Notice of Order Soliciting Community Proposals, 9385-9394 [E7-3581]

Agencies

• Office of the Secretary
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 72, Number 40 (Thursday, March 1, 2007)]
[Notices]
[Pages 9385-9394]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3581]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket OST-2007-27370]


Notice of Order Soliciting Community Proposals

AGENCY: Department of Transportation, Office of the Secretary.

ACTION: Notice of Order Soliciting Community Proposals (Order 2007-2-
22).

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SUMMARY: The Department of Transportation is soliciting proposals from 
communities or consortia of communities interested in receiving a grant 
under the Small Community Air Service Development Program. The full 
text of the Department's order is attached to this document. There are 
two mandatory requirements for filing of applications, both of which 
must be completed for a community's application to be deemed timely and 
considered by the Department. The first requirement is the submission 
of the community's proposal to Dockets, as described below; the second

[[Page 9386]]

requirement is the filing of SF424 through https://www.grants.gov.

DATES: Grant Proposals as well as the SF424 should be submitted no 
later than April 27, 2007.

ADDRESSES: Interested parties can submit applications either 
electronically using the procedures at https://dms.dot.gov or by hard 
copy. For the latter, an original and two copies of the application 
should be submitted to Dockets Operations and Media Management, M-30, 
Room PL-401, Department of Transportation, 400 7th Street, SW., 
Washington, DC 20590. Whichever method used, the application and any 
copies should bear the title ``Proposal under the Small Community Air 
Service Development Program, Docket OST-2007-27370, as well as the name 
of the applicant community or consortium of communities, the legal 
sponsor, and the applicant's DUNS number. The SF424 is submitted 
electronically through https://www.grants.gov.

FOR FURTHER INFORMATION CONTACT: Aloha Ley, Office of Aviation 
Analysis, 400 7th Street SW., Washington, DC 20590, (202) 366-2347.

    Dated: February 26, 2007.
Michael W. Reynolds,
Deputy Assistant Secretary for Aviation and International Affairs.
Issued by the Department of Transportation on the 26th day of February, 
2007.

[Docket OST-2007-27370]

In the Matter of Grant Applications; Small Community Air Service 
Development Program Under 49 U.S.C. 41743 et seq.; Order Soliciting 
Community Grant Proposals

Overview

    By this order, the Department invites proposals from communities 
and/or consortia of communities interested in obtaining a federal grant 
under the Small Community Air Service Development Program (Small 
Community Program) to develop cost-effective air services in their 
communities. Proposals should be submitted in the above-referenced 
docket no later than April 27, 2007. Applicants must submit form SF424, 
a standard federal government application form, in Grants.gov. An 
application will not be deemed complete until and unless all required 
documents are filed. (All applicants must register as Grants.gov users 
and are advised that the registration process can take two weeks to 
complete. See Appendix C for additional information on filing form 
SF424 using Grants.gov.)

Funding Opportunity

    The Small Community Program was established under the Wendell H. 
Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), 
Public Law 106-181, as a three-year ``pilot'' program and was designed 
to provide financial assistance to small communities to help them 
enhance their air service. The Department provides this assistance in 
the form of financial grants that are disbursed on a reimbursable 
basis. The program was subsequently reauthorized for an additional five 
years, through fiscal year 2008, under the Vision 100-Century of 
Aviation Reauthorization Act, Public Law 108-176 (Vision 100), which 
also eliminated the ``pilot'' status of the program.\1\ On February 15, 
2007, the President signed in to law the Revised Continuing 
Appropriations Resolution, 2007 (Pub. L. 110-005), which provides the 
Department with $10 million to administer the Small Community 
Program.\2\
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    \1\ For detailed background on the Small Community Program, see 
our Web site at: https://ostpxweb.dot.gov/aviation/X-50%20Role_
files/smallcommunity.htm#Funds.
    \2\ This funding is subject to a 1% across-the-board rescission. 
Furthermore, the program's funding for this year may be affected by 
a provision that provides the Secretary with authority to transfer 
funds from any program within or administered by the Office of the 
Secretary to the Essential Air Service (EAS) program if the EAS 
program does not have sufficient funds to meet its statutory 
obligations. In addition, a portion of the funds available for the 
Small Community Program may be used by the Department for grants-
management purposes.
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    The program's authorizing statute limits the Department to a 
maximum of 40 grant awards, with a maximum of four grants per state, in 
each year the program is funded. However, the law does not prescribe 
any limits on the amounts of individual awards, and the amounts awarded 
will vary depending upon the features and merits of the proposals 
selected. Over the past five years, the Department's individual grants 
have ranged from $20,000 to nearly $1.6 million. Awarded grant funds do 
not have to be expended in the year of award, nor do they need to be 
used within a one-year period. Authorized grant projects may include 
activities that extend over a multi-year period under a single grant 
award; however, grant funds are to be used in a timely manner. 
Generally speaking, grant awards have not exceeded a three-to-four-year 
period.

Eligibility Information

Who is Eligible to Apply for a Grant?

Basic Criteria
    Eligible applicants are those communities that (1) are served by an 
airport that was not larger than a small hub airport for calendar year 
1997 and (2) had insufficient air service or unreasonably high 
airfares.\3\ Communities that do not currently have commercial air 
service are also eligible, but they must have met or be able to meet in 
a reasonable period all necessary requirements of the Federal Aviation 
Administration for the type of service involved in their grant 
proposals. Communities served by medium and large hubs are not eligible 
to apply.
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    \3\ The hub classifications are based on the Federal Aviation 
Administration's CY 1997 enplanement data.
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EAS Communities May Apply
    Small communities that meet the basic criteria and currently 
receive subsidized air service under the Essential Air Service (EAS) 
program are eligible to apply for funds under the Small Community 
Program. Indeed, a number of EAS-subsidized communities applied in past 
years and some have received grant awards. However, grant awards to 
EAS-subsidized communities are limited to (1) marketing or promotion 
projects that support existing or newly subsidized air services or (2) 
new air services, such as on-demand air taxi service. Furthermore, 
grants funds will not be authorized for EAS-subsidized communities to 
support either additional flights by EAS carriers or changes to those 
carriers' existing schedules.
Additional Consideration for Communities/Members of Consortia That Have 
Previously Received a Grant
    Communities or members of a consortia that were awarded grants in 
previous years and want to apply for a grant this year should be aware 
that (1) they are precluded from seeking funds for projects for which 
they have already received an award under the Small Community Program, 
and (2) they cannot accept a new grant while they are a party to an 
existing grant under the program, either as an individual community or 
as a member of a consortium.
    New projects are eligible. Previous grant recipients may submit 
grant proposals and seek funds for new projects in a different 
category. For example, although a community which had received a grant 
for a market study

