[No title available]

[Federal Register Volume 59, Number 110 (Thursday, June 9, 1994)]

[Unknown Section]

[Page 0]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 94-13943]

[[Page Unknown]]

[Federal Register: June 9, 1994]

VOL. 59, NO. 110

Thursday, June 9, 1994

DEPARTMENT OF AGRICULTURE

Forest Service

RIN 0596-AB06

Recreation Residence Authorization

Correction

In notice document 94-13323 beginning on page 28713 in the issue of

Thursday, June 2, 1994, make the following corrections:

On page 28738, in the ``Terms and Conditions'' portion of the

``Forest Service Handbook 2709.11--Special Uses, Chapter 50,'' the

revised permit clauses were not printed in italics. For the convenience

of the reader, Exhibit 01 appearing on page 28737 is set forth below

along with the ``Terms and Conditions'' text appearing on pages 28738

through 28741 with the text of the revised permit clauses indicated in

italics.

BILLING CODE 1505-01-D

TN09JN94.000

BILLING CODE 1505-01-C

Note: Permit clauses revised as a result of the reformulation of

the recreation residence policy as described in this notice are

printed in italics.

Terms and Conditions

I. Authority And Use And Term Authorized

A. This permit is issued under the authority of the Act of March 4,

1915, as amended (16 U.S.C. 497), and title 36, Code of Federal

Regulations, sections 251.50-251.64. Implementing Forest Service

policies are found in the Forest Service Directives System (FSM 1920,

1950, 2340, 2720; FSH 2709.11, chap. 10-50). Copies of the applicable

regulations and policies will be made available to the holder at no

charge upon request made to the office of the Forest Supervisor.

B. The authorized officer under this permit is the Forest

Supervisor, or a delegated subordinate officer.

C. This permit authorizes only personal recreation use of a

noncommercial nature by the holder, members of the holder's immediate

family, and guests. Use of the permitted improvements as a principal

place of residence is prohibited and shall be grounds for revocation of

this permit.

D. Unless specifically provided as an added provision to this

permit, this authorization is for site occupancy and does not provide

for the furnishing of structures, road maintenance, water, fire

protection, or any other such service by a Government agency, utility

association, or individual.

E. Termination at End of Term: This authorization will terminate on

*____________. (insert date)

II. Operation and Maintenance

A. The authorized officer, after consulting with the holder, will

prepare an operation and maintenance plan which shall be deemed a part

of this permit. The plan will be reviewed annually and updated as

deemed necessary by the authorized officer and will cover requirements

for at least the following subjects:

1. Maintenance of vegetation, tree planting, and removal of

dangerous trees and other unsafe conditions.

2. Maintenance of the facilities.

3. Size, placement and descriptions of signs.

4. Removal of garbage or trash.

5. Fire protection.

6. Identification of the person responsible for implementing the

provisions of the plan, if other than the holder, and a list of names,

addresses, and phone numbers of persons to contact in the event of an

emergency.

Note: Forest Supervisors may include other provisions relating

to fencing, road maintenance, boat docks, piers, boat launching

ramp, water system, sewage system, incidental rental, and the Tract

Association. Regional Foresters may add specific provisions that

Forest Supervisors should include in the plan.

III. Improvements

A. Nothing in this permit shall be construed to imply permission to

build or maintain any improvement not specifically named on the face of

this permit or approved in writing by the authorized officer in the

operation and maintenance plan. Improvements requiring specific

approval shall include, but are not limited to: Signs, fences, name

plates, mailboxes, newspaper boxes, boathouses, docks, pipelines,

antennas, and storage sheds.

B. All plans for development, layout, construction, reconstruction

or alteration of improvements on the lot, as well as revisions of such

plans, must be prepared by a licensed engineer, architect, and/or

landscape architect (in those states in which such licensing is

required) or other qualified individual acceptable to the authorized

officer. Such plans must be approved by the authorized officer before

the commencement of any work.

IV. Responsibilities of Holder

A. The holder, in exercising the privileges granted by this permit,

shall comply with all present and future regulations of the Secretary

of Agriculture and all present and future federal, state, county, and

municipal laws, ordinances, or regulations which are applicable to the

area or operations covered by this permit. However, the Forest Service

assumes no responsibility for enforcing laws, regulations, ordinances

and the like which are under the jurisdiction of other government

bodies.

B. The holder shall exercise diligence in preventing damage to the

land and property of the United States. The holder shall abide by all

restrictions on fires which may be in effect within the forest at any

time and take all reasonable precautions to prevent and suppress forest

fires. No material shall be disposed of by burning in open fires during

a closed fire season established by law or regulation without written

permission from the authorized officer.

C. The holder shall protect the scenic and esthetic values of the

National Forest System lands as far as possible consistent with the

authorized use, during construction, operation, and maintenance of the

improvements.

D. No soil, trees, or other vegetation may be removed from the

National Forest System lands without prior permission from the

authorized officer. Permission shall be granted specifically, or in the

context of the operations and maintenance plan for the permit.

E. The holder shall maintain the improvements and premises to

standards of repair, orderliness, neatness, sanitation, and safety

acceptable to the authorized officer. The holder shall fully repair and

bear the expense for all damage, other than ordinary wear and tear, to

National Forest lands, roads and trails caused by the holder's

activities.

F. The holder assumes all risk of loss to the improvements

resulting from acts of God or catastrophic events, including but not

limited to, avalanches, rising waters, high winds, falling limbs or

trees and other hazardous natural events. In the event the improvements

authorized by this permit are destroyed or substantially damaged by

acts of God or catastrophic events, the authorized officer will conduct

an analysis to determine whether the improvements can be safely

occupied in the future and whether rebuilding should be allowed. The

analysis will be provided to the holder within 6 months of the event.

