Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48693

Dated: September 8, 1997.

Bernard Kulik,

Associate Administrator for Disaster

Assistance.

[FR Doc. 97–24510 Filed 9–15–97; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

[CGD 97–061]

National Offshore Safety Advisory

Committee

AGENCY: Coast Guard, DOT.

ACTION: Notice of meeting.

SUMMARY: The National Offshore Safety

Advisory Committee (NOSAC) will meet

to discuss various issues relating to

offshore safety. The meeting will be

open to the public.

DATES: The meeting of NOSAC will be

held on Thursday, October 23, 1997

from 8:30 a.m. to 2:30 p.m. Written

material and requests to make oral

presentations should reach the Coast

Guard on or before October 9, 1997.

ADDRESSES: The NOSAC meeting will be

held at Transocean Offshore Inc., 4

Greenway Plaza, Room C100, Houston,

Texas. Written material and requests to

make oral presentations should be sent

to Captain R.L. Skewes, Commandant

(G–MSO), U.S. Coast Guard

Headquarters, 2100 Second Street SW.,

Washington, DC 20593–0001.

FOR FURTHER INFORMATION CONTACT:

Captain R.L. Skewes, Executive Director

of NOSAC, or Mr. Jim Magill, Assistant

to the Executive Director, telephone

(202) 267–0214, fax (202) 267–4570.

SUPPLEMENTARY INFORMATION: Notice of

this meeting is given pursuant to the

Federal Advisory Committee Act, 5

U.S.C., App. 2.

Agenda of Meeting

The agenda includes the following:

(1) Introduction and swearing-in of

new members.

(2) Progress report from the

Prevention Through People

Subcommittee.

(3) Progress report from the

Subcommittee on Pipeline. Free

Anchorages for Mobile Offshore Drilling

Units (MODUs), Liftboats and Vessels.

(4) Status report on revision of 33 CFR

Subchapter ‘‘N’’, Outer Continental

Shelf Regulations.

(5) Status report on the Final Rule of

46 CFR Subchapter ‘‘L’’ on Offshore

Supply Vessels (OSVs) and Liftboats.

(6) Report on issues concerning the

International Maritime Organization

(IMO) and the International

Organization of Standardization (ISO).

(7) Status report from Safety

Regulatory Reform Subcommittee.

(8) Report from subcommittee on Big

‘‘L’’ OSVs, Crew Boats, Alternate

Tonnage and Licensing of OSVs.

Procedural

The meeting is open to the public. At

the Chairperson’s discretion, members

of the public may make oral

presentations during the meeting. If you

would like to make an oral presentation

at the meeting, please notify the

Executive Director no later than October

9, 1997. Written material for

distribution at the meeting should reach

the Coast Guard no later than October 9,

1997. If you would like a copy of your

material distributed to each member of

the Committee or Subcommittee in

advance of the meeting, please submit

25 copies to the Executive Director no

later than October 9, 1997.

Information on Services for Individuals

With Disabilities

For information on facilities or

services for individuals with disabilities

or to request special assistance at the

meeting, contact the Assistant to the

Executive Director as soon as possible.

Dated: September 10, 1997.

Joseph J. Angelo,

Director of Standards, Marine Safety and

Environmental Protection.

[FR Doc. 97–24571 Filed 9–15–97; 8:45 am]

BILLING CODE 4910–14–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. 28895]

Airport Privatization Pilot Program:

Application Procedures

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of final application

procedures.

SUMMARY: Section 149 of the Federal

Aviation Authorization Act of 1996

establishes an airport privatization pilot

program, and authorizes the Department

of Transportation to grant exemptions

from certain Federal statutory and

regulatory requirements for up to five

airport privatization projects. A request

for participation in the airport

privatization pilot program will be

initiated by the filing of either a

preliminary or final application for

exemption with the FAA. This

statement identifies the issues the

Department will consider in granting

exemptions and approving the transfer

of a public use airport under the

program; it also describes the

application procedures to be used by

interested public airport sponsors and

private parties to apply for an

exemption under the program.

DATES: This policy is effective on

publication. With exception noted

below, preliminary and final

applications for exemption will be

accepted or after December 1, 1997, and

will be handled on a first-come firstserved basis until the limits of section

47134 are reached. An otherwise

qualifying preliminary or final

application for exemption will be

accepted before December 1, 1997, if the

sponsor has issued, on or before the date

of publication of this notice, a formal

solicitation or request for proposals for

the sale or lease of an airport. All

applications will be evaluated in the

order of receipt.

FOR FURTHER INFORMATION CONTACT:

Benedict D. Castellano Manager, (202–

267–8728) or Kevin C. Willis (202–267–

8741) Airport Safety and Compliance

Branch, AAS–310, Federal Aviation

Administration, 800 Independence Ave.

SW., Washington, DC 20591,

SUPPLEMENTARY INFORMATION:

Introduction and Background

This notice of application procedures

to be used by applicants for an airport

privatization project is being published

pursuant to section 149 of the Federal

Aviation Administration Authorization

Act of 1996, Public Law 104–264

(October 9, 1996) (1996 Reauthorization

Act), which adds a new section 47134

to Title 49 of the U.S. Code. Section

47134 authorizes the Secretary of

Transportation, and through delegation,

the FAA Administrator, to exempt a

sponsor of a public use airport that has

received Federal assistance, from certain

Federal requirements in connection

with the privatization of the airport by

sale or lease to a private party.

Specifically, the Administrator may

exempt the sponsor from all or part of

the requirements to use airport revenues

for airport-related purposes, to pay back

a portion of Federal grants upon the sale

of an airport, and to return airport

property deeded by the Federal

Government upon transfer of the airport.

The Administrator is also authorized to

exempt the private purchaser or lessee

from the requirement to use all airport

revenues for airport-related purposes, to

the extent necessary to permit the

purchaser or lessee to earn

compensation from the operations of the

airport.
48694 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

In addition to identifying the

application procedures, this notice

discusses the issues the FAA will

consider in determining whether to

approve an application for an

exemption under section 47134 and

other Federal requirements for airport

operation. The term ‘‘public sponsor’’ is

used in this document to mean the

governmental agency or authority that

currently owns or operates a public

airport and proposes to sell or lease it

to a private purchaser or lessee. The

term ‘‘private operator’’ is used to refer

to a private firm or firms that propose

to purchase or lease a public airport

under the program; the term ‘‘applicant’’

means all of the parties jointly

participating in the application for

privatization of a particular airport.

Requirements for Transfer of a

Federally-Assisted Public Airport

A request for transfer of the operation

of an airport from an existing public

sponsor to a new operator, whether

public or private, requires FAA

approval. The request for exemption

under § 47134 would be considered in

conjunction with existing approval

requirements and processes.

Grant/Deed Conditions

Airport sponsors receiving Federal

assistance under a grant program or

through donation of surplus property

agree as a condition of the assistance to

obtain FAA approval before transferring

control or ownership of the airport to

another party. For example, Assurance

No. 5.b. in the Airport Improvement

Program (AIP) grant agreements

provides that a sponsor will not sell,

lease, or otherwise transfer any part of

its title or other interests in the airport

property subject to the grant assurances,

for the duration of the term of the grant

agreement, without approval by the

Secretary. Assurance No. 5 further

provides that the sponsor and the

transferee approved by the Secretary

shall insert in the contract or document

transferring the sponsor’s interest, and

make binding upon the transferee, all of

the terms, conditions and assurances

contained in the sponsor’s grant

agreement. Similar conditions are

written into the deeds of conveyance for

Federal surplus property donated to an

airport sponsor.

The FAA expects that applications

will include a statement that the new

owner/operator will assume the

obligations of the original sponsor under

existing grant agreements or deeds. The

FAA will consider whether the new

owner/operator has the powers and

authority to fulfill its obligations under

the assurances.

Regulatory Requirements

An operator of an airport receiving air

service by aircraft with more than 30

passenger seats must hold an FAA

operating certificate under 14 C.F.R.

Part 139. Authority to certificate airports

served by aircraft with 9 or more

passenger seats was granted to the FAA

in the 1996 Reauthorization Act. FAA

operating certificates are not

transferable; a new operator of a

certified airport must obtain a new

certificate issued by the FAA.

Section 47134

Section 47134 contains specific

provisions for issuance of an exemption

in connection with a transfer of airport

operation. These conditions supplement

and to some extent overlap the factors

that FAA would consider under

Assurance No. 5.b., but do not replace

other requirements for approval of an

airport transfer. In summary, section

47134(c) provides that the

Administrator may issue exemptions to

a public sponsor and a private sponsor

only if the Administrator finds that the

sale or lease agreement contains

provisions satisfactory to the

Administrator to ensure that:

(1) The airport will continue to be

available for public use on reasonable

terms and conditions without unjust

discrimination;

(2) The operation of the airport will

not be interrupted if the private operator

experiences bankruptcy or other

financial difficulty;

(3) The private operator will

‘‘maintain, improve, and modernize’’

airport facilities through capital

investments, and submit a plan for these

actions;

(4) Airport fees imposed on air

carriers will not increase faster than

inflation unless a higher amount is

approved by at least 65 percent of the

air carriers using the airport and the air

carriers having at least 65 percent of the

landed weight of aircraft at the airport;

(5) The percentage of increase in fees

imposed on general aviation operators

will not exceed the percentage increase

in fees imposed on air carriers;

(6) Safety and security will be

maintained ‘‘at the highest possible

levels;’’

(7) Adverse effects of noise from

operations at the airport will be

mitigated to the same extent as at a

public airport;

(8) Adverse effects on the

environment from airport operations

will be mitigated to the same extent as

at a public airport; and

(9) Any collective bargaining

agreement that covers airport employees

and is in effect on the date of the sale

or lease of the airport will not be

abrogated by the sale or lease.

In addition, the Administrator must

find that the transfer will not result in

unfair and deceptive trade practices or

unfair methods of competition, and that

the interests of general aviation users

are not adversely affected.

Number of Participating Airports

In establishing the privatization pilot

program, Congress placed limitations on

the number and kind of airports eligible

to participate. Paragraph 4713(d)(1)

provides that if the applications of 5

airports are approved, then at least one

must be a general aviation airport.

Paragraph 4713(d)(2) provides that no

more than one of the airports approved

may be an airport with more than 1

percent of total passenger boardings (a

large hub airport), as defined in 49

U.S.C. 47102(10).

Notice of Proposed Application

Procedures; Discussion of Comments

Received

On April 22, 1997, the Federal

Aviation Administration published in

the Federal Register a Notice of

Proposed Procedures entitled ‘‘Airport

Privatization Pilot Program: Application

Procedures,’’ proposing application

procedures for public sponsor

participation in the Airport

Privatization Pilot Program (62 FR

19638). The notice also included a

discussion of issues involved in

reviewing applications and a notice of a

public meeting. The agency asked for

public comment by June 4, 1997. The

FAA also solicited and received

comments at the public meeting held on

May 21, 1997. Verbatim transcripts of

the meeting have been included in the

docket of this proceeding.

The Agency received more than 22

written comments to the Notice of

proposed application procedures.

Comments were received from such

organizations and individuals as;

Aircraft Owners and Pilots Association,

(AOPA); Air Line Pilots Association,

(ALPA); Air Transport Association,

(ATA); Airport Commission City and

County of San Francisco; Airports

Council International-North America,

(ACI–NA); Airport Group International,

(AGI); Allegheny County Department of

Aviation; American Association of

Airport Executives, (AAAE); BAA USA,

Inc.; Infrastructure Management Group,

(IMG); Johnson Controls; Landrum and

Brown; National Air Transportation

Association, (NATA); National

Organization to Insure A Sound

Controlled Environment, (NOISE); New

York State Department of
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48695

Transportation, (NYSDOT); Sam Stuart

of ProAir Partner Inc.; Public Employees

Department, AFL–CIO, Reason

Foundation; Scenic Hudson; Mr.

