### 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

Answerat 1-2. FAR Section 16.21(b)(1) requires simply that a c omplainant 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 EXHIBIT1. 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. SeeEmail 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 EXHIBIT2. 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

EXHIBIT3.

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 EXHIBIT4. 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 EXHIBIT5. 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

953998 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 thehandling 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 under53999 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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 tofile 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 Law54000 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. andforeign 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 reflect54001 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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 disputeresolution 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 fully54002 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 adjudicatingcompliance 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.54003 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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.—C OST OF I NVESTIGATIONS C URRENT AND U NDER N EW R ULE

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 FAAfinds 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, executive54005 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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 an54006 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, 19 ll. [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 the54007 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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

(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 other54010 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 that54011 Federal Register / Vol. 61, No. 201, Wednesday, October 16, 1996 / Rules and Regulations

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 DocketNo. 16-08-01 Director's Determination

UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION

WASffiNGTON, 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

pursuant o the Rules ofPractice for Federally

Assisted Airport Enforcement

Proceedings

found in Title 14Codeof Federal Regulations

(CFR), Part 16.

JetAway Aviation (JetAway/Complainant) filed this formal Complaint pursuant to 14 CFR Part 16 againstthe Board of County Commissioners (BOCC), Montrose County, Colorado and the Montrose County Building Authority (County/Respondent/Sponsor),which owns and operatesthe Montrose Regional Airport (Airport) in Montrose County, Colorado. The Complainant alleges that the Respondentis 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 unreasonablydenies JetAway's aeronautical access to the Airport and grants a prohibited exclusive right to JCP. [FAA Exhibit 1, Item 1, pp. 1-2]



### JetAway andthe Respondent

wereparties

to a previousPart 16 proceeding. [See JetAwav Aviation LLC v Boardof CountyCommissioners. Montrose

County.Colorado.FAA DocketNo. 16-06-01,

(November

6,2006) (Director's Determination) and FAA Exhibit 1, Item 3, exh. Al (2006JetAwayDD) Complainant states that "two years

have now passed... andthe Countyhascontinued its pattern

of delayand refusal

to negotiate

with JetAway in good faith with respect o 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, Appendix5.]



### Page 1 of 50

### FAA DocketNo. 16-08-01 Director's Determination

The Respondentdenies 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 reviewand consideration of the evidence

submitted,

the administrative

recorddesignated

as FAA Exhibit 1,the relevant facts,and pertinentlaw and policy, the Directorconcludes, as setforth herein,

thatthe 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 leasesland 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,2assigned

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] JetAway states, in its Reply, "JetAway Aviation, LLC and One Creative Place, LLC are two separatelegal entities...

2 The FAA uses

the term 'through-the-

fence' operation

to referto an operation

that involvesthe movement
of aircraftto and from the airfield to a locationnot ownedor controlledby the airport sponsor. Such an operation

maybe commercial

or non-commercial.

A "through-the

fence" (TTF) operation

mayrange from only aircraftstorage

to a full-servicefixed-base operation

offering the into-plane

sale of aviation

fuels. 3In this case,

JetAway alleges that the County's failure to accept his November

28,2007 settlement
agreement

establishes

the County's violation of the grant assurances,

asdiscussed

herein.



### Page 2 of 50

### FAA DocketNo. 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 appearsthat 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 January10,2006,JetAway filed fonna1

Complaint,FAA DocketNo. 16-06-01, against the Countywith the FAA under 14CFRPart 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 JetAway 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 tern1inatedsettlement 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 Replyto the Respondent's Answerand 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 recordwith additional pleadings,

with evidence,

several times throughMarch3, 2009. [FAA Exhibit 1, Items 7- 12, 14-16]

The FAA acknowledged the parties' attempts and pleadings, eventually extending the due date of the issuanceof 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 betweenthe 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 adjacentto the Airport. This adjacent property, known as "the Park," is on the northern boundary of the Airport betweenthe 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 DocketNo. 16-08-01 Director's Determination

locatedonthe south

endof the apron,

westof 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 accordancewith 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 squarefeet. 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 standardsfor 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 increasedthe minimum standardsfor 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
squarefeet, 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
standardswas 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 agreementwith JCP. The

Page 5 of 50

### FAA DocketNo. 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 thatthe Countyaccept

its proposal

atthe next Boardof CountyCommissioners meeting to be held on December

19,2005. This proposal

was for JetAway

to become

a secondfixedbase 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 neededto understandthe 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 Countyrequested

the FAA to reviewand comment on the OffAirport Agreement

in relation

to the County's FAA grant assurances.