G. The holder has the responsibility of inspecting the site,

authorized rights-of-way, and adjoining areas for dangerous trees,

hanging limbs, and other evidence of hazardous conditions which could

affect the improvements and or pose a risk of injury to individuals.

After securing permission from the authorized officer, the holder shall

remove such hazards.

H. In case of change of permanent address or change in ownership of

the recreation residence, the holder shall immediately notify the

authorized officer.

V. Liabilities

A. This permit is subject to all valid existing rights and claims

outstanding in third parties. The United States is not liable to the

holder for the exercise of any such right or claim.

B. The holder shall hold harmless the United States from any

liability from damage to life or property arising from the holder's

occupancy or use of National Forest lands under this permit.

C. The holder shall be liable for any damage suffered by the United

States resulting from or related to use of this permit, including

damages to National Forest resources and costs of fire suppression.

Without limiting available civil and criminal remedies which may be

available to the United States, all timber cut, destroyed, or injured

without authorization shall be paid for at stumpage rates which apply

to the unauthorized cutting of timber in the State wherein the timber

is located.

VI. Fees

A. Fee Requirement: This special use authorization shall require

payment in advance of an annual rental fee.

B. Appraisals:

1. Appraisals to ascertain the fair market value of the lot will be

conducted by the Forest Service at least every 20 years. The next

appraisal will be implemented in *________ (insert year).

2. Appraisals will be conducted and reviewed in a manner consistent

with the Uniform Standards of Professional Appraisal Practice, from

which the appraisal standards have been developed, giving accurate and

careful consideration to all market forces and factors which tend to

influence the value of the lot.

3. If dissatisfied with an appraisal utilized by the Forest Service

in ascertaining the permit fee, the holder may employ another qualified

appraiser at the holder's expense. The authorized officer will give

full and complete consideration to both appraisals provided the

holder's appraisal meets Forest Service standards. If the two

appraisals disagree in value by more than 10 percent, the two

appraisers will be asked to try and reconcile or reduce their

differences. If the appraisers cannot agree, the Authorized Officer

will utilize either or both appraisals to determine the fee. When

requested by the holder, a third appraisal may be obtained with the

cost shared equally by the holder and the Forest Service. This third

appraisal must meet the same standards of the first and second

appraisals and may or may not be accepted by the authorized officer.

C. Fee Determination:

1. The annual rental fee shall be determined by appraisal and other

sound business management principles. (36 CFR 251.57(a)). The fee shall

be 5 percent of the appraised fair market fee simple value of the lot

for recreation residence use.

Fees will be predicated on an appraisal of the lot as a base value,

and that value will be adjusted in following years by utilizing the

percent of change in the Implicit Price Deflator-Gross National Product

(IPD-GNP) index as of the previous June 30. A fee from a prior year

will be adjusted upward or downward, as the case may be, by the

percentage change in the IPD-GNP, except that the maximum annual fee

adjustment shall be 10 percent when the IPD-GNP index exceeds 10

percent in any one year with the amount in excess of 10 percent carried

forward to the next succeeding year where the IPD-GNP index is less

than 10 percent. The base rate from which the fee is adjusted will be

changed with each new appraisal of the lot, at least every 20 years.

2. If the holder has received notification that a new permit will

not be issued following expiration of this permit, the annual fee in

the tenth year will be taken as the base, and the fee each year during

the last 10-year period will be one-tenth of the base multiplied by the

number of years then remaining on the permit. If a new term permit

should later be issued, the holder shall pay the United States the

total amount of fees forgone, for the most recent 10-year period in

which the holder has been advised that a new permit will not be issued.

This amount may be paid in equal annual installments over a 10-year

period in addition to those fees for existing permits. Such amounts

owing will run with the property and will be charged to any subsequent

purchaser of the improvements.

D. Initial Fee: The initial fee may be based on an approved Forest

Service appraisal existing at the time of this permit, with the present

day value calculated by applying the IPD-GNP index to the intervening

years.

E. Payment Schedule: Based on the criteria stated herein, the

initial payment is set at $*__________ per year and the fee is due and

payable annually on *__________ (insert date). Payments will be

credited on the date received by the designated collection officer or

deposit location. If the due date(s) for any of the above payments or

fee calculation statements fall on a nonworkday, the charges shall not

apply until the close of business of the next workday. Any payments not

received within 30 days of the due date shall be delinquent.

F. Interest and Penalties:

1. A fee owed the United States which is delinquent will be

assessed interest based on the most current rate prescribed by the

United States Department of Treasury Financial Manual (TFM-6-8020).

Interest shall accrue on the delinquent fee from the date the fee

payment was due and shall remain fixed during the duration of the

indebtedness.

2. In addition to interest, certain processing, handling, and

administrative costs will be assessed on delinquent accounts and added

to the amounts due.

3. A penalty of 6 percent per year shall be assessed on any

indebtedness owing for more than 90 days. This penalty charge will not

be calculated until the 91st day of delinquency, but shall accrue from

the date that the debt became delinquent.

4. When a delinquent account is partially paid or made in

installments, amounts received shall be applied first to outstanding

penalty and administrative cost charges, second to accrued interest,

and third to outstanding principal.

G. Nonpayment Constitutes Breach: Failure of the holder to make the

annual payment, penalty, interest, or any other charges when due shall

be grounds for termination of this authorization. However, no permit

will be terminated for nonpayment of any monies owed the United States

unless payment of such monies is more than 90 days in arrears.

H. Applicable Law: Delinquent fees and other charges shall be

subject to all the rights and remedies afforded the United States

pursuant to federal law and implementing regulations. (31 U.S.C. 3711

et seq.)

VII. Transfer, Sale, and Rental

A. Nontransferability: Except as provided in this section, this

permit is not transferable.

B. Transferability Upon Death of the Holder:

1. If the holder of this permit is a married couple and one spouse

dies, this permit will continue in force, without amendment or

revision, in the name of the surviving spouse.

