BEFORE THE 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

i e E 8 W E 

" ^ " I 

AIRPORT/ENVIRONMENTAL 

LAW, AGC-600 

n\ 

SKYDIVE SACRAMENTO, 

Complainant, 

V. 

THE CITY OF LINCOLN, CALIFOR^JIA, 

Respondent. 

Docket No. 16-09-09 

MEMORANDUM IN SUPPORT OF RESPONDENT'S MOTION TO DISMISS 

Please serve: 

Scott P. Lewis 

Christine M. Griffin 

ANDERSON &. KREIGER LLP 

One Canal Park, Suite 200 

Cambridge, MA 02141 

T: 617.621.6500 

F: 617.621.6660 

slewis@andersonkreiger. com 

cgriffin@andersonkreiger.com 

Counsel for Respondent 

— ( 

September 21, 2009 
Table of Contents 

Page 

Introduction 1 

Argument 2 

I. SKYDIVE CANNOT MEET ITS BURDEN OF PROVING THAT THE 

CITY IS CURRENTLY VIOLATING APPLICABLE FEDERAL 

REQUIREMENTS 2 

II. SKYDIVE HAS NOT SHOWN THAT ITIS A VICTIM OF UNJUST 

ECONOMIC DISCRIMINATION 3 

A. Applicable Legal Standards 3 

B. Skydive Is Not Similarly-Situated To Any Existing Aeronautical 

Tenant 6 

C. The City Has The Proprietary Right To Determine The Location Of 

Skydive's Support Facilities And To Limit Use Of The Drop Zone To 

Peirachute Jimiping 7 

1. Skydive has no right to build support facilities at the drop zone 8 

2. Skydive has no right to complain that the City will only allow 

Skydive to use the drop zone for parachute jumping 10 

D. Skydive Has No Right To A Long-Term Lease 11 

E. Skydive's Many Complaints About Lease Boilerplate Do Not Raise 

Any Serious Federal Issues 13 

1. Annual Rent Increase 13 

2. Insurance Requirements Applicable to Skydive 13 

a. Commercial Liability Insurance 14 

b. Automobile Liability Insurance 14 

3. Insurance Coverage for Subcontractors 15 

4. Payments of City's Insurance Premiums 15 

5. Indemnification 16 

6. Conflicting Lease Terms 16 
Page 

7. Time is of the Essence 17 

8. "Insulting" Recitals 17 

m. THE CITY HAS NOT IMPOSED ANY "UNATTAINABLE" CONDITIONS 

AND THAT CLAIM IS MOOT 17 

IV. SKYDIVE'S "EXCLUSIVE RIGHTS" CLAIM HAS NO INDEPENDENT 

SIGNIFICANCE 19 

Conclusion 20 

11 
BEFORE THE 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

SKYDIVE SACRAMENTO, 

Complainant, 

v. 

THE CITY OF LINCOLN, CALIFORNL\, 

Respondent. 

Docket No. 16-09-09 

MEMORANDUM IN SUPPORT OF RESPONDENT'S MOTION TO DISMISS 

The respondent, the City of Lincoln, California (the "City"), submits this memorandum 

under 14 C.F.R. § 16.23(j) in support of its motion to dismiss the Complaint by Skydive 

Sacramento ("Skydive"). 

Introduction. 

The City is the owner, operator and sponsor of the Lincoln, California Regional Airport 

(the "Airport"). Skydive currently operates a skydiving business at the Airport, but uses offAirport "drop zones." Skydive has sought to lease space within the Airport for use as a drop 

zone and a support facility. In a series of revised lease forms that attempted to respond to 

Skydive's demands, the City has offered to lease suitable space to Skydive for use as a drop 

zone. The City has, however, reasonably rejected Skydive's request to build a support facility 

adjacent to the drop zone or to use the drop zone for non-skydiving purposes. Skydive's 

complaint arises out of disputes with the City concerning the terms and conditions of the lease 

proposed by the City. 
Skydive's complaint presents a tangled, repetitive and confusing web of factual 

allegations and legal arguments. In the end, however, the complaint reveals that all of Skydive's 

claims are driven by its objections to the terms of the last of the three proposed lease forms that 

the City offered, sent to Skydive on April 30, 2009 (the "Lease") {see Skydive Ex. 19).* 

Skydive's Complaint alleges that certain of the terms of the proposed Lease violate federal 

aviation law because, according to Skydive, they (a) constitute imjust economic discrimination; 

(b) impose unattainable conditions; or (c) constructively grant unlawful exclusive rights. The 

City denies that in attempting to accommodate Skydive's desire for a drop zone at the Airport the 

City has violated any of its obligations as an AIP grant sponsor. The City asks the FAA to 

dismiss Skydive's complaint. 

Argument. 

I. SKYDIVE CANNOT MEET ITS BURDEN OF PROVING THAT THE CITY IS 

CURRENTLY VIOLATING APPLICABLE FEDERAL REQUIREMENTS. 

