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4 October 2006
[Federal Register: October 4, 2006 (Volume 71, Number 192)]
[Proposed Rules]
[Page 58546-58569]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc06-23]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 331
[Docket OST-2006-25906]
RIN 2105-AD61
Procedures for Reimbursement of General Aviation Operators and
Service Providers in the Washington, DC Area
AGENCY: Office of the Secretary, DOT.
ACTION: Notice of proposed rulemaking.
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SUMMARY: On November 30, 2005, President Bush signed into law the
Transportation, Treasury, Housing and Urban Development, the Judiciary,
the District of Columbia, and Independent Agencies Appropriation Act,
2006 (Pub.L. 109-115, 119 Stat. 2396, hereafter the Act, or the 2006
Appropriation Act). Section 185 of the Act authorized the Department of
Transportation to provide reimbursement to fixed-based general aviation
operators and providers of general aviation ground support services at
five metropolitan Washington, DC area airports, for the direct and
incremental financial losses they incurred while the airports were
closed due to Federal Government actions taken after the terrorist
attacks on September 11, 2001. The airports are: Ronald Reagan
Washington National Airport; College Park Airport in College Park,
Maryland; Potomac Airfield in Fort Washington, Maryland; Washington
Executive/Hyde Field in Clinton, Maryland; and Washington South Capitol
Street Heliport in Washington, DC. A total of up to $17,000,000 was
appropriated for this purpose. This proposed rule would establish the
eligibility requirements and application procedures for those who may
qualify for assistance under this statute.
DATES: Comments should be received by November 3, 2006.
ADDRESSES: Interested persons should send comments to Docket Clerk,
Docket OST-2006-25906, Department of Transportation, 400 7th Street,
SW., Room PL-401, Washington, DC 20590. We request that, in order to
minimize burdens on the dockets staff, commenters send three copies of
their comments to the docket. Commenters wishing to have their
submissions acknowledged should include a stamped, self-addressed
postcard with their comments. The Docket Clerk will date stamp the
postcard and return it to the commenter. Comments will be available for
inspection at the above address from 10 a.m. to 5 p.m., Monday through
Friday. Comments also may be sent electronically to the Dockets
Management System (DMS) at the following internet address: http://dms.dot.gov/.
Commenters who wish to file comments electronically
should follow the instructions on the DMS Web site. Interested persons
can also review comments through this same Web site.
FOR FURTHER INFORMATION CONTACT: James R. Dann, U.S. Department of
Transportation, Office of General Counsel, 400 7th Street, SW., Room
10102, Washington, DC 20590. Telephone 202-366-9154. Data sources to
assist applicants in preparing portions of their applications are
available at the Department of Transportation, Office of the
Secretary's Web site at http://ostpxweb.dot.gov/aviation/index.html,
under ``Programs.''
SUPPLEMENTARY INFORMATION: Following the terrorist attacks on the
United States on September 11, 2001, general aviation activity in the
Washington, DC metropolitan area was suspended. Five airports were most
affected: Ronald Reagan Washington National Airport (DCA); College Park
Airport in College Park, Maryland; Potomac Airfield in Fort Washington,
Maryland; Washington Executive/Hyde Field in Clinton, Maryland; and
Washington South Capitol Street Heliport in Washington, DC. General
aviation operations remain limited at DCA and the three Maryland
airports, and the South Capitol Street Heliport is now used exclusively
by the Washington DC Metropolitan Police. Because of the reduction in
general aviation activity at these locations, the fixed-based operators
and service providers that supported general aviation were also
affected. In addition, some such entities have had to incur additional
costs associated with new security regulations in order to keep their
businesses functioning.
Soon after the terrorist attacks, Congress enacted the Air
Transportation Safety and System Stabilization Act, Public Law 107-42
(Sept. 22, 2001) (the Stabilization Act). The Stabilization Act
directed that compensation be provided to ``air carriers'' for the
direct losses they incurred as a result of the Government's orders
halting air traffic, and the incremental losses they incurred between
September 11 and December 31, 2001, as a direct result of the terrorist
attacks. Under this authority, approximately $4.6 billion has been
distributed to qualifying carriers, providing them assistance as they
sought to avoid bankruptcy and recover financially in the aftermath of
September 11. Such carriers were also made eligible for loan guarantees
under a different title of the Act. However, as noted, relief was
limited in the statute to ``air carriers,'' a term defined at 49 U.S.C.
40102. Because the fixed-based operators and service providers at issue
here did not fall within that definition, they were not eligible for
either compensation or loan guarantees under the Stabilization Act.
In 2003, the United States House of Representatives Committee on
Appropriations requested that the Department of Transportation prepare
a report detailing the documented financial losses by holders of real
property leases at the five affected
[[Page 58547]]
airports that were attributable to the Federal actions since September
11, 2001. (House Report 108-243, July 30, 2003, p. 8.) The Committee
stated that such a report would assist the Congress in considering
``potential federal reimbursement for a portion of these unusual
financial losses.'' In October, 2005, the Secretary of Transportation
submitted to the Committee the requested report, which was entitled:
Estimated Financial Losses to Selected General Aviation Entities in the
Washington, DC Area Final Report (October 2005 DOT study). A copy of
this Report has been placed into Docket 2006-25906.
The October 2005 DOT study identified sixteen general aviation
leaseholders at the five airports, and estimated the financial losses
that each incurred during its study period (which ran from September
11, 2001 to January 23, 2004) due to the Federal actions taken after
the terrorist attacks. The estimates reflected the difference in net
income between what the companies projected for the study period and
the actual net income for that period, and included both losses in net
income and one-time costs attributable directly to compliance with new
restrictions or regulations resulting from the terrorist attacks. In
formulating its estimates, the Department's consultant relied primarily
on voluntary information provided by each entity, and while interviews
were conducted to confirm the general reasonableness and consistency of
the numbers provided, no independent analysis, audit or certification
was conducted. Therefore, the October 2005 DOT study advised that these
estimates were merely preliminary and meant solely to inform Congress
in determining whether and in what amount to appropriate funds to
reimburse these general aviation entities. The October 2005 DOT study
also indicated that, if compensation were to be made available, ``the
financial data establishing the basis for any payment, especially
forecast revenue, cost and net income, should * * * be subject to a
more rigorous verification regime.'' (Estimated Financial Losses to
Selected General Aviation Entities in the Washington, DC Area Final
Report, at fn. 3.)
The total estimated financial losses for the period reviewed were
$10,443,936, with more than half of that amount being reported for one
firm, Signature Flight Support. The estimates were in current dollars
and reflected no consideration for the time value of money.
On November 30, 2005, the Transportation, Treasury, Housing and
Urban Development, the Judiciary, the District of Columbia, and
Independent Agencies Appropriation Act, 2006, became law. Section 185
of the Act provides for the reimbursement of ``fixed-based general
aviation operators and the providers of general aviation ground support
services'' at the five cited airports for the ``direct and incremental
financial losses incurred while such airports were closed to general
aviation operations, or as of the date of enactment of this provision
in the case of airports that have not reopened to such operations, by
these operators and service providers solely due to actions of the
Federal Government following the terrorist attacks on the United States
that occurred on September 11, 2001.'' The Act provides up to $17
million to reimburse these general aviation entities; however, it
states that, of the $17 million provided, an amount not to exceed $5
million, if necessary, is to be available on a pro rata basis to fixed-
based general aviation operators and the providers of general aviation
ground support services located at the three Maryland airports: College
Park Airport in College Park, Maryland; Potomac Airfield in Fort
Washington, Maryland; and Washington Executive/Hyde Field in Clinton,
Maryland.
Section 185 further states that the appropriated funds included the
cost of ``an independent verification regime;'' that no funds shall be
obligated or distributed to such general aviation entities until an
independent audit is completed; that losses incurred as the result of
violations of law, or through fault or negligence of such entities or
of third parties (including airports) are not eligible for
reimbursement; and that the obligation and expenditure of funds are
conditional upon full release of the United States Government for all
claims for financial losses resulting from such actions.
Section-by-Section Analysis
Section 331.1 What is the purpose of this Part?
This section states the proposed purpose of part 331, which is to
carry out the statutory provisions of the Act with respect to
compensating fixed-based general aviation operators and providers of
general aviation ground support services at five metropolitan
Washington, DC area airports.
Section 331.3 What do the terms used in this part mean?
This definitions section proposes to incorporate terms from the Act
or other existing sources. This section also proposes to define
additional terms necessary to implement the procedures to provide
reimbursement under the Act.
Entities that meet the definition of a ``fixed-based general
aviation operator'' or a ``provider of general aviation ground support
services'' with operations at one or more of the five named airports on
September 11, 2001 would be eligible under the plain statutory language
to apply for reimbursement of eligible losses under the 2006
Appropriation Act.
The Department understands that a ``fixed based general aviation
operator,'' (FBO), customarily refers to an entity based at a
particular airport that provides services and support to general
aviation, which may include fuel and oil, aircraft storage and tie-
down, airframe and engine maintenance, avionics repair, baggage
handling, deicing, and the provision of air charter services. We expect
that most, if not all, eligible FBOs will have been leaseholders
identified in the October 2005 DOT study. The Department would
tentatively further define a ``provider of general aviation ground
support services'' as a non-FBO operating at an airport that supplies
such or similar services exclusively or predominantly to support
general aviation activities, extending as well to flight schools,
security services, aircraft and avionics maintenance, etc. The
reference to ``services'' in the statute would seem to preclude non-FBO
entities from qualifying that provided only products to general
aviation, e.g., a parts supplier.
