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Equal Access to Justice Act: Making the FAA Pay

by Greg Reigel 1. October 2006 00:00
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If the FAA initiates an enforcement action or civil penalty action and then loses, does the certificate holder or target of the civil penalty action have any recourse? Well, under the Equal Access to Justice Act ("EAJA") it may be able possible to make the FAA pay for the attorney's fees and expenses incurred by the certificate holder or target of the civil penalty action to defend against the claims asserted by the FAA. Although this may not seem like much consolation, it provides some recourse when the FAA has improperly pursued an action.

The EAJA is found at 5 U.S.C. 504 and is implemented in 49 CFR 826. According to 49 CFR 826.1, "The Equal Access to Justice Act, 5 U.S.C. 504 (the Act), provides for the award of attorney fees and other expenses to eligible individuals and entities who are parties to certain administrative proceedings (adversary adjudications) before the National Transportation Safety Board (Board). An eligible party may receive an award when it prevails over the Federal Aviation Administration (FAA), unless the Government agency's position in the proceeding was substantially justified or special circumstances make an award unjust." In order to determine whether EAJA fees are available, the key inquiries for a certificate holder or target of a civil penalty action who is applying for an award of fees (the "Applicant") are (1) Is the Applicant a "prevailing party"? (2) Was the Applicant involved in an "adversary adjudication"? (3) Was the FAA's position "substantially justified"? and (4) Were the fees actually "incurred" by the Applicant?

Was The Applicant A Prevailing Party?

Obviously, if an Applicant was successful at the hearing and the administrative law judge dismissed all charges against the Applicant, then the Applicant is a prevailing party. However, an Applicant may also be a prevailing party in situations where the FAA dismisses some, but not all of the charges or if the FAA asserts multiple charges against the Applicant but is only successful on some of the charges at the hearing. It is also possible that an Applicant could be considered a prevailing party under EAJA when the Applicant has been able to reach a favorable settlement with the FAA.

Was The Applicant Involved In An Adversary Adjudication?

For purposes of EAJA, an adversary adjudication does not arise until after an FAA order is appealed by the Applicant. If the FAA does not issue an order, EAJA is not triggered. Once the order is appealed, then the attorney's fees and expenses incurred from that point on become eligible for an EAJA award.

Was The FAA's Position Substantially Justified?

In order for the FAA's position to be substantially justified, it must have been reasonable both in fact and in law. This means that sufficient, reliable evidence must have existed in support of a reasonable legal theory asserted by the FAA in the action. This determination is made based upon the entire administrative record and the FAA's failure to prevail on the merits does not automatically result in award of the requested attorney's fees and expenses. It is important to note that under EAJA, the FAA's burden of proving substantial justification is less demanding than its burden of proof when arguing the merits of the underlying complaint at the hearing. If key factual issues can only be resolved through a credibility determination by the ALJ, then the FAA's position is considered justified. This is often the case and certainly the most common argument raised by the FAA in opposition to an EAJA fee request.

Were The Fees Actually Incurred By The Applicant?

In order to recover EAJA fees, an Applicant must show that the Applicant actually incurred the fees and expenses requested. In a situation where the Applicant has paid an attorney for representation throughout the enforcement process out of the Applicant's own pocket, this is easy. Conversely, when an Applicant's employer or union pays the fees then the Applicant did not incur the fees for purposes of EAJA. However, if the employer advances the fees and the Applicant is obligated to repay those fees regardless of the outcome of the action, then the Applicant would be considered to have incurred the fees.

Also, it may be possible for an Applicant to incur fees by retaining an attorney on a contingent fee basis under which the attorney would only receive payment in the event of an EAJA recovery. However, this type of arrangement must be documented at the time the attorney is retained in order for it to qualify under EAJA. In general, documentation of the payment of, or obligation for, the fees is critical to recovery under EAJA.

