oversight

General Aviation Airports: Unauthorized Land Use Highlights Need for Improved Oversight and Enforcement

Published by the Government Accountability Office on 1999-05-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Requesters




May 1999
                  GENERAL AVIATION
                  AIRPORTS
                  Unauthorized Land Use
                  Highlights Need for
                  Improved Oversight
                  and Enforcement




GAO/RCED-99-109
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-281078

      May 7, 1999

      The Honorable Bud Shuster
      Chairman
      The Honorable James L. Oberstar
      Ranking Democratic Member
      Committee on Transportation and Infrastructure
      House of Representatives

      The Honorable John J. Duncan, Jr.
      Chairman
      The Honorable William O. Lipinski
      Ranking Democratic Member
      Subcommittee on Aviation
      Committee on Transportation and Infrastructure
      House of Representatives

      To increase the capacity of the nation’s airport facilities and maintain the
      aviation infrastructure, the federal government has made financial grants
      or transferred federal land to about 2,000 of the almost 18,000 general
      aviation airports in the United States.1 Since 1982, the Federal Aviation
      Administration (FAA) has provided about $4.7 billion in financial grants to
      general aviation airports. About 350 such airports have received land that
      is surplus to federal needs, while about 100 have received land that was
      not considered surplus but was transferred to support the airports’ needs.
      To receive this federal assistance, airports must agree to abide by a
      number of requirements designed to ensure that the public interest is
      served. Among other things, airports must obtain approval from FAA before
      altering the use or ownership of airport land and must use airport
      revenues only for their operation, maintenance, or development. FAA is
      responsible for monitoring airports’ compliance with these requirements
      and, when requirements are not met, for enforcement.

      As requested in the House Transportation and Infrastructure Committee
      Report on the Airport Improvement Program Reauthorization Act of 1998,2
       this report evaluates (1) FAA’s monitoring of general aviation airports’
      compliance with federal land-use requirements and (2) FAA’s use of
      enforcement tools to resolve cases of noncompliance. To obtain
      information on FAA’s oversight of land at general aviation airports, we

      1
       While commercial service airports handle regularly scheduled commercial airline traffic, general
      aviation airports primarily support noncommercial aviation traffic.
      2
       House Transportation and Infrastructure Committee Rept. No. 105-639 (July 20, 1998), pp. 41-42.



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                   visited 14 and surveyed the remaining 9 FAA field offices responsible for
                   overseeing airports’ compliance.


                   FAA does not adequately monitor general aviation airports’ compliance
Results in Brief   with federal requirements and does not have the internal controls in place
                   to protect the federal government’s investment in the airports from
                   mismanagement, fraud, waste, and abuse. Although FAA’s compliance
                   policy clearly calls for monitoring airports to ensure they meet federal
                   requirements, only 4 of FAA’s 23 field offices monitor compliance. This
                   monitoring, however, relies primarily on airports themselves certifying
                   that they are complying with federal requirements. In 1994, the
                   Department of Transportation’s Inspector General concluded that relying
                   on such certifications was insufficient for ensuring compliance with
                   federal requirements on revenue use, noting that 14 of the 15 airport
                   owners identified as not complying with revenue use requirements had
                   previously certified that they were in compliance. One result of FAA’s lack
                   of monitoring is that airports’ unauthorized use of land has gone
                   undetected in some cases for over a decade. Unauthorized use has
                   resulted in the loss or diversion of millions of dollars in airport revenues
                   from general aviation airports, typically owned by a local government. In
                   some cases, increased risks to aviation safety also resulted. For example,
                   FAA determined that birds attracted by an unauthorized landfill at
                   Hesler-Noble Field in Laurel, Mississippi, posed a possible danger to
                   aircraft.

                   FAA generally addresses airports’ noncompliance with federal requirements
                   through negotiation and settlement rather than the use of available
                   enforcement actions. When negotiations are unsuccessful and persistent
                   noncompliance occurs, FAA has not always taken appropriate enforcement
                   action—such as withholding transportation grants, taking back the title to
                   airport land, or taking action through the courts. This report makes
                   recommendations on improving FAA’s compliance monitoring and
                   enforcement efforts.


                   To promote aviation, FAA provides grants and land to airports. Grants for
Background         airport development were authorized under the Federal Airport Aid
                   Program from 1946 through 1970 and the Airport Development Aid
                   Program from 1971 through 1981. During 1982 through 1997, more than
                   $20.5 billion in grants was awarded to commercial service and general
                   aviation airports under the current program, the Airport Improvement



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                       Program.3 About 45 percent of these grants, totaling almost $4.7 billion,
                       was made to general aviation airports for airport development, including
                       more than $800 million for land acquisition. While commercial airports
                       provide scheduled airline passenger service, general aviation airports
                       primarily serve noncommercial aviation traffic, including business and
                       recreational aircraft.

                       FAA’sOffice of Airports administers the Airport Improvement Program and
                       oversees both commercial and general aviation airports’ compliance with
                       federal grant and land transfer requirements. In December 1997, FAA
                       established an Airports Compliance Division within the Office of Airports
                       in Washington, D.C. While 10 full-time compliance policy specialists are
                       currently assigned to the Compliance Division to advise field offices on
                       airport land and revenue issues, 23 field offices provide day-to-day
                       oversight of about 2,000 general aviation airports that have received grant
                       funds or land from the federal government.4

                       This oversight responsibility includes ensuring that the airports use airport
                       land in accordance with federal statutes and regulations by monitoring
                       airports’ activities and taking enforcement actions, when necessary.
                       Enforcement begins with a formal notification to an airport of its
                       noncompliance and can include such actions as withholding aviation
                       grants or other transportation funds and filing a lawsuit.


                       In order to receive federal grants, airports must certify that they will abide
Federal Requirements   by the federal requirements contained in the grant agreements by
on Airports’ Use of    providing written assurances pertaining to the airports’ operation and
Land and Revenues      maintenance. For example, an airport must ensure that it will be available
                       for public use and that airport users will be charged comparable fees.
                       Generally, grant requirements remain in effect throughout the useful life of
                       the facilities developed under the grant but do not exceed 20 years.5
                       However, for land acquired with grant funds, these requirements remain in
                       effect as long as an airport is on the land.


