Notice of Order Soliciting Community Proposals, 34847-34858 [E9-17093]

Agencies

• Office of the Secretary
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 74, Number 136 (Friday, July 17, 2009)]
[Notices]
[Pages 34847-34858]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-17093]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket DOT-OST-2009-0149]


Notice of Order Soliciting Community Proposals

AGENCY: Department of Transportation.

ACTION: Notice of Order Soliciting Community Proposals (Order 2009-7-
11).

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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 filing of an 
Application for Federal Domestic Assistance (SF424) through https://www.grants.gov. The second is the submission of the community's 
proposal as an attachment to its SF424. Applicants must complete a one-
time registration at https://www.grants.gov, a process required by 
grants.gov that can take up to three weeks to complete. For this 
reason, applicants should register with grants.gov as soon as possible 
to

[[Page 34848]]

ensure they can meet the application deadline.

DATES: Grant proposals and the SF424 must be submitted no later than 5 
p.m. Eastern Daylight Time (EDT), on August 28, 2009.

ADDRESSES: Interested parties must submit applications electronically 
as an attachment to the SF424 through https://www.grants.gov. The 
application should bear the title, ``Proposal under the Small Community 
Air Service Development Program, Docket DOT-OST-2009-0149,'' as well as 
(1) the name of the applicant community or consortium of communities, 
(2) the legal sponsor and its DUNS number (including + 4), and (3) the 
2-digit Congressional district code applicable to the sponsoring 
organization and, if a consortium, to each participating community.

FOR FURTHER INFORMATION CONTACT: Aloha Ley, Office of Aviation 
Analysis, 8th Floor, Room W86-310, 1200 New Jersey Ave., SE., 
Washington, DC 20590 (202) 366-2347.

    Dated: July 10, 2009.
Christa Fornarotto,
Acting Assistant Secretary, for Aviation and International Affairs.
[GRAPHIC] [TIFF OMITTED] TN17JY09.165

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 address air service and airfare problems in their 
communities. Proposals must be submitted in the above-referenced docket 
no later than 5 p.m., Eastern Daylight Time (EDT), on August 28, 2009. 
Applicants must first register with https://www.grants.gov before 
submitting an Application for Federal Domestic Assistance (SF424), a 
standard Federal government grant application form, and must include 
their proposals as an attachment to the SF424. An application will not 
be deemed complete until and unless all required materials are filed by 
the August 28, 2009, deadline. Communities are reminded to register 
with Grants.gov early in the application period since the mandatory 
grants.gov registration process can take up to three weeks to complete. 
Tutorials and other guidance for completing the required registration 
and application procedures are available at the ``Applicant Resources'' 
page of Grants.gov.\1\
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    \1\ See https://www07.grants.gov/applicants/app_help_reso.jsp.
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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, and reauthorized under the Vision 100--Century of 
Aviation Reauthorization Act, Public Law 108-176 (Vision 100). The 
program is 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.\2\ Under the Omnibus Appropriations 
Act, 2009 (Pub. L. 111-8), the Department received up to $8 million to 
carry out the Small Community Program.\3\
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    \2\ For detailed background on the Small Community Program, see 
our Web site at: https://ostpxweb.dot.gov/aviation/X-50%20Role_files/smallcommunity.htm.
    \3\ Program funding for this year may be affected by a provision 
that directs the Secretary to transfer funds from any program within 
or administered by the Office of the Secretary to the Essential Air 
Service program if that program does not have sufficient funds to 
meet its statutory obligations. In addition, a portion of the funds 
available for the Small Community Program are used by the Department 
for grants-management purposes.
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    The program is limited to a maximum of 40 grant awards, with a 
maximum of four grants per State, in each year the program is funded. 
There are no 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 eight years, the Department's 
individual grants have ranged from $20,000 to nearly $1.6 million. 
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, individual 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 \4\ and (2) have insufficient air service or 
unreasonably high airfares. 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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    \4\ The hub classifications are based on the Federal Aviation 
Administration's CY 1997 enplanement data.
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    Essential Air Service 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 marketing or promotion projects that support existing or 
newly subsidized air services. Grant funds will not be authorized for 
EAS-subsidized communities to support any new air service. Furthermore, 
no funds will be authorized to support additional flights by EAS 
carriers or changes to those carriers' existing schedules. These 
restrictions are necessary to avoid conflicts with the EAS program.
    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 new 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.
    Grant must be for a new project. No community may participate in 
the program in support of the same project more than once. 49 U.S.C. 
41743(c)(4). In assessing whether a previous grantee's current proposal 
represents a new project, we would compare the goals and objectives of 
the earlier grant, including the key components of the means by which 
those goals and objectives were to be achieved, to the current 
proposal. For example, if a community received an earlier grant to 
support a revenue guarantee for service to a particular destination or 
direction,

