Document ID: DOT-OST-2008-0100-0001
Agency: dot
Document Type: Rule
Title: Notice of Order Soliciting Community Proposals
Posted Date: 2008-04-01T04:00Z

[Federal Register: April 1, 2008 (Volume 73, Number 63)]
[Notices]               
[Page 17397-17411]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap08-95]                         

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

 
Notice of Order Soliciting Community Proposals

AGENCY: Department of Transportation.

ACTION: Notice of Order Soliciting Community Proposals (Order 2008-3-8) 
Docket DOT-OST-2008-0100.

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SUMMARY: The Department of Transportation is soliciting proposals from 
communities or consortia of communities interested in receiving a grant 
under the Small Community Air Service Development Program. The full 
text of the Department's order is attached to this document. There are 
two mandatory requirements for filing of applications, both of which 
must be completed for a community's application to be deemed timely and 
considered by the Department. The first requirement is the filing of an 
Application for Federal Domestic Assistance (SF424) through http://
www.grants.gov. The second is the submission of the community's 
proposal as an attachment to its SF424. Applicants must complete a one-
time registration process at http://www.grants.gov that can take up to 
10 days to complete. For this reason, applicants should register as 
soon as possible to ensure they can meet the application deadline.

DATES: Grant proposals and the SF424 should be submitted no later than 
June 6, 2008.

ADDRESSES: Interested parties must submit applications electronically 
as an attachment to the SF424 through http://www.grants.gov. The 
application should bear the title, ``Proposal under the Small Community 
Air Service Development Program, Docket DOT-OST-2008-0100,'' as well as 
the name of the applicant community or consortium of communities, the 
legal sponsor, and the applicant's DUNS number.

FOR FURTHER INFORMATION CONTACT: Aloha Ley, Office of Aviation 
Analysis, 8th Floor, Room W86-310, 1200 New Jersey Ave., SE., 
Washington, DC 20590, (202) 366-2347.

    Dated: March 25, 2008.
Michael W. Reynolds,
Acting Assistant Secretary for Aviation and International Affairs.

[Docket DOT-OST-2008-0100]

In the Matter of Grant Applications

Small Community Air Service Development Program under 49 U.S.C. 41743 
et seq.; Order Soliciting Community Grant Proposals

Issued by the Department of Transportation on the 25th day of March, 
2008

Overview

    By this order, the Department invites proposals from communities 
and/or consortia of communities interested in obtaining a federal grant 
under the Small Community Air Service Development Program (Small 
Community Program) to address air service and airfare problems in their 
communities. Proposals should be submitted in the above-referenced 
docket no later than June 6, 2008. Applicants must submit an 
Application

[[Page 17398]]

for Federal Domestic Assistance (SF424), a standard federal government 
grant application form, at http://www.grants.gov and include their 
proposals as an attachment to the SF424. An application will not be 
deemed complete until and unless all required materials are filed by 
the June 6 deadline. (See Appendix C for additional information on 
filing form SF424.) Communities are reminded to register with 
Grants.gov early in the application period since the registration 
process can take up to 10 days to complete.

Funding Opportunity

    The Small Community Program was established under the Wendell H. 
Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), 
Public Law 106-181, and reauthorized under the Vision 100-Century of 
Aviation Reauthorization Act, Public Law 108-176 (Vision 100). The 
program is designed to provide financial assistance to small 
communities to help them enhance their air service. The Department 
provides this assistance in the form of financial grants that are 
disbursed on a reimbursable basis.\1\ Under the Consolidated 
Appropriation Act, 2008 (Pub. L. 110-161), the Department received $10 
million to carry out the Small Community Program.\2\
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    \1\ For detailed background on the Small Community Program, see 
our Web site at: http://ostpxweb.dot.gov/aviation/X-50%20Role--
files/smallcommunity.htm#Funds.
    \2\ Program funding for this year may be affected by a provision 
that provides the Secretary with authority to transfer funds from 
any program within or administered by the Office of the Secretary to 
the Essential Air Service program if that program does not have 
sufficient funds to meet its statutory obligations. In addition, a 
portion of the funds available for the Small Community Program may 
be used by the Department for grants-management purposes.
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    The program is limited to a maximum of 40 grant awards, with a 
maximum of four grants per State, in each year the program is funded. 
There are no limits on the amounts of individual awards, and the 
amounts awarded will vary depending upon the features and merits of the 
proposals selected. Over the past six years, the Department's 
individual grants have ranged from $20,000 to nearly $1.6 million. 
Authorized grant projects may include activities that extend over a 
multi-year period under a single grant award; however, grant funds are 
to be used in a timely manner. Generally speaking, individual grant 
awards have not exceeded a three- to four-year period.

Eligibility Information

Who Is Eligible To Apply for a Grant?

