[Federal Register Volume 62, Number 179 (Tuesday, September 16, 1997)]
[Notices]
[Pages 48693-48708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24430]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
[Docket No. 28895]
Airport Privatization Pilot Program: Application Procedures
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of final application procedures.
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SUMMARY: Section 149 of the Federal Aviation Authorization Act of 1996
establishes an airport privatization pilot program, and authorizes the
Department of Transportation to grant exemptions from certain Federal
statutory and regulatory requirements for up to five airport
privatization projects. A request for participation in the airport
privatization pilot program will be initiated by the filing of either a
preliminary or final application for exemption with the FAA. This
statement identifies the issues the Department will consider in
granting exemptions and approving the transfer of a public use airport
under the program; it also describes the application procedures to be
used by interested public airport sponsors and private parties to apply
for an exemption under the program.
DATES: This policy is effective on publication. With exception noted
below, preliminary and final applications for exemption will be
accepted or after December 1, 1997, and will be handled on a first-come
first-served basis until the limits of section 47134 are reached. An
otherwise qualifying preliminary or final application for exemption
will be accepted before December 1, 1997, if the sponsor has issued, on
or before the date of publication of this notice, a formal solicitation
or request for proposals for the sale or lease of an airport. All
applications will be evaluated in the order of receipt.
FOR FURTHER INFORMATION CONTACT: Benedict D. Castellano Manager, (202-
267-8728) or Kevin C. Willis (202-267-8741) Airport Safety and
Compliance Branch, AAS-310, Federal Aviation Administration, 800
Independence Ave. SW., Washington, DC 20591,
SUPPLEMENTARY INFORMATION:
Introduction and Background
This notice of application procedures to be used by applicants for
an airport privatization project is being published pursuant to section
149 of the Federal Aviation Administration Authorization Act of 1996,
Public Law 104-264 (October 9, 1996) (1996 Reauthorization Act), which
adds a new section 47134 to Title 49 of the U.S. Code. Section 47134
authorizes the Secretary of Transportation, and through delegation, the
FAA Administrator, to exempt a sponsor of a public use airport that has
received Federal assistance, from certain Federal requirements in
connection with the privatization of the airport by sale or lease to a
private party. Specifically, the Administrator may exempt the sponsor
from all or part of the requirements to use airport revenues for
airport-related purposes, to pay back a portion of Federal grants upon
the sale of an airport, and to return airport property deeded by the
Federal Government upon transfer of the airport. The Administrator is
also authorized to exempt the private purchaser or lessee from the
requirement to use all airport revenues for airport-related purposes,
to the extent necessary to permit the purchaser or lessee to earn
compensation from the operations of the airport.
[[Page 48694]]
In addition to identifying the application procedures, this notice
discusses the issues the FAA will consider in determining whether to
approve an application for an exemption under section 47134 and other
Federal requirements for airport operation. The term ``public sponsor''
is used in this document to mean the governmental agency or authority
that currently owns or operates a public airport and proposes to sell
or lease it to a private purchaser or lessee. The term ``private
operator'' is used to refer to a private firm or firms that propose to
purchase or lease a public airport under the program; the term
``applicant'' means all of the parties jointly participating in the
application for privatization of a particular airport.
Requirements for Transfer of a Federally-Assisted Public Airport
A request for transfer of the operation of an airport from an
existing public sponsor to a new operator, whether public or private,
requires FAA approval. The request for exemption under Sec. 47134 would
be considered in conjunction with existing approval requirements and
processes.
Grant/Deed Conditions
Airport sponsors receiving Federal assistance under a grant program
or through donation of surplus property agree as a condition of the
assistance to obtain FAA approval before transferring control or
ownership of the airport to another party. For example, Assurance No.
5.b. in the Airport Improvement Program (AIP) grant agreements provides
that a sponsor will not sell, lease, or otherwise transfer any part of
its title or other interests in the airport property subject to the
grant assurances, for the duration of the term of the grant agreement,
without approval by the Secretary. Assurance No. 5 further provides
that the sponsor and the transferee approved by the Secretary shall
insert in the contract or document transferring the sponsor's interest,
and make binding upon the transferee, all of the terms, conditions and
assurances contained in the sponsor's grant agreement. Similar
conditions are written into the deeds of conveyance for Federal surplus
property donated to an airport sponsor.
The FAA expects that applications will include a statement that the
new owner/operator will assume the obligations of the original sponsor
under existing grant agreements or deeds. The FAA will consider whether
the new owner/operator has the powers and authority to fulfill its
obligations under the assurances.
Regulatory Requirements
An operator of an airport receiving air service by aircraft with
more than 30 passenger seats must hold an FAA operating certificate
under 14 C.F.R. Part 139. Authority to certificate airports served by
aircraft with 9 or more passenger seats was granted to the FAA in the
1996 Reauthorization Act. FAA operating certificates are not
transferable; a new operator of a certified airport must obtain a new
certificate issued by the FAA.
Section 47134
Section 47134 contains specific provisions for issuance of an
exemption in connection with a transfer of airport operation. These
conditions supplement and to some extent overlap the factors that FAA
would consider under Assurance No. 5.b., but do not replace other
requirements for approval of an airport transfer. In summary, section
47134(c) provides that the Administrator may issue exemptions to a
public sponsor and a private sponsor only if the Administrator finds
that the sale or lease agreement contains provisions satisfactory to
the Administrator to ensure that:
(1) The airport will continue to be available for public use on
reasonable terms and conditions without unjust discrimination;
(2) The operation of the airport will not be interrupted if the
private operator experiences bankruptcy or other financial difficulty;
(3) The private operator will ``maintain, improve, and modernize''
airport facilities through capital investments, and submit a plan for
these actions;
(4) Airport fees imposed on air carriers will not increase faster
than inflation unless a higher amount is approved by at least 65
percent of the air carriers using the airport and the air carriers
having at least 65 percent of the landed weight of aircraft at the
airport;
(5) The percentage of increase in fees imposed on general aviation
operators will not exceed the percentage increase in fees imposed on
air carriers;
(6) Safety and security will be maintained ``at the highest
possible levels;''
(7) Adverse effects of noise from operations at the airport will be
mitigated to the same extent as at a public airport;
(8) Adverse effects on the environment from airport operations will
be mitigated to the same extent as at a public airport; and
(9) Any collective bargaining agreement that covers airport
employees and is in effect on the date of the sale or lease of the
airport will not be abrogated by the sale or lease.
In addition, the Administrator must find that the transfer will not
result in unfair and deceptive trade practices or unfair methods of
competition, and that the interests of general aviation users are not
adversely affected.
Number of Participating Airports
In establishing the privatization pilot program, Congress placed
limitations on the number and kind of airports eligible to participate.
Paragraph 4713(d)(1) provides that if the applications of 5 airports
are approved, then at least one must be a general aviation airport.
Paragraph 4713(d)(2) provides that no more than one of the airports
approved may be an airport with more than 1 percent of total passenger
boardings (a large hub airport), as defined in 49 U.S.C. 47102(10).
Notice of Proposed Application Procedures; Discussion of Comments
Received
On April 22, 1997, the Federal Aviation Administration published in
the Federal Register a Notice of Proposed Procedures entitled ``Airport
Privatization Pilot Program: Application Procedures,'' proposing
application procedures for public sponsor participation in the Airport
Privatization Pilot Program (62 FR 19638). The notice also included a
discussion of issues involved in reviewing applications and a notice of
a public meeting. The agency asked for public comment by June 4, 1997.
The FAA also solicited and received comments at the public meeting held
on May 21, 1997. Verbatim transcripts of the meeting have been included
in the docket of this proceeding.
The Agency received more than 22 written comments to the Notice of
proposed application procedures. Comments were received from such
organizations and individuals as; Aircraft Owners and Pilots
Association, (AOPA); Air Line Pilots Association, (ALPA); Air Transport
Association, (ATA); Airport Commission City and County of San
Francisco; Airports Council International-North America, (ACI-NA);
Airport Group International, (AGI); Allegheny County Department of
Aviation; American Association of Airport Executives, (AAAE); BAA USA,
Inc.; Infrastructure Management Group, (IMG); Johnson Controls; Landrum
and Brown; National Air Transportation Association, (NATA); National
Organization to Insure A Sound Controlled Environment, (NOISE); New
York State Department of
[[Page 48695]]
Transportation, (NYSDOT); Sam Stuart of ProAir Partner Inc.; Public
Employees Department, AFL-CIO, Reason Foundation; Scenic Hudson; Mr.
Charles Spence; Stewart Park & Reserve Coalition; Transportation Trades
Department, AFL-CIO (TTD).
The summary of comments is intended to represent the general
divergence of industry views on various issues. It is not intended to
be an exhaustive restatement of the comments received. All comments
received were considered by the FAA even if not specifically identified
in this summary. In addition to specific changes noted in the
discussion of the issues, the FAA has made editorial changes throughout
the application procedures to enhance readability and clarity. The
Notice of Proposed Procedures included a discussion of issues that
would be considered by the FAA in reviewing applications and granting
exemptions (62 FR at 19641-19645). This notice addresses comments on
that discussion, but does not repeat the separate discussion of those
issues.
Application Procedures
Required Report to Congress
Comments: A number of comments suggest changes in the reporting
requirement to Congress. Allegheny County Department of Aviation
suggests the FAA initiate a dialogue with industry groups to identify
potential measures of success to monitor and evaluate the program.
Several commenters suggest that industry comments should be solicited
annually and the FAA report to Congress on the efficacy of
privatization and the pilot program. The Transportation Trades
Department, AFL-CIO suggests that the FAA should address employee and
collective bargaining relationships in the two year report to Congress;
the report should address such issues as the program's effects on wages
and working conditions, retention percentages, contracting out
practices and other factors deemed relevant. The FAA should also
consider a yearly reporting requirement to monitor the long term effect
on employees.
Discussion: The law requires the FAA to provide a report to
Congress on the Progress of implementation of the program no later than
two years after the approval of the initial application. While the
statute requires the FAA to report only on the implementation of the
program, a considerable amount of effort has been undertaken to better
understand the potential impacts of airport privatization. During the
past year, the agency has held a number of meetings with industry
leaders and trade groups, both proponents and opponents of airport
privatization, both domestically and internationally. In May, 1997, the
FAA and DOT conducted a public meeting to obtain public testimony on
the topic.
