Via Electronic Filing

Office of Chief Counsel

Attention FAA Part 16 Airport Proceedings Docket DOCKET NO. 16-13-08

AGC-610

Federal Aviation Administration

800 Independence Avenue, SW

Washington, DC 20591

Email: 9-AWA-AGC-Part-16@faa.gov

David R. Guin, Esq.

Batton & Guin

P.O. Box 603

107 S. Main Street

Louisburg, NC 27549

Email: BGLAWNC@gmail.com

Counsel for Respondent

Communications with respect to this document should be sent to:

John R. Copley, Esquire

GAROFALO GOERLICH HAINBACH, P.C.

1200 New Hampshire Avenue, NW

Suite 800

Washington, DC 20036

Email: jcopley@ggh-airlaw.com

Counsel for Complainant

REPLY TO ANSWER OF RESPONDENT

Pursuant to Section 16.23 of the Federal Aviation Regulations (“FARs”), KNIGHTDALE 

AIRPORT, INC. and CARLINA, INC. (“Complainant”) file this REPLY to the ANSWER TO 

COMPLAINT filed by the COUNTY OF FRANKLIN, NORTH CAROLINA, (“Respondent”) on 24 

January 2014 (“Answer”).

Attempts at Resolution

As stated in the FAR Part 16 Complaint filed by Complainant docketed on 13 December 2013 

(“Complaint”), Complainant has on a number of occasions sought to initiate and engage in good faith 

efforts to resolve the disputed matter informally with the Respondent. Respondent alleges in the 

Answer that such efforts did not involve discussions of grant assurance violations, but related to “the 

1
terms of a lease and allegations of breaches, negotiations, termination, and remedy,” and therefore do 

not constitute an “attempt at pre-complaint resolution of purported grant agreement violations.” See

Answer at 1-2. FAR Section 16.21(b)(1) requires simply that a complainant have made “substantial 

and reasonable good faith efforts to resolve the disputed matter informally prior to filing the 

complaint.” There is no requirement that a complainant and respondent seek to determine or discuss 

whether any specific grant assurance has or has not been violated. Such a determination is the very 

purpose of the complaint process under FAR Part 16. 

In promulgating FAR Section 16.21, the FAA avoided imposing any specifics on the type of 

dispute resolution procedure, noting that “the final rule does not require any particular information 

resolution method” and only requires that a “complainant must show that dispute resolution was 

attempted.” Rules of Practice for Federally-Assisted Airport Proceedings, 61 Fed. Reg. 53998, 53999 

(October 16, 1996) attached as EXHIBIT 1. There is no requirement in FAR Section 16.21 that in 

seeking a resolution of a dispute that the Complainant have engaged the Respondent in specific 

discussions of grant assurance violations, only that the Complainant have sought resolution of the 

disputed matter at issue in the Complaint. The FAA recognized in promulgating FAR Part 16 that 

imposing specific legal or procedural requirements on pre-complaint dispute resolution would, as noted

by a commenter in the the preamble to the final rule, “be inappropriate to complaints filed by general 

aviation and add to the costs and time to arrive at resolution” without providing any added benefit. Id. 

The only requirement is that the Complainant have sought to resolve informally the matter at dispute 

that is the subject of the Complaint. This the Complainant has done on numerous occasions.

The Respondent's assertion in the Answer that “[t]here has been no correspondence regarding 

the alleged FAR Part 16 violations and no attempt to identify or address such concerns” is incorrect. 

Prior to filing the Complaint, Complainant did specifically indicate to Respondent that it considered 

2
that there were grounds for filing a FAR Part 16 complaint based on violations of grant assurances 

number 22 and number 23. On 30 April 2013, Complainant, through Jerry Meek, its Litigation 

Counsel, provided Counsel for Respondent with a detailed memorandum drafted by Counsel for 

Complainant explaining the basis for a FAR Part 16 complaint in detail and offered to engage 

Respondent in formal mediation on the matter. See Email from Litigation Counsel to Counsel for 

Respondent dated 30 April 2013 attaching a memorandum from Counsel for Complainant describing in

detail the grant assurance violations, attached hereto as EXHIBIT 2. As result of such communication 

a meeting was arranged between Respondent and Complainant. Counsel for Complainant was then 

made available to Respondent for discussion regarding the specifics of the grant assurance violations at

the meeting held at the offices of Respondent on 13 August 2013, although Respondent chose not to 

engage Complainant in addressing the grant assurance violation. Further communication between 

Litigation Counsel and Counsel for Respondent occurred on 26 August 2013 in which Counsel for 

Respondent indicated that Respondent was aware of Complainant’s intent to file a FAR Part 16 

complaint and Respondent would meet “to consult with an aviation attorney re grant assurances etc.;” 

however, the Respondent failed to provide any offer to address the grant assurance issues raised. See

Email from Litigation Counsel to Counsel for Respondent dated 26 August 2013 attached hereto as 

EXHIBIT 3.

Moreover, Complainant has throughout its negotiations with Respondent pointed out the 

discriminatory nature of Respondent's actions and sought redress thereof, even if specific grant 

assurances or FARs were not cited. In the letter from Complainant to Respondent dated March 31, 

2006, attached as Exhibit 3 to the Answer, Complainant specifically expressed its worry that the 

Respondent was not going to provide FBO services at the same standard as Complainant had been 

required. For example, Complainant noted in the 31 March 2006 letter that Respondent was choosing 

3
“to operate the airport without . . . standard equipment” that Complainant had used and offered to sell 

to Respondent. The Complainant further expressed its worry as to whether the Respondent would and 

was “prepared for” the responsibility of operating the airport at the same standard as Complainant, 

noting that Complainant had “done everything in [its] power to insure that” Respondent could continue 

with the high standards of Complainant. While Complainant may have complied with Respondent's 

insistence in relinquishing the premises, it did so with the implicit good faith assumption that the 

standards Respondent had imposed on Complainant were standards to be imposed on any FBO 

operating the premises, which proved to be an incorrect assumption and resulted in the discriminatory 

treatment of Complainant.

Subject Matter Of Complaint Is Within The Jurisdiction Of FAR Part 16

 Respondent argues in the Answer that the matters discussed in the Complaint are not within the

FAA's jurisdiction under FAR Part 16. The fact that part of the matter disputed, the Respondent's 

imposition of the requirement to build hangars and removal of Complainant and termination of 

Complainant's lease for failure to do so, is also part of a contract dispute does not remove the allegation

of discriminatory action by Respondent for failure to impose the same standards upon itself from 

jurisdiction under FAR Part 16. 

In the Letter from Respondent to Complainant of September 7, 2005, cited in the Answer as 

Exhibit 1, Respondent specifically cites Complainant's “failure to complete construction of the Thangars and Corporation hangar” and failure to meet the “deadlines imposed by the amendments to the 

Agreement” as the primary basis for removing Complainant from the airport premises. This forms the 

basis for the discriminatory action by Respondent. However, the issue posed by the Complaint is not 

whether the amendments which imposed the requirements were valid under State law, but whether 

Respondent's imposition of such requirements on Complainant without imposing the same 

4
requirements on itself violates grant assurances. As noted in the Complaint, Respondent, once in 

possession of Complainant's premises, did not attempt to meet such construction deadlines and simply 

failed to undertake such construction or impose upon itself the same high and economically unrealistic 

standards being imposed on Complainant.

There is no reason that the FAA should dismiss a complaint simply because the dispute also 

involves a parallel contractual dispute. In at least one instance of a FAR Part 16 complaint involving 

related contractual disputes, the FAA noted that complaints may be comprised of pleadings “submitted 

in court proceedings in other venues, including . . . State Court and United States District Court, where 

action is still pending.” JetWay Aviation Inc. v. Montrose County, Colorado and the Montrose County

Building Authority, FAA Docket 16-08-01 at 4 (DD July 2, 2009) attached hereto as EXHIBIT 4. In 

such case, where there may be specifically contractual law claims, the FAA need not “find facts on 

various questions indirectly related to matters under FAA's jurisdiction,” but instead “as is appropriate 

for a FAA Part 16 investigation, the Director must focus on questions of the Respondent's compliance 

with its grant assurances and Federal law.” Id. at 15. The FAA's task is to review the issues that 

“pertain to the question of the Respondent's compliance with its Federal obligations, relying on FAA 

law, policy and Part 16 precedent.” Id. Thus, the fact that there is a contractual dispute between 

Complainant and Respondent and the contractual issues may be relevant both in State court litigation as

well as the FAR Part 16 Complaint does not prevent or prohibit the FAA from reviewing issues raised 

by Complainant regarding the Respondent's compliance with grant assurances. 

The FAA is not being asked to decide whether there was a contractual violation contrary to State

law, but whether the Respondent's actions, which may or may not include a contractual termination 

contrary to requirements under State law, violate a grant assurance. As pointed out in the Complaint, to

the extent the Respondent has violated one of the grant assurances with regard to its treatment of 

5
Complainant, it is subject to the jurisdiction of the FAA to enforce such grant assurances. Final 

Decision and Order, Centennial Express Airlines v. Arapahoe County Public Airport Authority, FAA 

Docket No. 16-98-05 (February 18, 1999) attached as EXHIBIT 5. The issue posed by the 

Complaint, whether Respondent violated grant assurance number 22, regarding Economic 

Nondiscrimination, and grant assurance 23 regarding exclusive right, is precisely within the jurisdiction

of the FAA under FAR Part 16.

The Complaint Does Establish Violations Of Grant Assurances 22 and 23

Respondent alleges in the Answer that the Complainant's action is based on a faulty premise that

the Respondent is the only FBO on the field. However, the Complaint specifically acknowledges that 

there a number of companies that act as partial FBO's on the field providing services such as flight 

instruction, skydiving, aircraft sales and aircraft maintenance. However, as noted in the Complaint, 

Respondent “has retained for itself the primary functions previously performed by Complainant of fuel

sales and hangar rental, such that the [Respondent] has, in effect, chosen to become and remain the sole

FBO” engaged in the same aeronautical activity as Complainant. Moreover, because the other FBOs 

on the field do not provide hangar and fuel, none have been required to undertake the same type of 

obligations that were imposed on Complainant by Respondent. The fact that there are other FBOs on 

the field does not affect the principle that Respondent is in violation of grant assurance 23, regarding 

exclusive right, and grant assurance 22, regarding economic nondiscrimination.

Respondent further alleges that the terms of the lease with Complainant were negotiated at arms

length and therefore the Respondent could enforce its rights thereunder and thereafter modify 

construction plans for hangars. The Complainant does not dispute that the Respondent has the right to 

negotiate terms and conditions with FBO's on the field and to enforce its legal rights and remedies 

under such negotiated terms (although Complainant is contesting whether the Respondent in fact did so

6
in this instance in a separate State Court filing). What the Complainant alleges in the Complaint is that 

once the Respondent develops and imposes economic terms and conditions for an FBO, all other FBOs,

and in particular Respondent itself, if it chooses to engage in the same FBO activities, must be subject 

to those same economic terms and conditions as were applied to Complainant. Failure to do so is a 

failure to make the airport available on reasonable terms and an unjust discrimination against 

Complainant in favor of Respondent itself. Moreover, such action creates an impermissible exclusive 

right, by in practice denying access to the field to Complainant and other qualified parties.

While Respondent alleges that it has actively sought other companies to compete or replace its 

current provision of FBO services, no such company is in fact on the field. Complainant is unaware of 

of any bidding processes that the Respondent may have initiated for FBO services, or what other 

companies may or may not have come forward soliciting to provide such services. However, 

Complainant is not willing to assume such responsibilities again under terms and conditions that do not

provide remedy and relief from the discriminatory practices of Respondent alleged in the Complaint. 

Developing such remedy and relief is the purpose of filing the Complaint.

In summary, Complainant over a period of years has been in negotiations with the Respondent 

to resolve the dispute that is the basis for the complaint. The Complaint is within the FAA's 

jurisdiction under FAR Part 61 as it does not ask the FAA to decide contractual issues under State law, 

but decide whether the Respondent has violated its grant assurances. Lastly, the Complaint does state 

and establish Respondent's violation of both grant assurance 23, regarding exclusive right, and grant 

assurance 22, regarding economic nondiscrimination, due to its failure to apply requirements equally to

Complainant and to itself for the provision of the same aeronautical activities.

7
Respectfully submitted,

John R. Copley, Esquire

GAROFALO GOERLICH HAINBACH, P.C.

1200 New Hampshire Avenue, NW

Suite 800

Washington, DC 20036

(202) 776-3970

AS COUNSEL FOR COMPLAINANT

8
Certification of Service in accordance with Section 16.15

I hereby certify that I have this 3rd day of February 2014 served the foregoing FAR Part 16 Reply to 

Answer to Complaint of KNIGHTDALE AIRPORT, INC. and CARLINA, INC. on the following 

persons at the following addresses electronically:

Office of Chief Counsel

Attention FAA Part 16 Airport Proceedings Docket

AGC-610

Federal Aviation Administration

800 Independence Avenue, SW

Washington, DC 20591

Email: 9-AWA-AGC-Part-16@faa.gov

and 

David R. Guin, Esq.

Batton & Guin

P.O. Box 603

107 S. Main Street

Louisburg, NC 27549

Email: BGLAWNC@gmail.com

Counsel for Respondent

Dated this 3rd day of February 2014.

John R. Copley, Esquire

GAROFALO GOERLICH HAINBACH, P.C.

1200 New Hampshire Avenue, NW

Suite 800

Washington, DC 20036

(202) 776-3970

9
53998 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 13 and 16

[Docket No. 27783; Amendment No. 13–27,

16]

RIN 2120–AF43

Rules of Practice for FederallyAssisted Airport Proceedings

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This rulemaking establishes

rules of practice for filing complaints

and adjudicating compliance matters

involving Federally-assisted airports.

The rule addresses exclusively airport

compliance matters arising under the

Airport and Airway Improvement Act

(AAIA) of 1982, as amended; certain

airport-related provisions of the Federal

Aviation Act of 1994, as amended; the

Surplus Property Act, as amended;

predecessors to those acts; and

regulations, grant agreements, and

documents of conveyance issued or

made under those acts. The rule is

intended to expedite substantially the

handling and disposition of airportrelated complaints.

EFFECTIVE DATE: This rule is effective

December 16, 1996.

FOR FURTHER INFORMATION CONTACT:

Barry Molar or Frank J. San Martin,

Airports Law Branch (AGC–610), Office

of the Chief Counsel, (202) 267–3473,

Federal Aviation Administration,

(FAA), 800 Independence Avenue, SW.,

Washington, DC 20591.

SUPPLEMENTARY INFORMATION:

Background

A notice of proposed rulemaking

(NPRM) for this rulemaking was issued

on June 9, 1994 (59 FR 29880). The

NPRM proposed to amend the FAA’s

existing complaint and adjudication

procedures, 14 CFR Part 13,

‘‘Investigative and Enforcement

Procedures,’’ to remove from the

coverage of part 13 the airport-related

matters that will be handled under the

new part 16. Certain disputes between

U.S. and foreign air carriers and airport

proprietors concerning the

reasonableness of fees imposed by

airport proprietors are not covered by

the rule, but by 14 CFR part 302, subpart

F, pursuant to section 113 of the Federal

Aviation Act of 1994 (FAAct), Public

Law No. 103–305 (August 23, 1994), 49

United States Code (U.S.C.) 47129.

On September 16, 1994, the FAA

published a notice to withdraw subpart

J of the proposed rule, subpart J

contained special procedures for

handling airport fee complaints by air

carriers [59 FR 47568]. The withdrawal

became necessary with the passage of

section 113 of the FAA Act, which

contained specific provisions for airport

fee complaints by air carriers that

differed from, and were inconsistent

with, subpart J. The withdrawal notice

also extended the comment period for

the remainder of the NPRM, subparts A

through I, to December 1, 1994 [59 FR

47568]

Discussion of Comments

Sixteen commenters responded to the

NPRM. Commenters included the Air

Freight Association; Air Line Pilots

Association (ALPA); Air Ottawa Flying

Service, Inc.; Aircraft Owners and Pilots

Association (AOPA); Airports Council

International-North America (ACI–NA);

American Car Rental Association

(ACRA); Hawkins, Delafield & Wood;

Hogan & Harston; Maryland Aviation

Administration; Melbourne Airport

Authority; National Association of State

Aviation Officials (NASAO); National

Business Aircraft Association, Inc.

(NBAA); National Air Transportation

Association (NATA); Newton &

Associates, Inc. (NAI); Regional Airline

Association (RAA); and the United

States Parachute Association (USPA).

Seven commenters generally support

the promulgation of the proposed rule

with some reservations. The remaining

commenters address specific sections of

the proposed rule.

A discussion of the issues most

widely addressed in the comments and

an analysis of the final rule follows. All

comments received were considered by

the agency. The summary of comments

is intended to represent the general

divergence or correspondence in

industry views on various issues, and is

not intended to be an exhaustive

restatement of the comments received.

Comments pertaining to withdrawn

subpart J will not be addressed.

Standing

A number of commenters address

issues concerning who should be able to

file a complaint under new part 16.

ACI–NA strongly supports limiting a

complainant to a person ‘‘directly and

substantially affected by any alleged

non-compliance,’’ under proposed

§ 16.23. Otherwise, ACI–NA argues,

proceedings could be initiated by

persons making only minimal use of an

airport, burdening both the respondent

and the FAA with the time and expense

of administrative proceedings. AOPA

states it is concerned that, under

proposed § 16.23, an association would

not have standing to file a complaint on

behalf of its individual members. ACRA

requests clarification that a

nonaeronautical user of an airport, such

as a car rental company, could file a

complaint under part 16.

The final rule adopts the ‘‘directly

and substantially affected’’ standard of

the NPRM, with a special applicability

provision for cases where review

diversion is alleged. Under § 16.23(a) of

the final rule, a person directly and

substantially affected by any alleged

noncompliance may file a complaint

with the Administrator. Under § 16.3 of

the final rule, a ‘‘complaint’’ is defined

as ‘‘a written document * * * filed with

the FAA by a person directly and

substantially affected by anything

allegedly done or omitted to be done

* * * in contravention of any provision

of any Act, as defined in this section.’’

Complaints by persons not ‘‘directly and

substantially affected’’ by respondent’s

alleged noncompliance will be subject

to dismissal with prejudice under part

16.

Persons alleging revenue diversion by

an airport, as defined in 49 U.S.C.

47107(b), that do business with, and pay

fees or rents to, the airport, are

considered in the final rule to be

directly and substantially affected by

the alleged revenue diversion for the

sole purpose of having and standing to

file a revenue diversion complaint

under Part 16. This special applicability

provision for complaints of revenue

diversion is necessary because revenue

diversion principally affects the United

States as the grantor of the federal

airport funds allegedly diverted.

However, entities that do business on

the airport and pay fees to the airport

have some interest in alleging revenue

diversion because their payments

constitute airport revenue.

An association will have to meet the

same ‘‘directly and substantially

affected’’ standing requirement

individually, but will be able to file a

part 16 complaint as a representative of

its members who are ‘‘directly and

substantially affected’’ by an act or

omission of respondent.

The standing requirement is necessary

to assure that scarce agency resources

are devoted to matters in which the

complainant’s interest is sufficient to

justify the burden of processing a

complaint under part 16. Parties who

meet part 16 standing requirements may

be represented by duly authorized

representatives.

Nonaeronautical users of airports are

subject to the same ‘‘directly and

substantially affected’’ standard as

aeronautical users, and could forseeably

have standing to file a complaint under
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 53999

part 16. For example, an airport dutyfree shop could have standing to file a

part 16 complaint alleging revenue

diversion, and an airport concession

that is a disadvantaged business

enterprise (DBE) could have standing to

file a part 16 complaint alleging noncompliance with the applicable DBE

regulation. However, most of an

airport’s obligations are intended for the

benefit of aeronautical users. A

complaint alleging that an airport

operator’s treatment of a

nonaeronautical user violates such

obligation would be dismissed even

though the nonaeronautical user was

directly and substantially affected by

the alleged practice. For example, the

assurance against unjust discrimination

by an airport operator only applies to

aeronautical users, so a complaint by a

nonaeronautical user alleging unjust

discrimination by an airport operator

would be dismissed.

Notwithstanding, the standing

requirement, complaints that are

dismissed because complainant lacks

standing under Part 16 may be referred

by the FAA to the appropriate FAA

region for consideration under Subpart

D, Special Rules Applicable to

Proceedings Initiated by the FAA.

Pre-complaint Resolution

Most commenters approve of the

proposed requirement in § 16.21, that a

person engage in good faith efforts to

informally resolve a disputed matter,

directly with the person or entity in

alleged noncompliance, before filing a

complaint. ACI–NA supports the

proposed rule but is concerned that the

mention of ‘‘mediation, arbitration, or

use of a dispute resolution board’’ in

§ 16.21 will be interpreted to mean that

such alternative dispute resolution

(ADR) methods are mandatory. AOPA

suggests that the requirement to

undertake informal resolution before

filing a complaint would be

inappropriate to complaints filed by

general aviation and add to the costs

and time to arrive at resolution. USPA

states that part 16 would not permit

contact with the FAA at the local level

for assistance.