[[Page 9387]]

could not apply for a new grant for another market study, it could 
apply for funding for a revenue guarantee for new air service. 
Communities should note, however, that interest in this program could 
exceed both the funds available and the number of communities that can 
participate in any one year. For this reason, the fact that a community 
has already received one or more grants will be a consideration when 
comparing its new proposal with those of other applicant communities.
    No concurrent grants are permitted. A community or member of a 
consortia may participate in the program a subsequent time only after 
its participation in a prior grant has terminated. 49 U.S.C. 
41743(c)(4). Simply stated, for a grant applicant to enter into a 
subsequent grant, its most recent grant must have expired or its 
participation in the grant otherwise terminated. If a grant applicant 
is applying for a subsequent grant and its current grant has not yet 
expired, it must notify the Department of its intent to terminate the 
current grant prior to entering into the new grant. In addition, for 
grant applicants that are members of a consortia grant, permission must 
be granted from both the grant sponsor and the Department to withdraw 
from the current grant prior to being eligible to receive a subsequent 
grant.
City-pair Subsidies for a Carrier to Compete Against an Incumbent Raise 
Concerns
    Communities that propose to use the grant funds for service in a 
city-pair market that is already served by a carrier must explain in 
detail why the existing service is insufficient or unsatisfactory, or 
provide other compelling information to support such proposals. This 
information is necessary for the Department to consider the competitive 
implications of giving financial or other tangible incentives for one 
carrier that the other carrier is not receiving. The Department is 
concerned generally about subsidizing one carrier but not others in a 
competitive market and that, while bringing new competition may benefit 
the community in the short term, a market may prove insufficient to 
support two carriers and service may deteriorate to the point that the 
community's service is less beneficial than before.
A Consortium Is More Than a Collection of Communities
    The statute permits individual communities and consortia of 
communities to apply for grant awards under this program. In some 
instances in the past, several communities in a state have filed a 
single application as a ``consortium'' while in effect the application 
is a collection of individual community requests that involve different 
projects. We do not view this as a consortium. Rather, an application 
representing a consortium would be one that facilitates efforts of 
communities working together toward a joint grant project. For example, 
several communities surrounding an airport may apply together to 
improve air services at that airport, or surrounding airports may work 
together to provide regional air service.
Multiple Applications by a Community Will Not Be Considered
    The Department requests that communities file only one application 
for a grant. In the past, some communities have filed both individual 
applications and requests as part of a consortium. In many cases these 
applications have involved the same project at the same or different 
funding levels. We will not consider the stand-alone application if a 
community is also submitting a largely identical request as part of a 
consortium. To the extent that a community files separately and as part 
of a consortium for complementary projects--for example, one request 
for funding a revenue guarantee and one for marketing--we will consider 
such proposals. However, communities should be aware that they can 
still only receive one grant, either the stand-alone grant or as a 
member of a consortium, since a community may not have concurrent 
grants.

Cost Sharing and Local Contributions Are Important Factors

    The statute does not require communities to contribute toward a 
grant project, but those communities that contribute from local sources 
other than airport revenues are accorded priority consideration. One 
core objective of the Small Community Program is to promote community 
involvement in addressing air service/air fare issues through public/
private partnerships. As a financial stakeholder in the process, the 
community gains greater control over the type, quality, and success of 
the air service initiatives that will best meet its needs, and 
demonstrates a greater commitment towards achieving the stated goals. 
The Department has historically received many more applications than 
can be accommodated and nearly all of those applications have proposed 
a community financial contribution to the project. Thus, proposals that 
do not propose a community financial contribution will be at a 
competitive disadvantage.
Types of Contributions
    Contributions should represent a new financial commitment or new 
financial resources devoted to attracting new or improved service, or 
addressing specific high-fare or other service issues, such as 
improving patronage of existing service at the airport. Contributions 
from already-existing programs or projects (e.g., designating a portion 
of an airport's existing annual marketing budget to the project) are 
considered less favorably than contributions for new and innovative 
programs or projects. For those communities that propose to contribute 
to the grant project, that contribution can be in the following forms:
    Cash from non-airport revenues. This cash contribution can include 
funds from the State, the County or the local government, and/or from 
local businesses, or other private organizations in the community. Cash 
contributions exclude intangible or non-cash items, such as the 
``value'' of donated advertising.
    Cash from airport revenues. This includes contributions from funds 
generated by airport operations. Federal law (49 U.S.C. sections 
47107(b), (l)-(p)) and policy concerning the use of airport revenue (64 
FR 7696, February 16, 1999) preclude the use of airport revenues for 
revenue guarantees to airlines. Community proposals that include local 
contributions based on airport revenues do not receive priority 
consideration for selection.
    In-Kind Contributions from the airport. This can include such items 
as waivers of landing fees, terminal rents, fuel fees, and/or parking 
fees.
    In-Kind Contributions from the community. This can include such 
items as donated advertising from media outlets, catering services for 
inaugural events, or in-kind trading, such as advertising in exchange 
for free air travel. Travel banks and travel commitments/pledges are 
regarded as an in-kind contribution. Similarly, reduced fares by 
airlines will be considered an in-kind contribution.
Cash vs. In-Kind Contributions
    Only cash contributions will be eligible for reimbursement. ``In-
kind'' contributions involve services or benefits that do not include a 
cash transaction between the parties. Because grant funding under the 
Small Community Program is provided on a reimbursable basis, the 
Department cannot reimburse the grant sponsor for ``in-kind'' or non-
cash contributions.