Final Disposition: The FAA will consider the public comments
received from the notice combined with the results of the May 21 public
meeting and the background information provided by the industry in the
development of the report to Congress. The FAA does not plan further
notice and comment on the results of the program at this time, but will
consider a public forum for discussion of experience under the program
at an appropriate time in the future.
Resale or Lease to Third Party
Comments: ATA suggests that the FAA should establish procedures
prohibiting the resale of an airport to a third party and mandating the
reversion of the airport to the original public entity.
Discussion: Approval of a sale or lease under section 47134 would
not eliminate the Federal obligations of the private operator under
grant agreements to obtain FAA approval for a subsequent sale or lease.
Therefore, a prohibition on resale or sublease is unnecessary.
Final Disposition: The final procedures do not include a
prohibition on resale or subleasing of the airport.
Number of Airports in Pilot Program
Comments: Landrum and Brown, a consulting firm, requests policy
clarification on the number and type of participating airports. Landrum
and Brown believes that for the five airports selected for
participation in the program, specific limits should be placed on each
hub classification (e.g., large, medium, and small hub) to permit
participation by all airport hub classifications. FAA should also
provide guidelines and criteria for the development of the sponsor's
request for proposal/qualifications (RFP/RFQ).
Discussion: Congress did not intend for participation in the
airport privatization program to be defined according to airport hub
classifications beyond those specifically identified in section 149.
The conference report, for the bill which became section 149, indicates
that the program should be flexible using neither size or geographical
diversity as factors in the selection of airports. H.R. Rep. 104-848 at
27 (September 29, 1996).
Final Disposition: The final policy retains the original position
as identified in the April 22 Federal Register notice.
Two Year Assessment Period
Comments: Allegheny County Department of Aviation suggests that the
statutory two year assessment period provides as insufficient time to
fully evaluate the impacts of the program. As an example, the county
mentioned a typical capital development schedule can have a longer
horizon than two years. If the generation of new capital and investment
is a measure of performance, the two year reporting period does not
provide sufficient time for determining results. The county suggests
that Congress establish a longer horizon to permit a more realistic
assessment of the program.
Discussion: The statute requires the FAA to submit a report to
Congress not later than two years after the approval of the first
application.
Final Disposition: The report to Congress will be filed 2 years
from the date of the first application.
Selection Process
Comments: A number of comments suggest changes to the selection
process and application submission dates. San Francisco argues that the
FAA's system of ``first come first serve'' is arbitrary and unfair. San
Francisco suggests that the start date of December 1, 1997, should be
delayed for three months to allow applicants sufficient time to prepare
an exemption application. They also suggest that the selection process
be replaced by a lottery of pre-qualified applicants with five airports
selected by a disinterested third party.
Johnson Controls, a private airport operator, has two concerns with
the ``first come first serve'' approach. Their first concern is that
the first five applications submitted may not be the most qualified to
be included in the program. Second, if more than five airports submit
applications for the December 1 deadline, some of those airports
sponsors and their associated parties will be forced to expend a great
deal of preparatory work and expense with no assurance that they will
be able to obtain an exemption. As an alternative, Johnson Controls
suggests a two step process. The first step requires the submittal of a
preliminary application consisting of a description of the procurement
process, a copy of the request for proposal (RFP) and a list of the
airport owner's minimum requirements. The second step would consist of
the FAA granting conditional approval for five airport sponsors to
issue a RFP. A stand-by list would be utilized should one of the first
five
[[Page 48696]]
applicants be unable to complete the process. Airport sponsors would
have to request FAA approval of their final applications. This
selection process is endorsed by Airports Council International North
America (ACI-NA) and the American Association of Airport Executives
(AAAE).
Landrum and Brown wants both the airport sponsor and private
airport operator to be pre-qualified for exemption and participation in
the pilot program. Airport Group International (AGI) proposes that
interested airport sponsors submit an expression of interest by a date
certain. The statement would include basic information about the
facility and a feasibility report demonstrating that the economics of
the airport can support privatization. Based upon this submittal, the
FAA would select five airports best qualified for participation in the
program. Exemptions would be issued upon the completion of the
solicitation process.
The Reason Foundation suggests staggered start dates based upon
airport classification. Under this proposal, applications for general
aviation airports would be accepted from December 1 onward, but
approval would be limited to a maximum of two during the initial 18
months, while awaiting for applications from air carrier airports.
Large and medium hub airports could not submit an application until 18
months later, all other carrier airports would have 12 months. This
type of extended schedule would provide large and medium hub airports a
longer time for preparation due to the complexity of preparing a
request for proposals.
Discussion: We agree with commenters that a revision of the
selection procedures is warranted. The FAA drew on several different
comments for development of the following two-step selection process.
We continue to believe applications should be selected on a first come
first served basis, rather than a selection process based on criteria
not found in section 47134. First, the direction for a report to
Congress within 2 years indicates an interest in early implementation
of the program. A first-come first-served selection procedure is most
likely to meet this objective, as would the December 1 start date for
applications, rather than a date of 12 or 18 months hence. Second,
section 47134 does not provide specific authority or guidance for
comparative selection of eligible applications, should more than five
applications be received, based on their merits as privatization
projects. However, FAA agrees that a two-step process, involving both
preliminary and final applications, would be beneficial because it will
avoid a costly and extensive process by parties that will turn out not
to be among the first five qualifying applicants. Also, the FAA agrees
with the suggestion for a lottery procedure to the extent necessary to
assign priority to applications received on the same day.
Final Disposition: As a first step, interested public sponsors may
submit a summary preliminary application to the FAA for review and
approval on or after December 1, 1997 (with certain exceptions noted
below). The preliminary application will consist of: a summary
narrative of the objectives of the privatization initiative; i.e., what
the sponsor is trying to accomplish; second, a description of the
process and timetable to be employed in selecting an operator; third,
all the information required to be included in Part II of the final
application; fourth, airport financial statements including balance and
income statements for the last two reporting periods; and finally, a
distribution ready copy of the request for proposals (RFP) that the
sponsor will use in seeking a private operator.
The RFP must be specifically for the sale or lease of the airport
under the Sec. 47134 Airport Privatization Pilot Program. The document
should contain references to this notice and the nine statutory
objectives listed in section 47134(c). These preliminary applications
will be accepted for review on a first come first served basis. The FAA
will review each preliminary application and, if the preliminary
application is accepted for review, the FAA will publish the status of
the application in the Federal Register. Filing dates for applications,
for the purposes of determining filing order under this program, will
be the filing date of an approved preliminary application or the filing
date of the final application if no preliminary application is filed.
The FAA may accept up to five applications. If more than five airports
submit applications, the FAA will establish a stand-by list. The FAA
agrees to notify an applicant within thirty days of the filing of the
preliminary application whether the application has been accepted for
review.
Once a preliminary application is accepted for review, an applicant
may issue its RFP, select a private operator, negotiate an agreement
and submit a final application to the FAA for approval without
competing with other applicants for one of the five program slots. The
acceptance for review of the preliminary application is time specific
and based on the time table submitted with the preliminary application.
Extensions may be granted, if the FAA finds that the public sponsor is
making reasonable efforts to complete the process. For applications
received by the FAA on the same business day, the FAA will hold a
public lottery to assign priority.
Final applications and preliminary applications will not be
accepted before December 1, 1997, unless an applicant has issued an RFP
on or before the date of publication of this notice. Applicants that
have already issued an RFP for proposals for the sale or lease of the
airport on or before the date of publication of this notice and have
selected a private operator may submit a final application for review
before December 1, 1997. Applicants that have issued the RFP but have
not selected a private operator may file a preliminary application on
or before that date. When a final application is accepted for review,
the FAA will publish notice in the Federal Register with a 60-day
comment period.
The application procedures will be modified to reflect the changes
to the selection process.
Privately Owned General Aviation Airports
Comments: The State of New York recommends that privately held
general aviation airports be excluded from section 47134(a) because
they will not ``facilitate new forms of airport ownership'' as was
intended by the statute.
Discussion: The statute provides no basis for excluding privately
owned airports. Privately owned airports are currently bound by many of
the same laws, regulations, and grant assurances that govern publicly
owned airports. However, exemptions under the program are granted only
``to the extent necessary'' for the purposes listed in Sec. 47134(b)
(2) and (3). It is likely that no exemption would be necessary for
these purposes in a sale or lease of an airport from one private owner
to another, and the FAA does not anticipate that applications will be
received from private sponsors or that such sponsors would qualify for
an exemption under the standards of section 47134.
Final Disposition: The FAA will issue exemptions only to the extent
necessary for the purposes listed in section 47134(b) (2) and (3).
Public Outreach
Comments: Several commenters requested that additional public
outreach efforts be written into the procedures. NATA supports the idea
of publishing the application in the Federal Register for the
solicition of
[[Page 48697]]
public review and comment. AOPA wants the airport sponsor to implement
measures to improve the opportunity for public comment from the
airport's general aviation community. AOPA suggests that the airport
sponsor be required to contact all general aviation tenants
individually by mail, to the extent practical, and to post a notice in
a prominent location on the airport, to notify all general aviation
tenants of a pending application before the FAA. The FAA should also
conduct a public hearing at each airport being considered for
participation in the pilot program. Scenic Hudson, Incorporated and
Stewart Park and Reserve Coalition, two community organizations with an
interest in Stewart International Airport, Newburgh, New York,
requested the FAA to provide notification by personal mail service to
interested parties regarding the acceptance of a final application with
a copy of the final application provided upon request. They also
suggested that the comment period on each application be for a period
of 90 days.
Discussion: The FAA supports efforts to inform the public of any
expected changes affecting the airport community. However such efforts
to obtain tenant participation and comment are best initiated by the
airport sponsor in conjunction with local pilot groups and airport
tenant and user committees.
The FAA expects that a request for Federal exemption is only one
part of a complex process that will involve a considerable amount of
preparatory work, will generally also require the sponsor to obtain
local government legislative and other types of approval, and in some
cases will require state authorization. Public participation in the
process may be required before the application is submitted to the FAA.
