AFS-10-412-E Exemption No. 10157

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION WASHINGTON, DC 20591

In the matter of the petition of

MARATHON OIL CORPORATION Regulatory Docket No. FAA-2010-0988

for an exemption from Special Federal Aviation Regulation 77 of Title 14, Code of Federal Regulations

DENIAL OF EXEMPTION

By letter dated September 15, 2010, Mr. Steve Thomas, Aviation Manager, Marathon Oil Corporation (Marathon Oil), 17281 JFK Boulevar d, Houston, petitioned the Federal Aviation Administration (FAA) on behalf of Marathon Oil for an exemption from Special Federal Aviation Regulations (SFAR) No. 77-Prohibition Ag ainst Certain Flights Within the Territory and Airspace of Iraq of Title 14, Code of Fede ral Regulations. The proposed exemption, if granted, would allow Marathon Oil to operate its aircraft into the Kurdish region of northern Iraq, in the city of Erbil (ORER), on or about October 20, 2010, to transport key executives

into Erbil.

The petitioner requests relief from the following regulation:

Special Federal Aviation Regulations No. 77:

1. Applicability. This rule applies to the following persons:

a. All U.S. air carriers or commercial operators;

b. All persons exercising the privileges of an airman certificate issued by the FAA except such person operating U.S.-registered aircraft for a foreign air carrier; or

c. All operators of aircraft registered in the United States except where the operator of such aircraft is a foreign air carrier.2

2. Flight prohibition. No person may conduct flight operation over or within the territory of Iraq except as provided in paragraphs 3 and 4 of this SFAR or except as

follows:

a. Overflights of Iraq may be conducted above flight level (FL) 200 subject to the approval of, and in accordance with the conditions established by, the appropriate authorities of Iraq.

b. Flights departing from countries adjacent to Iraq whose climb performance will not permit operation above FL 200 prior to Iraqi airspace may operate at altitudes below FL 200 within Iraq to the extent necessary to permit a climb above FL 200, subject to the approval of, and in accordance with the conditions established by, the appropriate authorities of Iraq.

3. Permitted operations. This SFAR does not prohibit persons described in paragraph 1 from conducting flight operations within the territory and airspace of Iraq when such operations are authorized either by another agency of the United States Government with the approval of the FAA or by an exemption issued by the

Administrator.

4. Emergency situations. In an emergency that requires immediate decision and action for the safety of the flight, the pilot in command of an aircraft may deviate from this SFAR to the extent required by that emergency. Except for U.S. air carriers or commercial operators that are subject to the requirements of 14 CFR part 119, 121, or 135, each person who deviates from this rule shall, within ten days of the deviation, excluding Saturdays, Sundays, and Federal holidays, submit to the nearest FAA Flight Standards District Offi ce a complete report of the operations of

the aircraft involved in the deviation in cluding a description of the deviation and

the reasons therefore.

5. Expiration. This SFAR will remain in effect until further notice.

The petitioner supports its request with the following information:

The petitioner states it wishes to operate its wholly owned and operated Gulfstream V aircraft (N540M) into the Kurdish region of Northern Iraq. The purpose of the visit is to conduct meetings with key officials concerning oil exploration and production, which will provide sustainable revenue for the region and aid in the reconstruction of Iraq.

Marathon Oil believes the completion of these meetings will benefit the Iraqi people and central government of Iraq by integrating their oil infrastructure with western companies and providing long term employment and stability for many local citizens. Further, the petitioner believes that these meetings will foster closer ties between the northern Iraq region and the United States and will be in the public interest of both

countries.3

In preparation for the visit, Marathon Oil and Marathon Oil Security have conducted detailed ground and air threat analysis and have determined the risks within the Northern Kurdish region to be manageable.

The petitioner states that given the security measures and mitigation factors that it is employing, Marathon Oil estimates the risk to a U.S.-registered aircraft, its passengers, and crew are less than the risk imposed on its passengers if they were forced to use local charter services to travel from Tripoli, Libya to ORER.

The FAA has determined that good cause exists for waiving the requirement for Federal Register publication. Given the time in which this mission must be operated, the public interest would be served by granting Marathon Oil a waiver from the provision for publication and notice of this petition.

The FAA's analysis is as follows:

The FAA has considered fully the petitioner’s request and supporting material and finds that a grant of exemption would not be in the public interest.

In May 2008, the FAA issued a denial of a petition for exemption from SFAR-77 under circumstances similar in nearly all material respects to those presented in your petition. In Denial of Exemption No. 9697 (copy enclosed), th e FAA stated that the Department of State continues to advise companies that they incur significant political and legal risk by signing oil contracts with regional parties before a national law covering this sector is passed by the Iraqi Council of Representatives. The passage of a national law will contribute to promoting Iraqi national unity, a key goal of the United States and the international community. A new legal environment would provide additional assurance that companies will not become embroiled in a legal dispute between the Kurdistan Regional Government and Government of Iraq. It also offers the greatest prospect of a stable investment regime which will be needed to make investments in Iraq attractive. All companies which have spoken with the United States Government about investing in Iraq’s oil sector have been, and will continue to be, given the same advice. On this basis, the Department of State cannot concur with the envisioned operations of Marathon Oil to Erbil to meet with local governmental authorities in Iraq.

Additionally, the petitioner generally addressed the threat mitigation measures it would employ for its operations to and from Erbil; but did not provide the details FAA would need to decide whether or not to grant an exemption.

Applicants for an exemption from SFAR -77 must demonstrate exceptional circumstances to support a determination that the operation is in the public interest. (See FR 69 21953, April 23, 2004). In responding to similar petitions for exemption, the FAA has determined that operations, such as the one you describe, do not present exceptional circumstances. Further, the Department of State’s advice to prospective investors in Iraq’s oil sector remains the same4

today. Therefore, in reviewing the information provided in support of your petition for an exemption, I find that—

 The purpose of the proposed operation does not materially differ from the operation described by the petitioner in the enclosed denial of exemption;

 The reasons stated by the FAA for denying the enclosed exemption also apply to the operation you now propose to conduct; and

 A grant of exemption would not be in the public interest of the United States, including its foreign policy goals.

The FAA’s Decision:

In consideration of the foregoing, I find that a grant of exemption would not be in the public interest. Therefore, pursuant to the authority contained in 49 U.S.C. §§ 40113 and 44701, delegated to me by the Administrator, the petition of Marathon Oil for an exemption from SFAR No. 77-Prohibition Against Certain Flights Within the Territory and Airspace of Iraq of Title 14, Code of Federal Regulations is hereby denied.

Issued in Washington, DC, on October 29, 2010. .

/s/

John W. McGraw Acting Director, Flight Standards

Service