[[Page 34849]]

a new application for another revenue guarantee for the same service 
would be disqualified under Sec.  41743(c), even if the revenue 
guarantee were structured differently or the type of carrier were 
different. However, we do not read Sec.  41743(c) to disqualify a new 
application for service to a new destination or direction using a 
revenue guarantee, or for general marketing of the airport and the 
various services it offers. We recognize, for example, that not all 
revenue guarantees or marketing agreements are of the same nature, and 
that if a subsequent proposal incorporates different goals or 
significantly different components, it may be sufficiently different to 
constitute a new project under Sec.  41743(c).
    In its application, a community that is a previous grant recipient 
should compare and contrast its proposed project with its previously 
funded one(s) to demonstrate why its latest proposal represents a new 
project. Communities should also note that in each of the prior six 
years of the program, interest in participation exceeded both the funds 
available and the number of communities that could take part 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, a community can have only one Small 
Community Program grant at any time. 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.
    Subsidies for a carrier to compete against an incumbent raise 
concerns. The Department is reluctant to subsidize one carrier but not 
others in a competitive market. For this reason, 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.
    Subsidy proposals should reflect market analysis and a 
complementary marketing commitment. A thorough understanding of the 
target market is essential for the ultimate success of new or expanded 
air service. Likewise, the chances that such a service will become 
self-sustaining are enhanced when its implementation is supported by a 
well-designed marketing campaign. For these reasons, communities 
requesting funds for a revenue guarantee/subsidy/financial incentive 
are encouraged to include in their proposals an in-depth analysis 
evidencing close familiarity with their target markets. Such 
communities also are encouraged to designate in their proposals a 
portion of their requested funds for the development and implementation 
of a marketing plan in support of the service sought.
    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,'' but in effect the application was a collection of 
individual community requests involving 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 applications 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 for a revenue guarantee and one for marketing--we will 
consider such proposals. However, communities should be aware that they 
can receive only one grant, either the stand-alone grant or as a member 
of a consortium, because no community can 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. A 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. 
Contributions that are comprised of intangible non-cash items, such as 
the ``value'' of donated advertising, are considered ``in-kind'' 
contributions (see further discussion below).
    Cash from airport revenues. This includes contributions from funds 
generated by airport operations. Airport revenues may not be used for 
revenue guarantees to airlines.\5\ Community

[[Page 34850]]

proposals that include local contributions based on airport revenues do 
not receive priority consideration for selection.
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    \5\ 49 U.S.C. 47107, 47133.
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    In-Kind Contributions from the airport. This can include such items 
as waivers of landing fees, terminal rents, fuel fees, and/or vehicle 
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 
considered to be in-kind contributions,\6\ as are reduced fares offered 
by airlines.
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    \6\ A travel ``bank'' involves the actual deposit of funds from 
participating parties (e.g., businesses, individuals) into a 
designated bank account for the purpose of purchasing air travel on 
the selected airline, with defined procedures for the subsequent use 
or withdrawal of those funds under an agreement with the airline. 
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. As with other types of in-kind contributions, the Department 
views travel banks and pledges included in grant proposals as an 
indicator of local community support.
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    Cash vs. in-kind contributions. Only expenditures of cash 
contributions will be eligible for reimbursement. ``In-kind'' or non-
cash contributions, which encompass property or services contributed by 
non-Federal third parties without charge to the grantee, are not 
eligible. Because they are not reimbursable, in-kind contributions are 
not considered as part of the community's cash financial contribution 
to the project. Of course, communities should include any in-kind 
contributions in their proposals and 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 
and that its failure to meet this commitment could lead the Department 
to terminate the grant. Community participation in 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 5 p.m. EDT on August 28, 2009. As 
part of the submission process, an applicant must register as a grant 
applicant at https://www.grants.gov and complete the Application for 
Federal Domestic Assistance form SF424. An applicant must also include 
its grant proposal as an attachment to its SF424. In addition, the 
cover page of each application should contain the information specified 
under ``Cover page contents,'' below. Questions regarding the program 
should be directed to the Office of Aviation Analysis on (202) 366-2347 
or aloha.ley@dot.gov. Communities not previously registered are 
encouraged to register with Grants.gov early during the application 
period because the registration and SF424 application process required 
by www.grants.gov can take up to three weeks to complete. A community 
may file its proposal anytime after the initial registration process 
has been completed on https://www.grants.gov as long as the entire 
application is filed by August 28, 2009. Communities are encouraged to 
contact the Grants.gov help desk for any technical assistance in filing 
their applications.
    SF424 required. To comply with the 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. Further, grant proposals must be submitted as an 
attachment to the SF424. An application will NOT be deemed complete 
unless the SF424 and the attached proposal have been submitted through 
Grants.gov by the 5 p.m. EDT, August 28, 2009, deadline.
    Applicants must complete a mandatory one-time registration process 
in order to submit the SF424 application. This mandatory grants.gov 
registration process can take up to three weeks to complete, depending 
on the type of organization and whether all steps are met in a timely 
manner. For this reason, communities intending to file applications 
should register with grants.gov as soon as possible to ensure they can 
meet the application deadline. The Grants.gov ``Applicant Resources'' 
page (https://www07.grants.gov/applicants/app_help_reso.jsp) provides 
instructions and guidance on completing the registration and 
application processes.
    Cover page contents. The cover page for all applications should 
bear the title ``Proposal Under the Small Community Air Service 
Development Program, Docket DOT-OST-2009-0149'' and should include:
    (1) The name of the community or consortium of communities applying 
for the grant;
    (2) The legal sponsor and its Dun and Bradstreet (D&B) Data 
Universal Numbering System (DUNS) number, including + 4; and
    (3) The 2-digit Congressional district code applicable to the 
sponsoring organization and, if a consortium, to each participating 
community.
    Confidential treatment of information. Applicants will be able to 
provide certain information relevant to their proposals on a 
confidential basis. Under the Department's Freedom of Information Act 
regulations (49 CFR 7.17), such information is limited to commercial or 
financial information that, if disclosed, would either likely cause 
substantial harm to 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 DOT-OST-2009-0149,'' 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 motion and an 
original and two copies of the confidential material