Under § 16.21 as adopted, it will be

necessary for a potential complainant to

certify that good faith efforts have been

made to achieve informal resolution.

However, the final rule does not require

any particular informal resolution

method, and mentions mediation,

arbitration, and dispute resolution board

as examples only. The final rule has

been changed to add that the local FAA

Airport District Office (ADO), or FAA

Regional Airports Division, may be

asked by the parties to assist them in

resolving the dispute informally. That

change is intended to make the local

airports office available to mediate a

dispute, and reflects the FAA’s

experience. In many cases, the

involvement of the FAA ADO or

regional airports division can facilitate

informal resolution. Allegations of

revenue diversion, however, may not

lend themselves to full resolution in the

pre-complaint process unless the

proposed resolution addresses the total

amounts allegedly diverted by the

airport. Nevertheless, a complainant

must show that informal resolution was

attempted.

Hearing

Section 16.31(d) provides the

respondent with the opportunity for a

hearing if the initial determination finds

the respondent in noncompliance and

proposes the issuance of a compliance

order and an opportunity for a hearing

required by statute. In all other cases no

opportunity for a hearing is provided,

except at the discretion of the agency.

The law firm of Hogan & Hartson

proposes a fact-finding hearing before

the initial determination is issued in

order to develop the factual record. This

recommendation is not adopted in the

final rule.

Before issuing the initial

determination, the FAA engages in the

process of investigating a complain.

While complainants are entitled to

having their complaints investigated,

they do not have a property interest

sufficient to require an oral evidentiary

hearing as part of that investigation,

even when the investigation leads to a

dismissal of a complaint.

A respondent may be entitled to a

hearing in some cases before the FAA

takes adverse action. However,

§ 16.31(d) provides an opportunity for a

hearing in those cases after the initial

determination is made and before any

final agency action is taken. There is no

need to provide a respondent with an

additional oral evidentiary hearing

during the investigatory stage.

Furthermore, the factual record will be

developed by the supporting documents

that are required to be submitted with

each pleading under § 16.23, an by any

additional information submitted by the

parties or developed through informal

investigation under § 16.29.

Several commenters argue that,

contrary to § 16.203(b)(1), which

provides in the NPRM that the

respondent and the agency are the only

parties to the post-initial determination

hearing, the complainant should also be

a party to the hearing. The NBAA argues

that a complainant should be a party to

the hearing because the complainant’s

participation will help develop the

record of the case. NATA and Air

Ottawa Flying Service, Inc., argue that

nonhearing party status for a

complainant deprives the complainant

of due process of law because the

complainant may have property

interests at stake.

The final rule revised § 16.203(b)(1) to

allow complainant to be a party to a

hearing along with the respondent and

the agency. Under § 16.31(d), a case

proceeds to a hearing only after the FAA

has found against the respondent in an

initial determination that proposes the

issuance of a compliance order. Thus, at

the hearing the FAA has the burden of

proof to establish the validity of its

initial determination, including the

proposed order of compliance under

§ 16.109. The respondent is a party to

the hearing who seeks reversal of the

FAA’s initial determination. Although, a

complainant’s status as an airport user

alone does not give rise to a sufficient

property interests to justify party status

as a matter of right, party status for the

complainant will permit it to have an

opportunity to assist in the development

of the factual record as pointed out by

NBAA. In addition, providing automatic

party status will avoid burdening the

hearing officer and parties with routine

requests for intervention by

complainant. The rule provides the

hearing officer with ample powers to

control the conduct of the hearing and

to assure that complainant’s

participation does not unduly delay the

proceedings.

As noted in the NPRM, in the case in

which an adjudicatory hearing would be

held (under § 519 of the AAIA or § 1002

of the FAA Act), the hearing procedures

are intended to permit the FAA to

complete compliance hearings within

180 days, while assuring that a

respondent receives a fair hearing and

an opportunity to present evidence and

argument to support its position.

Section 519 specifies that the FAA may

temporarily withhold new grants.

Several commenters object to

proposed § 16.3 which provides that the

part 16 hearing officer is an attorney

designated by the FAA. They state that

the proposed provision gives the

appearance and possibility of

nonobjectivity. NBAA suggests that

hearing officers be administrative law

judges.

The commenters’ concerns about the

independence and objectivity of an FAA

designated hearing officer are

misplaced. Under the terms of § 16.3, no

FAA attorney in the region where the

noncompliance allegedly occurred, or in

the Airports and Environmental Law
54000 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

Division, may be a hearing officer. This

excludes all FAA attorneys who could

have access to factual knowledge of a

part 16 complaint obtained by means

other than the administrative record,

insures that the hearing officer is

independent of the offices that conduct

investigations and prosecutions, and

insures that the hearing officer is

objective and independent.

Further, section 519 by its terms

requires the FAA to provide notice and

‘‘an opportunity for hearing’’ before

imposing certain sanctions. The simple

requirement for a hearing, without

more, has been held not to constitute

‘‘an adjudication required by statute to

be determined on the record after

opportunity for an agency hearing,’’

within the meaning of section 554 of the

Administrative Procedure Act (APA).

See, e.g., Friends of the Earth v. EPA,

966 F.2d 690, 693 (D.C. Cir. 1992); St.

Louis Fuel and Supply Co., Inc. v. FERC,

890 F.2d 446, 448 (D.C. Cir. 1989).

Accordingly, part 16 is not required by

the APA to include all of the provisions

of sections 554, 556 and 557 of the APA.

In particular, the requirement that

administrative law judges serve as

hearing officers does not apply.

In the interests of assuring a fair

hearing, however, part 16 includes

many of the elements required by

sections 554, 556 and 557 of the APA.

For example, the hearing officer is

required to issue an initial decision; ex

parte communications are prohibited;

separation of the prosecutorial and

decision-making functions are required;

and the hearing officer has virtually all

of the authority specified in section

556(c).

Intervention

AOPA and NBAA comment that the

intervention provisions of § 16.207 are

too restrictive and give the hearing

officer too much discretion in admitting

a new party to a hearing. As explained

earlier, a part 16 hearing is to a large

extent a proceeding in which the FAA

acts as a prosecutor seeking an order of

compliance under § 16.109 against

respondent within the statutory time

limits for issuing such actions.

Furthermore, complainant will under

the final rule be a party to the hearing.

For these reasons, intervention in such

a proceeding should only be allowed if

it will not unnecessarily broaden the

issues, or cause delay, and, if the person

requesting intervention has interests

that need to be protected.

Analysis of the Provisions of the Final

Rule

After careful review of the available

data, including the comments received,

the FAA has determined to adopt this

proposed rule with the changes

described previously.

Subpart A—General Provisions

Subpart A includes provisions of

general applicability to proceedings

brought under part 16, definitions of

terms used in the regulation, and a

provision on separation of functions.

The final rule modifies proposed

§ 16.1(a) to exclude from the coverage of

part 16 disputes between U.S. and

foreign air carriers and airportproprietors concerning the

reasonableness of airport fees now

covered by 14 CFR part 302, as

mandated by Congress in the FAA Act,

Public Law No. 103–305 (August 23,

1994).

Proposed § 16.1(d) is modified to

specify that part 16 applies to

investigations initiated by the FAA, as

well as complaints filed with the FAA

on or after the effective date of the rule.

The definitions in § 16.3 are, for the

most part, derived from the definitions

of like or similar terms in 14 CFR part

13. The term ‘‘agency employee’’

defined as any employee of the

Department of Transportation, was

added to indicate that other offices

within the Department of

Transportation may assist the FAA in

part 16 cases.

The title of ‘‘Assistant Administrator

for Airports’’ in the definitions section

and throughout the text of the rule has

been changed in the final rule to

‘‘Associate Administrator for Airports’’

to reflect the correct title for this FAA

official, as changed by a recent agency

reorganization.

The term ‘‘Director,’’ defined as the

Director of the Office of Airport Safety

and Standards, was added to the

definitions section and to the text of the

rule. The ‘‘Director’’ replaces the

‘‘Assistant Administrator’’ as the

decisionmaker of the initial

determination without a hearing under

§ 16.31, as discussed more fully herein.

Although not technically incorrect,

the term ‘‘FAA decisionmaker’’ was

deleted from the definitions section and

text of the final rule because the term is

unnecessary. Deletion of the term

should avoid confusion surrounding the

ultimate decisionmaker in appeals from

initial determinations of the Director

without a hearing under § 16.31, and

from the initial decisions of hearing

officers after a hearing under § 16.241.

In both cases, the appeal will be

submitted to the Associate

Administrator, who will issue a final

decision under either § 16.33 or

§ 16.241.

The substitution of Director and

Associate Administrator as

decisionmakers instead of higher-level

officials reflects the concerns and

experiences of agency personnel who

reviewed the proposed rule. The

Director and Associate Administrator

are experienced in airport matters and

may be more accessible within the short

time periods in the final rule for issuing

decisions. The substitution also

conforms more closely to current

practice in deciding complaints

regarding airport compliance.

The term ‘‘Presiding officer’’ was

deleted from the definitions section

because it was referred to only in

subpart J, which was withdrawn.

The final rule contains no changes to

the separation of function section,

§ 16.5, except that ‘‘Associate

Administrator’’ replaces

‘‘Administrator’’ in § 16.5(b) and ‘‘FAA

decisionmaker’’ in § 16.5(c).

Separation of functions is not

required by statute because hearings

under part 16 are not subject to APA

hearing requirements; however, the

separation is provided to promote

confidence in the impartiality and

integrity of decisions under the new

procedures. Separation of prosecutorial

and adjudicatory functions will be

provided from the time the Director’s

determination is issued in all cases in

which an opportunity for hearing is

provided, including cases in which the

respondent waives hearing and appeals

the Director’s determination in writing

to the Associate Administrator. When

separation applies, the Director will be

considered as performing the

investigatory and prosecutorial function

and will not participate in the decision

of the Associate Administrator or

hearing officer.

Subpart B—General Rules Applicable to

Complaints, Proceedings, and Appeals

Initiated by the FAA

This subpart applies to all phases of

the investigations and adjudications

under this part.

The provisions governing filing and

service of documents, computation of

time, and motions (§§ 16.13, 16.15,

16.17, and 16.19), are based on similar

provisions in the Federal Rules of Civil

Procedure, the Department of

Transportation’s Rules of Practice in

Proceedings (14 CFR part 302), the FAA

Rules of Practice in Civil Penalty

Actions (14 CFR part 13, subpart G), and

the National Transportation Safety

Board’s (NSTB) Rules of Practice in Air

Safety Proceedings (49 CFR part 821).

The proposed rule was modified to

change the agency address in § 16.13. To

insure timely processing and to reflect
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54001

changes in the organization of the Office

of the Chief Counsel ‘‘FAA Part 16

Airport Proceedings Docket (AGC–600)’’

replaces ‘‘FAA Enforcement Docket

(AGC–10).’’ The additional 5 days

provided after service on a party of a

document by mail was changed to 3

days in § 16.17(c). This revision

conforms to the ‘‘mail rule’’ used in

federal practice under the Federal Rules

of Civil Procedure.

Subpart C—Special Rules Applicable to

Complaints

The final rule requires, under § 16.21,

a potential complainant to engage in

good faith efforts to resolve the disputed

matter informally with potentially

responsible respondents before filing a

complaint with the FAA under part 16.

Informal resolution may include

mediation, arbitration, use of a dispute

resolution board, or other form of thirdparty assistance, including assistance

from the responsible FAA Airports

District Office or FAA Regional Airports

Division.

Under § 16.21, it will be necessary for

the potential complainant or its

representative to certify that good faith

efforts have been made to achieve

informal resolution. To protect the

parties and for consistency with Rule

408 of the Federal Rules of Evidence,

the certification will not include

information on monetary or other

settlement offers made but not agreed

upon in writing. As explained earlier,

under § 16.21(a), the FAA ADO or

Regional Airports Division, will be

available upon request to assist the

parties with informal resolution.

The final rule retains the requirement

that a complainant be ‘‘directly and

substantially affected by any alleged

noncompliance’’ in order to have

standing to file a complaint under

§ 16.23. However, as explained above

complainants alleging revenue diversion

by an airport will be considered to be

directly and substantially affected by

the alleged revenue diversion, if

complainants do business with the

airport and pay fees or rentals to the

airport.

To provide a more efficient and

expedited process the time periods for

filing a reply to the answer and a

rebuttal to the reply in § 16.23 (e) and

(f) were reduced from 15 to 10 days.

At the suggestion of one commenter,

the final rule adds ‘‘lack of standing’’ as

another possible ground for dismissal

with prejudice under § 16.25. Besides

dismissal of complaints that clearly do

not state a cause of action, or those that

do not come within the jurisdiction of

the Administrator, a complaint may also

be dismissed if the complainant lacks

standing to file the complaint under

§§ 16.3 and 16.23. As a final order of the

agency, a dismissal with prejudice

would be appealable to a United States

Court of Appeals.

As explained above, the final rule

substitutes the Director of the Office of

Airport Safety and Standards as the

official who makes the initial

determination after investigation under

§ 16.31. The Director would issue an

initial determination in every case in

which the FAA investigates a

complaint. Under the final rule, the

agency is required to issue a Director’s

determination in 120 days from the due

date of the last pleading (i.e., reply or

rebuttal). The provision in the NPRM

allowing the Director to extend the

period for issuing an initial

determination by 60 days for good cause

was deleted from the final rule in order

to further expedite this administrative

complaint procedure.

The Director’s determination is

intended to provide a timely and

authoritative indication of the agency’s

position on a complaint. While the

Director’s determination can be

appealed to the Associate Administrator

under § 16.33, the FAA expects that, in

many instances, the Director’s

determination will resolve the issues

raised in the complaint to the

satisfaction of the parties. In such cases,

the parties may find it more beneficial

to negotiate a solution based on the

FAA’s initial position than to continue

to litigate the matter.

Under the final rule, the Associate

Administrator will issue the final

decision on appeal from a Director’s

determination without a hearing under

§ 16.33. If the initial determination finds

the sponsor in compliance and

dismisses the complaint, the

complainant may appeal the

determination by a written appeal to the

Associate Administrator within 30 days.

The Associate Administrator is required

to issue a final agency decision in an

appeal by a complainant within 60, not

30 days of the due date for the reply

brief, as proposed in the NPRM. The

additional time for issuing a final

agency decision was added to the final

rule to assure the agency adequate time

to review the record, prepare, and issue

a final decision.

If the Director’s determination

contains a finding of noncompliance

and the respondent is entitled to a

hearing, the determination will provide

the sponsor the opportunity to elect an

oral evidentiary hearing under subpart

F. The procedure for electing or waiving

a hearing is set forth in subpart E. If the

respondent waives a hearing and

instead elects to file a written appeal to

the Associate Administrator, a final

decision will be issued by the Associate

Administrator under § 16.33.

Subpart D—Special Rules Applicable to

Proceedings Initiated by the FAA

Section 16.101 makes clear the FAA’s

continuing authority to initiate its own

investigation of any matter within the

applicability of this part without having

received a complaint, as authorized by

§§ 313 and 1002 of the FAA Act and

§ 519 of the AAIA.

Subpart E—Proposed Orders of

Compliance

Subpart E contains procedures that

provide the respondent an opportunity

to file a request for hearing within 20

days after service of the Director’s

determination if the determination

proposes a sanction against the sponsor

subject to § 519(b) of the AAIA or § 1002

of the FAA Act. The 20-day period to

file a request for hearing was reduced

from 30 days in the NPRM in order to

provide a more efficient and expedited

process. If the respondent elects a

hearing, the agency will issue a hearing

order.

Alternatively, if the respondent

waives hearing and instead files a

written appeal (within 30 days), the

Associate Administrator will issue a

final decision in accordance with the

procedures set forth in § 16.33. If the

respondent fails to respond to the

Director’s determination, the initial

determination becomes final.

The final rule, based on comments

received, includes a new ground for the

agency to provide the opportunity for a

hearing under § 16.109(a): If the agency

proposes to issue an order withholding

approval of any new application to

impose a passenger facility charge

pursuant to § 112 of the FAA Act, 49

U.S.C. 47111(e). That new statutory

section creates additional enforcement

mechanisms against illegal revenue

diversion including the withholding of

a new application to impose a passenger

facility charge. The statute requires the

FAA to provide an opportunity for

hearing before imposing this sanction.

The opportunity for a hearing by the

agency under part 16 is limited to those

cases where there is a statutory

requirement to offer the opportunity for

a hearing before the FAA takes a

particular action, or specific cases in

which the FAA elects to offer a hearing.

Section 16.109(b)(3) allows

respondent and complainant to file a

joint motion to withdraw the complaint

and dismiss the proposed compliance

action. The FAA may, subject to its

discretion, grant the motion if it finds

that a settlement by the parties fully
54002 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

resolves the complaint violation and

further compliance action is not

necessary.

Subpart F—Hearings

Subpart F contains the procedures for

initiating and conducting adjudicative

hearings. The hearing order, issued by

the Deputy Chief Counsel under

§ 16.201, will set the scope of the

hearing by identifying the issues to be

resolved, as well as assigning the

hearing officer. If no material facts that

require oral examination of witnesses

are in dispute, the hearing may be

limited to submission of briefs and oral

argument.

In the hearing, the agency attorney

will represent the agency’s position

before the hearing officer and will have

the same status as any other

representatives of a party. The rule

includes commonly used adjudicatory

procedures, such as representation of

the parties by attorneys, intervention,

participation by non-parties, pretrial

procedures and discovery, the

availability of compulsory process to

obtain evidence, and procedures for

using at the hearing. These provisions

are intended to provide the parties with

a reasonable opportunity to prepare

their cases, while allowing the process

to be completed expeditiously. To

assure an expeditious hearing process,

paragraph (b) was added to § 16.213,

discovery, to emphasize the hearing

officer’s authority and duty to limit

discovery wherever feasible.

The final rule made the following

clarifications and corrections to the

subpart based on comments received.

The final rule added ‘‘or notice of

investigation’’ to § 16.201(1) to clarify

that the provisions of subpart F may

apply to proceedings initiated by the

FAA under subpart D. The final rule

deleted an incorrect citation in

§ 16.203(a)(2) and replaced it with a

citation to § 16.13.

In the NPRM, the last phrase in

proposed § 16.209(d) cited section

519(b) of the AAIA. The citation to the

AAIA was included because the AAIA

provision contains the 180-day time

limitation for a determination which

could affect the length of extensions of

time granted under part 16. (Although,

at this time, the FAA does not foresee

any circumstances where it would

provide for a hearing and section 519(b)

of the AAIA would not be applicable, in

a case not covered by section 519(b), an

extension of time by the hearing officer

for any reason could extend all of the

due dates beyond the 180-day time

limitation.) This provision is being

modified in the final rule to clarify this

point.

The provisions of § 16.233 on

evidence, in part, are to permit the

hearing officer to exercise control over

the hearing. Contrary to the suggestion

of one commenter, they are not intended

to authorize the hearing officer to

preclude all cross-examination of a

witness.

In keeping with the time limitations

imposed by section 519(b) of the AAIA,

§ 16.235(a) of the final rule retains the

provision permitting the hearing officer

to allow written argument during the

hearing only if the hearing officer finds

that such argument would not delay the

hearing. Parties may make their

arguments in posthearing briefs under

§ 16.235(b).

Subpart G—Initial Decisions, Orders

and Appeals

Subpart G provides procedures for

issuance of initial decisions and orders

by hearing officers, appeals of the initial

decision to the Associate Administrator

for Airports, and issuance of consent

orders.

Section 16.241 governs procedures

and time frames for initial decisions and

administrative appeals based on 14 CFR

13.20(g)–(i). However, shorter time

periods are provided to accommodate

the time limits of § 519 of the AAIA. In

appeals from initial decisions of hearing

officers, under § 16.241(c) and

16.241(f)(2), the Associate

Administrator must issue the final

agency decision within 30 days of the

due date of the reply. This provision

insures that the final agency decision is

issued within the 180-day time period

of section 519.

In addition, the rule includes a

provision for sua sponte review of an

initial decision by the Associate

Administrator, consistent with the

practice under 14 CFR 302.28(d).

Section 16.243 governing disposal of

cases by consent orders is derived from

14 CFR 13.13.

As explained above, the final rule

replaced all references to the ‘‘FAA

decisionmaker,’’ though technically

correct, with the ‘‘Associate

Administrator,’’ to avoid confusion and

clarify. The ultimate decisionmaker in

part 16 proceedings, with or without

hearings, is the Associate Administrator

for Airports for the reasons previously

given.