As the complainant, Skydive has the burden of proving that there is a reasonable basis for 

further investigation under 16 C.F.R. § 16.29(a); and if an investigation is undertaken, Skydive 

bears the burden of proving that the City is currently violating applicable federal obligations. 

See Steere v. County of San Diego, Docket No. 16-99-15, 2004 WL 3198209, at *14 (Dec. 7, 

2004) (Final Decision and Order) (burden of proof on complainant in Pt. 16 proceeding); Kent B. 

Ashton V. City of Concord, FAA Docket No. 16-99-09,2000 WL 1387887, at *14 (July 3,2000) 

' Skydive's complaint alludes to one non-lease claim: Skydive alleges in its Complaint (^I35) that the City 

has refused to allow Skydive to participate in a discount program for fuel customers at the Airport. The City admits 

that it offers a discount to large-volume purchasers of fuel. This offer currently provides discounts for large-volume 

customers who buy more than 300 gallons of fuel in a single purchase from the Airport's jet fuel truck. The City has 

never barred Skydive from participating in the program; Skydive has not qualified for any discounts because it has 

never bought the required minimum volumes of jet fuel in a single purchase. This fuel discount program is 

primarily used by large private or charter business jet aircraft that buy fuel at the Airport (Answer, H 35). There is 

no reason for the FAA to investigate this claim or take any enforcement action concerning the City's fuel discounts. 
(Final Decision and Order) ("Ashton") (same); 14 C.F.R. § 16.229(b) (proponent of order has the 

burden of proof); 5 U.S. C. § 556(d) (APA allocates burden of proof to proponent of agency 

action); Director. OWCP v. Greenwich Collieries, 512 U.S. 267, 271 (1994) (agency bound to 

follow APA on burden of proof absent contrary statutory directive); Air Canada v. DOT, 148 

F.3d 1142,1145 (D.C. Cir. 1998) (DOT property assigned burden of proof to complainant in Pt. 

302 rate proceeding). Skydive cannot possibly meet this burden under 49 U.S.C. §§ 47107 & 

40103(e) or under either Grant Assurance 22 (unjust discrimination) or Grant Assurance 23 

(exclusive rights).^ 

II. SKYDIVE HAS NOT SHOWN THAT IT IS A VICTIM OF UNJUST ECONOMIC 

DISCRIMINATION. 

A. Applicable Legal Standards. 

This is not a case where an airport sponsor has refiised to allow parachute jumping at an 

airport. After the FAA determined that a jump zone could safely be located at the Airport, the 

City proceeded to offer Skydive a proposed lease and then made two sets of revisions to its 

proposed lease terms in an effort to come to an agreement (Answer, | ^ 5, 23, 27, 36-38). 

Skydive rejected the City's proposed lease and filed a Pt. 16 complaint focused on a claim of 

unjust economic discrimination. 

Skydive's claim of unjust discrimination in violation of 49 U.S.C. § 47107 and Grant 

Assvirance 22 is animated by its allegations that the third draft of the Lease offered by the City 

has unfavorable terms that are different than the terms of leases the City has entered into with 

other commercial aeronautical operators at the Airport. Skydive appears to believe that the City 

has a federal obligation to leas6 airport property to Skydive on exactly the same terms it has 

Skydive's exclusive rights complaint reUes only upon § 40103(e) and never explicitly calls out Assurance 

(continued...) 
offered to any other aeronautical tenants that have ground leases, no matter how different their 

activities, investments in the Airport or other circumstances may be {see Complaint, ^ 43).^ 

Skydive attempts to root its argument in FAA Order 5109.6A, § 4.8.b. There, the FAA 

recites: 

Parachute jumping is an aeronautical use and requests to airport owners from 

parachute jumping clubs, organizations or individuals to establish a drop zone 

within the boundaries of an airport should be evaluated on the same basis as other 

aeronautical uses of the airport. 

This proclamation, the City believes, was intended simply to underscore that an airport sponsor 

cannot categorically exclude parachute jumping from the permitted aeronautical uses of an 

airport. Surely the FAA did not mean to say that an airport sponsor is obligated to give a 

skydiving operator the most favorable lease terms the sponsor has previously given to any 

aeronautical tenant at the airport - no matter how dissimilar their situations may be.'* 

Skydive badly misconceives the controlling legal principles. It is well established that to 

make out a claim under Assurance 22, Skydive must show that the City is engaged in unjust 

economic discrimination. It is not enough to show only that the City is treating Skydive 

differently than other airport tenants. To prevail on this claim, Skydive must establish both 

(a) that the City has given more favorable treatment to other airport tenants that are similarlysituated to Skydive, and (b) that the City has no legitimate reason, as the Airport proprietor, for 

(continued...) 

23, but the City assumes that the FAA will consider Assurance 23 in evaluating Skydive's complaint. 