                       3
                        The Airport Improvement Program is funded by the Airport and Airway Trust Fund. The fund is
                       financed by taxes on domestic and international airline travel, domestic cargo transported by air, and
                       noncommercial aviation fuel.
                       4
                        FAA’s Office of Airports has nine regions. Four regions—Alaska, Central, New England, and Western
                       Pacific—oversee some or all of the airports in the region. For the purposes of this report, we refer to
                       these four regions, along with the 19 airport district offices in the remaining five regions, as the 23 FAA
                       field offices.
                       5
                        49 U.S.C. 47107(d).



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In addition to providing financial assistance, federal agencies can transfer
deeds to federal land to airports. Since World War II, the federal
government has transferred land that is considered excess to the federal
government’s needs to about 350 general aviation airports under the
Surplus Property Act. Land that is not excess to a federal agency’s current
needs—called nonsurplus land—can also be transferred for airport
purposes; about 100 general aviation airports have received nonsurplus
land.6 Unlike financial grant obligations that are a part of a contract
related to the operation and maintenance of airport facilities, the statutory
authorities for the transfer of surplus or nonsurplus federal land place
conditions on an airport owner’s title to the land. If these conditions are
not met, title to the land may be reverted to (i.e., be reclaimed by) the
federal government.7

Both financial grants and land transfers restrict the use of airport land and
airport revenues to airport purposes. An airport purpose is any activity
that involves, makes possible, is required for the safety of, or is otherwise
directly related to the operation of aircraft, such as the use of aircraft
hangars, repair facilities, or runways. An approved Airport Layout Plan
reflects the agreement between FAA and the airport owner on the
allocation of airport areas for specific operational and support functions.
In general, land designated in the plan cannot be used, leased, or sold for
purposes other than airport purposes without the consent of the
Administrator of FAA. If the airport wishes to alter the use of any land
designated in the plan—for city parks or departments or industrial parks,
for example—FAA must agree that the land is not needed for present or
foreseeable airport purposes and must grant permission regardless of
whether the land was acquired by federal grant or land transfer or without
federal assistance. If the altered use generates revenues, the airport must
agree to reinvest the proceeds in the airport. With the consent (called a
“release” of the land) of the Administrator, airport land not needed for
aviation purposes may be sold or leased so that the airport can use the
resulting revenues to support airport development, improvement,
maintenance, and operations.8




6
 Surplus and nonsurplus land is transferred under section 47151 and section 47125 of title 49, United
States Code, respectively.
7
 See 49 U.S.C. 47152(1) and 14 C.F.R. part 155.
8
 The exception to this is nonsurplus land, which cannot be used for nonairport purposes or to generate
revenues; if nonsurplus land is not developed or used for an airport purpose, the title to this land
reverts to the federal government, at the option of the Secretary of Transportation.



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FAA has released land from restrictions on its use for airport purposes at an
estimated 205 airports since 1990. About 75 percent of these releases
involved fewer than 20 acres of land, and about 50 percent involved fewer
than 10 acres. Appendix I provides more information regarding our
estimate of releases nationwide. Most releases we reviewed involved such
issues as using unneeded land to generate revenues for the airport by
developing an industrial park, for example, or by using the land as
easements for roadways. If an airport has altered the use of (or sold)
airport land without FAA’s authorization, the agency may require the
airport to return the land to its former use and condition or approve the
new use of the land after the fact.

In general, all airport revenues must be expended for the airports’
operating expenses and other nonoperating expenditures, such as capital
development. The purpose of the restriction on revenue uses is to prevent
revenue losses or diversions by ensuring that airports receiving federal
assistance use airport revenues for operation and development. The goal is
to make airports as self-sustaining as possible and minimize the need for
further federal assistance. Therefore, when FAA approves the use of land
for nonairport purposes to generate revenues for an airport, its policy
requires that the airport receive fair market value for the sale or lease of
the land.9 Generally, if an airport sells or leases land for less than fair
market value, the revenues are considered to be lost, or forgone.

Revenues are considered to be “diverted” when an airport fails to use
revenues generated from activities that take place on airport land for
airport purposes. In addition, if an airport owner, typically a local
government, uses airport land for nonairport purposes, such as for city
parks or departments, and does not pay rent to the airport account, the
revenues are also considered to be diverted from the airport. Since 1992,
the Department of Transportation’s Inspector General has reported lost or
diverted revenues of over $18 million at 11 general aviation airports. FAA
closed eight of these cases involving about $15 million, as reported by the
Inspector General—recovering $1.7 million in three cases. FAA officials
noted that all cases were resolved with the Inspector General’s
concurrence.

To assist operators in avoiding revenue diversion, on February 16, 1999,
FAA published a policy statement on the appropriate use of funds
generated by airports. FAA’s new policy requires audits of some airports to

9
 For the sale of grant-acquired land, the amount to be reimbursed corresponds to the amount of
federal participation in the land acquisition. 49 U.S.C. 47107(c)(2)(B).



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                            determine if revenue diversion has occurred. In addition, the policy allows
                            FAA to select airports to be audited where there are indications that
                            revenue diversion may have occurred. According to an official in the
                            Department of Transportation, this new compliance tool will allow FAA to
                            target the airports most likely to have substantial revenue
                            diversion—primarily commercial service airports.


                            Only four FAA field offices have implemented internal controls to ensure
FAA’S Internal              that general aviation airports comply with federal requirements to use
Controls Are                airport land for airport purposes. These offices use periodic
Inadequate to Ensure        self-certifications or limited on-site monitoring, and all the field offices
                            rely primarily on third-party complaints to identify noncompliance. FAA
Land-Use Compliance         headquarters staff cited an agencywide emphasis on voluntary compliance
                            in the early 1990s and staffing reductions as reasons for not implementing
                            FAA’s compliance policy. When airports are not monitored, the
                            unauthorized use of airport land is more likely to occur and can lead to the
                            loss or diversion of airport revenues and increased risks to aviation safety.