Subpart H—Judicial Review

Subpart H contains rules applicable to

judicial review of final agency orders.

Section 16.247(a) sets forth the basic

authority to seek judicial review. The

provision is based on 14 CFR 13.235.

Specific reference to section 519(b)(4) of

the AAIA has been added. Section

16.247(b) identifies FAA decisions and

actions under part 16 that the FAA does

not consider to be judicially reviewable

final agency orders.

Subpart I—Ex Parte Communications

The rule on ex parte communications

is based on subpart J of the Rules of

Practice in Air Safety Proceedings of the

NTSB, 49 CFR Part 821, subpart J,

modified to reflect the fact that FAA

employees function as both parties and

decisional employees in hearings

conducted under subpart F of part 16.

Subpart J—Alternative Procedure for

Certain Complaints Concerning Airport

Rates and Charges

As explained above, subpart J of the

proposed rule, containing special

procedures for the handling of airport

fee complaints by U.S. and foreign air

carriers, was withdrawn on September

16, 1994 [59 FR 47568].

Regulatory Evaluation Summary

Introduction

This regulatory evaluation examines

the costs and benefits of the final rule

concerning Rules for Federally-Assisted

Airport Proceedings. The rule

establishes rules of practice for filing

complaints and adjudicating

compliance matters involving Federallyassisted airports. The rule is intended to

expedite substantially the handling and

disposition of airport-related

complaints. Since the impacts of the

changes are relatively minor this

economic summary constitutes the

analysis and no regulatory evaluation

will be placed in the docket.

Changes to Federal regulations must

undergo several economic analyses.

First, Executive Order 12866 directs that

each Federal agency shall propose or

adopt a regulation only upon a reasoned

determination that the benefits of the

intended regulation justify its costs.

Second, the Regulatory Flexibility Act

of 1980 requires agencies to analyze the

economic effect of regulatory changes

on small entities. Third, the Office of

Management and Budget directs

agencies to assess the effects of

regulatory changes on international

trade. In conducting these analyses, the

FAA has determined that this rule is ‘‘a

significant regulatory action’’ as defined

in the Executive Order and the

Department of Transportation

Regulatory Policies and Procedures.

This rule would not have a significant

impact on a substantial number of small

entities and would not constitute a

barrier to international trade.
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54003

Costs And Benefits

This final rule adopts a new

procedure for the filing, investigation,

and adjudication of complaints against

airports for violation of certain statutes

administered by the FAA. The new

procedures will substitute for existing

procedures under 14 CFR part 13. There

are no intended safety benefits that

result from this rule. The intended

advantages of the rule are in the form of

increased cost effectiveness and

timeliness in resolving complaints. The

rule will use FAA resources better and

result in modest cost savings.

About 30 investigations are initiated

per year due to complaints filed with

the FAA. Each investigation takes an

average of 3 years before a ruling is

issued. The typical investigation

requires a field investigation, an initial

review by the FAA’s Office of Airports

Safety and Standards, and a legal review

by an attorney in the Office of Chief

Counsel. A GS–12 (step 5) employee

requires 30 hours to complete the field

investigation, a GS–13 (step 5) requires

30 hours to complete the initial review,

and a GS–14 (step 5) employee requires

20 hours to complete the legal review.

The average cost per investigation is

$3,100. (See Table 1.)

TABLE 1.—COST OF INVESTIGATIONS CURRENT AND UNDER NEW RULE

Hours Average

grade

Yearly

salary

Hourly

rate

Loaded

rate Cost

CURRENT SITUATION

Field investigation ............................................................................................ 35 GS–12 $50,388 $24.14 $31.39 $1,098.54

Initial review at HQ .......................................................................................... 30 GS–13 59,917 28.71 37.32 1,119.68

Attorney review at HQ ..................................................................................... 20 GS–14 70,804 33.93 44.10 882.08

Average cost per investigation .................................................................................................................................................................. $3,100

Average annual number of investigations ................................................................................................................................................. 30

Average annual cost of investigations ....................................................................................................................................................... $93,009

NEW SITUATION

Field ................................................................................................................. 4 GS–12 $50,388 $24.14 $31.39 $125.55

Initial review at HQ .......................................................................................... 40 GS–13 59,917 28.71 37.32 1,492.90

Attorney review at HQ ..................................................................................... 20 GS–14 70,804 33.93 44.10 882.08

Average cost per investigation .................................................................................................................................................................. $2,501

Average annual number of investigations ................................................................................................................................................. 30

Average annual cost of investigations ....................................................................................................................................................... $75,016

Savings ...................................................................................................................................................................................................... $17,993

This number assumes a 30-percent

loaded hourly rate for fringe benefits.

The annual cost of investigations is

estimated to be $93,000.

Under the new rule, determinations

will be made without the need for a

field investigation. The FAA will be

able to decide the merits of the case by

looking at the record solely. The field

investigation is expected to require 4

hours of the GS–12 (step 5) employee

time, mostly to complete the proper

forms; the initial review at headquarters

is expected to require 40 hours of the

GS–13 (step 5) employee’s time, and the

legal review is expected to remain at 20

hours of the GS–14 (step 5) employee’s

time. The average cost per investigation

is estimated to be $2,500 and the annual

cost of investigations will be $75,000

(Table 1). The final rule will result in an

average cost savings of $18,000 per year

on investigations. Furthermore the FAA

estimates that instead of 3 years per

investigation, each investigation will

now take on average 1 year.

Conclusion

The FAA has determined that the

final rule would have only moderate

economic impacts on the industry,

public, or government. The only

measurable economic impact the FAA

estimates is a slight cost savings to

administer airport proceedings due to

the utilization of government resources

in a more efficient manner. The FAA

finds that the proposed rule is costbeneficial.

International Trade Impact Assessment

The Office of Management and Budget

directs agencies to assess the effects of

regulatory changes on international

trade. There should be no effect on

aircraft manufacturers or operators (U.S.

or foreign). Therefore, the FAA has

determined that the proposed rule

would neither have an effect on the sale

of foreign aviation products nor services

in the United States, nor would it have

an effect on the sale of U.S. products or

services in foreign countries.

Regulatory Flexibility Determination

The Regulatory Flexibility Act (RFA)

of 1980 was enacted by Congress to

ensure that small entities are not

unnecessarily or disproportionately

burdened by Government regulations.

The RFA requires a Regulatory

Flexibility Analysis if a rule would have

a significant economic impact, either

detrimental or beneficial, on a

substantial number or small entities.

Based on the potential relief that the

rule provides and the criteria contained

in FAA Order 2100.14A, Regulatory

Flexibility Criteria and Guidance, the

FAA has determined that the rule will

not have a significant economic impact

on a substantial number of small

entities.

Federalism Implications

The regulations adopted herein will

not have substantial direct effects on the

States, on the relationship between the

national government and the States, or

on the distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12612,

it is determined that this final rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

Paperwork Reduction Act

This final rule contains no

information collection requirements that

require approval of the Office of

Management and Budget pursuant to the

Paperwork Reduction Act of 1980 (44

U.S.C. 3507 et seq.)
54004 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

Conclusion

For the reasons discussed in the

preamble, and based on the findings in

the Regulatory Flexibility Determination

and the International Trade Analysis,

the FAA has determined that this final

rule is not economically significant

under Executive Order 12866. This final

rule is considered significant under

DOT Regulatory Policies and Procedures

(44 FR 111034, February 26, 1979) and

Executive Order 12866. The FAA

certifies that this final rule will not have

a significant economic impact, positive

or negative, on a substantial number of

small entities under the criteria of the

Regulatory Flexibility Act.

List of Subjects

14 CFR Part 13

Enforcement procedures,

Investigations, Penalties.

14 CFR Part 16

Enforcement procedures,

Investigations.

The Amendments

Accordingly, the Federal Aviation

Administration amends chapter I of title

14 of the Code of Federal Regulations as

follows:

PART 13—INVESTIGATIVE AND

ENFORCEMENT PROCEDURES

1. The authority citation for part 13

continues to read as follows:

Authority: 18 U.S.C. 6002; 49 U.S.C.

106(g), 5121–5124, 40113–40114, 44103–

44106, 44702–44703, 44709–44710, 44713,

46101–46110, 46301–46316, 46501–46502,

46504–46507, 47106, 47111, 47122, 47306,

47531–47532.

2. Section 13.3 is amended by adding

a new paragraph (d) to read as follows:

§ 13.3 Investigations (general).

* * * * *

(d) A complaint against the sponsor,

proprietor, or operator of a Federallyassisted airport involving violations of

the legal authorities listed in § 16.1 of

this chapter shall be filed in accordance

with the provisions of part 16 of this

chapter, except in the case of

complaints, investigations, and

proceedings initiated before December

16, 1996, the effective date of part 16 of

this chapter. 3. A new part 16 is added to

subchapter B to read as follows:

PART 16—RULES OF PRACTICE FOR

FEDERALLY-ASSISTED AIRPORT

ENFORCEMENT PROCEEDINGS

Subpart A—General Provisions

Sec.

16.1 Applicability and description of part.

16.3 Definitions.

16.5 Separation of functions.

Subpart B—General Rules Applicable to

Complaints, Proceedings Initiated by the

FAA, and Appeals

16.11 Expedition and other modification of

process.

16.13 Filing of documents.

16.15 Service of documents on the parties

and the agency.

16.17 Computation of time.

16.19 Motions.

Subpart C—Special Rules Applicable to

Complaints

16.21 Pre-complaint resolution.

16.23 Complaints, answers, replies,

rebuttals, and other documents.

16.25 Dismissals.

16.27 Incomplete complaints.

16.29 Investigations.

16.31 Director’s determinations after

investigations.

16.33 Final decisions without hearing.

Subpart D—Special Rules Applicable to

Proceedings Initiated by the FAA

16.101 Basis for the initiation of agency

action.

16.103 Notice of investigation.

16.105 Failure to resolve informally.

Subpart E—Proposed Orders of

Compliance

16.109 Orders terminating eligibility for

grants, cease and desist orders, and other

compliance orders.

Subpart F—Hearings

16.201 Notice and order of hearing.

16.202 Powers of a hearing officer.

16.203 Appearances, parties, and rights of

parties.

16.207 Intervention and other participation.

16.209 Extension of time.

16.211 Prehearing conference.

16.213 Discovery.

16.215 Depositions.

16.217 Witnesses.

16.219 Subpoenas.

16.221 Witness fees.

16.223 Evidence.

16.225 Public disclosure of evidence.

16.227 Standard of proof.

16.229 Burden of proof.

16.231 Offer of proof.

16.233 Record.

16.235 Argument before the hearing officer.

16.237 Waiver of procedures.

Subpart G—Initial Decisions, Orders and

Appeals

16.241 Initial decisions, orders, and

appeals.

16.243 Consent orders.

Subpart H—Judicial Review

16.247 Judicial review of a final decision

and order.

Subpart I—Ex Parte Communications

16.301 Definitions.

16.303 Prohibited ex parte

communications.

16.305 Procedures for handling ex parte

communications.

16.307 Requirement to show cause and

imposition of sanction.

Authority: 49 U.S.C. 106(g), 322, 1110,

1111, 1115, 1116, 1718 (a) and (b), 1719,

1723, 1726, 1727, 40103(e), 40113, 40116,

44502(b), 46101, 46104, 46110, 47104,

47106(e), 47107, 47108, 47111(d), 47122,

47123–47125, 47151–47153, 48103.

Subpart A—General Provisions

§ 16.1 Applicability and description of part.

(a) General. The provisions of this

part govern all proceedings involving

Federally-assisted airports, except for

disputes between U.S. and foreign air

carriers and airport proprietors

concerning the reasonableness of airport

fees covered by 14 CFR part 302,

whether the proceedings are instituted

by order of the FAA or by filing with the

FAA a complaint, under the following

authorities:

(1) 49 U.S.C. 40103(e), prohibiting the

grant of exclusive rights for the use of

any landing area or air navigation

facility on which Federal funds have

been expended (formerly section 308 of

the Federal Aviation Act of 1958, as

amended).

(2) Requirements of the Anti-Head

Tax Act, 49 U.S.C. 40116.

(3) The assurances contained in grantin-aid agreements issued under the

Federal Airport Act of 1946, 49 U.S.C.

1101 et seq (repealed 1970).

(4) The assurances contained in grantin-aid agreements issued under the

Airport and Airway Development Act of

1970, as amended, 49 U.S.C. 1701 et

seq.

(5) The assurances contained in grantin-aid agreements issued under the

Airport and Airway Improvement Act of

1982 (AAIA), as amended, 49 U.S.C.

47101 et seq., specifically section

511(a), 49 U.S.C. 47107(a) and (b).

(6) Section 505(d) of the Airport and

Airway Improvement Act of 1982, as

amended, 49 U.S.C. 47113.

(7) Obligations contained in property

deeds for property transferred pursuant

to section 16 of the Federal Airport Act

(49 U.S.C. 1115), section 23 of the

Airport and Airway Development Act

(49 U.S.C. 1723), or section 516 of the

Airport and Airway Improvement Act

(49 U.S.C. 47125).

(8) Obligations contained in property

deeds for property transferred under the

Surplus Property Act (49 U.S.C. 47151–

47153).

(b) Other agencies. Where a grant

assurance concerns a statute, executive
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54005

order, regulation, or other authority that

provides an administrative process for

the investigation or adjudication of

complaints by a Federal agency other

than the FAA, persons shall use the

administrative process established by

those authorities. Where a grant

assurance concerns a statute, executive

order, regulation, or other authority that

enables a Federal agency other than the

FAA to investigate, adjudicate, and

enforce compliance under those

authorities on its own initiative, the

FAA may defer to that Federal agency.

(c) Other enforcement. If a complaint

or action initiated by the FAA involves

a violation of the 49 U.S.C. subtitle VII

or FAA regulations, except as specified

in paragraphs (a)(1) and (a)(2) of this

section, the FAA may take investigative

and enforcement action under 14 CFR

part 13, ‘‘Investigative and Enforcement

Procedures.’’

(d) Effective date. This part applies to

a complaint filed with the FAA and to

an investigation initiated by the FAA on

or after December 16, 1996.

§ 16.3 Definitions.

Terms defined in the Acts are used as

so defined. As used in this part:

Act means a statute listed in § 16.1

and any regulation, agreement, or

document of conveyance issued or made

under that statute.

Agency attorney means the Deputy

Chief Counsel; the Assistant Chief

Counsel and attorneys in the Airports/

Environmental Law Division of the

Office of the Chief Counsel; the

Assistant Chief Counsel and attorneys in

an FAA region or center who represent

the FAA during the investigation of a

complaint or at a hearing on a

complaint, and who prosecute on behalf

of the FAA, as appropriate. An agency

attorney shall not include the Chief

Counsel; the Assistant Chief Counsel for

Litigation, or any attorney on the staff of

the Assistant Chief Counsel for

Litigation, who advises the Associate

Administrator regarding an initial

decision of the hearing officer or any

appeal to the Associate Administrator or

who is supervised in that action by a

person who provides such advice in an

action covered by this part.

Agency employee means any

employee of the U.S. Department of

Transportation.

Associate Administrator means the

Associate Administrator for Airports or

a designee.

Complainant means the person

submitting a complaint.

Complaint means a written document

meeting the requirements of this part

filed with the FAA by a person directly

and substantially affected by anything

allegedly done or omitted to be done by

any person in contravention of any

provision of any Act, as defined in this

section, as to matters within the

jurisdiction of the Administrator.

Director means the Director of the

Office of Airport Safety and Standards.

Director’s determination means the

initial determination made by the

Director following an investigation,

which is a non-final agency decision.

File means to submit written

documents to the FAA for inclusion in

the Part 16 Airport Proceedings Docket

or to a hearing officer.

Final decision and order means a final

agency decision that disposes of a

complaint or determines a respondent’s

compliance with any Act, as defined in

this section, and directs appropriate

action.

Hearing officer means an attorney

designated by the FAA in a hearing

order to serve as a hearing officer in a

hearing under this part. The following

are not designated as hearing officers:

the Chief Counsel and Deputy Chief

Counsel; the Assistant Chief Counsel

and attorneys in the FAA region or

center in which the noncompliance has

allegedly occurred or is occurring; the

Assistant Chief Counsel and attorneys in

the Airports and Environmental Law

Division of the FAA Office of the Chief

Counsel; and the Assistant Chief

Counsel and attorneys in the Litigation

Division of the FAA Office of Chief

Counsel.

Initial decision means a decision

made by the hearing officer in a hearing

under subpart F of this part.

Mail means U.S. first class mail; U.S.

certified mail; and U.S. express mail.

Noncompliance means anything done

or omitted to be done by any person in

contravention of any provision of any

Act, as defined in this section, as to

matters within the jurisdiction of the

Administrator.

Party means the complainant(s) and

the respondent(s) named in the

complaint and, after an initial

determination providing an opportunity

for hearing is issued under § 16.31 and

subpart E of this part, the agency.

Person in addition to its meaning

under 49 U.S.C. 40102(a)(33), includes a

public agency as defined in 49 U.S.C.

47102(a)(15).

Personal delivery means hand

delivery or overnight express delivery

service.

Respondent means any person named

in a complaint as a person responsible

for noncompliance.

Sponsor means:

(1) Any public agency which, either

individually or jointly with one or more

other public agencies, has received

Federal financial assistance for airport

development or planning under the

Federal Airport Act, Airport and Airway

Development Act or Airport and Airway

Improvement Act;

(2) Any private owner of a public-use

airport that has received financial

assistance from the FAA for such

airport; and

(3) Any person to whom the Federal

Government has conveyed property for

airport purposes under section 13(g) of

the Surplus Property Act of 1944, as

amended.

§ 16.5 Separation of functions.

(a) Proceedings under this part,

including hearings under subpart F of

this part, will be prosecuted by an

agency attorney.

(b) After issuance of an initial

determination in which the FAA

provides the opportunity for a hearing,

an agency employee engaged in the

performance of investigative or

prosecutorial functions in a proceeding

under this part will not, in that case or

a factually related case, participate or

give advice in an initial decision by the

hearing officer, or a final decision by the

Associate Administrator or designee on

written appeal, and will not, except as

counsel or as witness in the public

proceedings, engage in any substantive

communication regarding that case or a

related case with the hearing officer, the

Associate Administrator on written

appeal, or agency employees advising

those officials in that capacity.

(c) The Chief Counsel, the Assistant

Chief Counsel for Litigation, or an

attorney on the staff of the Assistant

Chief Counsel for Litigation advises the

Associate Administrator regarding an

initial decision, an appeal, or a final

decision regarding any case brought

under this part.

Subpart B—General Rules Applicable

to Complaints, Proceedings Initiated

by the FAA, and Appeals

§ 16.11 Expedition and other modification

of process.

(a) Under the authority of 49 U.S.C.

40113 and 47121, the Director may

conduct investigations, issue orders,

and take such other actions as are

necessary to fulfill the purposes of this

part, including the extension of any

time period prescribed where necessary

or appropriate for a fair and complete

hearing of matters before the agency.

(b) Notwithstanding any other

provision of this part, upon finding that

circumstances require expedited

handling of a particular case or

controversy, the Director may issue an
54006 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

order directing any of the following

prior to the issuance of the Director’s

determination:

(1) Shortening the time period for any

action under this part consistent with

due process;

(2) If other adequate opportunity to

respond to pleadings is available,

eliminating the reply, rebuttal, or other

actions prescribed by this part;

(3) Designating alternative methods of

service; or

(4) Directing such other measures as

may be required.

§ 16.13 Filing of documents.

Except as otherwise provided in this

part, documents shall be filed with the

FAA during a proceeding under this

part as follows:

(a) Filing address. Documents to be

filed with the FAA shall be filed with

the Office of the Chief Counsel,

Attention: FAA Part 16 Airport

Proceedings Docket, AGC–610, Federal

Aviation Administration, 800

Independence Ave., SW., Washington,

DC, 20591. Documents to be filed with

a hearing officer shall be filed at the

address stated in the hearing order.

(b) Date and method of filing. Filing

of any document shall be by personal

delivery or mail as defined in this part,

or by facsimile (when confirmed by

filing on the same date by one of the

foregoing methods). Unless the date is

shown to be inaccurate, documents to

be filed with the FAA shall be deemed

to be filed on the date of personal

delivery, on the mailing date shown on

the certificate of service, on the date

shown on the postmark if there is no

certificate of service, on the send date

shown on the facsimile (provided filing

has been confirmed through one of the

foregoing methods), or on the mailing

date shown by other evidence if there is

no certificate of service and no

postmark.

(c) Number of copies. Unless

otherwise specified, an executed

original and three copies of each

document shall be filed with the FAA

Part 16 Airport Proceedings Docket.