2. If the holder of this permit is an individual who dies during

the term of this permit and there is no surviving spouse, an annual

renewable permit will be issued, upon request, to the executor or

administrator of the holder's estate. Upon settlement of the estate, a

new permit incorporating current Forest Service policies and procedures

will be issued for the remainder of the deceased holder's term to the

properly designated heir(s) as shown by an order of a court, bill of

sale, or other evidence to be the owner of the improvements.

C. Divestiture of Ownership: If the holder through voluntary sale,

transfer, enforcement of contract, foreclosure, or other legal

proceeding shall cease to be the owner of the physical improvements,

this permit shall be terminated. If the person to whom title to said

improvements is transferred is deemed by the authorizing officer to be

qualified as a holder, then such person to whom title has been

transferred will be granted a new permit. Such new permit will be for

the remainder of the term of the original holder.

D. Notice to Prospective Purchasers: When considering a voluntary

sale of the recreation residence, the holder shall provide a copy of

this special use permit to the prospective purchaser before finalizing

the sale. The holder cannot make binding representations to the

purchasers as to whether the Forest Service will reauthorize the

occupancy.

E. Rental: The holder may rent or sublet the use of improvements

covered under this permit only with the express written permission of

the authorized officer. In the event of an authorized rental or sublet,

the holder shall continue to be responsible for compliance with all

conditions of this permit by persons to whom such premises may be

sublet.

VIII. Revocation

A. Revocation for Cause: This permit may be revoked for cause by

the authorized officer upon breach of any of the terms and conditions

of this permit or applicable law. Prior to such revocation for cause,

the holder shall be given notice and provided a reasonable time--not to

exceed ninety (90) days--within which to correct the breach.

B. Revocation in the Public Interest During the Permit Term:

1. This permit may be revoked during its term at the discretion of

the authorized officer for reasons in the public interest. (36 CFR

251.60(b.) In the event of such revocation in the public interest, the

holder shall be given one hundred and eighty (180) days' prior written

notice to vacate the premises, provided that the authorized officer may

prescribe a date for a shorter period in which to vacate (``prescribed

vacancy date'') if the public interest objective reasonably requires

the lot in a shorter period of time.

2. The Forest Service and the holder agree that in the event of a

revocation in the public interest, the holder shall be paid damages.

Revocation in the public interest and payment of damages is subject to

the availability of funds or appropriations.

a. Damages in the event of a public interest revocation shall be

the lesser amount of either (1) the cost of relocation of the approved

improvements to another lot which may be authorized for residential

occupancy (but not including the costs of damages incidental to the

relocation which are caused by the negligence of the holder or a third

party), or (2) the replacement costs of the approved improvements as of

the date of revocation. Replacement cost shall be determined by the

Forest Service utilizing standard appraisal procedures giving full

consideration to the improvement's condition, remaining economic life

and location, and shall be the estimated cost to construct, at current

prices, a building with utility equivalent to the building being

appraised using modern materials and current standards, design and

layout as of the date of revocation. If revocation in the public

interest occurs after the holder has received notification that a new

permit will not be issued following expiration of the current permit,

then the amount of damages shall be adjusted as of the date of

revocation by multiplying the replacement cost by a fraction which has

as the numerator the number of full months remaining to the term of the

permit prior to revocation (measured from the date of the notice of

revocation) and as the denominator, the total number of months in the

original term of the permit.

b. The amount of the damages determined in accordance with

paragraph a. above shall be fixed by mutual agreement between the

authorized officer and the holder and shall be accepted by the holder

in full satisfaction of all claims against the United States under this

clause: Provided, That if mutual agreement is not reached, the

authorized officer shall determine the amount and if the holder is

dissatisfied with the amount to be paid may appeal the determination in

accordance with the Appeal Regulations (36 CFR 251.80) and the amount

as determined on appeal shall be final and conclusive on the parties

hereto: Provided further. That upon the payment to the holder of the

amount fixed by the authorized officer, the right of the Forest Service

to remove or require the removal of the improvements shall not be

stayed pending final decision on appeal.

IX. Issuance of a New Permit

A. Decisions to issue a new permit or convert the permitted area to

an alternative public use upon termination of this permit require a

determination of consistency with the Forest Land and Resource

Management Plan (Forest plan).

1. Where continued use is consistent with the Forest plan, the

authorized officer shall issue a new permit, in accordance with

applicable requirements for environmental documentation.

2. If, as a result of an amendment or revision of the Forest plan,

the permitted area is within an area allocated to an alternative public

use, the authorized officer shall conduct a site specific project

analysis to determine the range and intensity of the alternative public

use.

a. If the project analysis results in a finding that the use of the

lot for a recreation residence may continue, the holder shall be

notified in writing, this permit shall be modified as necessary, and a

new term permit shall be issued following expiration of the current

permit.

b. If the project analysis results in a decision that the lot shall

be converted to an alternative public use, the holder shall be notified

in writing and given at least 10 years continued occupancy. The holder

shall be given a copy of the project analysis, environmental

documentation, and decision document.

c. A decision resulting from a project analysis shall be reviewed

two years prior to permit expiration, when that decision and supporting

environmental documentation is more than 5 years old. If this review

indicates that the conditions resulting in the decision are unchanged,

then the decision may be implemented. If this review indicates that

conditions have changed, a new project analysis shall be made to

determine the proper action.

B. In issuing a new permit, the authorized officer shall include

terms, conditions, and special stipulations that reflect new

requirements imposed by current Federal and State land use plans, laws,

regulations, or other management decisions. (36 CFR 251.64)

C. If the 10-year continued occupancy given a holder who receives

notification that a new permit will not be issued would extend beyond

the expiration date of the current permit, a new term permit shall be

issued for the remaining portion of the 10-year period.

