U.S. Department of Transportation Federal Aviation Administration

November 13,2014 Glenn I. Kimura Deputy Attorney General Office ofAirport Compliance and Management Analysis

Department ofthe Attorney General, State ofHawaii 465 S. King Street, Room 300 Honolulu, HI 96813 Counsel for Respondent 800 Independence Ave., SW. Washington, DC 20591

Re: FRANKHINSHAW, SKYDIVING SCHOOL, INC., d/b/a SKYDIVE HA WAil AND ISLAND SKYDIVING, LLC v. THE STATE OF HAW All (Docket No. 16-12-04) Dear Mr. Kimura: OnAugust 18,2014, the Director ofthe Office ofAirport Compliance and Management Analysis issued the Director's Preliminary Determination for the above-referenced matter preliminarily finding the Respondent to be in violation ofits federal obligations withrespect to Grant Assurance 22, Economic Nondiscrimination and Grant Assurance 23, Exclusive Rights. The Director found thatthe Respondent was not inviolation ofGrant Assurance 5, Preserving Rights andPowers. The Director's decision to issue a preliminary determination was predicated on the Director's expectation that the Respondent would submit a Corrective Action Plan (CAP) acceptable to the FAA within 30 days ofthe Determination. This CAP should clearly identify howthe Respondent will proceed to finalize and implement the HanaAirport OperatingRules andStandards resulting inimmediate aeronautical access for the Complainant. Additionally, the Respondent was directed to negotiate in good faith withthe Complainant to develop temporary parachute landing areaprocedures to allowthe Complainant to begin parachute operations at HNM during the pendency ofthe finalization ofthe OperatingRules andStandards. On September 17, 2014, the Respondent submitted the State of Hawaii's CorrectiveAction plan for FAA review and approval. The Director's review ofthe proposed corrective actions is detailed below: DIRECTIVE #1: The Director's Preliminary Determination directed the State to: "Submita CorrectiveAction Plan, acceptable to the FAA, within 30 days of the PreliminaryDetermination clearly identifyinghow the Respondent

1Now referenced by the Respondent as theHanaAirportRules for Skydiw and TransientAircraft Operations. Iwillproceedtofinalize andimplement the HanaAirport OperatingRules andStandards resulting in immediate aeronautical access for the Complainant. " [Director's Preliminary Determination, page 47] RESPONDENT'S PROPOSED CORRECTIVE ACTION: "The State will commence a rule making procedure in accordance with Section 91-3, etseq. Hawaii RevisedStatutes for the adoption of the HanaAirportRules for Skydive and TransientAircraft Operations by immediately beginning theprocessing for approvalwith the Office of the Governor, State of Hawaii, andwhich includes review by the State Departments of Budget andFinance andBusiness, Economic Development and Tourism in working towards havingpublic hearings scheduledonMaui, State of Hawaii, during the first weekof November 2014. " [State ofHawaii's Corrective Action, Page 2] DIRECTOR'S RESPONSE: The Director acknowledges that the finalization and implementation ofthe HanaAirport Rules for Skydive and TransientAircraft Operationi is subjectto a State-level regulatory process in accordance withthe Hawaii Revised Statutes. Accordingly, the Director is amenable to the Respondent's proposed corrective actions described above, including the proposed timeline for conducting public hearings inNovember 2014. However, absent from the Respondent's proposal is a timeline or schedule identifying any legislative, administrative, and/or procedural steps that may be necessary for fmalizing and implementing the Hana Airport Rules after the public hearings have occurred. As such, it is unclear to the Director the timeframe for which aeronautical access for parachuting operations atthe airport will be granted. In consideration ofthe foregoing, and inthe interest oftransparency, the Director conditionally approves the aforementioned proposed corrective action contingent upon the State providing a detailed timeframe for which the Respondent expects to finalize the HanaAirportRules. Accordingly, the Director hereby directs the Respondent to submit a comprehensive schedule of events, inclusive ofthe requisite legislative, administrative, and/or procedural steps that may be required by Hawaii state law or other mandate identifying the approval process and the projected timeframe for approval and aeronautical access. The requisite documentation mustbe forwarded to the Director no later than 15 days from the date ofthis correspondence. DIRECTIVE #2: The Director's Preliminary Determination also directed: "Additionally, shouldthe Complainant seekto beginparachute operations atHNM prior to thefinalization andimplementation of the OperatingRules andStandards, the State is directedto negotiate in good faith to develop temporaryprocedures satisfactory to both the

