Airport Privatization Pilot Program: Application Procedures

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. 28895]

Airport Privatization Pilot Program: Application Procedures

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of amendment to final application procedures; request

for comments.

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SUMMARY: Section 149 of the Federal Aviation Authorization Act of 1996

establishes an airport privatization pilot program, and authorizes the

Department of Transportation to grant exemptions from certain Federal

statutory and regulatory requirements for up to five airport

privatization projects. On September 16, 1997, the FAA issued a notice

of final procedures for application for an exemption under the program.

The notice included a provision that air carriers that submitted a

proposal for the private operation of an airport but were unsuccessful

would not be counted as air carriers for the purpose of the requirement

that certain aspects of the privatization application be approved by 65

percent of the air carriers at the airport. In this amendment to the

procedures, the FAA is clarifying that the provision does not apply

retroactively to requests for proposals issued prior to the issuance of

the FAA procedures on September 16, 1997. With respect to future

requests for proposals, the provision is suspended until the FAA

undertakes further public process on this aspect of the procedures. A

separate provision of the procedures, which states that an air carrier

that is a successful bidder on a privatization proposal will not be

considered an air carrier under the 65 percent rule, is not affected.

[[Page 63212]]

DATES: This policy amendment is effective on publication. Comments on

the issue are due January 12, 1998.

ADDRESSES: Comments should be mailed, in quadruplicate, to: Federal

Aviation Administration, Office of Chief Counsel, Attention: Rules

Docket (AGC-200), Docket No. 28895, 800 Independence Avenue, SW.,

Washington, DC 20591. All comments must be marked: ``Docket No.

28895.'' Commenters wishing the FAA to acknowledge receipt of their

comments must include a pre-addressed, stamped postcard on which the

following statement is made: ``Comments to Docket No. 28895.'' The

postcard will be date stamped and mailed to the commenter. Comments on

this Notice may be examined in room 915G on weekdays, except on Federal

holidays, between 8:30 a.m. and 5 p.m..

FOR FURTHER INFORMATION CONTACT:

Benedict D. Castellano Manager, (202-267-8728) or Kevin C. Willis (202-

267-8741) Airport Safety and Compliance Branch, AAS-310, Federal

Aviation Administration, 800 Independence Ave. SW., Washington, DC

20591.

SUPPLEMENTARY INFORMATION:

Introduction and Background

This notice of amendment to application procedures to be used by

applicants for an airport privatization project and request for

comments is being published pursuant to Sec. 149 of the Federal

Aviation Administration Authorization Act of 1996, Pub. L. No. 104-264

(October 9, 1996) (1996 Reauthorization Act), which adds a new

Sec. 47134 to Title 49 of the U.S. Code. Section 47134 authorizes the

Secretary of Transportation, and through delegation, the FAA

Administrator, to exempt a sponsor of a public use airport that has

received Federal assistance, from certain Federal requirements in

connection with the privatization of the airport by sale or lease to a

private party. Specifically, the Administrator may exempt the sponsor

from all or part of the requirements to use airport revenues for

airport-related purposes, to pay back a portion of Federal grants upon

the sale of an airport, and to return airport property deeded by the

Federal Government upon transfer of the airport. The Administrator is

also authorized to exempt the private purchaser or lessee from the

requirement to use all airport revenues for airport-related purposes,

to the extent necessary to permit the purchaser or lessee to earn

compensation from the operations of the airport.

On September 16, 1997, the FAA issued a notice of procedures to be

used in applications for exemption under the Airport Privatization

Pilot Program (62 FR 48693). The FAA has identified one issue in that

notice that requires clarification.

Specifically, 49 U.S.C. Sec. 47134(b)(1)(i)(ii) limits the

exemption to permit the use of funds by the public airport sponsor for

non-airport purposes, to amounts approved by 65 percent of the air

carriers serving the airport and 65 percent of the air carriers by

total landed weight of air carriers from the preceding calendar year.

The same approval is required for increases in air carrier fees that

exceed the increase in the Consumer Price Index. In interpreting this

requirement, the FAA stated that the air carriers included in the

calculation of the 65 percent would not include otherwise qualified air

carriers that submitted proposals or that participate in consortia that

submitted proposals for the privatization of the subject airport. This

position was based on the consideration that the vote of such a

carrier, whether or not it is the successful proponent, could be based

on its interests as a proponent rather than its interests as a user of

the airport and would not further the congressional objective of the 65

percent approval requirement.

On September 17, 1997, counsel for several Allegheny County Airport

Part 135 operators filed comments arguing that the FAA had exceeded its

authority by disqualifying otherwise qualified air carriers that

submitted proposals or that participate in consortia that submitted

proposals for the privatization of the subject airport from exercising

their voting rights expressly granted in 49 U.S.C. Section 47134. The

comments requested that the FAA delete provisions in question.

The comments argue that Congress did not intend for air carriers to

lose their voting rights in the privatization process. The statute

provides no basis for carrier exclusion or limitation other than the

creation of the two classes, number serving the airport and percentage

of landed weight. The comments further argue that the disqualification

provision was issued in final notice without an opportunity for public

comment and review. As a result, this provision violates the

Administrative Procedure Act. Additionally, its application,

retroactively is unlawful and a denial of due process. In the case of

Part 135 operators at Allegheny County Airport, the provision would

exclude many of the air carriers from exercising their voting rights

under the statute because many of the air carriers responded to the

airport's RFP without notice that doing so would jeopardize their

voting rights under the statute.

After consideration of counsel's arguments, the FAA has decided to

amend its application procedures and suspend the effectiveness of one

provision. First, air carrier exclusion from the 65 percent approval

rule based upon participation as a bidder in the privatization process

will not be applied retroactively, i.e., to a solicitation issued

before September 16, 1997, the date of the final notice, on the basis

that this provision was not proposed for public comment and review. To

impose it retroactively on carriers that participated in a bidding

process prior to publication of the final procedures would

inappropriately exclude them from exercising their voting rights

without the benefit of notice of the adverse consequences of their

participation as a bidder. Second, the FAA suspends indefinitely the

provision in Part VI Certification of Air Carrier Approval (62 FR

48707) excluding otherwise qualified air carriers who submitted

unsuccessful proposals as a private operator from participating in the

voting process.

This provision was not proposed by the FAA and was not suggested in

the Federal Register comment process. Moreover, it is not obvious that

an unsuccessful bidder would give more weight to its interests as an

unsuccessful bidder than its interests as an air carrier in deciding

how to cast its vote.

In contrast, the proposal to exclude successful air carrier bidders

from participation in the voting process was proposed in a comment in

the Federal Register process, and the September 17 comments do not

oppose such an exclusion. Moreover, the potential conflict of interest

for a successful bidder is clear.

The FAA is suspending the provision, rather than deleting it,

because we believe that the issue deserves further public comment

before a final decision is made. We are therefore, providing a 45-day

comment period to permit interested persons to address specifically the

issue of whether otherwise qualified air carriers should be

disqualified from participating in the statutory voting process because

of their participation as unsuccessful bidders in a privatization

proposal.

Pending further action, the FAA will exclude from the air carrier

voting process only otherwise qualified air carriers that have been

selected as the private operator (either individually or as a

participant in a consortium) by the public agency.

[[Page 63213]]

Issued in Washington, DC, on November 20, 1997.

Susan L. Kurland,

Associate Administrator for Airports.

[FR Doc. 97-31106 Filed 11-25-97; 8:45 am]

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