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

On January

4, 2006,JCPbegan

providing fixed-base

operator services, including the sale of aviationfuel. [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 MontroseCounty District Court. The action wasfiled to determine

the extent

of services

that may be provided

to the general

public under

the Off. Airport Agreement

aswell as

the 2004 Assignment

of thatAgreement. KMTJ Fuel, LLC,

an affiliate or relatedentity of OneCreative Place and JetA way, alsofiled in Montrose County District Courtseeking declaratory

relief to performoff-airportthrough-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 actionfor Injunctive Relief against JetAway,

OneCreativePlace,

and KMTJ Fuel, LLC, requesting the Court to enjointhose

entitiespermanently

from offering
anyservices

onthe off-airport property that are not permittedby the Off-Airport Agreement. JetAway

andthe County'scases

both address

the same centralissue,

which is the extent

of services

that JetA way and other Park

owners andtenants

may provideto the general public onthe off-airport propertyunder the Off-Airport Agreement. [2006 JetAwayDD, 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 onthe Airport at its locationadjacent o the through-the-fence

access point. Therefore,

on January

10,2006,JetAway

filed its 2006formal Complaint,FAA Docket No. 16-06-01,

against he County

with the FAA under 14 CFR Part 16allegingthe County

4 A VOR is a ground-based navigational

aid.



### Page 6 of 50

### Director's Determination

FAA DocketNo. 16-08-01

had granted

a prohibitedexclusiveright to JCP by failure to act on JetAway'sproposal. (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,

amongother

things, thatthe Courtenjoin JetAway from fueling aircraft and providing fixed-base

operator services. The Courtheld a hearingonthe motion on February15 and 17,2006, and issued an Orderon February

17. The District Court for Montrose

County, in response

to a request

for a temporary

restraining

order, issued

an Orderon April 10,2006,which was effectiveasof February 17, 2006. The Courtwas requested,

inter alia, to restrain

JetAway and its affiliates from providing fixed-base operator servicesat Montrose,

and from interferingwith JCP's FBO services.The Court reviewed the Off-Airport Use Agreement between JetAway andthe Countyandfound that JetAway was precluded

from fueling anyaircraft that are not ownedby JetAway. As a result,the Court took the positionthat JetAway could do what it did before,but could not addfueling andfixed-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 Orderon April 11,2006consolidating the pending cases, permitting intervention,

anddenyinga 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 adjacent

o its off-airport parcelconsisting

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

prohibitedJ

etA way from advertising

services that it had not been

authorized

by the Authority to provide. JetA way continued

to advertise itself asan FBO anduse

the A vFuellogo. JetA

way wasfoundto be in contempt of court regarding

its advertising

practices,

anda remedialcontempt 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

andAlternative 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

andthe partiesin March2007, which states, "mediationis 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 atthe mediation unless a written settlement

is reached and executed

by all necessary

parties." [FAA Exhibit 1, Item 3, exh. F, para. 6]

On November16,2007,

the Countysubmitted

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,whichthe Countyrejected.[FAA Exhibit 1, Item 1, exh. 6] The County terminated

settlement

negotiations

by letterto JetAwayon December

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

Page 7 of 50

### FAA DocketNo. 16-08-01

On June30, 2008,

the District Court, Montrose County,Colorado

issued its "Findings of Fact,Conclusions

of Law and Order," that consolidated and ruled on the threeseparate lawsuits. The District Courtordered that JetAway

canself-fuel its aircraft but cannot fuel
any otheraircmft. In addition,anyself-fueling must complywith the Minimum Standards,

must be from a pumpwith a metersystem ableto accurately

calculate the fuel flowage,and is subject

to the uniform fuel flowagefee established by the County. The Court alsofound that JetAway can providetowing, crewand passenger lounge facilities, public restrooms

andtelephone,

loadingand unloading,

hangar stomge, and aircraft maintenance.

Althoughthe Orderpermits JetAway to conduct

these FBO activities, it must comply with the Airport's Minimum Standards. The Courtalso saidthat JetAway must apply and pay for an access permit. Upon application and payment

of the fee,the Countyis obligated

to execute

a written document

establishing

and granting

the access right as a property right appurtenant to JetAway's off-Airport parcel. The Courtalso 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 effortswere not successful. [FAA Exhibit 1, Item 17] The partieseach moved to supplement

the recordwith additional evidence several timesthrough March 3, 2009.