' Skydive's Complaint was presented in narrative form, without numbered paragraphs. For ease of 

reference, the City prepared and attached to its Answer a hand-numbered copy of Skydive's Complaint. 

* In a similar vein, Skydive invokes FAA Order 5109.6A, § 3-12 for the proposition that the standards 

established for commercial aeronautical operators must all be "equal" (see Complaint, H 60). 
the difference in treatment.^ See, e.g., Penobscot Air Services, Ltd. v. FAA. 164 F.3d 713, 726 

(1st Cir. 1999) (affirming FAA Pt. 16 decision that differences in lease terms did not constitute 

unjust discrimination when there was no evidence that the premises leased to two FBOs were 

comparable and the first FBO's rental rate was set low to encourage service at the airport). As 

the Sixth Circuit has observed, "[t]he statute prohibits only unjust discrimination, not all 

discrimination .. .." Wilson Air Center. LLC v. FAA. 372 F.3d 807, 819 (2004) (original 

emphasis) (affirming FAA decision rejecting challenge to differential in rental rates "because the 

buildings were not similarly situated"). 

These rules apply to skydive operators in the same way they apply to any other alleged 

victim of economic discrimination. See, e.g.. National Airlift Support Corp. v. Fremont County 

Bd. of Commissioners, FAA Docket No. 16-98-18,1999 WL 768849 at *9 (Final Agency 

Decision) (Sept. 20,1999) (in disparate rate case, a finding of economic discrimination had to be 

based on dissimilar charges to "similarly situated airport operators"; complainant skydive 

operator not similarly-situated to UPS). The evidence Skydive has submitted to the FAA with its 

Complaint does not come close to satisfying these requirements. 

' The FAA's "unjust discrimination" decisions under Pt. 16 have followed the same approach used by the 

federal courts when adjudicating constitutional claims of "class of one" economic discrimination. See R/T182, LLC 

v. FAA, 519 F.3d 307,309 (6th Cir. 2008) (recognizing that FAA's "similarly sihiated" requirement accords with 

general equal protection principles). To prevail on a claim of this kind, a plaintiff must show that it was 

"intentionally treated differently from others similarly situated and that there is no rational basis for the difference in 

treatment." Vill. ofWillowbrook v. Olech, 528 U.S. 562, 564 (2000) (per curiam). This approach has recently been 

followed by the courts when considering economic discrimination claims lodged by airport tenants. See, e.g., 

Executive Air Taxi Corp. v. Bismarck, 518 F.3d 562, 566-570 (8th Cir. 2008) (rejecting claim of discrimination by 

an FBO, observing that "it is only natural that leases should vary depending on the size, location and quality of the 

property being leased, the length of the leasehold, the current needs and priorities of the parties to the lease, and 

many other factors"); Rectrix Aerodrome Centers, Inc. v. Barnstable Municipal Airport Commission, F. Supp. 

2d , 2009 WL 1989096, at •5-6 (D. Mass. 2009) ("apples to apples" comparison required; rational basis for 

different treatment sufficient). 
B. Skydive Is Not Similarly-Situated To Any Existing Aeronautical Tenant. 

Before turning to the specifics of Skydive's complaint, it is important for the FAA to 

understand who the Airport's current tenants are, what they do at the Airport and what their 

leases provide.^ 

The City currently has ground leases with eleven tenants at the Airport {see Answer, 

\ AF3; City Exs. 15-25).^ All of these tenants are either (a) long-term aeronautical tenants that 

have made significant capital investments in the Airport or (b) short-term non-aeronautical 

tenants engaged in activities that are not open to the public. Skydive is not similarly-situated to 

either of these two kinds of tenants. 

The City has nine aeronautical tenants at the Airport who have long-term ground leases 

that anticipate tenant-financed construction of hangars, aircraft manufacture and repair facilities 

or other permanent improvements at the Airport (Answer, | AF4: Mike Devlin (2001, 30-year 

lease for construction and use of hangars) (City Ex. 15); Crosswind Properties LLC (2001, 30-

year lease for construction and use of hangars) (City Ex. 16); Mark & Nancy Machado, d/b/a 

Velocity West (1998, 35-year lease for construction and use of industrial building for 

manufacture and maintenance of small aircraft) (City Ex. 17); Group Financial, Inc. (1997,40-

year lease for construction and use of hangars) (City Ex. 18); Nunno Corporation, Ltd. (1986, 

20-year lease for the construction and management of hangars and office space, extended for 10 

* Skydive implies that the City refused to give Skydive an opportunity to review other Airport ground leases 

and therefore that Skydive can only make allegations about what it believes the other leases contain (see Complaint, 

H 60). Skydive never requested the lease documents from the City, however (Answer, ^ 60), and the City has 

reproduced all of its Airport ground leases in the Supporting Evidentiary Materials it has submitted to the FAA with 

its Answer {see City Exs. 15-25). 