2 Previously referenced in the proceedings ofthis case as the HanaAirport Operating Rules andStandards. 2Respondent andthe Complainant to allow such operations. " [Director's Preliminary Determination, page 47] RESPONDENT'S PROPOSED CORRECTIVE ACTION: "In the interimpending theformal adoption of the saidHanaAirport Rules, the Stateproposes to enter into a Letter of Agreement ("LOA'') in which the Complainant agrees to abide with theproposedHanaAirport Rules thatwere developed in coordination with Complainant'sprior attorney andhelicopter operators at the HanaAirportbut further action waspendingdue to DRAFT AC 15015300-13 CHG 19 toAC 15015300- 13 Section 214 Guidancefor Parachute LandingArea. The Letter of Agreementwill require maintainingmembership in the US. Parachute Association (USP A) andhaving Complainant obtain a waiver from the USPA/or the use of the available designatedParachute LandingArea (PLA) as this area does notmeet the USP A Basic SafetyRequirements (BSR) as statedin BSR Section 2-1, paragraph I, I. The Complainant will also be required to addthe State as an additionally insured under the USP A member skydivingliability insurance and include the State in all liability waivers signedbyparticipants in the skydiving activity. The State will confirm with F AAIHNLADO for approval of the designated area within HanaAirport. Skydiving operations atHanaAirportcan commence upon receipt of the signedLOA andnotification that the said USPA waiver is grantedalong withproviding the certificate of insurance naming the State as an additionally insured" [State ofHawaii's Corrective Action, Page 2] DIRECTOR'S RESPONSE: The Director's corrective action requirement, identified above, compels the State to negotiate in good faith to develop and implementtemporary skydiving procedures in order to give the Complainant immediate aeronautical access to the HanaAirport while the State contemplates final implementation ofthe HanaAirportRules. The Director's prescriptive corrective action is in direct response to the State's protracted rulemaking process, and the State's more than 7 year delay in granting the Complainant aeronautical access to HNM in contravention ofGrant Assurance 22 and Grant Assurance 23. Uponreview, the Director concludes that the State's proposed corrective actions, identified above, were not developed in good faith withthe Complainant, nor were they developed in accordance with the State's obligations under the federal grant assurances. Specifically, the Director notes with concern, (1) the State's proposed requirement that the Complainant maintain membership inthe United States Parachute Association as a condition of aeronautical access to HNM, (2) the State's proposedrequirement that the Complainant obtain a waiver from the USPA for use ofthe proposed drop zone at HNM,( 3) the State's requirement that the State be named as an additionally insured under a USPAmember skydiving liability