Copies need not be signed, but the name

of the person signing the original shall

be shown. If a hearing order has been

issued in the case, one of the three

copies shall be filed with the hearing

officer. If filing by facsimile, the

facsimile copy does not constitute one

of the copies required under this

section.

(d) Form. Documents filed with the

FAA shall be typewritten or legibly

printed. In the case of docketed

proceedings, the document shall

include the docket number of the

proceeding on the front page.

(e) Signing of documents and other

papers. The original of every document

filed shall be signed by the person filing

it or the person’s duly authorized

representative. The signature shall serve

as a certification that the signer has read

the document and, based on reasonable

inquiry and to the best of the signer’s

knowledge, information, and belief, the

document is—

(1) Consistent with this part;

(2) Warranted by existing law or that

a good faith argument exists for

extension, modification, or reversal of

existing law; and

(3) Not interposed for any improper

purpose, such as to harass or to cause

unnecessary delay or needless increase

in the cost of the administrative process.

(f) Designation of person to receive

service. The initial document filed by

any person shall state on the first page

the name, post office address, telephone

number, and facsimile number, if any,

of the person(s) to be served with

documents in the proceeding. If any of

these items change during the

proceeding, the person shall promptly

file notice of the change with the FAA

Part 16 Airport Proceedings Docket and

the hearing officer and shall serve the

notice on all parties.

(g) Docket numbers. Each submission

identified as a complaint under this part

by the submitting person will be

assigned a docket number.

§ 16.15 Service of documents on the

parties and the agency.

Except as otherwise provided in this

part, documents shall be served as

follows:

(a) Who must be served. Copies of all

documents filed with the FAA Part 16

Airport Proceedings Docket shall be

served by the persons filing them on all

parties to the proceeding. A certificate

of service shall accompany all

documents when they are tendered for

filing and shall certify concurrent

service on the FAA and all parties.

Certificates of service shall be in

substantially the following form:

I hereby certify that I have this day served

the foregoing [name of document] on the

following persons at the following addresses

and facsimile numbers (if also served by

facsimile) by [specify method of service]:

[list persons, addresses, facsimile numbers]

Dated this lll day of lll, 19ll.

[signature], for [party]

(b) Method of service. Except as

otherwise agreed by the parties and the

hearing officer, the method of service is

the same as set forth in § 16.13(b) for

filing documents.

(c) Where service shall be made.

Service shall be made to the persons

identified in accordance with § 16.13(f).

If no such person has been designated,

service shall be made on the party.

(d) Presumption of service. There

shall be a presumption of lawful

service—

(1) When acknowledgment of receipt

is by a person who customarily or in the

ordinary course of business receives

mail at the address of the party or of the

person designated under § 16.13(f); or

(2) When a properly addressed

envelope, sent to the most current

address submitted under § 16.13(f), has

been returned as undeliverable,

unclaimed, or refused.

(e) Date of service. The date of service

shall be determined in the same manner

as the filing date under § 16.13(b).

§ 16.17 Computation of time.

This section applies to any period of

time prescribed or allowed by this part,

by notice or order of the hearing officer,

or by an applicable statute.

(a) The date of an act, event, or

default, after which a designated time

period begins to run, is not included in

a computation of time under this part.

(b) The last day of a time period is

included in a computation of time

unless it is a Saturday, Sunday, or legal

holiday for the FAA, in which case, the

time period runs until the end of the

next day that is not a Saturday, Sunday,

or legal holiday.

(c) Whenever a party has the right or

is required to do some act within a

prescribed period after service of a

document upon the party, and the

document is served on the party by

mail, 3 days shall be added to the

prescribed period.

§ 16.19 Motions.

(a) General. An application for an

order or ruling not otherwise

specifically provided for in this part

shall be by motion. Unless otherwise

ordered by the agency, the filing of a

motion will not stay the date that any

action is permitted or required by this

part.

(b) Form and contents. Unless made

during a hearing, motions shall be made

in writing, shall state with particularity

the relief sought and the grounds for the

relief sought, and shall be accompanied

by affidavits or other evidence relied

upon. Motions introduced during

hearings may be made orally on the

record, unless the hearing officer directs

otherwise.

(c) Answers to motions. Except as

otherwise provided in this part, or

except when a motion is made during a

hearing, any party may file an answer in

support of or in opposition to a motion,

accompanied by affidavits or other

evidence relied upon, provided that the
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54007

answer to the motion is filed within 10

days after the motion has been served

upon the person answering, or any other

period set by the hearing officer. Where

a motion is made during a hearing, the

answer and the ruling thereon may be

made at the hearing, or orally or in

writing within the time set by the

hearing officer.

Subpart C—Special Rules Applicable

to Complaints

§ 16.21 Pre-complaint resolution.

(a) Prior to filing a complaint under

this part, a person directly and

substantially affected by the alleged

noncompliance shall initiate and engage

in good faith efforts to resolve the

disputed matter informally with those

individuals or entities believed

responsible for the noncompliance.

These efforts at informal resolution may

include, without limitation, at the

parties’ expense, mediation, arbitration,

or the use of a dispute resolution board,

or other form of third party assistance.

The FAA Airports District Office, FAA

Airports Field Office, or FAA Regional

Airports Division responsible for

administrating financial assistance to

the respondent airport proprietor, will

be available upon request to assist the

parties with informal resolution.

(b) A complaint under this part will

not be considered unless the person or

authorized representative filing the

complaint certifies that substantial and

reasonable good faith efforts to resolve

the disputed matter informally prior to

filing the complaint have been made

and that there appears no reasonable

prospect for timely resolution of the

dispute. This certification shall include

a brief description of the party’s efforts

to obtain informal resolution but shall

not include information on monetary or

other settlement offers made but not

agreed upon in writing by all parties.

§ 16.23 Complaints, answers, replies,

rebuttals, and other documents.

(a) A person directly and substantially

affected by any alleged noncompliance

may file a complaint with the

Administrator. A person doing business

with an airport and paying fees or

rentals to the airport shall be considered

directly and substantially affected by

alleged revenue diversion as defined in

49 U.S.C. 47107(b).

(b) Complaints filed under this part

shall—

(1) State the name and address of each

person who is the subject of the

complaint and, with respect to each

person, the specific provisions of each

Act that the complainant believes were

violated;

(2) Be served, in accordance with

§ 16.15, along with all documents then

available in the exercise of reasonable

diligence, offered in support of the

complaint, upon all persons named in

the complaint as persons responsible for

the alleged action(s) or omission(s) upon

which the complaint is based;

(3) Provide a concise but complete

statement of the facts relied upon to

substantiate each allegation; and

(4) Describe how the complainant was

directly and substantially affected by

the things done or omitted to be done

by the respondents.

(c) Unless the complaint is dismissed

pursuant to § 16.25 or § 16.27, the FAA

notifies the complainant and

respondents in writing within 20 days

after the date the FAA receives the

complaint that the complaint has been

docketed and that respondents are

required to file an answer within 20

days of the date of service of the

notification.

(d) The respondent shall file an

answer within 20 days of the date of

service of the FAA notification.

(e) The complainant may file a reply

within 10 days of the date of service of

the answer.

(f) The respondent may file a rebuttal

within 10 days of the date of service of

the complainant’s reply.

(g) The answer, reply, and rebuttal

shall, like the complaint, be

accompanied by supporting

documentation upon which the parties

rely.

(h) The answer shall deny or admit

the allegations made in the complaint or

state that the person filing the document

is without sufficient knowledge or

information to admit or deny an

allegation, and shall assert any

affirmative defense.

(i) The answer, reply, and rebuttal

shall each contain a concise but

complete statement of the facts relied

upon to substantiate the answers,

admissions, denials, or averments made.

(j) The respondent’s answer may

include a motion to dismiss the

complaint, or any portion thereof, with

a supporting memorandum of points

and authorities. If a motion to dismiss

is filed, the complainant may respond as

part of its reply notwithstanding the 10-

day time limit for answers to motions in

§ 16.19(c).

§ 16.25 Dismissals.

Within 20 days after the receipt of the

complaint, the Director will dismiss a

complaint, or any claim made in a

complaint, with prejudice if:

(a) It appears on its face to be outside

the jurisdiction of the Administrator

under the Acts listed in § 16.1;

(b) On its face it does not state a claim

that warrants an investigation or further

action by the FAA; or

(c) The complainant lacks standing to

file a complaint under §§ 16.3 and

16.23. The Director’s dismissal will

include the reasons for the dismissal.

§ 16.27 Incomplete complaints.

If a complaint is not dismissed

pursuant to § 16.25 of this part, but is

deficient as to one or more of the

requirements set forth in § 16.21 or

§ 16.23(b), the Director will dismiss the

complaint within 20 days after receiving

it. Dismissal will be without prejudice

to the refiling of the complaint after

amendment to correct the deficiency.

The Director’s dismissal will include

the reasons for the dismissal.

§ 16.29 Investigations.

(a) If, based on the pleadings, there

appears to be a reasonable basis for

further investigation, the FAA

investigates the subject matter of the

complaint.

(b) The investigation may include one

or more of the following, at the sole

discretion of the FAA:

(1) A review of the written

submissions or pleadings of the parties,

as supplemented by any informal

investigation the FAA considers

necessary and by additional information

furnished by the parties at FAA request.

In rendering its initial determination,

the FAA may rely entirely on the

complaint and the responsive pleadings

provided under this subpart. Each party

shall file documents that it considers

sufficient to present all relevant facts

and argument necessary for the FAA to

determine whether the sponsor is in

compliance.

(2) Obtaining additional oral and

documentary evidence by use of the

agency’s authority to compel production

of such evidence under section 313

Aviation Act, 49 U.S.C. 40113 and

46104, and section 519 of the Airport

and Airway Improvement Act, 49 U.S.C.

47122. The Administrator’s statutory

authority to issue compulsory process

has been delegated to the Chief Counsel,

the Deputy Chief Counsel, the Assistant

Chief Counsel for Airports and

Environmental Law, and each Assistant

Chief Counsel for a region or center.

(3) Conducting or requiring that a

sponsor conduct an audit of airport

financial records and transactions as

provided in 49 U.S.C. 47107 and 47121.

§ 16.31 Director’s determinations after

investigations.

(a) After consideration of the

pleadings and other information

obtained by the FAA after investigation,
54008 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

the Director will render an initial

determination and provide it to each

party by certified mail within 120 days

of the date the last pleading specified in

§ 16.23 was due.

(b) The Director’s determination will

set forth a concise explanation of the

factual and legal basis for the Director’s

determination on each claim made by

the complainant.

(c) A party adversely affected by the

Director’s determination may appeal the

initial determination to the Associate

Administrator as provided in § 16.33.

(d) If the Director’s determination

finds the respondent in noncompliance

and proposes the issuance of a

compliance order, the initial

determination will include notice of

opportunity for a hearing under subpart

F of this part, if such an opportunity is

provided by the FAA. The respondent

may elect or waive a hearing as

provided in subpart E of this part.

§ 16.33 Final decisions without hearing.

(a) The Associate Administrator will

issue a final decision on appeal from the

Director’s determination, without a

hearing, where—

(1) The complaint is dismissed after

investigation;

(2) A hearing is not required by

statute and is not otherwise made

available by the FAA; or

(3) The FAA provides opportunity for

a hearing to the respondent and the

respondent waives the opportunity for a

hearing as provided in subpart E of this

part.

(b) In the cases described in paragraph

(a) of this section, a party adversely

affected by the Director’s determination

may file an appeal with the Associate

Administrator within 30 days after the

date of service of the initial

determination.

(c) A reply to an appeal may be filed

with the Associate Administrator within

20 days after the date of service of the

appeal.

(d) The Associate Administrator will

issue a final decision and order within

60 days after the due date of the reply.

(e) If no appeal is filed within the

time period specified in paragraph (b) of

this section, the Director’s

determination becomes the final

decision and order of the FAA without

further action. A Director’s

determination that becomes final

because there is no administrative

appeal is not judicially reviewable.

Subpart D—Special Rules Applicable

to Proceedings Initiated by the FAA

§ 16.101 Basis for the initiation of agency

action.

The FAA may initiate its own

investigation of any matter within the

applicability of this part without having

received a complaint. The investigation

may include, without limitation, any of

the actions described in § 16.29(b).

§ 16.103 Notice of investigation.

Following the initiation of an

investigation under § 16.101, the FAA

sends a notice to the person(s) subject

to investigation. The notice will set

forth the areas of the agency’s concern

and the reasons therefor; request a

response to the notice within 30 days of

the date of service; and inform the

respondent that the FAA will, in its

discretion, invite good faith efforts to

resolve the matter.

§ 16.105 Failure to resolve informally.

If the matters addressed in the FAA

notices are not resolved informally, the

FAA may issue a Director’s

determination under § 16.31.

Subpart E—Proposed Orders of

Compliance

§ 16.109 Orders terminating eligibility for

grants, cease and desist orders, and other

compliance orders.

This section applies to initial

determinations issued under § 16.31

that provide the opportunity for a

hearing.

(a) The agency will provide the

opportunity for a hearing if, in the

Director’s determination, the agency

proposes to issue an order terminating

eligibility for grants pursuant to 49

U.S.C. 47106(e) and 47111(d), an order

suspending the payment of grant funds,

an order withholding approval of any

new application to impose a passenger

facility charge pursuant to section 112

of the Federal Aviation Administration

Act of 1994, 49 U.S.C. 47111(e), a cease

and desist order, an order directing the

refund of fees unlawfully collected, or

any other compliance order issued by

the Administrator to carry out the

provisions of the Acts, and required to

be issued after notice and opportunity

for a hearing. In cases in which a

hearing is not required by statute, the

FAA may provide opportunity for a

hearing at its discretion.

(b) In a case in which the agency

provides the opportunity for a hearing,

the Director’s determination issued

under § 16.31 will include a statement

of the availability of a hearing under

subpart F of this part.

(c) Within 20 days after service of a

Director’s determination under § 16.31

and paragraph (b) of this section, a

person subject to the proposed

compliance order may—

(1) Request a hearing under subpart F

of this part;

(2) Waive hearing and appeal the

Director’s determination in writing to

the Associate Administrator, as

provided in § 16.33;

(3) File, jointly with a complainant, a

motion to withdraw the complaint and

to dismiss the proposed compliance

action; or

(4) Submit, jointly with the agency

attorney, a proposed consent order

under § 16.243(e).

(d) If the respondent fails to request

a hearing or to file an appeal in writing

within the time periods provided in

paragraph (c) of this section, the

Director’s determination becomes final.

Subpart F—Hearings

§ 16.201 Notice and order of hearing.

(a) If a respondent is provided the

opportunity for hearing in an initial

determination and does not waive

hearing, the Deputy Chief Counsel

within 10 days after the respondent

elects a hearing will issue and serve on

the respondent and complainant a

hearing order. The hearing order will set

forth:

(1) The allegations in the complaint,

or notice of investigation, and the

chronology and results of the

investigation preliminary to the hearing;

(2) The relevant statutory, judicial,

regulatory, and other authorities;

(3) The issues to be decided;

(4) Such rules of procedure as may be

necessary to supplement the provisions

of this part;

(5) The name and address of the

person designated as hearing officer,

and the assignment of authority to the

hearing officer to conduct the hearing in

accordance with the procedures set

forth in this part; and

(6) The date by which the hearing

officer is directed to issue an initial

decision.

(b) Where there are no genuine issues

of material fact requiring oral

examination of witnesses, the hearing

order may contain a direction to the

hearing officer to conduct a hearing by

submission of briefs and oral argument

without the presentation of testimony or

other evidence.

§ 16.202 Powers of a hearing officer.

In accordance with the rules of this

subpart, a hearing officer may:

(a) Give notice of, and hold,

prehearing conferences and hearings;
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54009

(b) Administer oaths and affirmations;

(c) Issue subpoenas authorized by law

and issue notices of deposition

requested by the parties;

(d) Limit the frequency and extent of

discovery;

(e) Rule on offers of proof;

(f) Receive relevant and material

evidence;

(g) Regulate the course of the hearing

in accordance with the rules of this part

to avoid unnecessary and duplicative

proceedings in the interest of prompt

and fair resolution of the matters at

issue;

(h) Hold conferences to settle or to

simplify the issues by consent of the

parties;

(i) Dispose of procedural motions and

requests;

(j) Examine witnesses; and

(k) Make findings of fact and

conclusions of law, and issue an initial

decision.

§ 16.203 Appearances, parties, and rights

of parties.

(a) Appearances. Any party may

appear and be heard in person.

(1) Any party may be accompanied,

represented, or advised by an attorney

licensed by a State, the District of

Columbia, or a territory of the United

States to practice law or appear before

the courts of that State or territory, or by

another duly authorized representative.

(2) An attorney, or other duly

authorized representative, who

represents a party shall file a notice of

appearance in accordance with § 16.13.

(b) Parties and agency participation.

(1) The parties to the hearing are the

respondent (s) named in the hearing

order, the complainant(s), and the

agency.

(2) Unless otherwise specified in the

hearing order, the agency attorney will

serve as prosecutor for the agency from

the date of issuance of the Director’s

determination providing an opportunity

for hearing.

§ 16.207 Intervention and other

participation.

(a) A person may submit a motion for

leave to intervene as a party. Except for

good cause shown, a motion for leave to

intervene shall be submitted not later

than 10 days after the notice of hearing

and hearing order.

(b) If the hearing officer finds that

intervention will not unduly broaden

the issues or delay the proceedings and,

if the person has a property or financial

interest that may not be addressed

adequately by the parties, the hearing

officer may grant a motion for leave to

intervene. The hearing officer may

determine the extent to which an

intervenor may participate in the

proceedings.

(c) Other persons may petition the

hearing officer for leave to participate in

the hearing. Participation is limited to

the filing of post-hearing briefs and

reply to the hearing officer and the

Associate Administrator. Such briefs

shall be filed and served on all parties

in the same manner as the parties’ post

hearing briefs are filed.

(d) Participation under this section is

at the discretion of the FAA, and no

decision permitting participation shall

be deemed to constitute an expression

by the FAA that the participant has such

a substantial interest in the proceeding

as would entitle it to judicial review of

such decision.

§ 16.209 Extension of time.

(a) Extension by oral agreement. The

parties may agree to extend for a

reasonable period of time for filing a

document under this part. If the parties

agree, the hearing officer shall grant one

extension of time to each party. The

party seeking the extension of time shall

submit a draft order to the hearing

officer to be signed by the hearing

officer and filed with the hearing

docket. The hearing officer may grant

additional oral requests for an extension

of time where the parties agree to the

extension.

(b) Extension by motion. A party shall

file a written motion for an extension of

time with the hearing officer not later

than 7 days before the document is due

unless good cause for the late filing is

shown. A party filing a written motion

for an extension of time shall serve a

copy of the motion on each party.

(c) Failure to rule. If the hearing

officer fails to rule on a written motion

for an extension of time by the date the

document was due, the motion for an

extension of time is deemed denied.

(d) Effect on time limits. In a hearing

required by section 519(b) of the Airport

and Airways Improvement Act, as

amended in 1987, 49 U.S.C. 47106(e)

and 47111(d), the due date for the

hearing officer’s initial decision and for

the final agency decision are extended

by the length of the extension granted

by the hearing officer only if the hearing

officer grants an extension of time as a

result of an agreement by the parties as

specified in paragraph (a) of this section

or, if the hearing officer grants an

extension of time as a result of the

sponsor’s failure to adhere to the

hearing schedule. In any other hearing,

an extension of time granted by the

hearing officer for any reason extends

the due date for the hearing officer’s

initial decision and for the final agency

decision by the length of time of the

hearing officer’s decision.

16.211 Prehearing conference.

(a) Prehearing conference notice. The

hearing officer schedules a prehearing

conference and serves a prehearing

conference notice on the parties

promptly after being designated as a

hearing officer.

(1) The prehearing conference notice

specifies the date, time, place, and

manner (in person or by telephone) of

the prehearing conference.

(2) The prehearing conference notice

may direct the parties to exchange

proposed witness lists, requests for

evidence and the production of

documents in the possession of another

party, responses to interrogatories,

admissions, proposed procedural

schedules, and proposed stipulations

before the date of the prehearing

conference.

(b) The prehearing conference. The

prehearing conference is conducted by

telephone or in person, at the hearing

officer’s discretion. The prehearing

conference addresses matters raised in

the prehearing conference notice and

such other matters as the hearing officer

determines will assist in a prompt, full

and fair hearing of the issues.

(c) Prehearing conference report. At

the close of the prehearing conference,

the hearing officer rules on any requests

for evidence and the production of

documents in the possession of other

parties, responses to interrogatories, and

admissions; on any requests for

depositions; on any proposed

stipulations; and on any pending

applications for subpoenas as permitted

by § 16.219. In addition, the hearing

officer establishes the schedule, which

shall provide for the issuance of an

initial decision not later than 110 days

after issuance of the Director’s

determination order unless otherwise

provided in the hearing order.