' In this brief, the City uses "City Ex. _" to refer to designated exhibits it offered in the Supporting 

Evidentiary Materials the City submitted with its Answer; the City uses "Skydive Ex. _" to refer to the exhibits 

Skydive filed with its Complaint. 
years upon expiration) (City Ex. 19); Gene Cantirell and American River Development, Inc. 

(1984, 50-year lease for construction of an FBO facility for lease to aircraft-related businesses) 

(City Ex. 20); Cemo Development Company (1983, 50-year lease for construction of an FBO 

facility for lease to aircraft-related businesses) (City Ex. 21); Thomas Camillucci, Greg Sanoski 

("Lincoln Skyways") and Robert M. Coon, Edwin F. Krass ("Kracon Aircraft") (assignees of 

amended 1978,40-year lease for construction and use of hangars and office space) (City Ex. 22); 

Placer Hangar Co. (1978, 40-year lease for construction and use of hangars) (City Ex. 23). 

Skydive cannot possibly prove that it is similarly-situated to any of these aeronautical tenants 

and as a result its claims of unjust economic discrimination must be dismissed. 

The City also has two non-aeronautical tenants with short-term ground leases at the 

Airport (Answer, f AF5): DeSilva Gates FCI ("DeSilva") (2008, one-year lease for temporary 

construction management offices for highway project, renewed for one year (City Ex. 25); and 

Energy Absorptions Incorporated ("Energy Absorptions") (2006, two-year lease for conducting 

crash tests using automobiles and highway barriers no more than six times per year) (this lease 

has been renewed twice for additional one-year terms) (City Ex. 25). 

C. The City Has The Proprietary Right To Determine The Location Of 

Skydive's Support Facilities And To Limit Use Of The Drop Zone To 

Parachute Jumping. 

Currently, the east side of the Airport is the center of all aeronautical operations. The 

west side of the Airport is undeveloped and consists almost entirely of open space located 

outside the security fence that is used only for non-aeronautical activities.^ Skydive has 

' The only structures (other than three dilapidated, imoccupied World War Il-vintage barracks) currently 

found on the west side of the Airport are temporary trailers used by DeSilva for construction management offices 

(Answer, Tl AF16). The City has permitted DeSilva to place its temporary construction management offices on the 

west side of the Airport in cormection with the construction of the nearby Lincoln State Highway 65 Bypass project 

{id.). In addition to these temporary trailers, the west side of the Airport is also used for some other non-

(continued...) 
proposed to locate its jump zone on the west side of the Airport, consistent with the FAA's 

determination that skydiving can safely be accommodated there {see Complaint, IHJ 3-5,23). The 

City has the proprietary right to determine the location of the drop zone, see Skydive Paris. Inc. 

V. Henry County. Tennessee, Docket No. 16-05-06, 2006 WL 247124, at *15 (Jan. 20,2006) 

(Director's Determination) (recognizing sponsor's proprietary right "to designate the location of 

on-airport drop zones"), but in this case there is no dispute about where it should be: the City 

has agreed to permit Skydive to establish a drop zone on the west side of the Airport, as Skydive 

proposed {see Answer, ^j 23). 

Skydive complains, however, that the City is obligated to allow them to construct a 

support facility on the site and use the drop zone for hot air ballooning or as a helicopter hover 

pad. Skydive cannot show, however, that the City is obligated to allow Skydive to erect any 

building at the drop zone or use it for non-skydiving purposes. Skydive also complains that the 

City has an obligation to give Skydive a long-term lease. Because Skydive will not be making 

any significant improvements to the site, however, the City's decision to offer only a short-term 

lease was consistent with its federal obligations. 

1. Skydive has no right to build support facilities at the drop zone. 

Skydive complains that Section 6 of the Lease prohibits Skydive from placing, 

constructing or building any building, structure or improvements on the leased premises {see 

Complaint, ff 16-11; Skydive Ex. 19, § 6). There are no aeronautical facilities or permanent 

(continued...) 

aeronautical purposes that do not require structures. The City stores minor debris, some City vehicles, and new trash 

receptacles on the west side of the Airport (Answer, ^ AF17). The City also permits one of its tenants to perform 

crash tests involving automobiles and highway barriers on an unused portion of old runway on the west side of the 

Airport {id.). There are no other activities currently taking place on the west side of the Airport {id.). 
stinctures of any kind on the west side of the Airport. Skydive complains, however, that one 

non-aeronautical tenant, DeSilva, has been permitted to place trailers on the west side of the 

Airport, and Skydive demands to a right to erect a facility for use as an office and for repacking 

parachutes {see Complaint, ^^I16-11). 

The City has permitted DeSilva, a non-aeronautical tenant, to place trailers on the west 

side of the Airport for use as temporary construction offices as part of the construction of the 

nearby Lincoln State Highway 65 Bypass project. Other than several unoccupied, dilapidated 

World War Il-era barracks, these trailers are the only "structures" on the west side of the Airport. 