[[Page 9388]]

Therefore, in-kind contributions are not considered as part of the 
community's cash financial contribution to the project. Of course, 
communities are free to include in-kind contributions in their 
proposals. In fact, communities are encouraged to offer in-kind 
inducements as an extra incentive to facilitate air service/fare 
improvements. While these contributions will not be considered as part 
of the community's cash contribution toward the project on which 
reimbursements are made, they will be considered as illustrative of the 
community's overall commitment to the proposed grant project. If there 
is any question about whether a proposed contribution would be 
considered as ``in-kind'' or cash, the applicant should contact the 
Department before submitting its proposal.
Financial Commitments Must Be Fulfilled
    Applicant communities should also note that, as part of the grant 
agreement between the Department and the community, the community has 
legally committed itself to fulfilling its proposed financial 
contribution to the project. Community participation with respect to 
all aspects of the proposal, including the financial aspects, is 
critical to the success of the authorized project initiative. As with 
the grant awards in past years, receipt of the full federal 
contribution awarded will thus be linked to the community's fulfillment 
of its financial contribution. Furthermore, communities cannot propose 
a certain level of cash contribution from non-airport sources, and 
subsequent to being awarded a grant, seek to substitute or replace that 
contribution with either ``in-kind'' contributions or contributions 
from airport revenues, or both. Given the statute's priority for 
contributions from non-airport sources and the competitive nature of 
the selection process, a community's grant award could be reduced or 
terminated altogether if it is unable to replace the committed funds 
from non-airport revenue sources.

Application and Submission Information

Filing Deadline and Procedures

    Grant applications are due by April 27, 2007. They may be submitted 
in hard-copy form or by electronic filing. Regardless of the filing 
method used, however, applicants must also register for and complete 
SF424, Application For Federal Domestic Assistance. In addition, the 
cover page of each application should contain the information specified 
under ``Cover page contents,'' below. Questions regarding the program 
or the filing of proposals should be directed to the Office of Aviation 
Analysis, at (202) 366-2347 or aloha.ley@dot.gov.
Hard-copy Submission
    Applications may be submitted by hand, mail, or express delivery. 
Proposals postmarked after the due date will not be accepted. There are 
two mandatory requirements for hard-copy filing of applications, both 
of which must be completed for a community's application to be deemed 
timely and considered by the Department.
     First, the applicant must submit a proposal that includes 
all of the information required by this Application and Submission 
section, including the Summary Sheet that appears in Appendix B. 
Applicants should submit an original and two copies of their proposals, 
including the Summary Information Sheet, if submitting their proposals 
using the hard-copy option.
     Second, the application (including original and two 
copies) must be sent/delivered to Dockets Operations and Media 
Management, M-30, Room PL-401, Department of Transportation, 400 7th 
Street, SW., Washington, DC 20590.
Electronic Submission
    Communities may submit their proposals electronically by following 
the instructions at our Web site, https://dms.dot.gov. If a community 
elects to file electronically, it should not submit a hard copy of the 
application to the Dockets Operations and Media Management Office. 
Questions about electronic filing procedures should be addressed to 
Renee Wright, Dockets Operations and Media Management, at (202) 493-
0402.\4\
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    \4\ Interested communities can view proposals submitted in prior 
years in Docket OST-2002-11590, Docket OST-2003-15065, Docket OST-
2004-17343, Docket OST-2005-20127, and Docket OST-2006-23671 for FY 
2002, 2003, 2004, 2005 and 2006 grants, respectively, through the 
Department's docket management system at the following Web address: 
https://dms.dot.gov/.
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SF424 Required
    To comply with Grants.gov initiative, a mandate of the President's 
Management Agenda, all applicants must submit form SF424, Application 
for Federal Domestic Assistance, found on https://www.grants.gov. 
Applicants must complete a one-time registration process in order to 
submit the SF424 application. This registration process can take 
approximately three to five days to complete. For this reason, 
communities intending to file applications should complete the 
registration process as soon as practicable to ensure they can meet the 
application deadline. Appendix C provides additional information with 
respect to the registration process in Grants.gov as well as 
instructions on submitting SF424 once the registration process has been 
completed. An application will not be deemed complete unless the 
proposal has been submitted to the Department's Docket Operations and 
Media Management office (hard copy or electronic submission) and the 
SF424 application has been submitted through Grants.gov by the April 27 
deadline.
Cover Page Contents
    The cover page for all applications, regardless of the method of 
submission, should bear the title ``Proposal Under the Small Community 
Air Service Development Program,'' and should include the docket number 
as shown on the first page of this order, the name of the community or 
consortium of communities applying, the legal sponsor, and the 
community's Dun and Bradstreet (D&B) Data Universal Numbering System 
(DUNS) number.
Additional Materials
    Additional materials such as DVDs and videos cannot be included in 
the Docket Management System. If communities want to include such 
information in their proposals, they should provide that information, 
along with a copy of their application, to the Department's Office of 
Aviation Analysis, X-50, Room 6401, 400 7th Street, SW., Washington, DC 
20590.
Confidential Treatment of Information
    Applicants will be able to provide certain information relevant to 
their proposals on a confidential basis. Under the Department's 
regulations, such information is limited to commercial or financial 
information that, if disclosed, would either significantly harm the 
competitive position of a business or enterprise or make it more 
difficult for the Federal Government to obtain similar information in 
the future.
    Applicants seeking confidential treatment of a portion of their 
applications must segregate the confidential material in a sealed 
envelope marked ``Confidential Submission of X (the applicant) in 
Docket OST-2007-27370'' and include with that material a request in the 
form of a motion seeking confidential treatment of the material under 
14 CFR 302.12 (Rule 12) of the Department's regulations. The applicant 
should submit an original and two copies of its

[[Page 9389]]

motion and an original and two copies of the confidential material in 
the sealed envelope. The confidential material should not be included 
in the original or in any of the copies of the applicant's proposal 
that are submitted to the Department. Those submissions, however, 
should indicate clearly where the confidential material would have been 
inserted. If applicants invoke Rule 12, the confidential portion of the 
filing will be treated as confidential pending a final determination. 
All confidential material must also be received by April 27, 2007.