§ 16.213 Discovery.

(a) Discovery is limited to requests for

admissions, requests for production of

documents, interrogatories, and

depositions as authorized by § 16.215.

(b) The hearing officer shall limit the

frequency and extent of discovery

permitted by this section if a party

shows that—

(1) The information requested is

cumulative or repetitious;

(2) The information requested may be

obtained from another less burdensome

and more convenient source;

(3) The party requesting the

information has had ample opportunity

to obtain the information through other
54010 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

discovery methods permitted under this

section; or

(4) The method or scope of discovery

requested by the party is unduly

burdensome or expensive.

§ 16.215 Depositions.

(a) General. For good cause shown,

the hearing officer may order that the

testimony of a witness may be taken by

deposition and that the witness produce

documentary evidence in connection

with such testimony. Generally, an

order to take the deposition of a witness

is entered only if:

(1) The person whose deposition is to

be taken would be unavailable at the

hearing;

(2) The deposition is deemed

necessary to perpetuate the testimony of

the witness; or

(3) The taking of the deposition is

necessary to prevent undue and

excessive expense to a party and will

not result in undue burden to other

parties or in undue delay.

(b) Application for deposition. Any

party desiring to take the deposition of

a witness shall make application

therefor to the hearing officer in writing,

with a copy of the application served on

each party. The application shall

include:

(1) The name and residence of the

witness;

(2) The time and place for the taking

of the proposed deposition;

(3) The reasons why such deposition

should be taken; and

(4) A general description of the

matters concerning which the witness

will be asked to testify.

(c) Order authorizing deposition. If

good cause is shown, the hearing officer,

in his or her discretion, issues an order

authorizing the deposition and

specifying the name of the witness to be

deposed, the location and time of the

deposition and the general scope and

subject matter of the testimony to be

taken.

(d) Procedures for deposition.

(1) Witnesses whose testimony is

taken by deposition shall be sworn or

shall affirm before any questions are put

to them. Each question propounded

shall be recorded and the answers of the

witness transcribed verbatim.

(2) Objections to questions or

evidence shall be recorded in the

transcript of the deposition. The

interposing of an objection shall not

relieve the witness of the obligation to

answer questions, except where the

answer would violate a privilege.

(3) The written transcript shall be

subscribed by the witness, unless the

parties by stipulation waive the signing,

or the witness is ill, cannot be found, or

refuses to sign. The reporter shall note

the reason for failure to sign.

§ 16.217 Witnesses.

(a) Each party may designate as a

witness any person who is able and

willing to give testimony that is relevant

and material to the issues in the hearing

case, subject to the limitation set forth

in paragraph (b) of this section.

(b) The hearing officer may exclude

testimony of witnesses that would be

irrelevant, immaterial, or unduly

repetitious.

(c) Any witness may be accompanied

by counsel. Counsel representing a

nonparty witness has no right to

examine the witness or otherwise

participate in the development of

testimony.

§ 16.219 Subpoenas.

(a) Request for subpoena. A party may

apply to the hearing officer, within the

time specified for such applications in

the prehearing conference report, for a

subpoena to compel testimony at a

hearing or to require the production of

documents only from the following

persons:

(1) Another party;

(2) An officer, employee, or agent of

another party;

(3) Any other person named in the

complaint as participating in or

benefiting from the actions of the

respondent alleged to have violated any

Act;

(4) An officer, employee, or agent of

any other person named in the

complaint as participating in or

benefiting from the actions of the

respondent alleged to have violated any

Act.

(b) Issuance and service of subpoena.

(1) The hearing officer issues the

subpoena if the hearing officer

determines that the evidence to be

obtained by the subpoena is relevant

and material to the resolution of the

issues in the case.

(2) Subpoenas shall be served by

personal service, or upon an agent

designated in writing for the purpose, or

by certified mail, return receipt

addressed to such person or agent.

Whenever service is made by registered

or certified mail, the date of mailing

shall be considered as the time when

service is made.

(3) A subpoena issued under this part

is effective throughout the United States

or any territory or possession thereof.

(c) Motions to quash or modify

subpoena.

(1) A party or any person upon whom

a subpoena has been served may file a

motion to quash or modify the subpoena

with the hearing officer at or before the

time specified in the subpoena for the

filing of such motions. The applicant

shall describe in detail the basis for the

application to quash or modify the

subpoena including, but not limited to,

a statement that the testimony,

document, or tangible evidence is not

relevant to the proceeding, that the

subpoena is not reasonably tailored to

the scope of the proceeding, or that the

subpoena is unreasonable and

oppressive.

(2) A motion to quash or modify the

subpoena stays the effect of the

subpoena pending a decision by the

hearing officer on the motion.

§ 16.221 Witness fees.

(a) The party on whose behalf a

witness appears is responsible for

paying any witness fees and mileage

expenses.

(b) Except for employees of the United

States summoned to testify as to matters

related to their public employment,

witnesses summoned by subpoena shall

be paid the same fees and mileage

expenses as are paid to a witness in a

court of the United States in comparable

circumstances.

§ 16.223 Evidence.

(a) General. A party may submit direct

and rebuttal evidence in accordance

with this section.

(b) Requirement for written testimony

and evidence. Except in the case of

evidence obtained by subpoena, or in

the case of a special ruling by the

hearing officer to admit oral testimony,

a party’s direct and rebuttal evidence

shall be submitted in written form in

advance of the oral hearing pursuant to

the schedule established in the hearing

officer’s prehearing conference report.

Written direct and rebuttal fact

testimony shall be certified by the

witness as true and correct. Subject to

the same exception (for evidence

obtained by subpoena or subject to a

special ruling by the hearing officer),

oral examination of a party’s own

witness is limited to certification of the

accuracy of written evidence, including

correction and updating, if necessary,

and reexamination following crossexamination by other parties.

(c) Subpoenaed testimony. Testimony

of witnesses appearing under subpoena

may be obtained orally.

(d) Cross-examination. A party may

conduct cross-examination that may be

required for disclosure of the facts,

subject to control by the hearing officer

for fairness, expedition and exclusion of

extraneous matters.

(e) Hearsay evidence. Hearsay

evidence is admissible in proceedings

governed by this part. The fact that
Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations 54011

evidence is hearsay goes to the weight

of evidence and does not affect its

admissibility.

(f) Admission of evidence. The

hearing officer admits evidence

introduced by a party in support of its

case in accordance with this section, but

may exclude irrelevant, immaterial, or

unduly repetitious evidence.

(g) Expert or opinion witnesses. An

employee of the FAA or DOT may not

be called as an expert or opinion

witness for any party other than the

agency except as provided in

Department of Transportation

regulations at 49 CFR part 9.

§ 16.225 Public disclosure of evidence.

(a) Except as provided in this section,

the hearing shall be open to the public.

(b) The hearing officer may order that

any information contained in the record

be withheld from public disclosure. Any

person may object to disclosure of

information in the record by filing a

written motion to withhold specific

information with the hearing officer.

The person shall state specific grounds

for nondisclosure in the motion.

(c) The hearing officer shall grant the

motion to withhold information from

public disclosure if the hearing officer

determines that disclosure would be in

violation of the Privacy Act, would

reveal trade secrets or privileged or

confidential commercial or financial

information, or is otherwise prohibited

by law.

§ 16.227 Standard of proof.

The hearing officer shall issue an

initial decision or shall rule in a party’s

favor only if the decision or ruling is

supported by, and in accordance with,

reliable, probative, and substantial

evidence contained in the record and is

in accordance with law.

§ 16.229 Burden of proof.

(a) The burden of proof of

noncompliance with an Act or any

regulation, order, agreement or

document of conveyance issued under

the authority of an Act is on the agency.

(b) Except as otherwise provided by

statute or rule, the proponent of a

motion, request, or order has the burden

of proof.

(c) A party who has asserted an

affirmative defense has the burden of

proving the affirmative defense.

§ 16.231 Offer of proof.

A party whose evidence has been

excluded by a ruling of the hearing

officer may offer the evidence on the

record when filing an appeal.

§ 16.233 Record.

(a) Exclusive record. The transcript of

all testimony in the hearing, all exhibits

received into evidence, all motions,

applications requests and rulings, and

all documents included in the hearing

record shall constitute the exclusive

record for decision in the proceedings

and the basis for the issuance of any

orders.

(b) Examination and copy of record.

Any interested person may examine the

record at the Part 16 Airport

Proceedings Docket, AGC–600, Federal

Aviation Administration, 800

Independence Avenue, SW.,

Washington, DC 20591. Any person may

have a copy of the record after payment

of reasonable costs for search and

reproduction of the record.

§ 16.235 Argument before the hearing

officer.

(a) Argument during the hearing.

During the hearing, the hearing officer

shall give the parties reasonable

opportunity to present oral argument on

the record supporting or opposing

motions, objections, and rulings if the

parties request an opportunity for

argument. The hearing officer may

direct written argument during the

hearing if the hearing officer finds that

submission of written arguments would

not delay the hearing.

(b) Posthearing briefs. The hearing

officer may request or permit the parties

to submit posthearing briefs. The

hearing officer may provide for the

filing of simultaneous reply briefs as

well, if such filing will not unduly delay

the issuance of the hearing officer’s

initial decision. Posthearing briefs shall

include proposed findings of fact and

conclusions of law; exceptions to

rulings of the hearing officer; references

to the record in support of the findings

of fact; and supporting arguments for

the proposed findings, proposed

conclusions, and exceptions.

§ 16.237 Waiver of procedures.

(a) The hearing officer shall waive

such procedural steps as all parties to

the hearing agree to waive before

issuance of an initial decision.

(b) Consent to a waiver of any

procedural step bars the raising of this

issue on appeal.

(c) The parties may not by consent

waive the obligation of the hearing

officer to enter an initial decision on the

record.

Subpart G—Initial Decisions, Orders

and Appeals

§ 16.241 Initial decisions, order, and

appeals.

(a) The hearing officer shall issue an

initial decision based on the record

developed during the proceeding and

shall send the initial decision to the

parties not later than 110 days after the

Director’s determination unless

otherwise provided in the hearing order.

(b) Each party adversely affected by

the hearing officer’s initial decision may

file an appeal with the Associate

Administrator within 15 days of the

date the initial decision is issued. Each

party may file a reply to an appeal

within 10 days after it is served on the

party. Filing and service of appeals and

replies shall be by personal delivery.

(c) If an appeal is filed, the Associate

Administrator reviews the entire record

and issues a final agency decision and

order within 30 days of the due date of

the reply. If no appeal is filed, the

Associate Administrator may take

review of the case on his or her own

motion. If the Associate Administrator

finds that the respondent is not in

compliance with any Act or any

regulation, agreement, or document of

conveyance issued or made under such

Act, the final agency order includes a

statement of corrective action, if

appropriate, and identifies sanctions for

continued noncompliance.

(d) If no appeal is filed, and the

Associate Administrator does not take

review of the initial decision on the

Associate Administrator’s own motion,

the initial decision shall take effect as

the final agency decision and order on

the sixteenth day after the actual date

the initial decision is issued.

(e) The failure to file an appeal is

deemed a waiver of any rights to seek

judicial review of an initial decision

that becomes a final agency decision by

operation of paragraph (d) of this

section.

(f) If the Associate Administrator

takes review on the Associate

Administrator’s own motion, the

Associate Administrator issues a notice

of review by the sixteenth day after the

actual date the initial decision is issued.

(1) The notice sets forth the specific

findings of fact and conclusions of law

in the initial decision that are subject to

review by the Associate Administrator.

(2) Parties may file one brief on

review to the Associate Administrator or

rely on their posthearing briefs to the

hearing officer. Briefs on review shall be

filed not later than 10 days after service

of the notice of review. Filing and

service of briefs on review shall be by

personal delivery.
54012 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

(3) The Associate Administrator

issues a final agency decision and order

within 30 days of the due date of the

briefs on review. If the Associate

Administrator finds that the respondent

is not in compliance with any Act or

any regulation, agreement or document

of conveyance issued under such Act,

the final agency order includes a

statement of corrective action, if

appropriate, and identifies sanctions for

continued noncompliance.

§ 16.243 Consent orders.

(a) The agency attorney and the

respondents may agree at any time

before the issuance of a final decision

and order to dispose of the case by

issuance of a consent order. Good faith

efforts to resolve a complaint through

issuance of a consent order may

continue throughout the administrative

process. Except as provided in § 16.209,

such efforts may not serve as the basis

for extensions of the times set forth in

this part.

(b) A proposal for a consent order,

specified in paragraph (a) of this

section, shall include:

(1) A proposed consent order;

(2) An admission of all jurisdictional

facts;

(3) An express waiver of the right to

further procedural steps and of all rights

of judicial review; and

(4) The hearing order, if issued, and

an acknowledgment that the hearing

order may be used to construe the terms

of the consent order.

(c) If the issuance of a consent order

has been agreed upon by all parties to

the hearing, the proposed consent order

shall be filed with the hearing officer,

along with a draft order adopting the

consent decree and dismissing the case,

for the hearing officer’s adoption.

(d) The deadline for the hearing

officer’s initial decision and the final

agency decision is extended by the

amount of days elapsed between the

filing of the proposed consent order

with the hearing officer and the

issuance of the hearing officer’s order

continuing the hearing.

(e) If the agency attorney and sponsor

agree to dispose of a case by issuance of

a consent order before the FAA issues

a hearing order, the proposal for a

consent order is submitted jointly to the

official authorized to issue a hearing

order, together with a request to adopt

the consent order and dismiss the case.

The official authorized to issue the

hearing order issues the consent order

as an order of the FAA and terminates

the proceeding.

Subpart H—Judicial Review

§ 16.247 Judicial review of a final decision

and order.

(a) A person may seek judicial review,

in a United States Court of Appeals, of

a final decision and order of the

Associate Administrator as provided in

49 U.S.C. 46110 or section 519(b)(4) of

the Airport and Airway Improvement

Act of 1982, as amended, (AAIA), 49

U.S.C. 47106(d) and 47111(d). A party

seeking judicial review of a final

decision and order shall file a petition

for review with the Court not later than

60 days after a final decision and order

under the AAIA has been served on the

party or within 60 days after the entry

of an order under 49 U.S.C. 40101 et

seq.

(b) The following do not constitute

final decisions and orders subject to

judicial review:

(1) An FAA decision to dismiss a

complaint without prejudice, as set

forth in § 16.27;

(2) A Director’s determination;

(3) An initial decision issued by a

hearing officer at the conclusion of a

hearing;

(4) A Director’s determination or an

initial decision of a hearing officer that

becomes the final decision of the

Associate Administrator because it was

not appealed within the applicable time

periods provided under §§ 16.33(b) and

16.241(b).

Subpart I—Ex Parte Communications

§ 16.301 Definitions.

As used in this subpart:

Decisional employee means the

Administrator, Deputy Administrator,

Associate Administrator, Director,

hearing officer, or other FAA employee

who is or who may reasonably be

expected to be involved in the

decisional process of the proceeding.

Ex parte communication means an

oral or written communication not on

the public record with respect to which

reasonable prior notice to all parties is

not given, but it shall not include

requests for status reports on any matter

or proceeding covered by this part, or

communications between FAA

employees who participate as parties to

a hearing pursuant to 16.203(b) of this

part and other parties to a hearing.

§ 16.303 Prohibited ex parte

communications.

(a) The prohibitions of this section

shall apply from the time a proceeding

is noticed for hearing unless the person

responsible for the communication has

knowledge that it will be noticed, in

which case the prohibitions shall apply

at the time of the acquisition of such

knowledge.

(b) Except to the extent required for

the disposition of ex parte matters as

authorized by law:

(1) No interested person outside the

FAA and no FAA employee

participating as a party shall make or

knowingly cause to be made to any

decisional employee an ex parte

communication relevant to the merits of

the proceeding;

(2) No FAA employee shall make or

knowingly cause to be made to any

interested person outside the FAA an ex

parte communication relevant to the

merits of the proceeding; or

(3) Ex parte communications

regarding solely matters of agency

procedure or practice are not prohibited

by this section.

§ 16.305 Procedures for handling ex parte

communications.

A decisional employee who receives

or who makes or knowingly causes to be

made a communication prohibited by

§ 16.303 shall place in the public record

of the proceeding:

(a) All such written communications;

(b) Memoranda stating the substance

of all such oral communications; and

(c) All written responses, and

memoranda stating the substance of all

oral responses, to the materials

described in paragraphs (a) and (b) of

this section.

§ 16.307 Requirement to show cause and

imposition of sanction.

(a) Upon receipt of a communication

knowingly made or knowingly caused to

be made by a party in violation of

§ 16.303, the Associate Administrator or

his designee or the hearing officer may,

to the extent consistent with the

interests of justice and the policy of the

underlying statutes, require the party to

show cause why his or her claim or

interest in the proceeding should not be

dismissed, denied, disregarded, or

otherwise adversely affected on account

of such violation.

(b) The Associate Administrator may,

to the extent consistent with the

interests of justice and the policy of the

underlying statutes administered by the

FAA, consider a violation of this

subpart sufficient grounds for a decision

adverse to a party who has knowingly

committed such violation or knowingly

caused such violation to occur.

Issued in Washington, DC, on October 8,

1996.

David R. Hinson,

Administrator.

[FR Doc. 96–26180 Filed 10–10–96; 8:45 am]

BILLING CODE 4910–13–M


FAA Docket No. 16-08-01 Director's Determination

UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

W ASffiNGTON, D.C.

Docket No. 16-08-01

DIRECTOR'S DETERMINATION

I.

INTRODUCTION

This matter is before the Federal Aviation Administration (FAA), Director of the Office of

Airport Compliance and Field Operations, to investigate pursuanto the Rules of Practice

for Federally Assisted Airport Enforcement Proceedings found in Title 14 Code of Federal

Regulations (CFR), Part 16.

JetAway Aviation (JetAway/Complainant) filed this formal Complaint pursuant to 14 CFR

Part 16 against the Board of County Commissioners (BOCC), Montrose County, Colorado

and the Montrose County Building Authority (County/Respondent/Sponsor), which owns

and operates the Montrose Regional Airport (Airport) in Montrose County, Colorado. The

Complainant alleges that the Respondent is in violation of its Federal grant assurances 22,

Economic Nondiscrimination; and 23, Exclusive Rights by allegedly favoring the

incumbent full-service FBo,l Jet Center Partners (JCP) and disfavoring JetAway in a

manner that unreasonably denies JetAway's aeronautical access to the Airport and grants a

prohibited exclusive right to JCP. [FAA Exhibit 1, Item 1, pp. 1-2]

JetAway and the Respondent were parties to a previous Part 16 proceeding. [See JetAwav

Aviation LLC v Board of County Commissioners. Montrose County. Colorado. FAA

Docket No. 16-06-01, (November 6,2006) (Director's Determination) and FAA Exhibit 1,

Item 3, exh. Al (2006 JetAway DD) Complainant states that "two years have now

passed... and the County has continued its pattern of delay and refusal to negotiate with

JetAway in good faith with respecto JetAway'sproposal to provide FBD services and

sell aviation fuel on the Airport." [FAA Exhibit 1, Item 1, p. 3]

I A fixed-base operator (FBO) is a commercial entity providing aeronautical services such as fueling,

maintenance, storage, ground and flight instruction, etc., to the public. [FAA Order 5190.6A, Airport

Compliance Requirements, October 2,1989, Appendix 5.]

Page 1 of 50
FAA Docket No. 16-08-01 Director's Determination

The Respondent denies these claims. Specifically, the Respondent denies that it is

violating grant assurance 22. [FAA Exhibit 1, Item 3, p. 8] The County denies that it is

violating grant assurance 23 or 49 V.S.C. §§ 40103(e) and 47107(a)(4), stating that it has

identified a site available on the Airport which may be leased for FBO operations in

accordance with the Director's comments in the 2006 JetA way DD. [FAA Exhibit 1, Item

3, p. 4] [See Also FAA Exhibit 1, Item 3, exh. A, p. 35]

Based on the Director's review and consideration of the evidence submitted, the

administrative record designated as FAA Exhibit 1, the relevant facts, and pertinent law

and policy, the Director concludes, as set forth herein, that the Respondent is currently not

in violation of grant assurances 22, Economic Discrimination or 23, Exclusive Rights.

II. PARTIES

Montrose Regional Airport (Airport) is a public-use airport owned by Montrose County

and operated by the Montrose County Board of County Commissioners (BOCC),

Montrose County, Colorado. The Montrose County Building Authority is the owner of the

land and included as a co-sponsor of the Airport, having signed AlP grant agreements.

