COMMUNITIES ESTIMATED FOR ELIMINATION IN FISCAL YEAR 1995

Mr. CARR. Please provide a similar chart showing those communities currently estimated to lose service assuming enactment of the President's budget request for fiscal year 1995.

[The information follows:]

The above lists of points are strictly illustrative in that they are based on currently available data.
Final decisions will be made on more current data. It also should be noted that events could occur
which could cause additional points to be eliminated, such as a change of Hub designation
from Small to Nonhub or vice versa, and changes both in subsidy rates and passenger levels.
While FY 1994 cuts were premised on a $200 subsidy/passenger based on passengers
carried during the year ended June 30, 1993, more current data will be used to determine

the FY 1995 cuts. If YE June 30, 1994, traffic is used, those data will not be available until late summer.
Highway distances are based on Federal Highway Administration official analysis--used for the

first time in support of the FY 1995 Budget--of the exact distances using a Geographic Information
System in conjunction with a highway network database from the U. S. Geological Survey.
As a result, in some cases, mileage figures are revised from prior year tables.

RECOVERIES

Mr. CARR. In a November 1993 audit of Prime Air's billings under the Essential Air Service Program, the IG "found numerous instances where the carrier claimed subsidy for flights that had been cancelled or for flights that made unauthorized stops." They found the company overbilled the Department by $589,180. Have these funds been recovered?

[The information follows:]

What appeared to be billing irregularities were first discovered by managers of the EAS program, based on a comparison of records they had requested from airport officials with the carrier's subsidy claim forms. The Department immediately asked the IG to perform more in-depth auditing. The IG confirmed the suspicions and brought their investigation unit into the case. Prime Air had ceased operations in 1989 and was liquidated shortly thereafter. However, the owner of Prime Air, Mr. Ron Langley, was charged by the Department of Justice with defrauding the government, and a plea-bargain agreement was reached. On March 25, 1994, Mr. Langley was fined $10,000, ordered to pay $200,000 in restitution, and sentenced to be incarcerated for one year and a day. The Department would pursue civil action in an attempt to recover additional monies, if it appears that any money could likely be recovered.

EAS AWARDS CRITERIA

Mr. CARR. This seems like a gross, and potentially fraudulent, case of overbilling. Is Prime Air still allowed to run air service or compete for EAS contracts? Does the Department have the legal authority to debar a company from participating in the EAS program?

[The information follows:]

Mr. Langley is now a convicted felon, having been found guilty of defrauding the Federal Government, and having been sentenced to serve a year in jail. Prime Air has been defunct for several years. While there is no statutory prohibition against a convicted felon applying for authority to start an airline, that airline would have to be found fit, willing and able to operate by the Department before it could start service. The Department's policies and fitness standards would make it virtually prohibitive for an applicant with Mr. Langley's record to be found fit. Further, the Department has complete discretion as to what EAS carriers it awards contracts and, as a practical matter, Mr. Langley will never again be awarded an EAS contract.

PROPOSED CHANGES TO EAS SUBSIDY CRITERIA

Mr. CARR. Your budget recommends deletion of the bill language allowing EAS points greater than 210 miles from the nearest large or medium hub airport. Without this language, what additional points would be eliminated in fiscal year 1995, and what is their annual subsidy and subsidy per passenger?

[The information follows:]

The 210-mile "safe haven" under the fiscal year 1994 EAS appropriation carves out a special exception for communities that are very isolated. While communities whose subsidy per passenger exceed $200 per passenger generally were made ineligible for subsidized service, in fiscal year 1994, communities more than 210 miles from the nearest Large or Medium Hub airport are exempt from the $200 per passenger standard. The following five communities currently have a subsidy-per-passenger over $200 and thus would be eliminated in fiscal year 1995, even though they are more than 210 miles from the nearest Large or Medium Hub. (We caution that subsidy rates and traffic levels are subject to change and the actual list could vary as subsidy and traffic at points near the $200 per passenger cutoff could change.)