X. Rights and Responsibilities Upon Revocation or Notification That a

New Permit Will Not Be Issued Following Termination of This Permit

A. Removal of Improvements Upon Revocation or Notification That A

New Permit Will Not Be Issued Following Termination Of This Permit: At

the end of the term of occupancy authorized by this permit, or upon

abandonment, or revocation for cause, Act of God, catastrophic event,

or in the public interest, the holder shall remove within a reasonable

time all structures and improvements except those owned by the United

States, and shall return the lot to a condition approved by the

authorized officer unless otherwise agreed to in writing or in this

permit. If the holder fails to remove all such structures or

improvements within a reasonable period--not to exceed one hundred and

eighty (180) days from the date the authorization of occupancy is

ended--the improvements shall become the property of the United States,

but in such event, the holder remains obligated and liable for the cost

of their removal and the restoration of the lot.

B. In case of revocation or notification that a new permit will not

be issued following termination of this permit, except if revocation is

for cause, the authorized officer may offer an in-lieu lot to the

permit holder for building or relocation of improvements. Such lots

will be nonconflicting locations within the National Forest containing

the residence being terminated or under notification that a new permit

will not be issued or at nonconflicting locations in adjacent National

Forests. Any in-lieu lot offered the holder must be accepted within 90

days of the offer or within 90 days of the final disposition of an

appeal on the revocation or notification that a new permit will not be

issued under the Secretary of Agriculture's administrative appeal

regulations, whichever is later, or this opportunity will terminate.

XI. Miscellaneous Provisions

A. This permit replaces a special use permit issued to:

*____________________ (Holder Name) on *__________ (Date), 19* ____.

B. The Forest Service reserves the right to enter upon the property

to inspect for compliance with the terms of this permit. Reports on

inspection for compliance will be furnished to the holder.

C. Issuance of this permit shall not be construed as an admission

by the Government as to the title to any improvements. The Government

disclaims any liability for the issuance of any permit in the event of

disputed title.

D. If there is a conflict between the foregoing standard printed

clauses and any special clauses added to the permit, the standard

printed clauses shall control.

Note: Additional provisions may be added by the authorized

officer to reflect local conditions.

Public reporting burden for this collection of information, if

requested, is estimated to average 1 hour per response for annual

financial information; average 1 hour per response to prepare or update

operation and/or maintenance plan; average 1 hour per response for

inspection reports; and an average of 1 hour for each request that may

include such things as reports, logs, facility and user information,

sublease information, and other similar miscellaneous information

requests. This includes the time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information. Send comments

regarding this burden estimate or any other aspect of this collection

of information, including suggestions for reducing this burden, to

Department of Agriculture, Clearance Officer, OIRM, room 404-W,

Washington, DC 20250; and to the Office of Management and Budget,

Paperwork Reduction Project (OMB control number 0596-0082), Washington,

DC 20503.

_______________________________________________________________________

Part II

Department of Transportation

_______________________________________________________________________

Federal Aviation Administration

_______________________________________________________________________

Proposed Policy Regarding Airport Rates and Charges; Notice

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. 27782]

Proposed Policy Regarding Airport Rates and Charges

AGENCY: Department of Transportation, Federal Aviation Administration.

ACTION: Notice of proposed policy.

-----------------------------------------------------------------------

SUMMARY: The Department of Transportation (DOT) and Federal Aviation

Administration (FAA) are publishing for comment a proposed policy

statement with respect to fair and reasonable, and nondiscriminatory

airport rates and charges. Specifically, the proposed policy statement

sets forth FAA policy regarding airport practices that DOT/FAA would

consider to be consistent with Federal requirements for airport rates

and charges for aeronautical uses. The proposed policy statement would

assist airport proprietors and users in negotiating rates and charges

and would be the basis for FAA to evaluate complaints of non-compliance

with applicable law governing airport rates and charges.

DATES: Comments must be received on or before August 8, 1994.

ADDRESSES: Comments on this notice should be mailed in quadruplicate

to: Federal Aviation Administration, Office of Chief Counsel, Attn.:

Rules Docket (AGC-10), Docket No. 27782, 800 Independence Ave. SW.,

Washington, DC 20591. Commenters wishing the FAA to acknowledge receipt

of their comments submitted in response to this notice must include a

preaddressed, stamped postcard on which the following statement is

made: ``Comments to Docket No. 27782.'' The postcard will be date

stamped and mailed to the commenter.

FOR FURTHER INFORMATION CONTACT:

John Rodgers, Director, Officer of Aviation Policy, Plans and

Management Analysis, Federal Aviation Administration, 800 Independence

Avenue SW., Washington, DC 20591, (202) 267-3274; Barry L. Molar,

Manager, Airports Law Branch, Office of Chief Counsel, Federal Aviation

Administration, 800 Independence Avenue SW., Washington, DC 20591 (202)

267-3473.

SUPPLEMENTARY INFORMATION:

Request for Comments

Commenters are requested to identify recommended changes to the

proposed policy statement and to identify legal, policy, financial or

administrative principles or practices relied on to support each

modification. Commenters are also requested to describe how each such

modification will better comport with governing legal requirements and

with the objectives of managing and developing the nation's air

transportation system effectively to promote safety and efficiency and

better serve aeronautical users, the traveling public and their

communities than would the proposed policy statement. Further, comment

is requested on the consistency of the proposed policy statement with

practices now prevailing in the industry.

The proposed policy statement would have airports use historical

costs as the basis for the aeronautical rate base, unless the airport

and aeronautical users agree to a different methodology. This proposal

is consistent with the prevalent practice in the airport industry.

Because historical costs provide a reliable and verifiable valuation

methodology on which to base rates and charges, they are consistent

with the policy statement's goal of encouraging local resolution of

disputes. Historic costs are also the generally used methodology in

public utility regulation. Historic cost valuation assures that airport

users will pay for the facilities currently in use, rather than for

replacement facilities.