    Basic criteria. Eligible applicants are those communities that (1) 
are served by an airport that was not larger than a small hub airport 
for calendar year 1997 \3\ and (2) have insufficient air service or 
unreasonably high airfares. Communities that do not currently have 
commercial air service are also eligible, but they must have met or be 
able to meet in a reasonable period all necessary requirements of the 
Federal Aviation Administration for the type of service involved in 
their grant proposals. Communities served by medium and large hubs are 
not eligible to apply.
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    \3\ The hub classifications are based on the Federal Aviation 
Administration's CY 1997 enplanement data.
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    Essential Air Service communities may apply. Small communities that 
meet the basic criteria and currently receive subsidized air service 
under the Essential Air Service (EAS) program are eligible to apply for 
funds under the Small Community Program. Indeed, a number of EAS-
subsidized communities applied in past years and some have received 
grant awards. However, grant awards to EAS-subsidized communities are 
limited to marketing or promotion projects that support existing or 
newly subsidized air services. Grant funds will not be authorized for 
EAS-subsidized communities to support any new air service. Furthermore, 
no funds will be authorized to support additional flights by EAS 
carriers or changes to those carriers' existing schedules. These 
restrictions are necessary to avoid potentially adverse effects on EAS 
program subsidies and the operations of EAS carriers.
    Additional consideration for communities/members of consortia that 
have previously received a grant. Communities or members of a consortia 
that were awarded grants in previous years and want to apply for a 
grant this year should be aware that (1) they are precluded from 
seeking new funds for projects for which they have already received an 
award under the Small Community Program and (2) they cannot accept a 
new grant while they are a party to an existing grant under the 
program, either as an individual community or as a member of a 
consortium.
    Grant must be for a new project. No community may participate in 
the program in support of the same project more than once. 49 U.S.C. 
41743(c)(4). In assessing whether a previous grantee's current proposal 
represents a new project, we would look particularly at the goals and 
objectives of the earlier grant, as well as the key components of the 
means by which those goals and objectives were to be achieved, in 
comparison to the current proposal. For example, if a community 
received an earlier grant to support a revenue guarantee for service to 
a particular destination or direction, a new application for another 
revenue guarantee for the same service would be disqualified under 
section 41743(c), even if the revenue guarantee were structured 
differently or the type of carrier were different. However, we do not 
read section 41743(c) to disqualify a new application for service to a 
new destination or direction using a revenue guarantee, or for general 
marketing of the airport and the various services it offers.
    Last year we interpreted this provision more narrowly than in 
previous years. We are revisiting the issue in light of concerns 
expressed that the interpretation is too restrictive; for example, that 
not all revenue guarantees or marketing agreements are of the same 
nature, and that if a subsequent proposal incorporates different goals 
or significantly different components, it may be sufficiently different 
to constitute a new project under section 41743(c).
    In its application, a community that is a previous grant recipient 
should compare and contrast its proposed project with its previously 
funded one(s) to demonstrate why its latest idea represents a new 
project. Communities should also note that in each of the prior six 
years of the program, interest in participation exceeded both the funds 
available and the number of communities that can take part in any one 
year. For this reason, the fact that a community has already received 
one or more grants will be a consideration when comparing its new 
proposal with those of other applicant communities.
    No concurrent grants are permitted. A community or member of a 
consortia may participate in the program a subsequent time only after 
its participation in a prior grant has terminated. 49 U.S.C. 
41743(c)(4). Simply stated, a community can have only one Small 
Community Program grant at any time. If a grant applicant is applying 
for a subsequent grant and its current grant has not yet expired, it 
must notify the Department of its intent to terminate the current grant 
prior to entering into the new grant. In addition, for grant applicants 
that are members of a consortia grant, permission must be granted from 
both the grant sponsor and the Department to withdraw from the

[[Page 17399]]

current grant prior to being eligible to receive a subsequent grant.
    Subsidies for a carrier to compete against an incumbent raise 
concerns. The Department is concerned generally about subsidizing one 
carrier but not others in a competitive market. For this reason, 
communities that propose to use the grant funds for service in a city-
pair market that is already served by a carrier must explain in detail 
why the existing service is insufficient or unsatisfactory, or provide 
other compelling information to support such proposals. This 
information is necessary for the Department to consider the competitive 
implications of giving financial or other tangible incentives for one 
carrier that the other carrier is not receiving.
    Subsidy proposals should reflect market analysis and a 
complementary marketing commitment. A thorough understanding of the 
target market is essential for the ultimate success of new or expanded 
air service. Likewise, the chances that such a service will become 
self-sustaining are enhanced when its implementation is supported by a 
well-designed marketing campaign. For these reasons, communities 
requesting funds for a revenue guarantee/subsidy/ financial incentive 
are encouraged to include in their proposals an in-depth analysis 
evidencing close familiarity with their target markets. Such 
communities also are encouraged to designate in their proposals a 
portion of their requested funds for the development and implementation 
of a marketing plan in support of the service sought.
    A consortium is more than a collection of communities. The statute 
permits individual communities and consortia of communities to apply 
for grant awards under this program. In some instances in the past, 
several communities in a State have filed a single application as a 
``consortium'' while in effect the application is a collection of 
individual community requests that involve different projects. We do 
not view this as a consortium. Rather, an application representing a 
consortium would be one that facilitates efforts of communities working 
together toward a joint grant project. For example, several communities 
surrounding an airport may apply together to improve air services at 
that airport, or surrounding airports may work together to provide 
regional air service.
    Multiple applications by a community will not be considered. The 
Department requests that communities file only one application for a 
grant. In the past, some communities have filed both individual 
applications and requests as part of a consortium. In many cases these 
applications have involved the same project at the same or different 
funding levels. We will not consider the stand-alone application if a 
community is also submitting a largely identical request as part of a 
consortium. To the extent that a community files separately and as part 
of a consortium for complementary projects--for example, one request 
for funding a revenue guarantee and one for marketing--we will consider 
such proposals. However, communities should be aware that they can 
receive only one grant, either the stand-alone grant or as a member of 
a consortium, because no community can have concurrent grants.

