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November 17, 2011



### BY FEDERAL EXPRESS AND EMAIL Lauralyn Remo Office ofthe Assistant Secretary for Aviation and International Affairs U.S. DepartmentofTransportation 1200 NewJersey Avenue, SE Room W96-495 Washington, DC 20590

Re: VIHCougarHelicopters, Inc.
DearMs. Remo: ' ' 

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_,.. __ 1



### CONFIDENTIAL AND PROPRIETARYDO NOT DISCLOSE OUTSIDE OF GOVERNMENT

We are writingto follow-up ourNovember 8, 2011 meeting withyou and your colleagues at the Department ofTransportation ("Department"), and in response to the Department'sOctober6, 2011 letter, which requested that VIH CougarHelicopters, Inc. ("VIH Cougar") take certain actions to address the Department'sconcerns relating to U.S. citizenshiprequirements under 49 U.S.C. 40l02(a)(l5).
As discussed below, we respectfully disagree with the Department's tentative conclusion, as stated in its October 6, 201 I letter, that VIH Cougar is not underthe actual control ofU.S. citizens. As we previously demonstrated in ourAugust 10, 2009 and September 30, 2010 letters to the Department, VIH Cougar's U.S. operations have at all relevant times been conducted underthe auspices and supervision ofits U.S.-citizen officers and managers. 1 VIH Cougaralone is responsible for overseeing its day-to-day operations and business affairs and is free from undue influence orleverage by any foreign citizen, entity orcompany. Nevertheless, in the spirit ofcooperation and to address the Department'sconcerns, VIH Cougar intends to restructure the Company to reduce (and possibly eliminate) the ownership interest ofMr. Kenneth Norie (through his company VIH Helicopters USA, Inc.) in VIH Cougar.
With regard to the Department's October 6, 2011 letter, for citizenship purposes, the statutory definition in 49U.S.C. 40102(a)(l5)requires that a corporation must be under the actual control ofcitizens ofthe United States, and at least 75 percent owned orcontrolled by persons that are

1 This letter and all information provided by VIH Cougar relating to this matter contain information that is proprietary and confidential and exempt from disclosure to any third party under the Freedom ofInformation, 5 U.S.C 

### § 552, and any other disclosure statute or regulation. To the extent this or any related submission ofVIH Cougar becomes part ofan administrative proceeding, VIH Cougar objects to public disclosure pursuant to 14 C.F.R. §302.I2.Lauralyn Remo November 17, 2011 Page 2
citizens ofthe United States. The Department has acknowledged that it should not interfere with the legitimate needs ofU.S. carriers to attract strategic investors from foreign markets and that its administrative interpretations should not run contrary to the statute.2 However, the Department concludes that based on past and currentassociations between VIH Cougar and foreign affiliates, including VIH Group, "we cannot find that U.S. citizens maintain day-to-day control ofVIH Cougar and its operations orthat VIH Cougar is independent from VIH Group." As you know, VIH Cougar is majority-owned by William Steeper (76 percent), a U.S. citizen, with the minority ownership by 

### Mr. Norie (24 percent), a Canadian citizen (through his company VIH Helicopters USA, Inc.).
As we discussed at the meeting, VIH Cougaremploys about 80 employees, who are all U.S. citizens with the exception ofoneperson. That individual, Bill McDonald, is the onlyforeign citizen currently employed by VIH Cougar. The otherrelationships cited in the Department's letterare insignificant, such as persons identified as registered agents for VIH Cougarand other entities. The Department's conclusion is based, in large part, on Mr. Steeper'srole as counsel to Mr. Norie and/or VIH Group in Canada. However, an attorney-client relationship does not make Mr. Steeper an employee ofthe entities he may represent, and the Department has not cited any precedent indicating that an attorney-client relationship violates the economic authority requirements. There is no co-management ofVIH Cougar's business by outside entities and VIH Cougarmaintains day-to-day control over its own operations. As Mr. Steeper demonstrated at the meeting, hehas thorough operational knowledge of(and control over) VIH Cougar's operations. An air carrieroperating in the United States underthe day-to-day control ofU.S. citizens satisfies the Department's economic authority requirements. 3

