General Aviation Airports: Unauthorized Land Use Highlights Need for
Improved Oversight and Enforcement (Letter Report, 05/07/99,
GAO/RCED-99-109).

Pursuant to a legislative requirement, GAO provided information on: (1)
the Federal Aviation Administration's (FAA) monitoring of general
aviation airports' compliance with federal land-use requirements; and
(2) FAA's use of enforcement tools to resolve cases of noncompliance.

GAO noted that: (1) FAA does not adequately monitor general aviation
airports' compliance with federal requirements and does not have the
internal controls in place to protect the federal government's
investment in the airports from mismanagement, fraud, waste, and abuse;
(2) although FAA's compliance policy clearly calls for monitoring
airports to ensure they meet federal requirements, only 4 of FAA's 23
field offices monitor compliance; (3) this monitoring, however, relies
primarily on airports themselves certifying that they are complying with
federal requirements; (4) in 1994, the Department of Transportation's
Inspector General concluded that relying on such certifications was
insufficient for ensuring compliance with federal requirements on
revenue use, noting that 14 of the 15 airport owners identified as not
complying with revenue use requirements had previously certified that
they were in compliance; (5) one result of FAA's lack of monitoring is
that airports' unauthorized use of land has gone undetected in some
cases for over a decade; (6) unauthorized use has resulted in the loss
or diversion of millions of dollars in airport revenues from general
aviation airports, typically owned by a local government; (7) in some
cases, increased risks to aviation safety also resulted; (8) FAA
determined that birds attracted by an unauthorized landfill at
Hesler-Noble Field in Laurel, Mississippi, posed a possible danger to
aircraft; (9) FAA generally addresses airports' noncompliance with
federal requirements through negotiation and settlement rather than the
use of available enforcement actions; and (10) when negotiations are
unsuccessful and persistent noncompliance occurs, FAA has not always
taken appropriate enforcement action--such as withholding transportation
grants, taking back the title to airport land, or taking action through
the courts.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-99-109
     TITLE:  General Aviation Airports: Unauthorized Land Use
	     Highlights Need for Improved Oversight and Enforcement
      DATE:  05/07/99
   SUBJECT:  Land management
	     Federal property management
	     Transportation safety
	     Airports
	     Noncompliance
	     Internal controls
	     Land use agreements
	     Sanctions
	     Monitoring
IDENTIFIER:  Federal Aid to Airports Program
	     FAA Airport Development Aid Program
	     FAA Airport Improvement Program
	     Hesler-Noble Field Airport (MS)
	     Bader Field Airport (NJ)
	     Richards-Gebaur Memorial Airport (MO)
	     Queen City Municipal Airport (PA)

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GENERAL AVIATION AIRPORTS: Unauthorized Land Use Highlights Need
for Improved Oversight and Enforcement GAO/RCED-99-109 United
States General Accounting Office

GAO Report to Congressional Requesters

May 1999 GENERAL AVIATION AIRPORTS Unauthorized Land Use
Highlights Need for Improved Oversight and Enforcement

GAO/RCED-99-109

  GAO/RCED-99-109

GAO United States General Accounting Office

Washington, D. C. 20548 Resources, Community, and Economic
Development Division

B-281078 May 7, 1999 The Honorable Bud Shuster Chairman The
Honorable James L. Oberstar Ranking Democratic Member Committee on
Transportation and Infrastructure House of Representatives

The Honorable John J. Duncan, Jr. Chairman The Honorable William
O. Lipinski Ranking Democratic Member Subcommittee on Aviation
Committee on Transportation and Infrastructure House of
Representatives

To increase the capacity of the nation's airport facilities and
maintain the aviation infrastructure, the federal government has
made financial grants or transferred federal land to about 2,000
of the almost 18,000 general aviation airports in the United
States. 1 Since 1982, the Federal Aviation Administration (FAA)
has provided about $4.7 billion in financial grants to general
aviation airports. About 350 such airports have received land that
is surplus to federal needs, while about 100 have received land
that was not considered surplus but was transferred to support the
airports' needs. To receive this federal assistance, airports must
agree to abide by a number of requirements designed to ensure that
the public interest is served. Among other things, airports must
obtain approval from FAA before altering the use or ownership of
airport land and must use airport revenues only for their
operation, maintenance, or development. FAA is responsible for
monitoring airports' compliance with these requirements and, when
requirements are not met, for enforcement.

As requested in the House Transportation and Infrastructure
Committee Report on the Airport Improvement Program
Reauthorization Act of 1998, 2 this report evaluates (1) FAA's
monitoring of general aviation airports' compliance with federal
land- use requirements and (2) FAA's use of enforcement tools to
resolve cases of noncompliance. To obtain information on FAA's
oversight of land at general aviation airports, we

1 While commercial service airports handle regularly scheduled
commercial airline traffic, general aviation airports primarily
support noncommercial aviation traffic. 2 House Transportation and
Infrastructure Committee Rept. No. 105- 639 (July 20, 1998), pp.
41- 42.

GAO/RCED-99-109 General Aviation Airports Page 1

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visited 14 and surveyed the remaining 9 FAA field offices
responsible for overseeing airports' compliance.

Results in Brief FAA does not adequately monitor general aviation
airports' compliance with federal requirements and does not have
the internal controls in place

to protect the federal government's investment in the airports
from mismanagement, fraud, waste, and abuse. Although FAA's
compliance policy clearly calls for monitoring airports to ensure
they meet federal requirements, only 4 of FAA's 23 field offices
monitor compliance. This monitoring, however, relies primarily on
airports themselves certifying that they are complying with
federal requirements. In 1994, the Department of Transportation's
Inspector General concluded that relying on such certifications
was insufficient for ensuring compliance with federal requirements
on revenue use, noting that 14 of the 15 airport owners identified
as not complying with revenue use requirements had previously
certified that they were in compliance. One result of FAA's lack
of monitoring is that airports' unauthorized use of land has gone
undetected in some cases for over a decade. Unauthorized use has
resulted in the loss or diversion of millions of dollars in
airport revenues from general aviation airports, typically owned
by a local government. In some cases, increased risks to aviation
safety also resulted. For example, FAA determined that birds
attracted by an unauthorized landfill at Hesler- Noble Field in
Laurel, Mississippi, posed a possible danger to aircraft.