Cost Sharing and Local Contributions Are Important Factors

    The statute does not require communities to contribute toward a 
grant project, but those communities that contribute from local sources 
other than airport revenues are accorded priority consideration. One 
core objective of the Small Community Program is to promote community 
involvement in addressing air service/air fare issues through public/
private partnerships. As a financial stakeholder in the process, the 
community gains greater control over the type, quality, and success of 
the air service initiatives that will best meet its needs, and 
demonstrates a greater commitment towards achieving the stated goals. 
The Department has historically received many more applications than 
can be accommodated and nearly all of those applications have proposed 
a community financial contribution to the project. Thus, proposals that 
do not propose a community financial contribution will be at a 
competitive disadvantage.
    Types of contributions. Contributions should represent a new 
financial commitment or new financial resources devoted to attracting 
new or improved service, or addressing specific high-fare or other 
service issues, such as improving patronage of existing service at the 
airport. Contributions from already-existing programs or projects 
(e.g., designating a portion of an airport's existing annual marketing 
budget to the project) are considered less favorably than contributions 
for new and innovative programs or projects. For those communities that 
propose to contribute to the grant project, that contribution can be in 
the following forms:
    Cash from non-airport revenues. This cash contribution can include 
funds from the State, the County or the local government, and/or from 
local businesses, or other private organizations in the community. 
Contributions that are comprised of intangible non-cash items, such as 
the ``value'' of donated advertising, are considered ``in-kind'' 
contributions (see further discussion below).
    Cash from airport revenues. This includes contributions from funds 
generated by airport operations. Airport revenues may not be used for 
revenue guarantees to airlines.\4\ Community proposals that include 
local contributions based on airport revenues do not receive priority 
consideration for selection.
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    \4\ 49 U.S.C. 47107, 47133.
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    In-Kind Contributions from the airport. This can include such items 
as waivers of landing fees, terminal rents, fuel fees, and/or vehicle 
parking fees.
    In-Kind Contributions from the community. This can include such 
items as donated advertising from media outlets, catering services for 
inaugural events, or in-kind trading, such as advertising in exchange 
for free air travel. Travel banks and travel commitments/pledges are 
considered to be in-kind contributions,\5\ as are reduced fares offered 
by airlines.
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    \5\ A travel ``bank'' involves the actual deposit of funds from 
participating parties (e.g., businesses, individuals) into a 
designated bank account for the purpose of purchasing air travel on 
the selected airline, with defined procedures for the subsequent use 
or withdrawal of those funds under an agreement with the airline. 
Often, however, what communities refer to as a travel ``bank'' in 
reality involves travel ``pledges'' from businesses in the community 
without any collection of funds or formal procedures for use of the 
funds. The Department views travel banks and pledges included in 
grant proposals as an indicator of local community support.
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    Cash vs. in-kind contributions. Only cash contributions will be 
eligible for reimbursement. ``In-kind'' or non-cash contributions, 
which encompass property or services contributed by non-Federal third 
parties without charge to the grantee, are not eligible. Because they 
are not reimbursable, in-kind contributions are not considered as part 
of the community's cash financial contribution to the project. Of 
course, communities should include any in-kind contributions in their 
proposals and are encouraged to offer in-kind inducements as an extra 
incentive to facilitate air service/fare improvements. While these 
contributions will not be considered as part of the community's cash 
contribution toward the project on which reimbursements are made, they 
will be considered as illustrative of the community's overall 
commitment to the proposed grant project. If there is any question 
about whether a proposed contribution would be considered as

[[Page 17400]]

``in-kind'' or cash, the applicant should contact the Department before 
submitting its proposal.
    Financial commitments must be fulfilled. Applicant communities 
should also note that, as part of the grant agreement between the 
Department and the community, the community has legally committed 
itself to fulfilling its proposed financial contribution to the project 
and that its failure to meet this commitment could lead the Department 
to terminate the grant. Community participation in all aspects of the 
proposal, including the financial aspects, is critical to the success 
of the authorized project initiative. As with the grant awards in past 
years, receipt of the full federal contribution awarded will thus be 
linked to the community's fulfillment of its financial contribution. 
Furthermore, communities cannot propose a certain level of cash 
contribution from non-airport sources, and subsequent to being awarded 
a grant, seek to substitute or replace that contribution with either 
``in-kind'' contributions or contributions from airport revenues, or 
both. Given the statute's priority for contributions from non-airport 
sources and the competitive nature of the selection process, a 
community's grant award could be reduced or terminated altogether if it 
is unable to replace the committed funds from non-airport revenue 
sources.

Application and Submission Information

Filing Deadline and Procedures

    Grant applications are due by June 6, 2008. As part of the 
submission process, an applicant must register for and complete SF424, 
Application for Federal Domestic Assistance. An applicant must also 
include its grant proposal as an attachment to its SF424. In addition, 
the cover page of each application should contain the information 
specified under ``Cover page contents,'' below. Questions regarding the 
program should be directed to the Office of Aviation Analysis on (202) 
366-2347 or aloha.ley@dot.gov. Communities are encouraged to register 
with Grants.gov early during the application period since the 
registration process can take up to 10 days to complete. Communities 
are also encouraged to contact the Grants.gov help desk for any 
technical assistance in filing their applications.
    SF424 required. To comply with the Grants.gov initiative, a mandate 
of the President's Management Agenda, all applicants must submit form 
SF424, Application for Federal Domestic Assistance, found on http://
www.grants.gov. Further, grant proposals must be submitted as an 
attachment to the SF424. An application will not be deemed complete 
unless the SF424 and the attached proposal have been submitted through 
Grants.gov by the June 6 deadline.
    Applicants must complete a one-time registration process in order 
to submit the SF424 application. This registration process can take 
seven to ten days to complete. For this reason, communities intending 
to file applications should register as soon as possible to ensure they 
can meet the application deadline. Appendix C provides additional 
information with respect to the registration process in Grants.gov, 
along with instructions on submitting the SF424 once the registration 
process has been completed.
    Cover page contents. The cover page for all applications should 
bear the title ``Proposal Under the Small Community Air Service 
Development Program,'' and should include the docket number DOT-OST-
2008-0100, the name of the community or consortium of communities 
applying, the legal sponsor, and the community's Dun and Bradstreet 
(D&B) Data Universal Numbering System (DUNS) number.
    Confidential treatment of information. Applicants will be able to 
provide certain information relevant to their proposals on a 
confidential basis. Under the Department's regulations, such 
information is limited to commercial or financial information that, if 
disclosed, would either significantly harm the competitive position of 
a business or enterprise or make it more difficult for the Federal 
Government to obtain similar information in the future.
    Applicants seeking confidential treatment of a portion of their 
applications must segregate the confidential material in a sealed 
envelope marked ``Confidential Submission of X (the applicant) in 
Docket DOT-OST-2008-0100,'' and include with that material a request in 
the form of a motion seeking confidential treatment of the material 
under 14 CFR 302.12 (Rule 12) of the Department's regulations. The 
applicant should submit an original and two copies of its motion and an 
original and two copies of the confidential material in the sealed 
envelope. The confidential material should not be included with the 
original of the applicant's proposal that is submitted via http://
www.grants.gov. The applicant's original submission, however, should 
indicate clearly where the confidential material would have been 
inserted. If an applicant invokes Rule 12, the confidential portion of 
its filing will be treated as confidential pending a final 
determination. All confidential material must be received by June 6, 
2008, and delivered to the Office of Aviation Analysis, 8th Floor, Room 
W86-310, 1200 New Jersey Ave., SE., Washington, DC 20590.