## IV. ISSUES

The Complainant

states that, "The Countyhasunjustlydiscriminated against Complainant JetAwayand granted

exclusiverightsto Jet Center Partners in violation of Grant Assurances

22 and23.,,6

[FAA Exhibit 1, Item 1, p. 21] In JetAway's30 counts, within
two broad allegations,7

it raises the issues

of the granting

of an exclusiveright to JCP by

means of land leases

with JCPand by means

of unreasonable

termsimposed

upon JetAway'splan to offer commercial services, including aeronautical

fueling; andthe unjusteconomic

discrimination

against JetAway by alleged

preference

to JCP. JetAway also raises

issues of errorsin the County's Airport LayoutPlan 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 refusalterm in JCP's lease. [FAA Exhibit 1, Item 1, p. 27] Considering the above, the FAA hasdetermined thatthe following issues

require analysis in order to provide a complete reviewof the Respondents' compliance

with applicable

Federal law andpolicy:

S JetAwayentered

into the Montrose Regional Airport Land Lease

Agreement

on November7,2005. The

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


### ~rmitted. The Complainant

cites the applicableFederal

aw. (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 concisebut completestatement of the facts relied uponto substantiate each allegation. [See 14 CFR § 16.23(b)(3)] Complainants will not be deemed

to meetthis burden simply because they have submitted

volumes of pages in exhibits if they have failed to explain how the individual exhibits support specificallegations. [See M. Daniel Carey

and CliffDavenDortv. Afton-Lincoln CountY MuniciQal

Aimort Joint Powers

Board. FAA Docket

No. 16-06-06,

(January19,2007)(Director's Determination), page 55]



### Page 8 of 50

### FAA DocketNo. 16-08-01 Director's Determination

1. Whether

the Countyhas

violated grant

assurance

5, Preserving

Rightsand Powers.



### 2. Whether the County

has violated grant

assurance

29, Airport LayoutPlan.



### 3. Whether

the County

hasgranted

an exclusiveright for the useof the Airport in violation of grant

assurance

23, Exclusive

Rights, 49 V.S.C. § 401

03( e) and49 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'sproposal

for a FBO business atthe Airport constitute

the constructive

granting of an exclusiveright by

means of an unreasonable

denial in violation of grant assurance

23, Exclusive Rights, 49 V.S.C. § 40103(e)

and49 V.S.C. § 47107(a)(4).

5. 

### Whether

the Countyhas

providedmorefavorable treatment o JCPwith regard

to retail aircraft services

in a manner

that unjustlydiscriminates against JetAwayin 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 aviationhas been augmented

by variouslegislativeactions that authorize programs

for providing Federal

fundsto local communities for the development of airportfacilities. In each such program, the airport sponsor

assumes certain obligations
to maintain

andoperate

its airportfacilities safely and efficiently and in accordance with specified conditions. Commitments assumed by airport sponsors

in grant agreements

are importantfactorsin maintaining a high degree

of safety and efficiencyin airport design, construction,

operation and maintenance,

aswell as ensuring

the public reasonable aeronautical

access.

Title 49 V.S.C. § 47101,et seq., provides for Federal

airportfinancial assistance for the development

of public-use

airportsunder

the Airport Improvement Program(AlP) established

by the Airport and Airway Improvement Act of 1982,

asamended.

Title 49 V.S.C. § 47107,et seq.,

sets forth assurances

to which an airport sponsor agrees as a condition of receivingFederal

financial assistance.

Upon acceptance

of an AlP grant,

the

assurances

become a binding contractual

obligation between

the airport sponsor

andthe Federal government.

The assurances

madeby airportsponsors in AlP grant

agreements

are important

factorsin maintaining

a viable nationalairportsystem.

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 mustreceive

certain assurances

from the airportsponsor.Title 49 V.S.C. § 47107(a)

sets forth the statutory

sponsorship

requirements

to which an airport
sponsor eceiving Federal

fmancialassistance

must agree.

Page 9 of 50

### FAA DocketNo. 16-08-01 Director's Detennination

The FAA hasa statutory mandate to ensure that airportownerscomplywith these sponsor

assurances.s

FAA Order 5190.6A,

Airoort Comoliance

Requirements

(FAA Order 5190.6A),issued

on October

2, 1989, provides the policies andprocedures to be followed by the FAA in carrying out its legislatively mandated

functions related to Federally obligatedairportowners' compliance

with their sponsor

assurances.

The FAA considers

it inappropriate

to provide Federal

assistance

for improvements

to airports

where the benefits of suchimprovements

will not be fully realized dueto inherent

restrictions

on aeronautical

activities. The following grant assurances

are relevant

to this Complaint:

Grant Assurance5, Preserving Rights and Powers

Grant Assurance

5, Preserving

Rightsand Powers,

implements

the provisions

of Title 49 V.S.C. § 47107,

and requires,

in pertinent

part, thatthe 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 necessaryto perform any or all of the terms, conditions, and

assurancesin the grant agreementwithout 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

underGrant

Assurance

5 assumed

by the owners of public-use

airports developed

with Federal

assistance.