In addition, we assume that industry organizations will make their
membership aware of the opportunity to comment at the appropriate level
of government authority. With respect to Federal action, the names of
public sponsors submitting preliminary applications will be published
in the Federal Register. FAA will institute a 60 day comment period for
public review of sponsor's final application. We believe a 60 day
comment period is reasonable considering the earlier requirement for
publication in the Federal Register of a sponsor's preliminary
application. We encourage airport sponsor to augment our efforts with
their local means of communicating with the general public, and we are
modifying the procedures to require that applicants describe their
public outreach efforts in the final application.
Final Disposition: Upon receipt of a preliminary application, the
FAA will publish a notice in the Federal Register. When a final
application is accepted for review by the FAA, the application will be
published in the Federal Register for public review and comment for a
sixty day period. The application procedures will be modified to
reflect these changes and to require a description of any local public
outreach efforts by the applicant.
Part II of the Application: Airport Property
Comments: Scenic Hudson and Stewart Park and Reserve Coalition
request clarification of what would be considered airport property,
specifically as it pertains to Stewart International Airport. The two
commenters want to know who will define what is to be included as
airport property and the criteria to be employed in this determination.
Discussion: The FAA agrees that property to be transferred must be
clearly identified. Airport sponsors, requesting an exemption under
section 47134, must provide a description of the airport property to be
transferred under the pilot program. They must also provide an
acquisition history of the existing airport property. The airport
sponsor, as property owner, is in the best position to know the
acquisition history of the airport's property and determine what
property will be included as part of the transfer.
Final Disposition: Questions regarding the property of a specific
airport should be directed to the airport operator.
Part III of the Application: Terms of the Transfer
Comments: ATA argues that the parties buying or leasing the airport
will be interested in recouping all or part of the cost of the initial
transaction. ATA recomends that the parties should provide information
on the source of reimbursement for purchase or lease payments and the
projected impact of the fees charged to airport users.
Discussion: We believe this information will be valuable in
evaluating a public sponsor's application. And find the ATA
recommendations to be reasonable.
Final Disposition: The application procedures will be changed to
incorporate a requirement that the source of funds for reimbursement of
the purchase or lease payments be identified, and that the applicants
describe the anticipated impact of the reimbursement on aeronautical
user fees.
Part IV of the Application: Qualifications of the Private Operator
Comments: San Francisco opposes the implementation of a fitness
test, because such a test would tend to discriminate against private
operators. Allegheny County, ATA and AGI believe that a fitness test
could be a valuable exercise for the FAA to perform. Several comments
express the concern that such a test should not be unduly burdensome
and the investigation process should be similar to those investigations
conducted for public operators. Johnson Controls emphasizes the need to
crease a ``level playing field'' for both publicly operated airports
and privately operated airports. FAA should not use the exemption
approval process as an excuse for placing burdens on the private
operator which were not imposed on the public entity previously
operating the airport.
Discussion: Comments supporting the need for a fitness test, raise
two concerns. First, a fitness test should not be discriminatory
against private operators; any investigation process conducted should
be the same for both public and private operators. Second, it should
not be unduly burdensome on the operator.
Section 47134 did not change existing requirements applicable to
public airport sponsors for ownership of airports or eligibility to
receive Federal grants. In contrast, this section did impose new
financial and other requirements for private firms undertaking the
operation of a public use airport under the pilot program. Accordingly,
a fitness test related to the eligibility requirements of the pilot
program cannot be considered discriminatory against private operators
applying for participation in the program. FAA believes a limited
fitness review of private operators, modeled on information reviewed
for DOT economic certification decisions, would be beneficial in
ensuring that the FAA meets the requirements of section 47134. The
information involved is limited to items related to this program, and
will not be a burden for applicants.
Final Disposition: In addition to the information previously
provided in the proposed application procedures the fitness test will
require the following:
1. A private operator's airport operation and management
experience.
2. The identity, experience, expertise and responsibility of key
personnel.
3. A description of facilities presently being managed by the
company, both domestically and internationally.
4. Copies of the 10K annual reports filed in the past 3 years with
the
[[Page 48698]]
Securities and Exchange Commission. If not filed, balance sheet and
income statement and a cash flow statement prepared in accordance with
Generally Accepted Accounting Principles, with all footnotes applicable
to the financial statements. The above mentioned statement shall be
filed annually, ninety days after the close of the operator's fiscal
year.
A finding of fitness in response to an application under this
program would apply only to that application and not to other
applications filed with the FAA or other offices of the Department of
Transportation.
Part V of the Application: Requests for Exemption
Comments: ATA also recommends that information provided as part of
the request for exemption to permit airport revenue to be used for
compensation of the private operator should include anticipated amount
and source of airport funds involved, and a description of the effect,
if any, on air carrier or other user fees.
Discussion: This request is consistent with ATA's request for
additional information requested in Part III, ``Terms of Transfer.''
Consistent with our action on that request, Part V is being modified to
include this information in the application. No further action is
required.
Part VI of the Application: Certification of Air Carrier Approval
Comments: ATA indicates that statistics for determining landed
weight should be based on the preceding calendar year. According to the
State of New York, the regulation does not address the manner in which
the 65 percent air carrier rule will be calculated in the event one or
more carriers announce a decision to discontinue service after the end
of the year preceding application review.
Discussion: The statistics requested in paragraph B of the
procedures for total landed weight must be based on the preceding
calendar year. This is a requirement of the statute. Section
47134(b)(1)(i)(ii) requires 65 percent approval of the air carriers
serving the airport and 65 percent approval of the total landed weight
of air carriers from the preceding calendar year. Carriers
discontinuing service during or after the calendar year and not
currently serving the airport would not be counted in the total landed
weight for the preceding calendar year. This interpretation is
necessary to permit the 65 percent statutory carrier approval mechanism
to work if a carrier having more than 35 percent of the landed weight
at the airport discontinues service. This issue is further discussed
under the heading ``Issues Considered by the FAA in Granting an
Exemption Under Section 47134.''
Final Disposition: The application procedures have been modified to
reflect the discussion.
Part VIII of the Application: Airport Operation and Development
Five-Year Capital Improvement Plan. Comments: The ATA suggests that
information on the five-year capital plan should include, if
applicable, information on sources and proposed repayment terms of any
borrowed funds.
Discussion: We find this request reasonable and consistent with our
request for disclosure of the source of funds in previously mentioned
comments.
Final Disposition: A request for a description of this information
will be incorporated into the application procedures.
Collective Bargaining Agreements
Comments: Public Employee Department, AFL-CIO requests that the
labor requirements be strengthened. FAA should require the recognition
of collective bargaining rights and an adherence to the collective
bargaining agreement. The details of workforce standards should be
identified in any lease or sale agreement. Transportation Trades
Department, AFL-CIO identified a clerical error in Part VII(A)(10) of
the proposed procedures. According to the statute, this section should
read, ``Any collective bargaining agreement that covers employees of
the airport and is in effect on the date of the sale or lease of the
airport will not be abrogated by the sale or lease''. The commenter
suggests that the FAA should more clearly discuss what defines an
abrogation of a collective bargaining agreement. The FAA should also
include detailed requirements for collective bargaining agreements. The
application should address successorship of existing representatives of
employees, adverse impacts on civil service employees and a requirement
that private operators offer employment to the existing workforce.
Transportation Trades Department recommends an addition to Part
VII(A)(10) requesting the applicant to determine and describe the long
term effects the transfer may have on collective bargaining agreements
and employees. Finally, the Transportation Trades Department suggests
that the FAA should have an oversight role in the treatment of
employees after the agreement is signed.
Discussion: Section 47134(c)(9) requires that any collective
bargaining that covers airport employees will not be abrogated by the
transfer or sale of the airport. The application procedures permit the
applicants to satisfy section 47134(c)(9) by providing a certification
that the collective bargaining agreement has not been abrogated. We
would expect as a part of submitting the exemption application, the
issues raised by labor would be the basis for discussion between the
private operator, the airport owner and the collective bargaining
units. Before issuing an exemption, the FAA would ensure the terms of
the agreement met the requirements of the Act.
After transfer of the airport, we assume that existing federal and
state agencies with responsibility for labor relations, rather than the
FAA, would perform oversight functions on labor agreements at the
airport. FAA's role would be limited to assuring that applicant public
sponsors and private operators, in the transfer of the airport to
private operation, comply with assurances of section 47134. Collective
bargaining agreements and Federal labor laws establish employee rights
and mechanisms for protecting employee interests. Section 47134(c)(9)
is not intended to make FAA oversight an alternative process. Rather,
by requiring assurance that collective bargaining agreements will not
be abrogated, Congress demonstrated an intent to rely on existing
devices to protect employee interests.
Final Disposition: The application procedures will be revised to
more closely conform with section 47134(c)(9).
Issues Considered by the FAA in Granting an Exemption Under Section
47134 65 Percent Carrier Approval
Comments: ATA believes that procedures must be clear that air
carriers approving ``diverted'' funds must constitute 65 percent in
number and 65 percent in landed weight.
Discussion: In order for a public sponsor to recover funds from the
sale or lease of the airport, the dollar amount must be approved by at
least 65 percent of the air carriers serving the airport and at least
65 percent of the total landed weight of the air carriers serving the
airport in the preceding calendar year. As discussed above, carriers
that have ceased operations at the airport at the time of application
will be excluded from the landed weight calculation.
Final Disposition: The final procedures are being modified to
reflect this discussion.
[[Page 48699]]
Comments: Landrum and Brown suggest that the 65 percent carrier
approval requirement is reasonable if obtained in advance of selection
of operator. ATA recommends that general aviation airports be exempt
from the 65 percent carrier provision rule in lieu of a similar test of
the majority of based air craft owners or some other indication of the
users.
The Allegheny County Department of Aviation (Allegheny County)
argues that it is not appropriate to equate Part 135 operators with
Part 121 air carriers, especially at general aviation airports.
Allegheny County argues that air taxi operators at general aviation
airports are typically fixed base operators that provide on-demand air
taxi services as one of a group of aviation related activities.