FAA generally addresses airports' noncompliance with federal
requirements through negotiation and settlement rather than the
use of available enforcement actions. When negotiations are
unsuccessful and persistent noncompliance occurs, FAA has not
always taken appropriate enforcement action such as withholding
transportation grants, taking back the title to airport land, or
taking action through the courts. This report makes
recommendations on improving FAA's compliance monitoring and
enforcement efforts.

Background To promote aviation, FAA provides grants and land to
airports. Grants for airport development were authorized under the
Federal Airport Aid

Program from 1946 through 1970 and the Airport Development Aid
Program from 1971 through 1981. During 1982 through 1997, more
than $20.5 billion in grants was awarded to commercial service and
general aviation airports under the current program, the Airport
Improvement

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Program. 3 About 45 percent of these grants, totaling almost $4.7
billion, was made to general aviation airports for airport
development, including more than $800 million for land
acquisition. While commercial airports provide scheduled airline
passenger service, general aviation airports primarily serve
noncommercial aviation traffic, including business and
recreational aircraft.

FAA's Office of Airports administers the Airport Improvement
Program and oversees both commercial and general aviation
airports' compliance with federal grant and land transfer
requirements. In December 1997, FAA established an Airports
Compliance Division within the Office of Airports in Washington,
D. C. While 10 full- time compliance policy specialists are
currently assigned to the Compliance Division to advise field
offices on airport land and revenue issues, 23 field offices
provide day- to- day oversight of about 2,000 general aviation
airports that have received grant funds or land from the federal
government. 4

This oversight responsibility includes ensuring that the airports
use airport land in accordance with federal statutes and
regulations by monitoring airports' activities and taking
enforcement actions, when necessary. Enforcement begins with a
formal notification to an airport of its noncompliance and can
include such actions as withholding aviation grants or other
transportation funds and filing a lawsuit.

Federal Requirements on Airports' Use of Land and Revenues

In order to receive federal grants, airports must certify that
they will abide by the federal requirements contained in the grant
agreements by providing written assurances pertaining to the
airports' operation and maintenance. For example, an airport must
ensure that it will be available for public use and that airport
users will be charged comparable fees. Generally, grant
requirements remain in effect throughout the useful life of the
facilities developed under the grant but do not exceed 20 years. 5
However, for land acquired with grant funds, these requirements
remain in effect as long as an airport is on the land.

3 The Airport Improvement Program is funded by the Airport and
Airway Trust Fund. The fund is financed by taxes on domestic and
international airline travel, domestic cargo transported by air,
and noncommercial aviation fuel.

4 FAA's Office of Airports has nine regions. Four regions Alaska,
Central, New England, and Western Pacific oversee some or all of
the airports in the region. For the purposes of this report, we
refer to these four regions, along with the 19 airport district
offices in the remaining five regions, as the 23 FAA field
offices.

5 49 U. S. C. 47107( d).

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In addition to providing financial assistance, federal agencies
can transfer deeds to federal land to airports. Since World War
II, the federal government has transferred land that is considered
excess to the federal government's needs to about 350 general
aviation airports under the Surplus Property Act. Land that is not
excess to a federal agency's current needs called nonsurplus land
can also be transferred for airport purposes; about 100 general
aviation airports have received nonsurplus land. 6 Unlike
financial grant obligations that are a part of a contract related
to the operation and maintenance of airport facilities, the
statutory authorities for the transfer of surplus or nonsurplus
federal land place conditions on an airport owner's title to the
land. If these conditions are not met, title to the land may be
reverted to (i. e., be reclaimed by) the federal government. 7

Both financial grants and land transfers restrict the use of
airport land and airport revenues to airport purposes. An airport
purpose is any activity that involves, makes possible, is required
for the safety of, or is otherwise directly related to the
operation of aircraft, such as the use of aircraft hangars, repair
facilities, or runways. An approved Airport Layout Plan reflects
the agreement between FAA and the airport owner on the allocation
of airport areas for specific operational and support functions.
In general, land designated in the plan cannot be used, leased, or
sold for purposes other than airport purposes without the consent
of the Administrator of FAA. If the airport wishes to alter the
use of any land designated in the plan for city parks or
departments or industrial parks, for example FAA must agree that
the land is not needed for present or foreseeable airport purposes
and must grant permission regardless of whether the land was
acquired by federal grant or land transfer or without federal
assistance. If the altered use generates revenues, the airport
must agree to reinvest the proceeds in the airport. With the
consent (called a release of the land) of the Administrator,
airport land not needed for aviation purposes may be sold or
leased so that the airport can use the resulting revenues to
support airport development, improvement, maintenance, and
operations. 8

6 Surplus and nonsurplus land is transferred under section 47151
and section 47125 of title 49, United States Code, respectively. 7
See 49 U. S. C. 47152( 1) and 14 C. F. R. part 155. 8 The
exception to this is nonsurplus land, which cannot be used for
nonairport purposes or to generate revenues; if nonsurplus land is
not developed or used for an airport purpose, the title to this
land reverts to the federal government, at the option of the
Secretary of Transportation.

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FAA has released land from restrictions on its use for airport
purposes at an estimated 205 airports since 1990. About 75 percent
of these releases involved fewer than 20 acres of land, and about
50 percent involved fewer than 10 acres. Appendix I provides more
information regarding our estimate of releases nationwide. Most
releases we reviewed involved such issues as using unneeded land
to generate revenues for the airport by developing an industrial
park, for example, or by using the land as easements for roadways.
If an airport has altered the use of (or sold) airport land
without FAA's authorization, the agency may require the airport to
return the land to its former use and condition or approve the new
use of the land after the fact.