Types of Projects and Application Content

    The statute is very general about the types of projects that can be 
authorized so that communities are provided greater flexibility in 
addressing their particular air service and airfare issues. Because 
circumstances may differ among communities, applicants have some 
latitude in identifying their own objectives and developing strategies 
for accomplishing them.
    One objective of the Small Community Program is to help communities 
secure enhancements that will be responsive to their air 
transportation/air fare needs on a long-term basis after the financial 
support of the grant has ended. There are many ways that a community 
might enhance its current air service or attract new service, such as:
     Promoting awareness among residents of locally available 
service;
     Attracting a new carrier through revenue guarantees or 
operating cost offsets;
     Attracting new forms of service, such as on-demand air 
taxi service;
     Offering an incumbent carrier financial or other 
incentives to lower its fares, increase its frequencies, add new 
routes, or deploy more suitable aircraft, including upgrading its 
equipment from turboprops to regional jets;
     Combining traffic support from surrounding communities 
with regionalized service through one airport; or
     Providing local ground transportation service to improve 
access to air service to the community and the surrounding area.\6\
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    \6\ These examples are illustrative only and are not meant as a 
list of projects favored by the Department. Interested communities 
can view actual proposals submitted in prior years. Go to http://
regulations/gov and, under ``Search,'' enter one of the following 
depending on the desired filing year: DOT-OST-2002-11590, DOT-OST-
2003-15065, DOT-OST-2004-17343, DOT-OST-2005-20127, DOT-OST-2006-
23671, or DOT-2007-27370 for proposals filed in 2002, 2003, 2004, 
2005, 2006 and 2007, respectively.
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    Communities are encouraged to be innovative and to consider a wide 
range of initiatives and air transportation services in developing 
their proposals, such as intermodal or regional solutions. At the same 
time, proposals must not be general, vague, or unsupported. The more 
highly defined

[[Page 17401]]

and focused the proposal, the more competitive it will be, particularly 
in light of the priority consideration afforded by the statute to those 
applicants that can use the funds in a timely manner. 49 U.S.C. 41743 
(c)(5)(E).
    There is no set format that must be used in submitting grant 
proposals. At a minimum, however, a proposal must provide the following 
information:
     A description of the community's existing air service, 
including the carrier(s) providing service, service frequency, direct 
and connecting destinations offered, available fares, and equipment 
types.
     A synopsis of the community's historical service, 
including destinations, traffic levels, service providers, and any 
extenuating factors that might have affected traffic in the past or 
that can be expected to influence service needs in the near to 
intermediate term.
     A description of the community's air service development 
efforts over the past five years and the results of those efforts. Many 
communities have been active on an on-going basis for many years in air 
service development efforts, while others are just beginning. To the 
extent that a community has previously engaged in other air service 
initiatives, including through public/private partnerships, it should 
describe those efforts and their results in its grant proposal. The 
description should include marketing and promotional efforts of airport 
services as well as efforts to recruit additional or improved air 
service and airfare initiatives.
     A description of the community's air service needs or 
deficiencies, including any major origin/destination markets not now 
served or not served adequately. In addition, communities are free to 
submit any information about their fare levels that they deem relevant 
to consideration of their grant request, including market analyses or 
studies demonstrating an understanding of local air service needs.
     A strategic plan for meeting those needs under the Small 
Community Program, including the community's specific project goal(s) 
and detailed plan for attaining that goal(s). Plans should:
    [check] Clearly identify the target audience of each component of 
the proposed transportation initiative, including all advertising and 
promotional efforts.
    [check] Set forth a realistic timetable for implementation of the 
grant project. In this regard, the statute includes timely use of the 
grant funds as a priority consideration. Consequently, communities must 
have a well-developed project plan and a detailed timetable for 
implementing that plan. In establishing the timetable, however, 
communities should be realistic about their ability to meet their 
project deadlines.\7\
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    \7\ The projected timetable will be an integral part of the 
grant agreements between the selected communities and the 
Department. Therefore, there is no advantage to a community in 
proposing an aggressive timetable that cannot be met, and there may 
be disadvantages if the community finds that it cannot meet its 
timetable. Communities should carefully consider all factors 
affecting implementation of their projects and develop realistic 
timeframes for achieving those objectives, keeping in mind that 
authorized projects generally have averaged three to four years.
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    [check] For proposals involving new or improved service, explain 
how the service will become self-sufficient. Under the statute, a 
community cannot seek grant funding in subsequent years in support of 
the same project. Moreover, it is important that communities seriously 
consider the scale of their proposed projects in developing their 
proposals and the timetable for achieving them. To the extent that a 
proposed project is dependent upon or relevant to the completion of 
other federally funded capital improvement projects, the community 
should provide a description of, and the construction time-line for, 
those projects, keeping in mind the statutory requirement to use Small 
Community Program funding in a timely manner.
    [check] Of particular importance, fully and clearly outline the 
goals and objectives sought to be achieved, e.g., ``to broaden the 
awareness by residents in the Tri-County area of the various services 
provided by passenger carriers at the Tri-County airport,'' or ``to 
obtain new and affordable service to a hub airport in a direction where 
there is no such service.'' When an application is selected, these 
goals and objectives will be incorporated into the grant agreement and 
define its basic project scope. Once an agreement is signed, if 
circumstances change and an amendment is sought to allow for different 
activities or a different approach, the Department will look to whether 
the change being sought is consistent with those fundamental project 
goals and objectives. Proposed changes that would alter those 
fundamental goals and objectives cannot be authorized, because doing so 
would undermine the competitive nature of the selection process. 
Applicants are also encouraged to include in their proposals 
alternative or back-up strategies for achieving their desired goals and 
objectives. By incorporating such information into the grant agreement, 
desired changes may be more easily accommodated.
    [check] If the applicant received a Small Community Program grant 
in the past, explain how its proposed project differs from its earlier 
one by comparing and contrasting project goals, objectives and methods 
of achieving them.
     A description of any public-private partnership that will 
participate in the project. Full community involvement is a key aspect 
of the Small Community Program. The statute gives a priority to those 
communities that already have established, or will establish, a public-
private partnership to facilitate air service to the public. The 
proposal should fully describe the public-private partnership that will 
participate in the community's proposal and how the partnership will 
actively participate in the implementation of the proposed project. In 
addition, applicants should identify each member of the partnership, 
the role that each will play, and the specific responsibilities of each 
member in project implementation. If the application does not include 
specific information on the partnership participation in the project, 
the Department cannot evaluate how well a community has met this 
consideration, and the applicant will not be deemed as having met this 
priority consideration in the Department's evaluation of the 
community's proposal.
     A detailed description of the funding necessary for 
implementation of the community's project, including the federal and 
non-federal contributions. Proposals should clearly identify the level 
of federal funding sought. They should also clearly identify the other 
cash contributions toward the proposed project, ``in-kind'' 
contributions from the airport, and ``in-kind'' contributions from the 
community. Cash contributions from airport revenues should be 
identified separately from cash contributions from other community 
sources. Similarly, cash contributions from the State and/or local 
government should be separately identified and described.
    Applicant communities should be aware that, if awarded a grant, the 
Department will not reimburse the community for pre-award expenses such 
as the cost of preparing the grant application or for any expenses 
incurred prior to the community executing a grant agreement with the 
Department. In addition, 10 percent of the grant funds will be withheld 
until the Department receives the final report of the grant project. 
See ``Award Administration Information,'' below.
     An explanation of how the community will ensure that its 
own funding contribution is spent in the manner proposed.