The Application Process

Under EAJA, an application for an award must be filed within 30 days of the final disposition of the enforcement action. Final disposition occurs as of the date on which an un-appealed initial decision becomes administratively final. For example, in a certificate action, any appeal of an initial decision must be filed within 10 days from the date of the NTSB administrative law judge's decision. Since the last day of a designated period is included in the computation of a time limit, on that tenth day, the 30-day period for filing an EAJA application also begins to run. Thus, in the case of a certificate action, the final day to file the EAJA application is actually the 29th day after expiration of the 10-day appeal period. As with many other deadlines in the enforcement process, this deadline is jurisdictional and will result in the denial of an EAJA request if it is filed after expiration of the 30 days. EAJA requires that the application be detailed and that it contain specific documentation and explanation of the fees and expenses requested. Additionally, the Applicant will need to submit evidence that the Applicant meets the net-worth limitations under EAJA (generally $2,000,000 for individuals and $7,000,000 for businesses).

The fees and expenses recoverable under EAJA include attorneys fees (at a current rate of approximately $156.00 per hour based upon the CPI) as well as costs and expenses reasonably incurred in the action such as witness fees, expert witness fees etc. The attorney's fees and expenses will be evaluate to determine their reasonableness based upon the customary fee or cost for such services, the prevailing rate for similar services in the community, the time actually spent in the representation of the Applicant, and the time reasonably spent in light of the difficulty or complexity of the issues enforcement action.

This means that the attorney representing the Applicant must include more detail than simply the amount owed. To do this, the attorney needs to be careful to provide a description of the nature of the work performed on behalf of the Applicant without disclosing sensitive client information or information subject to the attorney-client privilege.

Conclusion

If you have to defend yourself against the FAA in an enforcement action or civil penalty action, having the charges dismissed can be a bittersweet victory. You have won the war, but your wallet is a lot lighter. Fortunately, the EAJA can provide you with some consolation. Assuming you qualify, you can force the FAA to reimburse you for the attorney's fees and expenses you incurred defending yourself. Although this may not be complete satisfaction, making the FAA pay can certainly provide some consolation.

Question:

Have you or someone you know ever been in an enforcement action or civil penalty action with the FAA.  If you have please tell us about your experiences win or lose.

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Greg Reigel

Aircraft Market Report: 2006 Q3

by Jeremy Cox 1. October 2006 00:00
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Most of the data contained in this report is very courteously and kindly provided by the folks from Kansas at the Aircraft Bluebook – Price Digest, http://www.aircraftbluebook.com/ I would again like to especially thank Mr. Paul Wyatt, the Bluebook Editor for the use of his data in the production of my report. I hope that you find the report of some use to you.

The following aircraft/helicopters saw the largest gains in value, including the normal yearly/model new price increases:

The Winners

Augusta 109C at 6.63%, which is 6.35% UP from the last Quarterly Report.

Bell Jet and Long Rangers (B206 and B407), at 22.17%, which is 5.88% UP from the last Quarterly Report.

Bombardier Challenger 300, at 11.39%, which is 4.17% UP from the last Quarterly Report.

Cessna Citation Jet and CJ2 (525 and 525A), at 5.25%, which is 3.83% UP from the last Quarterly Report.

I.A.I. Westwind (1124, I and II), at 6.20%, which is 1.10% UP from the last Quarterly Report.

Dassault Falcon 900 (900A, B, C, DX and EX), at 5.36%, which is 0.78% UP from the last Quarterly Report.

Most Are Holding Their Own Regarding Value

The Overall Market has shown an Increase in value ‘Across the Board', equal to 3.9% over the last twelve months, which is 0.02% better from the last Quarterly Report. This may however, be an indication of a slowdown, or it may just be the normal effect of the annual summer holidays, on the overall marketplace.

The Losers

Rockwell Commander (112, 114 and 115) at -8.05%, which is a staggering 6.46% DOWN from the last Quarterly Report.

Cirrus (SR20 and SR22) at -5.42%, which is a further 1.03% DOWN from the last Quarterly Report.

Interpretation

Well the personal/corporate helicopter has won the day, so to speak when it comes to the percentage of value gains in the overall marketplace, especially when viewed against the figures of the last Quarterly Market Report back in August of this year (2006.) Both the Augusta 109C and Bell JetRanger and LongRanger have rocketed up in value this quarter.

