# G

U.S

. Departnnen t offic e o f th e Associat e 80 0 Independenc e Ave. , S.W

. o f Transportatio n Administrato rfo rAirport s Wasfiington , D.C

. 2059 1 Federa l Aviatio n Administratio n OC T2 7 200 9 ic/:> - Complainants , Respondent s an dCounse l - ^ ^^ ^ o n Attache dServic e Lis t

y > 5>j ^
L U C O RE : Northwes t

Airlines , Inc. , Delt aAirlines , Inc. , AirTra n Airway s Inc. , -C " Continenta l Airlines , Inc. , Southwes t Airlines , Inc
. V
. Indianapoli s Airpor t

Authorit y Indianapoli s Internationa l Airport , BAA-Indianapoli s Docke t No
. 16-07-0 4
Dea r Parties : Enclose di s acop y o f

th e Fina l Decisio n an dOrde r o f th e Federa l Aviatio n Administratio n (FAA ) withrespec t

t o th e above-reference dmatter . Base do n th e recor di n thi s proceeding , FA A finds that th e Determinatio n mad e b y th e Directo r o f Airport Complianc e an dFiel dOperation s ^ supporte db y apreponderanc e o f reliable , probative , an dsubstantial evidence
. I affir mth e Director' s Determination , whic hfoun dth e Airpor t

sponso r i s currentl y i n complianc e withit s federal obligations
. I further affir mth e Director' s advisory informatio n an dguidanc e provide di n th e Determinatio n wer e bot hcorrec t an dappropriate
. Th e reason s for

upholdin g th e Director' s Determinatio n ar e se t fort hi n th e enclose d Final Decisio n an dOrder
. Sincerely , 

# O/i^

- Catherin e M
. CSh

g Actin g Associat e Administrato r for Airport s
Enclosur eCERTIFICAT E O FSERVIC E

I HEREB Y CERTIF Y tha t o n (TC^TQIC^? ^ .•^' ^ .-^^ ^ I place di n th e Unite dState s mai l (firs t class , postag e paid ) atru e cop y o f th e f((regoin g documen t

addresse dto : Fo r Respondent s Pabl o O
. Nuesc h Jeffre y A
. Schwar z SPIEGE L& MCDIARMI D LL P 133 3 New Hampshir e Ave. , N W Washington , D C 2003 6 Rober t A
. Dunca n Airport Directo r Indianapoli s Airport

Authority Indianapoli s Internationa l Airport 250 0 SouthHig hSchoo l Road , Suit e 10 0 Indianapolis , IN 46241-494 3 Fo r Complainant s Rober t E
. Coh n Jonatha n L
. Abra m Patric k R
. Rizz i HOGAN & HARTSON , L.L.P
. 55 5 ThirteenthStreet , N W Washington , D C 2000 4 Bria n Mattingly , Regional Directo r

Airpor t Affair s Gar y Bunce , Assistan t Genera l Counse l NORTHWES T AIRLINES , INC
. 270 0 Lon e Oak

Parkwa y Eagan,M N 5512 1 Josep hZan g Assistan t Genera l Counse l Rebecc aBays , Genera l Attorne y DELT A AI RLINE S IN C 103 0 Delt aBoulevar d Atlanta , G A 3032 0 Lorrain e B
. Hallowa y CROWEL L& MORIN GLL P 100 1 Pennsylvani aAvenu e N W Washington , D C 2000 4 Counse l fo r

Continenta l Airlines , Inc
. Rober t W
. Kneisle y Associat e Genera l Counse l Lesli e Abbot t Attorne y SOUTHWES T AIRLINE S CO
. 190 1 LStreet , NW , Suit e 64 0 Washington , D C 2003 6 Thoma s Newto n Boilin g Managin g Attorney , Regulatory Affair s CONTINENTA LAIRLINES , INC
. P.O
. Bo x 460 7 - HQSL G Houston , T X 7721 0

Richar dP
. Magum o Senio r Vic e Presiden t

& Genera l Counse l AI RTRA N AIRWAYS , IN C 995 5 AirTran Boulevar d Orlando , F

L3282 7FA A Part 1 6 Airport

Proceeding s Docke t FA A Airpor t

Complianc e an dFiel dOperations , ACO-lO O FA A Great

Lake s Region , AGL-60 0


## J^^.^ 4 l e Torgerson , Offic e o f Airport Complianc e an dFiel dOperation sUNITE D STATE S DEPARTMEN T O FTRANSPORTATIO N FEDERA LAVIATIO N ADMINISTRATIO N

WASHINGTON , D C Northwes t

Airlines , Inc. , Delt aAirlines , Inc
. AirTra n Airway s Inc. , Continenta l Airlines , Inc. , Southwes t Airlines , Inc
.

Complainant s /

Appellee s V Indianapoli s Airpor t

Authority , Indianapoli s Internationa l Airport , BAA-Indianapoli s

Respondent s /

Appellant s FA A Docke t 16-07-0 4

FINA LDECISIO N AN D ORDE R I
. INTRODUCTIO N o 5
Thi s matte r

i s befor e th e Federa l Aviatio n Administratio n (FAA ) Associat e Administrato r for Airport s o n appea l filedb y Indianapoli s Airport Authority , Indianapoli s Internationa l Airport (lA A o r th e Authority) , an dBAA-Indianapolis , LL C (Respondent s o r Appellants ) fi-omth e Director' s Determinatio n o f Augus t 19 , 2008 , issue db y th e Directo r o f FA A Airport Complianc e an dFiel dOperation s pursuan t t o th e FA A Rule s o f

Practic e fo r Federall y Assiste dAirpor t Enforcemen t

Proceeding s foun di n Titl e 1 4 Cod e o f Federa l Regulation s (CFR ) Part

1 6 (Rule s o f

Practice)
. Appellant s agre e that

th e Directo r

properl y grante dthei r

motio n t o dismis s th e complain t o n th e ground s that

lA A i s currentl y i n complianc e withit s federal gran t obligation s relatin g t o unjus t

discrimination , exclusiv e rights, fe e an drenta l structure , an dairpor t revenue s becaus e ther e i s n o controvers y ripe for revie w b y th e FA A unde r Part 16
. Appellan t lA A ha s agree dt o fi-eeze a t 200 8 level s th e landin g fee rate s chargeabl e t o th e signatory airlines , unti l th e Airport Us e Agreemen t

a t Indianapoli s Internationa l Airport (IND ) expires. ^ A s aresult , th e cost s o f th e landin g fee ren t

credi t tha t lA A afforde d Federa l Expres s wil l no t

b e impose dupo n th e signatory airline s unti l a t leas t th e en do f Decembe r

2010
. However , appellant s objec t th e reasonin g i n th e res t

o f th e Director' s Determination
. The y conten dtha t i t "i s no t onl y dict a- i.e. , discussio n not necessary t o support th e outcom e o f

th e cas e - bu t

confusin g dict athat

ignore s controllin g judicial , DOT , an dFA A precedent , a s wel l a s th e recor devidence. " [FA A Exhibi t 1 , Ite m26 , pag e 4. ] Appellant s argu e "[t]ha t i s particularl y troublin g where , a s here , partie s the n seek t o us e tha

t dict aa s leverag e i n subsequen t negotiations... " [FAA Exhibi t 1 , Ite m26 , pag e 9. ]
FA A Exhibi t 1 , Ite m20 , pag e 21
.Appellant s as k th e Associat e Administrato r t o "affirmth e Determinatio n o n th e narro w ripeness ground s o n whic hi t i s based , an deithe r

correc t o r disavo w a s uimecessary th e allege derror s i n th e Director' s Determination
. [FA A Exhibi t 1 , Ite m26 , page s 5 an d10. ] Complainant s repl y tha t

lA A appeal s fi-omafavorabl e determinatio n an durg e that "th e appeal i s withou t

meri t an dshoul db e denied. " II
. SUMMAR Y O FTH E DIRECTOR' S DETERMINATIO N Th e Complain t

i s abou t th e interpla y betwee n tw o separat e agreements : (a ) th e Agreemen t

an dLeas e o f

Premise s a t

Indianapoli s Internationa l Airpor t (Airport Us e Agreement ) date dMarc h15 , 2001, ^ an d(h ) Amendmen t No
. 3 t o th e Airport-Federa l Expres s Lan dLeas e Agreemen t (Amendmen t

No
. 3 ) date dApri l 14 , 2006
. A
. Th e Airport

Us e Agreement^ i s an agreemen t betwee n th e Airport

an dtenan t

ai r carriers , calle dSignatory Airlines
. Eac ho f th e complainin g Airline s i s a signatory t o th e Airport

Us e Agreement
. Thi s agreement , whic hi s du e t o expir e o n it s ow n term s a

t th e en do f

Decembe r

2010'* , set s landin g fe e rate s a t th e Airport o n aresidua l basis. ^ Federa l Expres s (hereinafte r "FedEx") , whos e leas e i s a t th e cente r

o f thi s case , i s no t

aComplainant
. I t

i s atenan t

ai r carrie r an d signatory t o th e Airport

Us e Agreement. * B
. Amendmen t

No
. 3 i s a

n agreemen t

betwee n th e Airport

an dFedEx
. Unde r

thi s agreemen t

th e Airport

Authority consente dt o buil dacarg o apro n t o expan d FedEx' s carg o facilitie s a s aSpecia l Us e Facilit y i n exchang e for increase s i n operation s b y FedE x a

t th e Airport
. FedE x agree dt o pa y aspecial facilitie s ren t ove r a2 0 year perio dt o cove r

th e cos t o f expandin g th e apron ' adjacent t o th e FedE x facilities
. A t

th e sam e time , th e Airport Authorit y agree dt o provid e a credi t t o FedE x base do n aformul at o recogniz e FedEx' s increase doperation s a t th e airport

(referre dt o herei n a s aLandin g Fe e Ren t Credi t o r Credit)
.