Typically, according to Allegheny County, these operators have not made
financial commitments to the airport in the form of long-term leases
and they do not commit their credit-worthiness to the financing of the
general aviation airport. Allegheny County argues that the test
proposed--that any Part 135 operator with at least 50 annual operations
be counted in the 65 percent vote--would lead to the unfair result that
an itinerant air taxi with limited financial connections to the airport
would have a right to vote while a fixed base operator (FBO) located at
the airport (but with no Part 135 operations) would have no vote.
Allegheny County suggests that recognition as an air carrier should be
based on one or more of the following tests: (1) A Part 135 operator
lease is cited specifically as a security for the sponsor's financing
of any airport facility; (2) a Part 135 operator is a signatory to a
long term lease with airport; (3) a Part 135 operator paid to the
airport within the last twelve months, landing fees for commercial
flights which constituted a specified percentage of the airport's total
revenues or exceeded a specified dollar amount.
After the comment period closed, Allegheny County filed a request
for a complete waiver of the 65 percent approval requirement for
Allegheny County Airport, on the grounds that Congress did not intend
these airports to be subject to the requirement. The FAA provided the
Part 135 operators with lease or use agreements at the airport with an
opportunity to respond. To ensure a complete record, the FAA is
including in this docket the waiver request and all responses.
The State of New York requested clarification on several aspects of
the 65 percent carrier approval rule. New York believes carriers that
no longer have an agreement with the airport sponsor should not
participate in application approval. They also indicated that landed
weight requirements should not include general aviation. Finally, the
State of New York wants to know how the FAA will handle an airline,
airline holding company, or an affiliate of that airline that becomes
an applicant for private operation of the airport and also has
participatory rights under the 65 percent carrier approval provision.
The state suggests that such an airline would have an inherent conflict
of interest.
Discussion: The statute requires the airport sponsor to comply with
two tests regarding air carrier approval of the amount of funds the
sponsor can recover as a result of the initial transaction. While the
statute makes no reference to the timing of the approval, the amount of
funds to be recovered cannot be determined until the actual business
arrangements between the airport sponsor and a specific private
operator are known. Therefore, the FAA is not adopting the Landrum and
Brown suggestion.
On the question of including Part 135 air taxi operators in the 65
percent approval process, the FAA agrees that the proposed procedure
would have been impractical and could have led to results that are
undesirable from a policy perspective. However, we do not fully agree
with Allegheny County's assessment of Congressional intent regarding
Part 135 operators. Therefore, we are not adopting the modifications
proposed by Allegheny County Airport. Rather, the FAA is modifying the
65 percent approval requirement to limit participation to Part 135
operators with lease and/or use agreements and with aircraft used in
Part 135 operations. Itinerant Part 135 operators, even with 50 or more
flights per year, would not be included.
The FAA has reviewed the provisions of section 47134, and we do not
find strong evidence that Congress intended to distinguish, as a class,
either Part 135 operators from Part 121 operators, or general aviation
airports from commercial service airports receiving scheduled airline
service. Under the terms of the statute, the public sponsor's receipt
of sale or lease proceeds and fee increases exceeding the rate of
inflation must be approved by at least ``65 percent of the air
carriers'' serving the airport, without limitation or qualification.
The term ``air carriers'' as defined in 49 U.S.C. 40102 encompasses
Part 135 operators, as Allegheny County recognizes. The FAA assumes
that if Congress intended to treat Part 135 operators, as a class,
differently, explicit provisions authorizing or mandating different
treatment would have been included.
With respect to the comment that the 65 percent approval
requirement should not apply at general aviation airports, the FAA
notes that section 47134(b)(1) does not expressly exclude general
aviation airports from the 65 percent approval requirement. Based on
the foregoing, the FAA interprets section 47134(b)(1) (and the parallel
provision of section 47134(c)(4)) to reflect a Congressional intent to
give Part 135 operators at general aviation airports voting rights as
air carriers.
Nevertheless, the FAA recognizes that the differences in on demand
Part 135 operators and Part 121 operators justify, on both practical
and policy grounds somewhat different treatment.
The nature of Part 135 operator ``on-demand'' air service would
place an undue burden on the airport sponsor in administering the
proposed certification requirement, especially as applied to non-based
operators. Many Part 135 charter operations may be invisible to airport
surveillance. Many operators conduct their business with no visible
markings. In many cases it may be difficult to ascertain whether an
activity is being done as a commercial flight in air transportation, or
as another activity under Part 91.
In addition, providing itinerant Part 135 operators with voting
rights could give them more of an influence over the terms of a
privatization transaction than other users of a general aviation
airport who will be more substantially affected--fixed base operators
without Part 135 operations. The committee report indicates that the
approval provisions were added because Congress recognized ``that
airport users may be concerned that an airport could use its monopoly
power to increase their fees to unreasonable levels.'' Given this
concern, there is not a strong policy justification for giving
itinerant air taxi operators--who would likely be less impacted by the
increases in airport fees relative to airport tenants--a greater
influence over the terms of the privatization transaction than an
entire category of airport tenants--FBOs without Part 135 operations.
Moreover, an airport operator may have no practical means of
determining whether an itinerant operation is conducted under Part 135
or Part 91.
Therefore, the FAA has decided to limit participation in the 65
percent approval process to Part 135 operators that have lease and/or
use agreements with the airport and have aircraft used in Part 135
operations based at the airport. This resolution provides those Part
135 operators most likely to be
[[Page 48700]]
affected by a privatization transaction with the voting rights Congress
intended, while avoiding the practical and public policy difficulties
associated with extending the voting rights to itinerant operators.
This resolution will provide to FBO tenants with a Part 135 certificate
voting rights not shared by non-Part 135 FBOs. However, this is a
distinction that is clearly contemplated by the terms of the statute.
The FAA also notes that the definition of the term ``air carrier''
in 49 U.S.C. 40102 refers to U.S. citizens, and does not include
foreign air carriers. While section 40102 expressly governs Part A of
Title 49, Subpart VII, and Section 47134 is in Part B of that subtitle,
the FAA generally applies the definitions in section 40102 to Part B if
the terms are not defined to have a different meaning in section 47102,
the definition section for Part B. Section 47102 does not define ``air
carrier,'' but defines ``air carrier airport'' in a manner that refers
to service by U.S. carriers, which is consistent with the section 40102
definition of ``air carrier.'' Accordingly, the FAA concludes that
Congress did not intend the statutory procedure for air carrier
approval to include foreign air carriers in the calculation of either
65 percent of air carriers serving the airport or 65 percent of landed
weight in the preceding year. The application procedures reflect this
conclusion.
However, the FAA notes that this does not in any way affect
existing rights of foreign air carriers with respect to reasonable and
not unjustly discriminatory fees, or to the rights of foreign air
carriers to use the same administrative and legal processes available
to U.S. operators to challenge airport fees. Moreover, applicants are
reminded that bilateral air service agreements provide for consultation
with foreign air carriers. The applicant should conduct timely
consultation with foreign air carriers serving the airport on all
proposals for which approval is requested under section 47134(b)(1) and
section 47134(c)(4), and include a description of the consultation in
Part VI of the application.
Finally, the procedures exclude from the 65 percent approval
process otherwise qualified air carriers that submitted proposals or
that participate in consortia that submitted proposals for the
privatization of the subject airport. The vote of such a carrier,
whether or not it is the successful proponent, could be based on its
interests as a proponent rather than its interests as a user of the
airport. To the extent that it is, such a carrier's vote would not
further the Congressional objective of the 65 percent approval
requirement.
Final Disposition: The application procedures will be modified to
reflect the above discussion. Specifically, in applying the 65 percent
approval requirement, carriers serving the airport will consist of all
carriers conducting operations at the airport under authority of 14 CFR
Part 121 that have a lease and/or use agreement at the airport or that
conducted at least 50 flights under such authority in the preceding
calendar year; all carriers conducting operations at the airport as a
commuter air carrier within the meaning of 14 CFR Part 298 that have a
lease and/or use agreement at the airport or that conducted at least 50
flights under such authority in the preceding calendar year; and all
operators conducting operations at the airport under authority of 14
CFR Part 135 that have a lease and/or use agreement at the airport (or
similar agreement for use and occupancy of airport premises) and that
have at least one aircraft used in Part 135 operations based at the
airport. However, an otherwise qualified air carrier will not be
permitted to participate in the 65 percent approval process, or be
counted in the total landed weight in the previous year, if the air
carrier, air carrier holding company, or affiliate of that air carrier
responds to a solicitation or submits a proposal to serve as a private
operator or participate in a private operator consortium at that
airport. In addition, as proposed, an airport that does not keep
records of landed weight for purposes of calculating landing fees may
seek an appropriate waiver of the landed-weight approval requirement.
Terms and Conditions Required for Approval--General Approach
Comments: The State of New York, San Francisco and AGI believe that
third party beneficiary rights are not necessary and may exceed FAA's
authority. The State of New York believes the FAA has these rights
under existing law. Landrum and Brown suggests the FAA should require
the sale or lease agreement to include provisions that meet the
statutory objectives. Infrastructure Management Group request
clarification as to the standards and conditions under which it might
completely transfer grant obligations to the private sector without
subsequent recourse to the previous public sponsor.
Discussion: Section 47134(c) permits the FAA to approve an
exemption application only if the sale or lease agreement includes
provisions satisfactory to the FAA. The Agency considers the statutory
objectives in section 47134(c) as creating a third party beneficiary
rights for the United States Government. Congress has authorized the
FAA to approve an application for exemption only if the lease or sale
agreement contains terms and conditions that ensure the nine statutory
objectives are met. To assure that these rights are available, we will
require the sale or lease agreement to include provisions explicitly
granting third party beneficiary rights to the FAA. The FAA will accept
as an alternative a suitably structured tripartite agreement among the
FAA, the public sponsor and the private operator in which the three
parties agree that the key grant assurances required by section 47134
may be enforced directly against the private operator by the FAA under
the agreement as well as under applicable grants.
During the course of the application process, the FAA will
determine on a case by case basis, what grant obligations will be
transferred. As a result of the transfer, the public sponsor should not
be obligated for the airport grant assurances assumed by the private
operator. However, the public sponsor may continue to have Federal
obligations under the exemption approval. These Federal obligations may
depend on: (1) The conditions of exemption; (2) third party beneficiary
rights; and (3) specific terms of the transfer agreement.