The Challenger 300 still appears that it is the number one, most sought after used business jet aircraft, as reflected by the value increases seen both during this and the last quarter of 2006. The Citation Jet and CJ2 models still continue to be a strong market, but I wonder how soon the value increase of these models will be arrested as more CJ3 aircraft are delivered?

Surprisingly, what many might consider a member of the dinosaur category of aircraft, the Westwind 1124/I/II series have seen a good increase in its value over the last Quarterly Report. This has got to have a lot to do with its range/speed/fuel consumption profile, which is pretty impressive, even by today's standards.

And again, the values of the Falcon 900 continue a steady march upward. Its cabin size and runway performance, I believe, has a lot to do with this.

Watch for a new Quarterly Market Report in February.

Any input that you care to make will be of great interest to all of the readers here at Globalair.com. So please don't be bashful and go ahead and write your comments and suggestions here. Please don't forget that whatever you write here, can be seen publicly by everyone that visits this page, so please be funny, be inspired, but most importantly of all, please be nice. See you next month.

The Data

Historical Data

Label Data
OPEC Basket Price $53.89
One Year Ago $53.13
Dow Jones IA 12,134
One Year Ago 10,303
LIBOR % Rate (USD) 5.28875
One Year Ago 3.32875
FBO / Fuel Prices by Region (Full Service JETA)
Central Region $3.78
Eastern Region $4.28
Great Lakes Region $3.91
New England Region $4.00
Northwest Mountain Region $3.97
Southern Region $4.11
Southwest Region $3.88
Western Pacific Region $4.03
Alaska Region $4.52

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Jeremy Cox

The Need for Speed: Reno!

by Jeremy Cox 1. October 2006 00:00
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While standing in the ‘A' Boarding Group queue at the Phoenix airport with my wife Deb on our way to Reno, Nevada to attend the 43rd Annual Reno National Championship Air Races and Air Show last month, a fellow race goer that we became acquainted with while waiting to board, Mr. Dan Harden, a contract A&P mechanic, made the very insightful comment that "Airline Flying is so incongruous when connected with Air Racing. We finally landed in Reno almost an hour late. The Air Races are held just north of Reno, over in the next valley at the old Stead Airforce Base, now Stead Airfield. Why here? Well the Reno National Championship Air Races have been here since the early 1960s because it was chosen as the ending destination for a Transcontinental Race that started in St. Petersburg, Florida. The Reno Air Racing field consisted of 28 Biplane Category Aircraft (the field consists of mainly various iterations of the Pitts Special), 24 Formula One Category Aircraft (the field consists of various iterations of the Cassutt), 24 T6 Category Aircraft (North American's own supersonic propeller blade-tip trainer; what a fantastic noise they all make!), 29 Sport Category Aircraft (the field consists of lots of different and expensive fiberglass, Kevlar and carbon designs like the Glasair, Lancair, Venture, Harmon Rocket, etc.), 11 Jet Category Aircraft (the field consists entirely of the Czech Republic built Aero Vodochody Albatros L-39 strike-fighter/jet-trainer), and finally, everyone's favorite, 32 Unlimited Category Aircraft (the field mainly consists of ‘souped-up' venerable old lady's from World War II and the 1950's like the North American P-51 Mustang, Hawker Sea Fury, and the Grumman Bearcat.) Almost all of the 148 aircraft after flying the qualifying rounds earlier in the week (This event is played out over seven days, but the actual races officially begins at lunchtime on a Wednesday and end at five pm on Sunday with the final Unlimited Race ‘Gold'), each flew 4 to six Heats which then narrowed the field down to three final races for each category of aircraft: Bronze, Silver and Gold. The size and length of the Pylon delineated race courses vary by the category of the aircraft competing; with the longest, egg-shaped course reserved for the Jet and Unlimited category aircraft (10 – 40 foot high pylons, over approximately 8.5 Miles, and the Formula One and Biplane categories sharing the shortest, oval course of 7 pylons over approximately 3.0 miles. In between each race an Air or Ground based Display would fill the gap of time. This massive event was also supplemented by numerous race, aviation paraphernalia, aviation collectables and food vendor stands, a Static Display of Military aircraft and the additional paid admission entry to the Race Pits.


