BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

In the matter ofthe cancellation ofthe Air Taxi authority issued to: Docket DOT-OST-2012-0022 VIH COUGAR HELICOPTERS, INC.

VIH COUGAR HELICOPTERS, INC.'S MOTION TO STAY THE DEPARTMENT OF TRANSPORTATION'S MARCH 12,2012 SHOW CAUSE ORDER Communications with respect to this document should be sent to:

David M. Nadler David Y. Yang Andrew E. Smith DICKSTEIN SHAPIRO LLP 1825 Eye Street, NW Washington, DC 20006 Telephone: (202) 420-2200 Facsimile: (202) 420-2201 nadlerd@dicksteinshapiro.com yangd@dicksteinshapiro.com smitha@dicksteinshapiro.com Counsel to VJH Cougar Helicopters, Inc. Dated: April 2, 2012

DSMDB-3045610vlBEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

In the matter ofthe canceJJation ofthe Air Taxi authority issued to: Docket DOT-OST-2012-0022 VIH COUGAR HELICOPTERS, INC.

VIH COUGAR HELICOPTERS, INC.'S MOTION TO STAY THE DEPARTMENT OF TRANSPORTATION'S MARCH 12, 2012 SHOW CAUSE ORDER Pursuant to Rules II and 208 ofthe Rules ofPractice (14 C.F.R. §§ 302.11 , 302.208) of the Department ofTransportation ("Department"), VIH Cougar Helicopters, Inc. ("VIH Cougar"), by and through the undersigned counsel, respectfully submits this motion to stay these proceedings in connection with the Department's March I2, 20I2 Order to Show Cause ("Order") for 90 days, with interim progress updates subject to confidential treatment provided to the Department every 30 days, pending being undertaken by VIH Cougar which, once implemented, will render moot all ofthe issues asserted in the Order. For four years, VIH Cougar has fully cooperated with the Department's intermittent requests. After months and months ofsilence, on October 6, 20II, the Department advised VIH Cougar ofits tentative conclusion that it is not a U.S. air can-ier. Although the Department agreed to hold any show cause proceedings in abeyance the Department reversed course and issued a formal show cause notice on March 12, 2012
. A provisional 90-day stay ofthese proceedings is an appropriate and

DSMDB-304561 Ov Ireasonable allowance that 

### VIH Cougar believes will allow it to pursue measures that will fully resolve all ofthe Department's concerns in this matter and render these proceedings moot. I. INTRODUCTION The Department should stay the instant proceedings for the simple reason that regardless ofwhether 

### VIH Cougar, in the Department's view, is or is not presently subject to foreign control, 

### VIH Cougar is pursuin will put to rest any doubt that it 

### is a 

### bonafide U.S. air carrier, thus rendering these proceedings moot. Accordingly, because the steps that VIH Cougar currently is pursuing will resolve all ofthe Department's concerns, in accordance with its usual practice and past precedent in such circumstances, the Department should stay the proceedings and afford VIH Cougar a reasonable opportunity to pursue and implement these measures. II. FACTUALBACKGROUND 

### A. THE DEPARTMENT'S OCTOBER 6, 2011 LETTER On October 

### 6, 2011, the Department issued a fourth letter to 

### VIH Cougar. For the first time, the Department made known its tentative conclusion that despite clear satisfaction ofthe U.S. citizenship requirements set forth in 49 U.S.C. § 401 02(a)(l5) and a plethora ofevidence provided by VIH Cougar showing actual control by Mr. Steeper, a U.S. Citizen, VIH Cougar was allegedly under the actual control offoreign entities and, therefore, was not a U.S. citizen eligible for an air taxi exemption under the Federal Aviation Act. This letter outlined specific
areas ofinterest that the Department alleged must be addressed in order for VIH Cougar to be in compliance with the citizenship requirements needed for its air taxi exemption under 14 C.F.R. 

