[Federal Register Volume 67, Number 46 (Friday, March 8, 2002)]
[Notices]
[Pages 10788-10792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5635]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket OST-2002-11590]


Notice of Order Soliciting Community Proposals

AGENCY: Department of Transportation.

ACTION: Notice of order soliciting community proposals (Order 2002-2-
11).

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SUMMARY: The Department of Transportation is instituting a new small 
community air service development program by soliciting an initial 
round of proposals from interested communities and consortiums of 
communities. On Thursday, February 28, 2002, the Department published 
this Notice in the Federal Register [67 FR 9351]. However, Order 2002-
2-11, intended to be added as an attachment to this Notice, was 
inadvertently not published on February 28, 2002. The aforementioned 
Order has now been included and appears in full text as an attachment 
to this document.

DATES: Proposals should be submitted no later than April 22, 2002.

ADDRESSES: Interested parties should submit an original and five copies 
of their proposals, bearing the title ``Proposal under the Small 
Community Air Service Development Pilot Program, Docket OST-2002-
11590'' as well as the name of the community or consortium of 
communities, and the legal sponsor, to the Docket Operations and Media 
Management Division, SVC-124, Room PL-401, Department of 
Transportation, 400 7th Street, SW., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Matthew C. Harris, Special Assistant 
to the Assistant Secretary for Aviation and International Affairs, 
Department of Transportation, 400 7th Street, SW., Washington, DC 20590 
(202) 366-8822.

    Dated: March 4, 2002.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket OST-2002-11590]

    Institution of the Small Community Air Service Development Pilot 
Program under 49

[[Page 10789]]

U.S.C. 41743 et seq.; Order Soliciting Community Proposals
Issued by the Department of Transportation on the 13th day of February, 
2002.

SUMMARY: By this order, the Department is instituting a new small 
community air service development pilot program by soliciting an 
initial round of proposals from interested communities and consortiums 
of communities. Proposals should be submitted no later than 60 days 
after the date of service of this order to ensure priority 
consideration.

Background

    On April 5, 2000, the President signed the Wendell H. Ford Aviation 
Investment and Reform Act for the 21st Century (AIR-21), P.L. 106-181. 
Among other things, the statute establishes a new pilot program 
designed to help smaller communities to enhance their air service. To 
fund the program, the statute authorized a funding level of $20.0 
million for fiscal year 2001 and $27.5 million for each of fiscal years 
2002 and 2003. (Financial assistance is not the only type of assistance 
under the program. For example, in appropriate situations, the 
Department can assist a community in trying to get joint ticketing and 
other ``through'' services from a network carrier at the connecting 
hub.) No funds were appropriated for the first year, but in the 
Department's FY 2002 appropriation bill, P.L. 107-42, Congress 
appropriated $20 million for the program. The statute directs the 
Secretary to assist communities in developing projects that will 
enhance their access to the National air transportation system through 
public-private partnerships, and to help communities overcome factors 
that might be inhibiting improvements in their current air service.\1\
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    \1\ See Appendix A for the actual text of the authorizing 
statute.
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    Specifically, the law authorizes the Secretary to provide financial 
assistance (direct financial assistance to an air carrier is limited to 
three years) to as many as 40 communities nationwide at any given time, 
though no more than four of those may be from the same state.\2\ While 
no community is required to contribute a portion or share of the cost 
of this program, the law directs the Secretary to give priority to 
those communities or consortia of communities where: (a) average air 
fares are higher than the air fares for all communities; (b) a portion 
of the cost of the activity contemplated by the community is provided 
from local, non-airport revenue sources; (c) a public-private 
partnership has been or will be established to facilitate air carrier 
service to the public; and (d) improved service will bring the material 
benefits of scheduled air transportation to a broad section of the 
traveling public, including businesses, educational institutions, and 
other enterprises whose access to the National air transportation 
system is limited.
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    \2\ The statute specifies that a consortium of communities 
should be considered as a single entity.
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    Participation in the program will remain open and thus is not 
necessarily limited to those communities that initially apply for and 
receive funding. We would consider additional proposals over the 
balance of the program's life if funds remain unexpended.