Additionally, we are requesting sponsors to identify in the
application their approach to handling the protection of the airport's
runway protection zones and the acquisition and retention of avigation
easements, in consideration that a private operator will have neither
condemnation authority nor zoning power for adjacent property.
Final Disposition: The application procedures will be changed to
incorporate the request for information on the airport's runway
protection zones and avigation easements and to incorporate the
requirement for third-party beneficiary rights or a tripartite
agreement. None of the other comments required changes to the
procedures.
Terms and Conditions To Assure Public Access on Reasonable Terms
Without Unjust Discrimination
Comments: Landrum and Brown recommends that a private operator
should operate an airport without discrimination under the same
assurances required of a public sponsor. The State of New York argues
the introduction of requirements that would hold privately operated
airports to a higher than public airports would be contradictory and
deterrent.
[[Page 48701]]
NATA opposes the ability to transfer proprietary exclusive rights
to a private operator. It argues that a private operator exercising a
proprietary exclusive right in an area as fuel sales, for example, will
impact existing fuel operators. A proprietary exclusive operation may
result in the closure of existing fixed base operators or the denial of
market entry by potential new operators.
Discussion: Under existing FAA policy, the owner of a public-use
airport may elect to provide any or all of the aeronautical services
needed by the public at an airport. The statutory prohibition against
exclusive rights does not apply to these airport owners. They may
exercise, but not grant the exclusive right to conduct an aeronautical
activity. Existing policy permits airport owners to engage in these
services using only their employees and resources. Delegation or
subcontracting of the proprietary exclusive right is prohibited. As a
practical matter, public agencies recognize these services are often
best performed by a profit-motivated private enterprise.
Private owners of a public use airport are currently permitted to
exercise propriety exclusive rights on the same basis as public
agencies. The FAA sees no reason to grant a private operator a lesser
right than other operators just because the operator came into control
of the airport under section 47134. However, the FAA may object in
circumstances when the private operator attempts to exercise a
proprietary exclusive right through consortiums, joint or limited
partnerships when the intent is to circumvent the exclusive rights
provision or the limited exception.
Final Disposition: FAA will review each request for proprietary
exclusive on a case by case basis.
Reasonable Rates and Charges Imposed by Airport Operator
Comments: San Francisco believes the FAA lack the authority to
apply the Rates and Charges Policy and that the policy should not be
imposed on the transferee. It proposes that the FAA delete the
provision that subject fees imposed by the private operator to the
Policy on Airport Rates and Charges. San Francisco argues that under
the rule, airlines already have adequate protection against
unreasonable rates and charges. First: 65% of the air carriers must
approve the initial agreement in the form of revenue to be retained by
the airport sponsor; second, air carriers must approve all rates and
charges (except for those rate increases resulting from new capital
improvements). Application of the policy to the agreed upon rates and
charges could result in challenges to the rate structure as new users
enter the market. This could potentially undermine the investment
expectations of the private operator by lowering the level of rates and
charges.
Discussion: Before responding to the comments, it is necessary to
discuss a judicial decision in a challenge to the Rates and Charges
Policy that was pending when the FAA issued the NPP. The Air Transport
Association (ATA) and the City of Los Angeles each petitioned for
judicial review of the Airport Rates and Charges Policy. Los Angeles
challenged the requirement to use historic cost accounting in
establishing fees for the use of the airfield. The ATA challenged the
provisions in the policy that permit the airport operator to: (a) Use
any reasonable method to establish other aeronautical fees; and (b)
charge imputed interest on the airport operator's own funds from
specified sources invested in the airfield. On August 1, 1997, the
United States Court of Appeals issued its opinion, which vacated an
remanded the Airport Rates and Charges Policy to the Department.
The effect of the opinion on the provisions of that Policy that
were not challenged is unclear. Even if the effect of the opinion is to
vacate the entire policy, it is reasonable to expect that readoption of
the unchallenged provisions would not be objectionable. In addition,
the provisions of the policy most directly related to the privatization
pilot program--provisions on airport operator/user consultation,
application of the policy to fees set by agreement, and allowable rate
of return to private equity owners of airports--were not challenged.
Therefore, the FAA has assumed that those provisions continue to be in
effect in the discussion of the comments on this issue. We have made
appropriate editorial changes to the text of the procedures to reflect
the uncertain status of the Airport Rates and Charges Policy.
The comment that the FAA lacks authority to apply the Rates and
Charges Policy to transferees under the pilot program is not supported
by the statutory language authorizing the pilot program. Section 149(d)
of the Reauthorization Act, which established the privatization pilot
program, also included a revision to 49 U.S.C. 47129, the existing
statute which requires adoption of a DOT rates and charges policy and
process for adjudication of disputes. The new provision directs the
Secretary, ``in evaluating the reasonableness of a fee imposed by an
airport receiving an exemption under Sec. 47134 of this title [to]
consider whether the airport has complied with section 47134(c).'' 49
USC 47129(a)(4). This provision does not exempt fees that meet the 65
percent approval requirement from review under Sec. 47129. On the
contrary, the provision contemplates that the fees will be reviewed,
with consideration given to whether the fees meet the 65 percent
approval requirement.
The FAA considers the Airport Rates and Charges Policy, in
particular the first principle and associated guidance, and this policy
to be consistent with the statutory direction discussed above. The
first principle states the Department's preference for direct local
negotiation between the airport operator and aeronautical users. This
principle recognizes a generally held industry wide practice that
produces reasonable results. The Airport Rates and Charges Policy was
amended to avoid the need for investigation of complaints about the
reasonableness of fees set by agreement if filed by parties to the
agreement.
However, as we indicated in the Airport Rates and Charges Policy,
we believe that Congress did not intend to deprive non-signatory
carriers of the opportunity to have their fees reviewed by the FAA,
solely because they were not a signatory to the original agreement.
Section 47129 does not, by its terms, exempt fees set by agreement from
the requirement of reasonableness. Furthermore a difference in rates
between signatory or non-signatory carriers is not necessarily a basis
for a determination of unreasonable fees. Interested parties should
consult the section, ``Charges to Non-Signatory Carriers'' of the OST/
FAA Policy on Airport Rates and Charges for further details.
Final Disposition: The final policy is not modified from the
proposal.
Reasonable Compensation for the Airport Operator
Comments: Several commenters voiced concerns about the compensation
to the private operator. Landrum and Brown suggests that the rate of
return should be subjected to a reasonableness test. This should be
handled on a case by case basis. Compensation is driven by the
``price'' paid for the lease or sale of the airport. The State of New
York believes agreement between equity owner and airport users is most
appropriate to determine charges. Infrastructure Management Group
suggests that the FAA should not directly intervene on the issue of
reasonable rate of return.
[[Page 48702]]
These issues should be left to the three consenting parties in the
privatization process, the airport owner, the private operator and the
airlines. The FAA would still have the authority to exercise remedying
powers under its current Policy on Airport Rates and Charges. ATA
argues that the private operator's rate of return must be evaluated in
light of its impact on user fees, within the context of exemptions
being proposed under section 47134(b)(3). The ATA encourages the FAA to
``look at all payments in the aggregate, not as individual pieces.''
Discussion: A basic premise for determining the reasonableness of
compensation for the airport operator must begin with three consenting
parties in the privatization process, the airport owner, the private
operator and the airlines. As we have indicated, in order to protect
the general public interest, and the interest of airport users affected
by but not a party to the agreement, the FAA has a responsibility to
determine the reasonableness of airport fees paid by aeronautical users
and compensation to the airport operator included in those fees. The
FAA will examine an airport operator's rate of return for
reasonableness on a case by case basis. While we recognize the value of
agreement on compensation to the airport operator by all consenting
parties, the FAA reserves the right to ensure that the rate of return
charged for aeronautical facilities and services meets the applicable
reasonableness requirements.
Final Disposition: The final procedures retain the substance of the
proposed procedures.
Carrier Approval of Fee Increases
Comments: Landrum and Brown recommends private operators should be
allowed rate increases to cover at least their cost of capital. The
definition of capital improvements should be clearly stated so that
both airlines and the private operator can assess the impact on rates
and charges.
ATA and NATA oppose provisions that allow airport fee increases
based solely on new capital investment without approval of 65 percent
of the airport's air carriers. Both suggest that all capital
improvement resulting in fee increases should be subject to air carrier
approval. ATA argues that the provisions allow the proposed private
operator to make unnecessary investments for the sole purpose of
increasing their rate of return, exempt from the revenue retention
requirements. NATA believes that this automatic approval of capital
improvements will raise rates and charges, adversely affect its
membership, which represent many of the aviation businesses servicing
aeronautical users.
ACI-NA, AAAE and the State of New York support the measure that
excludes capital improvements from the 65 percent air carrier rule.
Supporters believe without this provision, few capital improvements
would be made. ACI-NA and AAAE in their joint statement, indicated,
``It would be simply too easy for carriers taking a short-term view of
expenses and profits to veto an airport's more long term assessment of
growing needs for capital investment.''
Discussion: FAA reaffirms its position that the 65 percent air
carrier rule should not apply to new capital improvement. As we have
stated before, Congress, in establishing the program, expressed an
intent to determine if private investment could be employed as an
alternative funding source. Applying the 65 percent air carrier rule to
new capital investment would give carriers undue power over an
airport's capital improvement program and possibly reduce an airport
operator's ability to meet the long term needs of the market.
Carriers are afforded sufficient protection by provisions of
section 47134(b)(1)(A)(i) and (ii). This provision of the statute
effectively requires the consent and participation of the carriers for
the airport sponsor to transfer the airport to a private operator. The
FAA expects that during this time carrier concerns and issues will be
addressed. Additionally, tenants and carriers have the protection of
their leases, an airport's grant assurances and the federal
requirements for airport rates and charges.
Final Disposition: The FAA retains the provisions of the draft
notice. The text is being modified to explicitly state the exclusion of
fee increases attributable solely to capital improvements.
