[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