^ FAA Exhibi t

1 , Ite m10 , exhibi t

B
. ^ Thi s agreemen t

i s referre db y th e Appellant s a s th e "Airpor t Us e Agreement. " I n th e Director' s Determination , i

t i s als o referre dt o a s th e "Leas e Agreement. " I n thi s document , w e hav e chose n t o refer t o i t a s th e "Airport

Us e Agreement " fo

r consistency
. ' ' FA A Exhibi t

1 , Ite m10 , pag e 2
. Th e Airport admit s that

eac ho f th e Conplainin g Airline s i s asignatory t o th e Airport

Us e Agreement
. [Se e FAA Exhibi t 1 , Ite m10 , pag e 9. ]

' Unde r aresidua l financial plan
. Signatory Airline s typicall y agree t o assum e part o r al l o f th e liability for th e Airport' s nonaeronautica l cost s i n exchang e fo r th e Airport' s agreemen t

t o cross-credi t nonaeronautica l revenue s t o aeronautica l users . [Se e FAA' s Polic y Regardin g Airpor t Rate s an d Charges , 6 1 FR3199 4 (Jun e 21,1996) , sectio n D , 2.1.1. ] ( A Signatory Airlin e i s an y ai r carrie r that sign s suc ha

n agreement. ) * FAA Exhibi t

1 , Ite m10 , pag e 2
. ' Th e term"apron " i s use dt o describ e adetlne dare ao n th e Airport intende dt o accommodat e aircraf t fo r purpose s o f

loadin g o r

unloadin g passengers , mail , o r cargo ; refueling ; parking ; o r maintenance
. [Aeronautica l Informatio n Manua l / Federa l Aviatio n Regulation s (AIM/FAR ) 2006 , pag e 359. ]A s th e Directo r summarized , th e primar y disput e underlyin g thi s Complain t i s whethe r lA A wa s require dunde r

th e Airport

Us e Agreemen t

t o obtai n th e approva l o f th e othe r signatory airline s befor e amendin g it s lan dleas e agreemen t withFedE x t o provid e FedE x alandin g fee ren t

credit
. [Se e FA A Exhibi t 1 , Ite m24 , pag e 44. ] Unde r th e Airport

Us e Agreement , th e Authority i s no t require dt o obtai n approva l fromth e Signator y Airline s for aSpecia l Us e Facility wher e th e sol e cos t wil l b e born e b y th e aeronautica l tenan t that wil l us e th e facility
. Th e Authorit y claim s that th e carg o apro n fimdedb y Federa l Expres s unde r

Amendmen t

No
. 3 qualifie s a s aSpecia l Us e Facility
. Th e Complainants , however , maintai n that

th e Landin g Fe e Ren t

Credi t i n Amendmen t

No
. 3 shift s th e capita l cost s o f

th e carg o apro n s o a s t o affec t th e Complainants ' future landin g fe e rates ; therefor e th e projec t

doe s not qualif y a s aSpecia l Us e Facility
. I f th e carg o apro n doe s not mee t th e requirement s for

aSpecia l Us e Facility , the n imde r th e Airport

Us e Agreemen t

th e Signatory Airline s mus t agre e t o an y additiona l capita l cost s befor e thos e cost s can b e implemente dan drecovere db y th e landin g fee
. Complainant s argue dthat th e Airport

Authorit y ha dunilaterall y increase dthei r fixture landin g fee s t o finance expansio n o f FedEx' s carg o apro n i n violatio n o f gran t assurance s 22 , Economi c Nondiscrimination ; 23 , Exclusiv e Rights ; 24 , Fe e an dRenta l Structure ; an d25 , Airpor t Revenues
. Th e Directo r grante dth e Airport

Authority' s motio n t o dismis s for

lac k o f ripeness becaus e th e Authorit y offere dan dagree dt o fi-eeze landin g fee rate s a

t 200 8 level s unti l th e Airport Us e Agreemen t

expire s at

th e en do f Decembe r

2010
. O n thi s basis , th e Directo r conclude dthat

th e Authorit y ha dno t

ye t impose dth e Landin g Fe e Ren t Credi t unde r Amendmen t

No
. 3 o f th e lan dleas e agreemen t

withFedEx , th e Complainant s ha dno t bee n harmed , an dther e wa s not ye t an y complianc e issu e ripe for

revie w tmde r

Part 16
. Th e Directo r

determine dtha t

th e Authority i s no t

currentl y i n violatio n of

:

•

• gran t assuranc e 22 , Economi c Nondiscrimination , a s aresul t o f enterin g int o a

n agreemen t

withFedE x tha t

include s aLandin g Fe e Ren t Credi t sinc e tha t

Credi t wa s neve r implemented
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 35. ] gran t assuranc e 23 , Exclusiv e Rights , a s aresul t o f enterin g int o a

n agreemen t wit hFedE x t o provid e a

n exclusive-us e apro n inasmuc ha s ther e i s n o evidenc e t o sugges t an y othe r

airlin e requeste dan dwa s denie dsimilar treatmen t imde r a similar situation
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 37. ] gran t assuranc e 24 , Fe e an dRenta l Structure , a s aresul t o f enterin g int o a

n agreemen t

wit hFedE x that

include s aLandin g Fe e Ren t Credi t eve n i f that Credi t i s implemented
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 38. ] gran t assuranc e 25 , Airpor t

Revenues , a s aresul t

o f enterin g int o a

n agreemen t wit hFedE x that

include s aLandin g Fe e Ren t Credi t wher e that

Credi t i s part o f acommitte dfinancial agreemen t an dnot asubsidy
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 40. ] Whil e th e Directo r

agree dwit hth e Authorit y that Amendmen t

No
. 3 ha dye t

t o adversel y affec t th e Complainants , th e Directo r conclude dtha t

th e Complainant s di dhav e standin g t o contes t th e potentia l fixture impac t o f th e ren t credi t afforde dt o FedE x o n thei r landin g fee s unde r

1 4 CF R§ 16.23(a)
. Th e Directo r accordingl y denie dth e motio n t o dismis s for lac k o f standing
. [FA A Exhibi t

1 , Ite m24 , Director' s Determination , pag e 29. ] Th e Directo r

fiirther foun dtha t

section s 8.01(D ) an d8.0 3 o f th e Airpor t

Us e Agreemen t provid e th e Complainant s withsubstantia l protectio n i n acivi l proceeding
. Complainant s als o enjo y protectio n unde r sectio n 17.04 , whic hstipulate s tha t th e law s o f

th e Stat e o f Indian aan dfederal la w govern th e Airport Us e Agreement
. Th e Directo r stated , "I f

th e partie s hav e adisput e regardin g thei r signatory [Airport

Use ] Agreement , Part

1 6 i s no t th e prope r

venu e for

resolvin g thes e type s o f

contrac t disputes ; othe r

civi l remedie s ar e availabl e t o th e Complainant s t o addres s dispute s relate dt o th e [Airport Use ] Agreemen t an dth e FedE x Credit. " [FA A Exhibi t 1 , Ite m24 , pag e 44. ] III
. PARTIE S The Airpor t

an dit s Federa l Oblisation s Indianapoli s Internationa l Airport (IN D o r Airport ) i s acommercia l servic e airport that hold s a1 4 CF RPart

13 9 operatin g certificate
. Th e Indianapoli s Airport Authorit y (Authority ) own s an doperate s th e Airport
. BAA-Indianapoli s manage dth e Airport throug hamanagemen t

contrac t withth e Authority a

t th e tim e o f

thi s Complaint. ^ BAA

Indianapoli s i s aprivat e managemen t compan y an di s on e o f

th e Respondent s i n thi s Part 1 6 Complaint. ' Th e Airport

ha s approximatel y 7,70 0 acres , occupyin g abou t 1 2 squar e mile s o f

lan di n Wayn e an dDecatu r

Township s o f

Mario n County , al l withi n th e cit y o f Indianapolis , Indiana." * A s o f

Septembe r

25 , 2008 , th e Airport

ha dmor e tha n 7 4 basedaircraf t an d 213,74 0 tota l operations , 96,96 8 o f whic hwer e for

ai r carrie r service
. [FA A Exhibi t

1 , Ite m16(b). ] Th e plannin g an ddevelopmen t o f th e Airport

ha s bee n financed, i n part , withfund s provide db y th e FA A unde r th e Airport

Improvemen t

Progra m(AIP)
. Betwee n 198 2 an d 2007 , th e Airport

receive dmor e than $35 5 millio n i n federal airport developmen t assistanc e i n AI P grants. " In addition , part o f th e Airport

was conveye db y th e Wa r Asset s Administratio n (WAA ) t o th e City o f Indianapoli s a s surplu s property . A s a result , th e Airport

incurre dobligation s i n th e for mo f restrictiv e dee dcovenant s arisin g
Th e BAA-Indianapoli s contrac t expire do n it s ow n term s o n Decembe r 31 , 2007
. [Se e FAA Exhibi t 1 , Ite m26 , pag e 35. ] 'http://www.indyindiana.com/indianapolis_airport.ht m "'http://www.indyindiana.com/indianapolis_airport.ht m "FA A Exhibi t

1 , Ite m1 8fi"omconveyance s o f lan dunde r

th e power s an dauthorit y containe di n th e provision s o f th e Surplu s Propert y Ac t

(SPA ) o f 194 4 a s amended , 4 9 Unite dState s Cod e (U.S.C.) § 47151-153.' ^ Th e Airf)Or

t i s th e larges t

i n Indiana
. I t

i s amajo r

hu b for FedEx
. Th e 1. 9 millio n squar e foo t FedE x hu b at

IN D i s FedEx' s secon dlarges t facility.' ^ Complainant s Th e Complainant s - Northwes t Airlines , Inc. , Delt aAi r

Lines , Inc. , AirTra n Airway s Inc. , Continenta l Airlines , Inc. , an dSouthwes t Airlines , Inc
. - i n thi s cas e ar e referre dt o a s "Airlines " o r

"Complainants. " Al l operat e a t IND
.

• Northwes t

i s aU.S
. certificate dai r

carrie r providin g schedule dpassenge r ai r servic e t o airport s throughou t th e Unite dState s an dth e world
.

• Delt ai s aU.S
. certificate dai r carrie r providin g schedule dpassenge r ai r servic e t o airport s throughou t

th e Unite dState s an dth e world
.

• AirTra n i s aU.S
. certificate dai r carrie r providin g schedule dpassenge r ai r servic e t o airport s throughou t

th e Unite dState s an dth e Bahamas
.

• Continenta l i s aU S certificate dai r carrie r providin g schedule dpassenge r ai r servic e t o airport s throughou t th e Unite dState s an dth e world.' *

• Southwes t

i s aU S certificate dai r

carrie r providin g schedule dpassenge r ai r servic e t o airport s throughou t th e Unite dStates.' ^ Eac ho f th e Complainin g Airline s i s asignatory t o th e Agreemen t an dLeas e o f

Premise s a t Indianapoli s Internationa l Airpor t (Airport Us e Agreement) , whic hset s landin g fee rate s a t th e Airport

o n aresidua l basi s unti l th e Airport Us e Agreemen t

expire s b y it s ow n term s a t th e en do f

Decembe r

2010.' * FedEx , wh o i s pivota l i n thi s cas e an dnot a Complainant , i s als o asignatory t o th e Airport Us e Agreement.' ^ IV
. BACKGROUN D AN D PROCEDURA LHISTOR Y Sinc e 1993 , FedE x an dth e Authority hav e ha da n operatin g leas e agreement . Th e 199 3 Amende dan dRestate dLan dLeas e Agreemen t i s on e o f tw o lease s currentl y i n effec t betwee n FedE x an dth e Authority an dha s bee n amende dthre e times
. It wa s first amende d

'^ FA A Exhibi t

1 , Ite m16
. '^ http://imaps.indygov.org/ed_portal/template.asp?page=transai r ' " FAA Exhibi t

1 , Ite m2 , pag e 2
. ' ^ FA A Exhibi t

1 , Ite m6 , pag e 2
. ' * FA A Exhibi t

1 , Ite m10 , pag e 2
. Th e Airport admit s that

eac h o f th e Complainin g Airline s i s asignatory t o th e Airport

Us e Agreement
. [Se e FA A Exhibi t 1 , Ite m10 , pag e 9. ]
'" ' FA A Exhibi t

1 , Ite m10 , pag e 2
.a s Amendmen t No. l i n Octobe r

21 , 1994 , asecon dtim e a s Amendmen t No
. 2 o n Jun e 16 , 2000 , an dfinally, b y Amendmen t No
. 3 o n Apri l 14 , 2006
. Amendmen t No
. 3 i s a

t issu e here.' ' In th e sprin g 2006 , th e Authorit y informe dNorthwes t Airlines , wh o i s th e designate d carrier-representativ e for

th e Signator y Airlines, " that th e Authorit y ha dbee n discussin g withFedE x th e expansio n o f it s domesti c carg o facilitie s an doperation s a t th e Airport.^ " O n Apri l 5 , 2006 , th e Authorit y provide dNorthwes t Airline s asummary o f

th e term s o f

a n agreemen t

an dprovide dth e othe r

airline s withwritte n informatio n abou t th e FedE x agreement . Th e Authorit y indicate dtha t Amendmen t