As soon as the highway construction is completed, they will be removed. The only utility that 

runs to these trailers is an electric line strung straight from an electric pole. Only employees 

working on the construction project have access to the trailers; they are not open to the public 

{see Answer, ^ AF16). Skydive, which proposes to place an open-to-the public aeronautical 

structure on the west side of the Airport, is not similarly-situated to DeSilva. 

The City also has legitimate reasons for refusing to permit Skydive to erect a building at 

the drop zone site. The City will not allow the construction of any structure, to be open to the 

public, which does not meet basic safety and sanitation standards or comply with generallyapplicable municipal ordinances. The City would require an open-to-the-public building on the 

west side of the Airport, such as the support facility Skydive proposes, to have (at a minimum) 

hot and cold running potable water, restroom facilities, and some kind of fire suppression system 

in case there is a fire. This required infrastructure does not exist on the west side of the Airport. 

{see Answer, THl AFl 8-AFl 9). 

The FAA has repeatedly held that while aeronautical users may have a right of reasonable 

access to an airport, they have no right to pick exactly where the facilities they use will be 
located at the airport. See Monroe. Inc. v. City of Monroe, Georgia, FAA Docket No. 16-06-02, 

2007 WL 1058450, at *8-9 (Director's Determination) (Mar. 30,2007) (applying this principle 

to skydive operator), citing Glyn Johnson v. Yazoo County and the Yazoo County Port 

Commission, FAA Docket No. 16-04-06 (Director's Determination) (Feb. 9, 2006); JetAway 

Aviation, Inc. v. Board of County Commissioners, Montrose County, Colorado, FAA Docket No. 

16-06-01 (Director's Determination) (Nov. 6,2006); Kent J. Ashton v. City of Concord, VPJ>s. 

Docket No. 16-99-09 (Final Agency Decision) (July 3, 2000). The City is not denying Skydive 

"ancillary space to conduct its operations." Id. at *9. The City has just rejected Skydive's 

request to locate its ancillary space at the drop zone. 

Skydive already has access as a subtenant to hangar space at the Airport (Answer, 

t AF15) and Skydive has not alleged and could not prove that there is no space available on the 

east side of the Airport to accommodate its needs. Under these circumstances, Skydive has no 

right under the Grant Assurances to compel the City to allow Skydive to erect any kind of 

ancillary support structure at the drop zone. As the FAA reaffirmed in Monroe, Inc., "the grant 

assurances only require reasonable accommodation" for "a skydiving operator [who] may 

require space on the airport to conduct briefings or pack parachutes." Id. at *9. Skydive's needs 

for ancillary support space can easily be met on the east side of the Airport. As a result, the 

City's refusal to allow Skydive to build a support facility at the drop zone on the west side of the 

Airport is not grounds for complaint. 

2. Skydive has no right to complain that the City will only allow Skydive 

to use the drop zone for parachute jumping. 

Skydive also complains that Section 6 of the Lease provides that the drop zone may be 

used only for the purpose of landing skydivers {see Complaint, ^ 13-15; Skydive Ex. 19, § 6). 

Skydive claims that the drop zone site would also be suitable for use as a helicopter hover pad 

10 
and for the launching and landing of hot air balloons. Skydive complains that the City should 

not be allowed to limit the use of the drop zone to skydiving and argues that other aeronautical 

tenants are permitted to make multiple use of their leased premises. 

Skydive is not similarly-situated to any other aeronautical tenant because only Skydive 

seeks to operate on the west side of the Airport, where its drop zone would be the only 

aeronautical facility. All other aeronautical activities - including hot air ballooning and 

helicopter operations - take place on the east side of the Airport. Skydive is only in the 

parachute jumping business, but if Skydive seeks to expand its activities to include hot air 

ballooning or helicopter operations, it can easily be accommodated, without charge, on the east 

side of the Airport {see Answer, T^l AF10-AF13). As a result, there is no basis for Skydive's 

complaint. See Monroe, Inc., 2007 WL 1058450, at *8 (reasonable access means for the use of 

aeronautical facilities on the airport, not necessarily the ability to lease - or use - particular space 

on the airport). 

D. Skydive Has No Right To A Long-Term Lease. 

Skydive complains that Section 3 of the proposed Lease provides for only a two-year 

term {see Complaint, ^ 68; Skydive Ex. 19, § 3). Skydive argues that the City has given longterm leases to its other aeronautical tenants and is obligated, as a result, to give the same benefit 

to Skydive. The key difference, however, is that Skydive will not be making any significant 

capital investments in permanent improvements in the drop zone. The aeronautical tenants that 

have been given long-term leases by the City, in contrast, have all made substantial capital 

investments in improvements at the Airport, such as hangars, FBO facilities or aircraft 

manufacture and repair facilities {see Answer, f 68). 

