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05/13/1985 - Airport Relations Commission �1 US. Department 800 Independence Ave., S.W. of Transportation Washington, D.0 20591 Federal Aviation Administration MAY 1 3 1985 Mr. Thomas L. Hedges City Administrator City of Eagan 3830 Pilot Knob Road Eagan, MN 55121 Dear Mr. Hedges: Secretary Dole has asked me to reply to your letter to her urging that the Federal Aviation Administration (FAA) strictly enforce its aircraft noise compliance regulation (section 91.303 of the Federal Aviation Regulations), in view of the strong public concern and support for noise abatement. The Congress, as part of the Conference Report which accompanied the Aviation Safety and Noise Abatement Act of 1979, urged that special consideration be given to hardship situations and noted five factors which would constitute such situations. FAA has consistently followed that guidance and will continue to apply the five hardship factors identified by the Congress. I am enclosing a copy of FAA's first order issued pursuant to the court's order, which fully explains FAA's appli- cation of these factors to petitions for exemption from the noise compliance regulation. This application of the Congressional guidance provides a fair balance between the needs for noise control for airport neighbors and the needs of our national system of air transportation. FAA remains firmly committed to aviation noise control and to all feasible actions which will reduce noise impacts on airport neighbors. The actions which we are taking relative to new petitions for exemption from the aircraft noise compliance regulation are fully consistent with that commitment. I hope this information is helpful. Sincerely, Donald R. Segner Associate Administrator for Policy and International Aviation Enclosure Exemption No. 4302 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D. C. 20591 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx In the Matter of the Petition of x x LINEAS AEREAS DEL CARIBE, S. A. x Regulatory Docket x No. 24028 -2 for an exemption from Section x 91.303 of the Federal Aviation x Regulations x xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx GRANT OF EXEMPTION By petition dated April 11, 1985, filed by Ms. J. W. Young, Barrett Smith Schapiro & Armstrong, 1201. Pennsylvania Avenue, N. W., Washington, D. C. 20004, on behalf of Lineas Aereas del Caribe, S. A. (hereinafter "LAC "), petitioner requested an exemption from the January 1, 1985 noise level compliance date contained in 14 CFR Part 91, Subpart E, section 91.303. The provisions of section 91.303 prohibit any person, on or after January 1, 1985, from operating any subsonic turbojet airplane covered by Subpart E to or from an airport in the United States unless that airplane has been shown to comply with Stage 2 or Stage 3 noise levels under 14 CFR Part 36. Petitioner conducts scheduled all -cargo air service, using aircraft that do not comply with the noise level requirements. Under section 91.303, absent an exemption, these aircraft cannot now legally be operated in the United States. On March 29, 1985, the United States Court of Appeals for the District of Columbia Circuit entered its opinion in Airmark, et al. v. FAA, et al., No. 84 -1619, remanding to the FAA certain cases dealing with petitions for exemption from the FAA's aircraft noise compliance rule. In that decision, the Court indicated that the FAA had broad discretion both as to the manner in which it could review newly filed exemption petitions and the criteria to be applied in reviewing such petitions. The Court, on April 5, 1985, issued an order concerning petitioner which required the FAA to show cause why the FAA's January 3, 1985, denial of LAC's previous petition for exemption should not be vacated. In light of this background, this petition has not been published in the Federal Register because the FAA has determined that it would be contrary to the public interest to delay disposition of this petition pending publication for comment. This grant contains information for petitioners, including petitioners affected by orders entered by the Court of Appeals who are confronted with early deadlines for filing new petitions with the FAA. Due to the imminence of the Court's filing deadlines, the FAA finds that it is in the public interest to make this information available as quickly as possible -2- to those petitioners affected by the orders of the Court, as well as all others. The FAA has determined, for good cause, that publication in advance in the Federal Register should be waived in this case, only, and to issue the exemption herewith since, as noted below, the FAA finds that this petitioner meets the criteria set forth herein. General Discussion. In reviewing this petition and all other petitions, the FAA has determined that two classes of petitions may warrant an exemption from section 91.303. First will be those petitioners who satisfy all five of the criteria set out by the Congress in the Conference Report on the Aviation Safety and Noise Abatement Act (ASNA) (H.R. Rep. No. 715, 96th Cong., 1st Sess. 23, reprinted in 1980 U.S. Code Cong. & Ad. News 115, 124). Second, those petitioners who have been designated in U. S. Department of Transportation (DOT) orders to serve routes determined to be essential service may be eligible for an exemption from the noise rule for service on those routes without regard to whether they otherwise satisfy the five criteria set out by Congress. I. Congressional Criteria. As stated previously, the ASNA Conferees indicated that the FAA in reviewing petitions for exemption from the noise rule should give consideration to hardship situations. The Conferees described a hardship situation as being comprised of the following five necessary components all of which must apply in each case: - smaller carrier - making a good faith compliance effort - needed technology delayed or unavailable - could suffer financial havoc - performs valuable airline service. The following is a discussion of the FAA's interpretation of these criteria. A. The term "smaller carrier" means a carrier which, on January 1, 1985, operated 9 or fewer transport category turbojet aircraft. A "smaller carrier" may also be one which on that date had less than 1500 employees. These definitions of "smaller carrier" are based upon the FAA's definition of a small entity for purposes of implementing the Regulatory Flexibility Act of 1980 (FAA Order 2100.14, dated July 15, 1983) and the Small Business Administration definition of "small business concern" contained in 15 U.S.C. 632 and in the Small Business Size Regulations promulgated by that Administration on February 9, 1984 (49 Federal Register 5024). Although the FAA and SBA standards were established for purposes other than the aircraft noise rule, they can be used as reliable guidance utilizing available data on industry size. -3— B. The term "good faith compliance effort" requires that the petitioner have a firm contract entered into no later than March 29, 1985 (the date of the U.S. Court of Appeals decision in the Airmark case), for either hush kits or- replacement complying aircraft supported by a non — refundable deposit of-at least $75,000 for each affected aircraft, and that the delivery date is the earliest possible date. Exemptions will be limited to aircraft which are the subject of a hush kit or replacement contract. Further, a petitioner may not obtain an exemption for more aircraft than the number of non — compliant aircraft operated by it in the comparable period in 1984, since the purpose of ASNA is to mitigate the noise impact of such aircraft. In addition, if the pertinent contract is for a hush kit, the contract must be with a supplier which had applied for a supplemental type certificate (STC) for the hush kits before January 1, 1985, and is continuing active efforts to obtain the STC. This requirement is necessary to ensure there be a serious likelihood that the non —noise compliant aircraft can be brought into compliance in a reasonable time — frame. Given the general experience of the FAA with the supplemental type certification process and its specific experience with certification of hush kits, any applicants who did not even apply for an STC prior to January 1, 1985, are faced with development efforts requiring a substantial amount of time prior to certification. The clear Congressional intent of ASNA was to place a policy premium on the expeditious delivery of improved noise technology to the market. Allowing later filed STC's to qualify for this criterion would contradict that legislative policy. Thus, to faithfully carry out the Congressional intent, contracts with suppliers who do not fulfill this requirement will not be considered by the FAA as constituting "good faith" compliance efforts for purposes of satisfying this criterion. C. The FAA has determined that the criterion "needed technology is delayed or unavailable" is essentially net by all petitioners. Those petitioners having aircraft for which the technology to manufacture hush kits was developed in 1973, meet this criterion because the commercial availability of the hush kits has been delayed until recently. Those petitioners that have aircraft for which there are no hush kits currently under development also meet this criterion. D. In determining whether a petitioner, absent an exemption, could suffer "financial havoc," the FAA will: 1. Presume that, if 20% or more of the petitioner's total operations during the same period in 1984 for which it is seeking an exemption in 1985 would be prohibited, then financial havoc would occur. 2. If, however, a petitioner cannot show that it would lose 20% or more of its total operations, but still believes it will suffer financial havoc if it does not receive an exemption, the FAA will apply the following test to the data submitted by the petitioner: Using publicly available data for 1984, delete revenue produced by non — compliant U.S. operations which would have been barred by the noise rule and which would not be permitted by any other exemption -4- held by the petitioner, from the operator's financial database, along with an equal percentage of variable costs. If the resulting figure results in a net loss of greater than 10% of the operator's assets, the FAA will presume that financial havoc exists in that case. Given the fact that there are significant carrier -by- carrier variations in economic make -up, (i.e. amount of accrued reserves, operating margins, etc.), a single, overall test for financial havoc is inadequate. Rather, the FAA will first apply a presumptive standard (20% of operations) which would reasonably be viewed as resulting in financial havoc if met by a petitioner. However, if an individual carrier fails to meet this presumptive standard, but still believes that its individual situation will result in financial havoc, the carrier may submit particularized information concerning its own profit and loss (10% of assets). Both the financial havoc tests use historical, publicly available data because such data are sufficiently objective for the FAA to evaluate. Any projections of 1985 operations or financial results would be so subjective that the agency could not adequately determine their validity. E. In the context of determining eligibility for an exemption from Section 91.303, the criterion "valuable airline service" is met by all petitioners who operated aircraft in charter or scheduled air transportation before January 1, 1985. This date has been used because Congress obviously intended that the service must have been provided prior to the effective date of the prohibition to be deemed "valuable" within the context of the criteria. II. Essential Air Service (EAS). Notwithstanding the five criteria explained above, the FAA has determined that carriers which have been designated in DOT orders to perform service on routes which have been designated