### § 298. The Department asse11ed four arguments as to why it thought VIH Cougar, under the totality ofthe circumstances test applied by the Department, was not under the actual control of 

### 2 DSMDB-3045610vlAmericans. First, the Department took issue with the business relationship between Mr. Steeper and Mr. Norie and the business relationships ofother "key personnel'' ofVIH Cougar and the VIHAG. Second, the Department stated that it was concerned about VIH Cougar's reliance on the VIHAG for the provision ofassets and personnel. Third, the Department expressed concern
over certain "contractual relationships" between VIH Cougar and VIHAG, arguing that these agreements, despite the commercially-standard terms and conditions therein, were not the product ofarms-length negotiations. Finally, the Department took issue with a handful oferrors in two out ofthe approximately two dozen corporate filings that VIH Cougar has made over nearly the past ten years, which the Department contended somehow impugned VIH Cougar's credibility. VIH Cougar acknowledged the errors and remedied them. Indeed, while it had previously implied as much, the Department now affirmatively stated that it found the "credibility ofVIH Cougar" in this matter to be "diminish[ed]." Oct. 6, 2011 DOT Ltr. at 5. The Department further asserted that it would issue a formal show cause order to this effect if VIH Cougar did not fall into compliance with the applicable requirements within a 30-day period. B. VIH COUGAR'S NOVEMBER 8, 2011 MEETING WITH THE DEPARTMENT Upon receiving the Department's October 6, 2011 letter, VIH Cougar requested a meeting with the Department to better understand the Department's position (given that VIH Cougar had demonstrated that it is under the actual control ofU.S. citizens and the Department has never provided any evidence to the contrary) and determine how best to mitigate those
concerns. On November 8, 2011,VIH Cougar met with the Department, and during the meeting, the Department reiterated its concerns that the relationship between Mr. Steeper and Mr. Norie evidenced that Mr. Steeper was not in actual control ofVIH Cougar. Accordingly, the
3 DSMDB-3045610vlDepartment proposed that to alleviate these and the other concerns raised in its October 6 letter, VIH Cougar should sever the relationship with Mr. Norie and VIHAG either through Mr. Norie
eliminating his role in the ownership and leasing ofaircraft with VIH Cougar, or eliminating Mr. Steeper's role with respect to VIH Cougar and replacing him with an independent U.S. Citizen
owner. In addition, the Department suggested that at least more than halfofthe aircraft leased by VIH Cougar should be leased from an entity other than VIHAG or Mr. Norie. VIH Cougar inquired ofthe Department about the source ofthe complaints against it. The Department was vague and did not present to VIH Cougar any ofthe letters or information that had been provided to it by third parties. The Department did acknowledge, however, that they had received inquiries by a senator from Louisiana on behalfofone ofits constituents who was a competitor ofVIH Cougar in Louisiana
. 

### See Declaration ofWilliam T. Steeper ("Steeper Decl. II")**~** 12, dated April2, 2012, attached as Exhibit 1 to VIH Cougar's April 2, 2012 Response and Objections to the Department's March 12, 2012 Show Cause Order. VIH Cougar informed the Department that notwithstanding the fact that its ownership and operations were proper, and believed that one or more ofthese efforts would resolve many, ifnot all, ofthe Department's
concerns.

4 DSMDB-3045610vlAccordingly, the Department agreed to refrain from issuing any show cause orders to provide VIH Cougar sufficient opportunity to pursue these potential
avenues that, ifsuccessfully implemented, would render such an order moot.

C. VIH COUGAR'S COMPETITORS' EFFORTS TO DISCREDIT AND DISRUPT VIH COUGAR'S LAWFUL BUSINESS OPERATIONS Despite its earlier agreement to hold any further show cause proceedings in abeyance
on March 12, 2012, the Department issued a Show Cause Order to VIH Cougar. On March 20, 2012, the Department filed on the public docket for this case correspondence between the Department and Jonathan Blank ofK&L Gates LLP, on behalfofa VIH Cougar competitor, Petroleum Helicopters, Inc. Mr. Blank's letter referenced a number ofother letters as attachments, and what are believed to be these referenced letters, along with a standard form response by the Department to each letter,
were subsequently placed on the docket on March 26, 2012. The attached letters were sent on behalfofthe Alaska Air Carriers Association, Temsco Helicopters, Inc., Maritime Helicopters, Security Aviation, and Northern Pioneer Helicopters. All ofthese entities are VIH Cougar competitors in the highly-competitive Alaska and GulfofMexico air taxi markets. Although Mr. Blank's letter appears to have been addressed solely to Assistant Secretary for Aviation and International Affairs, Susan L. Kurland (the presently designated fact finder in this case), the other letters were also copied to U.S. Secretary ofTransportation Ray LaHood, U.S. Representative Don Young- AK, U
.S. Senators Lisa Murkowski and Mark Begich

- AK, and Alaska Governor Sean Parnell.