The Department notes that the October 2005 DOT study performed
under House Report 108-243 was limited to ``holders of real property
leases'' at the airports. Because the 2006 Appropriation Act used
different language to describe the entities that were to be eligible
for reimbursement, the Department believes that reimbursement for
losses is not necessarily limited to only those sixteen entities that
were identified in the October 2005 DOT study. As the Department
expects that case-by-case determinations may be necessary, we propose
that any entity that applies for reimbursement under the Program
describe itself, the services it provides or provided, the airport or
airports at which it provided those services, and certify that it meets
the regulatory definitions, in order to facilitate an eligibility
determination by the Department.
We also propose common usage definitions for ``losses'' and
``incurred,'' as we did in the regulations
[[Page 58548]]
implementing the Stabilization Act. See 67 FR 54062 (August 20, 2002).
Thus, ``losses'' refer to something that is gone and cannot be
recovered, and ``incurred'' means to become liable or subject to (as to
incur debt). Applying these definitions, for example, a temporary loss
that is recovered later, or is expected to be recovered later, would
not be eligible for reimbursement.
The Department proposes to define the statutory phrase ``direct and
incremental losses'' to mean those losses that resulted from the
Federal Government's closure of the five Washington area airports to
general aviation operations. ``Direct and incremental losses'' would
include losses incurred on September 11, 2001 through the end of the
eligibility reimbursement period for each airport. The Department
proposes to read ``direct and incremental losses'' as a single category
because of the difficulty in apportioning losses between direct losses
and incremental losses while an airport was closed.
As discussed in more detail in Section 331.13, the eligibility
period is different for each of the five Washington area airports. For
the reasons set forth in Section 331.13, the Department is proposing
that the term ``closed'' or ``closure'' be defined so as to carry out
the intent of Congress in establishing the eligible period for
reimbursement for each airport. For Washington National Airport,
``closed'' or ``closure'' would mean the time between September 11,
2001 and the date that general aviation operations were generally
permitted to resume. For the Washington South Capitol Street Heliport,
which was closed at the date that Section 185 of the Act was enacted,
``closed'' or ``closure'' would mean the time between September 11,
2001 and November 30, 2005. For the three Maryland airports, because
general aviation operations resumed more gradually, ``closed'' or
``closure'' would mean the time between September 11, 2001 and the date
that transient traffic was generally permitted to return.
Finally, the Department proposes that, for purposes of determining
eligibility under the Act, ``forecast'' should be defined as an
objective and reliable projection of the revenue that would have been
earned and the expenses that would have been incurred during the
eligible reimbursement period had the attacks of September 11, 2001 not
occurred. The Department believes that applicants either prepared such
forecasts before September 11, 2001, or have the ability to prepare or
reconstruct such reasonable forecasts based on financial records
generated and maintained in the ordinary course of business.
Section 331.5 Who may apply for reimbursement under this part?
This part specifies the applicants eligible for reimbursement under
the Act. The Department proposes that applicants submitting claims
under the Act for losses incurred at two or more airports complete
separate applications. For example, if an applicant provided fixed-
based general aviation or general aviation ground support at Ronald
Reagan Washington National Airport and College Park Airport in College
Park, Maryland, then the applicant would complete two applications.
Section 331.7 What losses will be reimbursed?
Under subsection (a) the Department proposes the method that would
be applied to determine reimbursement. The Department proposes that
losses should be measured under the same general approach utilized in
the October 2005 DOT study, i.e., the difference in net income between
what an eligible applicant forecast (or would have reasonably expected)
for the applicable reimbursement period, and the actual net income it
earned for that period. The Department deemed this ``lost profits''
approach to be the most reasonable one for purposes of its October 2005
study, and it was the same approach that was utilized in providing
compensation to air carriers under the Air Transportation Safety and
System Stabilization Act. Thus, the Department has had considerable
experience in analyzing and approving compensation claims under such a
regime. Moreover, since Congress likely relied on the analysis and
estimates made by the Department and the Department's consultant in the
October 2005 DOT study when it enacted the 2006 Appropriation Act, this
approach would seem most consistent with Congress' expectations
regarding the cost to be incurred for the program.
Under subsection (b) the Department proposes that if applicants
make a claim for extraordinary, non-recurring, or unusual adjustments,
they would also be requested to demonstrate that such losses were fully
attributable to the Federal Government's actions, that the claim be
made in conformity with Generally Accepted Accounting Principles
(GAAP), that the expenses of the loss were fully borne within the
applicable statutory reimbursement period, that the charge was not
discretionary in nature, and that reimbursement would not be
duplicative of other relief. The Department notes that it appears that
Congress intended one-time costs that were necessarily incurred in
order to comply with Federal Government security requirements to be
reimbursable, and we propose that they be. However, under the Air
Transportation Safety and System Stabilization Act compensation
program, a number of applicants sought reimbursement for various types
of extraordinary, non-recurring, or unusual charges, which DOT
generally found not to be eligible. For example, the Department
typically rejected claims for impairment of long-lived assets, relying
in part on guidelines published by the Financial Accounting Standards
Board (FASB) recognizing that ``impairment of long-lived assets as a
result of the September 11 events would in many cases be impossible to
measure separately from impairment due to the general economic slowdown
that was generally acknowledged to be under way.'' (Emerging Issues
Task Force Meeting Minutes, at 4.) Therefore the Department is
proposing that extraordinary, non-recurring, or unusual adjustments be
separately explained by each applicant in order to determine
eligibility. Each such claim would prompt a case-by-case review to
determine whether it should be reimbursed under the Act, using the same
type of analysis that was employed in the Air Transportation Safety and
System Stabilization Act cases.
Subsection (c) proposes that temporary losses recovered after the
terrorist attacks of September 11, 2001, or that applicants expect to
recover, should not be eligible for reimbursement.
The Department proposes in subsection (d) that if an applicant
engaged in any aviation or non-aviation income-producing activities
after September 11, 2001, such income should mitigate its losses and so
reduce reimbursement. If, for example, an applicant after September 11,
2001 contracted out its services for some of its maintenance and
avionics repair work to other carriers or at other airports, that
income would serve to reduce its reimbursement under this Act.
Similarly, the Department proposes in subsection (e) that so-called
``cost savings'' cannot be claimed and manipulated into a basis for
additional reimbursement. Such ``cost savings'' arise from instances in
which an applicant achieves after September 11 a reduction in actual
expenses as compared to its forecast expenses in expense categories it
claims were not
[[Page 58549]]
affected by the Federal Government's closure of airports. We assume
that potentially eligible general aviation entities would, like most
businesses, try to maintain strict controls on expenditures, especially
in cases in which revenue shortfalls are being anticipated (such as
after the terrorist attacks). We perceive this as simply good business
practice, so that these savings should reduce reimbursement needs. See
67 FR 18473 (Apr. 16, 2002); Federal Express Corp. v. Mineta, 434 F.3d
597 (DC Cir., 2006).
The Department proposes in subsection (f) that applicants not be
reimbursed for the lost time value of money. As noted above, the
October 2005 DOT study questioned whether reimbursement pursuant to
Section 185 should account for the time value of money, through payment
of interest on lost profits for the period of time the funds were not
available for use. The Department has tentatively determined that, as a
legal matter, it is precluded from payment of interest under the
circumstances present here. See, e.g., United States v. Alcea Bank of
Tillamooks, 341 U.S. 48, 49 (1951) (noting that, ``[i]t is the
`traditional rule' that interest on claims against the United States
cannot be recovered in the absence of an express provision to the
contrary in the relevant statute or contract''). We are aware of no
exceptions that would apply here so as to make such payment here
allowable.
The Department also proposes to exclude lobbying fees and
attorneys' fees in subsection (g). The October 2005 DOT study did not
address the compensability of reasonable lobbying and attorney's fees.
However, a question has arisen as to whether the program should provide
reimbursement for those professional service fees, such as those
incurred in seeking and obtaining the legislative relief ultimately
embodied in Section 185. The Department proposes that such fees not be
eligible for reimbursement. We note initially that a Federal statute
(31 U.S.C 1352) prohibits using appropriated funds to compensate
lobbying costs for specific activities. To implement this provision,
the Department adopted regulations as generally prescribed by the
Office of Management and Budget (OMB), that broadly limit the
expenditure of appropriated funds by recipients of ``a Federal
contract, grant, loan, or cooperative agreement'' for lobbying costs.
See 49 CFR 20.100. While ``reimbursement'' is not included among the
covered Federal actions, the Department believes that it should be
here, in order to achieve consistency with the spirit and intent of
these provisions, and therefore would not reimburse with appropriated
funds expenditures for such specified activities. Accordingly, such
costs would need to be broken out and excluded from an applicant's
claim.
In order to assist the Department evaluate the reasonableness of
claims it receives from applicants, it proposes in subsection (h) that
the applicants' calculations of revenues, expenses and income be based
on financial documents customarily maintained by the applicants in the
course of conducting business.
Section 331.9 What funds will the Department distribute under this
part?
The Department proposes to disburse up to the full amount of
reimbursement it determines is payable to applicants under section 185
of the Act.
Section 335.11 What are the limits on reimbursement to operators or
providers?