Nevertheless, we recognize that there are alternative approaches to

historic cost valuation, including replacement costs and other

methodologies. We solicit comment on how other valuation methods would

comport with applicable legal requirements and promote efficient use of

airport resources. To facilitate analysis of any recommended

alternatives, the agency is particularly interested in examples in

which the proposed methodology has been used in comparable

circumstances to establish a rate base.

All comments received on or before the closing date for comments

will be considered before adoption and publication of a final policy

statement. The proposed policy statement may be changed in light of

comments received. All comments will be available in the Rules Docket

for examination by interested persons.

Public Meeting

A public discussion will be held in Washington, DC at which views

may be expressed orally. A notice setting forth the location, date and

time of the discussion and procedures for participation will be

published in the Federal Register.

The Secretary of Transportation and the FAA are charged with

promoting and maintaining a national aviation system that operates

safely and efficiently. The Federal government pursues this objective

by investing Federal funds, via grants-in-aid, in modern airport

facilities sufficient to handle current and future air traffic and by

facilitating local investment in such facilities. Transportation goals

are also advanced when airport rates and charges are reasonable and

consistent with airport development needs, and airport revenues are

employed in the aviation system.

Traditionally, these goals have been pursued effectively at the

local airport level through negotiation regarding operating costs,

capital investment needs and financing strategies. Airlines, airport

management and investors in airport securities have proven adept at

striking a reasonable balance. As a result, the public interest has

been served in the establishment of a safe air transportation system,

airport rates and charges that have broad acceptance, continued growth

of the national aviation system, and affordable air travel.

In publishing this proposed policy statement and associated

administrative procedures for review of airport compliance, DOT/FAA

continue to encourage negotiations between airport proprietors and

aeronautical users as the primary means of setting airport rates and

charges. Adversarial proceedings are no substitute for prompt and

productive negotiations between directly interested local parties.

Nonetheless, where needed to ensure the interests of airports,

their users and the traveling public, the Secretary and the

Administrator are prepared to take a more active role in airport-

airline disputes. Normally, the Federal role will be to assist parties

unable to resolve fee disputes locally to conclude their own agreements

successfully. In appropriate circumstances, the Secretary and the

Administrator have broad legal authority to review the legality of

proposed airport rates and to take all necessary investigatory and

enforcement actions in aid of that authority. Where an impasse could

have a significant adverse impact on air transportation, or otherwise

involves a significant policy issue, parties directly affected will

have the opportunity, through a streamlined procedural process being

proposed concurrently, to seek a determination as to compliance with

the principles set forth in this proposed policy statement. In these

proceedings, DOT/FAA would not determine a specific level of legally

acceptable rate, but rather would determine whether a rate was or was

not in compliance with requirements that rates be fair and reasonable

and not unjustly discriminatory.

To provide guidance to parties engaged in their own negotiations

and to make clear the criteria to which DOT/FAA would refer in

addressing disputes over airport rates and charges, DOT/FAA have

assembled, in a single policy statement, guidelines whose elements are

based on various statutes, judicial and administrative decisions and

historic industry practice. The fundamental requirement is that airport

rates and charges imposed on aeronautical users be fair, reasonable and

not unjustly discriminatory. This requirement is based on statutory

mandates and obligations assumed by airport owners or operators

(sponsors) as a condition for receiving Federal financial assistance.

In addition, in accordance with relevant federal statutory provisions,

airport sponsors are required to use airport revenue for the benefit of

the airport system.

While the proposed policy statement would provide guidance for many

airport charging practices, it cannot address each issue that may arise

in this complex and fact-specific area. DOT/FAA does expect that the

proposed policy statement would reduce uncertainty and, accordingly,

the need to bring matters to the FAA for resolution through the

administrative process. DOT/FAA intend that publication of the policy

statement would help focus airport-airline rate negotiations on

solutions that benefit airports and airlines alike. The FAA will

consider the challenged rate after consideration of all the

circumstances of the particular case in light of the basic principles

articulated in the proposed policy statement.

DOT/FAA do not intend the policy statement to limit unduly the

flexibility of airport proprietors to respond to a wide range of local

conditions. In addition, this proposed policy statement is intended to

preserve the credit ratings of airport revenue bonds by assuring

capital markets that the Federal framework maintains the flexibility

necessary for airport practices to meet local needs and changing

conditions on a timely basis. High credit ratings can reduce the cost

of airport infrastructure and ultimately of air transportation by

lowering the financing costs of airport capital projects. Conversely,

lower credit ratings can increase the financing costs of airport

infrastructure development.

The proposed policy statement is intended to assist in maintaining

a balance between airport infrastructure development and the

preservation of safe and efficient transportation. Airlines should

benefit from assurances that airport-related costs will be fair and

reasonable. Airport operators should benefit from being afforded the

flexibility necessary to tailor financial management, pricing, and

investment strategies to meet local needs and conditions. DOT/FAA

recognize that there is no single procedure or fixed methodology for

establishing rates and charges in use in the industry and that the

standard of reasonableness does not compel a single approach or a

single fee. Airport proprietors may adopt procedures and methdologies

that serve their objectives so long as they comply with applicable

Federal requirements, including the requirement to keep airport

revenues employed in the airport system.

This proposed policy statement is based on existing statutes,

regulations, policies and judicial and administrative precedent. These

sources are described below. The requirement that airport user charges

be fair and reasonable and not unjustly discriminatory is based in two

statutes, the Airport and Airway Improvement Act of 1982, as amended,

49 U.S.C. App. 2201 et seq. (AAIA) and the Anti-Head Tax Act, 49 U.S.C.

App. 1513(a)-(d) (AHTA).

a. Airport and Airway Improvement Act

The AAIA authorizes the Secretary of Transportation to make grants-

in-aid to airport sponsors to finance airport development in the

interests of safety, efficiency and capacity. In exchange for grant

funds, airport sponsors agree to follow Federal requirements for the

implementation of airport development projects and for operation of the

airport. The Secretary has delegated the authority to administer the

grant-in-aid program to the FAA.