Charles Spence; Stewart Park & Reserve

Coalition; Transportation Trades

Department, AFL–CIO (TTD).

The summary of comments is

intended to represent the general

divergence of industry views on various

issues. It is not intended to be an

exhaustive restatement of the comments

received. All comments received were

considered by the FAA even if not

specifically identified in this summary.

In addition to specific changes noted in

the discussion of the issues, the FAA

has made editorial changes throughout

the application procedures to enhance

readability and clarity. The Notice of

Proposed Procedures included a

discussion of issues that would be

considered by the FAA in reviewing

applications and granting exemptions

(62 FR at 19641–19645). This notice

addresses comments on that discussion,

but does not repeat the separate

discussion of those issues.

Application Procedures

Required Report to Congress

Comments: A number of comments

suggest changes in the reporting

requirement to Congress. Allegheny

County Department of Aviation suggests

the FAA initiate a dialogue with

industry groups to identify potential

measures of success to monitor and

evaluate the program. Several

commenters suggest that industry

comments should be solicited annually

and the FAA report to Congress on the

efficacy of privatization and the pilot

program. The Transportation Trades

Department, AFL–CIO suggests that the

FAA should address employee and

collective bargaining relationships in

the two year report to Congress; the

report should address such issues as the

program’s effects on wages and working

conditions, retention percentages,

contracting out practices and other

factors deemed relevant. The FAA

should also consider a yearly reporting

requirement to monitor the long term

effect on employees.

Discussion: The law requires the FAA

to provide a report to Congress on the

Progress of implementation of the

program no later than two years after the

approval of the initial application.

While the statute requires the FAA to

report only on the implementation of

the program, a considerable amount of

effort has been undertaken to better

understand the potential impacts of

airport privatization. During the past

year, the agency has held a number of

meetings with industry leaders and

trade groups, both proponents and

opponents of airport privatization, both

domestically and internationally. In

May, 1997, the FAA and DOT

conducted a public meeting to obtain

public testimony on the topic.

Final Disposition: The FAA will

consider the public comments received

from the notice combined with the

results of the May 21 public meeting

and the background information

provided by the industry in the

development of the report to Congress.

The FAA does not plan further notice

and comment on the results of the

program at this time, but will consider

a public forum for discussion of

experience under the program at an

appropriate time in the future.

Resale or Lease to Third Party

Comments: ATA suggests that the

FAA should establish procedures

prohibiting the resale of an airport to a

third party and mandating the reversion

of the airport to the original public

entity.

Discussion: Approval of a sale or lease

under section 47134 would not

eliminate the Federal obligations of the

private operator under grant agreements

to obtain FAA approval for a subsequent

sale or lease. Therefore, a prohibition on

resale or sublease is unnecessary.

Final Disposition: The final

procedures do not include a prohibition

on resale or subleasing of the airport.

Number of Airports in Pilot Program

Comments: Landrum and Brown, a

consulting firm, requests policy

clarification on the number and type of

participating airports. Landrum and

Brown believes that for the five airports

selected for participation in the

program, specific limits should be

placed on each hub classification (e.g.,

large, medium, and small hub) to permit

participation by all airport hub

classifications. FAA should also provide

guidelines and criteria for the

development of the sponsor’s request for

proposal/qualifications (RFP/RFQ).

Discussion: Congress did not intend

for participation in the airport

privatization program to be defined

according to airport hub classifications

beyond those specifically identified in

section 149. The conference report, for

the bill which became section 149,

indicates that the program should be

flexible using neither size or

geographical diversity as factors in the

selection of airports. H.R. Rep. 104–848

at 27 (September 29, 1996).

Final Disposition: The final policy

retains the original position as

identified in the April 22 Federal

Register notice.

Two Year Assessment Period

Comments: Allegheny County

Department of Aviation suggests that the

statutory two year assessment period

provides as insufficient time to fully

evaluate the impacts of the program. As

an example, the county mentioned a

typical capital development schedule

can have a longer horizon than two

years. If the generation of new capital

and investment is a measure of

performance, the two year reporting

period does not provide sufficient time

for determining results. The county

suggests that Congress establish a longer

horizon to permit a more realistic

assessment of the program.

Discussion: The statute requires the

FAA to submit a report to Congress not

later than two years after the approval

of the first application.

Final Disposition: The report to

Congress will be filed 2 years from the

date of the first application.

Selection Process

Comments: A number of comments

suggest changes to the selection process

and application submission dates. San

Francisco argues that the FAA’s system

of ‘‘first come first serve’’ is arbitrary

and unfair. San Francisco suggests that

the start date of December 1, 1997,

should be delayed for three months to

allow applicants sufficient time to

prepare an exemption application. They

also suggest that the selection process be

replaced by a lottery of pre-qualified

applicants with five airports selected by

a disinterested third party.

Johnson Controls, a private airport

operator, has two concerns with the

‘‘first come first serve’’ approach. Their

first concern is that the first five

applications submitted may not be the

most qualified to be included in the

program. Second, if more than five

airports submit applications for the

December 1 deadline, some of those

airports sponsors and their associated

parties will be forced to expend a great

deal of preparatory work and expense

with no assurance that they will be able

to obtain an exemption. As an

alternative, Johnson Controls suggests a

two step process. The first step requires

the submittal of a preliminary

application consisting of a description

of the procurement process, a copy of

the request for proposal (RFP) and a list

of the airport owner’s minimum

requirements. The second step would

consist of the FAA granting conditional

approval for five airport sponsors to

issue a RFP. A stand-by list would be

utilized should one of the first five
48696 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

applicants be unable to complete the

process. Airport sponsors would have to

request FAA approval of their final

applications. This selection process is

endorsed by Airports Council

International North America (ACI–NA)

and the American Association of

Airport Executives (AAAE).

Landrum and Brown wants both the

airport sponsor and private airport

operator to be pre-qualified for

exemption and participation in the pilot

program. Airport Group International

(AGI) proposes that interested airport

sponsors submit an expression of

interest by a date certain. The statement

would include basic information about

the facility and a feasibility report

demonstrating that the economics of the

airport can support privatization. Based

upon this submittal, the FAA would

select five airports best qualified for

participation in the program.

Exemptions would be issued upon the

completion of the solicitation process.

The Reason Foundation suggests

staggered start dates based upon airport

classification. Under this proposal,

applications for general aviation airports

would be accepted from December 1

onward, but approval would be limited

to a maximum of two during the initial

18 months, while awaiting for

applications from air carrier airports.

Large and medium hub airports could

not submit an application until 18

months later, all other carrier airports

would have 12 months. This type of

extended schedule would provide large

and medium hub airports a longer time

for preparation due to the complexity of

preparing a request for proposals.

Discussion: We agree with

commenters that a revision of the

selection procedures is warranted. The

FAA drew on several different

comments for development of the

following two-step selection process.

We continue to believe applications

should be selected on a first come first

served basis, rather than a selection

process based on criteria not found in

section 47134. First, the direction for a

report to Congress within 2 years

indicates an interest in early

implementation of the program. A firstcome first-served selection procedure is

most likely to meet this objective, as

would the December 1 start date for

applications, rather than a date of 12 or

18 months hence. Second, section 47134

does not provide specific authority or

guidance for comparative selection of

eligible applications, should more than

five applications be received, based on

their merits as privatization projects.

However, FAA agrees that a two-step

process, involving both preliminary and

final applications, would be beneficial

because it will avoid a costly and

extensive process by parties that will

turn out not to be among the first five

qualifying applicants. Also, the FAA

agrees with the suggestion for a lottery

procedure to the extent necessary to

assign priority to applications received

on the same day.

Final Disposition: As a first step,

interested public sponsors may submit a

summary preliminary application to the

FAA for review and approval on or after

December 1, 1997 (with certain

exceptions noted below). The

preliminary application will consist of:

a summary narrative of the objectives of

the privatization initiative; i.e., what the

sponsor is trying to accomplish; second,

a description of the process and

timetable to be employed in selecting an

operator; third, all the information

required to be included in Part II of the

final application; fourth, airport

financial statements including balance

and income statements for the last two

reporting periods; and finally, a

distribution ready copy of the request

for proposals (RFP) that the sponsor will

use in seeking a private operator.

The RFP must be specifically for the

sale or lease of the airport under the

§ 47134 Airport Privatization Pilot

Program. The document should contain

references to this notice and the nine

statutory objectives listed in section

47134(c). These preliminary

applications will be accepted for review

on a first come first served basis. The

FAA will review each preliminary

application and, if the preliminary

application is accepted for review, the

FAA will publish the status of the

application in the Federal Register.

Filing dates for applications, for the

purposes of determining filing order

under this program, will be the filing

date of an approved preliminary

application or the filing date of the final

application if no preliminary

application is filed. The FAA may

accept up to five applications. If more

than five airports submit applications,

the FAA will establish a stand-by list.

The FAA agrees to notify an applicant

within thirty days of the filing of the

preliminary application whether the

application has been accepted for

review.

Once a preliminary application is

accepted for review, an applicant may

issue its RFP, select a private operator,

negotiate an agreement and submit a

final application to the FAA for

approval without competing with other

applicants for one of the five program

slots. The acceptance for review of the

preliminary application is time specific

and based on the time table submitted

with the preliminary application.

Extensions may be granted, if the FAA

finds that the public sponsor is making

reasonable efforts to complete the

process. For applications received by

the FAA on the same business day, the

FAA will hold a public lottery to assign

priority.

Final applications and preliminary

applications will not be accepted before

December 1, 1997, unless an applicant

has issued an RFP on or before the date

of publication of this notice. Applicants

that have already issued an RFP for

proposals for the sale or lease of the

airport on or before the date of

publication of this notice and have

selected a private operator may submit

a final application for review before

December 1, 1997. Applicants that have

issued the RFP but have not selected a

private operator may file a preliminary

application on or before that date. When

a final application is accepted for

review, the FAA will publish notice in

the Federal Register with a 60-day

comment period.

The application procedures will be

modified to reflect the changes to the

selection process.

Privately Owned General Aviation

Airports

Comments: The State of New York

recommends that privately held general

aviation airports be excluded from

section 47134(a) because they will not

‘‘facilitate new forms of airport

ownership’’ as was intended by the

statute.

Discussion: The statute provides no

basis for excluding privately owned

airports. Privately owned airports are

currently bound by many of the same

laws, regulations, and grant assurances

that govern publicly owned airports.

However, exemptions under the

program are granted only ‘‘to the extent

necessary’’ for the purposes listed in

§ 47134(b) (2) and (3). It is likely that no

exemption would be necessary for these

purposes in a sale or lease of an airport

from one private owner to another, and

the FAA does not anticipate that

applications will be received from

private sponsors or that such sponsors

would qualify for an exemption under

the standards of section 47134.

Final Disposition: The FAA will issue

exemptions only to the extent necessary

for the purposes listed in section

47134(b) (2) and (3).