Among these

is the responsibility for enforcingadequate

rules, regUlations,

or ordinances

asarenecessary

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 airportdeveloped with Federal

grant assistance

is required

to operate

the airport for the useand benefit of the public. Federal

grant assurance

22, Economic Nondiscrimination,

(Assurance

22) deals with boththe reasonableness of airportaccess andthe prohibitionof adoptingunjustly 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 owneror sponsor] will make

the airport available

as an airportfor public use

on reasonable

terms and without unjustdiscrimination to all types,

kinds and classes

ofaeronautical

activities, includingcommercial aeronautical

activities offeringservices

to thepublic at theairport. [Assurance 22(a)]

8 See, e.g., the Federal

Aviation Act of 1958,

asamended

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



### Page10 of 50

### FAA DocketNo. 16-08-01 Director's Determination

Each fIXed-based

operator at the airport shall be subject to the same

rates, fees, rentals,andother charges as are uniformly

applicable

to all other

fixed-base operatorsmaking

the same or similar usesofsuchairport 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)]



### Thesponsormay

prohibit or limit anygiven type,kind or class ofaeronauticaluse ofthe airport if suchaction is necessary for the safeoperation ofthe airport or necessary

to serve the civil aviation needsof the public. [Assurance

22(i)]

Subsection

(h) qualifies subsection

(a), and subsection

(i) represents

an exception

to subsection

(a) to permitthe sponsor

to exercise

control of the airport sufficient to preclude unsafe and inefficient conditions thatwould be detrimental to the civil aviationneeds of the public.

In all cases

involving restrictions

on airportuseimposed

by airport owners

for safety

and efficiency reasons,

the FAA will make

the final determination

on the reasonableness

of such restrictions

when thoserestrictions

denyor limit access

to, or useof, the airport. [FAA Order5190.6A, 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)

and47107(a)(4),

and requires,

in pertinent

part, thatthe owneror sponsor of a Federally

obligated airport:

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

or intending to provide, aeronautical servicesto the public It further agrees that it will not, either directly or indirectly, grant or permit anyperson, 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. [Seee.g. Poml2anoBeach v FAA, 774 F2d 1529 (11 Cir, 1985)] An owner or sponsoris 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 DocketNo. 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 leaseswhere, for example, all the available airport land and/or facilities suitablefor aeronautical activities are leasedto a single aeronautical serviceprovider who cannot put it into productive

use within a reasonableperiod of time, thereby denying other qualified parties the opportunity to competeto be an aeronautical serviceprovider 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 secondFBO 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 RentalStructure, addresses

fees the owneror sponsor

levies

on airport users

in exchange

for the services

the airportprovides.

Title 49 V.S.C. § 47107(a)(13) requires, in pertinent

part,that the owneror sponsor of a Federally obligatedairport "will maintain a schedule

of charges

for useof facilities and services atthe airport thatwill make the airportas self-sustaining aspossibleunder

the circumstances

existing at the airport."

Grantassurance

24 satisfies

the requirements

of § 47107(a)(13). It provides,in pertinent part, thatthe owneror sponsor of a Federally-obligated

airportagrees

to establish

a fee and rentalstructure

thatwill make

the airportas self.sustaining aspossibleunder

the circumstances

existing atthe particularairport,taking into account such factors asthe volume of traffic and economy of collection. This sponsor will maintain

a fee and rental structure consistent

with assurances

22, Economic

Nondiscrimination,

and23, Exclusive Rights. The intentof the assurance is for the airport operator to charge feesthat are sufficient to coveras muchof the airport's costs as is feasible.

Moreover, the Order statesthat 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 expectedto 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 requiringan airport sponsor to keep up-to-date

the ALP. Specifically, Grant Assurance

29 requires

the airport sponsor

to showon its ALP the boundaries of the airportand all proposed

additions thereto, the location

and nature

of all existingand

Page12 of 50

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

proposed airportfacilities andstructures (such as runways,

taxiways,

aprons, terminal buildings, hangars

and roads),

andthe location

of all existingandproposed 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 accessby aircraft from adjacentproperty. 9
However, there are times when the sponsorwill enter into an agreementthat permits

access to the airfield by aircraft based on land adjacentto, 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

canplacean encumbrance upon the airport propertyand reduce

the airport's ability to meetits Federal obligations,

asa general principal the FAA doesnot 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 propertyowneror occupant o conformin all respects to the requirements

of anyexisting or proposed grantagreement

or Federal property conveyance

obligation. [FAA Order5190-6A, Section 6-6]

The development

of aeronautical

enterprises

on land off-airport and not controlledby 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

shouldobtainftom any off-airport enterprise or entity

a fair return for its useof the airfield by assessing access feesfrom those

entitieshaving "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 seesfit 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

9SeeFAA Order5190.6A, Section 6-6(a). Based

onthis, an airport sponsor may simply deny"throUghthe-fence"

access if it so chooses.