Section 511(a) of the AAIA, 49 U.S.C. App. 2210(a), requires

airport sponsors to the give various assurances satisfactory to the

Secretary as a condition for receipt of grants. Under the authority of

section 512 of the AAIA, 49 U.S.C. App. 2211, the FAA incorporates

these assurances as part of the grant agreement between the sponsor and

the FAA.

Of central importance to airport rates and charges is the

requirement in section 511(a)(1) that airports be made available on

fair and reasonable terms and without unjust discrimination. DOT/FAA

construe this provision to include a requirement that rates and charges

imposed on aeronautical users be fair and reasonable and without unjust

discrimination. Also relevant is section 511(a)(9), which obligates the

airport sponsor to maintain a fee and rental structure that will make

the airport as self-sustaining as possible, but to exclude the Federal

share of airport development from the airport's rate-base. In addition,

section 511(a)(12) obligates the airport sponsor, with certain

exceptions, to use airport revenue on the capital and operating costs

of the airport or closely related transportation facilities. Section

519 of the AAIA grants general authority to the FAA to conduct

investigations and hearings and to issue orders and regulations to

carry out its provisions. Under section 519(b), the FAA may withhold

approval of new entitlement grants and payments of funds under all

existing grants for up to 180 days before issuing a final determination

regarding compliance.

b. Anti-Head Tax Act

The requirement of reasonableness is also incorporated in the AHTA,

which is part of the FAAct. Section 1113(a), 49 U.S.C. App. 1513(a),

generally prohibits State and local taxation of air commerce and

passengers traveling in air commerce. Section 1113(b) excludes from the

prohibition reasonable landing fees and other charges to aircraft

operators using the airport. Based on these provisions, the courts have

consistently interpreted the AHTA to bar unreasonable landing fees as

prohibited taxation. These provisions must also be implemented

consistent with U.S. international obligations regarding airline user

charges, pursuant to section 1102(a) of the FAAct, 49 U.S.C. App.

1502(a).

Section 1113(e) contains another exception to the AHTA's general

prohibition. Section 1113(e) authorizes airport operators to impose a

passenger facility charge approved by the FAA on paying passengers

enplaned at the airport. Subsection 1113(e)(7)(B) generally prohibits

inclusion of the cost of capital projects paid for with PFC revenue in

the airport's rate base.

c. Other Sources

In addition to these statutory mandates, many airports have assumed

the obligation to charge fair and reasonable and not unjustly

discriminatory rates in connection with transfers of Federal property.

Under the authority of the Surplus Property Act of 1944, 50 U.S.C.

1622(g), the Federal government has transferred for airport use title

to real property to numerous airport operators around the country.

Judicial decisions and administrative decisions reviewing the

reasonableness of airport rates and charges, though relatively few in

number, have also provided guidance. The most recent is the decision in

Northwest Airlines v. Kent County, ______ U.S. ______, 114 S.Ct

855(1994).

FAA statements of policy regarding the administration of the

airport grant program, principally FAA Order 5190.6A, Airport

Compliance Requirements (October 1989) provide an additional basis for

some of the matters addressed. Finally, prevailing practices regarding

cost allocation, economic and financial modeling and generally accepted

accounting practices have been considered, as they apply specifically

to airport rates.

Additional FAA Actions Relating to Airport Rates and Charges

In addition to this proposed policy statement, DOT/FAA are taking a

variety of other actions to assure that airports comply with Federal

requirements relating to airport rates and charges and the use of

airport revenues.

First, DOT/FAA are concurrently publishing in the Federal Register

a Notice of Proposed Rulemaking proposing new procedural regulations

for review of complaints regarding airport proprietor compliance with

Federal obligations. The proposal regulation includes special expedited

procedures for review of carrier complaints about an increase in

airport rates and charges. Second, under the authority of section 518

of the AAIA, 49 U.S.C. App. 2217, the FAA is notifying airport sponsors

to make available to the public full financial statements and audit

reports maintained by the airport sponsor. Third, under the authority

of section 507(c)(3) of the AAIA, 49 U.S.C. App. 2206(c)(3), the FAA

will consider the availability of accumulated surplus from

nonaeronautical activities and the use of such surplus in selecting

projects for funding with AIP discretionary funds. In addition, the FAA

will continue to scrutinize the capital improvement plans submitted

with applications for passenger facility charges to assure that the

amount and duration of the PFC will not result in revenues that exceed

amounts necessary to finance the specific projects.

With respect to the requirements for the use of airport revenues,

the FAA is strengthening the audit procedures set forth in the

compliance supplement to the single audits of state and local

governments under the Single Audit Act. Additionally, the FAA is

developing and implementing an action plan to counsel those airports

identified as potentially in noncompliance and initiating enforcement

actions where continuing noncompliance is found. Enforcement actions

may include suspension or reduction of any AIP discretionary or

entitlement funds. In addition, the FAA is working closely with the

Office of Inspector General to address issues of unlawful revenue

diversion.

The Proposed Policy Statement

Accordingly, DOT/FAA propose to adopt a new policy statement

regarding the establishment of airport rates and charges as follows:

POLICY REGARDING THE ESTABLISHMENT OF AIRPORT RATES AND CHARGES

Introduction

DOT/FAA reiterate here the fundamental position that the issue of

rates and charges is best addressed at the local level by agreement

between users and airports. By providing guidance on standards

applicable to airport rates and charges imposed for aeronautical use of

the airport, DOT/FAA intend to facilitate direct negotiation between

the proprietor and aeronautical users and to minimize the need to seek

direct Federal intervention to resolve differences over airport rates

and charges. Because DOT/FAA encourage direct resolution of airport fee

issues, the FAA does not generally monitor practices established by

agreement, except with respect to requirements for the use of airport

revenue.