Few Field Offices Monitor   Of the 23 FAA field offices that are responsible for monitoring general
Compliance                  aviation airports’ compliance with federal requirements, only four—FAA’s
                            field offices in Kansas City, Missouri; Renton, Washington; Denver,
                            Colorado; and Helena, Montana—regularly monitor and document
                            airports’ compliance with land-use requirements. Combined, these offices
                            oversee 426—or 21 percent—of the approximately 2,000 general aviation
                            airports that have received grant funds or land from the federal
                            government.

                            FAA’s compliance policy handbook—FAA Order 5190.6A, Airport
                            Compliance Requirements—clearly requires field offices to monitor
                            airports for compliance with federal requirements. This requirement
                            serves as an internal control to provide assurance that the federal
                            government’s investment in airports is protected from mismanagement,
                            fraud, waste, and abuse. According to the handbook, FAA field offices must
                            be continuously aware of which airports are not in compliance and
                            conduct limited surveillance of each airport every 4 years to detect
                            recurring deficiencies, system weaknesses, or individual abuses of federal
                            requirements. The surveillance requirement may be met through site visits
                            or by obtaining a written certification by the airport that it is complying
                            with federal requirements. The handbook was last updated in 1990, and
                            FAA officials said they are working on an update, as discussed below.




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The four field offices that meet FAA’s monitoring requirement did so by
obtaining airport self-certifications. As required by the handbook, at least
once every 4 years, the four offices require each airport to certify in
writing that it is abiding by federal requirements. In addition, according to
FAA officials, staff in the Renton, Helena, and Denver field offices
occasionally review airports’ compliance with land-use requirements
during on-site safety reviews, conducting 27 such on-site compliance
inspections in 1998 (17, 7, and 3, respectively) out of about 350 airports
they oversee.

FAA headquarters staff cited an agencywide emphasis on voluntary
compliance in the early 1990s and staffing reductions as reasons why field
offices might choose not to implement FAA’s compliance policy. However,
these reasons do not fully explain why the majority of FAA’s field offices
chose not to monitor compliance. Despite an emphasis on voluntary
compliance, the compliance handbook clearly states the requirement to
have a monitoring system in place, as noted above. Furthermore, Airports
Division staffing levels have not changed significantly since 1985 and have
actually increased. For example, in 1985, Airports was authorized 476
positions. In 1990, Office of Airports staffing was 473, and by 1998 the
office was authorized 485 positions.

Staff in the 14 field offices we visited said that they rely primarily on
informal and formal third-party complaints to identify noncompliance and
that third-party complaints are sufficient to identify the few cases of
inadvertent noncompliance. Field offices reported that nine formal
third-party complaints have been made regarding land use at general
aviation airports since 1990.

Relying on airports’ self-certifications and third-party complaints does not
ensure compliance. For example, in 1994, the Department of
Transportation’s Inspector General reported revenue losses at the Malden
Municipal Airport in Malden, Missouri and found that the airport had
incorrectly responded to the Kansas City field office’s self-certification
questionnaire regarding the use of surplus property.10 In summarizing its
reviews of airports’ revenue use in a separate effort, the Inspector General
reported material weaknesses in FAA’s monitoring of commercial and
general aviation airports’ revenues and concluded that relying on
self-certifications and third-party complaints was insufficient for ensuring



10
   Monitoring of Accountability and Use of Airport Revenues at the Malden Municpal Airport,
R9-FA-4-010 (July 20, 1994).



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                        compliance with federal requirements on revenue use.11 The report
                        indicated that 14 of the 15 general aviation and commercial airport owners
                        identified as not complying with revenue use requirements had previously
                        certified they were in compliance, and third-party complaints had been
                        filed against only 2 of the 15 airports.

                        FAA officials consider noncompliance with federal land-use requirements
                        to be a problem, but they believe the incidence of the problem is limited.
                        However, without a monitoring system in place, FAA may not know when
                        unauthorized use of airport land occurs.


Unauthorized Land Use   Because FAA lacks an effective compliance monitoring program, the extent
Has Gone Undetected     of unauthorized land use at general aviation airports is unknown.
                        However, information supplied by field offices on the releases of land at
                        general aviation airports contained 24 instances of unauthorized land use
                        that have occurred since 1990. Some of these cases went undetected for
                        over a decade. These examples involved 15 states under the oversight of
                        12 different FAA field offices. The seriousness of the land-use violations
                        ranged from minor isolated infractions to periods of repeated
                        unauthorized use spanning more than two decades without correction.

                        Unauthorized land use may lead to the loss or diversion of revenues or
                        increased safety risks at an airport. For example, the Inspector General
                        identified almost $6.8 million in lost or diverted revenues at 5 of the 24
                        airports where the unauthorized use of airport land occurred, and FAA said
                        it had recovered about $184,000 from 3 of the other general aviation
                        airports where unauthorized use occurred. Safety problems can also result
                        from the unauthorized use of airport land, as when a landfill attracts
                        wildlife and thereby increases the risk of “birdstrikes” by landing and
                        departing aircraft.

                        In discussing the 24 cases, FAA officials concluded that the small number of
                        cases did not indicate that FAA’s compliance program was inadequate or
                        that a reallocation of resources by the Office of Airports was warranted.
                        However, as stated previously, without a monitoring system in place, the
                        extent of noncompliance is unknown and FAA has no assurance that
                        airports are complying with federal requirements. The following three
                        examples illustrate how unauthorized land use can continue undetected
                        for long periods of time when airports’ compliance is not actively


                        11
                         Interim Summary Report on the Audit of Monitoring Airport Revenue: Federal Aviation
                        Administration, R9-FA-4-004 (Mar. 7, 1994).



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                               monitored and how unauthorized use can result in lost or diverted
                               revenues or safety risks. All three airports obtained surplus land and
                               grants from the federal government that restrict the use of airport land and
                               revenues to airport purposes, and the unauthorized use of airport land
                               went undetected or uncorrected for decades at all three airports.

Hesler-Noble Field, Laurel,    According to FAA field staff, from about 1970 until 1981, Laurel, Mississippi,
Mississippi                    constructed police and fire training centers, a building to house street
                               maintenance equipment, a dog pound, a fire station, a water plant, a little
                               league park, and a landfill on airport land without FAA’s authorization and
                               without reimbursing the airport. FAA field staff identified the unauthorized
                               use in 1981 and reported that birds attracted by the landfill constituted a
                               safety hazard in 1982 but waited until 1994 to restrict dumping at the
                               landfill. In July 1998, FAA allowed the city to offset the lost revenues with
                               the value of city services provided to the airport. FAA field staff could not
                               explain why it had not addressed the safety problems and land and
                               revenue use issues for more than 12 years and 17 years, respectively.