as EAS routes pursuant to section 419 of the Federal Aviation Act of 1958, as amended, (49 U.S.C. 1389) warrant special consideration in that maintenance of air service on such routes is, by statute, deemed to be in the public interest. The Congress, in its passage of the Airline Deregulation Act, considered essential air service to be a critical element of the maintenance of air service to small and isolated communities. Despite the primary thrust of the Act to restore competitive incentives to civil aviation, Congress recognized the importance of ensuring that small communities would be given access to the air transportation system, and directed the Board (and now DOT) through section 419 to further: It . .the congressional policy to encourage and foster the continuation of safe and reliable scheduled air transportation for small communities and isolated areas." S. RE °. No. 95 -631, 95th Cong., 2nd. Sess., 89 (1978). The FAA also finds that the public interest requires that the objectives of the ASNA and the aircraft noise abatement program established by the FAA, including the aircraft noise operating rule contained in FAR section 91.303, must also be met insofar as possible consistent with continuation of essential air service. Therefore, the FAA will consider that an exemption from section 91.303 for a designated essential air service route is in the public interest if the petitioner shows that it: - is operating noncomplying aircraft on a route for which it has been found -5- by a DOT order to be providing essential air service, and - has a firm contract with a hush kit manufacturer which, before January 1, 1985 applied for an STC; is continuing active efforts to obtain the STC; and such contract is supported by a non- refundable deposit of at least $75,000, fof the installation of hush kits on each of its aircraft at the earliest available date, and - acquired the aircraft for which it seeks an exemption prior to January 1, 1985. III. Failure of Hush Kit Manufacturers to Obtain STC. Some hush kit suppliers which applied for STC's prior to January 1, 1985 may be unable, for various reasons, to obtain the STC that is required before their hush kit can be used on aircraft engaged in air commerce. To this end, included among the conditions and limitations contained in each exemption will be a provision which permits exemption holders to obtain substitute contracts if their hush kit suppliers are unable to obtain an STC. Therefore, the FAA will, without affecting the validity of the exemption, allow exemptions which are based on hush kit contracts that meet the good faith compliance criterion, to obtain substitute contracts if the initial hush kit supplier fails to obtain an STC by September 30, 1985. Those substitute contracts must be with suppliers which have obtained STCs by September 30, 1985, be supported by a non - refundable deposit of at least $75,000, and be for the earliest possible delivery date. If the hush kits from the substitute supplier cannot be installed until after December 31, 1985, these exemption holders will be able to continue operations under their exemptions until the earliest available installation date after December 31, 1985. September 30, 1985, has been selected as the date by which the supplier must have received its STC because that date represents the latest date by which a hush kit purchaser may reasonably expect to obtain delivery positions for its aircraft by December 31, 1985. In addition, based on the information the FAA now has concerning the status of hush kit suppliers which applied for STC's before January 1, 1985, September 30, 1985, is the latest date in calendar year 1985 that a hush kit supplier g can to have obtained its a reasonable expectation being that year. IV. General Exemption Provisions. All exemptions granted by the FAA will include, but not be limited to, the following conditions and limitations: - Operations allowed under the exemption will be the same number as in the comparable period in 1984,1/ or in the case of essential air service, the 1/ Carriers that engaged in exempted international flights may, in addition, conduct the same number of non-revenue of the eling that they did last year, at operation of section 124 of Pub. L. 98 -473 (the Hawkins - Chiles amendment), pursuant to which exempt carriers en route to Miami are allowed the same number of refueling stops at Bangor that they had in the previous year. -6- same number of operations for the essential route which was authorized in a previous grant of exemption or, in cases of further DOT orders designating EAS routes, the number of operations needed to meet the EAS requirements. - All operations except those to Miami International Airport (MIA) and Bangor International Airport (BIA) will be limited to the hours between 0700 and 2200 local time at all airports. The exception for MIA and BIA is based on the Congressional intent evinced in Pub. L. 98 -473. - The FAA will not grant an exemption beyond December 31, 1985, except where the exemption holder has a firm hush kit delivery position after that date, and the hush kit supplier has obtained its STC by September 30, 1985. 2/ - Certain reporting requirements will be required by the FAA to monitor the compliance with the terms of the exemption. Application of Criteria. Smaller carrier. The FAA finds that the petitioner meets this criterion because, on January 1, 1985 it operated nine or fewer transport category turbojet aircraft. Good faith compliance. The FAA finds that petitioner meets this criterion because it has a firm contract, entered into on or before March 29, 1985, for hush kits for the aircraft for which this exemption will be granted. The contract is supported by a non - refundable deposit of at least $75,000. The hush kit supplier applied to the FAA for a supplemental type certificate (STC) for that product before January 1, 1985. 