[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