Sincefederal

obligations

do not requirethataccess begranted

under these circumstances,

users havingaccess

to the airport under

a "through-the-fence"

agreement

are not protected

by the airport sponsor's

federal obligations

to the FAA.



### Page13 of 50

### FAA DocketNo. 16-08-01 Director's Determination

agreement

to ensure thatthe through.the-fence access doesnot complicate

the control of vehicular and aircraft traffic or compromise the security

of the airfield operations area. [FAA Order5190.6A, 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 agreementcircumvents 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 agreementswith the Government. [FAA Order 5190-6A, Section 6-6J

The FAA Aimort Comoliance Pro!!ram



### The FAA discharges

its responsibilities

for ensuring

airportowners' compliance with their Federal obligations

throughits Airport Compliance Program. The FAA's airport compliance

efforts are based

onthe contractual

obligations

an airport owner

accepts when receiving Federal

grant funds or the transfer

of Federal

property for airportpurposes. These obligations

are incorporated

in grant agreements

and instruments

of conveyance

in order to protect

the public's interest

in civil aviation

andto ensure

compliance

with Federal aw.

The FAA Airport Compliance Program is designedto ensurethe 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 sponsorconduct. Rather, it establishes

the policies and proceduresto 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 sponsorassurances, 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 designedto achieve voluntary compliance with Federal obligations accepted by owners and/or operators of public-use airports developed with FAA-administered assistance. Therefore, in addressingallegations 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 DocketNo. 16-08-01 Director's Determination

applicable

Fedemlobligation

to be grounds

for dismissal

of such allegations. [See

e.g. ~il~g~ ~ ~enter

v. MemDhis

and Sh~lbv

County Airoort AuthoritY, FAA DocketNo. 16-99-10,

(August 30, 2001) (Final Decision and Order)]

Enforcement

procedures

regarding

airportcompliance

matters may be found at FAA Rules ofPractice

for Federally

Assisted Airport Enforcement

Proceedings

(14 CFR Part 16). These enforcement

procedures

werepublished

in the Federal

Register (61 FR 53998, October16, 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 requestby resolving

the through-thefence issues

and without exposure

for the County'sresidents andthe expense

of further litigation. The County was unable

to do so. By identifying

and making availablethe9. 612-acre site, the Countyis confirmingits position from theonset: There is no exclusive

right. [FAA Exhibit 1, Item 3, pp. 4-5]

The allegations, arguments and evidence in this caseare extensive and complex. The parties dispute eachothers' facts and question eachothers' 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 understandsthat 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.



### Page15of 50

### FAA DocketNo. 16-08-01 Director's Determination

Motions and Preliminary Matters

Motion to Dismiss: BuildingAuthority

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

in this case. JetAway 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 acceptedthe associated grant obligations as the owner of the Airport property. [FAA Exhibit 1 ~Item 4} Therefore~ the FAA simply acceptsthat the Montrose County Building Authority and Montrose County are co-sponsorsof 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, becauseJetA way had not specifically engagedthe 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 managementis sufficient for purposes of conducting informal resolution.



### The County's motionto dismiss the MontroseCountyBuilding Authority is denied.

Motion to Dismiss: Confidentiality

The Countymoves

to dismiss

the Complaint

because JetA way violatedthe confidentiality of the FAA-sponsored

mediation

in its pleadings. Participation in the mediation

was governed

by an agreement

signed by the mediator

andthe parties

in March2007, which states, "mediationis a confidential process."

[FAA Exhibit 1, Item 3, exh. F, para.5] The agreement

also states,

"no party shall be boundby 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

andapartfrom this Part 16 proceeding.

In this case,

JetAway hasprovideda snapshot

in the form of JetAway's November 2007 Settlement

Offer. [FAA Exhibit 1, Item 1,exh. 5] The County responds with a motionto dismiss the Complaint.

The County's motionto dismiss the Complaint

over confidentiality

breaches of the mediation

is denied. The mediation doesnot controlthe Part 16 proceedings. Nevertheless,

the confidentiality

of the mediation

has been breached andthe documents

are now in the public domain. As such the Directorwill consider the documents

in this proceeding.