Congress has limited reimbursements to losses incurred as a direct
result of actions by the Federal Government and to losses incurred
within a finite period of time. As discussed above, even if losses may
be properly reported under generally accepted accounting principles
(GAAP) within that period, if they are actually experienced over a
longer or different period of time, and/or if they are not fully
attributable to the Federal Government's actions to close airports,
they may not be properly reimbursable under the Act.
The Department proposes in subsection (a) to reimburse applicants
subject to the subpart C set-aside for eligible operators or providers
at College Park Airport in College Park, Maryland; Potomac Airfield in
Fort Washington, Maryland; and Washington Executive/Hyde Field in
Clinton, Maryland. The Department further proposes that the amount
available to each applicant be subject to the Department's cost of
independently verifying claims for reimbursement, as explained in
Section 331.17.
In subsection (b), the Department proposes that, if an overpayment
is made to an applicant for any reason, the Federal Government would
collect the overpayment amount in accordance with the Federal Claims
Collection Act of 1996 (31 U.S.C. 3701 et seq.).
Section 185 requires that, as a condition for payment, parties
provide a full release to the United States from all claims for
financial losses resulting from actions of the Federal Government
following the terrorist attacks of September 11, 2001. The Department
proposes in subsection (c) to utilize a standard release form.
Section 331.13 What is the eligible reimbursement period under this
part?
Section 185 provides funds to reimburse GA entities for eligible
losses ``incurred while such airports were closed to general aviation
operations, or, if an airport has not reopened to such operations, as
of the date of enactment of Public Law 109-115'' (i.e., November 30,
2005). Because four of the five the airports in question were subject
to differing levels of restriction in general aviation activity over
time, the language ``while such airports were closed to general
aviation operations'' requires the Department to interpret whether the
eligible period is that during which the airports were closed to all
general aviation operations, or to some or any general aviation
operations.\1\
---------------------------------------------------------------------------
\1\The Department's GRA Study considered as ``direct losses''
those losses incurred during the period of ``full'' closure--through
March, 2002--and as ``incremental losses'' those losses incurred
after the reopening of the airports that were nonetheless
attributable to the Federal actions taken as a result of the
September 11 terrorist attacks. The language of section 185 limits
reimbursement to the direct and incremental losses incurred while
the airports were ``closed'' to GA operations, leaving unsettled
whether Congress was altering the time periods for which
calculations of loss would be made from the approach taken in the
Study.
---------------------------------------------------------------------------
As background, the period of closure for all five airports began on
September 11, 2001, when immediately after the terrorist attacks, the
Federal Aviation Administration (FAA) prohibited all aircraft
operations within the territorial airspace of the U.S. Exceptions were
made only for certain military, law enforcement, and emergency-related
aircraft operations. This general prohibition was lifted in part on
September 13, 2001.
Due to continuing security concerns in Washington, DC airspace,
restrictions remained in place on aircraft operations in the DC
metropolitan area. On October 4, 2001, limited air carrier operations
were permitted to resume at Ronald Reagan Washington National Airport
(``DCA''), but general aviation activity there and elsewhere in the
metropolitan area was limited to repositioning of aircraft and
operations under limited waivers. Under Notice to Airmen (NOTAM) 1/3354
of December 19, 2001, the FAA continued with minor exceptions the total
prohibition on all Part 91 flight operations within 15-miles of the
Washington Monument.
At DCA, official State and Federal government operations, and other
flights operating under limited waivers, generated about 20 general
aviation flights per month through 2004. These
[[Page 58550]]
flights required special security arrangements, including pilot and
passenger background checks and the presence of law enforcement
personnel on board. Because of these restrictions, much DCA general
aviation activity migrated to Washington Dulles Airport, Baltimore--
Washington International Airport, or other facilities. On May 25, 2005,
the Department of Homeland Security proposed a broader reopening of DCA
to various GA operations, including corporate aircraft and charter
flights. Up to 48 GA flights per day would be allowed, although only
for operations from authorized originating ``gateway'' airports.
Operations were subject to stringent security measures, including:
Advanced registration and qualification of operators and crews;
Transportation Security Administration (``TSA'') inspection of crews
and passengers; submission of manifests 24 hours in advance of the
flight; enhanced background checks; and the presence of a law
enforcement officer on board each flight. On October 18, 2005, flights
under the new rules resumed at DCA.
The FAA's Special Federal Aviation Regulation (SFAR) 94, issued as
a Final Rule on February 19, 2002 (67 FR 7537), set out procedures
under which College Park Airport, Potomac Airfield, and Washington
Executive/Hyde Field (the ``three Maryland airports'' ) could be
partially reopened to general aviation traffic. SFAR 94 permitted the
three Maryland airports to develop security procedures that, if
approved by the FAA Administrator, would allow pilots that had been
based there to resume some operations. These procedures encompassed
such matters as identification of an airport security coordinator,
maintenance of a record of all individuals and aircrafts authorized to
operate from the airport, implementation of robust security monitoring
and security awareness procedures, etc. Although SFAR 94 allowed the
resumption of some operations under tightly controlled security
requirements, based pilots were still unable to conduct pattern
operations or flights to another affected airport. In addition,
transient aircraft operations continued to be prohibited. Based on SFAR
94, and the FAA's NOTAM 2/1257 that was published on February 14, 2002,
College Park and Potomac airports were able to reopen to limited
resident GA operations on February 23, 2002. Washington Executive/Hyde
Field followed on March 2, 2002.
SFAR 94 was reissued on February 14, 2003 for an additional two
years, and, on February 10, 2005, new rules were issued that authorized
the resumption of transient operations on a restricted basis. 70 FR
7150. Under these restrictions, pilots were required to: Submit
background information on themselves, including fingerprints; to
undergo a terrorist threat assessment, criminal records check, and
check of his or her FAA record for certain violations; and be briefed
on procedures for operating at the airport. Further, pilots who wished
to operate aircraft from or to any of the three Maryland airports were
required to file a flight plan in advance, obtain air traffic control
clearances and a discrete transponder code, and follow the arrival and
departure procedures that were required by the FAA. See 49 CFR Part
1562. The flights into the three Maryland airports under these
restricted procedures began after these rules became effective on
February 13, 2005.
The restrictions on general aviation operations in Washington
airspace have obviously translated into a significantly lower volume of
operations than had been in place prior to the terrorist attacks. At
DCA, in the year 2000, there had been 60,225 GA operations. In
contrast, the Department of Homeland Security stated that, between
January of 2003 and March of 2004, there had been a total of 146.
The October 2005 DOT study found that local operations at College
Park Airport fell from 19,657 in 2001 to 2,500 in 2002 and 2,000 in
2003. Itinerant operations were reported as dropping from 4,800 in 2001
to zero in both 2002 and 2003.
At Potomac Airfield, the October 2005 DOT study reported local and
itinerant operations as staying constant for the three years, but
considered that such data ``may not be totally accurate because they
show exactly the same number of operations each year.''
Estimated Financial Losses to Selected General Aviation Entities in
the Washington, DC Area Final Report, at fn. 11.
At Washington Executive/Hyde Field, the October 2005 DOT study
found that local operations were constant at 34,580 in 2001 and 2002
(which conclusion may suffer from the same inaccuracy in reporting as
affected Potomac Airfield) but fell to 6,970 in 2003. As to itinerant
operations, the October 2005 DOT study reported a fall from 1,900 in
2001 to 30 in 2002 and 10 in 2003.
The Washington South Capitol Street Heliport is now closed to GA
operations. According to the Department's consultant, the Washington
Metropolitan Police Department helicopter operation unit is now the
exclusive user of the heliport.
The reduction in traffic volumes has translated into financial
losses for the fixed-based general aviation operators and providers of
general aviation ground support services at the airports. The October
2005 DOT study reported financial losses for the general aviation
leaseholders at the airports as being most severe in 2002, cumulating
at almost $5.3 million. However, the losses extended as well into 2003,
cumulating at over $3.4 million and into the early part of 2004.
In construing the language of section 185 as to the period each of
the five airports was ``closed to general aviation operations,'' one
approach would be for the Department to consider the period of closure
to run until the first general aviation operations were permitted (on
other than the special waiver, highly restricted basis in effect
immediately after September 11, 2001). For DCA, that would be until
October 18, 2005; for College Park and Potomac airports it would be
until February 23, 2002; and for Washington Executive/Hyde Field, it
would be until March 2, 2002. (For Washington South Capitol Street
Heliport, it seems clear that the period of reimbursement eligibility
would run for the full period from September 11, 2001 to November 30,
2005.) Another option would be to consider the three Maryland airports
``closed'' until the airports were more broadly reopened to include
transient traffic, if even on a restricted basis, i.e. February 13,
2005. A final alternative would be to interpret the language to extend
the time to the full September 11, 2001 to November 30, 2005 period, on
the basis that some of the pre-September 11 general aviation traffic
had not returned due to the restrictions, and so the airports might be
thought of as not being ``fully open'' even to the present day.
The Department has tentatively determined that the respective
periods of eligibility should be from September 11, 2001 until October
18, 2005 for DCA; until February 13, 2005 for the three Maryland
airports, although limited for Washington Executive/Hyde Field as
discussed below; and until November 30, 2005 for the Washington South
Capitol Street Heliport. Comments on these proposed timeframes are
welcomed. The following chart sets forth the proposed periods of
eligibility for reimbursement:
[[Page 58551]]
----------------------------------------------------------------------------------------------------------------
Period of eligibility for reimbursement
Airport -------------------------------------------------------------------------
Begin date End date
----------------------------------------------------------------------------------------------------------------
Ronald Reagan Washington National September 11, 2001................. October 18, 2005.