[[Page 17402]]

     Descriptions of how the community will monitor the 
progress of the grant project and the identity of critical milestones 
to be met during the life of the grant, including the need to modify or 
discontinue funding if identified milestones cannot be achieved. This 
is an important component of the community's proposal and serves to 
demonstrate the thoroughness of the community's planning of the 
proposed grant project.
     A description of how the community plans to continue with 
the project if it is not self-sustaining after the grant award expires. 
A particular goal of the Small Community Program is to provide long-
term, self-sustaining improvements to air service at small communities. 
A community cannot seek further grant funding in support of the same 
project. 49 U.S.C. 41743(c)(4). It is possible that a new or improved 
service at a community will be well on its way to becoming self-
sustaining, but will not have reached that goal before the grant 
expires. Similarly, it is possible that extensive marketing and 
promotional efforts may be in process, but have not been completed at 
the end of the grant period and will require continued support. 
Therefore, in developing its proposal, the community should carefully 
consider and describe in detail its plans for providing continued 
financial support for the project after the grant funding is no longer 
available. This aspect of the application reflects on the community's 
commitment to the grant project and is an important component to the 
Department's consideration of the community's proposal for selection 
for a grant award.
     Designation of a legal sponsor responsible for 
administering the program. The legal sponsor of the grant project must 
be a government entity. If the applicant is a public-private 
partnership, a public government member of the organization must be 
identified as the community's sponsor to receive program 
reimbursements. In this regard, communities can designate only a single 
government entity as the legal sponsor, even if a consortium, for 
example, consists of two or more local government entities. Private 
organizations cannot be designated as the legal sponsor of a grant 
under the Small Community Program.\8\
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    \8\ The community has the responsibility to ensure that the 
recipient of any funding has the legal authority under State and 
local laws to carry out all aspects of the grant.
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Air Service Development Zone Designation

    The statute authorizing the Small Community Program also provides 
that the Department will designate one of the grant recipients as an 
Air Service Development Zone. The purpose of the designation is to 
provide communities interested in attracting business to the area 
surrounding the airport or in developing land-use options for the area 
an opportunity to work with the Department on means to achieve those 
goals. The Department will assist the designated community in 
establishing contacts with and obtaining advice and assistance from 
appropriate government agencies, including the Department of Commerce 
as well as other offices within the Department of Transportation, and 
in identifying other pertinent resources that may aid the community in 
its efforts to attract businesses and to develop land-use options. 
However, the community receiving the designation will be responsible 
for developing, implementing, and managing activities related to the 
air service development zone initiative. Only communities that are 
interested in these objectives and have a plan to accomplish them 
should apply for the available designation. There are no additional 
funds associated with this designation, and applying for the 
designation will provide no special benefit or preference to a 
community in receiving a grant award under the Small Community Program.
    Grant applicants interested in selection for the Air Service 
Development Zone designation must include in their applications a 
separate section, titled, Support for Air Service Development Zone 
Designation. That section should include:
    [check] Detailed information regarding the property and facilities 
available for development such as an existing airpark or land for such 
an airpark near or adjacent to the local airport;
    [check] The other modes of transportation that would be available 
to support additional economic development, such as rail, road, and/or 
water access;
    [check] Information concerning historic, existing, and any future 
business activity in the area that would support further development;
    [check] Demographic information concerning the community and its 
environs relevant to the developmental efforts, including population, 
employment, and per capita income data; and
    [check] Any other information that the community believes is 
relevant to its plans to enhance air service development.
    The community should provide as detailed a plan as possible, 
including the goals it expects to achieve from the air service 
development zone designation and the types of activities on which it 
would like to work with the Department in achieving those goals. The 
community should also indicate whether further local government 
approvals are required in order to implement the proposed activities.