Page 16of 50

### FAA DocketNo. 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 supplementthe 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)] Respondentfiled multiple motions to supplementthe 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 supplementthe record. [FAA Exhibit 1, Item 13 and Item 17]



### Clearlythis extensive

number of supplemental

filings is highly unusual

in a Part 16 proceeding.Nonetheless, motionsare

the appropriate

means to make application

for an orderor ruling not otherwise specifically

providedfor in the regulation. [See 14 CFR § 16.19( a)] The requisite

procedural

requirements

havebeen

met. The Director has reviewed the filings andwill permitthe parties to supplement

the recordwith the requested

exhibits. Accordingly,the exhibitscontained in the supplemental

filings, including motionsandanswers, will be considered

by the Director in this determination andare includedin the Indexof the AdministrativeRecord.

Proprietary Rights,Federal Obligations and Negotiations

Oneof the key fundamental principles at issue

hereis the proprietary

rightsof an airport
sponsor.This was at issue in the 2006 JetAway

DD. Succinctly,Federal obligationslimit

a sponsor's

proprietary

rights, but do not eliminate them. [See,

KentJ. Ashtonand JacQuelin

R. Ashton

v. CitYof Concord.

North Carolin~ FAA Docket No. 16-02-01 (Director's Determination Issued August22,2003) (Final Agency DecisionIssued 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 KentJ. Ashton

and JacQuelin

R. Ashton

v. CitY of Concord.FAA Docket No. 16-02-01

(Director's

Determination

Issued August22, 2003) (Final Agency Decision Issued February 27, 2004),

the Director acknowledges,

"it is the Complainants' right to pursue complaints andprotect their interest (however) it is the Respondent's

right to protect itself

from thepossibility of

uture costly

and frivqlous litigation." Continuing,

the Directorfound thatan Airport sponsor: "... was not obligated to expose

itself tofuture lawsuitsby entering into a business agreement

with (Complainant).

Given (Complainant's)

prior history of lawsuitsand 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

IssuedMarch 17,2008),

the Directorstated,

"Clearly, theAirport management believes that its bundling of associated

services with the sale offuel serves the interests

of thepublic in civil aviation. Thisis its primary mission. ...In theend;the evidence presented

by the Complainant

is insufficient

to eclipse

the Airport's proprietary discretion to make management

decisions

in the bestaeronautical

interestsofthe public, balanced

with the bestbusiness

interests of the Airport as a going concern. " rssPumps.

DD, p.25]

Page 17 of 50

### FAA DocketNo. 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 accessfrom 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 foundthe County to be in non-compliance

with its Federal

obligations.[FAA Exhibit 1, Item 3, exh.A]

The Director has already observed thatthe Countymight be ableto structure some kind of

an agreement

or agreements

atthe Ajrport to allow JetAway to sell fuel in a manner

within the bounds

of its Federal

obligations. The Directorstated:

Additionally, the Director believes that all ofthe issues

in this case

can be resolved informally in a mannerconsistent with the County's

Federalobligations. Since both the County

andJCP have

stated that an additionalFED at theAirport 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 MinimumStandards,

successful

resolutionappears

to be possible. [FAA Exhibit 1, Item 3, exh.A, p. 35]

However,

the Directoralsostated:

...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" accessif 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 adjacentto 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 ThenncoAviation v Los Angeles.FAA Docket No. 16-06-07

(Final Agency Decision

Issued

December

17,2007),

the Associate

Administrator

states: "The very nature ofleaseagreements is that they

are for a definite term,

so that bothparties may change plans and arrangements to suit their respective interests. Federal obligations do notpreventthis sponsor from exercising

suchchange... Infact, the terms ofthe leaseagreement

arethe primary protection of tenants for continued

occupancy

of a leasehold;

not thegrant assurances."

[Thennco, FAD, p. 27] 13See 2006 JetAway

DD.

Page 18 of 50

### FAA DocketNo. 16-08-01 Director's Determination

hasargued

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 SantaMonica. oft Association SMAA Krue er Aviation and SantaMonica Air Center v. County of SantaMonic~ 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 developand 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 partiesin the prior 2006 DD is informative hereand clarifies the bounds

of the County's Federal

obligations

andthe 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 demonstratesthat the Complainant's primary intent in the mediation, the two FAA formal Part 16 complaints and its litigation againstthe 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 doesnot arbitrate or mediate

negotiations

througha 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

andthe Federal

government. [See

AmA v v. Maryland Aviation Administration.FAA DocketNo. 16-05-12, (March20, 2006) (Director's Detemrination), p.23] State

courts arethe appropriate

placefor the disposition of disputes

of contracts

andperformance

under contracts.Airport sponsors arefree to includetermsof performance in agreements,

such as leases.