Public Outreach

Comments: Several commenters

requested that additional public

outreach efforts be written into the

procedures. NATA supports the idea of

publishing the application in the

Federal Register for the solicition of
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48697

public review and comment. AOPA

wants the airport sponsor to implement

measures to improve the opportunity for

public comment from the airport’s

general aviation community. AOPA

suggests that the airport sponsor be

required to contact all general aviation

tenants individually by mail, to the

extent practical, and to post a notice in

a prominent location on the airport, to

notify all general aviation tenants of a

pending application before the FAA.

The FAA should also conduct a public

hearing at each airport being considered

for participation in the pilot program.

Scenic Hudson, Incorporated and

Stewart Park and Reserve Coalition, two

community organizations with an

interest in Stewart International Airport,

Newburgh, New York, requested the

FAA to provide notification by personal

mail service to interested parties

regarding the acceptance of a final

application with a copy of the final

application provided upon request.

They also suggested that the comment

period on each application be for a

period of 90 days.

Discussion: The FAA supports efforts

to inform the public of any expected

changes affecting the airport

community. However such efforts to

obtain tenant participation and

comment are best initiated by the

airport sponsor in conjunction with

local pilot groups and airport tenant and

user committees.

The FAA expects that a request for

Federal exemption is only one part of a

complex process that will involve a

considerable amount of preparatory

work, will generally also require the

sponsor to obtain local government

legislative and other types of approval,

and in some cases will require state

authorization. Public participation in

the process may be required before the

application is submitted to the FAA. In

addition, we assume that industry

organizations will make their

membership aware of the opportunity to

comment at the appropriate level of

government authority. With respect to

Federal action, the names of public

sponsors submitting preliminary

applications will be published in the

Federal Register. FAA will institute a

60 day comment period for public

review of sponsor’s final application.

We believe a 60 day comment period is

reasonable considering the earlier

requirement for publication in the

Federal Register of a sponsor’s

preliminary application. We encourage

airport sponsor to augment our efforts

with their local means of

communicating with the general public,

and we are modifying the procedures to

require that applicants describe their

public outreach efforts in the final

application.

Final Disposition: Upon receipt of a

preliminary application, the FAA will

publish a notice in the Federal Register.

When a final application is accepted for

review by the FAA, the application will

be published in the Federal Register for

public review and comment for a sixty

day period. The application procedures

will be modified to reflect these changes

and to require a description of any local

public outreach efforts by the applicant.

Part II of the Application: Airport

Property

Comments: Scenic Hudson and

Stewart Park and Reserve Coalition

request clarification of what would be

considered airport property, specifically

as it pertains to Stewart International

Airport. The two commenters want to

know who will define what is to be

included as airport property and the

criteria to be employed in this

determination.

Discussion: The FAA agrees that

property to be transferred must be

clearly identified. Airport sponsors,

requesting an exemption under section

47134, must provide a description of the

airport property to be transferred under

the pilot program. They must also

provide an acquisition history of the

existing airport property. The airport

sponsor, as property owner, is in the

best position to know the acquisition

history of the airport’s property and

determine what property will be

included as part of the transfer.

Final Disposition: Questions regarding

the property of a specific airport should

be directed to the airport operator.

Part III of the Application: Terms of the

Transfer

Comments: ATA argues that the

parties buying or leasing the airport will

be interested in recouping all or part of

the cost of the initial transaction. ATA

recomends that the parties should

provide information on the source of

reimbursement for purchase or lease

payments and the projected impact of

the fees charged to airport users.

Discussion: We believe this

information will be valuable in

evaluating a public sponsor’s

application. And find the ATA

recommendations to be reasonable.

Final Disposition: The application

procedures will be changed to

incorporate a requirement that the

source of funds for reimbursement of

the purchase or lease payments be

identified, and that the applicants

describe the anticipated impact of the

reimbursement on aeronautical user

fees.

Part IV of the Application:

Qualifications of the Private Operator

Comments: San Francisco opposes the

implementation of a fitness test, because

such a test would tend to discriminate

against private operators. Allegheny

County, ATA and AGI believe that a

fitness test could be a valuable exercise

for the FAA to perform. Several

comments express the concern that such

a test should not be unduly burdensome

and the investigation process should be

similar to those investigations

conducted for public operators. Johnson

Controls emphasizes the need to crease

a ‘‘level playing field’’ for both publicly

operated airports and privately operated

airports. FAA should not use the

exemption approval process as an

excuse for placing burdens on the

private operator which were not

imposed on the public entity previously

operating the airport.

Discussion: Comments supporting the

need for a fitness test, raise two

concerns. First, a fitness test should not

be discriminatory against private

operators; any investigation process

conducted should be the same for both

public and private operators. Second, it

should not be unduly burdensome on

the operator.

Section 47134 did not change existing

requirements applicable to public

airport sponsors for ownership of

airports or eligibility to receive Federal

grants. In contrast, this section did

impose new financial and other

requirements for private firms

undertaking the operation of a public

use airport under the pilot program.

Accordingly, a fitness test related to the

eligibility requirements of the pilot

program cannot be considered

discriminatory against private operators

applying for participation in the

program. FAA believes a limited fitness

review of private operators, modeled on

information reviewed for DOT economic

certification decisions, would be

beneficial in ensuring that the FAA

meets the requirements of section

47134. The information involved is

limited to items related to this program,

and will not be a burden for applicants.

Final Disposition: In addition to the

information previously provided in the

proposed application procedures the

fitness test will require the following:

1. A private operator’s airport

operation and management experience.

2. The identity, experience, expertise

and responsibility of key personnel.

3. A description of facilities presently

being managed by the company, both

domestically and internationally.

4. Copies of the 10K annual reports

filed in the past 3 years with the
48698 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

Securities and Exchange Commission. If

not filed, balance sheet and income

statement and a cash flow statement

prepared in accordance with Generally

Accepted Accounting Principles, with

all footnotes applicable to the financial

statements. The above mentioned

statement shall be filed annually, ninety

days after the close of the operator’s

fiscal year.

A finding of fitness in response to an

application under this program would

apply only to that application and not

to other applications filed with the FAA

or other offices of the Department of

Transportation.

Part V of the Application: Requests for

Exemption

Comments: ATA also recommends

that information provided as part of the

request for exemption to permit airport

revenue to be used for compensation of

the private operator should include

anticipated amount and source of

airport funds involved, and a

description of the effect, if any, on air

carrier or other user fees.

Discussion: This request is consistent

with ATA’s request for additional

information requested in Part III,

‘‘Terms of Transfer.’’ Consistent with

our action on that request, Part V is

being modified to include this

information in the application. No

further action is required.

Part VI of the Application: Certification

of Air Carrier Approval

Comments: ATA indicates that

statistics for determining landed weight

should be based on the preceding

calendar year. According to the State of

New York, the regulation does not

address the manner in which the 65

percent air carrier rule will be

calculated in the event one or more

carriers announce a decision to

discontinue service after the end of the

year preceding application review.

Discussion: The statistics requested in

paragraph B of the procedures for total

landed weight must be based on the

preceding calendar year. This is a

requirement of the statute. Section

47134(b)(1)(i)(ii) requires 65 percent

approval of the air carriers serving the

airport and 65 percent approval of the

total landed weight of air carriers from

the preceding calendar year. Carriers

discontinuing service during or after the

calendar year and not currently serving

the airport would not be counted in the

total landed weight for the preceding

calendar year. This interpretation is

necessary to permit the 65 percent

statutory carrier approval mechanism to

work if a carrier having more than 35

percent of the landed weight at the

airport discontinues service. This issue

is further discussed under the heading

‘‘Issues Considered by the FAA in

Granting an Exemption Under Section

47134.’’

Final Disposition: The application

procedures have been modified to

reflect the discussion.

Part VIII of the Application: Airport

Operation and Development

Five-Year Capital Improvement Plan.

Comments: The ATA suggests that

information on the five-year capital plan

should include, if applicable,

information on sources and proposed

repayment terms of any borrowed funds.

Discussion: We find this request

reasonable and consistent with our

request for disclosure of the source of

funds in previously mentioned

comments.

Final Disposition: A request for a

description of this information will be

incorporated into the application

procedures.

Collective Bargaining Agreements

Comments: Public Employee

Department, AFL–CIO requests that the

labor requirements be strengthened.

FAA should require the recognition of

collective bargaining rights and an

adherence to the collective bargaining

agreement. The details of workforce

standards should be identified in any

lease or sale agreement. Transportation

Trades Department, AFL–CIO identified

a clerical error in Part VII(A)(10) of the

proposed procedures. According to the

statute, this section should read, ‘‘Any

collective bargaining agreement that

covers employees of the airport and is

in effect on the date of the sale or lease

of the airport will not be abrogated by

the sale or lease’’. The commenter

suggests that the FAA should more

clearly discuss what defines an

abrogation of a collective bargaining

agreement. The FAA should also

include detailed requirements for

collective bargaining agreements. The

application should address

successorship of existing representatives

of employees, adverse impacts on civil

service employees and a requirement

that private operators offer employment

to the existing workforce.

Transportation Trades Department

recommends an addition to Part

VII(A)(10) requesting the applicant to

determine and describe the long term

effects the transfer may have on

collective bargaining agreements and

employees. Finally, the Transportation

Trades Department suggests that the

FAA should have an oversight role in

the treatment of employees after the

agreement is signed.

Discussion: Section 47134(c)(9)

requires that any collective bargaining

that covers airport employees will not

be abrogated by the transfer or sale of

the airport. The application procedures

permit the applicants to satisfy section

47134(c)(9) by providing a certification

that the collective bargaining agreement

has not been abrogated. We would

expect as a part of submitting the

exemption application, the issues raised

by labor would be the basis for

discussion between the private operator,

the airport owner and the collective

bargaining units. Before issuing an

exemption, the FAA would ensure the

terms of the agreement met the

requirements of the Act.

After transfer of the airport, we

assume that existing federal and state

agencies with responsibility for labor

relations, rather than the FAA, would

perform oversight functions on labor

agreements at the airport. FAA’s role

would be limited to assuring that

applicant public sponsors and private

operators, in the transfer of the airport

to private operation, comply with

assurances of section 47134. Collective

bargaining agreements and Federal labor

laws establish employee rights and

mechanisms for protecting employee

interests. Section 47134(c)(9) is not

intended to make FAA oversight an

alternative process. Rather, by requiring

assurance that collective bargaining

agreements will not be abrogated,

Congress demonstrated an intent to rely

on existing devices to protect employee

interests.

Final Disposition: The application

procedures will be revised to more

closely conform with section

47134(c)(9).

Issues Considered by the FAA in

Granting an Exemption Under Section

47134 65 Percent Carrier Approval

Comments: ATA believes that

procedures must be clear that air

carriers approving ‘‘diverted’’ funds

must constitute 65 percent in number

and 65 percent in landed weight.

Discussion: In order for a public

sponsor to recover funds from the sale

or lease of the airport, the dollar amount

must be approved by at least 65 percent

of the air carriers serving the airport and

at least 65 percent of the total landed

weight of the air carriers serving the

airport in the preceding calendar year.

As discussed above, carriers that have

ceased operations at the airport at the

time of application will be excluded

from the landed weight calculation.

Final Disposition: The final

procedures are being modified to reflect

this discussion.
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48699

Comments: Landrum and Brown

suggest that the 65 percent carrier

approval requirement is reasonable if

obtained in advance of selection of

operator. ATA recommends that general

aviation airports be exempt from the 65

percent carrier provision rule in lieu of

a similar test of the majority of based air

craft owners or some other indication of

the users.

The Allegheny County Department of

Aviation (Allegheny County) argues that

it is not appropriate to equate Part 135

operators with Part 121 air carriers,

especially at general aviation airports.