Types of Projects and Application Content

    The statute is very general about the types of projects that can be 
authorized so that communities are provided greater flexibility in 
addressing their particular air service and airfare issues. Since 
circumstances may differ among communities, applicants have some 
latitude in identifying their own objectives and developing strategies 
for accomplishing them.
    Another objective of the Small Community Program is to help 
communities secure enhancements that will be responsive to their air 
transportation/air fare needs on a long-term basis after the financial 
support of the grant has discontinued. There are many ways that a 
community might enhance its current air service or attract new service, 
such as:
     Promoting awareness among residents of locally available 
service;
     Attracting a new carrier through revenue guarantees or 
operating cost offsets;
     Attracting new forms of service, such as on-demand air 
taxi service;
     Offering an incumbent carrier financial or other 
incentives to lower its fares, increase its frequencies, add new 
routes, or deploy more suitable aircraft, including upgrading its 
equipment from turboprops to regional jets;
     Combining traffic support from surrounding communities 
with regionalized service through one airport; or
     Providing local ground transportation service to improve 
access to air service to the community and the surrounding area.\5\
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    \5\ These examples are illustrative only and are not meant as a 
list of projects favored by the Department.
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    Communities are encouraged to be innovative and to consider a wide 
range of initiatives and air transportation services in developing 
their proposals. At the same time, general, vague, or unsupported 
proposals will not be entertained. The more highly defined and focused 
the proposal, the more likely it will enhance its attractiveness, 
particularly given the statute's priority consideration for applicants 
who can use the funds in a timely manner. (49 U.S.C. 41743 (c)(5)(E)).
    There is no set format that must be used in submitting grant 
proposals. At a minimum, however, a proposal must provide the following 
information:
     A description of the community's existing air service, 
including the carrier(s) providing service, service frequency, direct 
and connecting destinations offered, available fares, and equipment 
types.
     A synopsis of the community's historical service, 
including destinations, traffic levels, service providers, and any 
extenuating factors that might have affected traffic in the past or 
that can be expected to influence service needs in the near to 
intermediate term.
     A description of the community's air service needs or 
deficiencies, including any major origin/destination markets not now 
served or not served adequately. In addition, communities are free to 
submit any information about their fare levels that they deem relevant 
to consideration of their grant request.
     A strategic plan for meeting those needs under the Small 
Community Program, including the community's specific project goal(s) 
and detailed plan for attaining that goal(s). Proposals should:
    [check] Clearly identify the target audience of each component of 
the proposed transportation initiative, including all advertising and 
promotional efforts.
    [check] Set forth a realistic timetable for implementation of the 
grant project. In this regard, the statute includes timely use of the 
grant funds as a priority consideration. Consequently, communities must 
have a well-developed project plan and detailed timetable for 
implementing that plan. In establishing the timetable, however, 
communities should be realistic about their ability to meet their 
project deadlines.\6\
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    \6\ The projected timetable will be an integral part of the 
grant agreements between the selected communities and the 
Department. Therefore, there is no advantage to a community in 
proposing an aggressive timetable that cannot be met, and there may 
be disadvantages if the community finds that it cannot meet its 
timetable. Communities should carefully consider all factors 
affecting implementation of their projects and develop realistic 
timeframes for achieving those objectives, keeping in mind that 
authorized projects generally have averaged three to four years.
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    [check] Proposals involving new or improved service explain how the 
service will become self-sufficient since, under the statute, a 
community cannot seek grant funding in subsequent years in support of 
the same project. It is important that communities seriously consider 
the scale of their proposed projects in developing their proposals and 
the timetable for achieving them. To the extent that a proposed project 
is dependent upon or relevant to completion of other federally funded 
capital improvement projects, the community should provide a 
description of, and the construction time-line for, those projects, 
keeping in mind the statutory requirement to use Small Community 
Program funding in a timely manner.
    [check] Of particular importance when drafting a proposal, 
applicants should fully and clearly outline the goals and objectives 
sought to be achieved, e.g., ``to broaden the awareness by residents in 
the Tri-County area of the operations provided by passenger carriers at 
the Tri-County airport,'' or ``to obtain new and affordable service to 
a hub airport in a direction where there is no such service.'' When an 
application is selected, these goals and objectives will be 
incorporated into the grant agreement and define its basic project 
scope. Once an agreement is signed, if circumstances change and an 
amendment is sought to allow for different activities or a different 
approach, the Department will look to whether the change being sought 
is consistent with those fundamental project goals and objectives. 
Proposed changes that would alter those fundamental goals and 
objectives cannot be authorized, because doing so would undermine the 
competitive nature of the selection process. Applicants are also 
encouraged to include in their proposals alternative or back-up 
strategies for achieving their desired goals and objectives. By 
incorporating such information into the grant agreement, desired 
changes may be more easily accommodated.
     A description of any public-private partnership that will 
participate in the project. Full community involvement is a key aspect 
of the Small Community Program. The statute gives a priority to those 
communities that already have established, or will establish, a public-
private partnership to facilitate air service to the public. The 
proposal should give a full description of the public-private 
partnership that will participate in the community's proposal and how 
the partnership will actively participate in the implementation of the 
proposed project. In addition, applicants should identify each member 
of the partnership, the role that each will play, and its specific 
responsibilities in the implementation