11 
The FAA has consistently held that it is reasonable for an airport sponsor to tie the length 

of leases to the nature and amount of capital investments by its tenants. The FAA has long 

recognized that when tenants make substantial investments in airport improvements, they can 

reasonably demand long-term leases so they have an opportunity to recover their investment; 

tenants that do not finance improvements, however, have no right to a long-term lease. See The 

Aviation Center, Inc. v. City of Ann Arbor, Michigan, FAA Docket No. 16-05-01, 2005 WL 

3722716 at *21 (Director's Determination) (Dec. 16, 2005): 

There are significant differences between a twenty-year long-term lease and a 

five-year short-term lease that have a bearing on financing and access to capital 

for equipment and facilities. It is a common practice to differentiate between 

fixed base operators having capital investment requirements under long-term 

leases and fixed-base operators with short-term leases making no capital 

investment. Airports routinely seek to initiate long-term leases to provide tenants 

with enough time to recover invested capital on the leasehold. Upon expiration of 

the lease, all facilities and improvements can become the property of the airport 

sponsor. 

See Wilson Air Center v. Memphis and Shelby County Airport Authority, FAA Docket No. 16-

99-10 (Final Agency Decision) (Aug. 30, 2001), aff'd, Wilson Air Center, LLC v. FAA, 372 F.3d 

807 (6th Cir. 2004). 

Because Skydive will not be making any significant investment in the drop zone, it is, in 

fact, similarly-situated in this respect to the two non-aeronautical tenants on the west side of the 

airport, DeSilva and Energy Absorptions. These two tenants have been granted only short-term 

leases: the DeSilva lease for temporary construction management offices has a one-year term, 

subject to renewal (City Ex. 24, f 3); the Energy Absorption crash test lease has a two-year term, 

subject to renewal (City Ex. 25, f| 1-3)- Moreover, the City has no recent experience with 

parachute jumping at the Airport and reasonably proposes only a short-term lease to see how 

well the proposed drop zone and Lease terms work out. Under these circumstances, the City has 

no federal obligation to give Skydive a long-term lease. 

12 
E. Skydive's Many Complaints About Lease Boilerplate Do Not Raise Any 

Serious Federal Issues. 

Skydive also complains about a variety of boilerplate terms included by the City in the 

proposed Lease. None of the City's proposals, however, warrants federal intervention in local 

lease negotiations. 

1. Annual Rent Increase. 

Skydive complains that Section 2 of the Lease provides for fixed annual 5% rent 

increases {see Complaint, \ 67; Skydive Ex. 19, § 2). Skydive argues that it is entitled to the 

lower CPI-based rent adjustments that are called for by the long-term leases the City entered into 

between 1978 and 2001 {see City Exs. 15-23). 

The fixed, 5% annual increase proposed by the City is consistent with its recent practice; 

neither the DeSilva nor the Energy Absorption leases call for CPI-based rent adjustments {see 

City Ex. 24, \ 2 [DeSilva] (5% annual rent increase); Ex. 25, Amndmt. No. 2 [Energy 

Absorption] (10% rent increase after third year of lease). The City is not forever bound to use 

CPI-based rent adjustment formulas just because it used them in leases it entered into many years 

ago. See Rick Aviation, Inc. v. Peninsula Airport Commission, FAA Docket No. 16-05-18,2007 

WL 1450398, at *27 (Director's Determination) (May 8,2007) ("The Director has consistentiy 

concluded that Assurance 22 does not require a sponsor to offer lease rates and terms that are 

identical to other leases negotiated at different points in time."). Skydive has not shown that a 5% 

rent adjustment is inherently unreasonable or otherwise unlawful. 

2. Insurance Requirements Applicable to Skydive. 

Skydive makes various complaints about the insurance coverage the City has required 

Skydive to obtain as a condition of entering into the Lease (see Complaint, ^ 48-64). The 

coverage that the City demands of Skydive, however, is either mandated by municipal ordinance 

13 
or required by the City's own policies {see Answer, 48) and provides no basis for a federal 

complaint. Skydive's specific complaints regarding the insurance requirements are addressed 

individually below. 

a. Commercial Liability Insurance. 

Skydive complains that Section 11 of the Lease contains a requirement for $1,000,000 in 

commercial general liability ("CGL") coverage {see Complaint, ^ 48-54; Skydive Ex. 19, § 11). 

Skydive asserts that CGL policies are not available to Skydive in the insurance market at any 

price. The City concedes that although Skydive does not have what is called a "CGL" policy, 

Skydive has policies with different names that could provide adequate general liability coverage 

{see Answer, Tf 48). 

The insurance that Skydive already has satisfies some of the necessary insurance 

requirements, but the City would require the following additional insurance coverage before 

entering into the Lease: Skydive's aircraft liability coverage should be increased to $1,000,000 

per occurrence, $2,000,000 aggregate, and should be expanded to include coverage for bodily 

injury, property damage, and any damage to or caused by passengers, and the City should be 

listed as an additional insured {see Answer, ^ 48). 

b. Automobile Liability Insurance. 