In general, all airport revenues must be expended for the
airports' operating expenses and other nonoperating expenditures,
such as capital development. The purpose of the restriction on
revenue uses is to prevent revenue losses or diversions by
ensuring that airports receiving federal assistance use airport
revenues for operation and development. The goal is to make
airports as self- sustaining as possible and minimize the need for
further federal assistance. Therefore, when FAA approves the use
of land for nonairport purposes to generate revenues for an
airport, its policy requires that the airport receive fair market
value for the sale or lease of the land. 9 Generally, if an
airport sells or leases land for less than fair market value, the
revenues are considered to be lost, or forgone.

Revenues are considered to be diverted when an airport fails to
use revenues generated from activities that take place on airport
land for airport purposes. In addition, if an airport owner,
typically a local government, uses airport land for nonairport
purposes, such as for city parks or departments, and does not pay
rent to the airport account, the revenues are also considered to
be diverted from the airport. Since 1992, the Department of
Transportation's Inspector General has reported lost or diverted
revenues of over $18 million at 11 general aviation airports. FAA
closed eight of these cases involving about $15 million, as
reported by the Inspector General recovering $1.7 million in three
cases. FAA officials noted that all cases were resolved with the
Inspector General's concurrence.

To assist operators in avoiding revenue diversion, on February 16,
1999, FAA published a policy statement on the appropriate use of
funds generated by airports. FAA's new policy requires audits of
some airports to

9 For the sale of grant- acquired land, the amount to be
reimbursed corresponds to the amount of federal participation in
the land acquisition. 49 U. S. C. 47107( c)( 2)( B).

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determine if revenue diversion has occurred. In addition, the
policy allows FAA to select airports to be audited where there are
indications that revenue diversion may have occurred. According to
an official in the Department of Transportation, this new
compliance tool will allow FAA to target the airports most likely
to have substantial revenue diversion primarily commercial service
airports.

FAA'S Internal Controls Are Inadequate to Ensure Land- Use
Compliance

Only four FAA field offices have implemented internal controls to
ensure that general aviation airports comply with federal
requirements to use airport land for airport purposes. These
offices use periodic self- certifications or limited on- site
monitoring, and all the field offices rely primarily on third-
party complaints to identify noncompliance. FAA headquarters staff
cited an agencywide emphasis on voluntary compliance in the early
1990s and staffing reductions as reasons for not implementing
FAA's compliance policy. When airports are not monitored, the
unauthorized use of airport land is more likely to occur and can
lead to the loss or diversion of airport revenues and increased
risks to aviation safety.

Few Field Offices Monitor Compliance

Of the 23 FAA field offices that are responsible for monitoring
general aviation airports' compliance with federal requirements,
only four FAA's field offices in Kansas City, Missouri; Renton,
Washington; Denver, Colorado; and Helena, Montana regularly
monitor and document airports' compliance with land- use
requirements. Combined, these offices oversee 426 or 21 percent of
the approximately 2,000 general aviation airports that have
received grant funds or land from the federal government.

FAA's compliance policy handbook FAA Order 5190.6A, Airport
Compliance Requirements clearly requires field offices to monitor
airports for compliance with federal requirements. This
requirement serves as an internal control to provide assurance
that the federal government's investment in airports is protected
from mismanagement, fraud, waste, and abuse. According to the
handbook, FAA field offices must be continuously aware of which
airports are not in compliance and conduct limited surveillance of
each airport every 4 years to detect recurring deficiencies,
system weaknesses, or individual abuses of federal requirements.
The surveillance requirement may be met through site visits or by
obtaining a written certification by the airport that it is
complying with federal requirements. The handbook was last updated
in 1990, and FAA officials said they are working on an update, as
discussed below.

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The four field offices that meet FAA's monitoring requirement did
so by obtaining airport self- certifications. As required by the
handbook, at least once every 4 years, the four offices require
each airport to certify in writing that it is abiding by federal
requirements. In addition, according to FAA officials, staff in
the Renton, Helena, and Denver field offices occasionally review
airports' compliance with land- use requirements during on- site
safety reviews, conducting 27 such on- site compliance inspections
in 1998 (17, 7, and 3, respectively) out of about 350 airports
they oversee.

FAA headquarters staff cited an agencywide emphasis on voluntary
compliance in the early 1990s and staffing reductions as reasons
why field offices might choose not to implement FAA's compliance
policy. However, these reasons do not fully explain why the
majority of FAA's field offices chose not to monitor compliance.
Despite an emphasis on voluntary compliance, the compliance
handbook clearly states the requirement to have a monitoring
system in place, as noted above. Furthermore, Airports Division
staffing levels have not changed significantly since 1985 and have
actually increased. For example, in 1985, Airports was authorized
476 positions. In 1990, Office of Airports staffing was 473, and
by 1998 the office was authorized 485 positions.

Staff in the 14 field offices we visited said that they rely
primarily on informal and formal third- party complaints to
identify noncompliance and that third- party complaints are
sufficient to identify the few cases of inadvertent noncompliance.
Field offices reported that nine formal third- party complaints
have been made regarding land use at general aviation airports
since 1990.

Relying on airports' self- certifications and third- party
complaints does not ensure compliance. For example, in 1994, the
Department of Transportation's Inspector General reported revenue
losses at the Malden Municipal Airport in Malden, Missouri and
found that the airport had incorrectly responded to the Kansas
City field office's self- certification questionnaire regarding
the use of surplus property. 10 In summarizing its reviews of
airports' revenue use in a separate effort, the Inspector General
reported material weaknesses in FAA's monitoring of commercial and
general aviation airports' revenues and concluded that relying on
self- certifications and third- party complaints was insufficient
for ensuring

10 Monitoring of Accountability and Use of Airport Revenues at the
Malden Municpal Airport, R9- FA- 4- 010 (July 20, 1994).

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compliance with federal requirements on revenue use. 11 The report
indicated that 14 of the 15 general aviation and commercial
airport owners identified as not complying with revenue use
requirements had previously certified they were in compliance, and
third- party complaints had been filed against only 2 of the 15
airports.

FAA officials consider noncompliance with federal land- use
requirements to be a problem, but they believe the incidence of
the problem is limited. However, without a monitoring system in
place, FAA may not know when unauthorized use of airport land
occurs.