[[Page 9390]]

of the project. If the application does not include specific 
information on the partnership participation in the project, the 
Department cannot evaluate how well a community has met this 
consideration, and the applicant will not be deemed as having met this 
priority consideration in the Department's evaluation of the 
community's proposal.
     A detailed description of the funding necessary for 
implementation of the community's project, including the federal and 
non-federal contributions. Proposals should clearly identify the level 
of federal funding sought. They should also clearly identify the other 
cash contributions toward the proposed project, ``in-kind'' 
contributions from the airport, and ``in-kind'' contributions from the 
community. Cash contributions from airport revenues should be 
identified separately from cash contributions from other community 
sources. Similarly, cash contributions from the state and/or local 
government should be separately identified and described.\7\
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    \7\ In this regard, instances have arisen in the past where 
communities have relied extensively on what they characterize as 
travel banks for a significant portion of their local contribution. 
A travel ``bank'' involves an actual deposit of funds from the 
participating entities into a bank for the purpose of purchasing 
committed air travel on the selected airline and defined procedures 
for use of those funds under an agreement with the airline. Most 
often, however, what communities refer to as a travel ``bank'' in 
reality involves travel ``pledges'' from businesses in the community 
without any collection of funds or formal procedures for use of the 
funds. In either case, communities that include travel banks in 
their proposals must also include a written confirmation from an 
airline supporting it.
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    Applicant communities should be aware that, if awarded a grant, the 
Department will not reimburse the community for pre-award expenses such 
as the cost of preparing the grant application or for any expenses 
incurred prior to the community executing a grant agreement with the 
Department. In addition, 10 percent of the grant funds will be withheld 
until the Department receives the final report of the grant project. 
See ``Award Administration Information,'' below.
     An explanation of how the community will ensure that its 
own funding contribution is spent in the manner proposed.
     Descriptions of how the community will monitor the 
progress of the grant project and identify critical milestones during 
the life of the grant, including the need to modify or discontinue 
funding if identified milestones cannot be met. This is an important 
component of the community's proposal and serves to demonstrate the 
thoroughness of the community's planning of the proposed grant project. 
Applicant communities are on notice that any modifications must first 
be approved by the Department. Moreover, modifications to the project 
will be considered only to the extent that the changes do not deviate 
from the original goal and scope of the authorized grant project. As 
noted above, the Department will not permit fundamental changes to a 
community's proposal in order to preserve a grant award.
     A description of how the community plans to continue with 
the project if it is not self-sustaining after the grant award expires. 
A particular goal of the Small Community Program is to provide long-
term, self-sustaining improvements to air service at small communities. 
A community cannot seek further grant funding in support of the same 
project. 49 U.S.C. 41743(c)(4). It is possible that a new or improved 
service at a community will be well on its way to becoming self-
sustaining, but will not have reached that goal when the grant has 
expired. Similarly, it is possible that extensive marketing and 
promotional efforts may be in process, but not completed, at the end of 
the grant period and will require continued support. Therefore, in 
developing its proposal, the community should carefully consider and 
describe its plans for continued financial support for the project 
after the grant funding is no longer available. This aspect of the 
application reflects on the community's commitment to the grant project 
and is an important component to the Department's consideration of the 
community's proposal for selection for a grant award.
     A description of the community's air service development 
efforts over the past five years and the results of those efforts. Many 
communities have been active on an on-going basis for many years in air 
service development efforts, while others are just beginning. To the 
extent that a community has previously engaged in other air service 
initiatives, including through public/private partnerships, it should 
describe those efforts and their results in its grant proposal. This 
should include marketing and promotional efforts of airport services as 
well as efforts to recruit additional or improved air service and 
airfare initiatives.
     Designation of a legal sponsor responsible for 
administering the program. The legal sponsor must be a government 
entity. If the applicant is a public-private partnership, a public 
government member of the organization must be identified as the 
community's sponsor to accept program reimbursements. In this regard, 
communities can designate only a single government entity as the legal 
sponsor, even if a consortium, for example, consists of two or more 
local government entities. Private organizations cannot be designated 
as the legal sponsor of a grant under the Small Community Program.\8\
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    \8\ The community has the responsibility to ensure that the 
recipient of any funding has the legal authority under State and 
local laws to carry out all aspects of the grant.
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Air Service Development Zone Designation

    The statute authorizing the Small Community Program also provides 
that the Department will designate one of the grant recipients as an 
Air Service Development Zone. The purpose of the designation is to 
provide communities interested in attracting business to the area 
surrounding the airport and/or developing land-use options for the area 
to work with the Department on means to achieve those goals. The 
Department will assist the designated community in establishing 
contacts with and obtaining advice and assistance from appropriate 
government agencies, including the Department of Commerce as well as 
other offices within the Department of Transportation, and in 
identifying other pertinent resources that may aid the community in its 
efforts to attract businesses and to formulate land-use options. 
However, the community receiving the designation will be responsible 
for developing, implementing, and managing activities related to the 
air service development zone initiative. Only communities that are 
interested in these objectives and have a plan to accomplish them 
should compete for the available designation. There are no additional 
funds associated with this designation, and applying for the 
designation will provide no special benefit or preference to a 
community in receiving a grant award under the Small Community Program.
    Grant applicants interested in selection for the Air Service 
Development Zone designation must include in their applications a 
separate section, titled, Support for Air Service Development Zone 
Designation. That section should include:
    [check] Detailed information regarding the property and facilities 
available for development such as an existing airpark or land for such 
an airpark;
    [check] The other modes of transportation that would be available 
to support additional economic development, such as rail, road, and/or 
water access;
    [check] Information concerning historic, existing, and any future 
business

[[Page 9391]]

activity in the area that would support further development;
    [check] Demographic information concerning the community and its 
environs relevant to the developmental efforts, including population, 
employment, and per capita income data; and
    [check] Any other information that the community believes is 
relevant to its plans to enhance air service development.
    The community should provide as detailed a plan as possible, 
including what goals it expects to achieve from the air service 
development zone designation and the types of activities on which it 
would like to work with the Department in achieving those goals. The 
community should also indicate whether further local government 
approvals are required in order to implement the proposed activities.

Application Review Information

    The Department will carefully review each proposal and the staff 
may contact applicants if clarification is needed. The grant awards 
will be made as quickly as possible so that communities awarded grants 
can complete the grant agreement process and proceed to implement their 
plans. Pending unforeseen circumstances, this process should be 
completed before September 2007. Given the competitive nature of the 
grant process, the Department will not meet with grant applicants with 
respect to their grant proposals. Our selection of communities for 
grant awards will be based on the communities' written submissions.