2/ Section 124 of Public Law 98 -473 required the Secretary to grant exemptions from the noise rule to certain petitioners for operations to Miami or Bangor International Airports. As mandated by that law, the FAA issued 25 exemptions from Section 91.303 of the Federal Aviation Regulations. Section 124(e) specifically provided that those exemptions shall expire no later than December 31, 1985, "except that, if the Secretary determines that equipment to insure compliance with the provisions of Public Law 96 -193 which has been certified by the Department for that purpose will not be available to the holder of the exemption by that date, the Secretary may extend such exemption for such period as the Secretary determines is necessary to insure compliance with such provisions." Accordingly, in evaluating whether a particular exemption granted under authority of Pub. L. 98 -473 should be extended beyond December 31, 1985, the FAA will consider whether the exemption holder has a firm hush kit delivery position after that date and whether the hush kit supplier has obtained the necessary certification from the FAA. This provision assures that operators acquire hush kits for their noncomplying aircraft at the earliest possible time and that hush kit suppliers diligently work toward acquiring the STC. -7- Needed technology is delayed or unavailable. The FAA finds that petitioner meets this criterion because no hush kits for petitioner's aircraft are commercially available. Financial havoc. The FAA finds that petitioner meets this criterion because more than twenty percent of petitioner's total operations during the same period in 1984 for which it seeks this exemption would be prohibited by the noise rule absent an exemption. Valuable airline service. The FAA finds that petitioner meets this criterion in that it operated aircraft in charter or scheduled air transportation before January 1, 1985, and continues to do so. In view of the foregoing matters, the FAA concludes that the petitioner has demonstrated that the public interest requires it be granted an exemption from section 91.303. Therefore, under the authority of sections 313(a), 601(c) and 611(b) of the Federal Aviation Act of 1958, as amended, which has been delegated to me by the Administrator (14 CFR section 11.53), the petition of Lineas Aereas del Caribe, S. A., for exemption from section 91.303 of the Federal Aviation Regulations is hereby granted, subject to the following conditions and limitations: Conditions and Limitations. 1. This exemption shall apply only to the DC -8 -54F aircraft having the following registration and serial number: HK -2632, 45768. 2. A copy of this Grant of Exemption shall be carried on board the above aircraft at all times. 3. This exemption is valid only for the operation of the above aircraft within the United States during the period between the date of this exemption and December 31, 1985, the date by which petitioner states that hush kits will have been installed on its aircraft. 4. This exemption is valid only for the number of operations within the U. S. that petitioner performed between April 1 and December 31, 1984. 5. With respect to the aircraft identified in paragraph 1, above, this exemption is valid only while the "SAI DC -8 Hush Kit Modification Contract" dated January 16, 1985, between Snow Aviation International, Inc. (SAI) and petitioner remains in effect, except that, should SAI fail to receive FAA certification for its hush kits by September 30, 1985, the exemption for the identified aircraft shall remain in effect for a period of sixty days after such failure occurs. If, during the sixty day period, petitioner obtains and submits to FAA a firm substitute contract, supported by a non - refundable deposit of at least $75,000, for installation of hush kits by a hush kit supplier which has obtained its STC by September 30, 1985, then the exemption granted herein shall remain in effect until installation of those hush kits on petitioner's aircraft. In all other cases, this exemption terminates on December 31, 1985. 9, -8- 6. This exemption is valid only while petitioner retains line position number 16 for the hush kits manufactured by SAI. 7. This exemption is valid only as long as petitioner remains the operator of the aircraft described in paragraph 1, above, and shall terminate immediately if petitioner sells, or otherwise disposes of said aircraft while this exemption is in effect. 8. During the period this exemption remains in effect, petitioner shall submit the following reports by an authorized official of the petitioner certifying that they are true and complete (under penalty of 18 USC 1001): (1) not later than May 10, 1985, a report which contains at least the following information: the frequency of operations conducted by the petitioner using noncomplying aircraft at the airports used by petitioner for noncomplying aircraft during each of the twelve months preceding the date of issuance of this exemption; and (2) not later than the tenth day of each month commencing in May, 1985, reports containing at least the following information: (a) the frequency of operations conducted by the petitioner at each airport used by the petitioner for noncomplying aircraft during the preceding calendar month; (b) the registration and serial numbers and the number of operations of each . noncomplying aircraft used at the airports reported under (a), above, during such month; (c) the status of petitioner's contract with its hush kit supplier, including particularly whether any change has occurred since the last monthly report in the expected date of installation of the hush kits and, if so, exact details of such change. 9. Except at Miami and Bangor International Airports, this exemption is valid only for landings or takeoffs of the above aircraft between the hours of 0700 and 2200 local time. Except as provided above, this exemption expires on December 31, 1985, the scheduled date for delivery of the hush kits. Issued at Washington, D. C. on APR 2 6 1985 esler •irector of Environment and Energy