Allegheny County argues that air taxi

operators at general aviation airports are

typically fixed base operators that

provide on-demand air taxi services as

one of a group of aviation related

activities. Typically, according to

Allegheny County, these operators have

not made financial commitments to the

airport in the form of long-term leases

and they do not commit their creditworthiness to the financing of the

general aviation airport. Allegheny

County argues that the test proposed—

that any Part 135 operator with at least

50 annual operations be counted in the

65 percent vote—would lead to the

unfair result that an itinerant air taxi

with limited financial connections to

the airport would have a right to vote

while a fixed base operator (FBO)

located at the airport (but with no Part

135 operations) would have no vote.

Allegheny County suggests that

recognition as an air carrier should be

based on one or more of the following

tests: (1) A Part 135 operator lease is

cited specifically as a security for the

sponsor’s financing of any airport

facility; (2) a Part 135 operator is a

signatory to a long term lease with

airport; (3) a Part 135 operator paid to

the airport within the last twelve

months, landing fees for commercial

flights which constituted a specified

percentage of the airport’s total revenues

or exceeded a specified dollar amount.

After the comment period closed,

Allegheny County filed a request for a

complete waiver of the 65 percent

approval requirement for Allegheny

County Airport, on the grounds that

Congress did not intend these airports to

be subject to the requirement. The FAA

provided the Part 135 operators with

lease or use agreements at the airport

with an opportunity to respond. To

ensure a complete record, the FAA is

including in this docket the waiver

request and all responses.

The State of New York requested

clarification on several aspects of the 65

percent carrier approval rule. New York

believes carriers that no longer have an

agreement with the airport sponsor

should not participate in application

approval. They also indicated that

landed weight requirements should not

include general aviation. Finally, the

State of New York wants to know how

the FAA will handle an airline, airline

holding company, or an affiliate of that

airline that becomes an applicant for

private operation of the airport and also

has participatory rights under the 65

percent carrier approval provision. The

state suggests that such an airline would

have an inherent conflict of interest.

Discussion: The statute requires the

airport sponsor to comply with two tests

regarding air carrier approval of the

amount of funds the sponsor can

recover as a result of the initial

transaction. While the statute makes no

reference to the timing of the approval,

the amount of funds to be recovered

cannot be determined until the actual

business arrangements between the

airport sponsor and a specific private

operator are known. Therefore, the FAA

is not adopting the Landrum and Brown

suggestion.

On the question of including Part 135

air taxi operators in the 65 percent

approval process, the FAA agrees that

the proposed procedure would have

been impractical and could have led to

results that are undesirable from a

policy perspective. However, we do not

fully agree with Allegheny County’s

assessment of Congressional intent

regarding Part 135 operators. Therefore,

we are not adopting the modifications

proposed by Allegheny County Airport.

Rather, the FAA is modifying the 65

percent approval requirement to limit

participation to Part 135 operators with

lease and/or use agreements and with

aircraft used in Part 135 operations.

Itinerant Part 135 operators, even with

50 or more flights per year, would not

be included.

The FAA has reviewed the provisions

of section 47134, and we do not find

strong evidence that Congress intended

to distinguish, as a class, either Part 135

operators from Part 121 operators, or

general aviation airports from

commercial service airports receiving

scheduled airline service. Under the

terms of the statute, the public sponsor’s

receipt of sale or lease proceeds and fee

increases exceeding the rate of inflation

must be approved by at least ‘‘65

percent of the air carriers’’ serving the

airport, without limitation or

qualification. The term ‘‘air carriers’’ as

defined in 49 U.S.C. 40102 encompasses

Part 135 operators, as Allegheny County

recognizes. The FAA assumes that if

Congress intended to treat Part 135

operators, as a class, differently, explicit

provisions authorizing or mandating

different treatment would have been

included.

With respect to the comment that the

65 percent approval requirement should

not apply at general aviation airports,

the FAA notes that section 47134(b)(1)

does not expressly exclude general

aviation airports from the 65 percent

approval requirement. Based on the

foregoing, the FAA interprets section

47134(b)(1) (and the parallel provision

of section 47134(c)(4)) to reflect a

Congressional intent to give Part 135

operators at general aviation airports

voting rights as air carriers.

Nevertheless, the FAA recognizes that

the differences in on demand Part 135

operators and Part 121 operators justify,

on both practical and policy grounds

somewhat different treatment.

The nature of Part 135 operator ‘‘ondemand’’ air service would place an

undue burden on the airport sponsor in

administering the proposed certification

requirement, especially as applied to

non-based operators. Many Part 135

charter operations may be invisible to

airport surveillance. Many operators

conduct their business with no visible

markings. In many cases it may be

difficult to ascertain whether an activity

is being done as a commercial flight in

air transportation, or as another activity

under Part 91.

In addition, providing itinerant Part

135 operators with voting rights could

give them more of an influence over the

terms of a privatization transaction than

other users of a general aviation airport

who will be more substantially

affected—fixed base operators without

Part 135 operations. The committee

report indicates that the approval

provisions were added because

Congress recognized ‘‘that airport users

may be concerned that an airport could

use its monopoly power to increase

their fees to unreasonable levels.’’ Given

this concern, there is not a strong policy

justification for giving itinerant air taxi

operators—who would likely be less

impacted by the increases in airport fees

relative to airport tenants—a greater

influence over the terms of the

privatization transaction than an entire

category of airport tenants—FBOs

without Part 135 operations. Moreover,

an airport operator may have no

practical means of determining whether

an itinerant operation is conducted

under Part 135 or Part 91.

Therefore, the FAA has decided to

limit participation in the 65 percent

approval process to Part 135 operators

that have lease and/or use agreements

with the airport and have aircraft used

in Part 135 operations based at the

airport. This resolution provides those

Part 135 operators most likely to be
48700 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

affected by a privatization transaction

with the voting rights Congress

intended, while avoiding the practical

and public policy difficulties associated

with extending the voting rights to

itinerant operators. This resolution will

provide to FBO tenants with a Part 135

certificate voting rights not shared by

non-Part 135 FBOs. However, this is a

distinction that is clearly contemplated

by the terms of the statute.

The FAA also notes that the definition

of the term ‘‘air carrier’’ in 49 U.S.C.

40102 refers to U.S. citizens, and does

not include foreign air carriers. While

section 40102 expressly governs Part A

of Title 49, Subpart VII, and Section

47134 is in Part B of that subtitle, the

FAA generally applies the definitions in

section 40102 to Part B if the terms are

not defined to have a different meaning

in section 47102, the definition section

for Part B. Section 47102 does not

define ‘‘air carrier,’’ but defines ‘‘air

carrier airport’’ in a manner that refers

to service by U.S. carriers, which is

consistent with the section 40102

definition of ‘‘air carrier.’’ Accordingly,

the FAA concludes that Congress did

not intend the statutory procedure for

air carrier approval to include foreign

air carriers in the calculation of either

65 percent of air carriers serving the

airport or 65 percent of landed weight

in the preceding year. The application

procedures reflect this conclusion.

However, the FAA notes that this

does not in any way affect existing

rights of foreign air carriers with respect

to reasonable and not unjustly

discriminatory fees, or to the rights of

foreign air carriers to use the same

administrative and legal processes

available to U.S. operators to challenge

airport fees. Moreover, applicants are

reminded that bilateral air service

agreements provide for consultation

with foreign air carriers. The applicant

should conduct timely consultation

with foreign air carriers serving the

airport on all proposals for which

approval is requested under section

47134(b)(1) and section 47134(c)(4), and

include a description of the consultation

in Part VI of the application.

Finally, the procedures exclude from

the 65 percent approval process

otherwise qualified air carriers that

submitted proposals or that participate

in consortia that submitted proposals for

the privatization of the subject airport.

The vote of such a carrier, whether or

not it is the successful proponent, could

be based on its interests as a proponent

rather than its interests as a user of the

airport. To the extent that it is, such a

carrier’s vote would not further the

Congressional objective of the 65

percent approval requirement.

Final Disposition: The application

procedures will be modified to reflect

the above discussion. Specifically, in

applying the 65 percent approval

requirement, carriers serving the airport

will consist of all carriers conducting

operations at the airport under authority

of 14 CFR Part 121 that have a lease

and/or use agreement at the airport or

that conducted at least 50 flights under

such authority in the preceding calendar

year; all carriers conducting operations

at the airport as a commuter air carrier

within the meaning of 14 CFR Part 298

that have a lease and/or use agreement

at the airport or that conducted at least

50 flights under such authority in the

preceding calendar year; and all

operators conducting operations at the

airport under authority of 14 CFR Part

135 that have a lease and/or use

agreement at the airport (or similar

agreement for use and occupancy of

airport premises) and that have at least

one aircraft used in Part 135 operations

based at the airport. However, an

otherwise qualified air carrier will not

be permitted to participate in the 65

percent approval process, or be counted

in the total landed weight in the

previous year, if the air carrier, air

carrier holding company, or affiliate of

that air carrier responds to a solicitation

or submits a proposal to serve as a

private operator or participate in a

private operator consortium at that

airport. In addition, as proposed, an

airport that does not keep records of

landed weight for purposes of

calculating landing fees may seek an

appropriate waiver of the landed-weight

approval requirement.

Terms and Conditions Required for

Approval—General Approach

Comments: The State of New York,

San Francisco and AGI believe that

third party beneficiary rights are not

necessary and may exceed FAA’s

authority. The State of New York

believes the FAA has these rights under

existing law. Landrum and Brown

suggests the FAA should require the

sale or lease agreement to include

provisions that meet the statutory

objectives. Infrastructure Management

Group request clarification as to the

standards and conditions under which

it might completely transfer grant

obligations to the private sector without

subsequent recourse to the previous

public sponsor.

Discussion: Section 47134(c) permits

the FAA to approve an exemption

application only if the sale or lease

agreement includes provisions

satisfactory to the FAA. The Agency

considers the statutory objectives in

section 47134(c) as creating a third party

beneficiary rights for the United States

Government. Congress has authorized

the FAA to approve an application for

exemption only if the lease or sale

agreement contains terms and

conditions that ensure the nine statutory

objectives are met. To assure that these

rights are available, we will require the

sale or lease agreement to include

provisions explicitly granting third

party beneficiary rights to the FAA. The

FAA will accept as an alternative a

suitably structured tripartite agreement

among the FAA, the public sponsor and

the private operator in which the three

parties agree that the key grant

assurances required by section 47134

may be enforced directly against the

private operator by the FAA under the

agreement as well as under applicable

grants.

During the course of the application

process, the FAA will determine on a

case by case basis, what grant

obligations will be transferred. As a

result of the transfer, the public sponsor

should not be obligated for the airport

grant assurances assumed by the private

operator. However, the public sponsor

may continue to have Federal

obligations under the exemption

approval. These Federal obligations may

depend on: (1) The conditions of

exemption; (2) third party beneficiary

rights; and (3) specific terms of the

transfer agreement.

Additionally, we are requesting

sponsors to identify in the application

their approach to handling the

protection of the airport’s runway

protection zones and the acquisition

and retention of avigation easements, in

consideration that a private operator

will have neither condemnation

authority nor zoning power for adjacent

property.

Final Disposition: The application

procedures will be changed to

incorporate the request for information

on the airport’s runway protection zones

and avigation easements and to

incorporate the requirement for thirdparty beneficiary rights or a tripartite

agreement. None of the other comments

required changes to the procedures.