Venice Municipal Airport,      Between approximately 1972 through 1992, Venice, Florida, constructed a
Venice, Florida                mobile home facility, little league parks, and a senior center and developed
                               the airport’s coastal land for public use without obtaining FAA’s
                               authorization or reimbursing the airport. In response to a complaint, the
                               Inspector General reported in 1993 that $2.4 million in revenues was lost
                               over a 4-year period and that almost 300 acres of federal land was
                               inappropriately used.12 FAA approved an after-the-fact release of airport
                               land in June 1998 and, according to a field staff, required the city to charge
                               fair market rent on future leases but recovered no lost revenues
                               (estimated to be at least $25 million) from leases that were below market
                               value because the agency had no authority to terminate the leases.

Stuttgart Municipal Airport,   In 1995, in response to a complaint, the Inspector General reported that
Stuttgart, Arkansas            Stuttgart, Arkansas, used a hangar for a mosquito control unit and
                               established a landfill on airport land without obtaining FAA’s authorization
                               or reimbursing the airport and leased large tracts of airport land for $1 per
                               year. Although the Inspector General identified $47,000 in diverted
                               revenues over a 3-year period, an FAA official said that the total amount
                               diverted was much greater because the unauthorized use spanned two
                               decades.13 Furthermore, because the leases of airport land were legally
                               binding, no amounts could be recovered. The city agreed to pay $6,250 per

                               12
                                  Report on Audit of Airport Revenue Accountability: City of Venice, Florida, R4-FA-3-724 (July 22,
                               1993).
                               13
                                 Airport Revenues, Stuttgart Municipal Airport, Arkansas, R6-FA-6-002 (Nov. 2, 1995).



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                       year for the landfill, and FAA officials said that future leases will obtain fair
                       market rents. In addition, the Inspector General found that FAA approved
                       airport leases that allowed hunting and farming on airport land. These
                       activities created a safety hazard because crops were planted to attract
                       ducks to the airport. As a result, an aircraft struck a bird in 1990. Although
                       the city subsequently banned hunting on the airport land, another
                       birdstrike occurred in 1994, causing $20,000 damage to one plane. And in
                       March 1995, the Inspector General found three duck blinds at the airport
                       as well as duck decoys near the blinds.


FAA’s Compliance       FAA has not revised its compliance and enforcement guidance to keep it
Guidance Is Outdated   current. FAA Order 5190.6A, Airports Compliance Requirements, was last
                       updated in October 1989, and the section on enforcement was last updated
                       in August 1973. While field offices rely on the handbook as a primary
                       source of guidance, FAA officials said that numerous policy changes have
                       been made and that they informally convey changes through training and
                       action memos. They noted that they had drafted a policy guidance letter in
                       March 1999 for distribution to the field offices to update information on
                       FAA’s enforcement policy, which dates to 1973. However, these informal
                       efforts do not provide a consolidated record of FAA’s compliance policy.
                       FAA’s lack of timely action to publish compliance policy for airports’
                       revenue use was identified by the Inspector General in 1998 as a
                       contributing factor to airports’ noncompliance.14 FAA’s Airports
                       Compliance Division staff said they planned to issue a revised compliance
                       policy order in 1999.

                       FAA’s order listing airports that are subject to federal requirements from
                       land and grant agreements, last revised in April 1990, is similarly
                       outdated.15 As a result, FAA headquarters does not have ready access to
                       current summary data on the government’s interests in general aviation
                       airports nationwide, and information that could be useful in quantifying
                       field offices’ monitoring workloads and making resource allocation
                       decisions is not available. In response to our request, field offices gathered
                       data showing that since the order was issued in 1990, 14 listed general
                       aviation airports had closed, while 81 others had become subject to
                       federal requirements.




                       14
                         Airport Financial Reports: Federal Aviation Administration, AV-1998-201 (Sept. 11, 1998).
                       15
                         FAA Order 5190.2R, List of Public Airports Affected by Agreements with the Federal Government.



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                         FAA has a variety of statutory and administrative alternatives for resolving
FAA Emphasizes           airports’ noncompliance but has generally chosen not to use them.
Negotiation Over         Instead, FAA prefers to address noncompliance through negotiation and
Enforcement              settlement. However, in several instances FAA’s attempts at negotiation
                         have been unsuccessful, and airports’ lack of willingness to comply with
                         federal requirements justified greater efforts to enforce compliance.
                         Furthermore, FAA has not followed its policy of obtaining fair market value
                         for airport land when it knows the use will change, as in the case of a
                         Kansas City, Missouri, general aviation airport now being closed.


FAA Has Numerous         The federal government is entitled to the same legal remedies as any other
Enforcement Tools but    party to a contract that has been breached, and FAA’s enforcement policy
Generally Fails to Use   calls for FAA officials to seek injunctions or judgments in the courts should
                         the circumstances warrant. However, FAA officials do not believe it is
Them                     generally practical to take legal actions. They said that these matters must
                         be referred to the Department of Justice for prosecution and that the
                         dollar amounts involved are usually too low to be a high priority for
                         Justice.

                         Alternatively, FAA may assess civil penalties of up to $50,000 without going
                         to court.16 FAA has not used this power for unauthorized land or revenue
                         use. For example, FAA allowed the closure of a small general aviation
                         airport in Fall River, Massachusetts, in February 1996 but required the
                         airport to reinvest the residual value of federal grant funding
                         (approximately $30,000) in a nearby general aviation airport in New
                         Bedford, Massachusetts. However, at the time of our review, almost 2
                         years after the agreement was signed, Fall River had not provided the
                         funds and FAA had not pursued legal action or civil penalties. FAA
                         headquarters staff said they had not pursued legal action because they
                         believed that ongoing negotiations might prove to be successful.