With respect to the second and third issues raised in the Department's October6, 20ll JetterVIH Cougar's alleged reliance on VIH Group for assets and personnel, and the contractual relationships between the two companies

- we likewise disagree that these factors support the Department's conclusion concerning the independence ofVIHCougar. The primaryconcern of

2 SeeActualControlofU.S.AirCarriers, 71 Fed. Reg. 7II06-01,2006WL3531614(Dec.8, 2006) (notice ofwithdrawal ofproposed rulcmaking). The notice explains thatgiven the economic realities oftoday's aviation markets, robustpartnerships between domestic and foreign air carriers (including foreign investments) are to be encouraged, are not indicative ofan undue control relationship, and should not run afoul ofthe Department'seconomic authority rules.
3 See DHLAirways, 2004 DOT Av. LEXIS 404 (May 13, 2004). This conclusion is true even if the carrier partners, orotherwise works closely in conjunction with, a foreign carrier on matters ofmutual strategic and business interest where, as here, the relationship is maintained at arms length and typical ofthe commercial arrangements commonly found in today's aviation industry. 

### ld. at *67 ('"[T}he existence ofa close working relationship between a U.S. airline and a foreign airline does not show that the foreign airline can exercise substantial influence over the U.S. airline for citizenship purposes.'').Lauralyn Remo November 17, 20I 1 Page 3
the Department appears to be the leasing ofaircraft from VIH Group to VIH Cougar. However,
as we demonstrated at the meeting, this leasing arrangement is done on an independent, arm's length basis and the Department has not identified any facts to the contrary. Nevertheless, in orderto address the Department's concerns, VIH Cougar is evaluating alternative arrangements to reduce its reliance on aircraft leased from VIH Group, by leasing aircraft from other entities not affiliated with VIH Group or Mr. Norie.4 We are also reviewing the terms ofthe existing leases and will modify them, as necessary, to ensure that undue influence cannot be exercised
over VIH Cougar through the leases from the foreign lessors (VIH Group/Mr. Norie).
VIH Cougarrespectfullydisagrees with the Department's tentative conclusion that it is not under the actual control ofU.S. citizens. Therecord clearly shows that VIH Cougaralone manages its business affairs and day-to-day operations, and abides by all applicable aviation requirements and regulations. There is no basis to conclude that VIH Cougar is underthe influence ofany foreign personorentity and certainly none that would warrant an enforcement action against the Company. Nevertheless, as discussed above, to address the Department's concerns, VIH Cougar intends to restructure the Company to reduce (and possibly eliminate) Mr. Norie's ownership interest in and business relations with VIH Cougar. In addition, we confirm Mr. Steeper's advice to you that VIH Cougar (in conjunction with VIH Group/Mr. Norie) is pursuing major transactions withtwo U.S. companies both ofwhom are Department licensed helicopter operators. Both transactions include the possible investment in VIH Cougar and the acquisition ofhelicopters leased by VIH Cougar, thereby fundamentally changing Mr. Norie's investment in thebusiness and itshelicopters on a going forward basis. Confidentiality agreements have been signed in both cases. Dual deal processes are being run and negotiations are currently in the due diligence stage. VIH Cougar anticipates signing firm letters ofintent and term sheets in the near future with one or both ofthe parties. We will keep you apprised ofourefforts in this regard and when permitted by the third parties to the transactions, to disclose further particulars to you.
We trustthatthe foregoing efforts by VIH Cougardemonstrate its good faith efforts to address the Department's concerns in a proactive and responsible manner. We look forward to continuing ourdialogue with the Department.
Thank you for yourcooperation.

4 As a general matter, VIH Cougaremploys its own pilots and is not dependent on VIH Group tor the provision ofpilots orflight crews. As discussed at our meeting, the occasional contracting for pilots between entities is customary in the helicopter industry, given a general shortage ofqualified pilots, and VIH Cougarhas occasionally contracted for pilots to or from VIH Group orother entities.

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### Lauralyn Remo ;..J'ovember 17, 20I I Page 4



### D vid M. 

### Nadler Joseph R. Berger Counsel to VJH Cougar Helicopters, Inc.

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