Terms and Conditions To Assure Public

Access on Reasonable Terms Without

Unjust Discrimination

Comments: Landrum and Brown

recommends that a private operator

should operate an airport without

discrimination under the same

assurances required of a public sponsor.

The State of New York argues the

introduction of requirements that would

hold privately operated airports to a

higher than public airports would be

contradictory and deterrent.
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48701

NATA opposes the ability to transfer

proprietary exclusive rights to a private

operator. It argues that a private

operator exercising a proprietary

exclusive right in an area as fuel sales,

for example, will impact existing fuel

operators. A proprietary exclusive

operation may result in the closure of

existing fixed base operators or the

denial of market entry by potential new

operators.

Discussion: Under existing FAA

policy, the owner of a public-use airport

may elect to provide any or all of the

aeronautical services needed by the

public at an airport. The statutory

prohibition against exclusive rights does

not apply to these airport owners. They

may exercise, but not grant the

exclusive right to conduct an

aeronautical activity. Existing policy

permits airport owners to engage in

these services using only their

employees and resources. Delegation or

subcontracting of the proprietary

exclusive right is prohibited. As a

practical matter, public agencies

recognize these services are often best

performed by a profit-motivated private

enterprise.

Private owners of a public use airport

are currently permitted to exercise

propriety exclusive rights on the same

basis as public agencies. The FAA sees

no reason to grant a private operator a

lesser right than other operators just

because the operator came into control

of the airport under section 47134.

However, the FAA may object in

circumstances when the private

operator attempts to exercise a

proprietary exclusive right through

consortiums, joint or limited

partnerships when the intent is to

circumvent the exclusive rights

provision or the limited exception.

Final Disposition: FAA will review

each request for proprietary exclusive

on a case by case basis.

Reasonable Rates and Charges Imposed

by Airport Operator

Comments: San Francisco believes the

FAA lack the authority to apply the

Rates and Charges Policy and that the

policy should not be imposed on the

transferee. It proposes that the FAA

delete the provision that subject fees

imposed by the private operator to the

Policy on Airport Rates and Charges.

San Francisco argues that under the

rule, airlines already have adequate

protection against unreasonable rates

and charges. First: 65% of the air

carriers must approve the initial

agreement in the form of revenue to be

retained by the airport sponsor; second,

air carriers must approve all rates and

charges (except for those rate increases

resulting from new capital

improvements). Application of the

policy to the agreed upon rates and

charges could result in challenges to the

rate structure as new users enter the

market. This could potentially

undermine the investment expectations

of the private operator by lowering the

level of rates and charges.

Discussion: Before responding to the

comments, it is necessary to discuss a

judicial decision in a challenge to the

Rates and Charges Policy that was

pending when the FAA issued the NPP.

The Air Transport Association (ATA)

and the City of Los Angeles each

petitioned for judicial review of the

Airport Rates and Charges Policy. Los

Angeles challenged the requirement to

use historic cost accounting in

establishing fees for the use of the

airfield. The ATA challenged the

provisions in the policy that permit the

airport operator to: (a) Use any

reasonable method to establish other

aeronautical fees; and (b) charge

imputed interest on the airport

operator’s own funds from specified

sources invested in the airfield. On

August 1, 1997, the United States Court

of Appeals issued its opinion, which

vacated an remanded the Airport Rates

and Charges Policy to the Department.

The effect of the opinion on the

provisions of that Policy that were not

challenged is unclear. Even if the effect

of the opinion is to vacate the entire

policy, it is reasonable to expect that

readoption of the unchallenged

provisions would not be objectionable.

In addition, the provisions of the policy

most directly related to the privatization

pilot program—provisions on airport

operator/user consultation, application

of the policy to fees set by agreement,

and allowable rate of return to private

equity owners of airports—were not

challenged. Therefore, the FAA has

assumed that those provisions continue

to be in effect in the discussion of the

comments on this issue. We have made

appropriate editorial changes to the text

of the procedures to reflect the

uncertain status of the Airport Rates and

Charges Policy.

The comment that the FAA lacks

authority to apply the Rates and Charges

Policy to transferees under the pilot

program is not supported by the

statutory language authorizing the pilot

program. Section 149(d) of the

Reauthorization Act, which established

the privatization pilot program, also

included a revision to 49 U.S.C. 47129,

the existing statute which requires

adoption of a DOT rates and charges

policy and process for adjudication of

disputes. The new provision directs the

Secretary, ‘‘in evaluating the

reasonableness of a fee imposed by an

airport receiving an exemption under

§ 47134 of this title [to] consider

whether the airport has complied with

section 47134(c).’’ 49 USC 47129(a)(4).

This provision does not exempt fees that

meet the 65 percent approval

requirement from review under § 47129.

On the contrary, the provision

contemplates that the fees will be

reviewed, with consideration given to

whether the fees meet the 65 percent

approval requirement.

The FAA considers the Airport Rates

and Charges Policy, in particular the

first principle and associated guidance,

and this policy to be consistent with the

statutory direction discussed above. The

first principle states the Department’s

preference for direct local negotiation

between the airport operator and

aeronautical users. This principle

recognizes a generally held industry

wide practice that produces reasonable

results. The Airport Rates and Charges

Policy was amended to avoid the need

for investigation of complaints about the

reasonableness of fees set by agreement

if filed by parties to the agreement.

However, as we indicated in the

Airport Rates and Charges Policy, we

believe that Congress did not intend to

deprive non-signatory carriers of the

opportunity to have their fees reviewed

by the FAA, solely because they were

not a signatory to the original

agreement. Section 47129 does not, by

its terms, exempt fees set by agreement

from the requirement of reasonableness.

Furthermore a difference in rates

between signatory or non-signatory

carriers is not necessarily a basis for a

determination of unreasonable fees.

Interested parties should consult the

section, ‘‘Charges to Non-Signatory

Carriers’’ of the OST/FAA Policy on

Airport Rates and Charges for further

details.

Final Disposition: The final policy is

not modified from the proposal.

Reasonable Compensation for the

Airport Operator

Comments: Several commenters

voiced concerns about the

compensation to the private operator.

Landrum and Brown suggests that the

rate of return should be subjected to a

reasonableness test. This should be

handled on a case by case basis.

Compensation is driven by the ‘‘price’’

paid for the lease or sale of the airport.

The State of New York believes

agreement between equity owner and

airport users is most appropriate to

determine charges. Infrastructure

Management Group suggests that the

FAA should not directly intervene on

the issue of reasonable rate of return.
48702 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

These issues should be left to the three

consenting parties in the privatization

process, the airport owner, the private

operator and the airlines. The FAA

would still have the authority to

exercise remedying powers under its

current Policy on Airport Rates and

Charges. ATA argues that the private

operator’s rate of return must be

evaluated in light of its impact on user

fees, within the context of exemptions

being proposed under section

47134(b)(3). The ATA encourages the

FAA to ‘‘look at all payments in the

aggregate, not as individual pieces.’’

Discussion: A basic premise for

determining the reasonableness of

compensation for the airport operator

must begin with three consenting

parties in the privatization process, the

airport owner, the private operator and

the airlines. As we have indicated, in

order to protect the general public

interest, and the interest of airport users

affected by but not a party to the

agreement, the FAA has a responsibility

to determine the reasonableness of

airport fees paid by aeronautical users

and compensation to the airport

operator included in those fees. The

FAA will examine an airport operator’s

rate of return for reasonableness on a

case by case basis. While we recognize

the value of agreement on compensation

to the airport operator by all consenting

parties, the FAA reserves the right to

ensure that the rate of return charged for

aeronautical facilities and services

meets the applicable reasonableness

requirements.

Final Disposition: The final

procedures retain the substance of the

proposed procedures.

Carrier Approval of Fee Increases

Comments: Landrum and Brown

recommends private operators should

be allowed rate increases to cover at

least their cost of capital. The definition

of capital improvements should be

clearly stated so that both airlines and

the private operator can assess the

impact on rates and charges.

ATA and NATA oppose provisions

that allow airport fee increases based

solely on new capital investment

without approval of 65 percent of the

airport’s air carriers. Both suggest that

all capital improvement resulting in fee

increases should be subject to air carrier

approval. ATA argues that the

provisions allow the proposed private

operator to make unnecessary

investments for the sole purpose of

increasing their rate of return, exempt

from the revenue retention

requirements. NATA believes that this

automatic approval of capital

improvements will raise rates and

charges, adversely affect its

membership, which represent many of

the aviation businesses servicing

aeronautical users.

ACI–NA, AAAE and the State of New

York support the measure that excludes

capital improvements from the 65

percent air carrier rule. Supporters

believe without this provision, few

capital improvements would be made.

ACI–NA and AAAE in their joint

statement, indicated, ‘‘It would be

simply too easy for carriers taking a

short-term view of expenses and profits

to veto an airport’s more long term

assessment of growing needs for capital

investment.’’

Discussion: FAA reaffirms its position

that the 65 percent air carrier rule

should not apply to new capital

improvement. As we have stated before,

Congress, in establishing the program,

expressed an intent to determine if

private investment could be employed

as an alternative funding source.

Applying the 65 percent air carrier rule

to new capital investment would give

carriers undue power over an airport’s

capital improvement program and

possibly reduce an airport operator’s

ability to meet the long term needs of

the market.

Carriers are afforded sufficient

protection by provisions of section

47134(b)(1)(A)(i) and (ii). This provision

of the statute effectively requires the

consent and participation of the carriers

for the airport sponsor to transfer the

airport to a private operator. The FAA

expects that during this time carrier

concerns and issues will be addressed.

Additionally, tenants and carriers have

the protection of their leases, an

airport’s grant assurances and the

federal requirements for airport rates

and charges.

Final Disposition: The FAA retains

the provisions of the draft notice. The

text is being modified to explicitly state

the exclusion of fee increases

attributable solely to capital

improvements.

Terms and Conditions To Assure

Continued Operation in the Event of

Bankruptcy or Insolvency

Comments: AGI believes that existing

Federal bankruptcy laws are adequate to

handle leased facilities. Title 11 U.S.C.

365(d)(3) (1995) was originally enacted

to protect a lessor of commercial realty

in the event that the tenant seeks

bankruptcy protection and performance

of the contract is essential. This section

requires the trustee to meet the tenant’s

obligations under the contract. AGI

argues that these provisions could apply

to operators of leased airports.

The State of New York suggests that

the FAA should require the parties to

enter into an agreement that addresses

bankruptcy within the framework of

existing law.

Landrum and Brown and

Infrastructure Management Group

suggest a reversion to the public sponsor

in the event of bankruptcy along with

reasonable cure provisions in the

agreement. The operators or creditors of

a facility should be given time to rectify

the problem before the original public

owner steps in. The only lingering issue

in such instances is whether and how

the parties must compensate each other.

ATA offers a number of options for

addressing bankruptcy. These include:

(1) The transfer agreement should

include an automatic reverter to the

public sponsor in the event that the

airport ceases operations due to

bankruptcy or reorganization (the

transfer agreement would not be

recognized as an executory contract

subject to assumption, rejection or

assignment under Section 365 of the

Bankruptcy Code); (2) FAA required

contingency plan for sponsor takeover

in defined circumstances; (3) Record as

an encumbrance on the airport property

the obligation to operate the property as

an airport; (4) establish an escrow fund

or bond fund to ensure funds are

available to pay essential costs of

operating the airport; (5) Use Chapter 9

insolvent municipality provisions

instead of Chapter 11 or 7 for airport

bankruptcies.

ATA also suggests that the FAA

pursue rigorous auditing of private

operators and impose the requirement

for financial fitness similar to those

imposed by the Department of

Transportation on air carriers.