Application Review Information

    The Department will carefully review each proposal and the staff 
may contact applicants if clarification is needed. The grant awards 
will be made as quickly as possible so that communities awarded grants 
can complete the grant agreement process and proceed to implement their 
plans. Pending unforeseen circumstances, this process should be 
completed before October 2008. Given the competitive nature of the 
grant process, the Department will not meet with grant applicants with 
respect to their grant proposals. Our selection of communities for 
grant awards will be based on the communities' written submissions.
    Priority factors considered. The law directs the Department to give 
priority consideration to those communities or consortia where: \9\
---------------------------------------------------------------------------

    \9\ 49 U.S.C. 41743(c)(5).
---------------------------------------------------------------------------

     Air fares are higher than the national average air fares 
for all communities;
     The community or consortium will provide a portion of the 
cost of the activity from local sources other than airport revenue 
sources;
     The community or consortium has established or will 
establish a public-private partnership to facilitate air carrier 
service to the public;
     The assistance will provide material benefits to a broad 
segment of the traveling public, including business, educational 
institutions, and other enterprises, whose access to the national air 
transportation system is limited; and
     The assistance will be used in a timely manner.
    Additional factors considered. Applications will be evaluated 
against the priority considerations listed above. Our experience has 
been that more applications are received than can be funded under the 
Small Community Program. Consequently, consistent with the criteria 
stated above, the selection process will take into consideration such 
additional factors as:
     The relative size of each applicant community;

[[Page 17403]]

     The geographic location of each applicant, including the 
community's proximity to larger centers of air service and low-fare 
service alternatives;
     The community's existing level of air service and whether 
that service has been increasing or decreasing;
     Whether the community's proposal, if successfully 
implemented, could serve as a working model for other communities;
     Current demographic indicators for the community, such as 
population, income and business activity;
     The community's demonstrated commitment to and 
participation in the proposed grant project;
     The grant amount requested compared with total funds 
available for all communities;
     The proposed federal grant amount requested compared with 
the local share offered;
     Whether the community has a realistic plan to use the 
funds in a timely manner;
     The uniqueness of an applicant's claimed problems and 
whether the proposed project addresses those problems;
     The extent to which the applicant's proposed solution(s) 
to solving the problem(s) is new or innovative;
     Whether the community's proximity to an existing grant 
recipient could impact its proposal; and
     Whether the applicant community has previously received a 
grant award under this program and, if so, whether its application 
includes an explanation of how the community's proposed project differs 
from its previously funded project.
    Full community participation is a key goal of this program as 
demonstrated by the statute's focus on local contributions and active 
participation in the project. Therefore, applications that demonstrate 
broad community support will be more attractive. For example, 
communities providing proportionately higher levels of cash 
contributions from other than airport revenues will have more 
attractive proposals. Communities that provide multiple levels of 
contributions--cash and in-kind contributions--also will have more 
attractive proposals. Similarly, communities that demonstrate 
participation in the development and execution of the proposed air 
service project will have the attractiveness of their proposals 
enhanced. In this regard, the Department welcomes letters of intent 
from airlines on behalf of community proposals that are specifically 
intended to enlist new or expanded air carrier presence. Such letters 
will be accorded greater credence when authorized by airline planning 
departments.
    Proposals that offer innovative solutions to the transportation 
issues facing the community will be more attractive. Small communities 
have faced many problems retaining and improving their air services and 
in coping with air fares that are higher than typical for larger 
communities. Therefore, proposals that offer new, creative approaches 
to addressing these problems, to the extent that they are reasonable, 
will have their attractiveness enhanced. Proposals that provide a well-
defined plan, a reasonable timetable for use of the grant funds, and a 
plan for continuation and/or monitoring of the project after the grant 
expires also will have greater attractiveness.

Award Administration Information

    The Department will announce its grant selections by Order, which 
will be served on each grant recipient, all other applicants, and all 
parties served with this order. The selection order will also be posted 
in the Docket at http://www.regulations.gov and on the Department's 
webpage.
    Grant agreement. Communities awarded grants are required to execute 
a grant agreement with the Department before they begin to spend funds 
under the grant award. Grant funds will be provided on a reimbursable 
basis only, with reimbursements made only for expenses incurred and 
billed during the period that the grant agreement is in effect. 
Applicants should not assume they have received a grant, nor should 
they obligate or spend local funds prior to receiving and fully 
executing a grant agreement with the Department. Expenditures made 
prior to the execution of a grant agreement, including costs associated 
with preparation of the grant application, will not be reimbursed. 
Moreover, there are numerous assurances that grant recipients must sign 
and honor when federal funds are awarded. All communities receiving a 
grant under the Small Community Program will be required to accept the 
responsibilities of these assurances and to execute the assurances when 
they execute their grant agreements. Copies of the applicable 
assurances are available for review on the Department's webpage at 
http://ostpxweb.dot.gov/aviation/X-50%20Role--files/
smallcommunity.htm#Funds.
    Grantee reports. The grant agreement between the Department and 
each selected community will require the submission of quarterly 
reports on the progress the community has made during the previous 
quarter in implementing its grant project. In addition, the grant 
agreement will require the submission on a quarterly or other time-
specific basis other materials relevant to the grant project, such as 
copies of advertising and promotional material and copies of contracts 
with consultants and service providers. In addition, each community 
will be required to submit a final report on its project to the 
Department, and 10 percent of the grant funds will not be reimbursed to 
the community until such final report is received.
    Cost reimbursement. Communities will be permitted to seek 
reimbursement of project implementation costs on a regular basis. The 
frequency of such requests will be established in the grant agreement, 
which will be tailored to the specific features of the community's 
grant project. In most cases, reimbursements will be made on a monthly 
basis. In this regard, the Department will provide the grant recipient 
communities with details and procedures for securing reimbursements 
electronically.
    Grant amendments. A grantee may wish to amend its agreement with 
the Department in the event of a material change in circumstances after 
the date the agreement is executed. Typically, amendments involve an 
extension to the time period for completing the grant or a change in 
the types of activities authorized for reimbursement under the goals 
and objectives (``project scope'') of the grant agreement. Grantees are 
cautioned, however, that the Department cannot authorize amendments 
that are incompatible with the scope of the agreement. For example, a 
grant awarded solely for the purpose of developing an airport marketing 
plan cannot be amended to permit subsidization of an air carrier's 
startup costs, since the latter was never contemplated by the original 
agreement.
    Grantees are also advised that the Department will not extend the 
expiration date of an agreement simply to allow more time for a 
community to solicit air carriers for new air service. Many grants have 
been awarded for the purpose of subsidizing new or additional air 
service for a small community, with the goal of that service becoming 
self-sustaining by the end of the subsidy period. In virtually all 
cases, the community seeking the grant funds has received expressions 
of interest from one or more air carriers. In some instances, these 
expressions of interest failed to pan out and the community was left 
without any immediate prospects, at which time it would ask for a grant 
extension to allow more time