3insurance policy, and (4) the State's request thatthe FAAIHNL ADO approve the designated parachute drop zone (PDZ) within Hana Airport. The Director's analysis ofthese components of the proposed corrective actions is explained inpertinent detail below. 1. Requirement that the Complainant maintains membership in the United States Parachute Association as a condition ofaeronautical access to HNM. As detailed inthe Director's Preliminary Determination, Grant Assurance 22 requires an airport sponsorto operate the airport for the use and benefit ofthe public and to make it available to all types, kinds, and classes ofaeronautical activity on fair and reasonable terms, and without unjust discrimination. FAA Order 5190.6B clearly defmes parachute activities as an aeronautical activity. 3 As such, an airport sponsor may not condition aeronautical access to a federally-obligated airport on the aeronautical user's voluntary membership (or lack thereof) in an advocacy group such as the United States Parachute Association (USPA). While a sponsor has the proprietary right to develop airport rules or minimum standards pertaining to the conduct ofparachute operations onto its airport, such rules or standards, temporary or otherwise, must be developed in a not unjustly discriminatory manner and must be in compliance with the sponsors federal grant obligations. The Director concludes that the State's proposed mandatory requirement that the Complainant obtain/maintain membership in the USPA inorder to gain aeronautical access to a federally-obligated airport to be contrary to Grant Assurance 22, Economic Discrimination. The Director also believes that itis pertinent to point out that the FAA, not the USPA, promulgates regulations, rules, orders, circulars, and other official publications pertaining to airport, aircraft, and airspace operations under the statutory authority granted to itunder 49 United States Code (USC) § I06. Specifically, 14 Code ofFederal Regulation (CFR) Part 91, General Operating andFlightRules, 14 CFR Part 119, Certification: Air Carriers and Commercial Operators, and 14 CFR 105, Parachute Operations provide the regulatory framework for which parachute operations withinthe national airspace system must be conducted, including onto airports. Additionally, FAA Advisory Circular 1 05-2E, Sport Parachutingprovides suggestions to improve sport parachuting safety and disseminates information to assist all parties associated with on-airport parachuting operations. While the FAA, to date, has not issued parachute drop zone siting or dimensional standards to be used by federally-obligated airports, the absence ofany such standards does not give an airport sponsor the ability to require the Complainant to adhere to USPA Basic Safety Requirements (BSR) in order to gain access to the Airport. The USPA's BSR's are considered best practices for skydiving operators and participants; however, the BSRs are not FAAsanctioned safety standards andtherefore cannotbe required as condition ofaccess to the airport. The Director also concludes that the State's proposed corrective actions were not developed in good faith with the Complainant, as was directed. Accordingly, the proposed corrective action described and evaluated above is not approved by the Director due to the inherent unjustly discriminatory nature ofthe State's requirements.

3 FAA Order 5190.68, Appendix Z at 314 42. Requirement that the Complainant obtain a waiver from the USPA for use ofthe proposed drop zone at HNM. In the analysis ofissue 

### # 1 above, the Director found that requiring the Complainant to maintain membership inthe USPA in order to gain aeronautical access to the Hana Airport to be unjustly discriminatory and therefore not in compliance with the State's federal grant assurances. Accordingly, the State's requirement that the Complainant obtain a waiver from the USP A for the use ofthe proposed drop zone at HNM is considered a mootpoint and therefore not an approved corrective action in accordance with the federal grant assurances and the prescriptive requirements ofthe Director's Preliminary Determination. 3. Requirement that the State be named as an additionally insured under a USPA member skydiving liability insurance policy. In the analysis ofissue #1above, the Director found that requiring the Complainantto maintain membership inthe USPA in order to gain aeronautical access to the HanaAirport to be unjustly discriminatory and therefore not in compliance with the State's federal grant assurances. Accordingly, the State's requirement that the Complainant name the State as an additionally insured under a USPA member skydiving liability insurance policy is considered to be a mootpoint and therefore is not an approved corrective action in accordance with the federal grant assurances and the prescriptive requirements ofthe Director's Preliminary Determination. However, the Director affirms that the State, as the proprietor ofthe HanaAirport, may exercise its proprietary rightto require general liability insurance on aeronautical tenants of the airport, as well as the proprietary right to be named as an additionally insured on such insurance policies. The Director cautions that minimum insurance requirements must notbe unjustly discriminatory and the amounts ofcoverage should be reasonably consistent with other similarly situated airport tenants. The Director also affirms that the State may exercise its proprietaryrightto require the Complainantto include the State inany or all liability waivers signed by skydiving participants.4 4. The State will confirm with FAAIHNL ADO the approval ofthe designated area within Hana Airport. The FAA does not formally approve or disapprove ofproposed PDZ siting or dimensional standards at airports. As discussed in detail inthe Director's Preliminary Determination, four ( 4) safety risk evaluations were conducted bythe FAA Flight Standards and/or the FAA Air Traffic Organization onthe proposed skydiving operations into Hana Airport. In each instance, the FAA concluded that the Complainant'sproposed skydiving operation at Hana Airport can be conducted safely with proper coordination, commuuication, and airport operational procedures in place. Accordingly, it is the airport sponsor's responsibilityto designate the PDZ and to develop airport rules and regulations governing the safe and

4 The Director encourages the parties to leverage the existing tenant/sponsorrelationship established through the Complainant's existing commercial skydiving operations at Upolu and Dillingham airports to develop a tenable commercial skydiving lease/use agreement at Hana Airport. 