Principles Applicable to Airport Rates and Charges

1. In general, DOT/FAA rely upon airport proprietors, aeronautical

users, and the market and institutional arrangements within which they

operate, to ensure compliance with applicable legal requirements.

Direct Federal intervention will be available, however, where needed.

2. Rates, fees, rentals and other charges (``rates and charges'')

imposed on aeronautical users must be fair and reasonable.

3. Airport rates and charges may not unjustly discriminate against

aeronautical users or user groups.

4. Airport proprietors must maintain a fee and rental structure

that in the circumstances of the airport makes the airport as

financially self-sustaining as possible.

5. In accordance with relevant Federal statutory provisions

governing the use of airport revenue, airport proprietors must keep

airport revenue employed in the local airport system.

Local Negotiation and Resolution

1. In general, DOT/FAA rely upon airport proprietors, aeronautical

users, and the market and institutional arrangements within which they

operate, to ensure compliance with applicable legal requirements.

Direct Federal intervention will be available, however, where needed.

1.1 DOT/FAA encourage direct resolution of differences at the

local level between aeronautical users and the airport proprietor. Such

resolution is best achieved through adequate and timely consultation

between the airport proprietor and the aeronautical users. Airport

proprietors should engage in adequate and timely consultation with

aeronautical users about airport rates and charges.

1.1.1 Airport proprietors should consult with aeronautical users

well in advance of introducing significant changes in charging systems

and procedures or in the level of charges. The proprietor should

provide adequate information to permit aeronautical users to evaluate

the airport proprietor's justification for the change and to assess the

reasonableness of the proposal. For consultations to be effective,

airport proprietors should give due regard to the views of aeronautical

users and to the effect upon them of changes in rates and charges.

Likewise, aeronautical users should give due regard to the views of the

airport proprietor and the financial needs of the airport.

1.1.2 Airport proprietors and aeronautical users should consider

the public interest in establishing airport rates and charges.

1.1.3 Airport proprietors and aeronautical users should make a

good-faith effort to reach agreement. Absent agreement, airport

proprietors are free to act in accordance with their proposals, subject

to review by the FAA upon complaint by the user or, in unusual

circumstances, on DOT/FAA's initiative.

1.2 Where airport sponsors and aeronautical users have been

unable, despite all reasonable efforts, to resolve disputes between

them, DOT/FAA will act to resolve the issues raised in the dispute.

1.2.1 First, DOT/FAA will offer its good offices to facilitate

parties' reaching a successful outcome in a timely manner. Prompt

resolution of these disputes is always desirable since extensive delay

can lead to uncertainty for the public and a hardening of the parties'

positions.

1.2.2 Second, where negotiations between the parties are

unsuccessful and a complaint is filed alleging that airport rates and

charges violate an airport sponsor's federal grant obligations, DOT/FAA

will, where warranted, exercise the broad statutory authority to

investigate and review the legality of those rates and charges. Where

an impasse could have a significant adverse impact on air

transportation, or otherwise involves a significant policy issue,

parties directly affected will have the opportunity, through a

streamlined procedural process, to seek DOT/FAA's determination as to

compliance with the principles set forth in this proposed policy

statement.

1.3 Airport proprietors must retain the ability to respond to

local conditions with flexibility and innovation. However, an airport

proprietor is encouraged to achieve consensus and agreement with its

airline tenants before implementing a practice that would represent a

major departure from this guidance. However, the requirements of any

law, including the requirements for the use of airport revenue, may not

be waived, even by agreement with the aeronautical users.

Fair and Reasonable Rates and Charges

2. Rates, fees, rentals and other charges (``rates and charges'')

imposed on aeronautical users must be fair and reasonable.

DOT/FAA consider the aeronautical use of an airport to be any

activity that involves, makes possible, is required for the safety of

the operations of, or is otherwise directly related to, the operation

of aircraft. Aeronautical use includes services provided by air

carriers related directly and substantially to the movement of

passengers, baggage, mail and cargo.

2.1 Revenues from rates and charges for aeronautical uses

(aeronautical revenues) may not exceed the costs to the airport

proprietor of providing airport services and facilities currently in

aeronautical use (aeronautical costs) unless otherwise agreed to by the

affected aeronautical users.

2.1.1 Aeronautical users may receive a cross-credit of non-

aeronautical revenues only if the airport proprietor agrees. Agreements

providing for such cross-crediting are commonly referred to as

``residual agreements'' and generally provide a sharing of non-

aeronautical revenues with aeronautical users. The aeronautical users

in turn agree to assume part or all of the liability for non-

aeronautical costs. An airport proprietor may not require aeronautical

users to cover losses generated by non-aeronautical facilities except

by agreement.

2.1.2 In other situations, an airport proprietor assumes all

liability for non-aeronautical costs and retains all non-aeronautical

profits for its own use in accordance with Federal requirements. This

approach to airport financing is generally referred to as the

compensatory approach.

2.1.3 Airports frequently adopt charging systems that employ

elements of both approaches. Federal law does not require a single

approach to airport financing.

2.2 The ``rate base'' is the total of all aeronautical costs that

may be recovered from aeronautical users through rates and charges.

Airport proprietors must employ a reasonable, consistent and

``transparent'' (i.e., clear and fully justified) method of

establishing the rate base and adjusting the rate base on a timely and

predictable schedule.

2.3 Costs that may be included in the rate base (allowable costs)

are limited to all operating and maintenance expenses directly and

indirectly associated with the provision of aeronautical facilities and

services; all capital costs directly associated with the provision of

aeronautical facilities and services currently in use; and current

costs of planning future aeronautical facilities and services.

2.3.1 Where airport proprietors have expended funds from non-

aeronautical sources to finance capital investments for aeronautical

use, the implicit capital cost of these funds may be included in the

aeronautical rate base in addition to the cost of the asset. DOT/FAA

consider it reasonable to use, as a measure of the implicit capital

cost, the average rate of interest on airport revenue bonds prevailing

of similarly-sized airports at the time the funds were spent for the

capital projects.

