6 VIH Cougar's June 1, 2012 Letter to the Department, DOT-OST-2012-0022-0062.
7 !d. at 1. s!d. 9 !d. at 2. 10 See, e.g., PHI's May 9, 2012 Letter to the Department, DOT-OST-2012-0022-0054, at I; Answer ofPHI to VIH Cougar's Motion to Stay the Show Cause Order, DOT-OST-20 12-0022-003X. at 3-5. 11 See PHI's Answer to Show Cause Objections at 6-7. 11 See id. at 12-13, 20-22. 13 See id. at 24. -2-

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# I Susan Kurland June 8, 2012 Page 3

have harmed PHI and other legitimate U.S. citizen companies. Civil penalties are an appropriate remedy in these circumstances. 14
Failure to make a searching inquiry into all aspects ofthis transaction would allow VIH Cougar to dispose ofits ill-gotten gains with impunity, and send a message to the industry that there is no penalty for violating the citizen control requirements, merely the opportunity to cash out one step ahead ofthe law. The Department should therefore require 

### VIH Cougarto provide full information on its proposed divestiturc/restmcturing that will allow full and transparent consideration ofits adequacy to remedy the violations identified in the OrderTo Show Cause, undertake an investigation to determine who has benefited from these violations, and impose penalties and require disgorgcmcnt ofthese unlawful benefits.

Very truly yours.

Jonathan Blank

cc: Docket DOT-OST-2012-0022 David M. Nadler, Esq. Dickstein Shapiro LLP 1825 Eye Street,**~V** Washington, DC 20006

14 See Show Cause Order at 3 ("a violation ofPart 298 is also considered a violation of49 U.S.C. § 41 IOJ"). Violations ofSection 4110I arc subject to civil penalties under 49ll.S.C. §46301 (a) ofup to $25,000per unlawful !light or perday ofa continuing violation. VIH Cougar has been operating under its unlawful structure since at least February L 2007, when Mr. Steeper became the sole director and Mr. MacDonald. a Canadian citizen managing Cougar Helicopters, Inc., a subsidiary ofMr. Norie's VIH Aviation Group, simultaneously assumed the role of General Manager ofVIH Cougar to run both companies as a single operation. See PHI's Answer to Show Cause Objections at 12, 16-18.

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-CERTIFICATE OF SERVICE
1certify that Ihave on this gth day ofJune, 2012 served the foregoing Jetter upon the persons listedbelow, and have also filed it electronically in the docket ofthis proceeding:

Susan L. Kurland Office ofthe Assistant Secretaryfor Aviation and International Affairs U.S. Department ofTransportation 1200 :'-Jew JerseyAvenue, SE Room W96-495 Washington, DC 20590 Susan.kurland@dot.gov
LauralynRemo Office ofthe Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200New Jersey Avenue, SE Room W96-495 Washington, DC 20590 Laura.remo@dot.gov

PeterLynch, AGC-300 Asst. ChiefCounsel for Enforcement Federal Aviation Administration 800 Independence Ave. SW Washington, DC 20591 peter.lynch@faa.dot.gov

DC-9628442 vl Rosalind Knapp Deputy General Counsel U.S. Department ofTransportation 1200New Jerscy SE Washington, DC 20590 lindy.knapp@dot.gov

Roy Hardie Aviation SafetyInspector Federal AviationAdministration 1601 Lind Avenue SW, Suite 260 Renton, WA 98057 roy.hardie@faa.gov;

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 V!H CougarHelicopters, IncWilliam J. Weber Certification Section Manager FAAAFS-900 45005 AviationDrive Suite 131 Dulles, VA 20166 w.jeff.weber@faa.dot.gov Damon D. Walker Department ofTransportation 1200 NewJerseyAvenue SE Washington, DC 20590 damon.walker@dot.gov

John Longstreth

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