No
. 3 woul db e signe db y FedE x withi n tw o weeks , o n Apri l 14 , 2006
. A s planned , o n Apri l 14 , 2006 , th e Authorit y an d FedE x execute dAmendmen t No
. 3 fo r th e financing an ddevelopmen t o f ne w carg o facilitie s an dan adjacen t

apro n a t IN D for FedEx' s exclusiv e use . Specifically , Amendmen t No
. 3 facilitate s amajo r

expansio n o f

FedEx' s operation s a

t th e Airport , includin g th e financing an dconstructio n o f a400,00 0 squar e foot

expansio n o f

it s existin g sort

building , ane w 175,00 0 squar e foo t secondar y sort

building , a40,00 0 squar e foo t aircraf t maintenanc e building , an da n 8,00 0 squar e foot

facility for

groun dsupport equipment , al l o f

whic hwil l belon g t o th e Authorit y upo n completio n o f construction
. Th e Authority expect s FedE x t o inves t approximatel y $16 2 millio n i n expandin g thos e facilities.^ ' Th e Complainant s alleg e tha t unde r Amendmen t

No
. 3 , th e Authorit y wil l buil dth e FedE x Carg o Apro n at acos t t o th e Authorit y o f

approximatel y $4 9 million.^^ O n Ma y 3 , 2006 , th e Authorit y sen t a n emai l t o th e member s o f th e EN D Airline

Authority Affair s Committe e Member s (Airlines/Complainants ) announcin g tha t th e negotiation s for

th e FedE x expansio n at

IN D ha dbee n successfull y completed
. Th e Authorit y notifie dth e Airline s tha t th e agreemen t

woul db e presente dt o th e Airport' s Boar dfor approva l o n Ma y 5 , 2006
. O n Ma y 5 , th e Airline s sen t th e Authorit y alette r objectin g t o th e Specia l Facilit y Landin g Fe e Ren t Credi t that i s part o f Amendmen t No
. 3
. That

sam e day , th e Airport

Boar dapprove dAmendmen t No
. 3. "

' * FA A Exhibi t

1 , Ite m10 , pag e 2
. " A n airlin e that

enter s int o a

n agreemen t

that i s substantiall y similar

t o th e Airport

Us e Agreemen t

i s considere dt o b e a"Signatory Airline. " [Se e FA A Exhibi t 1 , Ite m10 , pag e 2. ] ^ ^ I t i s note dthat

th e Authorit y denies that representative s o f

th e Signatory Airline s wer e no t informe dunti l th e sprin g o f

200 6 that ther e wer e ongoin g discussion s with FedE x regardin g th e expansio n o f th e carg o facilities
. Th e Authorit y State s i t introduce dth e carg o expansio n projec t t o th e Signator y Airline s a s earl y a s th e summe r

o f 200 5 durin g th e Airport' s capita l budge t revie w process . [Se e FA A Exhibi t 1 , Ite m10 , pag e 11. ] Th e Directo r note dthat

th e Authorit y faile dt o includ e i n th e recor dth e referenc e t o validat e thi s clai mdespit e anot e i n it s Answer
. Whethe r th e Complainant s wer e notifie di n th e sprin g o f 200 6 o r i n th e Summe r

200 5 i s no t

critica l t o th e issu e represente dhere
. [Se e FAA Exhibi t 1 , Ite m24 , pag e 4 , footnote #20. ]
^ ' FA A Exhibi t

1 , Ite m10 , page s 2-3
. ^ ^ FA A Exhibi t

1 , Ite m1 , pag e 2 state s th e expansio n wil l cos t $4 9 million , whil e th e Answe r state s th e expansio n wil l cos t

$46. 5 million
. Thi s differenc e i s irrelevan t for purpose s o f

th e Fina l Agenc y Decision
. " FA A Exhibi t

1 , Ite m1 , page s 18-19
.Throughou t 200 6 an d2007 , Complainant s an dth e Authorit y attempte dunsuccessfull y t o resolv e th e dispute
. I n Februar y 2007 , th e Authorit y provide dComplainant s witha n actual cop y o f

Amendmen t

No
. 3.^ * O n Apri l 13,2007 , Complainant s filed a1 4 CF R Part 1 6 Complain t

withth e FAA
. Th e Complain t wa s dockete da s FA A Docke t No
. 16

- 07-04. " O n Apri l 20 , 2007 , Continenta l Airlines , Inc
. submitte damotio n t o joi n th e Complain t a s aJoin t Complainant.^ * A n Answe r t o thi s motio n wa s filedo n Ma y 1,2007. " O n Ma y 1 , 2007 , th e Authorit y submitte daMotio n Requestin g Extensio n o f Time. ^ A n Answe r

b y Complainant s t o thi s motio n wa s filedo n Ma y 2 , 2007. ^ O n Ma y 4 , 2007 , FA A issue da n Orde r extendin g th e du e dat e for th e Answe r

unti l Jun e 4 , 2007. ^ Als o o n tha t day
. Southwes t

Airline s Co. , filed amotio n t o joi n th e Complain t a s aJoin t

Complainant.^ ' O n Ma y 9 , 2007 , th e Authorit y filedan Answe r T o Motion O f

Southwes t

Airlines , Co
. T o Joi n Complain t

A s A Join t

Complainant.^ ^ O n Jun e 4 , 2007 , a n Answe r an dMotio n t o Dismis s wa s filedb y th e Authority.' ^ Thi s wa s followe do n Jun e 8 , 2007 , b y a n Unoppose dMotion fo r

Extensio n o f

Time. ^ O n Jun e 22 , 2007 , Complainant s filed a Repl y an dAnswe r

t o th e Authority' s Motion t o Dismiss.^ * Thi s wa s followe db y th e Authority' s Rebutta l o n Jul y 16 , 2007.^ * O n Jul y 30 , 2007 , Complainant s filed aMotio n for Leav e t o Fil e an dResponse,^ ^ whic hwa s followe do n Augus t 9 , 2007 , b y th e Respondent' s Answe r

t o Complainin g Airlines ' Motio n for Leav e t o Fil e an dResponse.^ * O n Decembe r

5 , 2007 , th e FA A issue daNotic e o f Extensio n o f

Time.^ ' O n Marc h28 , 2008 , th e FA A issue dareques t for additiona l informatio n withsi x (6 ) question s (FA A Questions)
. Th e FA A requeste dth e followin g information : (1 ) Provid e alayou t

o f th e FedE x facilitie s locate do n th e Airport ; (2 ) I s th e FedE x Apro n subjec t t o th e Credi t

locate dwithi n th e Airport Cos t Cente r know n a s th e "Airfiel dArea " unde r th e Agreemen t

an dPremise s Lease ; (3 ) Wer e th e provision s o f section s 8.0 1 an d 8.0 3 applie dt o th e FedE x Apro n subjec t t o th e Credit ; (4 ) Ho w ar e th e fund s representin g th e Credi t applie dt o th e Specia l Facilitie s Deb t o f th e FedE x Apron ; (5 ) Doe s th e Agreemen t

an dLeas e o f

Premise s explicitl y provid e for increasin g th e Airfiel dAre a

^ * FA A Exhibi t

1 , Ite m1 , pag e 19
. ^ ^ FA A Exhibi t

l,Iteml
. ^ * FA A Exhibi t

1 , Ite m2
. "FA A Exhibi t

1 , Ite m3
. ^ * FA A Exhibi t

1 , Ite m4
. ^'FA A Exhibi t

1 , Ite m5
. ^ ° FA A Exhibi t

1 , Ite m7
. ^'FA A Exhibi t

1 , Ite m6
. ^ ^ FA A Exhibi t

1 , Ite m8
. "FA A Exhibi t

1 , Ite m10
. ^''FA A Exhibi t

1 , Ite m11
. "FA A Exhibi t

1 , Ite m12
. ^ * FA A Exhibi t

1 , Ite m13
. ^ ^ FA A Exhibi t

1 , Ite m14
. ^ * FA A Exhibi t

1 , Ite m15
. ^'FA A Exhibi t

1 , Ite m17
.requiremen t t o accoun t

for th e Credi t

unde r th e FedE x Amendmen t

N o 3 ; (6 ) What

othe r type s o f credit s hav e bee n claime db y Signatory Airline s imde r th e provision s o f

th e Agreemen t

an dPremise s Lease
. Th e Directo r aske dth e partie s t o "describ e th e flow o f fimds fi-omth e Airfiel dCos t Cente r onc e th e Credi t

i s claime db y FedEx.'"* " O n Ma y 12 , 2008 , th e FA A receive dth e respons e t o th e FA A Question s fi:omth e Authority.* ' Th e Authorit y advise dtha t i t "ha s offere dan dth e Signatory Airline s hav e indicate dunanimousl y tha t the y wis ht o accept , anegotiate dlandin g fe e rat e for th e balanc e o f

th e termo f

th e Signatory Agreemen t base do n 200 8 levels."^ ^ O n Jun e 11* , 2008 , th e FA A receive dth e respons e t o th e Authority' s respons e t o th e FA A Question s fro mth e Complainants.'' ^ O n Augus t

19,2008 , th e FA A issue dth e Director' s Determination
. [FA A Exhibi t 1 , Ite m24 , Director' s Determination. \ B y lette r date dSeptembe r

18 , 2008 , [FA A Exhibi t

1 , Ite m26 , attachmen t

A ] th e Complainant s sough t

clarificatio n o f

th e followin g statemen t

i n th e Director' s Determination : I f th e Complainant s agre e t o exten dth e Leas e Agreemen t an dno t t o amen di t

t o recogniz e th e Credit , [t]hi s matte r woul dcontinu e t o b e acontrac t disput e an d Part 1 6 woul dnot

b e th e appropriat e venue . Director' s Determinatio n at 33
. Complainant s sough t

thi s clarificatio n becaus e lA A an dth e Airline s wer e i n th e proces s o f discussin g atw o year

extensio n o f

th e curren t

Leas e Agreemen t

throug hDecembe r 2012
. [FA A Exhibi t

1 , Ite m26 , attachmen t

A. ] O n Septembe r

22 , 2008 , th e Indianapoli s Airport Authorit y (lAA ) appeale dth e Director' s Determination
. [FA A Exhibi t 1 , Ite m26. ] B y lette r date dSeptembe r

25 , 2008 , lA A reference dit s notic e o f appea l an drequeste d that th e FA A refrai n from"attemptin g t o expoun dth e Determinatio n a s suggeste db y th e Complainants. " [FA A Exhibi t 1 , Ite m36 ] O n Octobe r

7 , 2008 , th e FA A issue da n Errat at o th e Director' s Determination
. [FA A Exhibi t 1 , Ite m25. ] Th e FA A clarifie dth e statemen t a t issu e a s follows : I f th e Complainant s agre e t o exten dth e Leas e Agreemen t an dno t t o amen di t

t o recogniz e th e Credit , an dth e Credi t i s no t applied , thi s matte r

woul dcontinu e t o b e acontrac t

disput e an dPart

1 6 woul dno t

b e th e appropriat e venue .