Skydive complains that Section 11 of the Lease contains a requirement for $1,000,000 in 

automobile liability insurance {see Complaint, ][ 57; Skydive Ex. 19, § 11). Skydive complains 

that this level of automobile insurance is not available to businesses of Skydive's size. When 

Skydive obtained its business license from the City, however, Skydive offered proof that Garcia, 

its proprietor, is insurable for $1,000,000 in automobile liability coverage {see Answer, \ 48; 

City Ex. 14). This coverage limit is required by City Ordinance {see City Ex. 3). If Skydive 

14 
conclusively demonsfrates that it caimot obtain the required policy, however, the City will accept 

lower limits of coverage. 

3. Insurance Coverage for Subcontractors. 

Skydive complains that Section 11 of the Lease requires that any of its subconfractors 

operating on the drop zone obtain the same level of coverage as Skydive must have {see 

Complaint, \ 55; Skydive Ex. 19, § 11). In its complaint, Skydive states that it would use 

subconfractors for two purposes: to operate skydiving flights and to repack chutes between 

drops (Complaint, \ 55). These kinds of services create the same kinds of risks as Skydive's 

own operations and warrant comparable insurance coverage. Both the City's own insurance 

provider and the applicable municipal ordinance mandate this coverage {see Answer, Tj 55). 

There is nothing unreasonable or discriminatory about the City's proposal that Skydive's 

subconfractors prove that they carry the same coverage that Skydive must have. 

4. Payments of City's Insurance Premiums. 

Skydive complains that Section 11 of the Lease requires that Skydive pay for any 

increase in the City's own insurance costs that is attributable to Skydive's parachute jumping 

activities at the Airport {see Complaint, fTJ 61-64; Skydive Ex. 19, § 11). 

The City's own liability policy has a skydiving exclusion {see Answer, \ 48). To obtain 

reasonable coverage to protect the City from claims arising out of Skydive's activities, the City 

would have to purchase additional coverage through a new policy that it would not otherwise 

have {see Answer, ^ 48). There is nothing unreasonable or discriminatory about the City's 

15 
proposal that Skydive bear the incremental costs associated with the City's need to procure 

skydiving coverage.' 

5. Indemnification. 

Skydive complains that Sections 13 and 14 of the Lease are unjustly discriminatory 

because they require Skydive to indenmify the City, but the City has not offered to indemnify 

Skydive {see Complaint, ^ 79-80; Skydive Ex. 19, §§ 13 & 14). As the owner of the Airport, 

the City has the proprietary right to demand indemnificationyrow its tenants. The City has not 

provided indemnification to any of its existing aeronautical tenants in their leases {see City 

Exs. 15-25). The City has no federal obligation to offer to indemnify Skydive before it can 

require Skydive to indemnify the City. 

6. Conflicting Lease Terms. 

Skydive complains that Section 5 of the Lease, which specifically describes the FAA and 

TRACON safety requirements for skydiving at the Airport, may conflict with Section 8 of the 

Lease, which requires Skydive to comply with all applicable laws, if the FAA or TRACON 

someday changes the rules, regulations or safety requirements governing Skydive's activities at 

the Airport {see Complaint, ^ 71; Skydive Ex. 19, §§ 5 & 8). In calling out Skydive's obligation 

to comply with both (a) the specific FAA and TRACON safety requirements that are currently in 

effect and (b) applicable law as it may be amended from time to time, it was never the City's 

intent (as insinuated by Skydive) to frap Skydive by making it impossible for Skydive to comply 

with its Lease. To avoid doubt, the City would be happy to insert wording in the Lease to make 

' When Energy Absorptions proposed to conduct crash tests at the Airport, the City inserted a similar costrecovery clause in Energy Absorption's Lease (see City Ex. 25, ^ 8.1). As it turned out, the City did not incur any 

incremental insurance costs as a result of Energy Absorption's activities and had no need to invoke this provision 

(5ee Answer, 1161). 

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explicit that it is Skydive's obligation to comply with applicable FAA and TRACON safety 

requirements "as they may be amended from time to time" during the term of the Lease. 

7. Time is of the Essence. 

Skydive complains that Section 25 of the Lease makes "time of the essence" for Skydive 

to perform all of its obligations under the Lease, but that time is not of the essence for the City to 

perform its obligations under the Lease {see Complaint, f 81; Skydive Ex. 19, § 25). Skydive 

has not shown that the City has any federal obligation to make "time of the essence" a mutual 

requirement in its leases. 

8. "Insulting" Recitals. 

Skydive also complains that some of the Recitals at the beginning of the Lease are 

"insulting" to Skydive and, according to Skydive, unfairly impugn skydiving {see Complaint, 

TfTf 65-66). Skydive has not shown, however, how any of these non-binding recitals might 

actually affect its operations or impair any right protected by federal law. The City is prepared, 

however, to consider rewording the recitals to eliminate this problem if it would resolve the 

present dispute. 

III. THE CITY HAS NOT IMPOSED ANY "UNATTAINABLE" CONDITIONS AND 

THAT CLAIM IS MOOT. 