Discussion: Given the breadth of

suggestions and divergence of views

there is no consensus on a specific

requirement. As a part of the exemption

application submittal, the airport

sponsor and private operator should

provide a plan that specifically

addresses the requirements of section

47134(c)(2). Because it would involve

the application of bankruptcy law, the

plan should include legal justification

and a legal opinion. The proposed

approach will assure continued

operation of the airport in the

circumstances specified in section

47134(c)(2). FAA reserves the right to

modify, or totally reject the plan and

require the airport operator to submit a

new plan.

Final Disposition: The FAA will

revise the application procedures to

require the public sponsor and private

operator to specifically address the

requirements of section 47134(c)(2).
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48703

Terms and Conditions To Assure

Capital Investment and Improvements

by the Airport Operator

Comments: San Francisco questioned

whether FAA has the legal authority to

require that the private operator ‘‘exceed

or accelerate’’ the public sponsor’s

capital improvement plan (CIP). While

San Francisco recognizes that offering

such a five year CIP is one method of

ensuring sufficient private investment,

it suggests that this not be a requirement

for obtaining FAA approval. FAA

should make it clear that the private

operator’s CIP does not have to exceed

or accelerate the public sponsor’s CIP.

Such a requirement may decrease the

attractiveness of private investment,

when the public sponsor has made high

investments in the airport prior to

privatization. San Francisco believes

that the air carriers will effectively

ensure that the private sector will invest

sufficient amounts in capital projects.

FAA should exercise its role concerning

capital investment on a case by case

basis without a predetermined level of

investment.

ACI–NA and AAAE support the

procedural provisions that require the

transfer agreement to include a

provision to assure the airport operator

will maintain, improve and modernize

the airport facilities as specified in the

CIP and subsequent updates.

Landrum and Brown suggests that the

private operator should be required to

submit a master plan for FAA approval

along with the five year CIP.

ATA raises concerns that the

requirement to implement a five year

program could lead to inefficient

expenditures of funds for capital

projects. They recommended the FAA

require purchaser/lessor to provide

annual documentation showing sources

of funds for the projects to be

implemented in next 12 months

including, if applicable, information on

borrowed money and proposed means

of repayment of borrowed funds.

BAA USA is concerned that the

requirement of a ‘‘reasonable rate of

return’’ may prove to be a source of

controversy and generate wasteful

capital expenditure. Airport operators

could be induced to spend more on

capital projects, just to extend the scope

of the ‘‘reasonable rate of return’’.

AGI believes that the public sponsor

has the greatest incentive to ensure the

private operator’s CIP is sufficient for

the needs of the airport.

Discussion: In enacting the airport

privatization pilot program, it was the

intent of Congress to determine if new

investment and capital from the private

sector can be attracted through

innovative financial arrangements. The

FAA and the public have a reasonable

expectation that a private operator will

provide new capital and create new

investment opportunities at the airport.

A comparison of the public sponsor’s

five-year CIP with the private operator’s

CIP will be useful in evaluating the

private operator’s commitment. The

example of exceeding or accelerating the

public sponsor’s most recent five year

CIP is only one of several examples of

means that a private operator can use to

assure a sufficient minimum investment

of the private operator’s funds. The FAA

will not, however, require the private

operator’s commitment to do so.

The final procedures do not identify

a predetermined level of investment.

Rather, the private operator is required

to provide an assurance that the

operator will provide sufficient

resources of its own funds in

conjunction with other financial

resources for carrying out the

maintenance, improvements and

modernization of the facility as required

by the statute. This should be

accomplished on an annual basis with

documentation provided showing the

source of all funds.

One commenter suggested that the

private operator should be required to

submit a master plan for FAA approval

along with the five year CIP. While there

is not requirement for a master plan

development, we would expect all

capital development to be performed in

accordance with the airport sponsor’s

grant assurances.

Final Disposition: The application

procedures are modified as discussed.

Terms and Conditions Relating to Safety

and Security

Comments: Both the Air Line Pilots

Association and the Transportation

Trades of AFL–CIO recommend that

private operators should conduct public

hearings on safety and operational

considerations at the specific airport

with an opportunity for input by

representatives of aviation employees. It

was also suggested that private

operators conduct monthly or bimonthly safety meetings.

Discussion: Such mechanisms as

tenant advisory committees and airport

safety and security meetings are basic

management tools for ensuring a safe

and secure airport. We expect all

airports, depending on their level of

activity, degree of complexity and

regardless of whether they are privately

or publicly operated to have some

program for addressing the safety and

security needs of the airport.

As we have indicated, we will require

private operators to obtain a Part 139

airport operating certificate and comply

with Part 107 airport security

requirements at facilities where

appropriate. Existing certificates held by

the public operator are not transferable.

Private operators will be required to

demonstrate their fitness for approval in

the same manner that public operators

are presently required to comply. For

general aviation airports, we will expect

the private operator to provide the same

level of safety and security as required

of the public sponsor under the existing

grant obligations.

Final Disposition: The FAA believes

that existing airport procedures and

practices are adequate to ensure tenant

and employee input on safe airport

operating practices and conditions. The

application procedures are modified to

encourage the private operator to

maintain the public sponsor’s existing

mechanisms for communicating with

airport users and the public on safety

and security issues. No other

modifications have been made.

Terms and Conditions Relating to Noise

Mitigation

Comments: The National Organization

to Insure a Sound Controlled

Environment (NOISE), in their

comments, asked several questions

regarding the application procedures.

First, NOISE wants to know if the terms

and conditions of existing grants

applicable to noise mitigation will be a

part of the obligations of the private

operator; Second, will the new airport

owner be obligated to comply with the

determination of the existing Part 150

Noise Compatibility Plan. Third, will

notice of the proposed sale of the airport

be served on local jurisdictions that

surround the airport or that are located

a specified distance from the airport

within a certain number of miles, or

within a specified DNL noise contour.

NOISE’s concern is that Federal

Register notification may be insufficient

to reach many small communities.

Finally, NOISE would like to see a

public hearing in the airport community

before an exemption is granted.

AGI indicates that the statute limits

AIP grant funding to 40% Federal share

at section 47134 airports. The

procedures are unclear as to whether the

reduced Federal share applies to both

new applications and projects approved

but not funded.

Discussion: Standard grant assurance

No. 5 requires a transferee approved by

the Secretary to assume all of the terms,

conditions and assurances contained in

the sponsor’s grant agreement. These

requirements are inserted in the contract

or document transferring the sponsor’s
48704 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

interest, and become binding upon the

transferee.

In reviewing a request for transfer, the

FAA will consider whether a proposed

private operator under a privatization

pilot project will assume the obligations

of the original sponsor under existing

grant agreements or deeds, and whether

the new owner has the powers and

authority to fulfill its obligations under

the assurances. The FAA would expect

a private operator to assume any

existing Part 150 noise mitigation

program for the airport to the extent

applicable to a private firm. However,

we note that under Part 150,

implementation of approved noise

mitigation measures is voluntary.

With respect to the request for a

public hearing, as we previously

indicated, we encourage airport

sponsors to actively solicit public

comment. However, we do not intend to

dictate to airport sponsors a single

method for conducting public outreach.

We believe public outreach should be

conducted at the local level and in

accordance with applicable state and

local laws.

On the subject of the applicability of

reduced Federal share for AIP funded

projects, it makes no difference whether

the application is pending or in

preparation. If a grant of discretionary

funds is approved by the FAA prior to

the airport sponsor being granted an

exemption under section 47134, the

conventional Federal share would be

used, even if the project is not

completed at the time of the transfer.

Any grant of discretionary funds

executed after the transfer would be at

the Federal share of 40% for allowable

project costs.

Final Disposition: No modification is

required to address the concerns of the

commenter.

Unfair Competition Finding

Comments: AGI wanted to know what

constitutes ‘‘unfair and deceptive

practices’’. The concept is not defined.

The commenter suggests the standard

for ensuring reasonable access without

unjust discrimination replace the

‘‘unfair and deceptive practice’’

standard.

Discussion: The statute permits the

FAA only to approve an application, if

the approval will not result in unfair

and deceptive practices or unfair

methods of competition. While there

may be some overlap between this

standard and the standard of reasonable

access without unjust discrimination,

the FAA is not prepared to treat the

standards as identical. Doing so would

make one of the standards meaningless.

This outcome should be avoided in

construing statutory language. We will

not further define ‘‘unfair and deceptive

practices’’ or ‘‘unfair methods of

competition’’ in the procedures. Ample

guidance on this subject can be found in

agency and court decisions interpreting

section 411 of the Federal Aviation Act

of 1958, as amended, 49 USC 41712 and

§ 5 of the Federal Trade Commission

Act, 15 USC 16. However, to assist in

making this determination, the final

procedures are being modified to

require information on any findings that

the private operator or key personnel

have engaged in unfair or deceptive

practices or unfair methods of

competition, or are the subject of

pending investigations.

Protection of General Aviation Interests

Comments: AOPA recommended that

each private operator should

specifically address in the application

how proposed changes at the airport

will impact general aviation.

Discussion: Congress intended that

general aviation users not be adversely

impacted as a result of the transfer of

the airport from public to private

operation. This is demonstrated by the

provisions in the statute governing fee

increases, section 47134(c)(5) and the

protection of general aviation interests,

section 47134(f). In order for the FAA to

fulfill its responsibility under the

statute, we would expect to see what

actions the airport sponsor and private

operator plan to take to comply with the

requirements of these provisions. At a

minimum, we would expect to see how

the proposed changes in the

management and operation of the

airport would affect general aviation

users. Additionally, we would expect to

see some effort by the airport sponsor

and private operator to undertake

reasonable consultations with affected

parties using the airport. The

requirements of this section could also

be addressed by providing a description

of the operator’s plans for the

development of general aviation.

Final Disposition: The application

procedures will be revised to request

that the applicant private operator

provide information on its plans for

consulting and communicating with the

general aviation users regarding the

planned privatization of the airport, and

on the applicants’ projections of the

impact of the proposal on general

aviation.

Revocation Procedures

Comments: Several commenters argue

that the FAA should not require

automatic reversion of the airport to the

public sponsor. Automatic reversion

should be one of many options

available. The FAA should retain

discretion to take appropriate action.

ACI–NA and AAAE request that

revocation procedures should be crafted

in such a way that they are not an

impediment to the bond issuing ability

of the airport sponsor. The

Transportation Trades Department of

the AFL–CIO suggests that the FAA

consider revocation procedures for

termination of the program when

privatization has been found to be

contrary to the public interest.

Discussion: The FAA did not propose

to require reversion to the public

sponsor in the event of default or

violation of the exemption conditions,

as a condition of granting an exemption,

and the final procedures do not add a

requirement for reversion. However, the

application must provide for continued

operation of the airport and compliance

with other obligations in the future

under all foreseeable circumstances.

The provisions will vary according to

the circumstances of the airport

privatization proposed. For example,

where a public sponsor does not operate

any other airports and will no longer

maintain a capability to assume

operation of an airport on short notice,

the applicants may provide means other

than reversion to the former public

sponsor as a first recourse for correction

of problems in the private operation of

the airport.

The FAA is aware of effect that the

potential enforcement action, even if the

probability is very small, can have on

the predictability of a future revenue

stream for purposes of determining

investment risk. As the ACI–NA and

AAAE comments noted, the FAA has

developed enforcement procedures for

passenger facility charge (PFC)

collection requirements that permit

underwriting of bond issues based on

PFC collections alone. While the FAA

does not intend to prescribe separate

procedures for agency enforcement of

grant assurances and exemption

conditions involved in a privatization

project, we can give assurance that in

the unlikely event any enforcement

action was necessary in such a case, the

agency will be sensitive to the financial

commitments and covenants associated

with the financing of the project.