[[Page 17404]]

to pursue other carriers. Because we are charged by law to consider 
timely use of funds when selecting grant recipients, the Department 
will grant an extension only when the community can provide strong 
evidence of a firm commitment on the part of an air carrier to deliver 
the desired service.
    To avoid misunderstandings, grantees contemplating amendments to 
their agreements are urged to discuss their situations with the Small 
Community Program staff before requesting a formal amendment.
    This order is issued under authority delegated in 49 CFR 1.56a(f).

Accordingly

    1. Community proposals for funding under the Small Community Air 
Service Development Program should be submitted via http://
www.grants.gov as an attachment to the SF424 no later than June 6, 
2008; and
    2. This order will be published in the Federal Register and also 
will be served on the Conference of Mayors, the National League of 
Cities, the National Governors Association, the National Association of 
State Aviation Officials (NASAO), the Association of County Executives, 
the American Association of Airport Executives (AAAE), and the Airports 
Council International--North America (ACI), and posted at http://
www.grants.gov.

Michael W. Reynolds,
Acting Assistant Secretary for Aviation and International Affairs.

    An electronic version of this document is available on the World 
Wide Web at http://www.regulations.gov.

Appendix A--Small Community Air Service Development Program

United States Code Annotated

Title 49. Transportation

Subtitle VII. Aviation Programs

Part A. Air Commerce and Safety

Subpart II. Economic Regulation

Chapter 417. Operations of Carriers

Subchapter II. Small Community Air Service

>< Sec.  41743. Airports not 
receiving sufficient service

    (a) Small community air service development program.--The 
Secretary of Transportation shall establish a program that meets the 
requirements of this section for improving air carrier service to 
airports not receiving sufficient air carrier service.
    (b) Application required.--In order to participate in the 
program established under subsection (a), a community or consortium 
of communities shall submit an application to the Secretary in such 
form, at such time, and containing such information as the Secretary 
may require, including--
    (1) An assessment of the need of the community or consortium for 
access, or improved access, to the national air transportation 
system; and
    (2) An analysis of the application of the criteria in subsection 
(c) to that community or consortium.
    (c) Criteria for participation.--In selecting communities, or 
consortia of communities, for participation in the program 
established under subsection (a), the Secretary shall apply the 
following criteria:
    (1) Size.--For calendar year 1997, the airport serving the 
community or consortium was not larger than a small hub airport, 
and--
    (A) Had insufficient air carrier service; or
    (B) Had unreasonably high air fares.
    (2) Characteristics.--The airport presents characteristics, such 
as geographic diversity or unique circumstances, that will 
demonstrate the need for, and feasibility of, the program 
established under subsection (a).
    (3) State limit.--Not more than 4 communities or consortia of 
communities, or a combination thereof, from the same State may be 
selected to participate in the program in any fiscal year.
    (4) Overall limit.--No more than 40 communities or consortia of 
communities, or a combination thereof, may be selected to 
participate in the program in each year for which funds are 
appropriated for the program.
    No community, consortia of communities, nor combination thereof 
may participate in the program in support of the same project more 
than once, but any community, consortia of communities, or 
combination thereof may apply, subsequent to such participation, to 
participate in the program in support of a different project.
    (5) Priorities.--The Secretary shall give priority to 
communities or consortia of communities where--
    (A) Air fares are higher than the average air fares for all 
communities;
    (B) The community or consortium will provide a portion of the 
cost of the activity to be assisted under the program from local 
sources other than airport revenues;
    (C) The community or consortium has established, or will 
establish, a public-private partnership to facilitate air carrier 
service to the public;
    (D) The assistance will provide material benefits to a broad 
segment of the traveling public, including business, educational 
institutions, and other enterprises, whose access to the national 
air transportation system is limited; and
    (E) The assistance will be used in a timely fashion.
    (d) Types of assistance.--The Secretary may use amounts made 
available under this section--
    (1) To provide assistance to an air carrier to subsidize service 
to and from an underserved airport for a period not to exceed 3 
years;
    (2) To provide assistance to an underserved airport to obtain 
service to and from the underserved airport; and
    (3) To provide assistance to an underserved airport to implement 
such other measures as the Secretary, in consultation with such 
airport, considers appropriate to improve air service both in terms 
of the cost of such service to consumers and the availability of 
such service, including improving air service through marketing and 
promotion of air service and enhanced utilization of airport 
facilities.
    (e) Authority to make agreements.--
    (1) In general.--The Secretary may make agreements to provide 
assistance under this section.
    (2) Authorization of appropriations.--There is authorized to be 
appropriated to the Secretary $20,000,000 for fiscal year 2001, 
$27,500,000 for each of fiscal years 2002 and 2003, and $35,000,000 
for each of fiscal years 2004 through 2008 to carry out this 
section. Such sums shall remain available until expended.
    (f) Additional action.--Under the program established under 
subsection (a), the Secretary shall work with air carriers providing 
service to participating communities and major air carriers (as 
defined in section 41716(a)(2)) serving large hub airports to 
facilitate joint-fare arrangements consistent with normal industry 
practice.
    (g) Designation of responsible official.--The Secretary shall 
designate an employee of the Department of Transportation--
    (1) To function as a facilitator between small communities and 
air carriers;
    (2) To carry out this section;
    (3) To ensure that the Bureau of Transportation Statistics 
collects data on passenger information to assess the service needs 
of small communities;
    (4) To work with and coordinate efforts with other Federal, 
State, and local agencies to increase the viability of service to 
small communities and the creation of aviation development zones; 
and
    (5) To provide policy recommendations to the Secretary and 
Congress that will ensure that small communities have access to 
quality, affordable air transportation services.
    (h) Air Service Development Zone.--The Secretary shall designate 
an airport in the program as an Air Service Development Zone and 
work with the community or consortium on means to attract business 
to the area surrounding the airport, to develop land use options for 
the area, and provide data, working with the Department of Commerce 
and other agencies.
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Appendix C--Filing Form SF424: Application for Federal Domestic 
Assistance