Unauthorized Land Use Has Gone Undetected

Because FAA lacks an effective compliance monitoring program, the
extent of unauthorized land use at general aviation airports is
unknown. However, information supplied by field offices on the
releases of land at general aviation airports contained 24
instances of unauthorized land use that have occurred since 1990.
Some of these cases went undetected for over a decade. These
examples involved 15 states under the oversight of 12 different
FAA field offices. The seriousness of the land- use violations
ranged from minor isolated infractions to periods of repeated
unauthorized use spanning more than two decades without
correction.

Unauthorized land use may lead to the loss or diversion of
revenues or increased safety risks at an airport. For example, the
Inspector General identified almost $6.8 million in lost or
diverted revenues at 5 of the 24 airports where the unauthorized
use of airport land occurred, and FAA said it had recovered about
$184,000 from 3 of the other general aviation airports where
unauthorized use occurred. Safety problems can also result from
the unauthorized use of airport land, as when a landfill attracts
wildlife and thereby increases the risk of birdstrikes by landing
and departing aircraft.

In discussing the 24 cases, FAA officials concluded that the small
number of cases did not indicate that FAA's compliance program was
inadequate or that a reallocation of resources by the Office of
Airports was warranted. However, as stated previously, without a
monitoring system in place, the extent of noncompliance is unknown
and FAA has no assurance that airports are complying with federal
requirements. The following three examples illustrate how
unauthorized land use can continue undetected for long periods of
time when airports' compliance is not actively

11 Interim Summary Report on the Audit of Monitoring Airport
Revenue: Federal Aviation Administration, R9- FA- 4- 004 (Mar. 7,
1994).

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monitored and how unauthorized use can result in lost or diverted
revenues or safety risks. All three airports obtained surplus land
and grants from the federal government that restrict the use of
airport land and revenues to airport purposes, and the
unauthorized use of airport land went undetected or uncorrected
for decades at all three airports.

Hesler- Noble Field, Laurel, Mississippi According to FAA field
staff, from about 1970 until 1981, Laurel, Mississippi,

constructed police and fire training centers, a building to house
street maintenance equipment, a dog pound, a fire station, a water
plant, a little league park, and a landfill on airport land
without FAA's authorization and without reimbursing the airport.
FAA field staff identified the unauthorized use in 1981 and
reported that birds attracted by the landfill constituted a safety
hazard in 1982 but waited until 1994 to restrict dumping at the
landfill. In July 1998, FAA allowed the city to offset the lost
revenues with the value of city services provided to the airport.
FAA field staff could not explain why it had not addressed the
safety problems and land and revenue use issues for more than 12
years and 17 years, respectively.

Venice Municipal Airport, Venice, Florida Between approximately
1972 through 1992, Venice, Florida, constructed a

mobile home facility, little league parks, and a senior center and
developed the airport's coastal land for public use without
obtaining FAA's authorization or reimbursing the airport. In
response to a complaint, the Inspector General reported in 1993
that $2.4 million in revenues was lost over a 4- year period and
that almost 300 acres of federal land was inappropriately used. 12
FAA approved an after- the- fact release of airport land in June
1998 and, according to a field staff, required the city to charge
fair market rent on future leases but recovered no lost revenues
(estimated to be at least $25 million) from leases that were below
market value because the agency had no authority to terminate the
leases.

Stuttgart Municipal Airport, Stuttgart, Arkansas In 1995, in
response to a complaint, the Inspector General reported that

Stuttgart, Arkansas, used a hangar for a mosquito control unit and
established a landfill on airport land without obtaining FAA's
authorization or reimbursing the airport and leased large tracts
of airport land for $1 per year. Although the Inspector General
identified $47,000 in diverted revenues over a 3- year period, an
FAA official said that the total amount diverted was much greater
because the unauthorized use spanned two decades. 13 Furthermore,
because the leases of airport land were legally binding, no
amounts could be recovered. The city agreed to pay $6,250 per

12 Report on Audit of Airport Revenue Accountability: City of
Venice, Florida, R4- FA- 3- 724 (July 22, 1993). 13 Airport
Revenues, Stuttgart Municipal Airport, Arkansas, R6- FA- 6- 002
(Nov. 2, 1995).

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year for the landfill, and FAA officials said that future leases
will obtain fair market rents. In addition, the Inspector General
found that FAA approved airport leases that allowed hunting and
farming on airport land. These activities created a safety hazard
because crops were planted to attract ducks to the airport. As a
result, an aircraft struck a bird in 1990. Although the city
subsequently banned hunting on the airport land, another
birdstrike occurred in 1994, causing $20,000 damage to one plane.
And in March 1995, the Inspector General found three duck blinds
at the airport as well as duck decoys near the blinds.

FAA's Compliance Guidance Is Outdated

FAA has not revised its compliance and enforcement guidance to
keep it current. FAA Order 5190.6A, Airports Compliance
Requirements, was last updated in October 1989, and the section on
enforcement was last updated in August 1973. While field offices
rely on the handbook as a primary source of guidance, FAA
officials said that numerous policy changes have been made and
that they informally convey changes through training and action
memos. They noted that they had drafted a policy guidance letter
in March 1999 for distribution to the field offices to update
information on FAA's enforcement policy, which dates to 1973.
However, these informal efforts do not provide a consolidated
record of FAA's compliance policy. FAA's lack of timely action to
publish compliance policy for airports' revenue use was identified
by the Inspector General in 1998 as a contributing factor to
airports' noncompliance. 14 FAA's Airports Compliance Division
staff said they planned to issue a revised compliance policy order
in 1999.

FAA's order listing airports that are subject to federal
requirements from land and grant agreements, last revised in April
1990, is similarly outdated. 15 As a result, FAA headquarters does
not have ready access to current summary data on the government's
interests in general aviation airports nationwide, and information
that could be useful in quantifying field offices' monitoring
workloads and making resource allocation decisions is not
available. In response to our request, field offices gathered data
showing that since the order was issued in 1990, 14 listed general
aviation airports had closed, while 81 others had become subject
to federal requirements.

