Managing Aerial Firefighting Activities on Airports (2012)

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15 IntroductIon This section of the report is based on discussions with aircraft operators, government entities, and airport operators. Given the current macroeconomics of the times, and given that the interviews were with the individuals that deal with the financial matters of their respective companies, it is clear the discussions needed to be substantive. The discussions of financial and eco- nomic issues initiated and followed three themes: (1) rates and charges, (2) capital development, and (3) economic ben- efits for the community. rates and charges Although the sample population was relatively low, it became obvious from the interviews that there was no consensus on the actual “rate” or “fee” that individual airports charged to users. Of the various types of fees that are charged, the only one all airport operators imposed was some form of a fuel flowage fee. The airport operators were the most vocal on these mat- ters, and were keenly aware of the contributions that the fire- fighting agencies make to the community at large, as well as to the airport. Given these issues, the airport operators also recognized some of the dilemmas tenant agencies such as USFS, BLM, etc., will face over the coming years in comply- ing with the economic provisions of the grant assurances and other FAA guidance documents. Fuel Flowage Fees A fuel flowage fee is paid to the airport operator based on the “sale” or “delivery” of fuel to the airport or into the fuel tank of an aircraft. Fuel flowage fees have become a source of contention between fuel users (aircraft operators), fuel suppliers (commonly FBOs), and airport operators. Airport operators impose, by written agreement or in some form of a legally/formally adopted set of rules and regulations, the requirement on aircraft operators to pay a fuel flowage fee. The fee may be imposed in a number of different ways, but in all cases, the revenue is used for the benefit of the airport. Accounting for fuel flowage can be time-consuming. Some airport operators have chosen to employ an “audit trail” mechanism, through which fuel flowage fees are based on fuel delivered onto airport property as opposed to a mech- anism based on the amount of fuel pumped into an aircraft fuel tank. Commonly, bulk fuel is supplied to FBOs and vol- ume users—most commonly helicopter operators—by oil distributors (jobbers) that report to the airport operator when a delivery is completed. Airport operators invoice users a fixed fee for each gallon of fuel delivered by the jobber. This works well for deliveries that are made to the airport but becomes problematic when, for instance, a helicopter “nurse truck” fills at the jobbers distribution facility off-site. In other instances, airport operators have established pro- cedures for users such as helicopter operators to report the volume of fuel pumped at the airport. Obviously, this self- reporting mechanism is subject to abuse, but may be prefera- ble given the amount of effort needed to provide a legitimate audit trail. In other instances, agreements with the federal agency (commonly the USFS) have been developed where the aircraft operator—again, most commonly a helicopter company—reports the amount of fuel used to the agency, and the agency itself remits the fuel flowage fee to the air- port operator. Although these are common procedures, other mechanisms have been deployed. Landing Fees Landing fees are another topic in which there is little or no consensus, with regard to establishing landing fees for helicopters. Airports that provide services to regularly scheduled air- lines have a somewhat easier time of establishing a landing fee rate than airports that have no established ratemaking methodology or mechanism. For airports that service air carriers, a common practice is to establish an “airfield cost center” where the airfield is defined and expenses associated to the cost center are tracked. The cost (total expense) of operating the airfield is divided by the total annual landed weight, which then yields a dollar cost per thousand pounds; there are variations on this theme, but the principles are the same. If an airline has entered into a long-term agreement with the airport, then the airline pays what is commonly called a signatory rate; if no agreement is signed, then the airline is charged the nonsignatory rate, generally 25% or 30% higher than the signatory rate. All of these agreement elements are negotiated with the airlines. When a landing chapter five FInancIaL, economIc, and contractuaL matters

16 fee is established in this fashion, airport operators commonly charge commercial operators (including firefighting aircraft) landing fees based on these rates. Several airport operators reported during the interviews that they inherited agreements with the USFS that established landing and other use fees and a mechanism to increase them. The fee increase mechanisms might be annual, biannual, or triennial inflators tied to an index such as the consumer price index or a mutually acceptable negotiated inflator. In other instances, where no landing fee was established, the local operator accepted the landing fee offered by the USFS representative. Landing fees for helicopters appear to be more complex for airport operators to determine. The most pragmatic solution was to treat helicopters as fixed-wing aircraft and determine landing fees based on weight and the number of landings. Other operators established a per-day fee based on helicopter size; commonly the fee was determined by the size of the heli- copter used (Type I, II, or III) and included unlimited takeoffs and landings. Still others charged no fee if the helicopter opera- tor purchased fuel at the airport (see Table 1). Several operators opted for an “overnight parking fee” that included the landing fee. The fee was commonly associated to the size of the heli- copter as above. Despite the lack of consensus about establishing and col- lecting landing fees, each airport operator noted that its ser- vices are important to the users, and that it is important that the users help defray the operating costs of the airport. other use Fees During the airport operator interviews, a number of different