                         The Congress has strengthened FAA’s enforcement powers to resolve
                         revenue diversion cases by including restrictive language in appropriations
                         and transportation laws. For fiscal years 1994 and 1995, the Congress
                         specified that transportation funds could be withheld from any local
                         government that diverts revenues generated by a public airport.17 The
                         Airport Revenue Protection Act of 1996 made this enforcement action
                         permanent, giving the Secretary of Transportation the authority to
                         withhold aviation, transit, and rail funds from local governments that fail

                         16
                           49 U.S.C. section 46301.
                         17
                           P.L. 103-122 section 328 and P.L. 103-331 section 325.



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to reimburse airports for illegally diverted funds and to assess civil
penalties against those that fail to reimburse the federal government.18 FAA
headquarters officials said that the agency has never recommended that
transportation funds be withheld under these laws.

FAA also has special enforcement remedies that are inherent in various
types of airport agreements, such as returning to the federal government
the ownership of land it provided if an airport does not comply with
federal requirements. FAA officials said that FAA has never had the title to
surplus or nonsurplus land revert to the agency because it could not
manage the day-to-day operations of an airport.

FAA  also may take administrative actions, such as denying requested land
releases or withholding funds provided under the Airport Improvement
Program. For example, FAA field staff denied the airport’s request to
release land at Scholes Field in Galveston, Texas, in May 1998 because of
unresolved issues identified by the Inspector General, including lost
revenues and continued attempts by the city to sell off and/or lease airport
land at less than fair market value.19 FAA also informed the airport that a
failure to take corrective action could result in the city’s becoming
ineligible for federal grants. However, FAA field staff and headquarters
officials noted that withholding grant funds is not a significant deterrent
for communities that would rather close an airport or support it to a lesser
extent.

FAA’s compliance handbook requires that staff first attempt to have an
airport voluntarily correct compliance deficiencies. FAA officials told us
that airports are generally willing to take corrective action and FAA prefers
to exhaust all avenues of voluntary corrective action and negotiate a
settlement of the noncompliance before undertaking enforcement actions.
For example, in September 1998 at the Waterville-R. LaFleur general
aviation airport in Waterville, Maine, the airport began excavation for
construction of an industrial park before requesting a release of the land
from FAA. However, once airport officials realized they needed FAA’s
approval, they voluntarily stopped work until the release was approved.
FAA said that a confrontational approach using its enforcement authority
would be justified only if it resulted in a higher level of compliance than
maintaining a cooperative relationship with airports.


18
  P.L. 104-264 section 805.
19
   Airport Revenues: Galveston Municipal Airport Scholes Field, Galveston, Texas, AV-1998-011 (Nov. 7,
1997). According to FAA officials, they had recovered $142,663 and were still pursuing recovery of
funds for the use of airport land as a golf course at the time of our review.



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                                FAA  resolves unauthorized use of airport land by obtaining airports’
                                assurances that future revenue diversion or losses will not occur; allowing
                                cities to apply the value of services they provided to the airport, such as
                                police and fire protection, to offset the lost or diverted airport revenues;
                                requiring that future leases call for fair market value; or working out other
                                solutions. For example, FAA field staff drove by Frederick Municipal
                                Airport in Maryland and discovered an 11-acre public works facility
                                constructed on airport land. FAA arranged for the city to provide another
                                land parcel adjoining the airport in exchange for the unauthorized
                                conversion of the 11 acres of airport land subject to federal restrictions on
                                its use.

                                If an airport does not voluntarily make corrections, the handbook requires
                                FAA  to place the airport in pending noncompliance status and notify the
                                airport of the right to a hearing. As a result of the hearing (or if no hearing
                                has been requested), the FAA field manager is to determine whether the
                                airport is in noncompliance and whether FAA should take appropriate
                                sanctions or civil penalties. However, we found that FAA field offices very
                                rarely place airports in pending noncompliance or noncompliance status.
                                For example, out of the 24 cases of unauthorized land use we reviewed,
                                only 2 had been placed in noncompliance status.20 In the following two
                                cases—Queen City Municipal Airport in Allentown, Pennsylvania, and
                                Bader Field in Atlantic City, New Jersey—FAA has not initiated the
                                enforcement process by placing the airports in pending noncompliance
                                status despite long-standing compliance problems at both airports.

Queen City Municipal Airport,   In 1965, FAA approved the city’s request to use an airport hangar located on
Allentown, Pennsylvania         6 acres of airport land as a vehicle maintenance facility without releasing
                                the land or requiring the city to reimburse the airport, as required by the
                                federal surplus land transfer agreement signed in 1948. FAA officials could
                                not explain the reason for the inappropriate 1965 decision. In 1984, FAA
                                denied the city’s request to release the land and advised the city that it had
                                violated federal surplus property requirements. In 1987, FAA released
                                airport property for a highway right-of-way and between 1989 and 1992,
                                FAA awarded four grants totaling $2.3 million to repair runways and
                                develop a master plan. FAA officials stated that the land release and grants
                                were provided to persuade the city not to proceed with plans to close the
                                airport, an important regional reliever airport.21

                                20
                                  Pompano Beach Airpark in Pompano Beach, Florida and Benton Airport in Saline County, Arkansas.
                                21
                                 Reliever airports are those general aviation airports located in metropolitan areas that FAA has
                                designated to reduce congestion at large commercial airports and to provide access to general
                                aviation.



                                Page 13                                              GAO/RCED-99-109 General Aviation Airports
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In response to a complaint, the Inspector General reported in January 1997
that the city owed the airport about $2.8 million for the nonpayment of
rent for the maintenance facility from 1984 through 1995.22 Nonetheless,
the airport was scheduled to receive an Airport Improvement Program
grant for almost $300,000 in February 1999. After we discussed the
airports’ continuing noncompliance with FAA headquarters officials in
December 1998, they sent a letter to Queen City on March 5, 1999,
informing the city that FAA would consider taking steps to collect a portion
of the $2.8 million. FAA officials said they took steps to delay the award of
the $300,000 grant until the airport’s noncompliance was resolved. Figure
1 shows an aerial view of the airport and the unauthorized use of airport
hangars for a vehicle maintenance facility.




22
   Accountability and Use of Airport Revenues, Queen City Municipal Airport, R3-FA-7-002 (Jan. 30,
1997).



Page 14                                             GAO/RCED-99-109 General Aviation Airports
                                         B-281078




Figure 1: Vehicle Maintenance Facility
at Queen City Municipal Airport,
Allentown, Pennsylvania




                                         Source: Aircraft Owners and Pilots Association.


