U.S.Departmentof Transportation Officeofthe Secretory ofTransportation

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Subject: Notice ofCommunication (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 ofAviation Enforcement and Proceedings Lisa Swafford-Brooks, Office ofAviation Enforcement and Proceedings Michael Glynn, Shelby Financial Corporation Mark Atwood, Cozen O'Connor Summary ofConversation: On June 14,2014, Jonathan Dols and Lisa Swafford-Brooks met with Michael Glynn and Mark Atwood to discuss the possibility ofthe Department granting Shelby Financial Corporation (Shelby Financial) a waiver from certain provisions ofPart 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 bythe Federal Deposit Insurance Corporation (FDIC). Department staffexplained that they could not discuss the substance ofthe 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 ofValleyNational Bankto stop managing public charter escrow accounts. Mr. Atwood explained thatthis situationhas been exacerbated bythe decision ofFirst Niagara Bankto re-examine its current public charter escrow accounts, and its uncertainty about accepting newpublic charter clients. Mr. Atwood believes that unless additional banks are willing to accept**publ~c** charter escrowbusiness, the majority ofthe 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, processedPage 2 of2 prospectuses and managed accounts involving 196, 466 passengers on 9,380 flights. Mr. Atwood emphasizedthathis 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 ofsubstantial revision. Mr. Atwood suggested that a waiver could be fashioned that would meetthe basic escrow requirements. Department staffinformed Mr. Atwood that the Department is aware ofthe difficulties the public charter industry is facing since the departure ofValley National Bank from the public charter escrowbusiness. The Department staffasked Mr. Atwood ifShelby Financial hadthe technical ability toprovide the save service to public charter operators that a bank could provide ifa waiver was granted. In addition, the staffinformed 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 ofthe 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 bankwould safeguardpassenger funds and be in the public interest.