fee mechanisms were discussed. These fees had been negoti- ated on an airport-by-airport basis. Ramp use fees, used by several airports to generate revenue, were assessed on air- craft operators for parking or using the airports ramp areas; fees were based on the size of the aircraft or on a per aircraft/ per day basis. One airport established an all-encompassing per day rate that included ramp use and landing fees. Several airports developed fees for recovery of services such as dust control (water trucks), equipment storage, and water use for retardant mixing (metered per gallon basis). One enterprising FBO developed a shopping and delivery service for firefighting crews in remote locations. agreements In the course of this study, four agreements were provided by airport operators documenting individual arrangements for USFS use of the airport during wildland firefighting efforts. The airports that provided the information did so with the understanding that the copies would not be reproduced in the report. (Usually, airport managers are very willing to share this type information with other airport operators upon request.) While each of the agreements had some elements in common—generally the boilerplate sections developed by city or airport attorneys—many of the sections were devel- oped to address particular issues or matters of a local nature. The agreements were variously structured as memoranda of understanding, USFS contracts, short-term airport use agreements, and airport authority use resolutions. The agreement forms are unimportant (for this discussion); the provisions stipulating the terms of use are important and vary with the particular needs of each airport. More than half of the airport operators interviewed have permanent USFS facilities at their airports and have entered into long-term agreements addressing the terms and fees for the use of these facilities and other important matters. Several of the operators believed that it was important that the agreements for the lease and use of land be distinct from the contracts for facilities such as hangars, dry storage, and other buildings. The following is a checklist of items that are commonly considered in agreements between an airport and an aerial firefighting support agency/user such as the USFS, BLM, or aerial applicator. The actual form or provision will be deter- mined on a case-by-case basis. This checklist is intended to be generic and serve only as a reminder about issues that might appropriately be addressed in an agreement. In the fol- Type 1 2 3 Useful Load at 59°F at Sea Level 5,000 2,500 1,200 Passenger Seats 15 or more 9–14 4–8 Retardant or Water Carrying Capability (gallons) 700 300 100 Maximum Gross Takeoff/Landing Weight (lb) 12,501+ 6,000–12,500 Up to 6,000 Source: Interagency Helicopter Operations Guide, June 2009, Chart 6.1: ICS Type Specifications for Helicopters, page 6-2. TABLe 1 Type SpeCIFICATIOn FOR FIReFIGhTInG heLICOpTeRS

17 lowing narrative the term “agreement” is used for simplicity; “agreement” in this context also includes a memorandum of understanding, memorandum of agreement, contract, lease, purchase order, or any other form used to describe arrange- ments between parties. Boilerplate: These are “standard” subsections in agree- ments that address issues that may arise, including: • Costs and attorneys’ fees. In the event of a legal dispute, the party that loses pays the winning party’s legal fees. • Arbitration. Any disputes about the contract will be resolved through arbitration proceedings, not in a lawsuit. • Choice of law. In the event of a dispute, a choice of law provision determines which state’s legal rules will be applied in the lawsuit. • Jurisdiction. In the event of a dispute, a jurisdiction clause determines where (in which state and county) the lawsuit is filed. • Waiver. This permits the parties to forego the right to sue for breach of a particular provision of the agreement without giving up any future claims regarding the same provision. • Severability. This permits a court to sever (take out) an invalid provision while maintaining the rest of the agreement. • Integration. An integration clause says that the written contract represents the final agreement of the parties. Often, it explicitly states that any prior agreement or discussions of the agreement has been superseded by the written contract and that any further modification to the contract must be in writing. • Attachments. This guarantees that attachments and exhibits will be included as part of the agreement. • notice. This describes how each party will provide notices to the other (e.g., an intention to terminate the agreement). • Relationships. This prevents either party from claiming an inaccurate business relationship with the other (e.g., by stating that the parties are partners or that one is the other’s employee). • Assignment. This affects the ability of the parties to sell or transfer their rights under the agreement to another party. • Force majeure (also referred to as “Acts of God”). This clause establishes that the agreement will be suspended in the event of unforeseen disasters such as earthquakes, hurricanes, floods, and so on). • headings. This clause provides that the heading terminol- ogy used in the agreement have no special significance. • escrow. This provision allows each party to place trade secrets, payments, or other information into a special account to be opened only under certain and specific conditions. • Jury trial waivers. This establishes that if there is a court battle over the contract, the parties agree to have the dispute heard by the judge and to forego their rights to a jury trial. • Limitations on damages. This sets a cap on or otherwise limits the types of damages that may be awarded in a contract dispute. • Warranties. These are promises or assurances made by each party regarding various contract obligations. • Indemnity. In an indemnity provision, one party guar- antees that it will cover the costs of certain disputes brought by third parties (i.e., individuals or companies that are not parties to the agreement). • Liability. This defines which party accepts legal and fiscal responsibility for each item covered in the agreement. • Confidentiality. This guarantees that the parties will not disclose certain