Community Proposals

    The new law is very general about how program funding can be used. 
Moreover, we recognize that each community's circumstances may be 
different, and that each community needs some latitude in identifying 
its own objectives and developing strategies for accomplishing them. 
What should remain clear, however, is that program funding is intended 
to improve air service to those communities that are not receiving 
sufficient air service or are experiencing unreasonably high air fares, 
and not to shift existing costs from the local or state level to the 
federal level.
    There is a host of means by which a community might enhance its 
present air service or attract new service, such as: by promoting 
awareness among residents of locally available service; by attracting a 
new carrier through revenue guarantees or operating cost offsets; by 
offering an incumbent carrier financial incentives to lower its fares, 
increase its frequencies, add new routes, or deploy larger, faster 
aircraft, including upgrading its equipment from turboprops to regional 
jets. The core objective of the pilot program is to secure enhancements 
that will be responsive to a community's air transportation needs and 
whose benefits can be expected to continue after the initial 
expenditures.
    Consequently, we encourage communities and consortiums of 
communities to consider a wide range of initiatives in developing their 
proposals. At the same time, we will not entertain general, vague, or 
unsupported proposals. Also, the more highly defined a proposal is, the 
more likely it will receive favorable consideration. At a minimum, we 
expect proposals to address the following areas specifically:
     A description of the community's existing air service, 
including service frequency, direct and connecting destinations 
offered, available fares, and equipment types.
     A synopsis of the community's historical service including 
destinations, traffic levels, service providers, and any extenuating 
factors that might have affected traffic in the past or that can be 
expected to influence service needs in the near to intermediate term.
     An analysis of the community's air service needs or 
deficiencies, including a comparison of fares currently offered at the 
community to those offered at similar communities in similarly served 
markets.
     A strategic plan for meeting those needs through the pilot 
program, including the community's specific project goal and a 
timetable for attaining that goal. As noted above, we expect that self-
sufficiency of the new or improved service will be an integral part of 
the community's goal. Applicants should not assume a multi-year award. 
Moreover, many communities might find that a single funding award for 
one year would be sufficient to finance their projects, or resolve 
their service or fare issue.
     A description of the public-private partnership that will 
be responsible for the program developed at the local level. The 
partnership can either be an existing organization or an entirely new 
one. A public member of the organization should be identified as the 
community's sponsor to accept program reimbursements.
     An analysis of the funding necessary for implementation of 
the community's project, including the federal and non-federal 
contributions. In calculating the non-federal contribution, we 
anticipate that we would not recognize contributions that simply 
continue already-existing programs or projects; ideally, the 
contributions should represent new financial resources devoted to 
attracting new or improved service, or addressing a specific high-fare 
issue. Furthermore, while we will consider proposals that employ in-
kind trading (for example, reduced landing fees or terminal rent or 
non-cash transactions such as free advertising in exchange for reduced-
fare travel), as a general matter, in-kind trading is frequently hard 
to quantify and may put a community at a competitive disadvantage when 
compared to other communities whose proposals include straight cash 
contributions.
     An explanation of how the community will provide 
assurances that its own funding contribution is spent in the manner 
proposed.

[[Page 10790]]

     Descriptions of how the community or consortium of 
communities will monitor the success of the program and how they intend 
to notify the Department of critical milestones during the life of the 
program, including the need to modify, or discontinue funding.
     We are not encouraging proposals that rely primarily on 
diverting passengers for whom a neighboring airport would be most 
convenient. Rather, we would encourage proposals that attempt to 
stimulate new demand at the local airport and make that service more 
attractive such that local passengers would no longer have the 
incentives to drive to a more distant airport. Proposals should clearly 
identify the target audience of all advertising and promotion efforts.
    Proposals are due 60 days after the date of service of this 
order.\3\ Proposals filed after that date will be accepted, but those 
filed within the 60-day period will be given priority consideration.
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    \3\ See Appendix B for additional application information.
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Department Review