[FAA Exhibit 1, Item 4, p. 1] Montrose Regional Airport is a primary commercial service

airport. FAA records indicate the planning and development of the Airport has been

fmanced with funds provided by the FAA under the Airport Improvement Program (AlP)

authorized by the Airport and Airway Improvement Act of 1982, as amended, 49 U.S.C. §

47101, etseq. [See FAA Exhibit 1, Item 18]

The Complainant, JetAway Aviation leases land from One Creative Place, LLC. JetAway

may access the Airport (including the taxiing of aircraft through the airport boundaries),

pursuant to the powers granted by Montrose County in a specific 'through the fence

agreement,2 assigned to One Creative Place and its tenants, titled "Agreement Authorizing

Off-Airport Operations at Montrose Regional Airport." (Off-Airport Agreement) [FAA

Exhibit 1, Item 1, exh. 2] JetAway does business at the Airport and provides several

aeronautical services. [See 2006 JetAway DD; FAA Exhibit 1, Item 3, exh. A, pp. 2 & 4]

However, One Creative Place and JetA way have common ownership. According to the

Com~lainant's FBO proposal and revised draft settlement agreement, dated November 28,

2007 , Stephen S. Stuhmer offers himself on the signature line as a principle of JetAway

Aviation, One Creative Place LLC and KMTJ Fuel LLC, located at One Creative Place,

Montrose, Colorado. [FAA Exhibit 1, Item I, exhs. 6 & 7] JetA way states, in its Reply,

"JetAway Aviation, LLC and One Creative Place, LLC are two separate legal entities...

2 The FAA uses the term 'through-the- fence' operation to refer to an operation that involves the movement

of aircraft to and from the airfield to a location not owned or controlled by the airport sponsor. Such an

operation may be commercial or non-commercial. A "through-the fence" (TTF) operation may range from

only aircraft storage to a full-service fixed-base operation offering the into-plane sale of aviation fuels.

3 In this case, JetAway alleges that the County's failure to accepthis November 28,2007 settlement

agreement establishes the County's violation of the grant assurances, as discussed herein.

Page 2 of 50
FAA Docket No. 16-08-01 Director's Determination

The two limited liability companies presently do have common ownership... ." [FAA

Exhibit 1, Item 5, pp. 33-34] In the 2006 JetAway DD, the Director stated that JetAway

filed an action in Montrose County District Court, "to determine the extent of services that

may be provided to the general public under the Off-Airport Agreement." [FAA Exhibit 1,

Item 3, exh. A, p. 6] In its Findings of Fact, Conclusions of Law and Order, that Court

ordered, "Jetaway can self-fuel aircraft but cannot fuel any other aircraft. Any airplane to

be self-fueled must be owned and titled to One Creative Place, LLC." [FAA Exhibit 1,

Item 5, exh. 60, p. 40] It appears that JetAway and/or KMTJ Fuel have the right to selffuel aircraft titled to One Creative Place, LLC. Throughout the multiple court pleadings,

the parties and the court refer to the plaintiffs as JetAway, stating, "One Creative Place,

LLC, JetAway, LLC and KMTJ Fuel, LLC (collectively referred to as "JetAway")." [FAA

Exhibit 1, Item 5, exh. 60, p. 1] The Director adopts the Montrose County District Court's

practice to refer to One Creative Place, LLC, JetAway, LLC and KMTJ Fuel, LLC,

collectively as "JetAway."

III. PROCEDURAL mSTORY and BACKGROUND

Complainant's Part 16 Procedural Historv

On January 10,2006, JetAway filed fonna1 Complaint, FAA Docket No. 16-06-01, against

the County with the FAA under 14 CFRPart 16. (2006 JetAway Complaint) [FAA

Exhibit 1, Item 3, exh. A, p. 7J

On November 6, 2006, the FAA issued a Director's Determination for FAA Docket No.

16-06-01 (2006 JetAway DD) rJetAwav Aviation LLC v Board of County

Commissioners. Montrose County. Colorado, FAA Docket No. 16-06-01, (November 6,

2006) (Director's Determination) and FAA Exhibit 1, Item 3, exh. A], finding that the

County was not currently in violation of its grant assurances. (2006 JetAway DD) The

FAA also offered to assist in dispute resolution through mediation. [2006 JetA way DD,

FAA Exhibit 1, Item 3, exh. A, p. 35]

FAA engaged in mediation with both parties beginning on March 6, 2007. [FAA Exhibit

1, Item 1, page 7-8] The FAA mediation ended on November 19,2007. [FAA Exhibit 1,

Item 1, page 6] The County tern1inated settlement negotiations by letter dated December

5,2007. [FAA Exhibit 1, Item 1, exh. 8]

On January 25,2008, JetAway filed this Part 16 Complaint, FAA Docket No. 16-08-01

[FAA Exhibit 1, Item 1]

FAA issued its Notice of Docketing, dated February 12,2008. [FAA Exhibit 1, Item 2]

On March 26, 2008, the Respondent filed its Answer and Motion to Dismiss and an errata

on April 30, 2008. [FAA Exhibit 1, Items 3 & 4]

Page 3 of 50
FAA Docket No. 16-08-01 Director's Detemlination

On July 14,2008, JetAway filed their Reply to the Respondent's Answer and Motion to

Dismiss. [FAA Exhibit 1, Item 5]

On August 15,2008, the Respondent filed its Rebuttal to the Complainant's Reply. [FAA

Exhibit 1, Item 6]

In the fall of 2008, the parties continued negotiations in an attempt to settle their dispute.

[FAA Exhibit 1, Item 17] The parties moved to supplement the record with additional

pleadings, with evidence, several times through March 3, 2009. [FAA Exhibit 1, Items 7-

12, 14-16]

The FAA acknowledged the parties' attempts and pleadings, eventually extending the due

date of the issuance of the Director's Determination to June 30, 2009. [FAA Exhibit 1,

Items-I 3, 17, 18]

Factual Back!!round

Many of the documents comprising the record for this Complaint consist of pleadings

submitted in court proceedings in other venues, including Colorado State Court and United

States District Court, where action is still pending. Also, as stated, JetAway has filed a

previous formal Part 16 Complaint on similar grounds. The parties submit extensive draft

and final planning documents, some with FAA-approval and some without. The parties

submit opposing technical studies regarding the layout and operation of the Airport.

Finally, JetA way submits documents associated with negotiations between the parties in

FAA-sponsored mediation, prior to and after the filing of the extant 2008 JetAway

Complaint.

In its Complaint, JetAway states: "the background has been stated in parties' pleadings

and the 2006 JetAway DD in FAA Docket No. 16-06-01, which JetAway incorporates by

reference." [FAA Exhibit 1, Item 1, p. 2]

On August 23, 2001, the County entered into an "Agreement Authorizing Off-Airport

Operations" (Off-Airport Agreement) with several entities that controlled property

adjacent to the Airport. This adjacent property, known as "the Park," is on the northern

boundary of the Airport between the runways. The Off-Airport Agreement specifies that

any successor in interest to any of the Park owners "shall be entitled to all rights and

responsible for all liabilities under this Agreement." It contains a covenant specifying that

"this Agreement, and the obligations and benefits of the parties provided herein, shall be

covenants running with the land, and shall [be] binding upon and inure to the benefit of the

parties herein, and their respective heirs, successors, and assigns." [FAA Exhibit 1, Item 1,

exh. 2, p. 9] [2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 4]

On August 4, 2003, the County adopted minimum standards and requirements for the

provision of commercial aeronautical services at the Airport (2003 Minimum Standards).

[FAA Exhibit 1, Item 1, p. 9 & exh. 9] At the time, a full-service, County-owned, fixedbase operator -MTJ Air Services -served the Airport. The fixed-base operator was

Page 4 of 50
FAA Docket No. 16-08-01 Director's Determination

located on the south end of the apron, west of Runway 13/31. [2006 JetAway DD, FAA

Exhibit 1, Item 3, exh. A, p. 4]

In 2004, another entity -One Creative Place, LLC -purchased property within the Park

and succeeded to rights under the Off-Airport Agreement. The County executed the

Assignment of the Off-Airport Agreement in October 2004, effectively giving One

Creative Place the rights under the original August 23,2001, Agreement Authorizing OffAirport Operations. [FAA Exhibit 1, Item 1, exh. 2] One Creative Place owns off-airport

land and facilities and leases certain facilities to several tenants engaged in various

business activities. JetAway Aviation is one of the tenants of One Creative Place. This

allowed JetAway to conduct "through-the-fence" aeronautical activities at the Airport.

[2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 4]

In 2005, the County decided to privatize fixed-base operations and issued a Request for

Proposals (RFP) seeking fixed-base operators that complied with the Montrose Regional

Airport Minimum Standards. The County issued the RFP on April 1, 2005. [FAA Exhibit

1, Item 1, exh. 13] Two entities submitted proposals in accordance with the County's RFP

and the minimum standards. One was the Complainant, JetAway Aviation; the other was

Jet Center Partners (also known as Black Canyon Jet Center or JCP). [2006 JetAway DD,

FAA Exhibit 1, Item 3, exh. A, p. 4]

On August 15,2005, the County selected the JCP proposal for negotiation. JetAway's

proposal was not selected. [2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 4]

On November 7,2005, JetAway entered into a noncommercial Land Lease Agreement

with the County for airport ramp space. The term of the land lease was for 25 years and

the total area of the leased premises was 272,508 square feet. This area, pursuant to the

Land Lease Agreement, was not intended for fixed-base operator activities and was

designated "for the parking and moving of aircraft and for no other purpose." [FAA

Exhibit 1, Item 1, exh. 1] [2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 4]

On December 5, 2005, the County amended its minimum standards for land and

improvements. With this amendment, the County increased its minimum land

requirements for a fixed-base operation to 350,000 square feet with 250,000 square feet

allocated as ramp. It also increased the minimum standards for improvements to require at

least 27,500 square feet to be designated for fixed-base operator activities. Previously, the

Airport's Minimum Standards for the Provision of Commercial Aeronautical Services

provided: (1) the minimum land to be leased for a fixed base operation shall be 125,000

square feet, and (2) building improvements shall be permanent in nature and shall contain

at least 15,000 square feet for fixed-base operations. The change in the minimum

standards was adopted in Resolution No. 80-2005 of the Montrose County Board of

County Commissioners dated December 5, 2005. [FAA Exhibit 1, Item 1, exhs. 20 & 21]

[2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, pp. 4-5]

Also on December 5,2005, as a result of the August 15,2005 selection of the JCP

proposal for FBO services, the County entered into an FBO agreement with JCP. The

Page 5 of 50
FAA Docket No. 16-08-01 Director's Determination

initial teml was twenty years with options to extend and rights of first refusal at the end of

the options, commencing on January 4,2006. [FAA Exhibit 1, Item I, exh. 19]

On December 9,2005, JetAway submitted an FBO proposal to the County and requested

that the County accept its proposal at the next Board of County Commissioners meeting to

be held on December 19, 2005. This proposal was for JetAway to become a second fixedbase operator. [2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 5J

On December 20,2005, the County notified JetAway that consideration of JetAway's

proposal had been postponed due to specific concerns with the existing agreement

authorizing off-airport operations. The County also noted that it needed to understand the

functional use of the existing off-airport facility, review the proposed fixed-base operation

improvements in terms of the Airport's master plan, review the fixed-base operator

proposal relative to VOR4 restrictions, detennine whether to issue a request for proposals,

and provide other commissioners an opportunity to participate in the evaluation process.

[2006 JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 5]

On December 30, 2005, the County requested the FAA to review and comment on the OffAirport Agreement in relation to the County's FAA grant assurances. [2006 JetAway DD,

FAA Exhibit 1, Item 3, exh. A, p. 5]

On January 4, 2006, JCP began providing fixed-base operator services, including the sale

of aviation fuel. [2006 JetA way DD, FAA Exhibit 1, Item 3, exh. A, p. 6]

Also, on January 4, 2006, JetAway and One Creative Place filed a Complaint for

Declaratory Judgment in Montrose County District Court. The action was filed to

determine the extent of services that may be provided to the general public under the Off.

Airport Agreement as well as the 2004 Assignment of that Agreement. KMTJ Fuel, LLC,

an affiliate or related entity of One Creative Place and JetA way, also filed in Montrose

County District Court seeking declaratory relief to perform off-airport through-the-fence

fixed-base operations, including fueling. [2006 JetAway DD, FAA Exhibit 1, Item 3, exh.

A, p. 6 and Item 3, exh. E]

The County filed an action for Injunctive Relief against JetAway, One Creative Place, and

KMTJ Fuel, LLC, requesting the Court to enjoin those entities permanently from offering

any services on the off-airport property that are not permitted by the Off-Airport

Agreement. JetAway and the County's cases both address the same central issue, which is

the extent of services that JetA way and other Park owners and tenants may provide to the

general public on the off-airport property under the Off-Airport Agreement. [2006

JetAway DD, FAA Exhibit 1, Item 3, exh. A, p. 6]

As stated above, the County did not accept JetAway's December 2005 proposal to become

a second FHO on the Airport at its location adjacento the through-the-fence access point.

Therefore, on January 10,2006, JetAway filed its 2006 formal Complaint, FAA Docket

No. 16-06-01, againsthe County with the FAA under 14 CFR Part 16 alleging the County

4 A VOR is a ground-based navigational aid.

Page 6 of 50
FAA Docket No. 16-08-01 Director's Determination

had granted a prohibited exclusive right to JCP by failure to act on JetAway's proposal.

(2006 JetAway Complaint) [FAA Exhibit 1, Item 3, exh. A, p. 7]

In the County's February 2006 motion for a temporary restraining order, the County

requested, among other things, that the Court enjoin JetAway from fueling aircraft and

providing fixed-base operator services. The Court held a hearing on the motion on

February 15 and 17, 2006, and issued an Order on February 17. The District Court for

Montrose County, in response to a request for a temporary restraining order, issued an

Order on April 10, 2006, which was effective as of February 17, 2006. The Court was

requested, inter alia, to restrain JetAway and its affiliates from providing fixed-base

operator services at Montrose, and from interfering with JCP's FBO services. The Court

reviewed the Off-Airport Use Agreement between JetAway and the County and found that

JetAway was precluded from fueling any aircraft that are not owned by JetAway. As a

result, the Court took the position that JetAway could do what it did before, but could not

add fueling and fixed-base operator services not covered by the Off-Airport Agreement.

[2006 JetA way DD, FAA Exhibit 1, Item 3, exh. A, p. 6]

The Court issued an Order temporarily restraining JetA way from fueling to preserve the

status quo. Additionally, the Court issued an Order on April 11, 2006 consolidating the

pending cases, permitting intervention, and denying a stay of the proceedings. [2006

JetAway DD, FAA Exhibit 1, Item 3, exh. A, page 6]

On August 5, 2006, JetAway requested a lease of the South Tract adjacento its off-airport

parcel consisting of 187,395 square feet. [FAA Exhibit 1, Item 1, exh. 25]

In November of 2006, the Court issued a clarifying Order that added to and clarified the

temporary restraining order. This Order prohibited J etA way from advertising services that

it had not been authorized by the Authority to provide. JetA way continued to advertise

itself as an FBO and use the A vFuellogo. JetA way was found to be in contempt of court

regarding its advertising practices, and a remedial contempt order was issued. [FAA

Exhibit 1, Item 5, exhibit 60, p. 19]

On March 6, 2007, the parties and the FAA commenced mediation. The process was

conducted through the FAA's Office of the Chief Counsel, Administrative and Alternative

Dispute Resolution Division. [FAA Exhibit 1, Item 3, exh. F] It was not part of the Part 16

process. The FAA's participation in the mediation was governed by an agreement signed

by the mediator and the parties in March 2007, which states, "mediation is a confidential

process." [FAA Exhibit 1, Item 3, exh. F, para. 5] The agreement also states, "no party

shall be bound by anything said or done at the mediation unless a written settlement is

reached and executed by all necessary parties." [FAA Exhibit 1, Item 3, exh. F, para. 6]

On November 16, 2007, the County submitted its final settlement agreement to JetA way,

which was rejected. [FAA Exhibit 1, Item 1, exh. 5] JetA way responded with its version

of a settlement agreement on November 28, 2007, which the County rejected. [FAA

Exhibit 1, Item 1, exh. 6] The County terminated settlement negotiations by letter to

JetAway on December 5, 2007. [FAA Exhibit 1, Item 1, exh. 8]

Page 7 of 50
FAA Docket No. 16-08-01

On June 30, 2008, the District Court, Montrose County, Colorado issued its "Findings of

Fact, Conclusions of Law and Order," that consolidated and ruled on the three separate

lawsuits. The District Court ordered that JetAway can self-fuel its aircraft but cannot fuel

any other aircmft. In addition, any self-fueling must comply with the Minimum

Standards, must be from a pump with a meter system able to accurately calculate the fuel

flowage, and is subject to the uniform fuel flowage fee established by the County. The

Court also found that JetAway can provide towing, crew and passenger lounge facilities,

public restrooms and telephone, loading and unloading, hangar stomge, and aircraft

maintenance. Although the Order permits JetAway to conduct these FBO activities, it

must comply with the Airport's Minimum Standards. The Court also said that JetAway

must apply and pay for an access permit. Upon application and payment of the fee, the

County is obligated to execute a written document establishing and granting the access

right as a property right appurtenant to JetAway's off-Airport parcel. The Court also

terminated the Land Lease Agreement.5 [FAA Exhibit 1, Item 5, exh. 60, pp. 40-42]

The parties continued negotiations in the fall of 2008 in an attempt to settle their dispute,

but their efforts were not successful. [FAA Exhibit 1, Item 17] The parties each moved to

supplement the record with additional evidence several times through March 3, 2009.

IV. ISSUES

The Complainant states that, "The County has unjustly discriminated against Complainant

JetAwayand granted exclusive rights to Jet Center Partners in violation of Grant

Assurances 22 and 23.,,6 [FAA Exhibit 1, Item 1, p. 21] In JetAway's 30 counts, within

two broad allegations,7 itraises the issues of the granting of an exclusive right to JCP by

means of land leases with JCP and by means of unreasonable terms imposed upon

JetAway's plan to offer commercial services, including aeronautical fueling; and the

unjust economic discrimination against JetAway by alleged preference to JCP. JetAway

also raises issues of errors in the County's Airport Layout Plan in its Reply [FAA Exhibit

1, Item 5, p. 55] and questions Rights and Powers granted to JCP in the form of a right of

first refusal term in JCP's lease. [FAA Exhibit 1, Item 1, p. 27] Considering the above,

the FAA has determined that the following issues require analysis in order to provide a

complete review of the Respondents' compliance with applicable Federal law and policy:

S JetAway entered into the Montrose Regional Airport Land Lease Agreement on November 7, 2005. The

use of the ramp area premises was limited to parking and moving of aircraft, and FBO services were not

~rmitted. The Complainant cites the applicable Federalaw. (FAA Exhibit I, Item I, p. 2] 7 The burden of proof lies with the Complainants. Complainants who file under 14 CFR Part 16 shall

provide a concise but complete statement of the facts relied upon to substantiate each allegation. [See 14

CFR § 16.23(b)(3)] Complainants will not be deemed to meet this burden simply because they have

submitted volumes of pages in exhibits if they have failed to explain how the individual exhibits support

specific allegations. [See M. Daniel Carey and CliffDavenDort v. Afton-Lincoln CountY MuniciQal Aimort

Joint Powers Board. FAA Docket No. 16-06-06, (January 19,2007) (Director's Determination), page 55]

Page 8 of 50
FAA Docket No. 16-08-01 Director's Determination

1. Whether the County has violated grant assurance 5, Preserving Rights and Powers.

2.

Whether the County has violated grant assurance 29, Airport Layout Plan.

3. Whether the County has granted an exclusive right for the use of the Airport in

violation of grant assurance 23, Exclusive Rights, 49 V.S.C. § 401 03( e) and 49

V.S.C. § 47107(a)(4) by means of land leases to Jet Center Partners (JCP).

4. Whether the County's actions with regard to JetAway's proposal for a FBO

business at the Airport constitute the constructive granting of an exclusive right by

means of an unreasonable denial in violation of grant assurance 23, Exclusive

Rights, 49 V.S.C. § 40103(e) and 49 V.S.C. § 47107(a)(4).

5. Whether the County has provided more favorable treatmento JCP with regard to

retail aircraft services in a manner that unjustly discriminates against JetAway in

violation of Federal grant assurance 22, Economic Nondiscrimination, 49 V.S.C.

§ 47107(a).

v.

APPLICABLE FEDERAL LAW AND FAA POLICY

The Federal role in civil aviation has been augmented by various legislative actions that

authorize programs for providing Federal funds to local communities for the development

of airport facilities. In each such program, the airport sponsor assumes certain obligations

to maintain and operate its airport facilities safely and efficiently and in accordance with

specified conditions. Commitments assumed by airport sponsors in grant agreements are

important factors in maintaining a high degree of safety and efficiency in airport design,

construction, operation and maintenance, as well as ensuring the public reasonable

aeronautical access.