14 Airport Financial Reports: Federal Aviation Administration, AV-
1998- 201 (Sept. 11, 1998). 15 FAA Order 5190.2R, List of Public
Airports Affected by Agreements with the Federal Government.

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FAA Emphasizes Negotiation Over Enforcement

FAA has a variety of statutory and administrative alternatives for
resolving airports' noncompliance but has generally chosen not to
use them. Instead, FAA prefers to address noncompliance through
negotiation and settlement. However, in several instances FAA's
attempts at negotiation have been unsuccessful, and airports' lack
of willingness to comply with federal requirements justified
greater efforts to enforce compliance. Furthermore, FAA has not
followed its policy of obtaining fair market value for airport
land when it knows the use will change, as in the case of a Kansas
City, Missouri, general aviation airport now being closed.

FAA Has Numerous Enforcement Tools but Generally Fails to Use Them

The federal government is entitled to the same legal remedies as
any other party to a contract that has been breached, and FAA's
enforcement policy calls for FAA officials to seek injunctions or
judgments in the courts should the circumstances warrant. However,
FAA officials do not believe it is generally practical to take
legal actions. They said that these matters must be referred to
the Department of Justice for prosecution and that the dollar
amounts involved are usually too low to be a high priority for
Justice.

Alternatively, FAA may assess civil penalties of up to $50,000
without going to court. 16 FAA has not used this power for
unauthorized land or revenue use. For example, FAA allowed the
closure of a small general aviation airport in Fall River,
Massachusetts, in February 1996 but required the airport to
reinvest the residual value of federal grant funding
(approximately $30,000) in a nearby general aviation airport in
New Bedford, Massachusetts. However, at the time of our review,
almost 2 years after the agreement was signed, Fall River had not
provided the funds and FAA had not pursued legal action or civil
penalties. FAA headquarters staff said they had not pursued legal
action because they believed that ongoing negotiations might prove
to be successful.

The Congress has strengthened FAA's enforcement powers to resolve
revenue diversion cases by including restrictive language in
appropriations and transportation laws. For fiscal years 1994 and
1995, the Congress specified that transportation funds could be
withheld from any local government that diverts revenues generated
by a public airport. 17 The Airport Revenue Protection Act of 1996
made this enforcement action permanent, giving the Secretary of
Transportation the authority to withhold aviation, transit, and
rail funds from local governments that fail

16 49 U. S. C. section 46301. 17 P. L. 103- 122 section 328 and P.
L. 103- 331 section 325.

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to reimburse airports for illegally diverted funds and to assess
civil penalties against those that fail to reimburse the federal
government. 18 FAA headquarters officials said that the agency has
never recommended that transportation funds be withheld under
these laws.

FAA also has special enforcement remedies that are inherent in
various types of airport agreements, such as returning to the
federal government the ownership of land it provided if an airport
does not comply with federal requirements. FAA officials said that
FAA has never had the title to surplus or nonsurplus land revert
to the agency because it could not manage the day- to- day
operations of an airport.

FAA also may take administrative actions, such as denying
requested land releases or withholding funds provided under the
Airport Improvement Program. For example, FAA field staff denied
the airport's request to release land at Scholes Field in
Galveston, Texas, in May 1998 because of unresolved issues
identified by the Inspector General, including lost revenues and
continued attempts by the city to sell off and/ or lease airport
land at less than fair market value. 19 FAA also informed the
airport that a failure to take corrective action could result in
the city's becoming ineligible for federal grants. However, FAA
field staff and headquarters officials noted that withholding
grant funds is not a significant deterrent for communities that
would rather close an airport or support it to a lesser extent.

FAA's compliance handbook requires that staff first attempt to
have an airport voluntarily correct compliance deficiencies. FAA
officials told us that airports are generally willing to take
corrective action and FAA prefers to exhaust all avenues of
voluntary corrective action and negotiate a settlement of the
noncompliance before undertaking enforcement actions. For example,
in September 1998 at the Waterville- R. LaFleur general aviation
airport in Waterville, Maine, the airport began excavation for
construction of an industrial park before requesting a release of
the land from FAA. However, once airport officials realized they
needed FAA's approval, they voluntarily stopped work until the
release was approved. FAA said that a confrontational approach
using its enforcement authority would be justified only if it
resulted in a higher level of compliance than maintaining a
cooperative relationship with airports.

18 P. L. 104- 264 section 805. 19 Airport Revenues: Galveston
Municipal Airport Scholes Field, Galveston, Texas, AV- 1998- 011
(Nov. 7, 1997). According to FAA officials, they had recovered
$142,663 and were still pursuing recovery of funds for the use of
airport land as a golf course at the time of our review.

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FAA resolves unauthorized use of airport land by obtaining
airports' assurances that future revenue diversion or losses will
not occur; allowing cities to apply the value of services they
provided to the airport, such as police and fire protection, to
offset the lost or diverted airport revenues; requiring that
future leases call for fair market value; or working out other
solutions. For example, FAA field staff drove by Frederick
Municipal Airport in Maryland and discovered an 11- acre public
works facility constructed on airport land. FAA arranged for the
city to provide another land parcel adjoining the airport in
exchange for the unauthorized conversion of the 11 acres of
airport land subject to federal restrictions on its use.

If an airport does not voluntarily make corrections, the handbook
requires FAA to place the airport in pending noncompliance status
and notify the airport of the right to a hearing. As a result of
the hearing (or if no hearing has been requested), the FAA field
manager is to determine whether the airport is in noncompliance
and whether FAA should take appropriate sanctions or civil
penalties. However, we found that FAA field offices very rarely
place airports in pending noncompliance or noncompliance status.
For example, out of the 24 cases of unauthorized land use we
reviewed, only 2 had been placed in noncompliance status. 20 In
the following two cases Queen City Municipal Airport in Allentown,
Pennsylvania, and Bader Field in Atlantic City, New Jersey FAA has
not initiated the enforcement process by placing the airports in
pending noncompliance status despite long- standing compliance
problems at both airports.