As discussed

above, and in the 2006 JetAway

DD, airportsponsors

are bound by Federal

obligations

regarding reasonableness,

non-discrimination

andexclusiverightsasapplied to on-airport aeronautical

users. But even

with on-airport

users, the FAA doesnot 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 Agencymadeit clear that, "The purpose of

the grant assurances

is to protect thepublic interestin the operation ofF ederally obligatedairports. The

purpose is not to provide alternative or supplemental

rights to thosenormally availableto commercial

tenants in disputes

with their landlords,

i.e. negotiation

or commercial

itigation under applicable

stateand locallaws » [Penobscot at page24, citing to SkY East Services. Inc. v.
Suffolk County. Complaint Nos. 13-88-06

and 13-89-01]



### Page19 of 50

### FAA DocketNo. 16-08-01 Director's Determination

between J etA way andthe County

have been

litigated: the Off-Airport Agreement [F AA Exhibit 1, Item 1, exh. 2} andthe non-commercial Land Lease

Agreement.

[FAA Exhibit 1, Item 1, exh. I} Thefindings of the state court appear

well-supported

by evidence

and
appear to address

issues properlybeforea state

court. The court's FindingsFact. Conclusions

of Law and Order(MontroseCourtOrder),dated June 30, 2008,states:

The[Off-Airport Agreement is ambiguous

because it is susceptible

to two reasonable

interpretations. Specifically, Section 3(g) canbe interpreted;

as argued bythe County,

that JetAway

can onlyengage

in services

expressly allowedunder theagreement.On theother hand; as arguedby JetAway,

Section 3 (g) can be interpreted

as allowingJetAway

to offer any

services not expressly

prohibited. [FAA Exhibit 1, Item 5, exh. 60, p. 26]

As stated,

this contract

disputeis within thejurisdiction of the state court. It is properfor the statecourtto interpret the meaning

of the termsof the Off-Airport Agreement. JetAway's rights to conduct commercial

activitiesthat involve the transitof 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 MontroseCourt 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 leasedpremises isfor 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

oncefueling 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 Courtdid order

that, "The Land Lease

Agreement

is temrinated."[FAA Exhibit 1, Item 5, exh. 60, p. 41] So, JetAwayhas no on-airport

presence.

Also, asstated, 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 hasviolated grant assurance 5, Preserving

Rights and Powers.

In addition

to the proprietary

rights and powers

reserved to an airportowner, grant

assurance

5 prohibitsthe airport sponsor from giving awayrights andpowers it needs to control andoperate

the airport. It obligates

the sponsor

to retain financial and legal control of airportproperty to ensure the airport's continued

operation asan airport.

Two ways in which an airport sponsor might intentionallyor unintentionally cede rights and powersis by allowing through-the-fence aeronautical

access asdiscussed

herein and by granting rightsof first refusal. An airport sponsor can protectits rights and powers by limiting, mitigating or eliminatingthe through-the-fence agreements

and by negotiating away rights of first refusal. In some circumstances,

an airportsponsor's

Federal obligationsmay require such action.

The FAA did express

concern overthe Off-Airport Agreement in the 2006 JetAwayDD, statingthatthe Off-Airport Agreement providesperpetual

access and benefits

to any

successor

in interest

without providing anycontrolsfor the County to negotiate

with prospective

successors

and redefine

the termsof the agreement. [2006 JetAway

DD, pp. 20-21] In 'that

determination,

the Directordid not find the issue rose to a level of noncompliance

with grant

assurance

5, Preserving

Rightsand Powers,

under the circumstances

existing atthe Airport. The Director is reassured by the MontroseCourt

~, discussed

above, providing clarity to the limitations of the Off-Airport Agreement and by ensuring

that commercial

aircraft fueling cannot

occuronthe noncommercial Land Lease by terminating

JetAway's on-airport

leasehold.I5

From the record, it appearsthat 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. [SeeApplicable Law and Policy, above]

.



### The record reflects

someinformationrelevant to the County's obligation to impose

a fee and rental structure

thatwill make

the Airport as self-sustaining as possible

under the circumstances.

The 2006 JetAwayDD notes that JetAway

had not paid anyfees

to the

15 In addition,

the MontroseCourt Orderalsoeliminated JetAway's ability to advertise that it sells aviation

fuel. [FAA Exhibit 1, Item 5, exh. 60, p. 42]



### Page 21 of 50

### FAA DocketNo. 16-08-01 Director's Determination

Countyfor its access

to the Airport, except

for a $250access

permitfee. In the 2006 JetAwayDD, the Directornotedthatthe "disparity in [fixed-base operator] fees could affectthe Airport's ability to be self-sustaining, in violation of grant

assurance

24, Fee and Rental Structure." [2006 JetAway DD, p. 21.] Furthermore, the MontroseCourt Order observed thefollowing:

JetAway never obtained

an access permitfrom the County. Its position regarding this issue is inconsistent.Onthe one hand, JetAway maintains

that nobody

ever broughtthe need

for an access

permit to its attention,

eventhough

the requirement ofan access

permit is explicitlyaddressed in the OAA [Off-Airport Agreement]. It hasalso arguedthat the OAA itselfwas 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

ofthis litigation. JetAway never received

an access

permit or an assignment ofone from STW[the prior holderof the OAA]. TheCounty's

position regarding

an access permit is also somewhat inconsistent

... [FAA Exhibit I, Item 5, exh. 60, p. 5]

Also in the MontroseCourtOrder, the Court resolved

the issue by ordering:

JetAway must apply

andpay for an access

permit. Uponapplicationandpayment ofthe fee, the County

is obligated

to execute

a written document

establishing

and granting the access

right as a property right appurtenant o JetAway's

off-Airportparcel. [FAA Exhibit 1, Item 5, exh. 60, p. 29]

An annual

access fee of $250appears

to be too low in proportion to the level of throughthe-fence

business activity and is insufficient to meet the Airport's Federal

obligations undergrantassurance

24, Feeand Rental

Structure,

under the circumstances

existing at this Airport. However,

the recordin 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. Sincegrant

assurance

24 regards

financial selfsustainability,

the costs associated

with generating

appropriate

revenue or limiting access is a relevant

'particular circumstance

existing atthe Airport.'

In any event,

that is not the allegation

madeby this Complainant. Rather, JetAway states, "The Countyexecuted

a lease agreement

with JCPthat contains

an optionand 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 completionofthe extended term ofthe Agreement,

theparties will in good

faith negotiatemutually

agreeable

terms for the continued

lease and occupancy

ofthe leased

properties and improvements described herein. However,

if mutually

agreed uponterms

have not been

reached and County hasa bona

fide written offerfrom another party it desires

to accept,

County can do

so if it first provides

to Operatorthe right to continue the agreement

by matching

the terms ofthe bona

fide written offer. [FAA Exhibit 1, Item 1, exh. 19]

The County statesthat "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 DocketNo. 16-08-01 Director's Detennination

right of first refusal... the County will notify JCPthatthe offending provision mustbe rectified." [FAA Exhibit 1, Item 3, pp. 29-30]

JetA way presents

this allegation

as circumstantial

evidence of the County's allegedintent to grantan exclusiveright to JCP. However, that allegation

is inaptand 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

rightsto another

operator in another agreement.

A through-the-fence

agreement

is an example

of wherean airport sponsor mayhaveover-granted

rightsto 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 changethe 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 Directorfinds thatthe Countyis not in violation of grant

assurance

5, Preserving

RightsandPowers.

Issue2

Whether the County hasviolated grant assurance 29,Airport Layout Plan.

An Airport Layout Plan is a scaleddrawing of existing and proposedland and facilities
necessary

for the operationand development of the airport. It represents an understanding between the airport owner and the FAA regarding the currentand future development and operationof 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 accessroad 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,

statingthat JetA

way has not compliedwith 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 canbe

Page 23 of 50

### FAA DocketNo. 16-08-01 Director's Determination

updated at anytime, easilyresolvingmistakes 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 airportplanning processes.

This elevation

of the planning
process is inappropriate. For example, in its Complaint,

JetAway focuses in property 'identified' for FBO purposes onvarious

draft andfinal planning

documents

to form the basis for concluding

thatthe Countyhas

granted an exclusiveright 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 planningprocess andthe 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 ongoingplanning,in consultation with the FAA, recognizes

thatwe expect

airport management

pursue its Federal

obligations

and its proprietaryinterests

in an environment

of change.The Directorpointsto Pacific Coast FIvers.Inc. v. County

of SanDiego, 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

plansdiscriminated

against small pistonaircraft types by reducingaccessibility throughleasehold

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 grantassurance 29 would be more

akin to a refusal

to cooperate

with the FAA on an ongoing

planningprocess,

or refusing

to mitigatea significantproblem arising from an un-planned circumstance

at an airport upon

a demand

from the FAA to do

so. In Pacific Coast the Directoracknowledged that deviation

from an airportplan may be necessary

and expected.Conversely, the Directorhasfound that refusal to alteran ALP as a means

to deny anyaccess

may bea violation of a grant assurance.

In Gate9 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 'penand ink' notation on an existing,

approved ALP. (Boca

Aviation v. Boca Raton Aimort Authority. FAA Docket No. 16-00-10

(March20,2003) (Final Decision andOrder),p. 24, fn. 80.



## ~.

Page 24 of 50