Bader Field, Atlantic City, New          According to FAA officials, since the early 1970s, Atlantic City has used
Jersey                                   airport property without obtaining FAA’s approval or reimbursing the
                                         airport as required by federal grants that expire in 2006. Specifically, the
                                         city constructed a high school football field on airport land and used
                                         airport buildings for a police annex and fire station without approval or
                                         reimbursement. Furthermore, the airport’s condition has gradually
                                         deteriorated during the 1990s, and the city claims that the airport is unsafe
                                         and therefore should be closed. Safety issues have resulted from
                                         unauthorized use. In May 1996, after the city allowed the unauthorized
                                         excavation of an aircraft parking area for a minor league baseball stadium
                                         being constructed on the airport land, an aircraft accident occurred. A



                                         Page 15                                           GAO/RCED-99-109 General Aviation Airports
B-281078




plane hit an unmarked and unlighted excavation hole at night. No injuries
occurred. In addition, during the stadium’s construction, land survey
spikes were driven into the airport runways and left for an unknown
period of time while the airport was still open. In 1997, in defiance of FAA’s
explicit instructions that FAA’s approval was required to build the stadium
on the airport land, the Mayor of Atlantic City informed FAA that
construction of the baseball stadium would proceed. FAA subsequently
signed a memorandum of agreement that allowed the stadium to be built,
hoping that through cooperation, the city would make needed safety
improvements and not close the airport. The agreement required the city
to reimburse the airport for the fair market value of the baseball stadium
land but did not resolve the city’s unauthorized use of and lack of
compensation for airport buildings and the land for the high school
football stadium. Figures 2 and 3 show the unauthorized minor league
baseball stadium, police annex, and aircraft operations area at Bader Field
in Atlantic City, New Jersey.




Page 16                                 GAO/RCED-99-109 General Aviation Airports
                                                      B-281078




Figure 2: Use of Airport Land at Bader Field, Atlantic City, New Jersey




Minor league baseball stadium surrounded by
floodlights. Atlantic City Police Department annex
on the right behind the airport runway.




                                                     Ticket booth and entrance to minor league baseball stadium.




                                                     View of the airport with the skyline of Atlantic City in the background. Airplanes are parked on the left.
                                                     Police cars are parked in the middle. The police annex once used as a terminal building for commuter
                                                     airlines is on the right.



                                                      Page 17                                                GAO/RCED-99-109 General Aviation Airports
                                                      B-281078




Figure 3: Aircraft Operations Area at Bader Field, Atlantic City, New Jersey




                                        ACTIVE AIRPORT
                                        AIRCREWS &
                                        AUTHORIZED
                                        PERSONNEL
                                        BEYOND THIS POINT

              STOP
       AIRPORT OPERATIONS AREA
        -AUTHORIZED VECHICLES ONLY-

          SERVICE VEHICLES CHECK WITH
              AIRPORT OPERATIONS




 Entry to the runway and aircraft parking area, which are        Airport services are limited to parking--there are no fuel, telephone, or restroom facilities
 surrounded by a chain-link fence. Public notice posted by       within the airport for use by pilots and passengers. Atlantic City skyline is in the
 Atlantic City advising that the airport is "active".            background.




                                                      Although almost 2 years had passed without corrective action at the time
                                                      of our review, FAA had not cited the airport for official noncompliance,
                                                      requested the Inspector General to investigate the overt revenue diversion,
                                                      or used other stronger enforcement methods. In December 1998, we
                                                      discussed the noncompliance with FAA headquarters officials, who agreed
                                                      to determine if the situation was serious enough to warrant enforcement
                                                      action. On January 8, 1999, FAA requested the city to provide financial
                                                      reports showing that rent from the baseball stadium was being deposited
                                                      into an airport account. However, the city did not respond to the request
                                                      or repeated phone calls, and a follow-up letter was sent on March 19, 1999.
                                                      We referred this matter to the Inspector General in March 1999.


FAA Has Not Enforced                                  Even when FAA is aware of changes to an airport before they occur, it has
Revenue Use Policy for a                              not always followed its own policies and required that airports recoup the
Proposed Airport Closure                              fair market value for the sale of surplus property. For example, in
                                                      July 1998, FAA signed a memorandum of agreement to release the
in Kansas City, Missouri                              Richards-Gebaur Memorial Airport from grant assurances and surplus land
                                                      deed requirements once Kansas City, Missouri, and the Kansas City
                                                      Southern Railroad agree to establish an intermodal rail-highway depot on
                                                      the runway. FAA’s agreement with Kansas City required an estimated
                                                      $15 million to be reinvested in other area airports over a 20-year period. By




                                                      Page 18                                             GAO/RCED-99-109 General Aviation Airports
B-281078




signing the agreement, FAA did not follow its policy requiring an
independent appraisal to determine fair market value of the airport
property. The only indication of the value of the 1,300-acre property was a
$33 million estimate cited in field office files, but FAA officials did not
provide an appraisal to support or refute the estimate.

According to FAA officials, the compliance handbook provides that the
Associate Administrator for Airports consider requests to release an entire
airport from federal requirements on a case-by-case basis and that the
Associate Administrator’s authority is not limited by FAA’s policies for
releasing parcels of land. However, this provision in the handbook applies
only to those federal requirements related to federal grants and does not
apply to federal requirements related to airport land that was acquired as
surplus land from the federal government. All but a few acres of the
airport were provided to Kansas City as surplus land when the former
Richards-Gebaur Air Force Base was closed in 1985. FAA’s compliance
policy clearly states that releases of land provided under the Surplus
Property Act must clearly accrue a benefit to civil aviation and that

“This objective is not met unless an amount equal to the net sale proceeds based on the
current FMV [fair market value] of the property is realized as a consequence of the release
and such amount is committed to airport purposes . . . A sale and disposal of airport
property for less than its FMV is inconsistent with the intent of the statute.”