Queen City Municipal Airport, Allentown, Pennsylvania In 1965, FAA
approved the city's request to use an airport hangar located on

6 acres of airport land as a vehicle maintenance facility without
releasing the land or requiring the city to reimburse the airport,
as required by the federal surplus land transfer agreement signed
in 1948. FAA officials could not explain the reason for the
inappropriate 1965 decision. In 1984, FAA denied the city's
request to release the land and advised the city that it had
violated federal surplus property requirements. In 1987, FAA
released airport property for a highway right- of- way and between
1989 and 1992, FAA awarded four grants totaling $2.3 million to
repair runways and develop a master plan. FAA officials stated
that the land release and grants were provided to persuade the
city not to proceed with plans to close the airport, an important
regional reliever airport. 21

20 Pompano Beach Airpark in Pompano Beach, Florida and Benton
Airport in Saline County, Arkansas. 21 Reliever airports are those
general aviation airports located in metropolitan areas that FAA
has designated to reduce congestion at large commercial airports
and to provide access to general aviation.

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In response to a complaint, the Inspector General reported in
January 1997 that the city owed the airport about $2.8 million for
the nonpayment of rent for the maintenance facility from 1984
through 1995. 22 Nonetheless, the airport was scheduled to receive
an Airport Improvement Program grant for almost $300,000 in
February 1999. After we discussed the airports' continuing
noncompliance with FAA headquarters officials in December 1998,
they sent a letter to Queen City on March 5, 1999, informing the
city that FAA would consider taking steps to collect a portion of
the $2.8 million. FAA officials said they took steps to delay the
award of the $300,000 grant until the airport's noncompliance was
resolved. Figure 1 shows an aerial view of the airport and the
unauthorized use of airport hangars for a vehicle maintenance
facility.

22 Accountability and Use of Airport Revenues, Queen City
Municipal Airport, R3- FA- 7- 002 (Jan. 30, 1997).

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Figure 1: Vehicle Maintenance Facility at Queen City Municipal
Airport, Allentown, Pennsylvania

Source: Aircraft Owners and Pilots Association.

Bader Field, Atlantic City, New Jersey According to FAA officials,
since the early 1970s, Atlantic City has used

airport property without obtaining FAA's approval or reimbursing
the airport as required by federal grants that expire in 2006.
Specifically, the city constructed a high school football field on
airport land and used airport buildings for a police annex and
fire station without approval or reimbursement. Furthermore, the
airport's condition has gradually deteriorated during the 1990s,
and the city claims that the airport is unsafe and therefore
should be closed. Safety issues have resulted from unauthorized
use. In May 1996, after the city allowed the unauthorized
excavation of an aircraft parking area for a minor league baseball
stadium being constructed on the airport land, an aircraft
accident occurred. A

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plane hit an unmarked and unlighted excavation hole at night. No
injuries occurred. In addition, during the stadium's construction,
land survey spikes were driven into the airport runways and left
for an unknown period of time while the airport was still open. In
1997, in defiance of FAA's explicit instructions that FAA's
approval was required to build the stadium on the airport land,
the Mayor of Atlantic City informed FAA that construction of the
baseball stadium would proceed. FAA subsequently signed a
memorandum of agreement that allowed the stadium to be built,
hoping that through cooperation, the city would make needed safety
improvements and not close the airport. The agreement required the
city to reimburse the airport for the fair market value of the
baseball stadium land but did not resolve the city's unauthorized
use of and lack of compensation for airport buildings and the land
for the high school football stadium. Figures 2 and 3 show the
unauthorized minor league baseball stadium, police annex, and
aircraft operations area at Bader Field in Atlantic City, New
Jersey.

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Figure 2: Use of Airport Land at Bader Field, Atlantic City, New
Jersey

View of the airport with the skyline of Atlantic City in the
background. Airplanes are parked on the left. Police cars are
parked in the middle. The police annex once used as a terminal
building for commuter airlines is on the right. Minor league
baseball stadium surrounded by floodlights. Atlantic City Police
Department annex

on the right behind the airport runway. Ticket booth and entrance
to minor league baseball stadium.

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Figure 3: Aircraft Operations Area at Bader Field, Atlantic City,
New Jersey

Airport services are limited to parking-- there are no fuel,
telephone, or restroom facilities within the airport for use by
pilots and passengers. Atlantic City skyline is in the background.
Entry to the runway and aircraft parking area, which are

surrounded by a chain- link fence. Public notice posted by
Atlantic City advising that the airport is "active".

STOP

AIRPORT OPERATIONS AREA -AUTHORIZED VECHICLES ONLYSERVICE

VEHICLES CHECK WITH AIRPORT OPERATIONS

ACTIVE AIRPORT AIRCREWS & AUTHORIZED

PERSONNEL BEYOND THIS POINT

Although almost 2 years had passed without corrective action at
the time of our review, FAA had not cited the airport for official
noncompliance, requested the Inspector General to investigate the
overt revenue diversion, or used other stronger enforcement
methods. In December 1998, we discussed the noncompliance with FAA
headquarters officials, who agreed to determine if the situation
was serious enough to warrant enforcement action. On January 8,
1999, FAA requested the city to provide financial reports showing
that rent from the baseball stadium was being deposited into an
airport account. However, the city did not respond to the request
or repeated phone calls, and a follow- up letter was sent on March
19, 1999. We referred this matter to the Inspector General in
March 1999.

FAA Has Not Enforced Revenue Use Policy for a Proposed Airport
Closure in Kansas City, Missouri

Even when FAA is aware of changes to an airport before they occur,
it has not always followed its own policies and required that
airports recoup the fair market value for the sale of surplus
property. For example, in July 1998, FAA signed a memorandum of
agreement to release the Richards- Gebaur Memorial Airport from
grant assurances and surplus land deed requirements once Kansas
City, Missouri, and the Kansas City Southern Railroad agree to
establish an intermodal rail- highway depot on the runway. FAA's
agreement with Kansas City required an estimated $15 million to be
reinvested in other area airports over a 20- year period. By

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signing the agreement, FAA did not follow its policy requiring an
independent appraisal to determine fair market value of the
airport property. The only indication of the value of the 1,300-
acre property was a $33 million estimate cited in field office
files, but FAA officials did not provide an appraisal to support
or refute the estimate.