Airport.
College Park Airport in College Park, September 11, 2001................. February 13, 2005.
Maryland.
Potomac Airfield in Fort Washington, September 11, 2001................. February 13, 2005.
Maryland.
Washington Executive/Hyde Field in September 11, 2001................. May 16, 2002.
Clinton, Maryland. September 29, 2002................. February 13, 2005.
Washington South Capitol St. Heliport September 11, 2001................. November 30, 2005.
in Washington, D.C..
----------------------------------------------------------------------------------------------------------------
In so proposing, we considered that Congress must not, at the time
it enacted section 185, considered all five of the airports to still be
``closed.'' If it did, it would simply have provided that the period
for reimbursement would extend through the date the statute was
enacted. To give meaning to the phrase ``while closed to general
aviation operations'' in the Act, at least one of the airports must
have been thought of as having reopened prior to the date of enactment.
Of the remaining two approaches, we have tentatively decided to use the
February 13, 2005 date for the three Maryland airports, rather than the
alternative dates in 2002. The GA entities potentially eligible for
reimbursement at the three Maryland airports continued to sustain
serious financial losses well past the dates that the airports were
reopened for some resident based operations, and it seems inconsistent
with the clear remedial purpose of section 185 to restrict
reimbursement only for losses incurred by these entities through
February or March of 2002. Moreover, given these continuing financial
impacts, it seemed inequitable to permit reimbursements at DCA over a
four year period, but restrict such reimbursements at the three
Maryland airports for less than six months. And, although restrictions
continue at the three Maryland airports, they do as well at DCA, and
similar treatment among them would seem to be best achieved by using
the February 13, 2005 and October 18, 2005 dates.
The Department notes that section 185 also provides that losses
incurred as a result of violations of law, or through fault or
negligence, of such operators and service providers or of third parties
(including airports) are not eligible for reimbursement. In this
connection, the Department understands that Washington Executive
Airport/Hyde Field was reclosed on May 17, 2002, because of a security
violation, and not reopened again until September 28, 2002. See 70 FR
45256 (Aug. 4, 2005). The Department therefore tentatively believes
that that period must be excluded from the reimbursement calculus, only
for Washington Executive Airport/Hyde Field. The Department also
believes that Potomac Airfield was closed from November 1 to December
16, 2005 for a violation of its security program. However, because that
period would be outside the tentative reimbursement period of September
11, 2001 to February 13, 2005, reimbursements under this program would
not be affected. The Department would welcome comments on this issue,
particularly as to whether these exclusions should extend to other
periods or situations.
Section 331.15 How will other grants, subsidies, or incentives be
treated by the Department?
The Department understands that Potomac Airfield, College Park
Airport, and Washington Executive Airport/Hyde Field, at least,
received Federal grants under the Airport Improvement Program to
reimburse them for the cost of operations and capital improvements
associated with implementing security programs. State and local
authorities may have provided grants as well. The Department is
proposing that any applicants who received, directly or indirectly,
post-September 11 grants report them as revenues, because such grants
should have the effect of reducing reimbursable losses. The Department
is also proposing to add a question on receipt of any such grants in
the Background and Eligibility Form to ensure proper focus on this
issue.
Section 331.17 How will the Department verify and audit claims under
this part?
This part proposes the method by which the Department would handle
verification and auditing of claims. It is clear that Congress intended
that these appropriated funds be used carefully and responsibly to
reimburse only eligible entities for their eligible losses. To that
end, section 185 would provide funds for an ``independent verification
regime,'' and would require that an independent audit be completed
before funds were distributed to eligible general aviation entities.
Accordingly, the Department's Office of the Inspector General (OIG) was
consulted as to how to most efficiently and effectively implement this
mandate. In part because there may be a wide range in the dollar amount
of claims, we are proposing, with OIG concurrence, a flexible approach
to achieve Congress's objectives. First, all applicants would be
required to certify the accuracy and completeness of their claims,
under penalty of law. The Department has considerable experience with
such certification requirements, can refer suspected violations to the
Department of Justice, and itself has an enforcement program under
authority of the Program Fraud and Civil Penalties Act (31 U.S.C. 3801
note, Pub. L. 99-509; 49 CFR Part 31). For verification purposes,
applicants would also be required to retain all financial records for
the period covered by their claim, as well as all data used in support
of their claim (including actual monthly result data from 1999
forward).
Department staff including attorneys, accountants, and analysts,
who have extensive experience in reviewing the financial data of
aviation firms, would initially review each claim in detail, contacting
the individual applicants and consulting with OIG as questions arise in
order to verify the accuracy of the information provided. Larger
claims, and any questioned claims, would be subject to individual
audits. The Department proposes that this auditing process should be
flexible. Where an audit is warranted, the Department would forward the
claim to either the OIG or an independent auditor. Claims believed to
be fraudulent would be referred to the Department of Justice for
possible criminal or civil enforcement actions The Department believes
that this process, relying on the audit capabilities of the OIG and/or
independent auditors, and the enforcement capabilities of both DOT and
the Department of Justice, would meet Congress' intent that only
meritorious claims be reimbursed.
Under section 185, expenses necessitated by independent
verification and auditing activities may be paid with funds
appropriated in the Act. While the Department does not anticipate that
the verification activities performed by its analysts would necessitate
payment
[[Page 58552]]
from the appropriated funds, the Department recognizes that the costs
of an audit, particularly for larger claims, could be considerable.
Therefore, the Department is proposing to retain the flexibility to
recover the costs of audits from the amount of reimbursement that
eligible applicants would have received if their claims did not
necessitate audits in the first place. For example, if the cost to
audit a questioned claim of $100,000 is $5,000, then the applicant
would receive $95,000 in reimbursement once the Department determined
that the payment was appropriate.
Section 331.19 Who will approve reimbursement once an application has
been received and a claim has been verified and/or audited?
This part proposes to give the Assistant Secretary for Aviation and
International Affairs authority to determine eligibility and authorize
reimbursement under the Act. Expertise on aviation policy resides with
the Assistant Secretary for Aviation and International Affairs. This
official has administered similar programs and is supported by a
professional staff of aviation analysts and economists who are
knowledgeable on such matters.
Subpart B--Application Procedures
Section 331.21 What information must operators or providers submit in
their applications for reimbursement?
In order to calculate and support a reimbursement claim, the
Department proposes that an applicant complete the form which is found
in Appendix A and submit the information it requires, including
eligibility information and a summary calculation of the financial data
supporting an applicant's claim for reimbursement, as shown in the
following table (which is incorporated into Appendix A):
Financial Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C
-----------------------------------------------------------------------------------------
Pre 9-11-01 Forecast or
after-the-fact estimate for Actual results for the Column A minus Column B
the eligible period* eligible period*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 1--Total Operating Revenues..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 2--Total Operating Expenses..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 3--Total Operating Income or (Loss)......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 4--Non-operating Revenue.................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 5--Non-operating Expenses................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line 6--Non-operating income(loss)............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total--Line 3 plus line 6.................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Department proposes in the Background and Eligibility Form to
require the submission of an applicant's profit and loss statements, or
such financial records generated as a routine matter for the use of
management, for the years 1999 through 2005. Similarly, the Department
proposes to require the submission of actual forecasts that applicants
prepared for both these baseline periods and for any part of the
reimbursement periods. The Department further proposes that, where
appropriate, after-the-fact forecasts should be allowed. After-the-fact
forecasts are discussed in more detail under subsection (f) of this
section.
All financial records submitted in support on an application would
be subject to the same certification requirement as the other
information that is submitted through the Background and Eligibility
Form. These data would enable the Department to establish baseline
business trends and forecast experience for applicants prior to the
September 11, 2001 terrorist attacks, which would be used as benchmarks
to test the reasonableness of the applicants' reimbursement claims.
The Department would use the applicant's actual and forecast
results for the appropriate reimbursement period, together with such
sources as macroeconomic data, individualized applicant business trend
information, and the applicant's explanations, to make its
determinations on the payment of claims.
In calculating their revenues and expenses, the Department proposes
that applicants utilize already existing financial data, supplemented
as necessary by footnotes or explanations pertinent to the
reimbursement application. Financial schedules, such as income
statements, statements of operations, forecasts of operating results,
budget documents or other similar information, may be used as the
reference sources for completing the table in Appendix A. The
Department suggests that these documents be a starting point under the
assumption that most businesses maintain financial statements as a
routine part of doing business, or for other reasons such as income tax
preparation, loan applications, or contract negotiations. The
Department believes that use of these documents, rather than requiring
the completion of that detailed new forms, would facilitate the
reimbursement process, especially for the smaller companies typically
engaged in fewer activities.
As the eligibility periods, for the most part, begin and end on
days other than the first or last days of the month, quarter or year,
the Department proposes in subsection (b) that data from already
existing financial statements would be adjusted, on a pro-rata basis,
to comply with the eligibility periods.
The Department anticipates that some applicants may have prepared
multiple forecasts for the same time period of time. Therefore, the
Department proposes in subsection (c) that, if multiple forecasts were
prepared, applicants utilize the one most recently approved, prior to
September 11, 2001, so long as it was otherwise objective and reliable.