" " FA A Exhibi t

1 , Ite m22
. *'FA A Exhibi t

1 , Ite m20
. " ^ FA A Exhibi t

1 , Ite m24 , pag e 20 , citin g Exhibi t 1 , Ite m20
. "• ^ FAA Exhibi t

1 , Ite m21
.O n Novembe r 21 , 2008 , th e FA A issue dan extensio n o f tim e for th e Complainant s t o submi t thei r reply
. [FA A Exhibi t

1 , Ite m27. ] O n Decembe r

4 , 2008 , Complainant s submitte dthei r Reply
. [FA A Exhibi t

1 , Ite m28. ] V
. APPLICABL E LA WAN D POLIC Y Th e followin g i s adiscussio n pertainin g t o th e (a ) FAA' s enforcemen t responsibilities ; (b ) th e FA A complianc e program ; (c ) statutes , sponso r assurances , an drelevan t policies ; an d(d ) th e complain t

an dappea l process . A
. FA A Enforcemen t

Responsibilitie s Th e Federa l Aviatio n Ac t o f 1958 , a s amended , 4 9 U.S.C
. § 40101 , et seq. , assign s th e FA A Administrato r

broa dresponsibilitie s for th e regulatio n o f

ai r commerc e i n th e interest s o f

safety , security , an ddevelopmen t o f civi l aeronautics
. Th e federal rol e i n encouragin g an ddevelopin g civi l aviatio n ha s bee n augmente db y variou s legislativ e actions , whic hauthoriz e program s for providin g fund s an dothe r assistanc e t o local communitie s for

th e developmen t

o f airport facilities
. I n eac hsuc hprogram , th e airpor t sponso r assume s certai n obligations , eithe r b y contrac t

o r b y restrictiv e covenant s i n propert y deed s an dconveyanc e instruments , t o maintai n an doperat e it s airport facilitie s safely , efficiently , an di n accordanc e withspecifie dconditions
. Commitment s assume d b y airport sponsor s i n propert y conveyanc e o r gran t agreement s ar e importan t factor s i n maintainin g ahig hdegre e o f safety an defficienc y i n airport design , construction , operation , an dmaintenance , a s wel l a s ensurin g th e publi c reasonabl e acces s t o th e airport
. Pursuan t

t o 4 9 U.S.C
. § 47122 , th e FA A ha s astatutor y mandat e t o ensur e that airport owner s compl y wit hthei r federal gran t

a;ssurances . B
. FA A Airpor t

Complianc e Progra m Th e FA A discharge s it s responsibilit y for ensurin g that

airport sponsor s compl y with thei r federal obligation s throug hit s Airport Complianc e Program
. Sponso r obligation s ar e th e basi s for

th e FAA' s airport

complianc e effort
. Th e airport owne r accept s thes e obligation s whe n receivin g federal gran t fund s o r whe n acceptin g th e transfe r o f federal property for

airport purposes . Th e FA A incorporate s thes e obligation s i n gran t agreement s an dinstrument s o f conveyanc e t o protec t

th e public' s interes t

i n civi l aviatio n an dt o ensur e complianc e withfederal laws
. Th e FA A designe dth e Airport Complianc e Progra mt o ensur e th e availabilit y o f a nationa l syste mo f

saf e an dproperl y maintaine dpublic-us e airport s whic hairport sponsor s operat e i n amaime r consisten t

withthei r

federal obligation s an dth e public' s interes t i n civi l aviation
. Th e Airport Complianc e Progra mdoe s not confro l o r

direc t th e operatio n o f

airports
. Rather , i t

monitor s th e administratio n o f valuabl e rights, whic h airport sponsor s pledg e t o th e peopl e o f th e Unite dState s i n exchang e for monetary grant s an ddonation s o f

federal property , t o ensur e that airport sponsor s serv e th e publi c interest
.FA A Orde r 5190.6A , Airpor t

Complianc e Requirements , Octobe r 2 , 1989 , (hereinafte r Order)'* ^ set s fort

hpolicie s an dprocedure s for th e FA A Airport

Complianc e Program
. Th e Orde r

i s no t regulator y an di s not

confrollin g withregar dt o airport sponso r conduct ; rather , i t establishe s th e policie s an dprocedure s fo r FA A personne l t o follo w i n carryin g ou t th e FAA' s responsibilitie s for ensurin g airport

compliance
. I t

provide s basi c guidanc e for

FA A personne l i n interpretin g an dadministerin g th e variou s continuin g commitment s airport

owner s mak e t o th e Unite dState s a s aconditio n for th e gran t o f federal fiinds o r

th e conveyanc e o f

federal propert y fo r

airport purposes . Th e Order , inte r alia , analyze s th e variou s obligation s se t fort hi n th e standar dairport

sponso r assurances , addresse s th e applicatio n o f th e assurance s i n th e operatio n o f pubHc-us e airports , an d facilitate s interpretatio n o f th e assurance s b y FA A personnel
. Th e FA A Complianc e progra mi s designe dt o achiev e voluntar y compUanc e wit hfederal obligation s accepte db y owner s and/o r operator s o f

public-us e airport s develope dwith FA A administere dassistance
. Therefore , i n addressin g allegation s o f noncompliance , th e FA A wil l mak e adeterminatio n a s t o whethe r a n airport sponso r i s currentl y i n complianc e withth e applicabl e federal obligations
. Consequently , th e FA A wil l conside r th e successfu l actio n b y th e airport t o cur e an y allege do r

potentia l pas t

violatio n o f applicabl e federal obligatio n t o b e ground s for dismissa l o f

suc hallegations
. [Se e e.g . Wilso n Ai r

Cente r v . Memphi s an dShelb v County Airport Authority , FA A Docke t

No
. 16-99-10 , (Augus t

30 , 2001 ) (Final Decisio n an dOrder). ] Fo r similar reasons , th e FA A ma y als o conside r offer s mad e b y th e airport t o suspen d implementatio n unti l som e future even t t o b e ground s t o dismis s aPart 1 6 complaint
. Wher e FA A perceive s th e potentia l for afiiture violation , i t

typicall y provide s appropriat e guidance
. Thi s i s consisten t withth e rol e an dresponsibilit y o f th e FA A t o provid e pruden t

advic e an dcounse l t o assis t airport owner s i n achievin g volimtary complianc e unde r

th e Complianc e program . Suc hadvic e i s primaril y geare dtoward s assistin g airport s i n understandin g th e natur e o f thei r obligation s unde r

thei r gran t assurance s an dothe r

applicabl e federal laws
. [Se e Orde r 5190.6A , pag e 35
. {Se

e footnote #4 4 below. ) Note : Th e Airport Complianc e Division' s rol e i n providin g educatio n an dadvisory service s i s addresse di n FA A Orde r 5190.6 B i n chapte r

2 , page s 2- 1 throug h2-3. ] C
. Statutes , Sponso r

Assurances , an dRelevan t Policie s A s aconditio n preceden t

t o providin g airport

developmen t

assistanc e unde r

th e Airport an dAirwa y Improvemen t Ac t o f 198 2 (AAIA) , codifie dat Title 4 9 U.S.C
. § 47101 , et

seq. , th e Secretary o f

Transportatio n receive s certai n assurance s fromth e airpor t sponsor . O n Septembe r

30 , 2009 , th e FA A publishe dFAA Orde r 5190.6B , Airpor t

Conplianc e Manual , an d cancelle dFAA Orde r

5190.6A
. Durin g th e proceeding s o f th e Director' s Determinatio n an dappeal , FA A Orde r

5190.6 A outline dth e policie s an dprocedure s t o b e followe di n carryin g ou t th e FAA' s function s relate dt o airport compliance
. Th e citation s attache dt o FA A Orde r 5190.6 A hav e bee n retaine di n thi s Fina l Agenc y Decision
. Thi s ha s n o bearin g o n th e analysi s containe dherein
. 1 0Th e AAIA , 4 9 U.S.C
. § 47101 , et seq. , set s fort

hassurance s t o whic han airport sponso r receivin g federal financial assistanc e mus t agre e a s aconditio n preceden t t o receip t

o f suc hassistance
. Thes e sponsorshi p requirement s ar e include di n every airport improvemen t

progra m(AIP ) gran t

agreement . Upo n acceptanc e o f a n AI P gran t

b y a n airport sponsor , th e assurance s becom e abindin g obligatio n betwee n th e airport sponso r an dth e federal government . On e federal gran t

assurance s appl y t o th e specifi c circumstance s o f thi s appeal
. Assuranc e 22 , Economi c Nondiscriminatio/ i Federa l gran t

assuranc e 22 , Economi c Nondiscrimination , (Assuranc e 22 ) implement s th e provision s o f

4 9 U.S.C
. § 47107(a)(1 ) throug h(6) , an drequires , i n pertinen t part , tha t th e owne r o r sponso r o f afederall y obligate dairport : ...wil l mak e it s airport

availabl e a s a

n airport fo r publi c us e o n reasonabl e terms , an dwithou t

unjus t discrimination , t o al l types , kinds , an dclasse s o f aeronautica l activities , includin g commercia l aeronautica l activitie s offerin g service s t o th e publi c at th e airport
. [Assuranc e 22(a). ]

. . .eac hai r

carrie r usin g suc hairport

shal l hav e th e right

t o servic e itsel f

o r t o us e an y fixed-base operato r tha t i s authorize do r

permitte db y th e airport t o serv e an y ai r

carrie r a t suc hairport
. [Assuranc e 22(d). ]

. . .wil l no t exercis e o r

gran t an y right o r privileg e whic hoperate s t o preven t an y person , firm, o r

corporatio n operatin g aircraf t o n th e airport fromperformin g an y service s o n it s ow n aircraf t withit s ow n employee s (including , bu t

not limite dt o maintenance , repai r an dfueling ) tha t

i t ma y choos e t o perform
. [Assuranc e 22(f). ]
...may establis hsuc hreasonable , an dnot unjustl y discriminatory , condition s t o b e me t b y al l users o f

th e airport

a s ma y b e necessar y for

th e saf e an d efficient operatio n o f

th e airport
. [Assuranc e 22(h). ]
...may prohibi t

o r limi t an y give n type , kin do r

clas s o f aeronautica l us e o f th e airport

i f suc hactio n i s necessar y for th e saf e operatio n o f

th e airport o r necessar y t o serv e th e civi l aviatio n need s o f th e public. " [Assuranc e 22(i). ] Subsectio n (h ) qualifie s subsectio n (a) , an dsubsectio n (i ) represent s a n exceptio n t o subsectio n (a ) t o permi t

th e owne r

o r sponso r t o exercis e contro l o f

th e airport

sufficient t o preclud e imsaf

e an dinefficient

conditions , whic hwoul db e detrimenta l t o th e civi l aviatio n need s o f

th e public
.