Moreover, by requiring a three-way

agreement or the inclusion of thirdparty beneficiary rights for the FAA as

part of the original transaction, the FAA

has provided means for limited, targeted

correction of deficiencies without

relying on the revocation for the

underlying exemption.

Termination of the pilot program, as

opposed to action to correct deficiencies
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48705

in a specific privatization project, is not

within the FAA’s authority.

Final Disposition: As discussed

previously, the FAA will require the

parties to provide third party

beneficiary rights to the FAA or to

execute tripartite agreements. These

remedial options in addition to

revocation will assure that the FAA’s

compliance program is effective.

Administration of AIP Grants

Comments: The State of New York,

Landrum and Brown, and AGI argue

that the system of prioritization of

discretionary AIP funds should

continue to make no distinction

between public or private airports.

Projects should be selected solely on

their merits.

Final Disposition: Discretionary AIP

funds will be awarded in accordance

with existing policy on priority of

projects. Private ownership per se will

not affect grant priority or eligibility, but

the FAA will continue to consider the

availability of other sponsor resources

and the sponsor’s use of available funds

in granting applications for

discretionary grants.

Process for Applying for an Exemption

Under § 47134

Exemption Application and Review

Process: Overview

The FAA will apply the following

policies and procedures for filing and

review of requests for privatization of a

public airport under 49 U.S.C. 47134:

1. A request for participation in the

airport privatization pilot program will

be initiated by the filing of a

preliminary application for exemption

under section 47134(a). A public

sponsor may also elect to file a final

application without the prior filing of a

preliminary application, if the public

sponsor has selected a private operator.

2. With the exemption noted below,

preliminary and final applications for

exemption will be accepted on or after

December 1, 1997, and will be handled

on a first-come first-served basis until

the limits of section 47134 are reached.

An otherwise qualifying preliminary

application for exemption will be

accepted before December 1, 1997, if the

sponsor has issued, on or before the date

of publication of this notice, a formal

solicitation or request for proposals for

the sale or lease of an airport, but has

not selected an operator. If the sponsor

has selected the operator on or before

the date of publication of this notice, the

FAA will accept only a final application

before December 1, 1997. All

applications will be evaluated in the

order of receipt.

3. Participation in the program is

limited to five airports. The maximum

of five participants in the program will

be considered to have been reached

based on applications under review, not

exemptions granted, so that an airport

with an application on file will not be

in a race for inclusion in the program.

A standby list will be established for

airports not selected.

4. An application received by the

FAA will be considered to be filed on

the date received. Application packages

will be date-stamped on receipt in Room

600 East, FAA headquarters building.

The FAA will not determine order of

filing based on the time of day received.

If multiple applications are received on

the same day, their order of filing will

be determined by public lottery rather

than by time of day received.

5. FAA will review the application to

determine if it meets the procedural

requirements stated in this notice.

6. The FAA will accept preliminary

applications filed before the applicant

has commenced the procurement

process for the selection of an operator.

The preliminary application must

contain the information listed under the

section titled ‘‘Contents of

Applications’’. The FAA will notify

applicants of its decision on the

acceptance of the application for review

within thirty days of the filing of the

preliminary application.

7. If the preliminary application meets

the procedural requirements described

in this notice, the applicant will be

notified that the application is

‘‘accepted for review.’’ The FAA may

request additional information before

accepting the application for review, but

the original filing date will remain in

effect. The applicant is authorized to

select a private operator, negotiate an

agreement and submit a final

application to the FAA.

8. If the preliminary application does

not meet the procedural requirements

described in this notice, and cannot be

brought into compliance with those

requirements with information

requested by the FAA during its 30-day

review, the preliminary application will

be rejected. The FAA will notify the

applicant that the application is rejected

and that the application is no longer on

file. The applicant may file a new

application at any time, and receive a

new ‘‘on file’’ date at that time.

9. The FAA will publish in the

Federal Register a notice that a

preliminary application has been

received under 49 U.S.C. 47134, and

that the FAA has accepted the

application for review.

10. Applicants may file a final

application after the public sponsor has

selected a private operator and reached

substantial agreement on the terms of

the privatization transaction. If an

application cannot reasonably be

brought into compliance with the

requirements of section 47134 and other

applicable Federal statutes with current

information in accordance with the time

schedule submitted during the

preliminary application, the FAA will

notify the applicant that the application

is rejected and that the application is no

longer on file. The applicant may file a

new application at any time, and receive

a new ‘‘on file’’ date at that time.

11. The FAA will publish in the

Federal Register, a notice of receipt of

the final application, establish a docket,

and accept public comment on the

application for a period of 60 days.

Selection as one of the 5 airports eligible

to participate in the program will be

evidenced by the issuance of an

exemption under section 47134(b). If an

application is approved, an exemption

will be issued after the execution of all

documents necessary to fulfill the

requirements of section 47134 and other

laws and regulations within the FAA’s

jurisdiction (e.g., issuance of a Part 139

certificate to the private operator; FAA

approval of a security program under

Part 107). FAA representatives will be

available to meet with parties interested

in an airport privatization project both

before and after the filing of a

preliminary application for exemption

to discuss the Federal statutory

requirements and policies that apply to

applications under section 47134.

Filing an Application

1. Applicants must submit one

original application package and four

copies containing the information

described under ‘‘Content of

Applications’’ in this notice to: Susan L.

Kurland, Associate Administrator for

Airports, ARP–1, Room 600 East,

Federal Aviation Administration, 800

Independence Avenue, SW.,

Washington, DC 20591.

2. All preliminary and final

applications may be delivered or

mailed, but will not be considered to be

‘‘on file’’ with the FAA until received

and date stamped in the Office of the

Associate Administrator for Airports,

Room 600 East.

3. There is no required form for an

application. However, the application

package must be submitted with a cover

letter, signed, in the case of the

preliminary application, by appropriate

officials of the current public sponsor or

in the case of the final application,

jointly by appropriate officials of the

current public sponsor and the private

operator proposing to buy or lease the
48706 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

airport, requesting an exemption

pursuant to 49 U.S.C. 47134 for the

purpose of the privatization of an

airport. Please title each section

according to the appropriate sections of

the application. Officials signing for the

public sponsor must provide evidence

of their authority to file the application.

Contents of the Preliminary Application

The preliminary application should

consist of:

1. As much of the information

required by Part I, ‘‘Parties to the

Transaction,’’ for the Final Application,

as is available.

2. Summary narrative of the objectives

of the privatization initiative; what the

public sponsor wants to accomplish by

the solicitation.

3. A description of the process and a

reasonable, realistic timetable to be

employed in selecting an operator and

completing transfer of the airport. This

should include the identification of all

local approvals and the time frame

when the FAA can anticipate the final

application will be submitted for

review.

4. All of the information required by

Part II. ‘‘Airport Property,’’ from the

Final Application

5. Financial statements including

balance, income and cash flow

statements for the last two reporting

periods.

6. A distribution ready copy of the

request for proposals for the

management and operation if the airport

under section 47134. The document

should contain references to this notice

and the nine statutory objectives listed

in section 47134(c).

The Final Application

The following statements and

information must be included in the

final application. The FAA realizes that

some documents, figures, and other

information will not be available until

shortly before the execution of the

transfer transaction. The final

application must be filed after the

public sponsor has selected a private

operator and reached sufficient

agreement with the operator on the

terms of the transaction to represent

these terms in an application. The FAA

will not require that all information

listed below be provided at the time of

the application, however. For each item

below for which information is not

available, the applicant may substitute a

description of the expected response

and the date by which the final

information will be available.

Information not provided with the

application should be submitted to the

FAA as soon as it becomes available.

Part I. Parties to the Transaction

A. Name of the airport proposed for

sale or lease.

B. Name and address of the public

sponsor of the airport; name, address,

telephone number and fax number of

the person to contact about the

application.

C. Name and address of the private

operator proposing to purchase or lease

the airport; name, address, telephone

number and fax number of the person to

contact about the application.

D. If the private operator proposing to

purchase or lease the airport is a

partnership, jointly venture, or other

consortium of multiple interests, the

name and address of each of the

participating members.

E. Citizenship of the private operator

and/or each member of the private

operator consortium, and percentage of

interest of each such member.

F. A statement of the public sponsor’s

authority to sell or lease the airport,

with a citation to legal authorities.

Part II. Airport Property

A. A description if the airport

property to be transferred. Applications

should describe property in sufficient

detail to identify the parcels of property

and facilities to be transferred; a map

and a legal description of the property

may be included but are not required.

B. A history of the acquisition of

existing airport property: applicants

should include information on grants,

types of deeds, the dates and means of

conveyance, e.g. Surplus Property Act

other Federal conveyance of donated

property, parcels purchased with

Federal funds and parcels purchased

with only local funds.

Part III. Terms of the Transfer

A. A detailed description of the terms

of the transfer, other than financial,

including:

The form of the transaction (sale,

lease, other);

Term of the lease or other transfer

agreement;

Description of any rights, authority, or

interests retained by the public sponsor,

including reversion of title to facilities;

If the private operator is a consortium,

a description of the respective rights

and responsibilities of each member;

B. Financial terms of the transaction:

Amounts and timing of payments to

public sponsor.

Amounts of payments to sponsor to be

used, respectively, for airport purposes

(including recoupment of public

sponsor investments not previously

recovered) and other purposes.

Financial arrangements, including

source of the funds used by the private

operator for purchase payment or initial

and future lease payments.

Projected impact of the initial

transaction on the fee structure for

charges to airport users.

Projected impact of future purchase or

lease payments to the public sponsor on

the fee structure for charges to airport

users.

Other relevant financial terms of the

transfer.

C. Copies of all documents executed

as part of the transfer, to be provided as

they are executed or are in sufficiently

final form to indicate the substantive

nature of the expected final document.

D. If applicable, a request for

confidentiality of any particular

document or information submitted,

with supporting information.

E. Provisions in document conferring

third party beneficiary rights on behalf

of the FAA to enforce key obligations,

or the alternative tripartite agreement

among the FAA, the public sponsor and

the private operator giving the FAA the

right to enforce directly against the

private operator key obligations

contained in AIP grant agreements and

the assurances required by Section

47134..

Part IV. Qualifications of the Private

Operator

A. Complete description of airport

management and operations experience.

The identity, experience, expertise and

responsibility of key personnel. A

description of the facilities and airports

presently being managed by the

company, both domestically and

internationally. If the private operator is

a newly formed entity, describe the

experience of the constituent members

and the proposed management structure

to integrate operations functions.

B. Financial resources for operating/

capital expenses of the airport. Copies of

the 10K annual reports filed in the past

3 years with the Securities and

Exchange Commission, if not filed,

balance sheet and income statement

prepared in accordance with Generally

Accepted Accounted Principles, with all

footnotes applicable to the financial

statements.

C. Timing/details of application for

Part 139 certificate, if applicable.

D. Plan for compliance with Part 107,

if applicable.

E. A description of the private

operator’s capability of complying with

the public sponsor’s existing grant

assurances, including the assurance of

compatible land use around the airport;

the protection of navigation aids,

approach lights, runway safety areas,

and runway protection zones; and the
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices 48707

continuation and extension of aviation

easements.