In subsection (d), the Department proposes that information
provided by applicants for use in the October 2005 DOT study should not
be merely recited for purposes of the application. While
[[Page 58553]]
the October 2005 DOT study noted that the losses it reported were
likely to ``reasonably approximate'' the general aviation leaseholder's
total losses (at least through January 23, 2004), it also advised that
the financial data establishing the basis for a payment should ``be
subject to a more rigorous verification regime.'' The Department
proposes that applicants not simply rely on the estimates as then
reported; if they do, the Department would have the right to reject
their claim or forward it for full verification follow-up, including
audit. Applicants who reiterate the losses reported in the October 2005
DOT study should make fully transparent the bases for those estimates,
and provide a basis for testing the reasonableness of the estimates by
supplying supporting data.
In subsection (e) the Department proposes that failure to complete
the required information constitutes grounds for a rejection. This
subsection would adhere to Congress's desire that the appropriated
funds be expended prudently. The proposed language in subsection (e)
leaves the Department discretion in determining whether or not the
missing information warrants a rejection. Subsection (e) also seeks to
clarify that the burden to substantiate claims should rest with
applicants and not the Department.
Subsection (f) proposes to allow the use of ``after-the-fact''
forecasts. If pre-September 11, 2001 forecasts were not prepared at
all, or prepared for less than the full reimbursement period, the rule
would require applicants to make a good faith effort to quantify their
expected operating results for the part of the reimbursement period not
covered by its actual forecasts. The Department expects that not all of
the fixed-based general aviation operators and providers of general
aviation ground support services routinely forecasted projected
revenues and expenses, (and, for those that did, they may have done so
only in a rough or summary ``year-end'' fashion that would not permit
ready calculations of losses due to September 11-related events).
Further, the losses eligible for reimbursement here can extend over
several years, for which reliable forecasts may not be available, and
even when firms utilize advanced forecasting methods, there is
necessarily a range of reasonableness in any such exercise that makes
precise determinations of loss impossible. However, the Department
believes that Congress readily understood that precise calculations of
losses cannot be practically obtained, and that good-faith, carefully
considered estimates would need to be used in determining losses, with
those estimates subject to independent verification and audit to
prevent overreaching and fraud.
In subsection (g), the Department proposes that the Background and
Eligibility Form, along with supporting financial documents, be
certified as having been prepared under the supervision of the
applicant's President, Chief Executive Officer, or Chief Operating
Officer, and as being true and accurate to the best of his or her
knowledge. Subsection (g) further proposes that applicants acknowledge
in their certifications that the submission of false or deceptive data
is punishable under law by fine and/or imprisonment.
To assist the Department with verification of claims, and to
facilitate any necessary audits, the Department proposes in subsection
(h) that applicants retain all materials that they relied upon to
establish their claim for reimbursable losses.
The Department proposes under subsection (i) to seek information on
other specific types of expenses, including mitigating expenses,
lobbying expenses, and special expenses.
In subsection (j), the Department proposes that if an applicant
believes the release by the Department to the public of information
provided by the applicant would cause substantial harm to the
applicant's competitive position, the applicant may request that the
Department hold such submissions confidential. In preference to
``blanket'' requests, confidentiality requests should be specific to
particular data submitted, as it is very unlikely that all submitted
data could cause competitive harm if released to the public.
Section 331.23 In what format must applications be submitted?
The Department proposes in subsection (a) that the Background and
Eligibility Form found at Appendix A be submitted in hardcopy format
and, if possible, electronic format. The Department also proposes to
make the Background and Eligibility Form available in electronic
format.
In order to facilitate the review and manipulation of financial
data for verification purposes within the Department, subsection (b)
proposes that supporting financial records be submitted in electronic
format.
Under subsection (c), the Department proposes that faxes and e-
mails not be accepted because of the difficulties they create in
handling large volumes of documents.
Section 331.25 To what address must operators or providers send their
applications?
In order to expedite the timely receipt and review of applications,
the Department is proposing in subsection (b) that applications be
submitted via an express package service (e.g., Federal Express, DHL,
UPS). Alternatively, applicants may wish to hand deliver applications
to the Department. The Department would make arrangements to receive
such packages in a method that would be consistent with current
Departmental office security procedures.
The Department proposes that the address stated in the rule be
mandatory. Accordingly, the Department proposes in subsection (c) to
not accept applications sent elsewhere.
Section 331.27 When are applications due under this part?
Reimbursement is expected to provide potential applicants,
particularly small entities, with significant relief. The Department
expects that most, if not all, potential applicants are aware of the
reimbursement available under this rule, and that they are in a
position to quickly comply with its requirements in order to expedite
their reimbursement payments. The Department would take steps to post
all relevant information on its Web site and coordinate with the
management at the five airports to ensure that all potential applicants
are promptly advised of the issuance of the final rule. For the
foregoing reasons, the Department proposes to expedite the time
requirement for submitting applications. We believe that a period of 30
calendar days from the date of publication of the final rule provides
sufficient time to complete and submit an application. The Department
welcomes comment from potential applicants on the sufficiency of this
proposed period.
Subpart C--Set-Aside for Operators or Providers at Certain Airports
Section 331.31 What funds are available to applicants under this
subpart?
The 2006 Appropriation Act provides that, from the full $17 million
appropriated, an amount not to exceed $5 million shall be available on
a pro-rata basis, if necessary, to fixed-based general aviation
operators and providers of general aviation ground support services at
the three Maryland airports--College Park, Potomac Airfield, and
Washington Executive/Hyde Field. The Department tentatively construes
this language as necessitating a separate
[[Page 58554]]
totaling of the eligible losses incurred at these three airports.
Section 331.33 Which operators and providers are eligible for the set-
aside under this subpart?
The Department reads the plain language of the Act to restrict
eligibility under this subpart to fixed-based general aviation
operators and providers of general aviation ground support services at
the three Maryland airports--College Park, Potomac Airfield, and
Washington Executive/Hyde Field.
Section 331.35 What is the basis upon which operators and providers
will be reimbursed through the set-aside under this subpart?
For the $5 million set-aside for the three Maryland airports, the
Department proposes to apply the same procedures set forth in subpart B
of this part. The Department reads section 185 of the Act to require an
additional procedure if total eligible losses at the three Maryland
airports exceed $5 million. In the event that eligible losses at the
three Maryland airports total more than $5 million, the Department
proposes that a proportionate amount should be paid to each eligible
entity. For the reasons set forth in Section 331.17, the Department
proposes to deduct from an applicant's reimbursement amount the cost of
any independent audit associated with a questioned claim, before
distributing funds to the applicant.
Regulatory Analyses and Notices
This NPRM is nonsignificant for purposes of Executive Order 12866
and the Department of Transportation's Regulatory Policies and
Procedures. The NPRM proposes procedures to provide reimbursement to
eligible applicants from funds appropriated by Congress. The Department
administers a number of programs entailing similar procedures. This
NPRM therefore does not represent a significant departure from existing
regulations and policy. Furthermore, once implemented, this rule would
have only minimal cost impacts on regulated parties.
Federalism
This rule does not directly affect States, the relationship between
the national government and the States, or the distribution of power
among the national government and the States, such that consultation
with States and local governments is required under Executive Order
13132.
Regulatory Flexibility Act
The Department certifies that this rule would not have significant
economic effects on a substantial number of small entities. In the
aggregate, the cost among all applicants for gathering information and
submitting an application should range from $2,501 to $5,003.
Paperwork Reduction Act
This rule contains information collection requirements subject to
the Paperwork Reduction Act of 1995, specifically the application
documents that fixed-based general aviation operators and providers of
general aviation ground support services must submit to the Department
to obtain compensation. The title, description, and respondent
description of the information collections are shown below as well as
an estimate of the annual recordkeeping and periodic reporting burden.
Included in the estimate is the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
Title: Procedures (and Form) for Reimbursement of General Aviation
Operators and Service Providers in Washington, DC Area.
Need for Information: The information is required to administer the
requirements of the Act.
Use of Information: The Department of Transportation would use the
data submitted by the fixed-based general aviation operators and
providers of general aviation ground support services to determine
their reimbursement for direct and incremental financial losses
incurred while the airports were closed due to Federal Government
actions taken after the terrorist attacks on September 11, 2001.
Frequency: For this final rule, the Department would collect the
information once from fix-based general aviation operators and
providers of general aviation ground support services.
Respondents: The respondents include an estimated 24 fixed-based
general aviation operators and providers of general aviation ground
support service. This estimate is based on the number of fixed-based
general aviation operators and providers of general aviation ground
support services identified in the October 2005 DOT study.
Burden Estimate: Total applicant burden of between $2,501 and
$5,003 based on a burden of between three (3) and six (6) hours per
applicant and a weighted average cost per hour of $34.74.
Form(s): The data would be collected on the Form entitled,
``Background and Eligibility Information for Applicants Filing for
Reimbursement Under Section 185 of Public Law 109-115,'' and included
at Appendix A to this part.
Average Burden Hours per Respondent: A weighted average of four (4)
hours per application.
The Department has requested approval from the Office of Management
and Budget for this information collection.
Other Statutes and Executive Orders
There are a number of other statutes and Executive Orders that
apply to the rulemaking process that the Department must consider in
all rulemakings, but which the Department has determined are not
sufficiently implicated by this NPRM to require further action.
