Order 2013-11-16

 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty-Second day of November, 2013

VIH Cougar Helicopters, Inc.

Docket OST 2013-0004

Served November 22, 2013

Violations of 14 CFR Part 298

and 49 U.S.C. § 41101

CONSENT ORDER

This order concerns unauthorized interstate and foreign air transportation by VIH Cougar 

Helicopters, Inc., (VIH Cougar) which, while under the actual control of a non-U.S. 

citizen, engaged in air services as a common carrier between points in the United States

and between points in the United States and points abroad. VIH Cougar’s conduct in this 

regard violated 49 U.S.C. § 41101 and 14 CFR Part 298. This order directs VIH Cougar

to cease and desist from future violations of those provisions and assesses the carrier 

$300,000 in civil penalties, subject to footnote 6 below.

Applicable Law

In order to engage directly or indirectly in air transportation, air carriers must hold 

economic authority from the Department of Transportation (Department), either in the 

form of a certificate of public convenience and necessity issued pursuant to 49 U.S.C. 

§§ 41101 and 41102, or in the form of an exemption from the certificate requirement, 

such as those applicable to direct air carriers operating as air taxis under 14 CFR Part 298 

or to indirect air carriers acting as air freight forwarders under 14 CFR Part 296. (This 

economic authority is in addition to any safety authority necessary under applicable 

Federal Aviation Administration (FAA) requirements.) Part 298 exempts qualified air 
2

taxis from section 41101, but only if they comply with the requirements of Part 298, 

including the requirement that they remain citizens of the United States at all times.1

Under 49 U.S.C. § 40102(a)(15), as amended by Vision 100 – Century of Aviation 

Reauthorization Act (P.L. 108-176, 117 Stat. 2490, Dec. 12, 2003), a “citizen of the 

United States” includes a corporation organized in the United States that 1) meets certain 

specified standards regarding the citizenship of its president, officers and directors, and 

holders of its voting interests and 2) is under the actual control of citizens of the United 

States.2

 The Department has customarily looked at the totality of the circumstances to 

determine whether a carrier was under the actual control of U.S. citizens.3

Facts

VIH Cougar was a registered air taxi operating under 14 CFR Part 298.4 It held Part 133 

and 135 operating authority from the FAA. The air carrier provided a diverse range of 

services including seismic monitoring, firefighting, and passenger and cargo operations 

using a fleet of helicopters. VIH Cougar’s headquarters was located in Bellingham, 

Washington, and it maintained bases in Galliano, Louisiana, and Boise, Idaho. The air 

carrier’s passenger and cargo operations were primarily conducted from its Galliano 

operating base, while its seismic monitoring and firefighting operations were primarily 

conducted from its Boise operating base.

From 2012 to the present, VIH Cougar’s ownership and management structure has 

undergone numerous changes. On March 12, 2012, when the Department issued an order 

to show cause why it should not issue an order finding that VIH Cougar did not meet the 

U.S. citizenship requirements set forth at 49 U.S.C. § 40102(a)(15), ownership was 

divided between VIH Western, LLC, and VIH USA, which owned 76 and 24 percent of 

VIH Cougar, respectively. VIH Western was wholly owned by a U.S. citizen, while VIH 

USA was wholly owned by a Canadian corporation that was in turn wholly owned by a 

Canadian citizen. The Department tentatively found that VIH Cougar was not a U.S. 

 1 14 CFR 298.11. We also note that section 298.21 requires applicants for the exemption authority set forth 

in section 298.11 to certify that they are U.S. citizens.

2 Section 40102(a)(15) states that a U.S. citizen corporation is one in which the president and at least twothirds of the board of directors and other managing officers are citizens of the United States and at least 75 

percent of the voting interest is owned or controlled by persons who are citizens of the United States. An 

actual control test for citizenship historically was applied by the Department before Vision 100’s 

enactment.

3 See, e.g., In the Matter of the Citizenship of DHL Airways, Inc., n/k/a ASTAR Air Cargo, Inc., Order 

2004-5-10 at 6 (May 13, 2004) (assessment of actual control based on “totality of the circumstances”), and 

at 8, quoting Acquisition of Northwest Airlines by Wings Holdings, Order 89-9-51 at 5 (Sept. 29, 1989) 

(“control standard is a de facto one”).