1 1FA A Orde r 5190.6A , Airpor t

Complianc e Requirements , describe s th e responsibilitie s unde r Assuranc e 2 2 assiame db y th e owner s o r sponso r o f publi c us e airport s develope d withfederal assistance
. Amon g thes e i s th e obligatio n t o freat i n auniformmanne r

thos e user s makin g th e sam e o r similar us e o f th e airport

an dt o mak e al l airport

facilitie s an d service s availabl e o n reasonabl e term s withou t unjus t discrimination
. [Se e Order , Sees
. 4-14(a)(2 ) an d3-1. ] Th e owne r

o r sponso r o f an y airport

develope dwithfederal gran t assistanc e i s require dt o operat e th e airport

for th e us e an dbenefi t

o f th e publi c an dt o mak e i t availabl e t o al l types , kind s an dclasse s o f aeronautica l activit y o n reasonabl e terms , an dwithou t unjus t discrimination
. [Se e Order , Sec
. 4-13(a). ] Th e Orde r

als o provide s ".
. .an aircraf t operator , otherwis e entitle dt o us e th e landin g area , ma y tie-down , adjust , repair , refuel , clea n an dotherwis e service s it s ow n aircraft , provide di t

doe s s o withit s ow n employee s i n accordanc e withreasonabl e rule s o r standard s o f

th e sponso r

relatin g t o suc hwork. " [Se e Order , Se c 4-15(a). ] FA A polic y regardin g th e airport owne r o r sponsor' s responsibilit y for ensurin g th e availability o f

service s o n reasonabl e term s an dwithou t unjus t discriminatio n provide s that third-part y lease s contai n languag e incorporatin g thes e principles
. Assuranc e 22(b ) states , I n an y agreement , contract , lease , o r othe r arrangemen t

imde r whic ha right o r privileg e a

t th e airport

i s grante dt o an y person , firm, o r corporatio n t o conduc t

o r t o engag e i n an y aeronautica l activit y fo r fiimishing service s t o th e publi c a t th e airport , th e owne r

o r sponso r wil l insert an denforc e provision s requirin g th e confracto r t o - (a ) furnis hsai dservice s o n areasonable , an dno t unjustl y discriminatory , basi s t o al l users thereof

, an d (b ) charg e reasonable , an dno t imjustl y discriminatory , price s for eac huni t o r service , provide dthat

th e contracto r

ma y b e allowe dt o mak e reasonabl e an dnondiscriminator y discoimts , rebates , o r othe r similar type s o f pric e reduction s t o volum e purchasers
. Th e FA A consider s i t

inappropriat e t o provid e federal assistanc e for improvement s t o airport s wher e th e benefit s o f suc himprovement s wil l no t b e fully realize ddu e t o inheren t restriction s o f

aeronautica l activities
. [Se e Order , Sec
. 3-8(a). ] D
. Th e Complain t

an dAppea l Proces s 1
. Righ t t o Fil e th e Forma l Complain t Pursuan t t o 1 4 CFR , Part

16 , § 16.23 , aperso n directl y an dsubstantiall y affecte db y an y allege dnoncomplianc e ma y file acomplain t withth e FAA
. Th e complainan t shal l provid e aconcis e bu t

complet e statemen t

o f th e fact s relie dupo n t o substantiat e eac h

1 2allegation
. Th e complain t shal l als o describ e ho w th e complainan t wa s directl y an d substantiall y affecte db y th e thing s don e o r omitte db y th e respondents
. [1 4 CFR , Part 16 , § 16.23(b)(3,4). ] If , basedo n th e pleadings , ther e appear s t o b e areasonabl e basi s for fiirther investigation , th e FA A wil l investigat e th e subjec t matte r o f th e complaint
. In renderin g it s initia l determination , th e FA A ma y rel y entirel y o n th e complain t an dth e responsiv e pleading s provided
. Eac hpart y shal l file document s that i t consider s sufficient

t o presen t

al l relevan t fact s an dargument s necessar y for th e FA A t o determin e whethe r th e sponso r

i s i n compliance
. [1 4 CFR, Part 16 , § 16.29. ] Th e proponen t

o f amotion , request , o r

orde r ha s th e bidde n o f

proo f A part y wh o ha s asserte dan affirmativ e defens e ha s th e burde n o f provin g th e affirmativ e defense
. Thi s standar dburde n o f

proo f i s consisten t

withth e Administrativ e Procedur e Ac t (APA ) an d federal cas e law
. Th e AP A provisio n states , "[ejxcep t a s otherwis e provide db y statute , th e proponen t

o f arul e o r orde r ha s th e burde n o f

proof. " 5 U.S.C
. § 556(d)
. [Se e also
. Director , Offic e o f

Worker' s Compensatio n Programs
. Departmen t o f Labo r v . Greenwic hCollieries
. 51 2 U S 267 , 27 2 (1994) ; Ai r Canad aet

al
. v . Departmen t

o f Transportation
. 14 8 F3 d1142 , 115 5 (D C Cir , 1998). ] Titl e 1 4 CF R§ 16.229(b ) i s consisten t with1 4 CF R§ 16.23 , whic hrequire s th e complainan t t o submi t

al l document s the n availabl e t o support

hi s o r he r complaint
. Similarly , 1 4 CF R§ 16.2 9 state s tha t "[e]ac hpart y shal l file document s tha t i t consider s sufficient

t o presen t

al l relevan t

fact s an dargumen t

necessar y for

th e FA A t o determin e whethe r th e sponso r

i s i n compliance. " 2
. Righ t t o Appea l th e Director' s Determinatio n A part y t o thi s decisio n adversel y affecte db y th e Director' s Determinatio n ma y file a n appeal withth e Associat e Administrato r withi n 3 0 day s after

th e dat e o f

servic e o f

th e initia l determination
. [1 4 C.F.R. , Part 16 , § 16.31(c). ] I f

n o appeal i s filedwithi n th e tim e perio dspecified , th e Director' s Determinatio n become s th e final decisio n an dorde r o f th e FA A withou t

further action
. A Director' s Determinatio n tha t become s final becaus e ther e i s n o adminisfrativ e appeal i s no t judiciall y reviewable
. [1 4 CFR , Part 16 , § 16.33. ] Part 1 6 require s al l relevan t

fact s t o b e presente di n th e complain t documents
. [1 4 CFR , Part 16 , § 16.23(b)(3). ] Ne w allegation s o r issue s shoul dno t

b e presente do n appeal
. Revie w b y th e Associat e Administrato r i s limite dt o an examinatio n o f th e Director' s Determinatio n an dth e administrativ e recor dupo n whic hsuc hdeterminatio n wa s based
. Unde r Part 16 , complainant s ar e require dt o provid e withth e complain t an drepl y al l supportin g documentatio n upo n whic hi t relie dt o substantiat e it s claims
. Failur e t o rais e al l issue s an dallegation s i n th e origina l complain t document s ma y b e caus e for suc h issue s an dallegation s t o b e deeme dwaive dan dnot reviewabl e upo n appeal
. Thi s i s consisten t withth e Suprem e Court' s recognitio n that court s ma y requir e administrativ e issu e exhaustio n a s agenera l rul e becaus e i t i s usuall y appropriat e unde r a n [adminisfrative ] agency' s practic e fo r contestant s i n a

n adversaria l proceedin g befor e i t t o develo p fiilly al l issue s there
. Th e Court conclude dthat

wher e partie s ar e expecte dt o

1 3develo p th e issue s i n a n adversaria l adminisfrativ e proceeding , th e rational e for requirin g issu e exhaustio n i s a

t it s greatest . [Se e Sim s v . Apfel
. 53 0 U S 103 , 108-11 0 (2000 ) citin g Horme l v . Helvering
. 31 2 U S 55 2 (1941 ) an dU S v . L A Tucke r Truc k Lines
. 34 4 U S 33 , (1952). ] 3
. FAA' s Responsibilit y wit hRegar dt o a n Appea l Pursuan t t o 1 4 CFR , Part

16 , § 16.33 , th e Associat e Adminisfrato r wil l issu e afinal decisio n o n appeal fromth e Director' s Determination , withou t ahearing , wher e th e complain t i s dismisse dafter

investigation
. In suc hcases , i t

i s th e Associat e Adminisfrator' s responsibilit y t o determin e whethe r (a ) th e findings o f

fact mad e b y th e Directo r

ar e supporte db y apreponderanc e o f reliable , probative , an dsubstantial evidence , an d(b ) eac hconclusio n o f law i s mad e i n accordanc e withapplicabl e law , precedent , an dpubli c policy
. [Se e e.g . Rick s v Millingto n Mvmicipa l Airport
. FA A Docke t

No
. 16-98-19 , (Decembe r 30,1999 ) (Fina l Decisio n an dOrder ) pag e 21 , an d1 4 CFR, Part 16 , § 16.227. ] VI
. ANALYSI S an dDISCUSSIO N Thi s i s a n unusua l appeal i n tha t

th e Director' s Determinatio n grante dth e Authority' s motio n t o dismis s an dfoun dth e Authorit y wa s currentl y i n complianc e withit s federal obligation s o n al l matter s argue db y th e Complainants , ye t th e Authority i s appealin g th e decision
. O n appeal from aDirector' s Determination , th e appellan t mus t demonsfrate tha t

th e Directo r erre db y (1 ) makin g findings o f fac t that wer e no t supporte db y apreponderanc e o f reliable , probative , an dsubstantia l evidence , o r (2 ) b y makin g conclusion s o f law tha t wer e no t i n accordanc e withapplicabl e law , precedent , an dpubli c policy
. Appellant s argu e seve n point s o n appeal : A
. Th e Associat e Administrato r shoul daffir

mth e Director' s Determinatio n o n th e narto w ripeness ground s o n whic hi t i s base dan deithe r

correc t o r rejec t a s unnecessary th e Director' s analysi s o f th e substantiv e gran t

complianc e issues
. Appellant s ar e concerne dtha t th e dict ama y b e use db y th e Complainant s a s leverag e i n subsequen t

negotiations
. [FAA Exhibi t 1 , Ite m26 , pag e 7. ] B
. Th e Directo r

erre di n treatin g th e Landin g Fe e Ren t Credi t a s adiscret e ite man d i n failin g t o asses s th e impac t o f Amendmen t

No
. 3 a s awhole
. [FA A Exhibi t 1 , Ite m26 , pag e 10. ] C
. Eve n withth e Landin g Fe e Ren t Credit , FedEx' s ren t

exceed s th e Authority' s costs , an dn o residua l apro n cost s are include di n th e landin g fee rat e calculation
. [FA A Exhibi t

1 , Ite m26 , pag e 14. ] D
. Th e Directo r

erre di n concludin g that

Amendmen t

No
. 3' s renta l provisio n coul d increas e th e Complainants ' landin g fees
. [FA A Exhibi t 1 , Ite m26 , pag e 17. ]

1 4E
. Th e Determination' s dict aregardin g gran t assuranc e 22 , Economi c Nondiscrimination , canno t b e reconcile dwithFAA , DOT , o r appellat e precedent
. [FAA Exhibi t

1 , Ite m26 , pag e 24. ] F
. Th e Determinatio n erre di n failin g t o recogniz e tha t residua l rate s frequently includ e cost s o f

facilitie s no t

benefitin g al l airlines
. [FA A Exhibi t 1 , Ite m26 , pag e 31. ] G
. Th e Determinatio n erre di n failin g t o dismis s BAA-Indianapolis , LL C a s a name dpart y i n th e investigation
. [FA A Exhibi t 1 , Ite m26 , pag e 34. ] Issu e A : Correc t

th e Dict ao r

Limi t th e Scop e o f

th e Determinatio n Appellant s as k

th e Associat e Adminisfrato r t o affir mth e Director' s Determinatio n o n th e narro w ripeness ground s o n whic hi t i s basedan dt o correc t

o r rejec t a s unnecessar y it s dicta^ ^ [FA A Exhibi t

1 , Ite m26 , pag e 7. ] Appellant s correctl y state , th e principa l issu e reviewe di n th e Determinatio n i s whethe r FedEx' s variabl e apro n ren t wil l affec t

th e landin g fee s pai db y th e Complainants
. [FAA Exhibi t 1 , Ite m26 , pag e 2. ] Appellant s argu e i t wil l not ; Complainant s argu e i t could
. However , th e Authority agree dt o freeze landin g fe e rate s chargeabl e t o al l ai r carrier s for th e remainde r

o f th e termo f

th e Airport

Us e Agreement.'* ^ A s aresult , th e Landin g Fe e Ren t Credi t ha s not ye t bee n impose dan di s not

ye t ripe for revie w unde r

Part 16
. Th e Directo r accordingl y foun dLA

A wa s not currentl y i n violatio n o f

it s federal gran t assuranc e an dothe r

obligations
. Complainant s not e i n thei r repl y th e curiou s fact

that lA A i s appealin g from afavorabl e result , th e gran t

o f it s ow n motio n t o dismiss
. The y argu e th e "th e appea l i s withou t meri t an dshoul db e denied. " Accordin g t o Complainants , th e Director' s findings an dconclusion s ar e supporte db y th e record , fully consisten t

withpolic y an dprecedent , an dshoul db e affirmed
. The y further argue : "I t i s routin e an dlawfu l for

administrativ e agencie s t o issu e polic y determination s andt o provid e guidanc e i n adjudicativ e decisions. " [Se e FA A Exhibi t 1 , Ite m28 , pag e 22. ] Th e Associat e Administrato r disagree s withAppellant s that th e Directo r

shoul dno t

hav e provide daflill discussio n o n th e matter . Th e impac t o f th e Landin g Fe e Ren t