Specifically, this NPRM does not impact the human environment under the
National Environmental Policy Act, does not concern constitutionally
protected property rights such that Executive Order 12630 is
implicated, does not involve policies with tribal implications such the
Executive Order 13175 is invoked, does not concern civil justice reform
under Executive Order 12988, does not involve the protection of
children from environmental risks under Executive Order 13045, and will
not result in expenditures by State, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
one year.
Comment Period
This rule concerns a small group of potential applicants and others
who might be interested, and the Department believes that most, if not
all, are aware of the provisions of the statute. The Department
therefore concludes that 30 days is sufficient time for the receipt of
comments from the public.
List of Subjects in 14 CFR Part 331
Air transportation, Airports, Airspace, Claims, Grant programs,
Reporting and recordkeeping requirements.
Issued this 19th day of September, 2006, at Washington, DC.
Maria Cino,
Acting Secretary of Transportation.
For the reasons set forth in the preamble, the Department proposes
to add 14 CFR part 331 to read as follows:
PART 331--PROCEDURES FOR REIMBURSEMENT OF GENERAL AVIATION
OPERATORS AND SERVICE PROVIDERS IN THE WASHINGTON, DC AREA
Subpart A--General Provisions
331.1 What is the purpose of this part?
331.3 What do the terms used in this part mean?
[[Page 58555]]
331.5 Who may apply for reimbursement under this part?
331.7 What losses will be reimbursed?
331.9 What funds will the Department distribute under this part?
331.11 What are the limits on reimbursement to operators or
providers?
331.13 What is the eligible reimbursement period under this part?
331.15 How will other grants, subsidies, or incentives be treated by
the Department?
331.17 How will the Department verify and audit claims under this
part?
331.19 Who will approve reimbursement once an application has been
received and a claim has been verified and/or audited?
Subpart B--Application Procedures
331.21 What information must operators or providers submit in their
applications for reimbursement?
331.23 In what format must applications be submitted?
331.25 To what address must operators or providers send their
applications?
331.27 When are applications due under this part?
Subpart C--Set-Aside for Operators and Providers at Certain Airports
331.31 What funds are available to applicants under this subpart?
331.33 Which operators and providers are eligible for the set-aside
under this subpart?
331.35 What is the basis upon which operators and providers will be
reimbursed through the set-aside under this subpart?
Appendix A to Part 331--Background and Eligibility Information for
Applicants Filing for Reimbursement under Section 185 of Public Law
109-115
Subpart A--General Provisions
Sec. 331.1 What is the purpose of this part?
The purpose of this part is to establish procedures to implement
section 185 of the Transportation, Treasury, Housing and Urban
Development, the Judiciary, the District of Columbia, and Independent
Agencies Appropriation Act, 2006 (``the Act'' or ``the 2006
Appropriation Act''), Public Law 109-115, 119 Stat. 2396. Section 185
is intended to reimburse certain fixed-based general aviation operators
or providers of general aviation ground support services at five
airports in the Washington, DC metropolitan area for direct and
incremental losses due to the actions of the Federal Government to
close airports to general aviation operations following the terrorist
attacks of September 11, 2001.
Sec. 331.3 What do the terms used in this part mean?
The following terms apply to this part:
Airport means Ronald Reagan Washington National Airport; College
Park Airport in College Park, Maryland; Potomac Airfield in Fort
Washington, Maryland; Washington Executive/Hyde Field in Clinton,
Maryland; or Washington South Capitol Street Heliport in Washington,
DC.
Closed or closure means the period of time until the first general
aviation operations were generally permitted at Ronald Reagan
Washington National Airport; until November 30, 2005 at Washington
South Capitol Street Heliport; or the earliest that transient traffic
was generally permitted to return to the three Maryland airports.
Department means the U.S. Department of Transportation and all its
components, including the Office of the Secretary (OST) and the Federal
Aviation Administration (FAA).
Direct and incremental losses means losses incurred by a fixed-
based general aviation operator or a provider of general aviation
ground support services as a result of the Federal Government's closure
of an airport following the terrorist attacks against the United States
on September 11, 2001. These losses do not include any losses that
would have been incurred had the terrorist attacks on the United States
of September 11, 2001 not occurred.
Fixed-based general aviation operator means an entity based at a
particular airport that provides services to and support for general
aviation activities, including the provision of fuel and oil, aircraft
storage and tie-down, airframe and engine maintenance, avionics repair,
baggage handling, deicing, and the provision of air charter services.
The term does not include an entity that exclusively provides products
for general aviation activities (e.g. a parts supplier).
Forecast or forecast data means a projection of revenue and
expenses during the eligible reimbursement period had the attacks of
September 11, 2001 not occurred.
Incurred means to become liable or subject to (as in ``to incur a
debt'').
Loss means something that is gone and cannot be recovered.
Provider of general aviation ground support services means an
entity that does not qualify as a fixed-based general aviation operator
but operates at a particular airport and supplies services, either
exclusively or predominantly, to support general aviation activities,
including flight schools or security services. The term does not
include an entity that exclusively provides products for general
aviation activities (e.g. a parts or equipment supplier).
You means fixed-based general aviation operators or providers of
general aviation ground support services.
Sec. 331.5 Who may apply for reimbursement under this part?
If you are an eligible fixed-based general aviation operator or
provider of general aviation ground support services (collectively
``operators or providers'') at an eligible airport or airports in the
Washington, DC area, you may apply for reimbursement for direct and
incremental losses under this part. If you are applying for
reimbursement based on losses at more than one airport, then you must
submit separate applications for each airport. For example, if you are
a provider of general aviation ground support services at Ronald Reagan
Washington National Airport and Potomac Airfield in Fort Washington,
Maryland, you must submit two separate applications.
Sec. 331.7 What losses will be reimbursed?
(a) You may be reimbursed for the difference between the net income
you actually or reasonably forecast for the eligible reimbursement
period and the actual net income you earned during the eligible
reimbursement period. If you did not forecast net income for the
eligible reimbursement period or any part of the eligible reimbursement
period, you may be reimbursed for the difference between what you can
show you would have reasonably expected to earn as net income during
that period had the airport at which you are or were an operator or
provider not closed, and the actual net income you earned during the
eligible reimbursement period.
(b) If you make a claim for extraordinary, non-recurring, or
unusual adjustments, you must demonstrate that such adjustments were
fully attributable to the Federal Government's closure of the five
Washington-area airports, are in conformity with Generally Accepted
Accounting Principles, were fully borne within the statutory
reimbursement period, that the loss was not discretionary in nature,
and that reimbursement would not be duplicative of other relief.
(c) A temporary loss that you recovered after the attacks of
September 11, 2001, or that you expect to recover, is not eligible for
reimbursement under this part. You will not be reimbursed for those
losses incurred through your own fault, negligence, or violation of
law, or because of the actions of a third party (e.g. an airport).
(d) If you engaged in any non-aviation income-producing activities
after September 11, 2001, such income must be reported under question
number 5 on the Background and Eligibility Form.
[[Page 58556]]
(e) So called ``cost savings'' claims (i.e. increasing the claimed
amount of reimbursement by reducing actual expenses to ``adjust'' for
savings in expense categories asserted not to have been affected by the
terrorist attacks) are not eligible for reimbursement.
(f) You cannot claim reimbursement for the lost time value of money
(i.e. interest on lost profits for the period of time the funds were
not available for your use).
(g) Lobbying fees and attorneys' fees are not eligible for
reimbursement.
(h) Your calculation of revenues, expenses and income must be based
on financial documents maintained in the ordinary course of business
that were prepared for the eligible reimbursement period, such as
income statements, statements of operations, profit-and-loss
statements, operating forecasts, budget documents or other similar
documents.
Sec. 331.9 What funds will the Department distribute under this part?
The Department will distribute the full amount of reimbursement it
determines is payable to you under section 185 of the Act.
Sec. 331.11 What are the limits on reimbursement to operators or
providers?
(a) You are eligible to receive reimbursement subject to the
subpart C set-aside for eligible operators or providers at College Park
Airport in College Park, Maryland; Potomac Airfield in Fort Washington,
Maryland; and Washington Executive/Hyde Field in Clinton, Maryland. The
amount available to you as reimbursement may be reduced to cover the
cost of independent verification and auditing, as set forth in Section
331.17.
(b) If you receive more reimbursement than the amount to which you
are entitled under section 185 of the Act or the subpart C set-aside,
the Department will notify you of the basis for the determination and
the amount that you must repay to the Department. The Department will
follow collection procedures under the Federal Claims Collection Act of
1966 (31 U.S.C. 3701 et seq.) to the extent required by law, in
recovering such overpayments.
(c) Payment will not be made to you until you have agreed to
release the United States Government for all claims for financial
losses resulting from the closure of the five airports in the
Washington, DC area. The Department will provide a release form to
applicants that must be completed before any payment is made under
Section 185.
Sec. 331.13 What is the eligible reimbursement period under this
part?
The eligible reimbursement period for direct and incremental losses
differs by airport:
(a) For Ronald Reagan Washington National Airport the eligibility
period for reimbursement is from September 11, 2001 until October 18,
2005.
(b) For College Park Airport in College Park, Maryland, the
eligibility period for reimbursement is from September 11, 2001 until
February 13, 2005.
(c) For Potomac Airfield in Fort Washington, Maryland, the
eligibility period for reimbursement is from September 11, 2001 until
February 13, 2005.