FAA’s  decision to allow Kansas City to sell the Richards-Gebaur Memorial
Airport without conducting an appraisal or ensuring that fair market value
is obtained was improper. In commenting on our preliminary findings in
March 1999, FAA headquarters officials said that they are carefully
reviewing the proposed leases of the airport and will consider amending
the memorandum of agreement or rejecting the deal entirely. Figure 4
shows an aerial view of the airport. The railroad tracks are parallel and to
the left of the 8,700 foot runway that is to be converted to an intermodal
rail/truck facility. Figure 5 shows some of the facilities on the airport land.




Page 19                                        GAO/RCED-99-109 General Aviation Airports
                                          B-281078




Figure 4: Aerial View of Richards-Gebaur Memorial Airport, Kansas City, Missouri




                                          Source: Aircraft Owners and Pilots Association.




                                          Page 20                                           GAO/RCED-99-109 General Aviation Airports
                                                        B-281078




Figure 5: Facilities at Richards-Gebaur Memorial Airport, Kansas City, Missouri




Air traffic control tower, parking area, and hangers.




View of the terminal building (front) and aircraft hanger          Another view of airport from the air traffic control tower.
(back and aircraft parking ramp.


                                                        Source: Aircraft Owners and Pilots Association.



                                                        FAA’s compliance program is intended to ensure that the public interest
Conclusions                                             and investment in general aviation airports receiving federal assistance are
                                                        protected. This is not currently the case. Because none of FAA’s 23 field
                                                        offices conduct regularly scheduled on-site visits to monitor general
                                                        aviation airports’ compliance with federal requirements, FAA does not
                                                        know the extent of noncompliance at these airports nationwide. Nor does
                                                        FAA always effectively enforce federal requirements. Not surprisingly,
                                                        therefore, we found unauthorized land and revenue uses and increased




                                                        Page 21                                               GAO/RCED-99-109 General Aviation Airports
                  B-281078




                  risks to aviation safety. These problems are compounded by the lack of
                  current policy guidance and current summary information on the nature of
                  airports’ federal requirements nationwide. Overall, FAA’s failure to
                  effectively implement its compliance program leaves the nation’s federally
                  assisted general aviation airports vulnerable to mismanagement, fraud,
                  waste, and abuse. Although our review focused on FAA’s land-use
                  requirements for general aviation airports receiving federal assistance,
                  FAA’s lack of an effective compliance and enforcement program leaves
                  compliance with other federal requirements, such as the requirement to
                  keep airports available for public use and to charge airport users
                  comparable fees, vulnerable as well.

                  Addressing noncompliance after it occurs is often difficult. Therefore,
                  prevention is key to ensuring compliance with federal requirements.
                  Airports’ self-certifications can also serve to educate airports about their
                  requirements. However, self-certifications alone are not a sufficient
                  internal control because, in some instances, noncompliance may be
                  deliberate, suggesting the need for a more hands-on monitoring approach
                  than that provided by self-certifications. Consequently, on-site monitoring
                  and enforcement action are also essential elements of any preventative
                  compliance strategy.

                  In instances in which negotiations with an airport are unsuccessful, FAA
                  has not used its available enforcement actions effectively to deter
                  violations or recoup losses to the federal government. It has not withheld
                  transportation grants, taken back the title to airport land, or taken action
                  through the courts. When such actions are not taken, even in cases of
                  long-standing noncompliance, the lack of action becomes a de facto policy
                  of permissiveness. This de facto policy has occurred in two cases we
                  identified—Bader Field and Queen City Municipal Airport. In the case of
                  Richards-Gebaur Memorial Airport, however, FAA still has time to adhere
                  to its own policy of obtaining fair market value for the land being sold for
                  other purposes.


                  To effectively implement the internal controls contained in FAA’s
Recommendations   compliance policy, we recommend that the Secretary of Transportation
                  direct the Administrator of FAA to revise current compliance policy
                  guidance to airports to require regularly scheduled monitoring methods
                  that provide for periodic on-site visits. In conjunction with periodic on-site
                  visits, the monitoring component could include requiring periodic
                  self-certifications of compliance from all airports and formally



                  Page 22                                 GAO/RCED-99-109 General Aviation Airports
                     B-281078




                     coordinating with interested parties who may have information about
                     airports’ compliance, such as general aviation organization field
                     representatives.23 In addition, FAA should provide specific criteria for
                     initiating enforcement action and set reasonable time frames for taking
                     progressively stronger enforcement actions in cases in which efforts to
                     achieve voluntary corrective action are unsuccessful.

                     In those cases of noncompliance that FAA cannot resolve in a reasonable
                     period of time, we further recommend that the Secretary of Transportation
                     direct the Administrator of FAA to apply the enforcement tools already
                     provided by the Congress by holding field offices accountable for taking
                     enforcement actions, particularly in cases of long-term, repeated, or willful
                     unauthorized land or revenue use.

                     Until FAA develops and implements a compliance and enforcement
                     program that provides adequate internal control over airports’ compliance
                     with federal requirements, the FAA Administrator should determine
                     whether the internal control weakness disclosed in this report should be
                     included when providing information to the Secretary for inclusion in the
                     Secretary’s annual report to the President and the Congress, as required by
                     the Federal Managers’ Financial Integrity Act of 1982.

                     Finally, the FAA Administrator should resolve long-standing instances of
                     noncompliance and revenue diversion by taking enforcement action to
                     protect the public investment in aviation at the Queen City Municipal
                     Airport and at Bader Field. FAA should also require that Kansas City obtain
                     a fair market appraisal of the value of airport land and, upon closing
                     Richards-Gebaur Memorial Airport, reinvest an amount equal to the
                     appraised value in local area airports to promote aviation, as required by
                     FAA’s policy.



                     We provided copies of a draft of this report to the Department of
Agency Comments      Transportation and the Federal Aviation Administration (FAA) for review
and Our Evaluation   and comment. We met with FAA officials including the Director, Office of
                     Airport Safety and Standards. We also met with Department of
                     Transportation officials from the Office of Acquisition and Grant
                     Management and the Office of General Counsel. FAA officials had several
                     concerns about the information in the report but did not comment
                     specifically on the report’s recommendations.


                     23
                      In 1997, the Aircraft Owners and Pilots Association announced a program to have volunteers monitor
                     public-use airports to identify concerns.