Credi t o n landin g fee s was , after

all , th e basi s o f

th e Complaint
. It

i s describe db y th e Appellant s a s th e principa l issue
. Appellants ' argument s disregar dth e crucia l fac t tha t th e Directo r qualifie dhi s advic e t o avoi dspeculation
. A s discusse di n detai l belo w i n relatio n t o th e

"* * Appellant s defin e dict aa s "discussio n no t necessary t o support

th e outcom e o f

th e case. " [FAA Exhibi t 1 , Ite m26 , pag e 4. ] •* * Th e curren t

Agreemen t

an dLeas e o f

Premise s a t

Indianapoli s Internationa l Airpor t (Airport Us e Agreement ) expire s o n Decembe r 31 , 2010
.
1 5applicatio n o f th e Ren t Credit , th e Directo r

mad e i t clear tha t h e wa s not

issuin g a n adjudicativ e decision
. H e indicate dthat h e wa s not

makin g findings o f

fac t o r conclusion s o f

law abou t

prospectiv e fees
. [Se e FA A Exhibi t 1 , Ite m24 , pag e 33. ] Althoug hth e Directo r

di dnot repeat th e poin t i n addressin g eac han devery argimient , whe n th e Determinatio n i s rea da s awhol e i t i s clear that th e Dfrecto r

woul donl y issu e findings an dconclusion s afte r apresentatio n o f

th e fact s an dcircumstance s i n effec t at th e tim e th e ne w charg e i s actuall y propose db y Appellants
. Appellants ' argument s als o overloo k th e temporar y natur e o f

th e rat e freeze that

resulte d i n th e Complain t

no t bein g ripe for

review
. Polic y guidanc e fromth e Directo r wa s appropriat e because , notwithstandin g Appellants ' agreemen t t o freeze rent s temporarily, th e Landin g Fe e Ren t

Credi t coul di n th e fiiture hav e affecte dlandin g fee s i n awa y tha t woul dviolat e federal law
. Th e challenge dfe e methodolog y coul dg o int o effec t a s soo n a s th e curren t

Airport Us e Agreemen t

expire s i n Decembe r

2010
. Indeed , Appellan t lA A ha s alread y signe daleas e Amendmen t No
. 3 withon e carrie r

tha t woul dimpos e th e challenge dfee s o n othe r

carriers
. Particularl y i n ligh t o f thei r ow n defens e o f

th e fee s o n th e merits
. Appellant s mak e n o showin g tha t th e Directo r

violate dfederal law i n providin g guidanc e t o assis t the mi n tmderstandin g thei r federal gran t

assuranc e obligation s an dachievin g voluntary complianc e here
. A s note dabove , i t i s FAA' s rol e t o provid e precisel y thi s typ e o f guidanc e t o Appellan t

imde r th e Complianc e program . [Se e Orde r 5190.6A , pag e 35
. (Se e footnot e #4 4 above. ) Note : Th e Airport Comphanc e Division' s rol e i n providin g educatio n an dadvisory service s i s addresse di n FA A Orde r 5190.6 B i n chapte r

2 , page s 2- 1 throug h2-3. ] Moreover , withholdin g polic y guidanc e abou t a n airport fe e merel y becaus e a

n airport temporaril y suspend s it s applicatio n woul d b e contrary t o th e publi c interest
. It woul dreduc e th e incentiv e for Complainant s t o pursu e relie f

an dth e FAA' s ability t o encourag e voluntar y compliance
. [Se e Miam i Internationa l Airport

Rate s Proceeding , Orde r 97-3-2 6 (Marc h19 , 1997). ] Fo r similar reasons . Appellants ' objectio n t o th e discussio n abou t ho w th e FedE x Landin g Fe e Ren t

Credi t coul daffec t

th e Complainant s an dho w i t coul daffec t

th e Authority' s complianc e withit s federal obligation s dependin g upo n ho w th e Credi t i s applie di n th e future , lack s merit
. [FAA Exhibi t 1 , Ite m26 , pag e 8. ] At an y rate , th e Associat e Administrato r finds th e Directo r

properl y explaine dtha t

h e was providin g guidanc e abou t requirement s unde r

applicabl e law , no t

makin g findings o r drawin g conclusion s abou t ho w th e Landin g Fe e Ren t Credi t migh t b e applie di n th e future
. Rather , th e Directo r stated , "Sinc e th e FA A doe s not

kno w th e for

mo f th e futur e agreement , o r whethe r ther e wil l eve n b e a

n agreement , i t

i s no t appropriat e a

t thi s tim e t o rul e o n th e Authority' s possibl e future applicatio n o f th e [Landin g Fe e Rent ] Credi t

for th e FedE x apron . Th e Directo r finds tha t

i f th e Complainant s an dth e Authority d o no t com e t o term s i n areplacemen t agreemen t

an dth e Authority unilaterall y impose s th e Credi t o n th e Complainant s (an dal l airlines ) suc ha n actio n woul db e subjec t t o th e [FAA ] Rate s an dCharge s Policy
. Th e Polic y woul dno t permi t th e

1 6Authorit y t o unilaterall y impose th e cost s o f on e carrie r

o n all othe r carrier s b y addin g suc hcost s t o it s commo n rat e bas e xmles s approve db y thos e carriers."^ ^ [FA A Exhibi t 1 , Ite m24 , pag e 33. ] Her e th e FA A wa s clearl y fulfillin g it s responsibilitie s t o provid e guidanc e t o facilitat e gran t compliance , no t

makin g factual findings o r drawin g conclusion s tha t woul db e considere dbindin g i n an y future Part 1 6 proceeding
. A s such , ther e i s n o nee dt o correc t o r rejec t th e advic e a s dicta
. Appellant s expresse dconcern that th e Complainant s ma y us e th e Director' s discussio n a s leverag e i n subsequen t

negotiations
. [FA A Exhibi t 1 , Ite m26 , pag e 9. ] That concern doe s no t mak e th e discussio n o r

analysi s wron g o r

inappropriate
. Th e Associat e Adminisfrato r

finds th e Directo r

di dno t err i n discussin g th e potentia l future impac t o f th e Landin g Fe e Ren t

Credi t whe n th e issu e wa s not

ripe. Th e discussio n wa s neithe r unnecessar y no r

incorrect
. Th e Associat e Administrato r affirm s th e Director' s Determination
. Issu e B : Amendmen t

No
. 3 a s aWhol e Appellant s argu e th e Directo r erre di n treatin g th e Landin g Fe e Ren t Credi t a s adiscret e ite man di n failin g t o asses s th e impac t o f Amendmen t

No
. 3 a s awhole
. [FA A Exhibi t 1 , Ite m26 , pag e 10. ] Appellant s argu e th e Landin g Fe e Ren t Credi t i s asingle , non-severabl e componen t o f th e overal l busines s deal withFedE x se t fort hi n Amendmen t

No
. 3
. [FA A Exhibi t

1 , Ite m26 , pag e 10. ] Appellant s state , "Amendmen t No
. 3 expande dFedEx' s leasehol dan d extende dth e termo f

it s lease , al l o f

whic hbenefite dth e Authorit y an dth e Signatory Airline s b y securin g a

n increased , long-termrevenu e streamthat excee dth e Authority' s out-of-pocke t

costs. " [FA A Exhibi t

1 , Ite m26 , pag e 6. ] Appellant s als o state , "Th e Determinatio n als o appear s t o accep t tha t Amendmen t

No
. 3 wa s th e bes t

dea l 'feasible ' unde r th e circumstances , an dthat th e variabl e ren t

produce db y th e [Landin g Fee ] Ren t Credi t wa s 'integral ' t o th e overal l deal. " [FAA Exhibi t 1 , Ite m26 , pag e 11. ] Thes e statement s fail t o acknowledg e that Complainant s wer e no t

apart y t o Amendmen t No
. 3 establishin g th e Landin g Fe e Ren t Credi t for FedEx ; Complainant s ha dn o voic e i n th e propose dunilatera l applicatio n o f th e Landin g Fe e Ren t

Credi t t o determin e th e landin g fe e unde r

th e Airport

Us e Agreemen t

for al l Signatory Airlines
. Appellant s argu e th e "deal " withFedE x financially benefit s th e Complainant s an dstat e th e Director' s Determinatio n appear s t o accep t Amendmen t

No
. 3 a s th e bes t

dea l feasibl e unde r

th e circumstances
. Th e Determinatio n make s n o suc hfinding concernin g th e Landin g Fe e Ren t Credi t an dAmendmen t

No
. 3.^** Appellant s argu e the y hav e establishe dth e bes t

" ^ FAA Polic y Regardin g Airpor t Rate s an dCharges , 6 1 F R3199 4 (Jun e 21,1996) , (Rate s an dCharge s Policy ) sectio n C
. * * Th e Director' s comment s regardin g th e benefi t o f th e agreemen t

wit h FedE x wer e limite dt o th e Authority' s ability t o b e sel f sustaining
. Th e Directo r stated , "I t

appear s that

th e Authorit y negotiate da n
1 7deal possibl e unde r th e circumstance s bu t

fai l t o acknowledg e that

- othe r tha n FedE x - non e o f th e othe r Signatory Airlines , includin g th e Complainants , ha dan y sa y i n determinin g th e term s o f

th e deal
. Thes e statement s ar e als o inconsisten t wit hth e allegatio n tha t

th e Directo r

di dno t conside r Amendmen t

No
. 3 a s awhole
. Th e fac t tha t th e Directo r

reviewe daparticular aspec t o f Amendmen t

No
. 3 - th e Landin g Fe e Ren t Credi t - separately , doe s not

detrac t fromth e Director' s revie w o f th e entir e Amendment
. A s note db y th e Complainants , th e "gravame n o f

th e Join t Complain t

wa s tha t appHcatio n o f

th e FedE x [Landin g Fee ] Ren t Credi t woul dcaus e th e Join t

Complainant s t o pa y mor e i n landin g fee s tha n the y otherwis e woul dhav e t o pa y i n th e absenc e o f th e [Landin g Fee ] Ren t