Title 49 V.S.C. § 47101, et seq., provides for Federal airport financial assistance for the

development of public-use airports under the Airport Improvement Program (AlP)

established by the Airport and Airway Improvement Act of 1982, as amended. Title 49

V.S.C. § 47107, et seq., sets forth assurances to which an airport sponsor agrees as a

condition of receiving Federal financial assistance. Upon acceptance of an AlP grant, the

assurances become a binding contractual obligation between the airport sponsor and the

Federal government. The assurances made by airport sponsors in AlP grant agreements

are important factors in maintaining a viable national airport system.

Airport SDonsor Assurances

As a condition precedent to providing airport development assistance under the Airport

Improvement Program, 49 V.S.C. § 47107, etseq., the Secretary of Transportation and, by

extension, the FAA must receive certain assurances from the airport sponsor. Title 49

V.S.C. § 47107(a) sets forth the statutory sponsorship requirements to which an airport

sponsoreceiving Federal fmancial assistance must agree.

Page 9 of 50
FAA Docket No. 16-08-01 Director's Detennination

The FAA has a statutory mandate to ensure that airport owners comply with these sponsor

assurances.s FAA Order 5190.6A, Airoort Comoliance Requirements (FAA Order

5190.6A), issued on October 2, 1989, provides the policies and procedures to be followed

by the FAA in carrying out its legislatively mandated functions related to Federally

obligated airport owners' compliance with their sponsor assurances. The FAA considers it

inappropriate to provide Federal assistance for improvements to airports where the

benefits of such improvements will not be fully realized due to inherent restrictions on

aeronautical activities. The following grant assurances are relevant to this Complaint:

Grant Assurance 5, Preserving Rights and Powers

Grant Assurance 5, Preserving Rights and Powers, implements the provisions of Title 49

V.S.C. § 47107, and requires, in pertinent part, that the sponsor of a Federally obligated

airport:

"... will not take or permit any action which would operate to deprive it of any of the

rights and powers necessary to perform any or all of the terms, conditions, and

assurances in the grant agreement without the written approval of the Secretary,

and will act promptly to acquire, extinguish or modify any outstanding rights or

claims of right of others which would interfere with such performance by the

sponsor. This shall be done in a manner acceptable to the Secretary. "

The Order describes the responsibilities under Grant Assurance 5 assumed by the owners

of public-use airports developed with Federal assistance. Among these is the responsibility

for enforcing adequate rules, regUlations, or ordinances as are necessary to ensure the safe

and efficient operation of the airport. ~ FAA Order 5190.6A, Sec. 4-7 & 4-8.]

Grant Assurance 22, Economic Nondiscrimination

The owner of any airport developed with Federal grant assistance is required to operate the

airport for the use and benefit of the public. Federal grant assurance 22, Economic

Nondiscrimination, (Assurance 22) deals with both the reasonableness ofairport access

and the prohibition of adopting unjustly discriminatory conditions as a potential for

limiting access. Assurance 22 of the prescribed sponsor assurances implements the

provisions of 49 V.S.C. § 47107(a)(1) through (6), and requires, in pertinent part:

[The airport owner or sponsor] will make the airport available as an airport for

public use on reasonable terms and without unjust discrimination to all types, kinds

and classes of aeronautical activities, including commercial aeronautical activities

offering services to the public at the airport. [Assurance 22(a)]

8 See, e.g., the Federal Aviation Act of 1958, as amended and recodified, Title 49 U.S.C. §§ 40101,40113,

40114,46101,46104,46105,46106,46110; and the Airport and Airway Improvement Act of 1982, as

amended and recodified, Title 49 U.S.C. §§ 47105(d), 47106(d), 47107(k), 47107(1), 47111(d), 47122

Page 10 of 50
FAA Docket No. 16-08-01 Director's Determination

Each fIXed-based operator at the airport shall be subject to the same rates, fees,

rentals, and other charges as are uniformly applicable to all other fixed-base

operators making the same or similar uses of such airport and utilizing the same or

similar facilities. [Assurance 22( c)]

The sponsor may establish such reasonable, and not unjustly discriminatory,

conditions to be met by all users of the airport as may be necessary for the safe and

efficient operation of the airport. [Assurance 22 (h)]

The sponsor may prohibit or limit any given type, kind or class of aeronautical use

of the airport if such action is necessary for the safe operation of the airport or

necessary to serve the civil aviation needs of the public. [Assurance 22(i)]

Subsection (h) qualifies subsection (a), and subsection (i) represents an exception to

subsection (a) to permit the sponsor to exercise control of the airport sufficient to preclude

unsafe and inefficient conditions that would be detrimental to the civil aviation needs of

the public.

In all cases involving restrictions on airport use imposed by airport owners for safety and

efficiency reasons, the FAA will make the final determination on the reasonableness of

such restrictions when those restrictions deny or limit access to, or use of, the airport.

[FAA Order 5190.6A, Section 4-8]

Grant Assurance 23, Exclusive Rights

Federal grant assurance 23, Exclusive Rights, (Assurance 23) implements the provisions of

49 V.S.C. §§ 40103(e) and 47107(a)(4), and requires, in pertinent part, that the owner or

sponsor of a Federally obligated airport:

...will permit no exclusive right for the use of the airport by any persons providing,

or intending to provide, aeronautical services to the public It further agrees that

it will not, either directly or indirectly, grant or permit any person, firm, or

corporation, the exclusive right at the airport to conduct any aeronautical

activities. [Assurance 23]

While public~use airports may impose qualifications and minimum standards upon those

who engage in aeronautical activities, FAA has taken the position that the application of

any unreasonable requirement or any standard that is applied in an unjustly discriminatory

manner may constitute the constructive grant of an exclusive right. Courts have found the

grant of an exclusive right where a significant burden has been placed on one comJ?etitor

that is not placed on another. [See e.g. Poml2ano Beach v FAA, 774 F2d 1529 (11 Cir,

1985)] An owner or sponsor is under no obligation, however, to permit aircraft owners to

introduce onto the airport equipment, personnel. or practices which would be unsafe,

unsightly, detrimental to the public welfare, or which would affect the efficient use of

airport facilities. [FAA Order 5190.6A, Section 3-9 (e)]

Page 11 of 50
FAA Docket No. 16-08-01 Director's Determination

The FAA has updated exclusive rights guidance in FAA Advisory Circular 150/5190-6

Exclusive Rights at Federally-Obligated Airports, January 4, 2007, stating:

An exclusive rights violation can occur through the use of leases where, for example,

all the available airport land and/or facilities suitable for aeronautical activities are

leased to a single aeronautical service provider who cannot put it into productive

use within a reasonable period of time, thereby denying other qualified parties the

opportunity to compete to be an aeronautical service provider at the airport. An

airport sponsor's refusal to permit a single FBO to expand based on the sponsor's

desire to open the airport to competition is not a violation of the grant assurances.

Additionally, an airport sponsor may exclude an incumbent FBO from participating

under a competitive solicitation in order to bring a second FBO onto the airport to

create a more competitive environment. [Excusive Rights AC, Section 1.3(b)(3)]

Grant Assurance 24, Fee and Rental Structure

Grant assurance 24, Fee and Rental Structure, addresses fees the owner or sponsor levies

on airport users in exchange for the services the airport provides.

Title 49 V.S.C. § 47107(a)(13) requires, in pertinent part, that the owner or sponsor of a

Federally obligated airport "will maintain a schedule of charges for use of facilities and

services at the airport that will make the airport as self-sustaining as possible under the

circumstances existing at the airport."

Grant assurance 24 satisfies the requirements of § 47107(a)(13). It provides, in pertinent

part, that the owner or sponsor of a Federally-obligated airport agrees to establish a fee

and rental structure that will make the airport as self .sustaining as possible under the

circumstances existing at the particular airport, taking into account such factors as the

volume of traffic and economy of collection. This sponsor will maintain a fee and rental

structure consistent with assurances 22, Economic Nondiscrimination, and 23, Exclusive

Rights. The intent of the assurance is for the airport operator to charge fees that are

sufficient to cover as much of the airport's costs as is feasible.

Moreover, the Order states that the owner or sponsor's obligation to make an airport

available for public use does not preclude the owner or sponsor from recovering the cost

of providing the facility. The owner or sponsor is expected to recover its costs through the

establishment of fair and reasonable fees, rentals, or other user charges that will make the

airport as self-sustaining as possible under the circumstances existing at the particular

airport. [See FAA Order 5190.6A, Section 4-14(a).]

Grant Assurance 29, Airport Layout Plan

Grant Assurance 29, Airport Layout Plan (ALP), implements the provisions of 49 V.S.C.

§ 47107(a)(16) by requiring an airport sponsor to keep up-to-date the ALP. Specifically,

Grant Assurance 29 requires the airport sponsor to show on its ALP the boundaries of the

airport and all proposed additions thereto, the location and nature of all existing and

Page 12 of 50
FAA Docket No. 16-08-01 Director's Determination

proposed airport facilities and structures (such as runways, taxiways, aprons, terminal

buildings, hangars and roads), and the location of all existing and proposed

nonaeronautical uses.

Airport layout plans and all1endments, revisions, or modifications thereto, are subject to

the approval of the FAA. What this means from a practical standpoint is that an airport

sponsor must not make or permit any changes or alterations in the airport or any of its

facilities which are not in conformity with the airport layout plan. The FAA may require

elimination, relocation or mitigation of any change to the airport that is not approved by

the FAA on the ALP and that adversely affects the safety, utility or efficiency of any

Federally improved property.

Airport Ae:reements Grantine: "Throue:h-the-Fence" Access

The Federal obligation to make an airport available for the use and benefit of the public

does not impose any requirement to permit access by aircraft from adjacent property. 9

However, there are times when the sponsor will enter into an agreement that permits

access to the airfield by aircraft based on land adjacent to, but not a part of, the airport

property. This type of an arrangement has frequently been referred to as a "through-thefence" operation even though a perimeter fence may not be visible.

Because through-the-fence arrangements can place an encumbrance upon the airport

property and reduce the airport's ability to meet its Federal obligations, as a general

principal the FAA does not support agreements that grant access to the public landing area

by aircraft stored and serviced off-site on adjacent property. The existence of such an

arrangement could conflict with the sponsor's Federal obligations unless the sponsor

retains the legal right to require the off site property owner or occupanto conform in all

respects to the requirements of any existing or proposed grant agreement or Federal

property conveyance obligation. [FAA Order 5190-6A, Section 6-6]

The development of aeronautical enterprises on land off-airport and not controlled by the

sponsor can create problems. For example, it can result in an economic competitive

advantage for the "through-the-fence" operator to the detriment of on-airport tenants. To

equalize this imbalance, the sponsor should obtain ftom any off-airport enterprise or entity

a fair return for its use of the airfield by assessing access fees from those entities having

"though-the- fence" access.

The airport sponsor must not discriminate against those aeronautical users within the

airport. However, the airport may also charge any fee it sees fit to those outside the

airport. In addition, the airport sponsor is entitled to seek recovery of initial and

continuing capital and operating costs of providing a public use airfield. Moreover,

special safety and operational requirements should be incorporated into any access

9 See FAA Order 5190.6A, Section 6-6(a). Based on this, an airport sponsor may simply deny "throUghthe-fence" access if it so chooses. Since federal obligations do not require that access be granted under

these circumstances, users having access to the airport under a "through-the-fence" agreement are not

protected by the airport sponsor's federal obligations to the FAA.

Page 13 of 50
FAA Docket No. 16-08-01 Director's Determination

agreement to ensure that the through.the-fence access does not complicate the control of

vehicular and aircraft traffic or compromise the security of the airfield operations area.

[FAA Order 5190.6A, Section 6.6]

Finally, the existence of an arrangement granting access to a public landing area from offsite locations contrary to FAA recommendations shall be reported to the FAA along with

details on the circumstances. If the FAA determines that the existence of such an

agreement circumvents the attainment of the public benefit for which the airport was

developed, the owner of the airport will be notified that the airport may be in violation of

its agreements with the Government. [FAA Order 5190-6A, Section 6-6J

The FAA Aimort Comoliance Pro!!ram

The FAA discharges its responsibilities for ensuring airport owners' compliance with their

Federal obligations through its Airport Compliance Program. The FAA's airport

compliance efforts are based on the contractual obligations an airport owner accepts when

receiving Federal grant funds or the transfer of Federal property for airport purposes.

These obligations are incorporated in grant agreements and instruments of conveyance in

order to protect the public's interest in civil aviation and to ensure compliance with

Federalaw.

The FAA Airport Compliance Program is designed to ensure the availability of a national

system of safe and properly maintained public-use airports operated in a manner consistent

with the airport owners' Federal obligations and the public's investment in civil aviation.

The Airport Compliance Program does not control or direct the operation of airports.

Rather, it monitors the administration of the valuable rights pledged by airport sponsors to

the people of the United States in exchange for monetary grants and donations of Federal

property to ensure that the public interest is being served. FAA Order 5190.6A sets forth

policies and procedures for the FAA Airport Compliance Program. The Order is not

regulatory and is not controlling with regard to airport sponsor conduct. Rather, it

establishes the policies and procedures to be followed by FAA personnel in carrying out

the FAA's responsibilities for ensuring airport compliance. It provides basic guidance for

FAA personnel in interpreting and administering the various continuing commitments

made to the United States by airport owners as a condition of receiving a grant of Federal

funds or the conveyance of Federal property for airport purposes. The Order analyzes the

various obligations set forth in the standard airport sponsor assurances, addresses the

nature of those assurances, addresses the application of those assurances in the operation

of public-use airports, and facilitates interpretation of the assurances by FAA personnel.

The FAA Compliance Progranl is designed to achieve voluntary compliance with Federal

obligations accepted by owners and/or operators of public-use airports developed with

FAA-administered assistance. Therefore, in addressing allegations of noncompliance, the

FAA will make a determination as to whether an airport sponsor is currently in

compliance with the applicable Federal obligations. Consequently, the FAA will consider

the successful action by the airport to cure any alleged or potential past violation of

Page 14 of 50
FAA Docket No. 16-08-01 Director's Determination

applicable Fedeml obligation to be grounds for dismissal of such allegations. [See e.g.

~il~g~ ~ ~enter v. MemDhis and Sh~lbv County Airoort AuthoritY, FAA Docket No.

16-99-10, (August 30, 2001) (Final Decision and Order)]

Enforcement procedures regarding airport compliance matters may be found at FAA Rules

of Practice for Federally Assisted Airport Enforcement Proceedings (14 CFR Part 16).

These enforcement procedures were published in the Federal Register (61 FR 53998,

October 16, 1996) and became effective on December 16, 1996.

VI. ANALYSIS AND DISCUSSION

This Complaint is primarily an allegation that Montrose County has granted an unlawful

exclusive right to the Airport's FBO, Jet Center Partners (JCP), by the circumstance of the

Airport layout and land leases (allegation A, counts 1-5,8,9) and by the intent to deny

access to others by means of unreasonable terms (allegation A, counts 6 & 7). Also,

JetAway alleges that the County has failed to accommodate JetAway's proposed FBO

business plan at its preferred airport location (Airpark adjacent location) to such an extent

as to unjustly discriminate against JetAway (allegation B). [FAA Exhibit 1, Item 1, p. 2]

The County states:

The County sought to accommodate JetAway 's request by resolving the through-thefence issues and without exposure for the County's residents and the expense of

further litigation. The County was unable to do so. By identifying and making

available the 9. 612-acre site, the County is confirming its position from the onset:

There is no exclusive right. [FAA Exhibit 1, Item 3, pp. 4-5]

The allegations, arguments and evidence in this case are extensive and complex. The

parties dispute each others' facts and question each others' motives, evidence and experts.

Also, the parties have been engaged in extensive litigation in state court and United States

District Court. [See FAA Exhibit 1, Item 1, exh. 3 and Item 6, exh. QQ, p.3] JetAway

filed a Formal Part 16 Complaint in 2006 with similar allegations to the extant Complaint.

The Director dismissed that Complaint on November 7, 2006. [FAA Exhibit 1, Item 3,

exh. A] The Director understands that the Complainant and the Respondent may be

expecting the FAA to find facts on various questions indirectly related to matters under

FAA's jurisdiction. However, as is appropriate for a FAA Part 16 investigation, the

Director must focus on questions of the Respondent's compliance with its grant assurances

and Federal law. We will find facts relevant when they pertain to the question of the

Respondent's compliance with its Federal obligations, relying on FAA law, policy and

Part 16 precedent.

Page 15 of 50
FAA Docket No. 16-08-01 Director's Determination

Motions and Preliminary Matters

Motion to Dismiss: Building Authority

The Complainant, JetA way, included the Montrose County Building Authority as a

named-respondent in this case. JetA way had not included the Building Authority in its

2006 JetAway Complaint. In correcting an original error in its Answer, the Respondent

admits that the Montrose County Building Authority has signed grant agreements, and

accepted the associated grant obligations as the owner of the Airport property. [FAA

Exhibit 1 ~ Item 4} Therefore~ the FAA simply accepts that the Montrose County Building

Authority and Montrose County are co-sponsors of the Airport and will simply refer to

them, collectively, as the Respondent, County or Sponsor. The County moved to dismiss

the Montrose County Building Authority from the Complaint, because JetA way had not

specifically engaged the Building Authority in informal resolution. JetAway and the

County have an extensive record of attempts to resolve this ongoing dispute, including the

prior 2006 JetAway Complaint and FAA-sponsored mediation. While the parties may

continue to argue the importance of the relationship between Montrose County and the

Montrose County Building Authority~ it is the Director's view that JetAway's ongoing

dialogue with airport management is sufficient for purposes of conducting informal

resolution.

The County's motion to dismiss the Montrose County Building Authority is denied.

Motion to Dismiss: Confidentiality

The County moves to dismiss the Complaint because JetA way violated the confidentiality

of the FAA-sponsored mediation in its pleadings. Participation in the mediation was

governed by an agreement signed by the mediator and the parties in March 2007, which

states, "mediation is a confidential process." [FAA Exhibit 1, Item 3, exh. F, para. 5] The

agreement also states, "no party shall be bound by anything said or done at the mediation

unless a written settlement is reached and executed by all necessary parties." [FAA

Exhibit 1, Item 3, exh. F, para. 6] The mediation is separate and apart from this Part 16

proceeding.

In this case, JetAway has provided a snapshot in the form of JetAway's November 2007

Settlement Offer. [FAA Exhibit 1, Item 1, exh. 5] The County responds with a motion to

dismiss the Complaint.

The County's motion to dismiss the Complaint over confidentiality breaches of the

mediation is denied. The mediation does not control the Part 16 proceedings.

Nevertheless, the confidentiality of the mediation has been breached and the documents

are now in the public domain. As such the Director will consider the documents in this

proceeding.

Page 16 of 50
FAA Docket No. 16-08-01 Director's Detennination

Motions to Supplement Record

Each of the parties has submitted Motions to Supplement the Record. Complainant filed

multiple motions to supplement the record with additional exhibits and two responses

which included additional exhibits. [FAA Exhibit 1, Item 7 (Exhibit 73), Item 8 (Exhibits

74 and 75), Item 12 (Exhibit 76), Item 14 (Exhibit 76(a), and Item 16 (Exhibit 77)]

Respondent filed multiple motions to supplement the record with multiple exhibits. [FAA

Exhibit 1, Item 9 (Exhibits TT, UU, VV, WW, XX), Item 11 (Exhibits YY and ZZ), and

Item 15 (Exhibit AAA)] The Director issued two orders acknowledging the parties'

multiple filings to supplement the record. [FAA Exhibit 1, Item 13 and Item 17]

Clearly this extensive number of supplemental filings is highly unusual in a Part 16

proceeding. Nonetheless, motions are the appropriate means to make application for an

order or ruling not otherwise specifically provided for in the regulation. [See 14 CFR

§ 16.19( a)] The requisite procedural requirements have been met. The Director has

reviewed the filings and will permit the parties to supplement the record with the

requested exhibits. Accordingly, the exhibits contained in the supplemental filings,

including motions and answers, will be considered by the Director in this determination

and are included in the Index of the Administrative Record.

Proprietary 

Rights, Federal Obligations and Negotiations

One of the key fundamental principles at issue here is the proprietary rights of an airport

sponsor. This was at issue in the 2006 JetAway DD. Succinctly, Federal obligations limit

a sponsor's proprietary rights, but do not eliminate them. [See, Kent J. Ashton and

JacQuelin R. Ashton v. CitY of Concord. North Carolin~ FAA Docket No. 16-02-01

(Director's Determination Issued August 22,2003) (Final Agency Decision Issued

February 27,2004) Ashton III, DD, p. 27]

One example of where an airport sponsor may exercise its proprietary rights is to protect

itself as a going concern in the face of litigation. 10 Another way in which an airport

sponsor may exercise its proprietary rights is to pursue a range of aeronautical services to

serve the needs of the aviation community .11 A third way in which an airport sponsor may

reasonably exercise its proprietary rights is to plan for the long-term development,

10 In Kent J. Ashton and JacQuelin R. Ashton v. CitY of Concord. FAA Docket No. 16-02-01 (Director's

Determination Issued August 22, 2003) (Final Agency Decision Issued February 27, 2004), the Director

acknowledges, "it is the Complainants' right to pursue complaints and protect their interest (however) it is

the Respondent's right to protect itself from the possibility ofuture costly and frivqlous litigation."

