U.S. Department of 

Transportation 

Office of the Secretory 

of Transportation -- :--, 

Subject: Notice of Communication 

(Docket: DOT-OST- 2013-0107) 

From: Jonathan Dols --1'62.--

Deputy Assi~ ~1 Counsel for 

Aviation Enforcement and Proceedings 

To: Chief, Dockets 

Memorandum 

Date: August 1, 2014 

Please place this memorandum in the appropriate file and in the Docket. 

Communication: 

A meeting to discuss a waiver from certain provisions in 14 CFR Part 380 (Part 380) 

Participants: 

Jonathan Dols, Office of Aviation Enforcement and Proceedings 

Lisa Swafford-Brooks, Office of Aviation Enforcement and Proceedings 

Michael Glynn, Shelby Financial Corporation 

Mark Atwood, Cozen O'Connor 

Summary of Conversation: 

On June 14,2014, Jonathan Dols and Lisa Swafford-Brooks met with Michael Glynn and Mark 

Atwood to discuss the possibility of the Department granting Shelby Financial Corporation 

(Shelby Financial) a waiver from certain provisions of Part 380. Specifically, Shelby Financial 

would like a waiver from the requirement in Section 380.34 that public charter escrow accounts 

must be maintained by a bank insured by the Federal Deposit Insurance Corporation (FDIC). 

Department staff explained that they could not discuss the substance of the pending rulernaking 

petition filed by Shelby Financial. 

Mr. Atwood, attorney for Shelby Financial, stated there is a significant problem in the public 

charter industry because ofthe decision ofValley National Bank to stop managing public charter 

escrow accounts. Mr. Atwood explained that this situation has been exacerbated by the decision 

of First Niagara Bank to re-examine its current public charter escrow accounts, and its 

uncertainty about accepting new public charter clients. Mr. Atwood believes that unless 

additional banks are willing to accept publ~c charter escrow business, the majority of the public 

charter operators will no longer be able to operate. Mr. Atwood noted that between March 2013 

and March 2014, Shelby Financial, in conjunction with First Niagara Bank, processed 
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prospectuses and managed accounts involving 196, 466 passengers on 9,380 flights. Mr. 

Atwood emphasized that his client believes the business model prescribed in Part 380 is no 

longer attractive to bankers, and the Part 380 public charter rules are in need of substantial 

revision. Mr. Atwood suggested that a waiver could be fashioned that would meet the basic 

escrow requirements. 

Department staff informed Mr. Atwood that the Department is aware of the difficulties the public 

charter industry is facing since the departure of Valley National Bank from the public charter 

escrow business. The Department staff asked Mr. Atwood if Shelby Financial had the technical 

ability to provide the save service to public charter operators that a bank could provide if a 

waiver was granted. In addition, the staff informed Mr. Atwood that the Department is willing to 

review waiver requests to determine ifthey are in the public interest since the primary goal of 

Part 380 is the protection of the public charter passengers' funds. The Department staff 

concluded the meeting by asking Shelby Financial to provide a written waiver request explaining 

how a public charter escrow system without an FDIC insured bank would safeguard passenger 

funds and be in the public interest.