Terms and Conditions To Assure Continued Operation in the Event of
Bankruptcy or Insolvency
Comments: AGI believes that existing Federal bankruptcy laws are
adequate to handle leased facilities. Title 11 U.S.C. 365(d)(3) (1995)
was originally enacted to protect a lessor of commercial realty in the
event that the tenant seeks bankruptcy protection and performance of
the contract is essential. This section requires the trustee to meet
the tenant's obligations under the contract. AGI argues that these
provisions could apply to operators of leased airports.
The State of New York suggests that the FAA should require the
parties to enter into an agreement that addresses bankruptcy within the
framework of existing law.
Landrum and Brown and Infrastructure Management Group suggest a
reversion to the public sponsor in the event of bankruptcy along with
reasonable cure provisions in the agreement. The operators or creditors
of a facility should be given time to rectify the problem before the
original public owner steps in. The only lingering issue in such
instances is whether and how the parties must compensate each other.
ATA offers a number of options for addressing bankruptcy. These
include: (1) The transfer agreement should include an automatic
reverter to the public sponsor in the event that the airport ceases
operations due to bankruptcy or reorganization (the transfer agreement
would not be recognized as an executory contract subject to assumption,
rejection or assignment under Section 365 of the Bankruptcy Code); (2)
FAA required contingency plan for sponsor takeover in defined
circumstances; (3) Record as an encumbrance on the airport property the
obligation to operate the property as an airport; (4) establish an
escrow fund or bond fund to ensure funds are available to pay essential
costs of operating the airport; (5) Use Chapter 9 insolvent
municipality provisions instead of Chapter 11 or 7 for airport
bankruptcies.
ATA also suggests that the FAA pursue rigorous auditing of private
operators and impose the requirement for financial fitness similar to
those imposed by the Department of Transportation on air carriers.
Discussion: Given the breadth of suggestions and divergence of
views there is no consensus on a specific requirement. As a part of the
exemption application submittal, the airport sponsor and private
operator should provide a plan that specifically addresses the
requirements of section 47134(c)(2). Because it would involve the
application of bankruptcy law, the plan should include legal
justification and a legal opinion. The proposed approach will assure
continued operation of the airport in the circumstances specified in
section 47134(c)(2). FAA reserves the right to modify, or totally
reject the plan and require the airport operator to submit a new plan.
Final Disposition: The FAA will revise the application procedures
to require the public sponsor and private operator to specifically
address the requirements of section 47134(c)(2).
[[Page 48703]]
Terms and Conditions To Assure Capital Investment and Improvements by
the Airport Operator
Comments: San Francisco questioned whether FAA has the legal
authority to require that the private operator ``exceed or accelerate''
the public sponsor's capital improvement plan (CIP). While San
Francisco recognizes that offering such a five year CIP is one method
of ensuring sufficient private investment, it suggests that this not be
a requirement for obtaining FAA approval. FAA should make it clear that
the private operator's CIP does not have to exceed or accelerate the
public sponsor's CIP. Such a requirement may decrease the
attractiveness of private investment, when the public sponsor has made
high investments in the airport prior to privatization. San Francisco
believes that the air carriers will effectively ensure that the private
sector will invest sufficient amounts in capital projects. FAA should
exercise its role concerning capital investment on a case by case basis
without a predetermined level of investment.
ACI-NA and AAAE support the procedural provisions that require the
transfer agreement to include a provision to assure the airport
operator will maintain, improve and modernize the airport facilities as
specified in the CIP and subsequent updates.
Landrum and Brown suggests that the private operator should be
required to submit a master plan for FAA approval along with the five
year CIP.
ATA raises concerns that the requirement to implement a five year
program could lead to inefficient expenditures of funds for capital
projects. They recommended the FAA require purchaser/lessor to provide
annual documentation showing sources of funds for the projects to be
implemented in next 12 months including, if applicable, information on
borrowed money and proposed means of repayment of borrowed funds.
BAA USA is concerned that the requirement of a ``reasonable rate of
return'' may prove to be a source of controversy and generate wasteful
capital expenditure. Airport operators could be induced to spend more
on capital projects, just to extend the scope of the ``reasonable rate
of return''.
AGI believes that the public sponsor has the greatest incentive to
ensure the private operator's CIP is sufficient for the needs of the
airport.
Discussion: In enacting the airport privatization pilot program, it
was the intent of Congress to determine if new investment and capital
from the private sector can be attracted through innovative financial
arrangements. The FAA and the public have a reasonable expectation that
a private operator will provide new capital and create new investment
opportunities at the airport. A comparison of the public sponsor's
five-year CIP with the private operator's CIP will be useful in
evaluating the private operator's commitment. The example of exceeding
or accelerating the public sponsor's most recent five year CIP is only
one of several examples of means that a private operator can use to
assure a sufficient minimum investment of the private operator's funds.
The FAA will not, however, require the private operator's commitment to
do so.
The final procedures do not identify a predetermined level of
investment. Rather, the private operator is required to provide an
assurance that the operator will provide sufficient resources of its
own funds in conjunction with other financial resources for carrying
out the maintenance, improvements and modernization of the facility as
required by the statute. This should be accomplished on an annual basis
with documentation provided showing the source of all funds.
One commenter suggested that the private operator should be
required to submit a master plan for FAA approval along with the five
year CIP. While there is not requirement for a master plan development,
we would expect all capital development to be performed in accordance
with the airport sponsor's grant assurances.
Final Disposition: The application procedures are modified as
discussed.
Terms and Conditions Relating to Safety and Security
Comments: Both the Air Line Pilots Association and the
Transportation Trades of AFL-CIO recommend that private operators
should conduct public hearings on safety and operational considerations
at the specific airport with an opportunity for input by
representatives of aviation employees. It was also suggested that
private operators conduct monthly or bi-monthly safety meetings.
Discussion: Such mechanisms as tenant advisory committees and
airport safety and security meetings are basic management tools for
ensuring a safe and secure airport. We expect all airports, depending
on their level of activity, degree of complexity and regardless of
whether they are privately or publicly operated to have some program
for addressing the safety and security needs of the airport.
As we have indicated, we will require private operators to obtain a
Part 139 airport operating certificate and comply with Part 107 airport
security requirements at facilities where appropriate. Existing
certificates held by the public operator are not transferable. Private
operators will be required to demonstrate their fitness for approval in
the same manner that public operators are presently required to comply.
For general aviation airports, we will expect the private operator to
provide the same level of safety and security as required of the public
sponsor under the existing grant obligations.
Final Disposition: The FAA believes that existing airport
procedures and practices are adequate to ensure tenant and employee
input on safe airport operating practices and conditions. The
application procedures are modified to encourage the private operator
to maintain the public sponsor's existing mechanisms for communicating
with airport users and the public on safety and security issues. No
other modifications have been made.
Terms and Conditions Relating to Noise Mitigation
Comments: The National Organization to Insure a Sound Controlled
Environment (NOISE), in their comments, asked several questions
regarding the application procedures. First, NOISE wants to know if the
terms and conditions of existing grants applicable to noise mitigation
will be a part of the obligations of the private operator; Second, will
the new airport owner be obligated to comply with the determination of
the existing Part 150 Noise Compatibility Plan. Third, will notice of
the proposed sale of the airport be served on local jurisdictions that
surround the airport or that are located a specified distance from the
airport within a certain number of miles, or within a specified DNL
noise contour. NOISE's concern is that Federal Register notification
may be insufficient to reach many small communities. Finally, NOISE
would like to see a public hearing in the airport community before an
exemption is granted.
AGI indicates that the statute limits AIP grant funding to 40%
Federal share at section 47134 airports. The procedures are unclear as
to whether the reduced Federal share applies to both new applications
and projects approved but not funded.
Discussion: Standard grant assurance No. 5 requires a transferee
approved by the Secretary to assume all of the terms, conditions and
assurances contained in the sponsor's grant agreement. These
requirements are inserted in the contract or document transferring the
sponsor's
[[Page 48704]]
interest, and become binding upon the transferee.
In reviewing a request for transfer, the FAA will consider whether
a proposed private operator under a privatization pilot project will
assume the obligations of the original sponsor under existing grant
agreements or deeds, and whether the new owner has the powers and
authority to fulfill its obligations under the assurances. The FAA
would expect a private operator to assume any existing Part 150 noise
mitigation program for the airport to the extent applicable to a
private firm. However, we note that under Part 150, implementation of
approved noise mitigation measures is voluntary.
With respect to the request for a public hearing, as we previously
indicated, we encourage airport sponsors to actively solicit public
comment. However, we do not intend to dictate to airport sponsors a
single method for conducting public outreach. We believe public
outreach should be conducted at the local level and in accordance with
applicable state and local laws.
On the subject of the applicability of reduced Federal share for
AIP funded projects, it makes no difference whether the application is
pending or in preparation. If a grant of discretionary funds is
approved by the FAA prior to the airport sponsor being granted an
exemption under section 47134, the conventional Federal share would be
used, even if the project is not completed at the time of the transfer.
Any grant of discretionary funds executed after the transfer would be
at the Federal share of 40% for allowable project costs.
Final Disposition: No modification is required to address the
concerns of the commenter.
Unfair Competition Finding
Comments: AGI wanted to know what constitutes ``unfair and
deceptive practices''. The concept is not defined. The commenter
suggests the standard for ensuring reasonable access without unjust
discrimination replace the ``unfair and deceptive practice'' standard.
Discussion: The statute permits the FAA only to approve an
application, if the approval will not result in unfair and deceptive
practices or unfair methods of competition. While there may be some
overlap between this standard and the standard of reasonable access
without unjust discrimination, the FAA is not prepared to treat the
standards as identical. Doing so would make one of the standards
meaningless. This outcome should be avoided in construing statutory
language. We will not further define ``unfair and deceptive practices''
or ``unfair methods of competition'' in the procedures. Ample guidance
on this subject can be found in agency and court decisions interpreting
section 411 of the Federal Aviation Act of 1958, as amended, 49 USC
41712 and Sec. 5 of the Federal Trade Commission Act, 15 USC 16.
However, to assist in making this determination, the final procedures
are being modified to require information on any findings that the
private operator or key personnel have engaged in unfair or deceptive
practices or unfair methods of competition, or are the subject of
pending investigations.