    Grants.gov, originally called the E-Grants Initiative, a mandate 
of the President's Management Agenda, states:
    ``Agencies will allow applicants for Federal Grants to apply for 
and ultimately manage grant funds online through a common Web site, 
simplifying grants management and eliminating redundancies.''
    Public Law 106-107, the legislation that mandates streamlining 
and improved accountability for Federal grants, and related 
references in the President's Management Agenda, requires that 
Federal grant management activities be standardized. As a result, 
the Office of Management and Budget recently issued a policy 
directive requiring that all Federal agencies post grant 
opportunities online as of November 7, 2006.
    Therefore, the Department requires applications to be submitted 
via http://www.grants.gov. In order for an application to be 
considered in the Small Community Air Service Development Program, 
the community must submit its application on form SF424--Application 
for Federal Domestic Assistance--via http://www.grants.gov. Below 
are instructions on:
     How to FIND the SCASDP application online at http://
www.grants.gov;
     How to GET REGISTERED to submit applications; and
     How to APPLY or complete and submit the application 
form SF424.

Finding the SCASDP Grant Opportunity on Grants.Gov

    Start your search for the Small Community Air Service 
Development Program grant opportunity by entering http://
www.grants.gov and clicking the Find Grant Opportunities tab at the 
top of the page. Next, select ``Basic Search'' from the search 
choices. In the search box titled ``Search for Catalog of Federal 
Domestic Assistance (CFDA) number'' enter 20.930. You will see a 
summary of the SCASDP requirements.

Register to Submit Applications

    Prior to applying, you must register to create a Grants.gov 
account and receive approval from your organization to submit 
applications. Registration can take seven to ten days to complete, 
so it is best to begin the process as soon as possible. Detailed 
instructions on how to complete the registration are available on 
http://www.grants.gov. For your reference, the Grants.gov 
``Organization Registration Checklist'' is reproduced on the final 
three pages of this Appendix. You can also access the Checklist at: 
http://grants.gov/assets/Organization--Steps--Complete--
Registration.pdf.

Applying for the Grant

    Once you have located the Small Community Air Service 
Development Program grant opportunity, you will need to enter the 
Funding Opportunity and/or the Catalog of Federal Domestic 
Application (CFDA) number 20.930 to access the application package 
and instructions online. However, you must complete the registration 
process before applying. In order to view the application package 
and instructions, you will also need to download and install Adobe 
Reader 8.1.2. This version is available to download for free on the 
Grants.gov Web site.
    1. Download Adobe Reader 8.1.2 [Required].
    2. Download an Application Package.
    3. Complete an Application Package.
    4. Submit an Application Package.
    Enter the SCASDP CFDA number (20.930) to download the 
application form SF424 and begin the process to apply for the grant 
through http://www.grants.gov. It is a 4-step process:

Apply Step 1: Download the Grant Application Form SF424 and Application 
Instructions

    You will need to enter the Funding Opportunity and/or CFDA 
number to access the application package and instructions. Download 
and install the Adobe Reader 8.1.2 (available on http://grants.gov). 
This small, free program will allow you to access, complete, and 
submit applications electronically and securely.

Apply Step 2: Complete the Selected Grant Application Package

    You can complete the application offline--giving you the 
flexibility to complete grant applications when and where you want. 
It also enables you to easily route it through your organization for 
review, or completion of various components, just like any other e-
mail attachment.

Apply Step 3: Submit a Completed Grant Application Package

    You will submit the application online. When you are ready to 
submit the completed application form SF424, you must have already 
completed the Get Registered steps. You will then need to log into 
http://www.grants.gov using the username and password you entered 
when you registered with a Credential Provider to submit the 
application.

    Note: To submit electronic grant applications, you must be fully 
authorized by your organization, i.e., been given status as an 
Authorized Organization Representative (AOR). You can easily check 
your status by logging into http://www.grants.gov by accessing the 
Applicant link at the top of the screen. If you have registered your 
user name and password with Grants.gov, you will be able to log in. 
After logging in, access the `Manage Profile' link. Your status, 
located below your title, will state: ``AOR--request sent'' or 
``AOR--Approved.'' If your status is `AOR--request sent', you cannot 
yet submit grant applications. You may correct this by

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contacting your E-Business Point of Contact (POC). He or she will 
need to login by accessing the Ebiz link at the top of the screen. 
They will need your organization's DUNs number and MPIN, to approve 
you as an AOR.

Apply Step 4: Track the Status of a Completed Grant Application Package

    Once you have submitted an application, you can check the status 
of your application submission. You can identify your application by 
CFDA Number (20.930), Funding Opportunity Number, Competition ID, 
and/or Grants.gov Tracking Number.
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BILLING CODE 4910-9X-C