2.3.2 Airport proprietors may include reasonable environmental

costs in the rate base to the extent that the airport proprietor incurs

a corresponding actual expense (an example of an actual expense is the

cost of providing acoustical insulation for homes). All revenues

received based on the inclusion of these costs in the rate base are

subject to Federal requirements on the use of airport revenue.

2.3.3 Airport proprietors are encouraged to establish rates and

charges with due regard for economy and efficiency.

2.3.4 The airport proprietor may include in the rate base amounts

needed to fund short-term cash reserves to protect against the risks of

cash-flow fluctuations associated with normal airport operations.

2.4 Airport proprietors must comply with the following practices

in establishing the rate base, provided, however, that one or more

aeronautical users may agree to a rate base that deviates from these

practices in the establishment of those users' rates and charges.

2.4.1 Airport assets must be valued according to their historic

cost to the original airport proprietor. Subsequent airport proprietors

shall acquire the cost basis of the original airport proprietor. An

airport proprietor may not employ current cost and replacement cost

methods to value airport assets.

2.4.2 The costs of facilities not yet built and operating may not

be included in the rate base. The airport proprietor may include in the

rate base the costs of land that facilitates the current operations of

the airport.

2.4.3 The rate base of an airport cannot include costs associated

with another airport unless (1) the proprietor of the first airport is

also the proprietor of the second airport; (2) the second airport is

currently in use; and (3) the costs of the second airport to be

included in the first airport's rate base reflect the aviation benefits

that the second airport provides or is expected to provide to the

aeronautical users of the first airport.

2.5 At all times, airport proprietors must comply with the

following practices:

2.5.1 Indirect costs may not be included in the rate base unless

they are based on a reasonable, transparent cost allocation formula

calculated consistently for other units or cost centers of government.

2.5.2 The value of airport development or planning projects paid

for with government grants and contributions and passenger facility

charges (PFCs) may not be included in the rate base.

2.5.2(a) Exception: In the case of gates and related areas, or

another terminal facility that is occupied by one or more carriers on

an exclusive or preferential use basis, the rates and charges paid to

use those facilities shall be no less than the fees charged for similar

facilities that were not financed with PFC revenue.

Prohibition on Unjust Discrimination

3. Airport rates and charges may not unjustly discriminate against

aeronautical users or user groups.

3.1 Unless aeronautical users agree, the rates and charges imposed

on any aeronautical user or group of aeronautical users may not exceed

the costs allocated to that user or user group under the cost

allocation methodology adopted by the airport proprietor that is

consistent with this guidance.

3.2 A properly structured peak pricing system that allocates

limited resources using price during periods of congestion will not be

considered to be unjustly discriminatory. An airport proprietor may,

consistent with the policies expressed in this policy statement,

establish rates and charges that maximize the efficient utilization of

the airport.

3.3 Relevant provisions of the Convention on International Civil

Aviation (Chicago Convention) and many bilateral aviation agreements

specify, inter alia, that charges imposed on foreign airlines must not

be unjustly discriminatory, must not be higher than those imposed on

domestic airlines engaged in similar international air services and

equitably apportioned among categories of users. Charges that are

inconsistent with these principles will be considered unjustly

discriminatory or unfair and unreasonable.

3.5 Allowable costs--costs properly included in the rate base--

must be allocated to aeronautical users by a transparent, reasonable

and not unjustly discriminatory rate-setting methodology. The

methodology must be applied consistently and cost differences must be

determined quantitatively.

3.5.1 Common costs (costs not directly attributable to a specific

user group or cost center) must be allocated according to a reasonable,

transparent and not unjustly discriminatory cost allocation formula

that is applied consistently.

Requirement of Financial Self-Sufficiency

4. Airport proprietors will maintain a fee and rental structure

that in the circumstances of the airport makes the airport as

financially self-sustaining as possible.

4.1 If market conditions or demand for air service do not permit

the airport to be financially self-sustaining, the airport proprietor

should establish long-term goals and targets to make the airport

financially self-sustaining.

4.2 The federal obligation to make the airport as financially

self-sustaining as possible does not justify the inclusion of

environmental costs in the rate base unless an airport proprietor

incurs actual costs.

Requirements Governing Revenue Application and Use

5. In accordance with relevant Federal statutory provisions

governing the use of airport revenue, airport proprietors must keep

airport revenue employed in the local airport system.

5.1 Whether or not total airport revenues exceed full current

airport costs--

(a) aeronautical revenues may not exceed aeronautical costs; and

(b) the airport proprietor must keep all airport revenue and assets

(aeronautical and non-aeronautical) employed in the local airport

system in accordance with relevant Federal statutory provisions

governing the use of airport revenue.

5.2 The progressive accumulation of substantial amounts of airport

revenues may warrant an FAA inquiry into the airport proprietor's

application of revenues to the local airport system.

5.3 The airport proprietor should consider the conversion of a

reasonable amount of surplus airport revenues into airport

improvements, which may include types of development that are not

eligible for grants of funds under the Airport Improvement Program.

5.4 Indirect costs may not be included in the rate base unless

they are based on a reasonable, transparent cost allocation formula

calculated consistently for other units or cost centers of government.

5.5 If an airport proprietor generates a surplus from non-

aeronautical sources, such revenue shall be expended in accordance with

relevant Federal statutory provisions governing the use of airport

revenue for the capital or operating costs of the airport, the local

airport system, or other local facilities directly and substantially

related to air transportation.

Issued in Washington, DC, on June 3, 1994.

Federico Pena,

Secretary of Transportation.

David R. Hinson,

Administrator, Federal Aviation Administration.

[FR Doc. 94-13943 Filed 6-3-94; 4:22 pm]

BILLING CODE 4910-13-M