    The Department will carefully review each proposal and the staff 
may contact applicants and discuss their proposals with them if 
clarifications or more information is needed. At that time, the 
communities will have an opportunity to amend their proposals. 
Department staff will then review the final proposals before 
recommending appropriate action for final consideration.
    In general terms, our review will focus on the following questions:
     Is the community truly experiencing insufficient air 
service or higher than average air fares when compared to similar 
communities?
     Does the proposal represent the best and most efficient 
method of meeting that need, given the community's circumstances?
     Are the community's objectives attainable during the 
funding period requested? Is there a realistic prospect that the 
enhanced service--in terms of quantity, quality, or price--could be 
sustained beyond the end of the funding period?
     Is there low-fare service within a reasonable distance of 
the community that may affect the potential for the community's project 
to be successful?
     Has a public-private partnership been identified to be 
responsible for the program at the local level? Has a public agency or 
organization been identified as the local sponsor to serve as a 
clearinghouse to submit reimbursement requests and receive program 
funding from the Department? Have protections been established to 
ensure that money intended for this project cannot be diverted to other 
uses?
     Is the requested funding level appropriate for the project 
being proposed? Has the community proposed an acceptable method to 
modify or suspend the requested funding prior to the end of the planned 
funding period if the project is not attaining the desired results?
    Interested communities should submit an original and five copies of 
their proposals, bearing the title ``Proposal under the Small Community 
Air Service Development Pilot Program'' as well as the name of the 
community or consortium of communities, the legal sponsor, and the 
docket number as shown on the first page of this order, to the Docket 
Operations and Media Management Division, SVC-124, Room PL-401, 
Department of Transportation, 400 7th Street, SW., Washington DC 20590. 
Questions regarding the new program or the filing of proposals should 
be directed to Matthew C. Harris, Special Assistant to the Assistant 
Secretary for Aviation and International Affairs, at (202) 366-8822 or 
[email protected].
    This order is issued under authority delegated in 49 CFR 1.56a(f).
    Accordingly,
    1. Community proposals for funding under the Small Community Air 
Service Development Pilot Program should be submitted no later than 60 
days after the date of service of this order. Subsequent proposals will 
be considered on an ad hoc basis; and
    2. This docket will remain open until further order of the 
Department.
    This order will be published in the Federal Register.

Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.

Appendix A

Sec. 203. Improved Air Carrier Service to Airports not Receiving 
Sufficient Service

    (a) In General--Subchapter II of chapter 417 is amended by 
adding at the end the following:
    Sec. 41743. Airports not receiving sufficient service
    (a) Small Community Air Service Development Pilot Program--The 
Secretary of Transportation shall establish a pilot program that 
meets the requirements of this section for improving air carrier 
service to airports not receiving sufficient air carrier service.
    (b) Application Required--In order to participate in the program 
established under subsection (a), a community or consortium of 
communities shall submit an application to the Secretary in such 
form, at such time, and containing such information as the Secretary 
may require, including--
    (1) An assessment of the need of the community or consortium for 
access, or improved access, to the national air transportation 
system; and
    (2) An analysis of the application of the criteria in subsection 
(c) to that community or consortium.
    (c) Criteria for Participation--In selecting communities, or 
consortia of communities, for participation in the program 
established under subsection (a), the Secretary shall apply the 
following criteria:
    (1) Size--For calendar year 1997, the airport serving the 
community or consortium was not larger than a small hub airport (as 
that term is defined in section 41731(a)(5)), and--
    (A) Had insufficient air carrier service; or
    (B) Had unreasonably high air fares.
    (2) Characteristics--The airport presents characteristics, such 
as geographic diversity or unique circumstances, that will 
demonstrate the need for, and feasibility of, the program 
established under subsection (a).
    (3) State Limit--No more than four communities or consortia of 
communities, or a combination thereof, may be located in the same 
State.
    (4) Overall Limit--No more than 40 communities or consortia of 
communities, or a combination thereof, may be selected to 
participate in the program.
    (5) Priorities--The Secretary shall give priority to communities 
or consortia of communities where--
    (A) Air fares are higher than the average air fares for all 
communities;
    (B) The community or consortium will provide a portion of the 
cost of the activity to be assisted under the program from local 
sources other than airport revenues;
    (C) The community or consortium has established, or will 
establish, a public-private partnership to facilitate air carrier 
service to the public; and
    (D) The assistance will provide material benefits to a broad 
segment of the traveling public, including business, educational 
institutions, and other enterprises, whose access to the national 
air transportation system is limited.
    (d) Types of Assistance--The Secretary may use amounts made 
available under this section--
    (1) To provide assistance to an air carrier to subsidize service 
to and from an underserved airport for a period not to exceed 3 
years;
    (2) To provide assistance to an underserved airport to obtain 
service to and from the underserved airport; and
    (3) To provide assistance to an underserved airport to implement 
such other measures as the Secretary, in consultation with such 
airport, considers appropriate to improve air service both in terms 
of the cost of such service to consumers and the availability of 
such service, including improving air service through marketing and 
promotion of air service and enhanced utilization of airport 
facilities.
    (e) Authority to Make Agreements--
    (1) In General--The Secretary may make agreements to provide 
assistance under this section.
    (2) Authorization of Appropriations--There is authorized to be 
appropriated to the

[[Page 10791]]