According to FAA officials, the compliance handbook provides that
the Associate Administrator for Airports consider requests to
release an entire airport from federal requirements on a case- by-
case basis and that the Associate Administrator's authority is not
limited by FAA's policies for releasing parcels of land. However,
this provision in the handbook applies only to those federal
requirements related to federal grants and does not apply to
federal requirements related to airport land that was acquired as
surplus land from the federal government. All but a few acres of
the airport were provided to Kansas City as surplus land when the
former Richards- Gebaur Air Force Base was closed in 1985. FAA's
compliance policy clearly states that releases of land provided
under the Surplus Property Act must clearly accrue a benefit to
civil aviation and that

This objective is not met unless an amount equal to the net sale
proceeds based on the current FMV [fair market value] of the
property is realized as a consequence of the release and such
amount is committed to airport purposes . . . A sale and disposal
of airport property for less than its FMV is inconsistent with the
intent of the statute.

FAA's decision to allow Kansas City to sell the Richards- Gebaur
Memorial Airport without conducting an appraisal or ensuring that
fair market value is obtained was improper. In commenting on our
preliminary findings in March 1999, FAA headquarters officials
said that they are carefully reviewing the proposed leases of the
airport and will consider amending the memorandum of agreement or
rejecting the deal entirely. Figure 4 shows an aerial view of the
airport. The railroad tracks are parallel and to the left of the
8,700 foot runway that is to be converted to an intermodal rail/
truck facility. Figure 5 shows some of the facilities on the
airport land.

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Figure 4: Aerial View of Richards- Gebaur Memorial Airport, Kansas
City, Missouri

Source: Aircraft Owners and Pilots Association.

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Figure 5: Facilities at Richards- Gebaur Memorial Airport, Kansas
City, Missouri

Air traffic control tower, parking area, and hangers. View of the
terminal building (front) and aircraft hanger (back and aircraft
parking ramp.

Another view of airport from the air traffic control tower.

Source: Aircraft Owners and Pilots Association.

Conclusions FAA's compliance program is intended to ensure that
the public interest and investment in general aviation airports
receiving federal assistance are

protected. This is not currently the case. Because none of FAA's
23 field offices conduct regularly scheduled on- site visits to
monitor general aviation airports' compliance with federal
requirements, FAA does not know the extent of noncompliance at
these airports nationwide. Nor does FAA always effectively enforce
federal requirements. Not surprisingly, therefore, we found
unauthorized land and revenue uses and increased

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risks to aviation safety. These problems are compounded by the
lack of current policy guidance and current summary information on
the nature of airports' federal requirements nationwide. Overall,
FAA's failure to effectively implement its compliance program
leaves the nation's federally assisted general aviation airports
vulnerable to mismanagement, fraud, waste, and abuse. Although our
review focused on FAA's land- use requirements for general
aviation airports receiving federal assistance, FAA's lack of an
effective compliance and enforcement program leaves compliance
with other federal requirements, such as the requirement to keep
airports available for public use and to charge airport users
comparable fees, vulnerable as well.

Addressing noncompliance after it occurs is often difficult.
Therefore, prevention is key to ensuring compliance with federal
requirements. Airports' self- certifications can also serve to
educate airports about their requirements. However, self-
certifications alone are not a sufficient internal control
because, in some instances, noncompliance may be deliberate,
suggesting the need for a more hands- on monitoring approach than
that provided by self- certifications. Consequently, on- site
monitoring and enforcement action are also essential elements of
any preventative compliance strategy.

In instances in which negotiations with an airport are
unsuccessful, FAA has not used its available enforcement actions
effectively to deter violations or recoup losses to the federal
government. It has not withheld transportation grants, taken back
the title to airport land, or taken action through the courts.
When such actions are not taken, even in cases of long- standing
noncompliance, the lack of action becomes a de facto policy of
permissiveness. This de facto policy has occurred in two cases we
identified Bader Field and Queen City Municipal Airport. In the
case of Richards- Gebaur Memorial Airport, however, FAA still has
time to adhere to its own policy of obtaining fair market value
for the land being sold for other purposes.

Recommendations To effectively implement the internal controls
contained in FAA's compliance policy, we recommend that the
Secretary of Transportation

direct the Administrator of FAA to revise current compliance
policy guidance to airports to require regularly scheduled
monitoring methods that provide for periodic on- site visits. In
conjunction with periodic on- site visits, the monitoring
component could include requiring periodic self- certifications of
compliance from all airports and formally

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coordinating with interested parties who may have information
about airports' compliance, such as general aviation organization
field representatives. 23 In addition, FAA should provide specific
criteria for initiating enforcement action and set reasonable time
frames for taking progressively stronger enforcement actions in
cases in which efforts to achieve voluntary corrective action are
unsuccessful.

In those cases of noncompliance that FAA cannot resolve in a
reasonable period of time, we further recommend that the Secretary
of Transportation direct the Administrator of FAA to apply the
enforcement tools already provided by the Congress by holding
field offices accountable for taking enforcement actions,
particularly in cases of long- term, repeated, or willful
unauthorized land or revenue use.

Until FAA develops and implements a compliance and enforcement
program that provides adequate internal control over airports'
compliance with federal requirements, the FAA Administrator should
determine whether the internal control weakness disclosed in this
report should be included when providing information to the
Secretary for inclusion in the Secretary's annual report to the
President and the Congress, as required by the Federal Managers'
Financial Integrity Act of 1982.

Finally, the FAA Administrator should resolve long- standing
instances of noncompliance and revenue diversion by taking
enforcement action to protect the public investment in aviation at
the Queen City Municipal Airport and at Bader Field. FAA should
also require that Kansas City obtain a fair market appraisal of
the value of airport land and, upon closing Richards- Gebaur
Memorial Airport, reinvest an amount equal to the appraised value
in local area airports to promote aviation, as required by FAA's
policy.