Priority Factors Considered

    The law directs the Department to give priority consideration to 
those communities or consortia where:
     Air fares are higher than the national average air fares 
for all communities;
     The community or consortium will provide a portion of the 
cost of the activity from local sources other than airport revenue 
sources;
     The community or consortium has established or will 
establish a public-private partnership to facilitate air carrier 
service to the public;
     The assistance will provide material benefits to a broad 
segment of the traveling public, including business, educational 
institutions, and other enterprises, whose access to the national air 
transportation system is limited; and
     The assistance will be used in a timely manner.

Additional Factors Considered

    Applications will be evaluated against the priority considerations 
listed above. Our experience has been that more applications are 
received than can be funded under the Small Community Program. 
Consequently, consistent with the criteria stated above, the selection 
process will take into consideration such additional factors as:
     The relative size of each applicant community;
     The geographic location of each applicant, including the 
community's proximity to larger centers of air service and low-fare 
service alternatives;
     The community's existing level of air service and whether 
that service has been increasing or decreasing;
     Whether the community's proposal, if successfully 
implemented, could serve as a working model for other communities;
     Current demographic indicators for the community, such as 
population, income and business activity;
     The community's demonstrated commitment to and 
participation in the proposed grant project;
     The grant amount requested compared with total funds 
available for all communities;
     The proposed federal grant amount requested compared with 
the local share offered;
     Whether the community has a realistic plan to use the 
funds in a timely manner;
     The uniqueness of an applicant's claimed problems and 
whether the proposed project addresses those problems;
     The extent to which the applicant's proposed solution(s) 
to solving the problem(s) is new or innovative;
     Whether the community's proximity to an existing grant 
recipient could impact its proposal; and
     Whether the applicant community has previously received a 
grant award under this program.
    Full community participation is a key goal of this program as 
demonstrated by the statute's focus on local contributions and active 
participation in the project. Therefore, applications that demonstrate 
broad community support will be more attractive. For example, 
communities providing proportionately higher levels of cash 
contributions from other than airport revenues will have more 
attractive proposals. Communities that provide multiple levels of 
contributions--cash and in-kind contributions--also will have more 
attractive proposals. Similarly, communities that demonstrate historic 
and/or active participation in the proposed air service project will 
have the attractiveness of their proposals enhanced. In this regard, 
the Department welcomes letters of intent from airlines on behalf of 
community proposals that are specifically intended to enlist new or 
expanded air carrier presence. Such letters will be accorded greater 
credence when authorized by airline planning departments.
    Proposals that offer innovative solutions to the transportation 
issues facing the community will be more attractive. Small communities 
have faced many problems retaining and improving their air services and 
in coping with air fares that are higher than typical for larger 
communities. Therefore, proposals that offer new, creative approaches 
to addressing these problems, to the extent that they are reasonable, 
will have their attractiveness enhanced. Proposals that provide a well-
defined plan, a reasonable timetable for use of the grant funds, and a 
plan for continuation and/or monitoring of the project after the grant 
expires also will possess greater attractiveness.

Award Administration Information

    The Department will announce its grant selections by Order, which 
will be served on each grant recipient, all other applicants, and all 
parties served with this order. The selection order will also be posted 
on the Department's Docket Management System and Web page.

Grant Agreement

    Communities awarded grants are required to execute a grant 
agreement with the Department before they begin to spend funds under 
the grant award. Grant funds will be provided on a reimbursable basis 
only, with reimbursements made only for expenses incurred and billed 
during the period that the grant agreement is in effect. Applicants 
should not assume they have received a grant, nor should they obligate 
or spend local funds prior to receiving and fully executing a grant 
agreement with the Department. Expenditures made prior to the execution 
of a grant agreement, including costs associated with preparation of 
the grant application, will not be reimbursed. Moreover, numerous 
assurances are required to be made and honored when federal funds are 
awarded. All communities receiving a grant under the Small Community 
Program will be required to accept the responsibilities of these 
assurances and to execute the assurances when they

[[Page 9392]]

execute their grant agreements.\9\ Copies of the applicable assurances 
are available for review on the Department's Web page at https://
ostpxweb.dot.gov/aviation/X-50%20Role_files/
smallcommunity.htm#Funds.\10\
_____________________________________-

 \9\ With respect to grants administration generally, the 
Department is considering possible actions to streamline and 
simplify certain aspects of its existing administrative processes. 
Grantees will be apprised if any such actions are to be implemented.
    \10\ The applicable regulations include, among others: (1) 49 
CFR Parts 21 and 27 and 14 CFR Parts 271 and 382--Nondiscrimination 
in federally-assisted programs of the Department of Transportation--
Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR 
Part 27--Nondiscrimination on the basis of disability in programs 
and activities receiving or benefiting from Federal financial 
assistance; and 14 CFR Part 382--Nondiscrimination on the basis of 
disability in air travel; (2) 49 CFR Part 29--Government-wide 
debarment and suspension (non-procurement) and government-wide 
requirements for drug-free workplace (grants); and (3) 49 CFR Part 
20--New restrictions on lobbying. The complete list of the 
applicable assurances is on the cited webpage. The assurances noted 
are for reference purposes only and should not be included in the 
community's application. The assurances are part of the grant 
agreement that will be sent to each grant recipient and should be 
completed at that time.
---------------------------------------------------------------------------

Grantee Reports

    The grant agreements between the Department and the selected 
communities will require quarterly reports on the progress of 
implementation of the grant project, as well as the submission on a 
quarterly or other time-specific basis of additional material relevant 
to the grant project, such as copies of advertising and promotional 
material and copies of contracts with consultants and service 
providers. In addition, communities will be required to submit a final 
report to the Department with respect to their grant projects, and 10 
percent of the grant funds available will not be reimbursed to the 
community until the final report has been received. Communities will be 
permitted to seek reimbursement of project implementation costs on a 
regular basis. The frequency of such requests will be established in 
the grant agreement, which will be tailored to the specific features of 
the community's grant project. In most cases, reimbursements will be 
made on a monthly basis. In this regard, the Department will provide 
the grant recipient communities with details and procedures for 
securing reimbursements electronically.