### 5 DSMDB-30456 10vlThese e xparte communications with the Department indicate that these competitors
came into possession ofthe Depattment's October 6, 20II letter to VIH Cougar, which contained conclusions based on, and references to, confidential business

-sensitive infonnation that VIH Cougar had provided and requested not be disclosed without its prior written consent (which was not obtained), and in which the Department tentatively determined that VIH Cougar
was under the actual control ofCanadian citizens. The letters went on to state that all the air carries have "long maintained" the same tentative conclusion reached by the Department and that VIH Cougar has been "competing unfairly" for many years.

Finally, the letters assert that it is imperative that VIH Cougar be brought under formal proceedings by the Department to revoke its air taxi exemption. At best, these letters are the obvious product ofa concerted effort by VIH Cougar's competitors to disrupt VIH Cougar's lawful U.S. air operations. At worst, they seek to destroy VIH Cougar's business altogether,

The timing ofthese most recent letters is also noteworthy,
as they were issued mere weeks before the Order to Show Cause was issued in this matter and call into question the reliability ofthe Depatiment's credibility determinations concerning VIH Cougar. Further, the letters state that the caniers have "long maintained" the conclusion that VIH Cougar is not under the actual controlofU.S. citizens, which demonstrates that there have

6 DSMDB-304561 Ov Ibeen previous other e xparte communications between VIH Cougar's competitors and the Department regarding this matter.

This years-long campaign waged against VIH Cougar by its competitors has colored the Department's investigation and steered it to the incorrect and unsupported conclusions that it has asserted, yet lacks any actual evidence to support, in the Show Cause Order. Further, this most recent letter writing campaign was obviously intended to place political pressure on the Department to escalate the matter to fom1al proceedings (and apparently succeeded), as the Secretary himself , the Alaska governor, both U.S. Senators from Alaska, and the U.S
. Representative from Alaska were all copied on the exchanges. III. ARGUMENT A. THOUGH COMPLIANT WITH FEDERAL AVIATION CITIZENSHIP VIREMENT
THE SHOW CAUSE ORDER MOOT 1. The Department's Prior Suggested Corrective Actions As noted, upon receiving the October 6, 2011 letter, VIH Cougar requested a meeting with the Department to better understand the Government's position. On November 8, 7 DSMDB-304561 Ov I2011 ,VIH Cougar met with the Department, and during that meeting, the Depa1iment reiterated its concerns that the relationship between Messrs. Steeper Norie suggested that Mr. Steeper was not in actual control ofVIH Cougar. Accordingly, the Department proposed that to alleviate these and the other concerns raised in its October 6 letter, VIH Cougar should sever its relationship with Mr. Norie and VIHAG either through Mr. Norie eliminating his role in the ownership and leasing ofaircraft to VIH Cougar, or eliminating Mr. Steeper's role with respect to VIH Cougar and replacing him with an independent U.S. citizen owner. In addition, the Department suggested that at least more than halfofthe aircraft leased by VIH Cougar should be leased from an entity other than VIHAG or Mr. Norie
. 

### 2.

8 DSMDB-304561 OvI1See Exhibit 2 to VIH Cougar' s Response and Objections to the Depm1ment's March 12,2012 Show Cause Order. 9 DSMDB-3045610vlThese proposed measures exceed the far more limited course ofaction that was suggested by the Department during the November 8, 2011 meeting.

10 DSMDB-30456 10vlB. 

### THE DEPARTMENT SHOULD STAY ITS ORDER TO SHOW CAUSE BECAUSE IT IS UNNECESSARY, DISRUPTIVE, AND HAS THE POTENTIAL TO DELAY AND INTERFERE

As the Department stated during the November 8 meeting, the Department's review and the purpose ofthese proceedings are meant to be remedial, not punitive, in that they seek only to have VIH Cougar undertake


### 11 DSMDB-3045610vlcorrective actions that, in the Government's view, will be sufficient to satisfy the Government that the company is under the control ofU.S. citizens
. The process is not intended to punish or put VIi-I Cougar out ofbusiness, or tojeopardize thejobs ofthe 80 Americans that it employs. In light ofVIH Cougar's good-faith efforts to resolve the Department's concerns, the only parties that stand to gain from pursuing the instant proceedings (in an obvious effort to finalize the Department's tentative findings) are VTH Cougar's competitors who would like nothing more than to eliminate VIH Cougar altogether, The Department should not allow VIH Cougar's competitors to subvert the show cause process to further their own ends and gain. As such, VIH Cougar requests that the Department stay these proceedings