Skydive complains that the City has placed unattainable conditions on the Lease in 

violation of FAA Order 5190.6A, § 3-12, Administration of Policy; 49 U.S.C. §§ 47107 and 

40103(e); and "the grant agreements" {see Complaint, If 51). Skydive's claim of unattainable 

conditions is based entirely on its complaints about two insurance requirements contained in the 

proposed Lease: the requirement for CGL coverage and the requirement for $1,000,000 in 

automobile liability coverage {see above Pt. n.E.2). 

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With respect to CGL coverage: since Skydive filed its Complaint, the City has 

determined that a CGL policy will not be required, provided that Skydive has aircraft liability 

coverage with limits of $1,000,000 per occurrence, $2,000,000 aggregate, that includes coverage 

for bodily injury, property damage, and any damage to or caused by passengers, and lists the 

City as an additional insured. The City has no reason to believe that this required coverage is 

unavailable to Skydive in the insurance market; Skydive already has an aircraft liability policy 

with limits of $300,000 per occurrence {see Answer, ^ 48). 

With respect to automobile liability coverage: there is no reason to believe that Skydive 

could prove that the required $1,000,000 policy is unattainable, since Skydive showed that 

Garcia was insurable for such a policy when it obtained its business license from the City (see 

Answer, f 48; City Ex. 14). However, if Skydive conclusively demonsfrates that it no longer can 

obtain this coverage, the City will accept lower policy limits. 

Any complaint that Skydive may have had on the basis of these insurance requirements is 

now moot because the City has given up the CGL requirement and has agreed, if necessary, to 

accept lower coverage limits on Skydive's automobile liability policy. The FAA should, 

therefore, dismiss this claim by Skydive. As the FAA has observed: 

. . . in addressing allegations of noncompliance, the FAA will make a 

determination as to whether an airport sponsor is currently in compliance with the 

applicable federal obligations. Consequently, the FAA will consider the 

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

application federal obligation[s] to be grounds for dismissal of such allegations. 

Hill Air, 2006 WL 325373, at *24 (Jan. 31, 2006) (Record of Decision) (emphasis added). See 

Jimsair Aviation Services, Inc. v. San Diego County Regional Airport Authority, 2007 WL 

2405821, at *38 (April 12,2007) (Director's Determination). 

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IV. SKYDIVE'S "EXCLUSIVE RIGHTS" CLAIM HAS NO INDEPENDENT 

SIGNIFICANCE. 

Skydive's "exclusive rights" claim under 49 U.S.C. § 40103(e) is predicated on the 

theory that the City has granted unlawful "exclusive rights" by imposing unjustly discriminatory 

or xmattainable conditions in the Lease {see Complaint, ^ 44-46). Skydive apparentiy relies 

upon the FAA's position that an unjustiy discriminatory application of airport standards may 

constitute a "constructive" grant of an unlawful exclusive right. See FAA Order 5190.1 A, 

^11 .c; Ashton, 2000 WL 1387887 at *6. Skydive's complaint makes plain that its exclusive 

rights claim is derivative of and depends upon its unjust discrimination claim. It has no 

independent significance. Skydive posits that the City has granted unlawfiil exclusive rights by 

offering more favorable lease terms to other aeronautical tenants than it offered to Skydive. If 

the FAA finds, as it should, that the City's proposed Lease terms are not unjustly discriminatory, 

the FAA must reject Skydive's exclusive rights claim.'° 

'" Even if the FAA were to find merit in Skydive's unjust discrimination claim, there would be no reason for 

the FAA to consider the "exclusive rights" issue. See Skydive Paris, Inc., 2006 WL 247124, at *16 (in view of the 

finding on unjust discrimination, it was "unnecessary to consider the related allegation regarding exclusive rights"). 

19 
Conclusion. 

For all of these reasons, the FAA should dismiss Skydive's Complaint with prejudice. 

Respecjfi^lly submitted. 

September 21,2009 

ScoVCV. Lewis 

CJmstine M.lGrifiln 

PERSON <ffi^i^IGER LLP 

One Canal Park, Suite 200 

Cambridge, MA 02141 

T: 617.621.6500 

F: 617.621.6660 

slewis@andersonkreiger. com 

cgriffin@andersonkreiger.com 

Counsel for Respondent 

20 
CERTIFICATE OF SERVICE 

I hereby certify in accordance with 14 CFR § 16.15(a) that today I served the foregoing 

Memorandum in Support of Respondent's Motion to Dismiss on the following persons at the 

following addresses by Federal Express: 

Richard J. Durden 

Attorney at Law 

27987 Richmond Hill Road 

Conifer, CO 80433 

Office of Chief Counsel, Attention: 

FAA Part 16 Airport Proceedings Docket 

AGC-610 

FEDERAL AVL\TION ADMINISTRATION 

800 Independence Avenue, SW 

Washington, DC 20591 

Dated this 21'* day of September, 2009 

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