(d) For the Washington South Capitol Street Heliport in Washington,
DC, the eligibility period for reimbursement is from September 11, 2001
to November 30, 2005.
(e) For Washington Executive/Hyde Field in Clinton, Maryland, there
are two eligibility periods for reimbursement. The first period is from
September 11, 2001 until May 16, 2002. The second period is from
September 29, 2002 until February 13, 2005.
Sec. 331.15 How will other grants, subsidies, or incentives be
treated by the Department?
Grants, subsidies, or incentives that you have received during the
eligible reimbursement period, either directly or indirectly, from
Federal, State, and local entities, to reimburse you for the cost of
operations and capital improvements associated with implementing
security programs, or maintaining or providing general aviation
services and facilities, will be considered revenues and should be
reported as such on your application.
Sec. 331.17 How will the Department verify and audit claims under
this part?
Departmental staff will initially review each claim in detail, and
contact you should questions arise. If they are unable to
satisfactorily resolve the matter following consultation with you, your
claim will be forwarded to the Office of the Inspector General, or
another independent auditor, for verification and, if necessary, an
audit. In addition, the Department may consult with, or make referrals
to, other government agencies, including the Department of Justice.
Sec. 331.19 Who will approve reimbursement once an application has
been received and a claim has been verified and/or audited?
The Assistant Secretary of Aviation and International Affairs will
make a final determination of your eligibility and authorize
reimbursement to you.
Subpart B--Application Procedures
Sec. 331.21 What information must operators or providers submit in
their applications for reimbursement?
(a) You must submit the form entitled Background and Eligibility
Information for Applicants Filing for Compensation Under Section 185 of
Public Law 109-115 (``Background and Eligibility Form''), which is
found in Appendix A to this part, along with the profit and loss
statements, forecasts, or other financial documents (collectively
``supporting financial documents'') generated as a routine matter for
the purposes of managing your business, and relied upon in completing
your application.
(b) To the extent that your calculation of revenues, expenses and
incomes are based on monthly records, you must adjust your calculation,
on a pro-rata basis, to conform to the eligibility period. For example,
if you utilize a monthly financial record to prepare a calculation of
your September 2001 revenues, you should apportion your results for the
period between September 11 and September 30, 2001.
(c) If multiple forecasts were prepared for the same period, you
must utilize the one most recently approved, prior to September 11,
2001, so long as it is otherwise objective and reliable.
(d) If you provided information to the Department as part of its
study entitled Estimated Financial Losses to Selected General Aviation
Entities in the Washington, DC Area (Oct. 2005) (``2005 General
Aviation Study''), you should not simply reiterate the same data
provided to the Department at that time; you must provide the most
current information that is available to you. If you do reiterate that
same data provided to the Department for the 2005 General Aviation
Study, the basis for your estimates must be verifiable from the
supporting financial documents that you submit with your application.
(e) Failure to include all required information will delay
consideration of your application by the Department and may result in a
rejection. You have the burden to document and substantiate your claim;
the Department will provide reimbursement only if it is satisfied that
payment is fully supported.
(f) If, prior to September 11, 2001, you did not prepare a forecast
covering the entire eligible reimbursement period, or if the forecast
you completed is not relevant to the information required by this part,
you may submit an ``after-the-fact'' estimate of the amount that you
would have reasonably expected to accrue as net income had the airport
at which you are or were an operator or
[[Page 58557]]
provider not closed. ``After-the-fact'' estimates must consider items
particular to your business, including labor agreements and the terms
of contracts in place at the time of the eligible reimbursement period,
short-term or long-term budget documents, documents submitted in
support of applications for loans or lines-of-credit, and other similar
documents. You must explain the methodology that you used when
preparing your reconstructed forecast.
(g) You must certify that the information on the Background and
Eligibility Form and all of the supporting financial documents that you
are submitting is true and accurate under penalty of law and that you
acknowledge that falsification of information may result in prosecution
and the imposition of a fine and/or imprisonment.
(h) You must retain all materials you relied upon to establish your
claim for losses.
(i) You must provide mitigating expenses, lobbying expenses, and
special expenses, as well as extraordinary adjustments, as instructed
on the Background and Eligibility Form.
(j) If you believe that the release of financial information
provided to the Department in support of your application would cause
you substantial harm if released by the Department to the public upon
an appropriately made request, you may request that the Department hold
portions of your application as confidential. Your request must specify
the portions of your application that should be held by the Department
as confidential, and you must provide an explanation as to how the
release of such information would cause you substantial harm.
Sec. 331.23 In what format must applications be submitted?
(a) Appendix A of this part must be submitted in hardcopy format
and, if possible, in electronic format. The Department has made
available an electronic version of this form at the following Web site:
http://ostpxweb.dot.gov/aviation/index.html. (Click on ``Programs.'')
(b) All supporting financial documents must be submitted in
electronic format utilizing a 3.5 inch floppy disk, compact
disk, or flash memory stick.
(c) Faxed and e-mailed applications are not acceptable and will not
be considered.
Sec. 331.25 To what address must operators or providers send their
applications?
(a) You must submit your application and all required supporting
information, to the following address: U.S. Department of
Transportation, Aviation Relief Desk (X-50), 400 7th Street, SW.,
Washington, DC 20590.
(b) Your application must be submitted via courier or an express
package service, such as Federal Express, UPS, or DHL.
(c) If complete applications are not submitted to the address in
paragraph (a) of this section, they will not be accepted by the
Department.
Sec. 331.27 When are applications due under this part?
You must submit your application within 30 calendar days from the
effective date of the final rule.
Subpart C--Set-Aside for Operators and Providers at Certain
Airports
Sec. 331.31 What funds are available to applicants under this
subpart?
The Department is setting aside a sum of $5 million to reimburse
eligible operators or providers, as set forth in section 185 of the
Act.
Sec. 331.33 Which operators and providers are eligible for the set-
aside under this subpart?
Operators or providers at the following three airports during the
eligible reimbursement periods are eligible for the set-aside:
(a) College Park Airport in College Park, Maryland;
(b) Potomac Airfield in Fort Washington, Maryland; and
(c) Washington Executive/Hyde Field in Clinton, Maryland.
Sec. 331.35 What is the basis upon which operators or providers will
be reimbursed through the set-aside under this subpart?
Operators or providers eligible under this subpart will be
reimbursed pursuant to the same procedures set forth in subpart B of
this part. If total losses for all eligible claims at the three
airports set forth in Sec. 331.31 of this part are less than $5
million, then such claims will be paid in full. If the total losses for
all eligible claims at the three airports set forth in Sec. 331.31 of
this part exceed $5 million, then the total losses will be divided on a
pro rata basis, and a proportionate amount for each claim will be
distributed to applicants.
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Instructions for Completing Background and Eligibility Information for
Applicants Filing for Reimbursement Under Section 185 of Public Law
109-115
1. Applicant name
This is the person or legal entity who undertakes to act as a
fixed-based general aviation operator or who provides general
aviation ground support services, directly or by a lease or any
other arrangement.
2. Applicant address
The applicant address is that location within the local tax
authority jurisdiction that is held out to the public as the
business or airport address.
3. Airport of operation on September 11, 2001
This question asks the applicant to identify those airports in
the Washington, DC area where it provided either fixed-based general
aviation services or general aviation ground support services on
September 11, 2001. Check as many airports as you served on
September 11, 2001.
4. Briefly describe the nature of the applicant's operations as a
fixed-based general aviation operator or a provider of general aviation
ground support services at each airport during the eligible period for
reimbursement.
You should describe the specific fixed-based general aviation
services or general aviation ground support services that you
provided at each of the airports.
5. Did the applicant or any part of it conduct non-fixed-based general
aviation activities or provide non-aviation ground support services
during the 2001 through 2005 period?
Check ``Yes'' if you conducted any non-fixed-based general
aviation activities or provided non-aviation ground support services
during the 2001 through 2005 period. Describe the activities that
you undertook during this period that did not directly support
general aviation at the airport.
6. Briefly describe how the events of September 11, 2001 affected the
applicant's operations as a fixed-based general aviation operator or a
provider of general aviation ground support services.
You should describe how the level and conduct of your operations
as a fixed-based general aviation operator or your operations as a
provider of general aviation ground support services were changed as
a result of September 11, 2001 and the ensuing security restrictions
that were imposed by the Federal Government.
7. Did the applicant undertake any actions to lessen or offset the
impact of the Federal Government's closure of airports in the
Washington, DC area following the attacks of September 11, 2001?
Check ``Yes'' if you attempted to minimize the impact that the
terrorist attacks of September 11, 2001, had on your business.
Briefly describe your actions and the effect that they had on you.
Include any activities or services undertaken after September 11,
2001 that did not provide support for general aviation but that did
provide revenues to sustain your business.
[[Page 58568]]
8. Has the applicant filed income taxes for any period between 1999 and
2005?
Check ``Yes'' if you filed income taxes during this period, and
indicate the filing status under which you filed your income tax
returns.
9. Baseline Financial Data and Forecasts. Attach to this Appendix
copies of your profit and loss statements, or such financial records as
you generated as a routine matter for the use of management, for the
periods 1999 through 2005, that show your actual financial results.
Similarly, attach copies of any actual forecasts that you prepared for
both these baseline periods and for any part of the reimbursement
periods that were prepared prior to September 11, 2001.