Grant Amendments

    A grantee may wish to amend its agreement with the Department in 
the event of a material change in circumstances after the date the 
agreement is executed. Typically, amendments involve an extension to 
the time period for completing the grant or a change in the types of 
activities authorized for reimbursement under the goals and objectives 
(``project scope'') of the grant agreement. Grantees are cautioned, 
however, that the Department cannot authorize amendments that are 
incompatible with the scope of the agreement. For example, a grant 
awarded solely for the purpose of developing an airport marketing plan 
cannot be amended to permit subsidization of an air carrier's startup 
costs, since the latter was never contemplated by the original 
agreement. Likewise, an agreement intended to subsidize new service 
expressly to an ``eastern hub city'' cannot be amended to permit a 
subsidy for service to a hub on the West Coast. Accommodating such a 
change would effectively require the Department to consent to a new 
grant agreement, an action for which we have no legal authority.
    Grantees are also advised that the Department will not extend the 
expiration date of an agreement simply to allow more time for a 
community to solicit air carriers for new air service. Many grants have 
been awarded for the purpose of subsidizing new or additional air 
service for a small community, with the goal of that service becoming 
self-sustaining by the end of the subsidy period. In virtually all 
cases, the community seeking the grant funds has received expressions 
of interest from one or more air carriers. In some instances, these 
expressions of interest failed to pan out and the community was left 
without any immediate prospects, at which time it would ask for a grant 
extension to allow more time to pursue other carriers. Because we are 
charged by law to consider timely use of funds when selecting grant 
recipients, the Department will grant an extension only when the 
community can provide strong evidence of a firm commitment on the part 
of an air carrier to deliver the desired service.
    To avoid misunderstandings, grantees contemplating amendments to 
their agreements are urged to discuss their situations with the Small 
Community Program staff before requesting a formal amendment.
    This order is issued under authority delegated in 49 CFR 1.56a(f).

Accordingly,

    1. Community proposals for funding under the Small Community Air 
Service Development Program should be submitted in Docket OST-2007-
27370 no later than April 27, 2007; \11\ and
---------------------------------------------------------------------------

    \11\ Proposals must be postmarked no later than April 27, 2007. 
The original application should be submitted on 8.5'' x 11'' paper, 
in dark ink (not green) and without tabs to facilitate inclusion in 
the Department's docket management system. The remaining copies may 
be tabbed and include use of any color ink.
---------------------------------------------------------------------------

    2. This order will be published in the Federal Register and also 
will be served on the Conference of Mayors, the National League of 
Cities, the National Governors Association, the National Association of 
State Aviation Officials (NASAO), the Association of County Executives, 
the American Association of Airport Executives (AAAE), and the Airports 
Council International-North America (ACI), and posted on https://
www.grants.gov

 By:

Michael W. Reynolds,
Deputy Assistant Secretary for Aviation and International Affairs.

    An electronic version of this document is available on the World 
Wide Web at https://dms.dot.gov.

Appendix A

United States Code Annotated
Title 49. Transportation
Subtitle VII. Aviation Programs
Part A. Air Commerce and Safety
Subpart II. Economic Regulation
Chapter 417. Operations of Carriers
Subchapter II. Small Community Air Service


Sec.  41743  Airports not receiving sufficient service

    (a) Small community air service development program.--The Secretary 
of Transportation shall establish a program that meets the requirements 
of this section for improving air carrier service to airports not 
receiving sufficient air carrier service.
    (b) Application required.--In order to participate in the program 
established under subsection (a), a community or consortium of 
communities shall submit an application to the Secretary in such form, 
at such time, and containing such information as the Secretary may 
require, including--
    (1) An assessment of the need of the community or consortium for 
access, or improved access, to the national air transportation system; 
and
    (2) An analysis of the application of the criteria in subsection 
(c) to that community or consortium.
    (c) Criteria for participation.--In selecting communities, or 
consortia of communities, for participation in the program established 
under subsection (a), the Secretary shall apply the following criteria:
    (1) Size.--For calendar year 1997, the airport serving the 
community or consortium was not larger than a small hub airport, and--

[[Page 9393]]