4 After an investigation, on June 11, 2013, the Department made final its decision that VIH Cougar was not 

a U.S. citizen corporation and therefore cancelled the air carrier’s air taxi exemption authority. See In the 

Matter of the Cancellation of the Air Taxi Authority Issued to VIH Cougar Helicopters, Inc., Order 2013-6-

8 (June 11, 2013). On August 7, 2013, VIH Cougar filed a Petition for Review of the Department’s final 

decision with the U.S. Court of Appeals for the District of Columbia Circuit. 
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citizen because it was under the actual control of a Canadian citizen.5 In May 2012, in 

response to the Department’s tentative findings, VIH Cougar provided documentation to 

the Department indicating that it was restructuring its company. In June 2012, VIH 

Cougar provided a report stating that it had entered into a letter of intent with a U.S. 

citizen purchaser in an attempt to comply with the citizenship requirement. A majority of 

the ownership interest in VIH Cougar was subsequently sold to Turner Aviation 

Holdings, LLC (“Turner Aviation”), a U.S. citizen, pursuant to a Share Purchase 

Agreement dated June 27, 2012. 

Nevertheless, after reviewing the previous changes to VIH Cougar’s management 

structure, the Department issued Order 2013-6-8 (June 11, 2013) (“Final Order”), where 

it determined that the changes made in response to the Department’s 2012 show cause 

order were insufficient and that the Canadian citizen still had the ability to exert 

substantial influence over VIH Cougar’s operations and its management. The 

Department found that VIH Cougar was under the actual control of VIH Group, a citizen 

of Canada, and its Canadian citizen owner; and therefore was not a U.S. citizen under the 

statute or otherwise eligible for exemption authority under Part 298 of the Department’s 

rules.6

 VIH Cougar’s operations while under the control of the Canadian citizen were in 

violation of 49 U.S.C. § 41101 and 14 CFR Part 298.

Mitigation

VIH Cougar notes that the Department first began its inquiry into VIH Cougar in April 

2008, but did not initiate the Show Cause proceedings until nearly four years later in 

March 2012. VIH Cougar maintains that during this time, it cooperated fully with the 

Department’s review, including providing thousands of pages of responsive documents in 

response to its numerous requests for information and detailed explanations of VIH 

Cougar’s corporate structure, management, and operations. VIH Cougar also met with 

Department officials to further explain these matters and discuss the agency’s concerns. 

VIH Cougar states that throughout this process, it explained to the Department that VIH 

Cougar, in accordance with the applicable statutory requirements, has always been 76

percent owned by U.S. citizens and all of its officers and directors have always been U.S. 

citizens. VIH Cougar maintains that there were no voting or other similar agreements 

 5 See In the Matter of the Cancellation of the Air Taxi Authority Issued to VIH Cougar Helicopters, Inc., 

Order 2012-3-7 (Mar. 12, 2012). 

6 On July 2, 2013, VIH Cougar surrendered its air carrier certificate. At that time, a majority of shares had 

been acquired by Turner Aviation, which is owned by Christopher G. Turner who also owns Construction 

Helicopters, Inc. (“Construction”), a U.S. commercial helicopter operator based in Howell, Michigan. VIH 

Cougar is currently majority owned by Turner Aviation. Turner Aviation and Construction (including their 

present or former officers, directors, employees, shareholders, and affiliates), and any present or former 

officers, directors, employees, shareholders, and affiliates of VIH Cougar, are not and will not be the 

subject of Department enforcement proceedings in connection with this matter. VIH Cougar has 

represented to the Department that VIH Cougar has no assets, and the Department will not take any action 

to pursue payment of the penalties assessed by this order against Turner Aviation or Construction (their 

present or former officers, directors, employees, shareholders, and affiliates), or against any present or 

former officers, directors, employees, shareholders, and affiliates of VIH Cougar.
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providing any minority foreign shareholders with any rights to control the company, that 

all of VIH Cougar’s aircraft leases were arm’s length, commercial agreements that 

complied with the standard industry practices approved by the Federal Aviation 

Administration (“FAA”), and that, at all relevant times, VIH Cougar has operated under 

the actual control of its U.S. citizen officers and directors. VIH Cougar states that despite 

these facts, and in response to the Department’s stated concerns, it voluntarily agreed to 

restructure its business operations beginning in 2011 and concluding in 2012. VIH 

Cougar notes that notwithstanding its efforts, the Department issued its Final Order on 

June 11, 2013, finding that VIH Cougar is under foreign control.