[[Page 34851]]

in the sealed envelope. The confidential material should not be 
included with the original of the applicant's proposal that is 
submitted via https://www.grants.gov. The applicant's original 
submission, however, should indicate clearly where the confidential 
material would have been inserted. If an applicant invokes Rule 12, the 
confidential portion of its filing will be treated as confidential 
pending a final determination. All confidential material must be 
received by August 28, 2009, and delivered to the Office of Aviation 
Analysis, 8th Floor, Room W86-310, 1200 New Jersey Ave., SE., 
Washington, DC 20590.

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 flexibility in addressing 
their particular air service and airfare issues. Because circumstances 
may differ among communities, applicants have some latitude in 
identifying their own objectives and developing strategies for 
accomplishing them.
    One 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 ended. 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.\7\
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    \7\ These examples are illustrative only and are not meant as a 
list of projects favored by the Department. Interested communities 
can view actual proposals submitted in prior years. Go to https://www.regulations.gov and, under ``Search,'' enter one of the 
following depending on the desired filing year: DOT-OST-2002-11590, 
DOT-OST-2003-15065, DOT-OST-2004-17343, DOT-OST-2005-20127, DOT-OST-
2006-23671; DOT-OST-2007-27370 and DOT-OST-2008-0100 for proposals 
filed in 2002, 2003, 2004, 2005, 2006, 2007 and 2008, respectively.
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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, such as intermodal or regional solutions. At the same 
time, proposals must not be general, vague, or unsupported. The more 
highly defined and focused the proposal, the more competitive it will 
be, particularly in light of the priority consideration afforded by the 
statute to those applicants that 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 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. The 
description should include marketing and promotional efforts of airport 
services as well as efforts to recruit additional or improved air 
service and airfare initiatives.
     A description of the community's air service needs or 
deficiencies. A community should submit any information about (1) major 
origin/destination markets that are not now served or are not served 
adequately, and (2) fare levels that the community deems relevant to 
consideration of its grant request, including market analyses or 
studies demonstrating an understanding of local air service needs.
     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 such goal(s). Plans should:
    [cir] Clearly identify the target audience of each component of the 
proposed transportation initiative, including all advertising and 
promotional efforts.
    [cir] Set forth a realistic timetable for implementation of the 
grant project. Because the statute includes timely use of the grant 
funds as a priority consideration, a community must have a well-
developed project plan and a detailed timetable for implementing that 
plan. In establishing the timetable, however, the community should be 
realistic about its ability to meet its project deadlines.\8\
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    \8\ 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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    [cir] For proposals involving new or improved service, explain how 
the service will become self-sufficient. Under the statute, a community 
cannot seek grant funding in subsequent years in support of the same 
project. Moreover, in developing a proposal, it is important that a 
community seriously consider the scale of its proposed project and the 
timetable for achieving it. To the extent that a proposed project is 
dependent upon or relevant to the 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.
    [cir] 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 various services 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