    (A) Had insufficient air carrier service; or
    (B) Had unreasonably high air fares.
    (2) Characteristics.--The airport presents characteristics, such as 
geographic diversity or unique circumstances, that will demonstrate the 
need for, and feasibility of, the program established under subsection 
(a).
    (3) State limit.--Not more than 4 communities or consortia of 
communities, or a combination thereof, from the same State may be 
selected to participate in the program in any fiscal year.
    (4) Overall limit.--No more than 40 communities or consortia of 
communities, or a combination thereof, may be selected to participate 
in the program in each year for which funds are appropriated for the 
program.
    No community, consortia of communities, nor combination thereof may 
participate in the program in support of the same project more than 
once, but any community, consortia of communities, or combination 
thereof may apply, subsequent to such participation, to participate in 
the program in support of a different project.
    (5) Priorities.--The Secretary shall give priority to communities 
or consortia of communities where--
    (A) Air fares are higher than the average air fares for all 
communities;
    (B) The community or consortium will provide a portion of the cost 
of the activity to be assisted under the program from local sources 
other than airport revenues;
    (C) The community or consortium has established, or will establish, 
a public-private partnership to facilitate air carrier service to the 
public;
    (D) The assistance will provide material benefits to a broad 
segment of the traveling public, including business, educational 
institutions, and other enterprises, whose access to the national air 
transportation system is limited; and
    (E) The assistance will be used in a timely fashion.
    (d) Types of assistance.--The Secretary may use amounts made 
available under this section--
    (1) To provide assistance to an air carrier to subsidize service to 
and from an underserved airport for a period not to exceed 3 years;
    (2) To provide assistance to an underserved airport to obtain 
service to and from the underserved airport; and
    (3) To provide assistance to an underserved airport to implement 
such other measures as the Secretary, in consultation with such 
airport, considers appropriate to improve air service both in terms of 
the cost of such service to consumers and the availability of such 
service, including improving air service through marketing and 
promotion of air service and enhanced utilization of airport 
facilities.
    (e) Authority to make agreements.--
    (1) In general.--The Secretary may make agreements to provide 
assistance under this section.
    (2) Authorization of appropriations.--There is authorized to be 
appropriated to the Secretary $20,000,000 for fiscal year 2001, 
$27,500,000 for each of fiscal years 2002 and 2003, and $35,000,000 for 
each of fiscal years 2004 through 2008 to carry out this section. Such 
sums shall remain available until expended.
    (f) Additional action.--Under the program established under 
subsection (a), the Secretary shall work with air carriers providing 
service to participating communities and major air carriers (as defined 
in section 41716(a)(2)) serving large hub airports to facilitate joint-
fare arrangements consistent with normal industry practice.
    (g) Designation of responsible official.--The Secretary shall 
designate an employee of the Department of Transportation--
    (1) To function as a facilitator between small communities and air 
carriers;
    (2) To carry out this section;
    (3) To ensure that the Bureau of Transportation Statistics collects 
data on passenger information to assess the service needs of small 
communities;
    (4) To work with and coordinate efforts with other Federal, State, 
and local agencies to increase the viability of service to small 
communities and the creation of aviation development zones; and
    (5) To provide policy recommendations to the Secretary and Congress 
that will ensure that small communities have access to quality, 
affordable air transportation services.
    (h) Air Service Development Zone.--The Secretary shall designate an 
airport in the program as an Air Service Development Zone and work with 
the community or consortium on means to attract business to the area 
surrounding the airport, to develop land use options for the area, and 
provide data, working with the Department of Commerce and other 
agencies.

Appendix B

Small Community Air Service Development Program

[Docket OST-2007-27370]

Summary Information

    All applicants must submit this information along with their 
proposal. In addition, applicants must also fill out form SF424 on 
https://www.grants.gov. (See Appendix C for the SF424 filing process)

A. Applicant Information: (Check All That Apply)

[ballot] Not a Consortium
[ballot] Interstate Consortium
[ballot] Intrastate Consortium
[ballot] Community now receives EAS subsidy
[ballot] Community (or Consortium member) previously received a Small 
Community Grant
If previous recipient, expiration date of grant:-----------------------

B. Public/Private Partnerships: (List Organization Names)

Public
1.---------------------------------------------------------------------
2.---------------------------------------------------------------------
3.---------------------------------------------------------------------
4.---------------------------------------------------------------------
5.---------------------------------------------------------------------
Private
1.---------------------------------------------------------------------
2.---------------------------------------------------------------------
3.---------------------------------------------------------------------
4.---------------------------------------------------------------------
5.---------------------------------------------------------------------

C. Project Proposal: (Check All That Apply)

[ballot] Marketing
[ballot] Personnel
[ballot] Travel Bank
[ballot] Upgrade Aircraft
[ballot] Increase Frequency
[ballot] Service Restoration
[ballot] New Route
[ballot] Low Fare Service
[ballot] Subsidy
[ballot] Surface Transportation
[ballot] Revenue Guarantee
[ballot] Start Up Cost Offset
[ballot] Study
[ballot] Regional Service
[ballot] Launch New Carrier
[ballot] First Service
[ballot] Secure Additional Carrier
[ballot] Other (specify)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------

D. Existing Landing Aids at Local Airport:

[ballot] Full ILS

[[Page 9394]]

[ballot] Outer/Middle Marker
[ballot] Published Instrument Approach
[ballot] Localizer
[ballot] Other (specify)
-----------------------------------------------------------------------

E. Project Cost:

Federal amount requested:----------------------------------------------
Total local cash financial contribution:-------------------------------
-----------------------------------------------------------------------
Airport funds:---------------------------------------------------------
Non-Airport funds:-----------------------------------------------------
State cash financial contribution:-------------------------------------
Existing funds:--------------------------------------------------------
New funds:-------------------------------------------------------------
Airport In-kind contribution: (amount & description)-------------------
Other In-Kind contribution: (amount & description)---------------------
Total cost of project:-------------------------------------------------

F. Enplanements:

2000-------------------------------------------------------------------
2001-------------------------------------------------------------------
2002-------------------------------------------------------------------
2003-------------------------------------------------------------------
2004-------------------------------------------------------------------
2005-------------------------------------------------------------------

G. Is this application subject to review by State under Executive Order 
12372 process?

[ballot] a. This application was made available to the State under the 
Executive Order 12372 Process for review on (date) .-------------------
[ballot] b. Program is subject to E.O. 12372, but has not been selected 
by the State for review.
[ballot] c. Program is not covered by E.O. 12372.

H. Is the Applicant delinquent on any Federal debt? (if ``yes'', 
provide explanation)

[ballot] No
[ballot] Yes (explain)-------------------------------------------------

Appendix C

Filing Form SF424--Application for Federal Domestic Assistance

    Grants.gov, originally called the E-Grants Initiative, a mandate 
of the President's Management Agenda, states,

    ``Agencies will allow applicants for Federal Grants to apply for 
and ultimately manage grant funds online through a common Web site, 
simplifying grants management and eliminating redundancies.''

    Public Law 106-107, the legislation that mandates streamlining 
and improved accountability for Federal grants, and related 
references in the President's Management Agenda, requires that 
Federal grant management activities be standardized. As a result, 
the Office of Management and Budget recently issued a policy 
directive requiring that all Federal agencies post grant 
opportunities online as of November 7, 2006.
    Therefore, this year, to comply with the Grants.gov initiative, 
the Department will begin accepting grant applications via https://
www.grants.gov. In order for an application to be considered in the 
Small Community Air Service Development Program, the community must 
submit its application of form SF424--Application for Federal 
Domestic Assistance--via 
                    

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