Secretary $20,000,000 for fiscal year 2001 and $27,500,000 for each 
of fiscal years 2002 and 2003 to carry out this section. Such sums 
shall remain available until expended.
    (f) Additional Action--Under the pilot program established under 
subsection (a), the Secretary shall work with air carriers providing 
service to participating communities and major air carriers (as 
defined in section 41716(a)(2)) serving large hub airports (as 
defined in section 41731(a)(3)) to facilitate joint-fare 
arrangements consistent with normal industry practice.
    (g) Designation of Responsible Official--The Secretary shall 
designate an employee of the Department of Transportation--
    (1) To function as a facilitator between small communities and 
air carriers;
    (2) To carry out this section;
    (3) To ensure that the Bureau of Transportation Statistics 
collects data on passenger information to assess the service needs 
of small communities;
    (4) To work with and coordinate efforts with other Federal, 
State, and local agencies to increase the viability of service to 
small communities and the creation of aviation development zones; 
and
    (5) To provide policy recommendations to the Secretary and 
Congress that will ensure that small communities have access to 
quality, affordable air transportation services.
    (h) Air Service Development Zone--The Secretary shall designate 
an airport in the program as an Air Service Development Zone and 
work with the community or consortium on means to attract business 
to the area surrounding the airport, to develop land use options for 
the area, and provide data, working with the Department of Commerce 
and other agencies.'.
    (b) Conforming Amendment--The analysis for subchapter II of 
chapter 417 is amended by adding at the end the following: 41743. 
Airports not receiving sufficient service.'.

Appendix B

Small Community Air Service Development Pilot Program Grant Application

General, Review Criteria, Deadline

    Congress recently approved a new Federal program within the 
Department of Transportation to assist small communities with 
efforts to address scheduled air service deficiencies. The 
Department of Transportation's Office of Aviation and International 
Affairs has been assigned the responsibility to design and implement 
this new program in such a way as to help local communities 
implement air service development strategies to address a variety of 
issues related to high air fares and poor service. At the heart of 
the new program is a scaled grant-in-aid formula similar in some 
respects to the grant allocation formula used by the Federal 
Aviation Administration to administer the Airport Improvement 
Program. In order to participate in the Pilot program, a community, 
or a consortium of communities, must submit a Grant Application, 
described below. Once the Application has been reviewed, the 
Department will issue a proposed Grant Offer and Grant Agreement to 
each airport, community, or consortium of communities selected for 
inclusion in the program.
    The Department's selection of those airports and communities to 
be included in the Pilot Program will be based on the following 
objective criteria and none other:
     Relative size of each applicant community;
     Geographic location of each applicant;
     Grant amount requested compared with total funds 
available for all communities;
     Proposed federal grant amount compared with local share 
offered;
     Uniqueness of applicants' claimed problem(s); and
     Relative ability of applicant to resolve or address 
claimed problem(s).
    An original and five copies of each application should be 
submitted by the end of the 60-day period commencing with the date 
of service of this order. Applications that are submitted after that 
date, or applications that are incomplete, will be considered for 
inclusion in the program only if funds remain after all other 
successful pending applications have been funded. If an incomplete 
or incorrect application is submitted early in the 60-day period, 
the DOT staff will contact the applicant and provide the applicant 
an opportunity to complete or correct the application.

Grant Application, Grant Offer and Grant Agreement; When To Proceed

    Because each airport community's needs are different, the 
Department expects to see a variety of grant-in-aid requests. There 
is no exact format to follow or form to fill out per se. Each 
community should submit an application containing as much detail as 
possible, both to describe the recent history of local air service, 
efforts on the part of the community to address service 
deficiencies, the current service situation, and the service issues 
and opportunities assistance from the Federal government will help 
to address.
    Please be aware that applicants should not assume they have 
received a grant-in-aid until they have received and executed a 
Grant Agreement. All grant funds are provided on a reimbursable 
basis and only for expenses incurred and billed during the period 
the Grant Agreement is in effect. There can be no exceptions.

Who Is Eligible to Participate in This Grant Program?

    This is a grant-in-aid program designed to help local 
communities deal effectively with actual air service problems or 
opportunities. By P.L. 106-181, in order to be eligible, the airport 
serving the community or consortium was a small hub or nonhub 
airport in calendar year 1997. (49 U.S.C. 41743(C)(1).) The 
recognized owner or operator of any public-use airport in the United 
States may submit a Grant Application. In addition, a local chamber 
of commerce, an air service task force, or a similar organization or 
group of local organizations may serve as the ``unofficial'' sponsor 
as long as a local government unit executes the Grant Agreement as a 
co-sponsor on behalf of the local non-public organization.
    What should the application consist of?