[[Page 34852]]

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 accommodated.
    [cir] If the applicant received a Small Community Program grant in 
the past, explain how its proposed project differs from its earlier one 
by comparing and contrasting project goals, objectives and methods of 
achieving them.
     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 fully describe 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 the specific responsibilities of each 
member in project implementation. If the application does not include 
specific information on the partnership participation in the project, 
the Department will not be able to evaluate how well a community has 
met this consideration, and the applicant will not be deemed to have 
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 
community's cash contributions to 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.
    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 the identity of critical milestones 
to be met during the life of the grant, including the need to modify or 
discontinue funding if identified milestones cannot be achieved. 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.
     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 not have reached that goal before the grant expires. 
Similarly, it is possible that extensive marketing and promotional 
efforts may be in process, but not have been 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 in detail its plans for providing 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.
     Designation of a legal sponsor responsible for 
administering the program. The legal sponsor of the grant project 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 receive program 
reimbursements. In this regard, communities can designate only a single 
government entity as the legal sponsor, even if applying as consortium, 
that 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.\9\
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    \9\ 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 in the 
program as an Air Service Development Zone (ASDZ). Because a previous 
grant recipient is still active as an ASDZ designee, the Department is 
not required by the statute to make another ASDZ designation in the FY 
2009 round of awards. However, communities are welcome to apply for the 
designation, as described below.
    The purpose of the designation is to provide communities interested 
in attracting business to the area surrounding the airport or in 
developing land-use options for the area with an opportunity to work 
with the Department on means to achieve those goals. 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.
    If selected, 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 develop land-use options. The 
community receiving the designation (if any) 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 consider applying for the designation since none is required.
    Grant applicants interested in being selected 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:
    Detailed information regarding the property and facilities 
available for development such as an existing airpark or land for such 
an airpark near or adjacent to the local airport;

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     The other modes of transportation that would be available 
to support additional economic development, such as rail, road, and/or 
water access;
     Information concerning historic, existing, and any future 
business activity in the area that would support further development;
     Demographic information concerning the community and its 
environs relevant to the developmental efforts, including population, 
employment, and per capita income data;
     Information as to whether the community has or had applied 
to other State or Federal agencies for economic assistance in the 
previous five years, including the Economic Development Administration 
of the United States Department of Commerce, and if so whether its 
application(s) were approved and the result, if any, of the assistance 
provided; and
     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 the 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, 
and, if so, the projected timeframe under which decisions on 
applications would be expected.

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, the grant selection process 
should be completed by December 2009. Given the competitive nature of 
the grant process, the Department will not meet with grant applicants 
with respect to their grant proposals. The Department's 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: \10\
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    \10\ 49 U.S.C. 41743(c)(5).
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     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 and, if so, whether its application 
includes an explanation of how the community's proposed project differs 
from its previously funded project.

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 
participation in the development and execution of the proposed air 
service project will enhance the attractiveness of their proposals. 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 have greater attractiveness.

Award Administration Information

    The Department will announce its grant selections in a selection 
order, which will be served on each grant recipient, all other 
applicants, and all parties served with this solicitation order. The 
selection order will also be posted in the Docket at https://www.regulations.gov and on the Department's 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

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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, there are numerous assurances that grant 
recipients must sign and honor 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 execute their grant agreements. 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 (click on ``FAA Grant Assurances'').
    Grantee reports. The grant agreement between the Department and 
each selected community will require the submission of quarterly 
reports on the progress the community has made during the previous 
quarter in implementing its grant project. In addition, the grant 
agreement will require the submission on a quarterly or other time-
specific basis other materials relevant to the grant project, such as 
copies of advertising and promotional material and copies of contracts 
with consultants and service providers. In addition, each community 
will be required to submit a final report on its project to the 
Department, and 10 percent of the grant funds will not be reimbursed to 
the community until such final report is received.
    Cost reimbursement. 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 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.
    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 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 asked for a grant 
extension to allow more time to pursue other carriers. Because the 
Department is 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 via https://www.grants.gov as an attachment to the SF424 no later than August 28, 
2009; and
    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:

Christa Fornarotto,
Acting Assistant Secretary for Aviation and International Affairs.

Appendix A--Small Community Air Service Development Program

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--
    (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, or 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;

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    (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.
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