This question directs applicants to provide the Department with
certain financial documents in order to verify and substantiate
their claims. Documents that you have already prepared should be
sufficient. When necessary, you should supplement these documents
with footnotes or explanations that are pertinent to your
reimbursement claim. The financial data may include such documents
as income statements, statements of operations, forecasts of
operating results, income projections, pro forma budget projections,
budget documents, tax preparation support material, information
presented in investment perspectives and registrations, or other
similar information that in whole or in part cover the period from
1999 through 2005.
10. By regulation, the requested amount of reimbursement claimed below
must be based on a comparison of actual operating results (revenues,
expenses and profits or losses) with a company forecast of operating
results that existed prior to September 11, 2001 if such a forecast was
actually prepared. If the applicant did not prepare any such pre-
September 11 forecasts, or prepared them for less than the full
reimbursement period, an after-the-fact estimate of what the applicant
can document it reasonably expected to earn during the remaining
eligible period may be submitted. If such an after-the-fact estimate is
used, describe below the period for which it applies and the
methodology that was used to determine it.
Indicate here whether an ``after-the-fact'' forecast was
prepared, and briefly describe the methodology used in preparing the
forecast. Your methodology must take into account items relevant to
your businesses, such as the terms of existing contracts, short-term
or long-term budget documents, documents submitted in support of
applications for loans or lines-of-credit, existing labor agreements
and leasing agreements, and other similar types of documents.
In preparing your ``after-the-fact'' forecast, you may wish to
consult a July 2001 report prepared for the FAA, entitled
Forecasting Aviation Activity by Airport. This report was prepared
by GRA, Incorporated (GRA), for the FAA's Office of Aviation Policy
Plans Statistical and Forecast Branch (APO-110). While the
Department recognizes that fixed based general aviation operators
and providers of general aviation ground support services are
different entities from airports, the Department believes that this
document offers relevant guidance to applicants who do not prepare
forecasts as part of regular business operations. This July 2001
report may be accessed at: http://www.faa.gov/data_statistics/aviation_data_statistics/forecasting/media/AF1.doc
.
The July 2001 report explains the basic steps usually utilized
in preparing forecasts, including: Identifying parameters and
measures to forecast; collecting forecast information of expected
revenues or expenses, including budgets; gathering and evaluating
data; selecting a forecast method (such as regression and trend
analysis, share analysis, or exponential smoothing); applying
methods and evaluating results; and summarizing and documenting the
results.
Additionally, data sources to assist you in making adjustments
to your forecast are available from the Department's Web site at
http://ostpxweb.dot.gov/aviation/index.html (Click on ``Programs'').
The Department notes that, while it can answer questions for
applicants that might arise while applicants develop forecasts, the
Department is not in a position to propose or develop projections
for applicants.
11. Reimbursement Claim
For purposes of completing the information in the reimbursement
claim table, total operating revenues (line 1) include the inflow of
funds to the applicant resulting from the sale of goods and services
related to the activities of a fixed-based operator or a provider of
general aviation services. Examples include, but are not limited to
monetary amounts or value received for providing: Aircraft fuel or
oil; delivery of aircraft fuel or oil; transient and long-term
storing, tie down parking and sheltering of aircraft; maintenance,
inspection, checking, upgrading of aircraft and aircraft related
equipment and for polishing and cleaning property and equipment; for
providing flight instruction services and materials; and
miscellaneous items for purchase such as maps, books, flight
clothing, sectional charts, devices and parts for aircraft, food
services, hospitality services, auto rentals, aircraft custodial and
sanitation services.
Total operating expenses (line 2) include the cost to the
applicant of providing the goods and services related to the
activities of a fixed-based operator or a provider of general
aviation services. Examples include, but are not limited to: Labor
costs for all categories of employees (including compensation,
vacation and sick leave pay, medical benefits, workmen's
compensation contributions, accruals or annuity payments to pension
funds, training reimbursements, professional fees, licensing fees,
educational or recreational activities for the benefit of the
employee, stock incentives, etc.); the cost of fuel and oil
including nonrefundable aircraft fuel and oil taxes; insurance;
flight and ground equipment parts; general services purchased for
flight or ground equipment maintenance; depreciation of flight and
ground equipment; amortization of capitalized leases for flight and
ground equipment; provisions for obsolescence and deterioration of
spare parts; and rental expenses of flight and ground equipment.
Advertising, promotion and publicity expenses, landing fees,
clearance, customs and duties, utilities, bookkeeping, accounting,
recordkeeping and legal services are also part of the total
operating expenses.
For reasons set forth elsewhere in section 331.7 of this Part,
you may not include lobbying expenses.
Total operating income or loss is calculated by subtracting the
total operating expenses from the total operating revenues. If the
total operating revenues exceed the total operating expenses, the
calculation results in a total operating income. If the total
operating expenses exceed the total operating revenues, the
calculation results in a total operating loss.
Non-operating revenue and expenses include: Income and loss
incident to commercial ventures not inherently related to the direct
provision of fixed-based operator services or general aviation
ground support services; other revenues and expenses attributable to
financing or other activities that are extraneous to and not an
integral part of general aviation services; and special recurrent
items of a nonperiod nature.
Examples of non-operating income include, but are not limited
to: interest income; foreign exchange gains; equity income of an
investor controlled company; intercompany transactions; dividend
income; net unrealized gains on marketable equity securities; and
capital gains.
Examples of non-operating expenses include, but are not limited
to: interest on long-term debt and capital leases; interest on
short-term debt; imputed interest capitalized; amortization of
discount and expense on debt; foreign exchange losses; fines or
penalties imposed by governmental authorities; costs related to
property held for future use; donations to charities, social and
community welfare purposes; losses on reacquired and retired or
resold debt securities; and losses on uncollectible non-operating
receivables.
Non-operating income is the result of subtracting the non-
operating expenses from the non-operating revenues.
Total income in the sum of the total operating income or
(loss)(line 3) plus line 6 non-operating income.
The difference between column A and B is the basis for column C.
This constitutes the total amount of your claim for reimbursement.
As the eligibility periods, for the most part, begin and end on
days other than the first or last days of the month, quarter or
year, data from already existing financial statements must be
adjusted, on a pro-rata basis, to reflect the eligibility periods.
For example, the period of eligibility for all applicants begins on
September 11, 2001 and therefore, the only time period during the
month of September that is eligible for reimbursement is September
11 through September 30, a period of 20 days. Applicants should be
prepared to show both how they apportioned such financial data into
the reimbursement periods, and why they chose the apportionment
approach used. Applicants
[[Page 58569]]
can then use these estimates for the specified periods at the
beginning and end of the eligible period to add to the financial
amounts for 2002, 2003, and 2004 to calculate the total amounts
sought in Appendix A.
12. Has the applicant or any of its subsidiaries or affiliates received
grants, subsidies, incentives or similar payments from local, state, or
Federal governmental entities in support of the security, maintenance
and provision of general aviation services and facilities furnished in
response to the events of September 11, 2001? (This includes payments
under the Aviation and Transportation Security Act of 2001 (Public Law
107-38) and the Airport Improvement Program under the Airport and
Airway Improvement Act of 1982 (Public Law 97-248).)
This question requires that you disclose all grants, subsidies,
or incentives that you received during the eligible reimbursement
period, either directly or indirectly, from Federal, State, and
local entities, to reimburse you for the cost of operations and
capital improvements associated with implementing security programs,
or maintaining or providing general aviation services and
facilities.
13. Has the applicant or any of its subsidiaries or affiliates incurred
lobbying expenses, mitigating expenses, or special expenses (as
described in the section captioned ``What information must operators or
providers submit in their applications for reimbursement?''), or
extraordinary adjustments.
Check ``Yes'' if you incurred any such expenses or experienced
any such adjustments. You must briefly describe the nature of such
expenses and adjustments, including the amounts. Additionally, you
must indicate whether or not such expenses or adjustments have been
included in or excluded from the totals in the table at item number
11.
Lobbying includes any amount paid to any person for influencing
or attempting to influence an officer or employee of any agency, a
Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress.
Mitigating expenses include the utilization of property, the
provision of services and the sale of goods that were undertaken to
mitigate losses arising from the Federal Government's closure of
airports attendant to the September 11, 2001 attack. These could
include expenses incurred for the provision of services and sale of
goods moved from restricted airports to unrestricted airports or
compensation for non-aviation oriented goods and services provided
at restricted airports. Mitigating expenses may also include
expenses for aviation-related fixed assets or capital utilized
outside of the restricted airport.
Special expenses include, but are not limited to, moving
expenses, additional security equipment and facilities, and loss on
sale of assets that arose from the direct imposition of restrictions
during the period September 11, 2001 through the applicable eligible
date. Any item reported as Special Expenses shall not also be
expensed in other expense categories that are reflected in the
calculation of the reimbursement claim. Details regarding special
expenses should be noted in footnotes.
Extraordinary adjustments are events or transactions that are
material to your business and unusual in nature and infrequent in
occurrence.
14. Certification
You must certify that all information contained on the
Background and Eligibility Form and the documents submitted in
support of your application (e.g. profit and loss statements, actual
forecasts, after-the-fact forecasts, etc.) are accurate. This
certification is made under penalty of law. Falsification may be
grounds for monetary and/or criminal sanctions. This certification
must be made by a company CEO, COO, or CFO.
[FR Doc. 06-8250 Filed 10-3-06; 8:45 am]
BILLING CODE 4910-9X-C