Agency Comments and Our Evaluation

We provided copies of a draft of this report to the Department of
Transportation and the Federal Aviation Administration (FAA) for
review and comment. We met with FAA officials including the
Director, Office of Airport Safety and Standards. We also met with
Department of Transportation officials from the Office of
Acquisition and Grant Management and the Office of General
Counsel. FAA officials had several concerns about the information
in the report but did not comment specifically on the report's
recommendations.

23 In 1997, the Aircraft Owners and Pilots Association announced a
program to have volunteers monitor public- use airports to
identify concerns.

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FAA officials said that over the last several years FAA has been
working to enhance its oversight of airport owners' compliance
with federal obligations. For example, FAA recently issued a
revised airport revenue use policy that requires audits of some
airports to determine if revenue diversion has occurred and allows
FAA to select airports to be audited where there are indications
that revenue diversion may have occurred. It also established an
Airports Compliance Division within the Office of Airports in
December 1997 and assigned 10 full- time compliance policy
specialists to advise field offices on airport land and revenue
issues and provide procedural support for compliance personnel in
the field. The FAA officials said that, using the new policy and
staff, the agency is working to ensure that it provides effective
oversight to the airports in the national airport system. FAA
officials also said that, over the past several years, the agency
has enhanced its airport industry outreach and educational efforts
by providing agency- sponsored seminars and participating in
conferences sponsored by airport industry and airport owner
associations. The efforts to improve oversight of airports'
compliance described in FAA's comments are included in this
report, and, therefore, we made no changes in response to these
comments. Because FAA said that it has enhanced its airport
industry outreach and educational efforts, we deleted from our
recommendations a reference to a need to improve these educational
efforts.

The agency officials did not dispute the report's findings on the
level of monitoring and enforcement, but offered a number of
reasons for why monitoring and enforcement efforts are not more
extensive. FAA officials told us that providing effective
oversight requires that the agency prioritize its use of the
limited available staff. FAA officials indicated that its
financial compliance activities are most appropriately focused on
commercial service airports that receive the majority of federal
funding. While the FAA officials agreed that it may be possible to
further strengthen compliance oversight activities with general
aviation airports, they believe that the draft report did not
provide sufficient context in which to understand the relative
scope of the issues described in the report. Although there are
over 2,000 general aviation airports subject to federal
requirements, they account for a relatively small proportion of
funding and thus do not warrant a greater expenditure of FAA's
limited resources, the officials stated. With approximately one
person assigned to compliance duties per region (and many of these
people have multiple duties), the FAA officials said that it is
appropriate to focus compliance oversight efforts on the 840
commercial service airports that account for about 80 percent of
Airport Improvement Program funding. The draft report included
information

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placing general aviation airports in context within all airports
receiving federal funding. Therefore, we made no changes in
response to these comments. While we acknowledge that the
oversight of commercial service airports is important, this does
not relieve FAA from its responsibility for ensuring that all
airports comply with the requirements associated with the federal
funding or land they receive.

Scope and Methodology

We visited 14 and surveyed 9 of the 23 FAA field offices
responsible for overseeing general aviation airports. The 14
offices we visited represent seven of the nine FAA regions and
manage airports in 33 of the 50 states, or about two- thirds of
all public airports with land subject to federal requirements in
the United States. Specifically, we visited the following field
offices to discuss implementation of the compliance program:
Atlanta, Georgia; Burlingame, California; Burlington,
Massachusetts; Camp Hill, Pennsylvania; Detroit, Michigan; Dulles,
Virginia; Garden City, New York; Jackson, Mississippi; Kansas
City, Missouri; Lawndale, California; Orlando, Florida; and three
field offices in Fort Worth, Texas.

We obtained information regarding compliance monitoring and cases
of noncompliance with the federal requirements for land and
revenue use, complaints and investigations, and land releases and
airport closures from each of the 23 FAA field offices. We took a
random sample of 506 general aviation airports and obtained data
for each airport in the sample in the 23 field offices to estimate
the incidence of releases on a nationwide basis. With general
aviation interest groups, including the Aircraft Owners and Pilots
Association, the National Air Transportation Association, and the
American Association of Airport Executives, we discussed the issue
of airports' compliance. These groups identified a number of
issues regarding land use at general aviation airports, including
the diversion of airport revenues and safety concerns.

We performed our review in accordance with generally accepted
government auditing standards from September 1998 through April
1999.

We are providing copies of this report to the Honorable Rodney E.
Slater, the Secretary of Transportation; and the Honorable Jane F.
Garvey, Administrator, FAA. We will also make copies available to
others on request.

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If you or your staff have any questions about this report, please
call me at (202) 512- 2834. Major contributors to this report are
listed in appendix II.

John H. Anderson, Jr. Director, Transportation Issues

GAO/RCED-99-109 General Aviation Airports Page 26

GAO/RCED-99-109 General Aviation Airports Page 27

Appendix I Sampling Results

As discussed in the Scope and Methodology section of the report,
we used a probability sample of airports to estimate the incidence
of releases on a nationwide basis. Since we used a sample to
develop our estimates, each estimate has a measurable precision.
This precision can be used to develop upper and lower bounds for
each estimate. This range is called a confidence interval.
Confidence intervals are stated at a certain confidence level in
this case, 95 percent. For example, a confidence interval at the
95- percent confidence level means that in 95 of 100 instances,
the sampling procedure that we use would produce a confidence
interval containing the universe value we are estimating. The
following table contains the estimates that we made and their
upper and lower bounds at the 95- percent confidence level. Note
that we found 51 releases in our sample, but we were unable to
obtain the number of released acres for 1 of the releases.

Number or Percentage of Airports Estimate Lower bound Upper bound

Total releases 205 156 254 Releases of less than 10 acres 97 73
126 Releases of from 10 acres to less than 20 acres 52 34 78

Releases greater than or equal to 20 acres 52 34 78

Percentage of releases of less than 10 acres 48% 33% 63%

Percentage of releases of less than 20 acres 74% 61% 87%

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Appendix II Major Contributors to This Report

Resources, Community, and Economic Development Division

Janet Barbee Chris Keisling Mark Lambert Allen Rogers

Office of General Counsel

Dave Hooper

(348130) GAO/RCED-99-109 General Aviation Airports Page 29

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