As asserted in its filings in DOT-OST-2012-0022, VIH Cougar strongly disagrees with 

the Department’s Final Order. VIH Cougar states that there is no evidence to support the 

Department’s determination that the new VIH Cougar has ceded control of nearly all 

aspects of its operations through the use of pervasive contracts and agreements to VIH 

Group or a Canadian citizen. VIH Cougar asserts that it alone controls its management 

and strategic decision-making, including all day-to-day operational decisions. VIH 

Cougar further asserts that there are no employment or contracting relationships between 

VIH Cougar, Turner Aviation, or Construction (or any affiliate thereof) and VIH Group 

or any Canadian citizen. VIH Cougar asserts that there are no ownership or management 

interests by, or any other control or decision-making relationships between, any Canadian

citizen and Turner Aviation or Construction.

VIH Cougar notes that even before the Final Order was issued, it voluntarily began wind 

down efforts, including voluntarily surrendering its operating licenses. VIH Cougar has 

since wound down its business after the Final Order was issued.

Decision

The Enforcement Office has carefully considered the information provided by VIH

Cougar but continues to believe that enforcement action is warranted. The Office of 

Aviation Enforcement and Proceedings and VIH Cougar have reached a settlement of this 

matter in order to avoid litigation. VIH Cougar consents to the issuance of this order to 

cease and desist from future violations of 49 U.S.C. § 41101 and 14 CFR Part 298 and to 

the assessment of $300,000 in compromise of potential penalties otherwise due and 

payable pursuant to 49 U.S.C. § 46301. Within five business days of the execution of 

this Consent Order, VIH Cougar agrees to withdraw its petition for reconsideration of the 

Department’s June 11, 2013, Final Order and to dismiss with prejudice its petition for 

review of that Final Order, VIH Cougar v. DOT, No. 13-1234, filed in the U.S. Court of 

Appeals for the District of Columbia Circuit.

This compromise assessment is appropriate considering the nature and extent of the 

violations described herein and serves the public interest. It represents a strong deterrent 

to future noncompliance with the statutory citizenship requirement and 14 CFR Part 298.

This order is issued under the authority contained in 49 CFR Part 1.
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ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of 

this order as being in the public interest;

2. We find that VIH Cougar Helicopters, Inc., for a significant period of time,

engaged in interstate and foreign air transportation while it was under the actual control 

of foreign citizens and, therefore, was not a citizen of the United States as defined at 49 

U.S.C. § 40102(a)(15);

3. We find that by engaging in the conduct described in ordering paragraph 2, 

above, VIH Cougar Helicopters, Inc., violated 49 U.S.C. § 41101 and 14 CFR Part 298;

4. We order VIH Cougar Helicopters, Inc., and all other entities owned or 

controlled by, or under common ownership and control with VIH Cougar Helicopters, 

Inc., and its successors, affiliates, and assignees, to cease and desist from future 

violations of 49 U.S.C. § 41101 and 14 CFR Part 298. Failure to comply with this cease 

and desist provision shall subject VIH Cougar Helicopters, Inc., and its successors, 

affiliates, and assignees to further enforcement action; 

5. We assess VIH Cougar Helicopters, Inc., $300,000 in lieu of civil penalties that 

might otherwise be assessed for the violations described in ordering paragraph 3, above. 

Subject to footnote 6, this amount shall be due and payable 30 days after the issue date 

of this order; and

6. We order VIH Cougar Helicopters, Inc., to pay the penalty through Pay.gov to 

the account of the U.S. Treasury. Payments shall be made in accordance with the 

instructions contained in the Attachment to this order. Failure to pay the compromise 

penalty assessment as ordered shall subject VIH Cougar Helicopters, Inc., to an 

assessment of interest, penalty, and collection charges under the Debt Collection Act and 

to possible enforcement action for failure to comply with this order.

This order will become a final order of the Department ten days after its service date 

unless a timely petition for review is filed or the Department takes review on its own 

initiative.

BY:

SAMUEL PODBERESKY

Assistant General Counsel for

 Aviation Enforcement and Proceedings

An electronic version of this document is available at www.regulations.gov.