[Federal Register Volume 62, Number 228 (Wednesday, November 26, 1997)]
[Notices]
[Pages 63211-63213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31106]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration
[Docket No. 28895]


Airport Privatization Pilot Program: Application Procedures

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of amendment to final application procedures; request 
for comments.

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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. On September 16, 1997, the FAA issued a notice 
of final procedures for application for an exemption under the program. 
The notice included a provision that air carriers that submitted a 
proposal for the private operation of an airport but were unsuccessful 
would not be counted as air carriers for the purpose of the requirement 
that certain aspects of the privatization application be approved by 65 
percent of the air carriers at the airport. In this amendment to the 
procedures, the FAA is clarifying that the provision does not apply 
retroactively to requests for proposals issued prior to the issuance of 
the FAA procedures on September 16, 1997. With respect to future 
requests for proposals, the provision is suspended until the FAA 
undertakes further public process on this aspect of the procedures. A 
separate provision of the procedures, which states that an air carrier 
that is a successful bidder on a privatization proposal will not be 
considered an air carrier under the 65 percent rule, is not affected.


[[Page 63212]]


DATES: This policy amendment is effective on publication. Comments on 
the issue are due January 12, 1998.

ADDRESSES: Comments should be mailed, in quadruplicate, to: Federal 
Aviation Administration, Office of Chief Counsel, Attention: Rules 
Docket (AGC-200), Docket No. 28895, 800 Independence Avenue, SW., 
Washington, DC 20591. All comments must be marked: ``Docket No. 
28895.'' Commenters wishing the FAA to acknowledge receipt of their 
comments must include a pre-addressed, stamped postcard on which the 
following statement is made: ``Comments to Docket No. 28895.'' The 
postcard will be date stamped and mailed to the commenter. Comments on 
this Notice may be examined in room 915G on weekdays, except on Federal 
holidays, between 8:30 a.m. and 5 p.m..

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 amendment to application procedures to be used by 
applicants for an airport privatization project and request for 
comments is being published pursuant to Sec. 149 of the Federal 
Aviation Administration Authorization Act of 1996, Pub. L. No. 104-264 
(October 9, 1996) (1996 Reauthorization Act), which adds a new 
Sec. 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.
    On September 16, 1997, the FAA issued a notice of procedures to be 
used in applications for exemption under the Airport Privatization 
Pilot Program (62 FR 48693). The FAA has identified one issue in that 
notice that requires clarification.
    Specifically, 49 U.S.C. Sec. 47134(b)(1)(i)(ii) limits the 
exemption to permit the use of funds by the public airport sponsor for 
non-airport purposes, to amounts approved by 65 percent of the air 
carriers serving the airport and 65 percent of the air carriers by 
total landed weight of air carriers from the preceding calendar year. 
The same approval is required for increases in air carrier fees that 
exceed the increase in the Consumer Price Index. In interpreting this 
requirement, the FAA stated that the air carriers included in the 
calculation of the 65 percent would not include otherwise qualified air 
carriers that submitted proposals or that participate in consortia that 
submitted proposals for the privatization of the subject airport. This 
position was based on the consideration that 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 and would not further the congressional objective of the 65 
percent approval requirement.
    On September 17, 1997, counsel for several Allegheny County Airport 
Part 135 operators filed comments arguing that the FAA had exceeded its 
authority by disqualifying otherwise qualified air carriers that 
submitted proposals or that participate in consortia that submitted 
proposals for the privatization of the subject airport from exercising 
their voting rights expressly granted in 49 U.S.C. Section 47134. The 
comments requested that the FAA delete provisions in question.
    The comments argue that Congress did not intend for air carriers to 
lose their voting rights in the privatization process. The statute 
provides no basis for carrier exclusion or limitation other than the 
creation of the two classes, number serving the airport and percentage 
of landed weight. The comments further argue that the disqualification 
provision was issued in final notice without an opportunity for public 
comment and review. As a result, this provision violates the 
Administrative Procedure Act. Additionally, its application, 
retroactively is unlawful and a denial of due process. In the case of 
Part 135 operators at Allegheny County Airport, the provision would 
exclude many of the air carriers from exercising their voting rights 
under the statute because many of the air carriers responded to the 
airport's RFP without notice that doing so would jeopardize their 
voting rights under the statute.
    After consideration of counsel's arguments, the FAA has decided to 
amend its application procedures and suspend the effectiveness of one 
provision. First, air carrier exclusion from the 65 percent approval 
rule based upon participation as a bidder in the privatization process 
will not be applied retroactively, i.e., to a solicitation issued 
before September 16, 1997, the date of the final notice, on the basis 
that this provision was not proposed for public comment and review. To 
impose it retroactively on carriers that participated in a bidding 
process prior to publication of the final procedures would 
inappropriately exclude them from exercising their voting rights 
without the benefit of notice of the adverse consequences of their 
participation as a bidder. Second, the FAA suspends indefinitely the 
provision in Part VI Certification of Air Carrier Approval (62 FR 
48707) excluding otherwise qualified air carriers who submitted 
unsuccessful proposals as a private operator from participating in the 
voting process.
    This provision was not proposed by the FAA and was not suggested in 
the Federal Register comment process. Moreover, it is not obvious that 
an unsuccessful bidder would give more weight to its interests as an 
unsuccessful bidder than its interests as an air carrier in deciding 
how to cast its vote.
    In contrast, the proposal to exclude successful air carrier bidders 
from participation in the voting process was proposed in a comment in 
the Federal Register process, and the September 17 comments do not 
oppose such an exclusion. Moreover, the potential conflict of interest 
for a successful bidder is clear.
    The FAA is suspending the provision, rather than deleting it, 
because we believe that the issue deserves further public comment 
before a final decision is made. We are therefore, providing a 45-day 
comment period to permit interested persons to address specifically the 
issue of whether otherwise qualified air carriers should be 
disqualified from participating in the statutory voting process because 
of their participation as unsuccessful bidders in a privatization 
proposal.
    Pending further action, the FAA will exclude from the air carrier 
voting process only otherwise qualified air carriers that have been 
selected as the private operator (either individually or as a 
participant in a consortium) by the public agency.


[[Page 63213]]


    Issued in Washington, DC, on November 20, 1997.
Susan L. Kurland,
Associate Administrator for Airports.
[FR Doc. 97-31106 Filed 11-25-97; 8:45 am]
BILLING CODE 4910-13-M