Credit. " [FA A Exhibi t 1 , Ite m28 , pag e 15. ] Fo r th e reason s state dabove , i t wa s reasonabl e for

th e Directo r t o revie w i n detai l an dprovid e guidanc e concernin g th e aspec t tha t i s th e subjec t o f th e Complaint
. Th e Associat e Adminisfrato r finds th e Directo r

di dno t fai l t o asses s th e impac t

o f Amendmen t

No
. 3 a s awhol e an ddi dno t er r b y discussin g th e Landin g Fe e Ren t Credi t separately
. Issu e C : N o Residua l Apro n Cost s i n Landin g Fe e Appellant s state , "Eve n withth e [Landin g Fe e Rent ] Credit , FedEx' s ren t exceed s th e Authority' s costs , an dn o residua l apro n cost s ar e include di n th e landin g fee rat e calculation. " [FA A Exhibi t 1 , Ite m26 , pag e 14. ] Appellant s state , ".
. .th e Determination' s dicta , addressin g ho w Gran t Assuranc e No
. 2 2 migh t appl y i f th e Authorit y ha dnot

offere dt o freeze it s landin g fe e rat e throug h2010 , ar e basedo n flawedfactual premise s an deithe r shoul db e correcte do r

disavowed. " [FA A Exhibi t 1 , Ite m26 , pag e 17. ] Appellant s d o not

specificall y stat e ho w the y believ e th e Directo r erre di n discussin g gran t assuranc e 22 , Economi c Nondiscrimination , a s i t pertain s t o th e residua l apro n cos t bein g include do r

exclude dfromth e landin g fee
. Th e discussio n i n th e Determinatio n o n assuranc e 2 2 cover s 1 9 pages . Appellant s d o no t direc t thei r appea l allegatio n t o an y particular poin t i n thi s discussion
. O n appeal fromaDirector' s Determination , th e Appellant s mus t demonstrat e that

th e Directo r erre db y (1 ) makin g findings o f fac t that wer e not supporte db y apreponderanc e o f reliable , probative , an dsubstantia l evidence , o r (2 ) b y makin g conclusion s o f law that wer e no t i n accordanc e withapplicabl e law , precedent , an dpubli c policy
. Appellant s hav e no t me t thi s burde n o n thi s point
. Th e Associat e Administrato r wil l no t attemp t t o mak e acas e for

th e Appellant s that

th e Appellant s hav e no t

mad e i n thei r

appeal
.

agreemen t

wit hFedE x that

contribute s t o it s ability t o b e self-sustaining. " [FAA Exhibi t 1 , Ite m24 , pag e 37. ]

1 8(Argument s regardin g landin g fee s relativ e t o th e Landin g Fe e Ren t Credi t ar e discusse d i n Issu e D below. ) Issu e D : Landin g Fee s Appellant s argu e th e Directo r erre di n concludin g tha t

th e renta l provisio n i n Amendmen t No
. 3 coul dincreas e th e Complainants ' landin g fees
. [FA A Exhibi t 1 , Ite m26 , pag e 17. ] T o demonsfrate tha t

Complainant s wil l not

experienc e a

n increas e i n thei r

landin g fee s a s aresul t o f th e Landin g Fe e Ren t

Credi t t o FedEx , Appellant s provid e asimplifie d illustratio n for

ho w th e Landin g Fe e Ren t Credi t i s expecte dt o work
. [Se e FA A Exhibi t 1 , Ite m26 , page s 2-4. ] I n thi s illusfration , assum e th e airfiel dcost s tota l $2 0 an dal l ai r carrier s pa y th e sam e fee for landin g on e imi t

o f weight , fo r

exampl e $5
. I f

FedE x an daComplainan t ai r carrie r eac hlan don e uni t

o f weight , eac hwoul dpa y $5
. Unde r Amendmen t

No
. 3 , FedE x woul dpa y aseparat e apro n ren t t o cove r th e amortizatio n o f

th e apron , for

exampl e $10 , but that ren t woul db e reduce di f

FedE x land s an additiona l tw o unit s o f weight
. S o i f FedE x continue s t o lan djus t on e uni t o f weight , i t

woul dpa y $1 0 i n ren t

an d$ 5 i n landin g fee s for

atota l o f $1 5 whil e th e Complainan t ai r carrie r woul dpa y $ 5 i n landin g fee s for it s on e imit
. Thi s woul dcove r th e airfiel dcos t

o f $20
. If , o n th e othe r

hand , FedE x increase s it s landing s t o thre e unit s o f weight , th e extr alandin g fee s woul db e use d t o reduc e th e rent . FedE x woul dthe n pa y $ 0 i n ren t an d$1 5 i n landin g fee s for atota l stil l o f $15
. Th e Complainan t

ai r carrie r woul dcontinu e t o pa y $ 5 withn o increas e a t al l i n it s landin g fee
. Th e airfiel dcos t o f $2 0 woul db e recovered
. Appellant s argu e th e Complainan t

ai r carrie r would , therefore , not

b e impacted
. [FAA Exhibi t 1 , Ite m26 , pag e 3. ] Complainant s d o no t

argu e that

thei r landin g fee s wil l increase , pe r se . Rather , the y argu e th e "applicatio n o f

th e FedE x [Landin g Fee ] Ren t Credi t woul dcaus e th e Join t Complainant s t o pa y mor e i n landin g fee s tha n the y otherwis e woul dhav e t o pa y i n th e absenc e o f

th e Ren t Credit. " [FA A Exhibi t

1 , Ite m28 , pag e 15. ] A bette r illusfratio n o f

th e effec t o f th e Landin g Fe e Ren t

Credi t o n landin g fe e rate s woul db e a s follows : Assum e FedE x initiall y represent s 5 0 percen t (50% ) o f th e lande dweigh t

a t th e Airport an dth e airfiel drequiremen t (cost s t o b e recovered ) i s $ 1 millio n pe r year . Total lande d weigh t i s 40 0 millio n pound s resultin g i n alandin g fe e o f $2.5 0 pe r

thousan dpound s o f lande dweight
. FedE x increase s it s lande dweigh t from20 0 millio n t o 60 0 millio n poimds
. Tota l lande dweigh t i s no w 80 0 millio n pound s (60 0 millio n for FedE x plu s 20 0 million s fo

r th e Complainants)
. Thi s result s i n alandin g fee o f $1.2 5 pe r

thousan d pound s o f lande dweight
. FedE x receive s a2 0 percen t (20% ) credi t

of f it s lande dweigh t becaus e o f

Amendmen t

No
. 3
. FedEx' s lande dweigh t i s reduce dfrom60 0 millio n t o 48 0 millio n pounds
. Tota l lande dweigh t for th e landin g fee calculatio n i s no w 48 0 millio n poimd s plu s 20 0 millio n pounds , o r 68 0 millio n pounds , resultin g i n alandin g fee

1 9o f

$1.47 1 pe r

thousan dpound s o f

lande dweight
. Thi s i s les s tha n th e $2.5 0 pe r thousan d pound s befor e th e FedE x expansio n bu t mor e tha n th e $1.2 5 pe r

thousan dpoimd s befor e th e applicatio n o f

th e FedE x Ren t

Credit
. Complainant s pa y $1.47 1 pe r thousan dpound s instea do f $1.2 5 pe r

thousan dpound s becaus e o f th e appHcatio n o f

th e FedE x Ren t Credit
. Appellant s agre e Complainant s wil l benefi t fromth e additiona l fee s pai db y FedEx
. Appellant s state , "s o lon g a s landin g fee s ar e se t o n aresidua l basis , th e Complainant s benefi t fromth e additiona l renta l revenue s produce db y Amendmen t No
. 3. " [FAA Exhibi t 1 , Ite m26 , pag e 19. ] Appellant s objec t that th e Complainant s ar e "seekin g t o benefi t fromFedEx' s increase dactivit y at th e Airport. " [FA A Exhibi t 1 , Ite m26 , pag e 4. ] Appellant s argu e tha t th e Landin g Fe e Ren t

Credi t i s designe di n suc hawa y tha t FedE x wil l pa y ahighe r

percentag e o f

th e increase dAirport

Syste mRequiremen t tha n th e othe r

ai r carriers
. Th e recor dshow s Appellant s stated , ".
. .an y increas e o f th e Airport Syste mRequiremen t

cause db y th e [Landin g Fee ] Ren t Credi t i s mor e tha n offse t b y a n increas e i n FedEx' s landin g fees. " [Se e FA A Exhibi t 1 , Ite m24 , pag e 20. ] Th e Directo r

develope dan illusfrativ e calculatio n o f th e Landin g Fe e Ren t

Credi t for th e year 2012
. [Se e Tabl e 1 belo w an dFA A Exhibi t 1 , Ite m24 , pag e 20. ] H e showe dth e developmen t

o f a$1,416,24 7 Credi t

cause db y th e downwar dadjustmen t o f FedEx' s lande dweigh t

from6,182,79 3 pound s t o an adjuste dbas e o f 5,304,50 0 pounds
. Th e allocatio n o f

7 5 percen t

o f thi s incrementa l lande dweigh t t o th e Credi t

an dno t t o th e landin g fe e calculatio n raise s th e resultin g landin g fee rat e highe r tha n woul dotherwis e b e th e cas e i f

al l lande dweigh t

wa s include di n th e landin g fe e calculation
.

Tabl e 1 Calculatio n o f

Ren t Credi t Fo r 201 2 Acnial Lande dWeigh t

6,182,79 3 Yea r Rat e Adjustmen t

Adjuste dBas e 201 0 5,000,00 0 201 1 3 5,150,00 0 201 2 3 5,304,50 0 Les s Adjuste dLande dWeigh t Bas e 5,304,50 0 Equal : Additiona l Lande dWeigh t Attributabl e t o Expansio n 878,29 3 Landin g Fe e Rat e $ 2.1 5 Incrementa l Landin g Fe e Revenu e $1,888,33 0 Les s 25 % Retaine dfor

Airport Syste m$ 472,08 2 Equal s 75 % o f

Incrementa l Landin g Fe e Availabl e for Credi t $1,416,24 7 Th e Directo r

note dth e Airport

Us e Agreemen t

i s aseparat e stand-alon e agreemen t betwee n th e Authorit y an dth e Signatory Airlines , includin g th e Complainant s an d FedEx
. Amendmen t

No
. 3 i s astand-alon e agreemen t betwee n th e Authorit y an dFedEx
. [FA A Exhibi t

1 , Ite m24 , pag e 21. ]

2 0Federa l law doe s no t requir e asingle approac ht o rate-setting
. Fee s ma y b e se t accordin g t o a"residual " o r

"compensatory " rate-settin g methodology , b y acombinatio n o f th e two , o r b y ordinance , statute , resolution , regulation , o r agreement . Th e FA A Rate s an d Charge s Polic y state s tha t rates , fees , rentals , landin g fees , an dothe r servic e charge s impose do n aeronautica l user s mus t b e fair an dreasonable
. In aresidua l methodology , th e Signatory Airline s agre e t o bea r th e burde n o f

an y financial shortfal l b y th e airport i n exchang e for

th e benefi t

o f applyin g concessio n revenue s t o lowe r airfiel dcost s for

th e Signatory Airlines
. Th e residua l methodolog y require s agreemen t betwee n th e airport an dth e Signatory Airlines
. Th e Complainant s ar e al l Signator y Airline s unde r th e Airport Us e Agreement , whic hi s aresidua l agreement . I f th e Authorit y unilaterall y impose dth e Landin g Fe e Ren t Credit , i t ma y b e foun dt o b e subjec t t o th e reasonablenes s principl e o f

th e FA A Rate s an dCharge s Policy
. [Se e Rate s an dCharge s Policy , sectio n D. 2 "Fai r

an dReasonabl e Fees." ] Appellant s objec t

t o an y illusfratio n o r

example s o f

ho w th e Landin g Fe e Ren t Credi t ma y o r ma y not affec t th e Signator y Airline s i n th e future
. Appellant s argu e that "addressin g speculativ e future events burden s th e recor dan drequire s th e parties , th e agency , an dpotentiall y th e courts , t o expen dsignifican t resource s correctin g error s i n th e Director' s analysi s o f

event s tha t

ma y not com e t o pass. " [FA A Exhibi t 1 , Ite m26 , pag e 10. ] A s part

o f hi s determination , th e Directo r ha dbroaddiscretio n t o provid e guidanc e t o lA A a s h e deeme dappropriat e for purpose s o f

th e Complianc e program . [Se e Orde r 5190.6A , pag e 35
. (5*6

^ footnot e #4 4 above. ) Note : Th e Airport Comphanc e Division' s rol e i n providin g educatio n an dadvisory service s i s addresse di n FA A Orde r 5190.6 B i n chapte r