The Department previously has recognized such efforts as more than sufficient to

12 DSMDB-304561 Ov Idispense with the need for any further show cause proceedings, or the revocation ofa caiTier's operating authority, because all ofthe underlying concerns will have been addressed by those actions
. In fact, the Department encourages such proactive measures. 2 For example, in deciding whether Virgin America was a U
.S. citizen in approving its application for a certificate ofpublic convenience, the Department allowed Virgin America to restructure its business and operations to satisfy the Department's concerns that Virgin America was under the actual control ofnonU.S. citizens
. See Application ofVirgin America, Inc., Final Order, Docket No. OST-2005- 23307, at 3 (noting that the Department's tentative findings ofcontrol by non-U.S. citizens

"changed as a result ofthe material changes Virgin America proposed to implement to its financial arrangements, its management, and corporate governance..."). Even in its final order in that case, the Department compromised with Virgin America by granting the certificate with conditions. 

### Id.

Given that this investigation has been ongoing for four years, since April 2008, but the Department's tentative conclusions regarding VIH Cougar's citizenship were only

2 See Application ofVirgin America, Inc
., Final Order, Docket No
. OST-2005-23307, at 1 (May 18, 2007) (allowing the air carrier Virgin America to substantially revise its operations pursuant to requests by the Department, and finding that the company now complied with the U.S
. Citizen requirements and thus its application for a certificate would be approved); Air-EvacAir Ambulance Inc
. Concerning US Citizenship, Order 96-6-13 , at 1-2 (June 7, 1996) (allowing
"various" responses to the show cause order evidencing restructuring and withdrawing show cause order proposing revocation ofair taxi authority where company'finally provided subsequent information showing that restructuring brought it into compliance with the applicable citizenship regulations). 13 DSMDB-3045610vlcommunicated in October 2011 and the Department had agreed to hold any show cause proceedings in abeyance, a 90-day stay ofthe instant proceedin

· appropriate. 3 Moreover, there are
no urgent public interest concerns that would require these proceedings to continue or be expedited, since VIH Cougar always has, and continues to maintain, an exemplary safety, performance, and regulatory record. Indeed, neither the FAA nor the Department has ever raised any concerns regarding VIH Cougar's safety record or fitness. The arguments by VIH Cougar's competitors (the apparent instigators ofthese proceedings) should be accorded no weight, as they
are acting with obvious selfinterest and have significant financial incentives to do all that they
can to put VIH Cougar out ofbusiness.



### IV. CONCLUSION For the foregoing reasons, and because VIH Cougar already is voluntarily undertaking
measures that, once implemented, will fully resolve and render moot all ofthe concerns raised in the Show Cause Order, the Department should stay these proceedings for a provisional period of 90 days

3 Moreover, we note that since the Department would allow 91 days for the wind up in the event it issues a final order · VIH C 's air taxi authority, see Order at 9 n.44, a provisional 90-day stay that would obviate the need for such an order is entirely reasonable and no prejudice would result from the deferment. 14 DSMDB-3045610vlDated: April 2, 2012 Respectfully submitted, By: 

# 1tJ**~/c~**

15 David M. Nadler David Y. Yang Andrew E. Smith DICKSTEIN SHAPIRO LLP 1825 Eye Street, NW Washington, DC 20006 Telephone: (202) 420-2200 Facsimile: (202) 420-2201 nadlerd@dicksteinshapiro.com yangd@dicksteinshapiro.com smitha@dicksteinshapiro.com Counsel to VIH Cougar Helicopters, Inc.

DSMDB-304561 Ov ICERTIFICATE OF SERVICE I certify that I have on this 2nd day ofApril 2012 served the foregoing response ofVIH Cougar Helicopters, Inc. upon the persons listed below:
Susan L. Kurland Office ofthe Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200 New Jersey Avenue, SE Room W96-495 Washington, DC 20590 Lauralyn Remo Office ofthe Assistant Secretary for Aviation and International Affairs U.S. Department ofTransportation 1200 New Jersey Avenue, SE Room W96-495 Washington, DC 20590 Docket DOT-OST-2012-0022 Department ofTransportation Dockets 1200 NewJersey Avenue, SE Room W12-140 Washington, D.C. 20590 Peter Lynch, AGC-300 Asst. ChiefCounsel for Enforcement Federal Aviation Administration 800 Independence Ave. SW Washington, DC 20591 William J. Weber Certification Section Manager FAA AFS-900 45005 Aviation Drive Suite 131 Dulles, VA 20166 Roy Hardie Aviation Safety Inspector Federal Aviation Administration 1601 Lind Avenue SW, Suite 260 Renton, WA 98057

Andrew E. Smith

16 DSMDB-3045610vl