On Sunday the Unlimited Gold Race was won Mr. Michael Brown from Carson City, Nevada in his Hawker Sea Fury at a speed of almost 482 MPH. The fastest aircraft around the Unlimited course this weekend, was the United States Navy Demonstration Team's FA18 Super Hornet, which was clocked at an exciting 683 MPH. There was enough humidity in the high desert atmosphere of Reno, to see the visible onset of a sonic boom. Fortunately for the demonstration pilot, he managed to keep the aircraft from tearing the air apart enough to break the sound barrier and create a sonic boom, because, as the air show announcer said ‘He will be looking for a different line of work, if he does shatter everyone's car windows, here today.'

That exhibition of immense speed impelled me to reflect afterwards, that ever since the Wright Flyer powered its way across 852 feet of sand at Kill Devil Hills, at a speed of 31 MPH, a large contingent of people working within the then, ever growing aviation industry, have focused on making powered aircraft fly faster and faster and faster. Before the Wrights cracked the code of powered flight, man had to be content with either traveling by the fastest form of transportation at that time, the steam locomotive, the fastest of which could attain a breathtaking speed of about 60 MPH; or stand transfixed in awe of the Peregrine Falcon, which is the World's fastest bird, which can surpass 200 MPH in a dive. Powered Aircraft contraptions started to become more and more prolific in both America and Europe, and after the famed Frenchman, Monsieur Louis Bleriot had successfully crossed the English Channel, less than five years after Wilber and Orville had succeeded with their experiments, the World's first official Air Race took place in France on the outskirts of the beautiful champagne and cathedral city of Reims. Sponsored by newspaperman Mr. James ‘Gordon Bennett', publisher of both the New York and Paris Herald newspaper, pioneer flyers came from all over the world to compete for prize money and ultimately the Gordon Bennett Trophy.

American pioneer, Glenn Curtis pipped Monsieur Bleriot to the trophy by almost 6 seconds, having flown a 12 mile course (two circuits of 6 miles) at an average speed of slightly more than 59 MPH. Soon, as aircraft design matured into a reasonably reliable science, the Air Racing scene exploded. Next came the famous Trophy spawned by Monsieur Jacques Schneider, the French Under-Secretary of the Air. This famous competition ultimately led to the creation of the venerable and much loved, Supermarine Spitfire. Englishman, Mr. Reginald Joseph (R.J.) Mitchell's Supermarine S6B Seaplane set a new World Speed Record during it's plight to win the Schneider Trophy, by flying the approximately 6 ½ mile course for 28 laps, achieved an average speed of just over 340 MPH. Shortly after the win over the waters of Southampton, Mitchell's S6B again set a new World Record at 407 MPH. This was broken three years later by the Italian built Macchi MC.72 which set the standing World Speed Record for Seaplanes of almost 441 MPH. Also during the years between the disastrous events of the two World Wars, Air Racing blossomed all over the United States, with the Thompson, Pulitzer, Aerol and Bendix Trophies hotly contested for by the likes of Jimmy Doolittle, Roscoe Turner, Amelia Earhart, and Wiley Post, to drop a few well known names.

Racing Speeds remained in the 300+ MPH range, while these times were given the name of ‘the Golden Age of Air Racing.' After the massive human cost of the events of World War II had passed, Air Racing evolved into the same basic form and speeds that can still be seen every September in Nevada. If you ever wanted to have a crack at competing at Reno yourself, you may ask the question: ‘How does one qualify to compete at the Reno National Championship Air Races?' Well other than needing to have access to a very, very fast aircraft along with the money and infrastructure to support your new hobby competing in what is called the ‘World's fastest motor sport,' you will need to attend and successfully be signed off at the Annual Pylon Racing Seminar hosted by the Reno Air Racing Association.

