UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

HIROKAI NISHIO 

COMPLAINANT 

v. 

W ASIDNGTON, DC 

SAIPAN INTERNATIONAL AIRPORT 

(COMMONWEALTH PORTS AUTHORTY) 

RESPONDENT 

FAA Docket No. 16-13-03 

DIRECTOR'S RESPONSE TO RESPONDENT'S CORRECTIVE ACTION PLAN 

On April 29, 2016, the Director of the FAA Office of Airport Compliance & Management 

Analysis issued the Director's Determination pursuant to 14 CFR Part 16 finding the 

Commonwealth Ports Authority (Respondent or Authority) to be in violation of its federal 

grant obligations with respect to Grant Assurance 22, Economic Nondiscrimination. The 

Authority was directed to submit a Corrective Action Plan (CAP) demonstrating how the 

Authority will comply with the prescribed corrective actions. On June 16, 2016, the 

Respondent submitted its proposed Corrective Action Plan. Upon review, the Director 

identified a concern with the Respondent's proposed aircraft liability insurance requirements 

for GA aircraft operators that will require clarification. 

General Aviation Aircraft Liability Insurance Coverage 

The second directive in the Director's Determination required the Respondent to "develop 

and apply an aircraft liability insurance requirement for general aviation aircraft operators 

that is commensurate with the level of coverage available on the market to general aviation 

aircraft operating in the CNMI." [Director's Determination, pg. 39) The basis for the 

Director's finding was, in part, due to the Respondent's failure to sufficiently justify its 

$10M minimum liability insurance rate for general aviation users of the airport as 

reasonable. [Director's Determination, pg. 38] 

CAP Proposal: In its CAP, the Respondent proposes to revise its Airport Rules and 

Regulations and to reduce its general aviation aircraft liability insurance requirement from 

$1OM to $4 M. The CAP states that the " ... difference is based on the availability of aircraft 

liability insurance identified in the record of and in the Determination, the recommendation 

of the Authority's consultant, and the Authority's proprietary right to protect itself from 

exposure to liability." 
FAA Response: In developing the proposed $4M insurance requirement, the Respondent 

appears to rely heavily on the investigation and findings in Issue 2 of the Director's 

Determination. In Issue 2, the Director found that certain commercial operators ofGA 

aircraft have obtained $1OM in liability insurance and that, to some degree, liability 

insurance levels as low as $1M may be available toGA aircraft operators. [Director's 

Determination, pg. 31] The findings were based on the Complainant's own insurance 

coverage history, liability insurance coverage held by existing operators at GSN, and the 

Director's brief investigation into GA aircraft insurance availability in the CNMI market. 

[Director's Determination, pgs. 27-31] 

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However, the Director's investigation did not establish, confirm, or eliminate an acceptable 

minimum liability insurance requirement, nor was it the Director's role or intent. Rather, the 

Director's investigation simply established that, based on a sampling of the varying levels of 

coverage available to (or already obtained by) aircraft operators in the CNMI, there was 

insufficient evidence to substantiate the Complainant's claim of unreasonable denial of 

access due to the unavailability of insurance. [Director's Determination, pg. 31] The 

Director's investigation was not an all-encompassing evaluation of the aircraft liability 

insurance market in the CNMI and should not be construed as such. 

Further, the Respondent did not provide any insight, rationale, methodologies, or other 

justifications used by its risk management consultant (or otherwise) in determining the 

revised $4M insurance requirement, nor did it provide any evidence that the requirement is 

commensurate with general aviation liability insurance availability in the CNMI market, as 

required. [Director's Determination, pg. 39] Significantly, the Director's Determination 

noted that the Respondent has recently allowed an existing commercial operator of Cessna 

172 aircraft - the same aircraft type as the Complainant- to maintain only $2M in liability 

insurance even as a commercial operator is required by the Airport Rules and Regulations to 

maintain $1OM in insurance coverage. (Director's Determination, pg. 28] Such a finding 

demonstrates that $2M in liability insurance is not only available in the CNMI market for 

this type of aircraft, but also is evidence that $2M apparently is acceptable to the 

Respondent. The CAP did not address this discrepancy and further demonstrates that the 

Respondent has not been effective in the management and application of its insurance 

requirements or its Airport Rules and Regulations. 

Accordingly, as outlined in the Director's Determination, the Respondent's aircraft liability 

insurance requirements must be consistently applied, must not be arbitrary, and must be 

commensurate with insurance availability in the CNMI market. [Director's Determination, 

pg. 31] By all appearances, $2M in aircraft liability insurance is avai !able in the CNMI and 

is currently maintained by an operator at the Airport. While the sponsor is not necessarily 

required to mandate the lowest available liability insurance on the market, the sponsor must 

provide a justification for the reasonableness of the proposed higher $4M minimum 

insurance requirement for general aviation users. This is particularly relevant in light of the 

existing lower insurance amount obtained by a commercial user of the airport. The 

Respondent must also demonstrate that it has taken the necessary steps to be consistent in 

the application and interpretation of its Airport Rules and Regulations across all aircraft 

operators at the airport. 
Conclusion 

The Respondent is hereby directed to provide a detailed justification for the revised 

minimum liability insurance requirement for general aviation aircraft operators, to include 

any market research, risk-based assumptions, and/or other documents and methodologies 

sufficient to justify the Respondent's proposed corrective action. In all cases, the 

Respondent's documentary evidence must be relevant to particular risks posed by the 

conditions and operations existing at GSN and directly related to general aviation aircraft 

operations. The Respondent is also directed to identify and address the aforementioned 

discrepancies in the application of its liability insurance requirements across all types of 

operations at the airport, including aircraft similar in type to those being used by the 

Complainant. Please submit the applicable justifications and supporting documentary 

evidence within 60 days of the date of this correspondence. 

Sincerely, 

Dire or, Office of Airport Compliance 

and Management Analysis 

/iCJ/c_a,Jr- 21

1 ZDIL. 

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CERTIFICATE OF SERVICE 

I HEREBY CERTIFY that on December 22, 2016, I caused to be sent via certified U.S. 

Mail a true copy of the foregoing document addressed to: 

HIROAKI NISHIO 

P.O. BOX 5910 CHRB 

SAIPAN, MP 96950 

Complainant 

Maryann Q. Lizama 

Acting Executive Director 

Commonwealth Ports Authority 

Saipan International Airport 

P.O. Box 501055 

Saipan, MP 96950-1055 

Respondent 

Robert Tenorio Torres 

Attorney at Law 

P.O. Box 503758 CK 

Saipan, MP 96950 

Counsel to the Respondent 

Copy to: 

FAA Part 16 Airport Proceedings Docket 

FAA Airports Compliance Division, AC0-1 00 

Western Pacific Region Airports Division, A WP-600 

Honolulu Airports District Office 

Claudia Roberts 

Office of Airport Compliance 

and Management Analysis 

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