information. • Announcements. This establishes the manner in which the parties can make public disclosures about elements of the contract, for instance statements about a forth- coming merger or joint business venture. • Counterparts. This sets forth the right of the various parties to execute (sign) copies of the agreement with- out all being present in one place at one time to sign them all. (nolo 2011). • no party deemed drafter. This addresses the principal of law stating that any ambiguity in a contract shall be construed to the detriment of the contract’s author. • Termination. This clause specifies when and under what conditions the agreement is or may be terminated. • Utilities. This identifies the party or parties responsi- bilities for maintenance and payment of fees for utility services. • Fees. This specifies the costs for various services provided. Other subsections that may be addressed in contracts or agreements include: • purpose. States the reason the agreement is being proposed. • Witnesseth. Basically mean “takes notice of this” • Location. This identifies the specific site referred to in the agreement. A site drawing may be attached or a legal description provided or added. • Responsibilities. This identifies the obligations of each party with regard to each element of the agreement. • Commencement/expiration/termination. These sections establish the effective date and duration of the agreement and in some cases the reasons for its cancellation. • Funding. This establishes which parties will pay for specific improvements or acquisitions. • Maintenance. This specifies which party/parties must maintain the facilities subject to the agreement. • Insurance. This specifies the nature and amounts of insurance to be carried by the renter. Contracts usually require that the airport is among the entities insured.

18 • Rules and regulations. This generally refers to additional documents governing conduction of persons or compa- nies (renters included) while on the airport property. rates and charges summary As is typical of the airport industry, there was little consensus on the types of fees and rates charged by airports. On the other hand, airport operators as a group are very open to sharing information with one another and often exchange ideas, prac- tices, and documents on such matters as fees and agreements. Most airport operators believed that it was helpful to have an established rate mechanism or fee structure published in their rules and regulations document. While the form varied, the use of written agreements with the USFS (and other agencies) was believed to be helpful and a widely accepted practice. capItaL deveLopment Over the years, airports have built and leased facilities to the USFS, creating mutually satisfying relationships. each airport operator currently hosting a firefighting agency at the airport expressed appreciation for the benefits that those agencies, primarily the USFS, bring to the airport and community. not only do those agencies make a positive contribution to the airport’s bottom line, they are always described as “good” neighbors and partners. Several airport operators have expressed concerns about the future of these relationships, given the economic stress on airports and on virtually all government agencies. The increasing demand for fire suppression is in direct conflict with shrinking budgets and accelerating costs, some of which are associated with fees that airport operators must charge to meet their sponsor assurances, particularly the provisions of Assurance 24 [FAA, Grant Assurances (Obligations) 2011]. One of the concerns expressed by airport operators is the FAA’s pressure on airport operators to get “fair market value” for its property. The challenge for airport operators is deter- mining exactly what “fair market value” means for a particular facility, so that they meet their obligations under the sponsor assurances. This will likely make more challenging the task of negotiating future successor agreements with aerial fire- fighting agencies and encouraging USFS development on the airport. Airport operators also cautioned that while some facilities used by the USFS can only be located on an airport, certain administrative and support functions can be located elsewhere in the community or in regional centers. As airports look to the future, it will become increasingly important to develop alternative sources of revenue to help with development costs. One airport operator interviewed was able to obtain state economic development grant funds, matched with local fire department funds, city funds, and air- port funds, to construct a joint use multi-purpose fire center on the airport where each agency could be housed in (and charged for) facilities owned and maintained by the operator. Airport operators, tenants, third-party developers, and users will have to consider new and nontraditional partnerships to develop creative solutions to the financial challenges of today. communIty economIc BeneFIts As noted in previous sections of this study, the airport opera- tors acknowledged the significant impacts that aerial wildland firefighting operations have on the airport and the local com- munity. Only one negative impact was identified, noise from tanker operations; however, that impact was usually described as less than significant. As airport operators are generally very sensitive to noise complaints, it is significant that most local residents understand it is the firefighting aircraft trying to pro- tect the local area that generate the noise. Several airport oper- ators noted that most noise complaints arise when firefighting efforts continue for extended periods of time. According to the airport managers interviewed, positive economic benefits to a community resulting from an aerial wildland firefighting operation (either permanent or transient), include increased use of: • hotels/motels • Restaurants • Groceries, convenience stores, and service stations • Laundry services and laundromats • Rental car leasing • Catering services • portable restrooms • equipment rental. The benefits of a permanent firefighting agency on an air- port have been identified in chapter three, but it is equally important to recognize the beneficial and multiplying effect of its presence on a community.