Held every June, the students and repeat race pilots all meet to study, talk and practice the required flying techniques along with the critical strategies that must be mastered if things go wrong. According to the Commemorative Program that I brought home with me back to St. Louis, one of the Reno Air Racing Association's veteran racer and Pylon Racing Seminar instructor, Mr. Alan Preston, who has previously won the National Championship Formula One Title twice and the Biplane Title once, is quoted as saying that the annual seminar is necessary because ‘…non-cooperative formation flying with high-performance aircraft maneuvering close to the ground at the maximum speeds the machines and pilots can handle, is not easy.' I'll say! Interestingly enough, did you know that…. the World's fastest manned, Jet Aircraft, is reported to be the 1960's Lockheed SR-71A ‘Blackbird' with its 2,193+ MPH record set in 1976? The World's fastest Rocket Powered, manned Aircraft is the North American Aviation X-15A-2, which set a 4,520 MPH speed record in 1967. Beyond the Earth's atmosphere, the technology of the 1960's still prevails, as the current holder of the World's fastest manned vehicle is still held by the Apollo 10 Capsule on re-entry at a staggering recorded speed of 24,790 MPH in 1969. This record is reasonably, closely followed by the technology of the 1980's which spawned the Rockwell Space Transportation System (STS) ‘Space Shuttle.' The ill fated shuttle ‘Columbia' was officially clocked doing 17,000 MPH during its re-entry in 1981. Finally, the World's fastest man-made, (un-manned) object harks back to the 1970's. This is the American and German built research spacecraft, ‘Helios B' which was recorded traveling through space at 150,000 MPH in 1976.

As a parting gift, I would like to mention that the Guinness Book of Records states that a ‘Racing' Snail was officially clocked at 12,488 HPM (Hours Per Mile.) Next month is the Quarterly Market Report. Until then, have a great month. Maybe I will see some of you in person in Orlando at this year's NBAA Convention? If you are going to attend, please plan on stopping by the GlobalAir.com Booth to say hello to Jeff and his merry crew. Oh, and Dan, I sincerely hope that you are successful in getting a flight-line wrenching position with the Rocket Racing League that is forming up, out in New Mexico.

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Jeremy Cox

Five Steps to a Competitive Acquisition

by David Wyndham 1. October 2006 00:00
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In turbines, it is mostly a seller's market. Many of the manufacturers are sold out 18 – 24 months ahead. That doesn't mean that you can't negotiate, you just have to be willing to wait, or look at the pre-owned market which still has some great aircraft at reasonable prices.

Regardless of the market you are in, you need to follow some simple steps to ensure you are getting a good deal. The objective of a competitive acquisition is to get the best price for the right aircraft.

Step one is to do your homework. Have your performance parameters defined. What are your missions? What do you need in order to accomplish that mission? Be realistic – we all want more speed and more range. What do you truly need versus what would you like to have. Know the difference between the two.

I use "required" and "desired" criteria. Required criteria are those performance items that the aircraft must meet in order to be successful at accomplishing the mission. It may be a combination of payload, range, speed and take-off/landing capability. Desired criteria are the nice-to-have items that, although not necessary for mission accomplishment, will enhance the ability of the aircraft to perform the mission. Desired criteria enable you to better differentiate between the various aircraft.

What aircraft are capable of performing those missions? What do those aircraft cost to own and operate?

You need at least two types, and preferably three or more different types to set up a competition. If there is only one make/model that will do your job, then it is hard to expect much competition.

Step two is to get your in-house team together. You need technical expertise in aviation and finance. You also need legal and tax advice. Setting up a true competition takes time. Know what your options are before looking at aircraft. If you plan to get a loan, or to lease, what are the prices? If trading/selling one business aircraft for another can you take advantage of a tax-deferred exchange?

Step three: Separate Performance from Price. Be clear as to what performance parameters your aircraft must meet. All these specifications must be measurable - a 5 foot 9 inch cabin is measurable, a stand-up cabin is not. Make sure each specification ties into a mission parameter, i.e. is defensible as a requirement. Document these specifications for the seller.

In a separate document, have your pricing and delivery schedule. Set up the format that you want the price proposals to be in. You may specify the price proposals are to include life cycle costing, finance or lease options, and multiple delivery options. You may specify a base configuration with several options. Be realistic in your expectations. Don't plan to get an early delivery position on an extremely popular aircraft.