F. Affiliations with air carriers or

other persons engaged in aeronautical

business activity at an airport (other

than airport management).

G. A description of all charges of

unfair or deceptive practices or unfair

methods of competition brought against

the private operator, private operator’s

key personnel and in the case of a

private operator that is a joint venture,

partnership or other consortium, the

separate members of the entity in the

past 10 years. The description should

include the disposition or current status

of each such proceeding.

Part V. Requests for Exemption

A. Describe the specific exemption

requested by the public sponsor under

49 U.S.C. 47134(b)(1), from the

prohibition on use of airport revenue for

general purposes, including the amount

of funds involved. The description

should include sale or lease proceeds as

well as funds in existing airport

accounts that would be transferred to

general accounts.

B. Describe the specific exemption

requested by the public sponsor under

49 U.S.C. 47134(b)(2), from the

requirement to repay Federal grants

funds or return property.

C. Describe the specific exemption

requested by the private operator under

49 U.S.C. 47134(b)(3), from the

prohibition on use of airport revenue for

general purposes. The description

should include the anticipated amount

of airport revenue to be used for

compensation of the private operator,

the source of airport funds involved,

and a description of the effect, if any, on

air carrier or other aeronautical user

fees.

Part VI. Certification of Air Carrier

Approval

A. Provide a certification that air

carriers meeting the requirements of 49

U.S.C. 47134(b)(1)(A) approve the

exemption described in Part V.A. above.

B. Provide (1) a list of all U.S. air

carriers serving the airport, to include

all carriers conducting operations at the

airport under authority of 14 CFR Part

121 that have a lease and/or use

agreement at the airport or that

conducted at least 50 flights under such

authority in the preceding calendar

year; all carriers conducting operations

at the airport as a commuter air carrier

within the meaning of 14 CFR Part 298

that have a lease and/or use agreement

at the airport or that conducted at least

50 flights under such authority in the

preceding calendar year; and all

operators conducting operations at the

airport under authority of 14 CFR Part

135 that have a lease and/or use

agreement at the airport and that have

at least one aircraft used in Part 135

operations based at the airport; but

excluding any carrier that is not

currently serving the airport or that has

responded to a solicitation or submitted

a proposal to serve as a private operator

or participate in a private operator

consortium at that airport; (2) a list of

the air carriers that have approved the

exemption; (3) the total landed weight

of all operations by air carriers listed

under VI.B.1 above at the airport for the

preceding year; (4) the total landed

weight of each air carrier listed under

VI.B.1 above that has approved the

exemption; and (5) a list of carriers

serving the airport in the previous or

current year but excluded from the list

in VI.B.1, with the reason for exclusion.

C. Provide a copy of each document

indicating air carrier approval of or

objection to the exemption requested.

D. Provide a description of

consultation with foreign air carriers

serving the airport on proposals for air

carrier approval under 49 U.S.C.

47134(b)(1)(A).

Part VII. Airport Operation and

Development

A. Provide a description of how the

private operator, the public sponsor, or

both will address the following issues

with respect to the operation,

maintenance, and development of the

airport after the proposed transfer.

1. Part 139 certification. A request for

Part 139 certificate should be filed with

the local FAA regional Airports

Division. The exemption application

needs only to reflect the private

operator’s intentions and the status of a

certificate application, if applicable.

2. Continuing access to the airport on

fair and reasonable terms and without

unjust discrimination, in accordance

with section 47134(c)(1).

3. Continued operation of the airport

in the event of bankruptcy or other

financial or legal impairment of the

private operator, in accordance with the

specific terms of section 47134(c)(2).

The application should include any

provision for reversion to the public

sponsor. The application should include

a legal opinion and certification that the

proposed plan will be effective under

operation of all applicable law,

including but not limited to bankruptcy

law, in assuring the continued operation

of the airport.

4. Maintenance, improvement, and

modernization of the airport, in

accordance with section 47134(c)(3),

including the public sponsor’s most

recent 5-year capital improvement plan

(CIP) and the 5-year CIP proposed by the

private operator. Applicants should

identify the sources of funds to be used

for capital development, including any

continuing contributions by the public

sponsor. If funds are to be borrowed,

applicants should identify the expected

sources, anticipated repayment terms of

any borrowed funds, and the source of

revenue to be used for repayment.

Applicants should also include any

financial security provisions, such as a

letter of credit or performance bond, for

the accomplishment of the maintenance,

improvement, and modernization

projects committed to by the private

operator.

5. Compliance with the limitations on

air carrier fees, pursuant to section

47134(c)(4), not imposed for funding of

new capital development undertaken

after the transfer to the private operator.

6. Compliance with the limitation on

general aviation fees described in

section 47134(c)(5).

7. Maintenance of safety and security

at the airport, in accordance with

section 47134(c)(6). The application

should note the applicant’s contacts

with the Airports District Office on Part

139 and the Office of Aviation Security

on Part 107, but does not need to

duplicate information filed in

connection with those actions. The

application should include planned

efforts by the private operator to

maintain the public sponsor’s existing

mechanisms for communicating with

airport tenants and users and the public

on safety and security issues.

8. Mitigation of adverse effects of

noise from airport operations, in

accordance with section 47134(c)(7).

The applicant should specifically

describe its intentions with respect to an

existing or future Part 150 noise

compatibility program for the airport,

with respect to the public sponsor’s

commitments under past records of

decisions on airport development

projects, and other measures the private

operator intends to take in the future.

9. Mitigation of adverse effects on the

environment from airport operations, in

accordance with section 47134(c)(8).

10. Recognition that section

47134(c)(9) provides that any collective

bargaining agreement that covers

employees of the airport and is in effect

on the date of the sale or lease of the

airport will not be abrogated by the sale

or lease.

11. The private operator’s intentions

regarding consultation with general

aviation users regarding the planned

privatization of the airport, and the

projected effect on general aviation of

the proposed changes in operation and

management of the airport.
48708 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Notices

12. Private operator’s plans (if known)

for development of general aviation.

B. The private operator’s acceptance

of the grant assurances contained in the

public sponsor’s grant agreements with

the FAA. Assurance 25 need not be

addressed. In addition, either (1) the

applicants’ agreement that the grant

assurances and the assurances required

for granting an exemption under section

47134 create third-party beneficiary

rights enforceable by the FAA in an

administrative or judicial legal

proceeding, or (2) a proposed tripartite

agreement among the FAA, the private

operator and the public sponsor

granting to the FAA the right to enforce

directly against the private operator the

grant assurances and the assurances

required for granting an exemption

under section 47134.

C. Provide a description of the parties’

efforts to consult with airport users

about the proposed transaction and of

the parties’ community outreach efforts.

Part VIII. Periodic Audits

Section 47134(k) provides that the

FAA may conduct periodic audits of the

financial records and operations of an

airport receiving an exemption under

the pilot program. Applicants should

indicate their express assent to this

provision in the application.

Issued in Washington, DC, on September 9,

1997.

Susan L. Kurland,

Associate Administrator for Airports.

[FR Doc. 97–24430 Filed 9–15–97; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

Research and Development Programs

Meeting Agenda

AGENCY: National Highway Traffic

Safety Administration, DOT.

ACTION: Notice.

SUMMARY: This notice provides the

agenda for a public meeting at which

the National Highway Traffic Safety

Administration (NHTSA) will describe

and discuss specific research and

development projects.

DATES AND TIMES: As previously

announced, NHTSA will hold a public

meeting devoted primarily to

presentations of specific research and

development projects on September 17,

1997, beginning at 1:30 p.m. and ending

at approximately 5:00 p.m.

ADDRESSES: The meeting will be held at

the Tysons Westpark Hotel, 8401

Westpark Drive, McLean, Virginia.

SUPPLEMENTARY INFORMATION: This

notice provides the agenda for the

eighteenth in a series of public meetings

to provide detailed information about

NHTSA’s research and development

programs. This meeting will be held on

September 17, 1997. The meeting was

announced on August 8, 1997 (62 FR

42852). For additional information

about the meeting consult that

announcement.

Starting at 1:30 p.m. and concluding

by 5:00 p.m., NHTSA’s Office of

Research and Development will discuss

the following topics:

Summary of Research Activity on 5thPercentile, 3-Year-Old, and 6-YearOld Dummies,

Status of Research on Restraint Systems

for Rollover Protection,

Improved Frontal Crash Protection—

Update on National Automotive

Sampling System (NASS) Analysis,

Vehicle Aggressivity and Fleet

Compatibility, and

Special Crash Investigations Studies of

Air Bag Cases.

NHTSA has based its decisions about

the agenda, in part, on the suggestions

it received by August 21, 1997, in

response to the announcement

published August 8, 1997.

As announced on August 8, 1997, in

the time remaining at the conclusion of

the presentations, NHTSA will provide

answers to questions on its research and

development programs, where those

questions have been submitted in

writing by September 3, 1997, to

Raymond P. Owings, Ph.D., Associate

Administrator for Research and

Development, NRD–01, National

Highway Traffic Safety Administration,

Washington, DC 20590. Fax number:

202–366–5930.

FOR FURTHER INFORMATION CONTACT: Rita

I. Gibbons, Staff Assistant, Office of

Research and Development, 400

Seventh Street, S.W., Washington, DC

20590. Telephone: 202–366–4862. Fax

number: 202–366–5930.

Issued: September 11, 1997.

Raymond P. Owings,

Associate Administrator for Research and

Development.

[FR Doc. 97–24648 Filed 9–15–97; 8:45 am]

BILLING CODE 4910–59–P

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

[Docket No. 97–058; Notice 1]

General Motors; Receipt of Application

for Decision of Inconsequential

Noncompliance

General Motors Corporation (GM) of

Warren, Michigan, has determined that

some of its 1997 model Chevrolet

Corvettes fail to meet the requirements

of Federal Motor Vehicle Safety

Standard (FMVSS) No. 124,

‘‘Accelerator Control Systems,’’ and has

filed an appropriate report pursuant to

49 CFR Part 573, ‘‘Defects and

Noncompliance Reports.’’ GM has also

applied to be exempted from the

notification and remedy requirements of

49 U.S.C. Chapter 301—‘‘Motor Vehicle

Safety’’ on the basis that the

noncompliance is inconsequential to

motor vehicle safety.

This notice of receipt of an

application is published under 49

U.S.C. 30118 and 30120 and does not

represent any agency decision or other

exercise of judgment concerning the

merits of the application.

In FMVSS No. 124, Paragraph S5.2

requires the throttle to return to idle

position within the time limits specified

in S5.3, whenever any component of the

accelerator control system is

disconnected or severed at a single

point. S5.3 requires return to idle within

3 seconds for any vehicle exposed to

temperatures of 0 degrees to ¥40

degrees F (¥18 degrees to ¥40 degrees

C).

During the 1997 model year, GM

produced 9,500 Chevrolet Corvettes

which may not comply with FMVSS No.

124. The vehicles’ accelerator pedal

module assembly may not return to idle

condition within the required time.

GM supports its application for

inconsequential noncompliance with

the following:

The Chevrolet Corvette employs an

electronic throttle control which adjusts

the throttle position based on input

from the accelerator pedal position. The

accelerator pedal is equipped with three

springs, any two of which are capable of

returning the pedal to rest position.

Once this occurs, the throttle returns to

idle position approximately 0.2 seconds

later. A test run in early May, however,

raised a question about the ability of the

pedal assembly to return at low

temperatures.

GM believes that the failure of the

pedal assembly to meet the throttle

closing time requirements of FMVSS

No. 124 at extremely low temperatures