                     Page 23                                            GAO/RCED-99-109 General Aviation Airports
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FAA officials said that over the last several years FAA has been working to
enhance its oversight of airport owners’ compliance with federal
obligations. For example, FAA recently issued a revised airport revenue use
policy that requires audits of some airports to determine if revenue
diversion has occurred and allows FAA to select airports to be audited
where there are indications that revenue diversion may have occurred. It
also established an Airports Compliance Division within the Office of
Airports in December 1997 and assigned 10 full-time compliance policy
specialists to advise field offices on airport land and revenue issues and
provide procedural support for compliance personnel in the field. The FAA
officials said that, using the new policy and staff, the agency is working to
ensure that it provides effective oversight to the airports in the national
airport system. FAA officials also said that, over the past several years, the
agency has enhanced its airport industry outreach and educational efforts
by providing agency-sponsored seminars and participating in conferences
sponsored by airport industry and airport owner associations. The efforts
to improve oversight of airports’ compliance described in FAA’s comments
are included in this report, and, therefore, we made no changes in
response to these comments. Because FAA said that it has enhanced its
airport industry outreach and educational efforts, we deleted from our
recommendations a reference to a need to improve these educational
efforts.

The agency officials did not dispute the report’s findings on the level of
monitoring and enforcement, but offered a number of reasons for why
monitoring and enforcement efforts are not more extensive. FAA officials
told us that providing effective oversight requires that the agency prioritize
its use of the limited available staff. FAA officials indicated that its financial
compliance activities are most appropriately focused on commercial
service airports that receive the majority of federal funding. While the FAA
officials agreed that it may be possible to further strengthen compliance
oversight activities with general aviation airports, they believe that the
draft report did not provide sufficient context in which to understand the
relative scope of the issues described in the report. Although there are
over 2,000 general aviation airports subject to federal requirements, they
account for a relatively small proportion of funding and thus do not
warrant a greater expenditure of FAA’s limited resources, the officials
stated. With approximately one person assigned to compliance duties per
region (and many of these people have multiple duties), the FAA officials
said that it is appropriate to focus compliance oversight efforts on the 840
commercial service airports that account for about 80 percent of Airport
Improvement Program funding. The draft report included information



Page 24                                   GAO/RCED-99-109 General Aviation Airports
              B-281078




              placing general aviation airports in context within all airports receiving
              federal funding. Therefore, we made no changes in response to these
              comments. While we acknowledge that the oversight of commercial
              service airports is important, this does not relieve FAA from its
              responsibility for ensuring that all airports comply with the requirements
              associated with the federal funding or land they receive.


              We visited 14 and surveyed 9 of the 23 FAA field offices responsible for
Scope and     overseeing general aviation airports. The 14 offices we visited represent
Methodology   seven of the nine FAA regions and manage airports in 33 of the 50 states, or
              about two-thirds of all public airports with land subject to federal
              requirements in the United States. Specifically, we visited the following
              field offices to discuss implementation of the compliance program:
              Atlanta, Georgia; Burlingame, California; Burlington, Massachusetts; Camp
              Hill, Pennsylvania; Detroit, Michigan; Dulles, Virginia; Garden City, New
              York; Jackson, Mississippi; Kansas City, Missouri; Lawndale, California;
              Orlando, Florida; and three field offices in Fort Worth, Texas.

              We obtained information regarding compliance monitoring and cases of
              noncompliance with the federal requirements for land and revenue use,
              complaints and investigations, and land releases and airport closures from
              each of the 23 FAA field offices. We took a random sample of 506 general
              aviation airports and obtained data for each airport in the sample in the 23
              field offices to estimate the incidence of releases on a nationwide basis.
              With general aviation interest groups, including the Aircraft Owners and
              Pilots Association, the National Air Transportation Association, and the
              American Association of Airport Executives, we discussed the issue of
              airports’ compliance. These groups identified a number of issues regarding
              land use at general aviation airports, including the diversion of airport
              revenues and safety concerns.

              We performed our review in accordance with generally accepted
              government auditing standards from September 1998 through April 1999.


              We are providing copies of this report to the Honorable Rodney E. Slater,
              the Secretary of Transportation; and the Honorable Jane F. Garvey,
              Administrator, FAA. We will also make copies available to others on
              request.




              Page 25                                GAO/RCED-99-109 General Aviation Airports
B-281078




If you or your staff have any questions about this report, please call me at
(202) 512-2834. Major contributors to this report are listed in appendix II.




John H. Anderson, Jr.
Director, Transportation Issues




Page 26                                GAO/RCED-99-109 General Aviation Airports
Page 27   GAO/RCED-99-109 General Aviation Airports
Appendix I

Sampling Results


              As discussed in the “Scope and Methodology” section of the report, we
              used a probability sample of airports to estimate the incidence of releases
              on a nationwide basis. Since we used a sample to develop our estimates,
              each estimate has a measurable precision. This precision can be used to
              develop upper and lower bounds for each estimate. This range is called a
              confidence interval. Confidence intervals are stated at a certain
              confidence level—in this case, 95 percent. For example, a confidence
              interval at the 95-percent confidence level means that in 95 of 100
              instances, the sampling procedure that we use would produce a
              confidence interval containing the universe value we are estimating. The
              following table contains the estimates that we made and their upper and
              lower bounds at the 95-percent confidence level. Note that we found 51
              releases in our sample, but we were unable to obtain the number of
              released acres for 1 of the releases.


                                                    Number or Percentage of Airports
                                                   Estimate    Lower bound      Upper bound
              Total releases                            205              156              254
              Releases of less than 10 acres             97               73              126
              Releases of from 10 acres
              to less than 20 acres                      52               34               78
              Releases greater than or equal to
              20 acres                                   52               34               78
              Percentage of releases of
              less than 10 acres                         48%              33%              63%
              Percentage of releases of
              less than 20 acres                         74%              61%              87%




              Page 28                                GAO/RCED-99-109 General Aviation Airports
Appendix II

Major Contributors to This Report


                       Janet Barbee
Resources,             Chris Keisling
Community, and         Mark Lambert
Economic               Allen Rogers
Development Division
                       Dave Hooper
Office of General
Counsel




(348130)               Page 29          GAO/RCED-99-109 General Aviation Airports
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