Once you have the performance and prices rules set forth, then its time to send them out. If you are dealing with both new and pre-owned aircraft, then you'll be dealing with multiple airframe manufacturers and perhaps an aircraft broker. Make sure they know that they are to return two separate items in response to your request, Performance and Price. Don't ask for proposals on Aircraft Model X, ask for a proposal on aircraft that meet the criteria you specify.

Step four: evaluate the proposals. First evaluate the performance without looking at price. For those that do not meet your required criteria – no more analysis is needed. Do not open the price proposal and be tempted by an aircraft that won't do the job for you. Rank order the remaining aircraft according to how well they meet or exceed your required and desired criteria.

Step five: Thank everyone for "coming to your party" and notify those that no longer are in competition. Of those remaining, whether there is room in the market for negotiations or not, ask them to improve their offer. Let the contenders know they are in a run-off. Acquisition price may be non-negotiable, but added equipment, delivery dates, training, etc. may be used to give you a better deal.

The goal is to get you the best value for the price. If you remove emotion and leave folks with the impression that not buying now is an option, and then even in a seller's market, you will still be able to get as good a deal as you can.

Gone through this process recently? Have any tips to share? Without naming names, let me know how it went.

PS: If you are attending the NBAA Convention down at Orlando, please drop by we are at Booth #2877

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David Wyndham

How to Compare Aircraft Costs

by David Wyndham 1. October 2006 00:00
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Given all the recent activity in announcing new models, plus the general overall health of the economy, you may be fortunate to be in a position to acquire a new, or new to you, aircraft. It would be a grave error to focus in on the acquisition cost alone. Why?
 
While there is a ceiling on how much you can spend, the operating costs are a significant part of aircraft ownership. An extreme example is a Gulfstream GII. You can buy an early model GII for under $2 million, but to operate it for 5 years will likely cost you more than $14 million!
 
When you are comparing aircraft costs, it is important to understand what costs are included and what aren't. Otherwise, you can end up comparing "apples and oranges." This can lead to making a decision with wrong or incomplete information. What is the general methodology to use when analyzing the acquisition of an aircraft? It is called Life Cycle Costing.
 
As the name implies, Life Cycle Costing looks at a period, or a "Life" of the asset. It does not have to be the entire useful life, but it should cover the anticipated period of ownership.
 
Life Cycle Costing also ensures that all appropriate costs should be considered. The Life Cycle Costing includes not only the acquisition cost, but also operating and maintenance costs, and market depreciation. If the acquisition is for business use, amortization, interest, depreciation, taxes and the cost of capital can be included. At the end of the Life Cycle, it also recognizes the estimated value of the asset (i.e. assumes a sale at the end). Think of Life Cycle Costing as a multi-year operating budget that also includes the acquisition and resale.
 
All your assumptions used need to be clearly spelled out. Fuel, hangar, insurance, all need to be reasonable estimates based on your experience, or that from a reliable source.
 
The costs should cover a specific period and take into account an expected aircraft value at the end of the term. If you plan to own the aircraft for 10 years, then that is your life cycle. As an estimate, I'd recommend at least 5 years to show the effects of a major inspection or two. The residual value or market value of the aircraft should be based on a combination of historical data and market prognostication. Don't forget about inflation. It adds to your costs and adds to the residual value as well.
 
When comparing two or more options, you should cover the same period of time and utilization. This provides for a fair comparison. A complete Life Cycle Cost can also account for the time- value of money in a Net Present Value (NPV) analysis. This way, the differing cash flows form two or more options that can be compared and analyzed from a fair and complete perspective. The NPV takes into account not only how much, but when expenses (and revenues) occur.
 
Calculating the NPV time value of money is a snap with a spreadsheet. In fact, doing the entire Life Cycle Cost in a well set up spreadsheet using reliable data is much easier that it sounds.
 
Different operations can have a different focus. Regardless of that focus, a well done Life Cycle Cost shows all the costs and allows the financial decision to be based on as complete a picture as possible. What methodology do you use to evaluate different aircraft costs? Are you directed to look only at certain costs? Please click reply and let me know.

How do you or your company determine Life Cycle Cost of the aircraft you fly. Do you follow the general outline listed above?

 



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