 A cover letter describing the Grant Request, the sponsoring 
government entity and any co-sponsors;
 Airport operating budgets for the previous two years 
showing revenues and expenses. Expenses and revenues should be 
broken down on an object basis according to GAAP.
 Airport operating budget for the current fiscal or calendar 
year showing planned expenses and anticipated revenues;
 Air Service Development Action Plan--general description, 
including as much detail as possible.
     What is the primary objective of your plan?
     What do you hope to accomplish: upgraded service, new 
hubs, more airlines, lower fares, more frequent flights, etc.?
     What do you not expect to accomplish with this grant?
     If you intend to conduct a study(s) as a portion of 
your action plan, what type will you conduct: deficiency studies, 
ticket lift surveys, parking lot studies, zip code studies, 
passenger surveys, demographic comparisons, fare analyses, traffic 
bleed analyses, other?
     Will you hire to fill any full-time equivalent 
position(s) to carry out the action plan now or in the future?
     Will you make use of local universities in any travel-
related surveys?
     Do you expect to hire or employ any type of consulting 
firm or public-relations firm to assist you?
     If you have an existing Action Plan that a Federal 
grant from this program will assist, show existing funding sources 
and amounts, and describe the existing program with sufficient 
detail to explain or define the past, the current situation, and any 
existing 5-year, 10-year, and 20-year plans.
     If this is a new program, what are the immediate, mid-
term, and long-term goals?
     Does the airport have an existing master plan or 
airport layout plan that details any airside or groundside capacity-
related projects that must be completed or will be required if the 
airport is successful in reaching its goal?
     Are Federal AIP funds currently obligated, through a 
Letter of Intent or otherwise, for any Federal-eligible project 
identified above?
     What is the construction time-line of all Federal-
eligible projects identified above?
     How should the effectiveness of your Action Plan be 
measured?

 Budget for near-term (immediate to five-year) air service 
improvement strategies--immediate action plan

 Anticipated local share
     Actual funds from all sources, including local 
government (budgeted amount, current, and projected for the proposed 
life of the Grant Agreement), local businesses and organizations 
(contributions), airlines, airport users.
     Value and description of in-kind services.
 Anticipated state contribution
     Actual funds from current programs

[[Page 10792]]

 Anticipated new funds for this program
 Expected Federal contribution
     Budget request
 Total of all Funds Available for Action Plan
 Projected budget for mid-term and long-term (5-year and 
beyond) Air Service Improvement Strategies
 Expected local contribution
     Actual funds from all sources, including local 
government (budgeted amount, current and projected for the proposed 
life of the Grant Agreement), local businesses and organizations 
(contributions), airlines, airport users.
     Value and description of in-kind services
 Expected state contribution
     Actual funds from current programs
     Anticipated new funds for this program

How Can Pilot Program Funds Be Used?

    Pilot Program funds can be used to cover the expenses of any new 
advertising or promotional activities that can reasonably be related 
to improving the scheduled air service to the community. Funds may 
be used for any type of new media advertising; for new studies 
designed to measure air service deficiencies, or to measure traffic 
loss or bleed to other communities; for new expenses associated with 
conducting promotional activities; and for the employment of new 
dedicated air service development staff on a long-term basis, 
advertising or public relations agencies, universities, and 
consulting firms.

Design of Pilot Program

    This Small Community Air Service Development Pilot Program is 
designed to help individual communities address a variety of service 
issues. Indeed, because air service problems can run the gamut of 
issues from low frequency and wrong equipment to high fares and 
wrong markets, there is no one program that will be ``right'' for 
every community. Certain things are well known, however, that will 
allow the Department to channel the limited grant resources in this 
Pilot Program to those communities where it will do the most good.

Why Are Large and Medium Hubs not Included in the Pilot Program?

    Congress limited eligibility to small hubs and smaller airports 
based on calendar year 1997 designations.

What Is an Appropriate Local Share of the Project's Cost?

    A local share is not required to receive a grant under the Pilot 
Program, although it will be considered a positive element. To the 
extent that a grant under this program would enhance a community's 
ongoing effort to improve its local air service, a local share would 
be appropriate and may help the Department to extend the benefits of 
the program to a larger pool of communities. We would anticipate 
that larger airports would seek a larger grant amount and submit 
proposals showing a larger local/state share.

Grant Application Checklist

 Airport and community name
    Address
    Contact person w/phone number
 Additional community members
    Addresses
    Contact persons w/phone numbers
 Project Sponsor (If different from above)
    Address
    Contact person w/phone number
 Project Proposal
     Project description
     Project duration
     Project elements
     Project Cost
     Local share
     Public funds
     Private funds
     State share
     Federal share
     Total Cost $______
 Proposed evaluation criteria
[FR Doc. 02-5635 Filed 3-7-02; 8:45 am]
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