Protection of General Aviation Interests
Comments: AOPA recommended that each private operator should
specifically address in the application how proposed changes at the
airport will impact general aviation.
Discussion: Congress intended that general aviation users not be
adversely impacted as a result of the transfer of the airport from
public to private operation. This is demonstrated by the provisions in
the statute governing fee increases, section 47134(c)(5) and the
protection of general aviation interests, section 47134(f). In order
for the FAA to fulfill its responsibility under the statute, we would
expect to see what actions the airport sponsor and private operator
plan to take to comply with the requirements of these provisions. At a
minimum, we would expect to see how the proposed changes in the
management and operation of the airport would affect general aviation
users. Additionally, we would expect to see some effort by the airport
sponsor and private operator to undertake reasonable consultations with
affected parties using the airport. The requirements of this section
could also be addressed by providing a description of the operator's
plans for the development of general aviation.
Final Disposition: The application procedures will be revised to
request that the applicant private operator provide information on its
plans for consulting and communicating with the general aviation users
regarding the planned privatization of the airport, and on the
applicants' projections of the impact of the proposal on general
aviation.
Revocation Procedures
Comments: Several commenters argue that the FAA should not require
automatic reversion of the airport to the public sponsor. Automatic
reversion should be one of many options available. The FAA should
retain discretion to take appropriate action. ACI-NA and AAAE request
that revocation procedures should be crafted in such a way that they
are not an impediment to the bond issuing ability of the airport
sponsor. The Transportation Trades Department of the AFL-CIO suggests
that the FAA consider revocation procedures for termination of the
program when privatization has been found to be contrary to the public
interest.
Discussion: The FAA did not propose to require reversion to the
public sponsor in the event of default or violation of the exemption
conditions, as a condition of granting an exemption, and the final
procedures do not add a requirement for reversion. However, the
application must provide for continued operation of the airport and
compliance with other obligations in the future under all foreseeable
circumstances. The provisions will vary according to the circumstances
of the airport privatization proposed. For example, where a public
sponsor does not operate any other airports and will no longer maintain
a capability to assume operation of an airport on short notice, the
applicants may provide means other than reversion to the former public
sponsor as a first recourse for correction of problems in the private
operation of the airport.
The FAA is aware of effect that the potential enforcement action,
even if the probability is very small, can have on the predictability
of a future revenue stream for purposes of determining investment risk.
As the ACI-NA and AAAE comments noted, the FAA has developed
enforcement procedures for passenger facility charge (PFC) collection
requirements that permit underwriting of bond issues based on PFC
collections alone. While the FAA does not intend to prescribe separate
procedures for agency enforcement of grant assurances and exemption
conditions involved in a privatization project, we can give assurance
that in the unlikely event any enforcement action was necessary in such
a case, the agency will be sensitive to the financial commitments and
covenants associated with the financing of the project. Moreover, by
requiring a three-way agreement or the inclusion of third-party
beneficiary rights for the FAA as part of the original transaction, the
FAA has provided means for limited, targeted correction of deficiencies
without relying on the revocation for the underlying exemption.
Termination of the pilot program, as opposed to action to correct
deficiencies
[[Page 48705]]
in a specific privatization project, is not within the FAA's authority.
Final Disposition: As discussed previously, the FAA will require
the parties to provide third party beneficiary rights to the FAA or to
execute tripartite agreements. These remedial options in addition to
revocation will assure that the FAA's compliance program is effective.
Administration of AIP Grants
Comments: The State of New York, Landrum and Brown, and AGI argue
that the system of prioritization of discretionary AIP funds should
continue to make no distinction between public or private airports.
Projects should be selected solely on their merits.
Final Disposition: Discretionary AIP funds will be awarded in
accordance with existing policy on priority of projects. Private
ownership per se will not affect grant priority or eligibility, but the
FAA will continue to consider the availability of other sponsor
resources and the sponsor's use of available funds in granting
applications for discretionary grants.
Process for Applying for an Exemption Under Sec. 47134
Exemption Application and Review Process: Overview
The FAA will apply the following policies and procedures for filing
and review of requests for privatization of a public airport under 49
U.S.C. 47134:
1. A request for participation in the airport privatization pilot
program will be initiated by the filing of a preliminary application
for exemption under section 47134(a). A public sponsor may also elect
to file a final application without the prior filing of a preliminary
application, if the public sponsor has selected a private operator.
2. With the exemption noted below, preliminary and final
applications for exemption will be accepted on or after December 1,
1997, and will be handled on a first-come first-served basis until the
limits of section 47134 are reached. An otherwise qualifying
preliminary application for exemption will be accepted before December
1, 1997, if the sponsor has issued, on or before the date of
publication of this notice, a formal solicitation or request for
proposals for the sale or lease of an airport, but has not selected an
operator. If the sponsor has selected the operator on or before the
date of publication of this notice, the FAA will accept only a final
application before December 1, 1997. All applications will be evaluated
in the order of receipt.
3. Participation in the program is limited to five airports. The
maximum of five participants in the program will be considered to have
been reached based on applications under review, not exemptions
granted, so that an airport with an application on file will not be in
a race for inclusion in the program. A standby list will be established
for airports not selected.
4. An application received by the FAA will be considered to be
filed on the date received. Application packages will be date-stamped
on receipt in Room 600 East, FAA headquarters building. The FAA will
not determine order of filing based on the time of day received. If
multiple applications are received on the same day, their order of
filing will be determined by public lottery rather than by time of day
received.
5. FAA will review the application to determine if it meets the
procedural requirements stated in this notice.
6. The FAA will accept preliminary applications filed before the
applicant has commenced the procurement process for the selection of an
operator. The preliminary application must contain the information
listed under the section titled ``Contents of Applications''. The FAA
will notify applicants of its decision on the acceptance of the
application for review within thirty days of the filing of the
preliminary application.
7. If the preliminary application meets the procedural requirements
described in this notice, the applicant will be notified that the
application is ``accepted for review.'' The FAA may request additional
information before accepting the application for review, but the
original filing date will remain in effect. The applicant is authorized
to select a private operator, negotiate an agreement and submit a final
application to the FAA.
8. If the preliminary application does not meet the procedural
requirements described in this notice, and cannot be brought into
compliance with those requirements with information requested by the
FAA during its 30-day review, the preliminary application will be
rejected. The FAA will notify the applicant that the application is
rejected and that the application is no longer on file. The applicant
may file a new application at any time, and receive a new ``on file''
date at that time.
9. The FAA will publish in the Federal Register a notice that a
preliminary application has been received under 49 U.S.C. 47134, and
that the FAA has accepted the application for review.
10. Applicants may file a final application after the public
sponsor has selected a private operator and reached substantial
agreement on the terms of the privatization transaction. If an
application cannot reasonably be brought into compliance with the
requirements of section 47134 and other applicable Federal statutes
with current information in accordance with the time schedule submitted
during the preliminary application, the FAA will notify the applicant
that the application is rejected and that the application is no longer
on file. The applicant may file a new application at any time, and
receive a new ``on file'' date at that time.
11. The FAA will publish in the Federal Register, a notice of
receipt of the final application, establish a docket, and accept public
comment on the application for a period of 60 days. Selection as one of
the 5 airports eligible to participate in the program will be evidenced
by the issuance of an exemption under section 47134(b). If an
application is approved, an exemption will be issued after the
execution of all documents necessary to fulfill the requirements of
section 47134 and other laws and regulations within the FAA's
jurisdiction (e.g., issuance of a Part 139 certificate to the private
operator; FAA approval of a security program under Part 107). FAA
representatives will be available to meet with parties interested in an
airport privatization project both before and after the filing of a
preliminary application for exemption to discuss the Federal statutory
requirements and policies that apply to applications under section
47134.
Filing an Application
1. Applicants must submit one original application package and four
copies containing the information described under ``Content of
Applications'' in this notice to: Susan L. Kurland, Associate
Administrator for Airports, ARP-1, Room 600 East, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591.
2. All preliminary and final applications may be delivered or
mailed, but will not be considered to be ``on file'' with the FAA until
received and date stamped in the Office of the Associate Administrator
for Airports, Room 600 East.
3. There is no required form for an application. However, the
application package must be submitted with a cover letter, signed, in
the case of the preliminary application, by appropriate officials of
the current public sponsor or in the case of the final application,
jointly by appropriate officials of the current public sponsor and the
private operator proposing to buy or lease the
[[Page 48706]]
airport, requesting an exemption pursuant to 49 U.S.C. 47134 for the
purpose of the privatization of an airport. Please title each section
according to the appropriate sections of the application. Officials
signing for the public sponsor must provide evidence of their authority
to file the application.
Contents of the Preliminary Application
The preliminary application should consist of:
1. As much of the information required by Part I, ``Parties to the
Transaction,'' for the Final Application, as is available.
2. Summary narrative of the objectives of the privatization
initiative; what the public sponsor wants to accomplish by the
solicitation.
3. A description of the process and a reasonable, realistic
timetable to be employed in selecting an operator and completing
transfer of the airport. This should include the identification of all
local approvals and the time frame when the FAA can anticipate the
final application will be submitted for review.
4. All of the information required by Part II. ``Airport
Property,'' from the Final Application
5. Financial statements including balance, income and cash flow
statements for the last two reporting periods.
6. A distribution ready copy of the request for proposals for the
management and operation if the airport under section 47134. The
document should contain references to this notice and the nine
statutory objectives listed in section 47134(c).
The Final Application
The following statements and information must be included in the
final application. The FAA realizes that some documents, figures, and
other information will not be available until shortly before the
execution of the transfer transaction. The final application must be
filed after the public sponsor has selected a private operator and
reached sufficient agreement with the operator on the terms of the
transaction to represent these terms in an application. The FAA will
not require that all information listed below be provided at the time
of the application, however. For each item below for which information
is not available, the applicant may substitute a description of the
expected response and the date by which the final information will be
available. Information not provided with the application should be
submitted to the FAA as soon as it becomes available.
Part I. Parties to the Transaction
A. Name of the airport proposed for sale or lease.
B. Name and address of the public sponsor of the airport; name,
address, telephone number and fax number of the person to contact about
the application.