Continuing, the Director found that an Airport sponsor: "... was not obligated to expose itself to future

lawsuits by entering into a business agreement with (Complainant). Given (Complainant's) prior history of

lawsuits and FAA complaints, plus a threatoffuture litigation" [See, A~hton III DD, Page 27] II In Self Serve Pumps v Chicago Executive Aimort, FAA Docket No. 16-07-02 (Director's Determination

Issued March 17, 2008), the Director stated, "Clearly, the Airport management believes that its bundling of

associated services with the sale offuel serves the interests of the public in civil aviation. This is its

primary mission. ...In the end; the evidence presented by the Complainant is insufficient to eclipse the

Airport's proprietary discretion to make management decisions in the best aeronautical interests of the public, balanced with the best business interests of the Airport as a going concern. " rssPumps. DD, p.25]

Page 17 of 50
FAA Docket No. 16-08-01 Director's Determination

marketing and layout of its airport to ensure its utility and self -sustainability.12 Finally, an

airport sponsor may exercise its proprietary rights to protect itself as a going concern by

limiting, mitigating or eliminating aeronautical access from adjacent off-airport property

'through-the-fence.,13 In some cases, a sponsor's Federal obligation under grant assurance

5, Preserving Rights and Powers, might prevent a sponsor from accommodating the

wishes of a particular on-airport, or through-the-fence proponent.

The negotiations in the FAA-sponsored mediation were not a negotiation of the County's

state of compliance with its Federal obligations or part of this Part 16 proceeding. The

FAA had not found the County to be in non-compliance with its Federal obligations. [FAA

Exhibit 1, Item 3, exh. A]

The Director has already observed that the County might be able to structure some kind of

an agreement or agreements at the Ajrport to allow JetAway to sell fuel in a manner within

the bounds of its Federal obligations. The Director stated:

Additionally, the Director believes that all of the issues in this case can be resolved

informally in a manner consistent with the County's Federal obligations. Since both

the County and JCP have stated that an additional FED at the Airport is feasible,

that it appears that sufficient airport property is available to accommodate a second

FBD, and the County appears to have concluded on March 20, 2006 that JetAway's

proposal meets all Minimum Standards, successful resolution appears to be

possible. [FAA Exhibit 1, Item 3, exh. A, p. 35]

However, the Director also stated:

...the Federal obligation to make an airport available for the use and benefit of the

public does not impose any requirement to permit access by aircraft from adjacent

property and the airport sponsor may, from FAA's perspective, simply deny

"through-the-fence" access if it so chooses. Based on this, Complainant's right to

provide any services from its off-airport location is not a matter protected by the

County's Federal obligations. Additionally, the Off-Airport Agreement can lead to

violations of the airport's Federal obligations. [FAA Exhibit 1, Item 3, exh. A, p.

13]

In addition~ the Director stated other options~ by pointing out that an "aerial view and the

Airport Layout Plan clearly show that there are potential locations for FBO facilities at

the Airport in addition to JCP, albeit the area may not be adjacent to JetAway's current

off-airport facilities. The fact that potential locations for FBO operations are not

located next to JetAway's current off-Airport facility should not be an issue since JetAway

12 In Thennco Aviation v Los Angeles. FAA Docket No. 16-06-07 (Final Agency Decision Issued

December 17, 2007), the Associate Administrator states: "The very nature of lease agreements is that they

are for a definite term, so that both parties may change plans and arrangements to suit their respective

interests. Federal obligations do not prevent this sponsor from exercising such change... Infact, the terms

of the lease agreement are the primary protection of tenants for continued occupancy of a leasehold; not

the grant assurances." [Thennco, FAD, p. 27]

13See 2006 JetAway DD.

Page 18 of 50
FAA Docket No. 16-08-01 Director's Determination

has argued that its proposed on-Airport proposal is independent from its off-airport

operations." [FAA Exhibit 1, Item 3, exh. A, p. 35, fn. 302] [See Also FAA Exhibit 1, Item

1, exh. 12, p. D.13, exh. 17, p. 2, exh. 26 and Item 5, exh. 53 & exh. 43, pp. E.13 & E.17]

The FAA has found in Santa Monica. oft Association SMAA Krue er Aviation and

Santa Monica Air Center v. County of Santa Monic~ FAA Docket No. 16-99-21

(February 4, 2003), that: "A sponsor is not required to develop any and all parcels of land

in a manner consistent with the wishes of anyone party, but rather may exercise its

proprietary rights and powers to develop and administer the Airport's land in a manner

consistent with the public's interest." rSMAA FAD, 16-99-21, p. 19}

Thus, the Director's guidance to the parties in the prior 2006 DD is informative here and

clarifies the bounds of the County's Federal obligations and the County's proprietary rights.

Other Disputes Between the Parties

The point of the FAA-sponsored mediation was to determine whether the two parties,

JetAway and Montrose County, could come to terms on their specific interests and goals.

The process was conducted through the FAA's Office of the Chief Counsel, Administrative

and Alternative Dispute Resolution Division. [FAA Exhibit 1, Item 3, exh. FJ It was not

part of this Part 16 proceeding. The Director notes that the extensive record in this case

clearly demonstrates that the Complainant's primary intent in the mediation, the two FAA

formal Part 16 complaints and its litigation against the County is to establish a full-service

FBO facility, vending fuel, in the vicinity of its existing infrastructure on the off-airport

property known as the Park. [See Procedural History and Background, and Findings of Fact]

The FAA does not arbitrate or mediate negotiations through a formal Part 16 proceeding.

Nor does the FAA enforce lease terms between parties to an agreement. Rather, the FAA

enforces contracts between an airport sponsor and the Federal government. [See AmA v v.

Maryland Aviation Administration. FAA Docket No. 16-05-12, (March 20, 2006)

(Director's Detemrination), p.23] State courts are the appropriate place for the disposition

of disputes of contracts and performance under contracts. Airport sponsors are free to

include terms of performance in agreements, such as leases. As discussed above, and in

the 2006 JetAway DD, airport sponsors are bound by Federal obligations regarding

reasonableness, non-discrimination and exclusive rights as applied to on-airport

aeronautical users. But even with on-airport users, the FAA does not adjudicate questions

of default under leases agreed to by parties. [FAA Exhibit 1, Item1, exh.1]14

In fact~ JetAway has been aggressive in state and Federal courts to protect its rights under

its agreements. [See FAA Exhibit 1~ Item 6~ exh. QQ, p. 3] For example, two agreements

14 Penobscot Air Service v. Knox County, FAA Docket No. 16-97-04 (September 25,1997) (Director's

Determination) (Penobscot), the FAA summarized this long-standing concept: The Agency made it clear

that, "The purpose of the grant assurances is to protect the public interest in the operation ofF ederally

obligated airports. The purpose is not to provide alternative or supplemental rights to those normally

available to commercial tenants in disputes with their landlords, i.e. negotiation or commercialitigation under applicable state and locallaws » [Penobscot at page 24, citing to SkY East Services. Inc. v.

Suffolk County. Complaint Nos. 13-88-06 and 13-89-01]

Page 19 of 50
FAA Docket No. 16-08-01 Director's Determination

between J etA way and the County have been litigated: the Off-Airport Agreement [F AA

Exhibit 1, Item 1, exh. 2} and the non-commercial Land Lease Agreement. [FAA Exhibit

1, Item 1, exh. I} The findings of the state court appear well-supported by evidence and

appear to address issues properly before a state court. The court's Findings Fact.

Conclusions of Law and Order (Montrose Court Order), dated June 30, 2008, states:

The [Off-Airport Agreement is ambiguous because it is susceptible to two

reasonable interpretations. Specifically, Section 3(g) can be interpreted; as argued

by the County, that JetAway can only engage in services expressly allowed under

the agreement. On the other hand; as argued by JetAway, Section 3 (g) can be

interpreted as allowing JetAway to offer any services not expressly prohibited.

[FAA Exhibit 1, Item 5, exh. 60, p. 26]

As stated, this contract dispute is within the jurisdiction of the state court. It is proper for

the state court to interpret the meaning of the terms of the Off-Airport Agreement.

JetAway's rights to conduct commercial activities that involve the transit of aircraft

'through-the-fence' of the Airport may be protected by the Off-Airport Agreement, but not

the County's Federal grant assurances.

With regard to JetAway's rights to provide commercial services under the Off-Airport

Agreement, the Montrose Court Order found:

The [Off-Airport Agreement] specifically lists the sale of aircraft fuel, flight

training [with exceptions] and aircraft rentals or charters as additional FBO

services that are prohibited. Therefore, Jetaway cannot offer these services without

express approval from the County. [FAA Exhibit 1, Item 5, exh. 60, p. 27]

With regard to JetAway's noncommercial Land Lease Agreement (LLA), the Montrose

Court Order found:

The LLA specifies that the leased premises is for the parking and moving of aircraft

and for no other purpose, and that the LLA does not create any additional rights or

diminish any existing rights under the [Off-Airport Agreement]...

The County also argues that Jetaway breached the lease by using the leased area

for FBO operations. The Court agrees. It is undisputed that Jetaway fueled

airplanes on the leased premises after entering into the LLA. Although Jetaway

initially argued it had a right under the [Off-Airport Agreement] to fuel airplanes

once fueling services were privatized at the Airport, it later withdrew that argument.

Jetaway now concedes that it had no right to fuel airplanes without the County's

approval. Fueling is an FBO service. The LLA specifically prohibits engaging in

FBO services on the leased premises. Therefore, Jetaway breached the LLA in this

regard. The County is entitled to terminate the lease for this breach.

In conclusion, the LLA can be rescinded for a mutual mistake of facts. The LLA

can be terminated by the County for Jetaway's breach in fueling airplanes on the

leased premises. [FAA Exhibit 1, Item 5, exh. 60, pp. 30-32]

Page 20 of 50
FAA Docket No. 16-08-01 Director's Determination

The Court did order that, "The Land Lease Agreement is temrinated." [FAA Exhibit 1,

Item 5, exh. 60, p. 41] So, JetAway has no on-airport presence. Also, as stated,

JetAway's noncommercial Land Lease Agreement never allowed for the conduct of

commercial operations on the Airport. [FAA Exhibit 1, Item 1, exh. 1, p. 2]

Issue 1

Whether the County has violated grant assurance 5, Preserving Rights and Powers.

In addition to the proprietary rights and powers reserved to an airport owner, grant

assurance 5 prohibits the airport sponsor from giving away rights and powers it needs to

control and operate the airport. It obligates the sponsor to retain financial and legal

control of airport property to ensure the airport's continued operation as an airport.

Two ways in which an airport sponsor might intentionally or unintentionally cede rights

and powers is by allowing through-the-fence aeronautical access as discussed herein and

by granting rights of first refusal. An airport sponsor can protect its rights and powers by

limiting, mitigating or eliminating the through-the-fence agreements and by negotiating

away rights of first refusal. In some circumstances, an airport sponsor's Federal

obligations may require such action.

The FAA did express concern over the Off-Airport Agreement in the 2006 JetAway DD,

stating that the Off-Airport Agreement provides perpetual access and benefits to any

successor in interest without providing any controls for the County to negotiate with

prospective successors and redefine the terms of the agreement. [2006 JetAway DD, pp.

20-21] In 'that determination, the Director did not find the issue rose to a level of

noncompliance with grant assurance 5, Preserving Rights and Powers, under the

circumstances existing at the Airport. The Director is reassured by the Montrose Court

~, discussed above, providing clarity to the limitations of the Off-Airport Agreement

and by ensuring that commercial aircraft fueling cannot occur on the noncommercial Land

Lease by terminating JetAway's on-airport leasehold.I5

From the record, it appears that important financial considerations from the Off-Airport

parties have yet to be resolved. These financial concerns are important in regard to the

County's obligation to protect its on-airport aeronautical service providers from unjust

economic discrimination under grant assurance 22, Economic Nondiscrimination; and to

pursue a financially self-sustaining rate structure under grant assurance 24, Fee and Rental

Structure. Grant assurance 24 obligates the airport sponsor to maintain a fee and rental

structure that will make the airport as self-sustaining as possible under the particular

circumstances existing at that airport. [See Applicable Law and Policy, above] .

The record reflects some information relevant to the County's obligation to impose a fee

and rental structure that will make the Airport as self-sustaining as possible under the

circumstances. The 2006 JetAway DD notes that JetAway had not paid any fees to the

15 In addition, the Montrose Court Order also eliminated JetAway's ability to advertise that it sells aviation

fuel. [FAA Exhibit 1, Item 5, exh. 60, p. 42]

Page 21 of 50
FAA Docket No. 16-08-01 Director's Determination

County for its access to the Airport, except for a $250 access permit fee. In the 2006

JetAway DD, the Director noted that the "disparity in [fixed-base operator] fees could

affect the Airport's ability to be self-sustaining, in violation of grant assurance 24, Fee and

Rental Structure." [2006 JetAway DD, p. 21.] Furthermore, the Montrose Court Order

observed the following:

JetAway never obtained an access permit from the County. Its position regarding

this issue is inconsistent. On the one hand, JetAway maintains that nobody ever

brought the need for an access permit to its attention, even though the requirement

of an access permit is explicitly addressed in the OAA [Off-Airport Agreement]. It

has also argued that the OAA itself was the access permit. Recently, JetAway

tendered to the County $250 for the access fee (the amount specified in the OAA).

The County did not accept the fee because of this litigation. JetAway never received

an access permit or an assignment of one from STW [the prior holder of the OAA].

The County's position regarding an access permit is also somewhat inconsistent ...

[FAA Exhibit I, Item 5, exh. 60, p. 5]

Also in the Montrose Court Order, the Court resolved the issue by ordering:

JetAway must apply and pay for an access permit. Upon application and payment

of the fee, the County is obligated to execute a written document establishing and

granting the access right as a property right appurtenanto JetAway's off-Airportparcel. 

[FAA Exhibit 1, Item 5, exh. 60, p. 29]

An annual access fee of $250 appears to be too low in proportion to the level of throughthe-fence business activity and is insufficient to meet the Airport's Federal obligations

under grant assurance 24, Fee and Rental Structure, under the circumstances existing at

this Airport. However, the record in this case is insufficient to determine that the County

has failed to exercise an option to limit, mitigate or extinguish the Off-Airport Agreement

contrary to grant assurance 24. Since grant assurance 24 regards financial selfsustainability, the costs associated with generating appropriate revenue or limiting access

is a relevant 'particular circumstance existing at the Airport.'

In any event, that is not the allegation made by this Complainant. Rather, JetAway states,

"The County executed a lease agreement with JCP that contains an option and right of fITst

refusal." [FAA Exhibit 1, Item 1, p. 27] The JCP Lease does include the following provision:

1.03 Right of First Refusal. After the completion of the extended term of the

Agreement, the parties will in good faith negotiate mutually agreeable terms for the

continued lease and occupancy of the leased properties and improvements described

herein. However, if mutually agreed upon terms have not been reached and County

has a bona fide written offer from another party it desires to accept, County can do

so if it first provides to Operator the right to continue the agreement by matching the

terms of the bona fide written offer. [FAA Exhibit 1, Item 1, exh. 19]

The County states that "The right of first refusal, however, is open ended. ...If the [FAA]

notifies the County... that there is a grant assurance issue with the option to extend or the

Page 22 of 50
FAA Docket No. 16-08-01 Director's Detennination

right of first refusal... the County will notify JCP that the offending provision must be

rectified." [FAA Exhibit 1, Item 3, pp. 29-30]

JetA way presents this allegation as circumstantial evidence of the County's alleged intent

to grant an exclusive right to JCP. However, that allegation is inapt and not supported, as

discussed below in Issue 3.

FAA observes that sponsors might over-grant rights out of a lack of discipline or foresight,

or because they had previously over-granted rights to another operator in another

agreement. A through-the-fence agreement is an example of where an airport sponsor

may have over-granted rights to an airport user.

A right of first refusal for future occupancy of the same leasehold is generally of greater

concern because it might limit an airport sponsor's ability to change the use of property in

the future, when the public's interest in aviation may demand some other use. This is

potentially a violation of grant assurance 5. However, the facts in this case are far too

speculative for a finding of non-compliance in related to grant assurance 5. To avoid

future problems, the County is well advised to negotiate the elimination of the right-offirst refusal provision in its existing leases, including the JCP Lease.

Considering the above, the Director finds that the County is not in violation of grant

assurance 5, Preserving Rights and Powers.

Issue 2

Whether the County has violated grant assurance 29, Airport Layout Plan.

An Airport Layout Plan is a scaled drawing of existing and proposed land and facilities

necessary for the operation and development of the airport. It represents an understanding

between the airport owner and the FAA regarding the current and future development and

operation of the airport. FAA approval of Airport Layout Plans assists to ensure that federally

funded airport development will be safe, useful and efficient.

JetAway raises an allegation of the County's violation of grant assurance 29, Airport Layout

Plan, in its Reply. JetAway states:

It now appears that Respondents have also violated Grant Assurance 29 by

manipulating the Airport Layout Plan and constructing an aircraft parking apron

and access road for JCP that are not shown as existing or proposed improvements

on the Airport Layout Plan that was in effect when the County made those

improvements. [FAA Exhibit 1, Item 5, p. 6]

In its Rebuttal, the County moves to dismiss this allegation, stating that JetA way has not

complied with Part 16 requirements for pre-complaint resolution (14 CFR § 16.21). [FAA

Exhibit 1, Item 6, p. 10] Also, in its Answer, the County characterizes the Airport Layout

Plan (ALP) process and its significance to compliance. Airport Layout Plans can be

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FAA Docket No. 16-08-01 Director's Determination

updated at any time, easily resolving mistakes or omissions.16 [FAA Exhibit 1, Item 6, pp.

8-9] The FAA recognizes an airport's planning process is dynamic, not static

In its Complaint, and in more detail in its Reply, JetAway relies heavily on allegations of

manipulation of the County's airport planning processes. This elevation of the planning

process is inappropriate. For example, in its Complaint, JetAway focuses in property

'identified' for FBO purposes on various draft and final planning documents to form the

basis for concluding that the County has granted an exclusive right to JCP, by leasing all

'identified' FBO parcels to JCP. [FAA Exhibit 1, Item 1, p. 22] This is a misapplication

of the role of the planning process and the standards for compliance.

Montrose County Airport Management correctly states the appropriate role of the ALP:

It is common for airports to regularly update and revise ALPs based on changes at

the airport. The FAA does not have to approve specific FBO locations and FAA

approval of an ALP does not require an airport to locate FBO facilities at such

locations as may be designated on the ALP or prohibit the airport from later

changing its designated site to another location. [FAA Exhibit 1, Item 6, exh. GG,

exh. 5, p. 2]

This understanding of the need to engage in ongoing planning, in consultation with the

FAA, recognizes that we expect airport management pursue its Federal obligations and its

proprietary interests in an environment of change. The Director points to Pacific Coast

FIvers. Inc. v. County of San Diego, FAA Docket No. 16-04-08 (July 25, 2005)

(Director's Determination) (Pacific Coast). In Pacific Coast, the complainant alleged that

the sponsor's airport development plans discriminated against small piston aircraft types

by reducing accessibility through leasehold development in favor of jet aircraft. [Pacific

~, DD, p. 32] Specifically, Pacific Coast states:

The Director recognizes that the current [Master Plan] for [the Airport], as the

County's "vision" for the future of the airport, plays a role in its decision-making

process, and for development of the airport. Having said that, the Director also

notes that deviatingfrom the [Master Plan], to accommodate changing airport

conditions or new requirements, is not only permissible, but may be necessary and

expected rPacific CQast, DD, p. 35]

A typical violation of grant assurance 29 would be more akin to a refusal to cooperate with

the FAA on an ongoing planning process, or refusing to mitigate a significant problem

arising from an un-planned circumstance at an airport upon a demand from the FAA to do

so. In Pacific Coast the Director acknowledged that deviation from an airport plan may

be necessary and expected. Conversely, the Director has found that refusal to alter an

ALP as a means to deny any access may be a violation of a grant assurance. In Gate 9 v

16 The FAA has previously stated that it is common practice for the FAA to accept interim updates to the

ALP, resulting in a 'pen and ink' notation on an existing, approved ALP. (Boca Aviation v. Boca Raton

Aimort Authority. FAA Docket No. 16-00-10 (March 20,2003) (Final Decision and Order), p. 24, fn. 80.

~.

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