### 5efficient integration ofthe PDZ into the overall airport operation in a manner that is reasonable and not unjustly discriminatory to the parachute operator. CONCLUSION: 

### I. The Director conditionally approves ofthe State's corrective actions identified in Directive #1 

### above.
Inthe interest oftransparency, the Director's conditional approval is contingent upon the State providing (1) a detailed timefrarne for which the Respondent expects to finalize the HanaAirportRules and (2) a comprehensive schedule ofevents, inclusive ofthe requisite legislative, administrative and/or procedural steps that maybe required by Hawaii state law or other mandate identifying the totality ofthe approval process for whichthe HanaAirport Rules will be subjected, and the projectedtimefrarne for approval and aeronautical access. The requisite documentation must be forwarded to the Director no later than 

### 15 days from the date ofthis correspondence.
2. 

### The Director does not approve the State's proposed corrective actions in Directive #2 above. The Director's Preliminary Determination specifically directed the State to negotiate in good faith to develop temporary skydiving procedures satisfactory to both the Respondent andthe Complainant to allow commercial skydiving operations to take place at HNM during the pendency ofthe State's bureaucratic rulemaking process. Instead, the State acted to develop proposed temporary procedures that are not consistent with the State's federal grant obligations and the Director's Preliminary Determination. More specifically, the Director does not concur with:

a. The State's proposed requirement thatthe Complainant maintain membership in the United States Parachute Association as a condition ofaeronautical access to HNM; b. The State'sproposed requirement thatthe Complainant obtain a waiver from the USP A for use ofthe proposed drop zone at HNM, and;

c. The State's requirement that the State be named as an additionally insured under a USPA member skydiving liability insurance policy. The Director concludes that the State's proposedrequirement thatthe Complainant obtain/maintain membership in the USPA in order to gain aeronautical access to a federallyobligated airport to be contrary to Grant Assurance 22, Economic Discrimination, as more fully described above. Consequently, the Director once again directs the State to negotiate in good faith, withthe Complainant's active participation, to develop temporary parachuting procedures to allow the Complainant immediate aeronautical access to the Hana Airport. Suchtemporary procedures mustbe in compliance with the State's federal grant obligations, including the requirement

6that the State operate the airport for the use and benefit ofthepublic and to make it available to all types, kinds, and classes ofaeronautical activity on fair and reasonable terms, and without unjust discrimination in accordance with Grant Assurance 22. Please note, it will notbe necessary to obtain the Director's direct approval ofthe temporary procedures priorto the start ofthe Complainant's commercial skydiving operation since the Director expects the procedures to be developed to the satisfaction ofboth the State and the Complainant and in compliance with the sponsor's federal obligations. The Director cautions the State thatprotracted correspondence ornegotiations withthe Complainant in developing the temporaryprocedures can be construed as additional unreasonable delay and could result in the Directorinitiating action to withhold the processing ofthe State ofHawaii's applications for Airport Improvement Program discretionary grants under 49 U.S.C. §47115 and general aviation airport grants under49 U.S.C. §47114(d).
Sincerely,

Randall S. Fiertz Director, Office ofAirport Compliance and Management Analysis 

## Nw. 

## 1), 2.. 

### oly Date

7CERTIFICATE OF SERVICE 

### /:l-- I HEREBY CERTIFY that on 

# f31 /{0</, 2014, I placed in the United States mail (first class, postage paid) a true copy ofthe foregoing document addressed to: For Complainant Frank Hinshaw Skydiving School Inc.,

d/b/a Skydive Hawaii PO Box 75520 Honolulu, Hawaii, 96836 Richard 

### J. Durden Attorney at Law 27987 Richmond Hill Road Conifer, CO 80433 ForRespondent Glenn I. Kimura Deputy Attorney General Department ofthe Attorney General, State ofHawaii 465 S. King Street, Room 300 Honolulu, HI 96813 Copy to: FAA Part 16 Airport Proceedings Docket Office ofAirport Compliance and ManagementAnalysis FAAWestern Pacific Region Honolulu Airports District Office



# &ct:;j::-~ Claudia :oberts·· Office ofAirport Compliance and Management Analysis

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