C. Name and address of the private operator proposing to purchase
or lease the airport; name, address, telephone number and fax number of
the person to contact about the application.
D. If the private operator proposing to purchase or lease the
airport is a partnership, jointly venture, or other consortium of
multiple interests, the name and address of each of the participating
members.
E. Citizenship of the private operator and/or each member of the
private operator consortium, and percentage of interest of each such
member.
F. A statement of the public sponsor's authority to sell or lease
the airport, with a citation to legal authorities.
Part II. Airport Property
A. A description if the airport property to be transferred.
Applications should describe property in sufficient detail to identify
the parcels of property and facilities to be transferred; a map and a
legal description of the property may be included but are not required.
B. A history of the acquisition of existing airport property:
applicants should include information on grants, types of deeds, the
dates and means of conveyance, e.g. Surplus Property Act other Federal
conveyance of donated property, parcels purchased with Federal funds
and parcels purchased with only local funds.
Part III. Terms of the Transfer
A. A detailed description of the terms of the transfer, other than
financial, including:
The form of the transaction (sale, lease, other);
Term of the lease or other transfer agreement;
Description of any rights, authority, or interests retained by the
public sponsor, including reversion of title to facilities;
If the private operator is a consortium, a description of the
respective rights and responsibilities of each member;
B. Financial terms of the transaction:
Amounts and timing of payments to public sponsor.
Amounts of payments to sponsor to be used, respectively, for
airport purposes (including recoupment of public sponsor investments
not previously recovered) and other purposes.
Financial arrangements, including source of the funds used by the
private operator for purchase payment or initial and future lease
payments.
Projected impact of the initial transaction on the fee structure
for charges to airport users.
Projected impact of future purchase or lease payments to the public
sponsor on the fee structure for charges to airport users.
Other relevant financial terms of the transfer.
C. Copies of all documents executed as part of the transfer, to be
provided as they are executed or are in sufficiently final form to
indicate the substantive nature of the expected final document.
D. If applicable, a request for confidentiality of any particular
document or information submitted, with supporting information.
E. Provisions in document conferring third party beneficiary rights
on behalf of the FAA to enforce key obligations, or the alternative
tripartite agreement among the FAA, the public sponsor and the private
operator giving the FAA the right to enforce directly against the
private operator key obligations contained in AIP grant agreements and
the assurances required by Section 47134..
Part IV. Qualifications of the Private Operator
A. Complete description of airport management and operations
experience. The identity, experience, expertise and responsibility of
key personnel. A description of the facilities and airports presently
being managed by the company, both domestically and internationally. If
the private operator is a newly formed entity, describe the experience
of the constituent members and the proposed management structure to
integrate operations functions.
B. Financial resources for operating/capital expenses of the
airport. Copies of the 10K annual reports filed in the past 3 years
with the Securities and Exchange Commission, if not filed, balance
sheet and income statement prepared in accordance with Generally
Accepted Accounted Principles, with all footnotes applicable to the
financial statements.
C. Timing/details of application for Part 139 certificate, if
applicable.
D. Plan for compliance with Part 107, if applicable.
E. A description of the private operator's capability of complying
with the public sponsor's existing grant assurances, including the
assurance of compatible land use around the airport; the protection of
navigation aids, approach lights, runway safety areas, and runway
protection zones; and the
[[Page 48707]]
continuation and extension of aviation easements.
F. Affiliations with air carriers or other persons engaged in
aeronautical business activity at an airport (other than airport
management).
G. A description of all charges of unfair or deceptive practices or
unfair methods of competition brought against the private operator,
private operator's key personnel and in the case of a private operator
that is a joint venture, partnership or other consortium, the separate
members of the entity in the past 10 years. The description should
include the disposition or current status of each such proceeding.
Part V. Requests for Exemption
A. Describe the specific exemption requested by the public sponsor
under 49 U.S.C. 47134(b)(1), from the prohibition on use of airport
revenue for general purposes, including the amount of funds involved.
The description should include sale or lease proceeds as well as funds
in existing airport accounts that would be transferred to general
accounts.
B. Describe the specific exemption requested by the public sponsor
under 49 U.S.C. 47134(b)(2), from the requirement to repay Federal
grants funds or return property.
C. Describe the specific exemption requested by the private
operator under 49 U.S.C. 47134(b)(3), from the prohibition on use of
airport revenue for general purposes. The description should include
the anticipated amount of airport revenue to be used for compensation
of the private operator, the source of airport funds involved, and a
description of the effect, if any, on air carrier or other aeronautical
user fees.
Part VI. Certification of Air Carrier Approval
A. Provide a certification that air carriers meeting the
requirements of 49 U.S.C. 47134(b)(1)(A) approve the exemption
described in Part V.A. above.
B. Provide (1) a list of all U.S. air carriers serving the airport,
to include all carriers conducting operations at the airport under
authority of 14 CFR Part 121 that have a lease and/or use agreement at
the airport or that conducted at least 50 flights under such authority
in the preceding calendar year; all carriers conducting operations at
the airport as a commuter air carrier within the meaning of 14 CFR Part
298 that have a lease and/or use agreement at the airport or that
conducted at least 50 flights under such authority in the preceding
calendar year; and all operators conducting operations at the airport
under authority of 14 CFR Part 135 that have a lease and/or use
agreement at the airport and that have at least one aircraft used in
Part 135 operations based at the airport; but excluding any carrier
that is not currently serving the airport or that has responded to a
solicitation or submitted a proposal to serve as a private operator or
participate in a private operator consortium at that airport; (2) a
list of the air carriers that have approved the exemption; (3) the
total landed weight of all operations by air carriers listed under
VI.B.1 above at the airport for the preceding year; (4) the total
landed weight of each air carrier listed under VI.B.1 above that has
approved the exemption; and (5) a list of carriers serving the airport
in the previous or current year but excluded from the list in VI.B.1,
with the reason for exclusion.
C. Provide a copy of each document indicating air carrier approval
of or objection to the exemption requested.
D. Provide a description of consultation with foreign air carriers
serving the airport on proposals for air carrier approval under 49
U.S.C. 47134(b)(1)(A).
Part VII. Airport Operation and Development
A. Provide a description of how the private operator, the public
sponsor, or both will address the following issues with respect to the
operation, maintenance, and development of the airport after the
proposed transfer.
1. Part 139 certification. A request for Part 139 certificate
should be filed with the local FAA regional Airports Division. The
exemption application needs only to reflect the private operator's
intentions and the status of a certificate application, if applicable.
2. Continuing access to the airport on fair and reasonable terms
and without unjust discrimination, in accordance with section
47134(c)(1).
3. Continued operation of the airport in the event of bankruptcy or
other financial or legal impairment of the private operator, in
accordance with the specific terms of section 47134(c)(2). The
application should include any provision for reversion to the public
sponsor. The application should include a legal opinion and
certification that the proposed plan will be effective under operation
of all applicable law, including but not limited to bankruptcy law, in
assuring the continued operation of the airport.
4. Maintenance, improvement, and modernization of the airport, in
accordance with section 47134(c)(3), including the public sponsor's
most recent 5-year capital improvement plan (CIP) and the 5-year CIP
proposed by the private operator. Applicants should identify the
sources of funds to be used for capital development, including any
continuing contributions by the public sponsor. If funds are to be
borrowed, applicants should identify the expected sources, anticipated
repayment terms of any borrowed funds, and the source of revenue to be
used for repayment. Applicants should also include any financial
security provisions, such as a letter of credit or performance bond,
for the accomplishment of the maintenance, improvement, and
modernization projects committed to by the private operator.
5. Compliance with the limitations on air carrier fees, pursuant to
section 47134(c)(4), not imposed for funding of new capital development
undertaken after the transfer to the private operator.
6. Compliance with the limitation on general aviation fees
described in section 47134(c)(5).
7. Maintenance of safety and security at the airport, in accordance
with section 47134(c)(6). The application should note the applicant's
contacts with the Airports District Office on Part 139 and the Office
of Aviation Security on Part 107, but does not need to duplicate
information filed in connection with those actions. The application
should include planned efforts by the private operator to maintain the
public sponsor's existing mechanisms for communicating with airport
tenants and users and the public on safety and security issues.
8. Mitigation of adverse effects of noise from airport operations,
in accordance with section 47134(c)(7). The applicant should
specifically describe its intentions with respect to an existing or
future Part 150 noise compatibility program for the airport, with
respect to the public sponsor's commitments under past records of
decisions on airport development projects, and other measures the
private operator intends to take in the future.
9. Mitigation of adverse effects on the environment from airport
operations, in accordance with section 47134(c)(8).
10. Recognition that section 47134(c)(9) provides that any
collective bargaining agreement that covers employees of the airport
and is in effect on the date of the sale or lease of the airport will
not be abrogated by the sale or lease.
11. The private operator's intentions regarding consultation with
general aviation users regarding the planned privatization of the
airport, and the projected effect on general aviation of the proposed
changes in operation and management of the airport.
[[Page 48708]]
12. Private operator's plans (if known) for development of general
aviation.
B. The private operator's acceptance of the grant assurances
contained in the public sponsor's grant agreements with the FAA.
Assurance 25 need not be addressed. In addition, either (1) the
applicants' agreement that the grant assurances and the assurances
required for granting an exemption under section 47134 create third-
party beneficiary rights enforceable by the FAA in an administrative or
judicial legal proceeding, or (2) a proposed tripartite agreement among
the FAA, the private operator and the public sponsor granting to the
FAA the right to enforce directly against the private operator the
grant assurances and the assurances required for granting an exemption
under section 47134.
C. Provide a description of the parties' efforts to consult with
airport users about the proposed transaction and of the parties'
community outreach efforts.
Part VIII. Periodic Audits
Section 47134(k) provides that the FAA may conduct periodic audits
of the financial records and operations of an airport receiving an
exemption under the pilot program. Applicants should indicate their
express assent to this provision in the application.
Issued in Washington, DC, on September 9, 1997.
Susan L. Kurland,
Associate Administrator for Airports.
[FR Doc. 97-24430 Filed 9-15-97; 8:45 am]
BILLING CODE 4910-13-M