2 , page s 2- 1 throug h2-3. ] Appellant s fai l t o demonsfrate ho w thi s discretio n wa s abuse do r exercise dimproperl y a s amatte r o f law
. It shoul db e note dtha t

whe n th e Complain t

wa s filedthi s wa s not

a"speculativ e fiiture event. " Amendmen t

No
. 3 t o th e FedE x agreemen t allow s for

2 0 year s o f

Landin g Fe e Ren t Credits
. Complainant s argue dthi s Landin g Fe e Ren t Credi t ove r th e cours e o f

2 0 year s woul dcaus e Complainant s t o pa y highe r landin g fee s tha n the y otherwis e woul d pa y in th e absenc e o f

th e Ren t Credit
. [FA A Exhibi t

1 , Ite m28 , pag e 2. ] Complainant s are no t arguin g thei r

landin g fee s woul db e highe r tha n the y ar e right

now ; onl y that

the y woul db e highe r

withth e Landin g Fe e Ren t Credi t tha n i f th e Landin g Fe e Ren t

Credi t wer e no t applied
. After th e Complain t

wa s filed. Appellant s agree dt o freeze landin g fee rate s throug hth e en do f th e curren t

Airport Us e Agreement , whic hexpire s Decembe r 31 , 2010
. Sinc e th e Landin g Fe e Ren t

Credi t wa s no t applie dcurrently , th e Directo r determine dther e wa s n o curren t violatio n o f

th e Authority' s federal obligation s wit hregar dt o aCredi t that ma y o r ma y no t occu r i n th e future
. [Se e FA A Exhibi t 1 , Ite m28 , pag e 2. ] Appellant s objec t

t o th e Director' s statement , ".
. .th e Authorit y canno t impos e th e cos t

o f FedEx' s [Landin g Fee ] Ren t Credi t o n othe r carrier s eve n i f

th e othe r carrier s benefi t fromth e additiona l operation s b y FedE x a s aresul t o f havin g th e airfiel dcost s sprea d ove r mor e operations , an deve n i f th e othe r carrier s actuall y pa y les s a s aresul t o f th e

2 1overal l deal. " [FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 4 0 an dIte m26 , page s 17-18. ] Appellant s argu e th e Directo r erre di n thi s statemen t

because : 1
. Th e Determinatio n doe s not an dcanno t

sho w tha t

Complainant s woul dbea r increase d costs . [FA A Exhibi t

1 , Ite m26 , pag e 18. ] 2
. Th e Determination' s assumptio n tha t FedEx' s incrementa l fee s reflec t increase dwea r an doperationa l cost s i s not supported
. [FA A Exhibi t 1 , Ite m26 , pag e 20. ] 3
. Th e Determinatio n erre di n rejectin g controllin g preceden t fromth e Miam i Rate s proceeding
. [FA A Exhibi t 1 , Ite m26 , pag e 21. ] 1
. Increase dCost s Appellant s argu e that

th e "Determinatio n doe s not an dcanno t

sho w tha t Complainant s woul dbea r increase dcosts. " [FA A Exhibi t 1 , Ite m26 , pag e 18. ] A s state dthroughou t

th e adminisfrativ e record , th e focu s o f th e Complain t

i s not tha t th e landin g fe e rate s wil l b e highe r tha n the y ar e right

no w (increase dcosts) , bu t that Complainant s ma y pa y highe r landin g fee s ove r

man y year s tha n the y otherwis e woul dpa y i n th e absenc e o f th e FedE x Landin g Fe e Ren t Credit
. [Se e FA A Exhibi t

1 , Ite m28 , pag e 3. ] Th e Directo r

foun dthat

sinc e th e Complainant s an dAuthorit y operat e o n a residua l fee structur e methodolog y b y mutua l agreemen t unde r th e Airport

Us e Agreement , th e Landin g Fe e Ren t Credi t coul dnot

b e unilaterall y impose deve n i f th e Complainant s actuall y pa y les s tha n the y otherwis e woul dhav e paid
. [FA A Exhibi t 1 , Ite m24 , pag e 21. ] I t

i s immateria l whethe r

th e cost s increas e o r decrease
. Unde r

th e Airport

Us e Agreement , Complainant s an dth e Authorit y hav e aproces s t o follo w for th e developmen t

o f capita l improvements
. [FA A Exhibi t 1 , Ite m24 , pag e 26. ] Th e Airport Us e Agreemen t

woul db e th e confrollin g documen t

t o determin e ho w tha t

proces s wil l b e applied
. Th e impositio n o f

landin g fee s o n ai r

carrier s i n th e absenc e o f followin g a

n agreed

upo n proces s woul db e subjec t t o th e reasonablenes s principl e o f th e FA A Rate s an dCharge s Policy
. [Se e Issu e Fbelow. ] Th e Associat e Adminisfrato r finds th e Directo r

di dno t mak e an y findings o n th e premis e that

Complainant s woul dhav e increase dcost s ove r thei r curren t fe e structure . Rather , th e Director' s analysi s follow s th e primar y focu s o f th e Complain t

tha t th e Complainants ' landin g fee s coul dh e highe r i f th e Landin g Fe e Ren t Credi t t o FedE x i s applie dtha n thos e fee s woul dotherwis e b e unde r th e residua l methodolog y define dan dagree dt o i n th e Airport Us e Agreement
.

222
. Wea

r an dTear Appellant s argu e th e Determination' s assumptio n tha t FedEx' s incrementa l fee s reflec t increase dwea r

an doperationa l cost s i s no t supported
. [FA A Exhibi t 1 , Ite m26 , pag e 20. ] Appellant s objec t

t o th e Director' s statemen t tha t "FedEx' s additional operation s wil l impos e cost s o n th e airfiel dproportionat e t o th e additiona l fee s i t i s payin g i n th e for mo f pavemen t

wear an dairport

operation s costs. " [Se e FA A Exhibi t 1 , Ite m26 , pag e 20 ; an dIte m24 , pag e 43. ] Appellant s argu e "ther e i s n o recor d evidenc e demonstratin g tha t increase doperation s b y FedE x wil l resul t i n a proportiona l increas e i n pavemen t wear o r airport operation s costs. " [FA A Exhibi t 1 , Ite m26 , pag e 20. ] Appellant s fiirther stat e th e Determinatio n conduct s n o analysi s o f

th e type s o f

aircraf t operate db y FedEx , th e Complainants , o r an y othe r airlin e a t th e Airport , o r

thei r individua l certificate dmaximu mtake-of f weigh t o r landin g weight , o r

thei r landin g gear

configuration , o r

th e airlines ' tota l numbe r o f takeoffs , operationa l frequencies, fraffic mixtures , o r eve n specifi c runway an dtaxiwa y use . [Se e FA A Exhibi t 1 , Ite m26 , pag e 20. ] Th e Associat e Adminisfrato r concur s withth e Appellant s o n thi s point
. Ther e wa s n o analysi s t o confirmo r den y tha t FedEx' s additional operation s wil l impos e cost s o n th e airfiel dproportionat e t o th e additiona l fee s i t wil l b e paying
. Th e Associat e Administrato r finds i t reasonable , however , t o conclud e tha t increase doperation s wil l resul t i n increase dwear

o f th e airfield
. Whethe r

th e fee s assesse dt o FedE x ZH

Q proportionat e t o that

increase dwea r

- o r ar e highe r

tha n o r lowe r than that increase dwear

- canno t b e assesse dfromth e informatio n provided
. Th e cru x o f

th e Complain t

i s tha t Complainant s migh t

pa y highe r

landin g fee s a s aresul t o f th e Landin g Fe e Ren t

Credi t t o FedE x than the y woul dotherwis e pa y i n landin g fee s unde r

th e sam e circumstance s i f th e Credi t

wer e not applied
. Eve n thoug hit ma y hav e bee n th e Airport' s inten t t o appl y th e Landin g Fe e Ren t Credi t currently , th e Directo r

foun dthat

th e Airport

ha dno t implemente dit s plan
. A s such , th e Directo r

foun dComplainant s wer e arguin g agains t a n uncertai n potentia l futur

e even t an ddetermine dth e Airport wa s no t currentl y i n violatio n o f it s federa l obligations
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , page s 28-2 9 an d35. ] 3
. Miam i Rate s Proceedin g Appellant s argu e th e Determinatio n erre di n rejectin g confrollin g preceden t from th e Miam i Rate s proceeding
. [FA A Exhibi t 1 , Ite m26 , pag e 21. ] Complainant s poin t

ou t that th e Directo r

di dno t rejec t th e Miam i Case , bu t distinguishe dth e fact s i n that cas e fromthos e presente di n thi s case . [Se e FA A

2 3Exhibi t 1 , Ite m28 , pag e 19. ] Th e Directo r wrote , "Credit s give n bac k t o FedE x i n return fo r lande dweigh t

wil l serv e t o dilut e th e cost s o f th e improvement s t o FedE x an dwil l sprea dthe mout , throug hth e residua l agreement , t o al l Signator y Airline s a t th e Airport
. I t

i s not reasonabl e t o impos e on e carrier' s specia l facility cost s o n othe r

carrier s wher e ther e wil l not b e areciproca l benefit , a s i n th e blende d rate s i n th e Miam i terminal , wher e al l th e carrier s woul deventuall y hav e thei r facilitie s upgraded
. Furthermore , i t i s confrar y t o th e expres s term s o f

th e [Airport Use ] Agreement. " [FA A Exhibi t 1 , Ite m24 , pag e 32. ] Th e Associat e Administrato r finds th e Directo r

di dnot rejec t th e Miam i Rate s proceeding , bu t

considere dth e fact s o f

th e Miam i Cas e i n ligh t

o f th e evidenc e presente di n thi s curren t

case . Th e Associat e Adminisfrato r finds th e Directo r

di dno t er r i n reasonin g th e renta l provisio n i n Amendmen t

No
. 3 coul dincreas e th e Complainants ' landin g fee s ove r wha t thos e fee s migh t

b e i f th e Landin g Fe e Ren t

Credi t wer e no t applied
. Issu e E : Reconciliatio n wit hFAA , DOT , an dAppellat e Preceden t Appellant s argu e th e Determination' s dict aregardin g gran t assuranc e 22 , Economi c Nondiscrimination , canno t b e reconcile dwithFAA , DOT , o r appellat e precedent
. [FA A Exhibi t 1 , Ite m26 , pag e 24. ] A s withIssu e C above , th e Appellant s ar e no t specifi c with regar dt o thei r

allegations
. Appellant s argu e Complainant s bea r th e burde n o f

provin g th e existenc e o f

unjus t discriminatio n unde r

gran t assuranc e 22 , Economi c Nondiscrimination
. Appellant s further argu e "Complainant s coul dnot establis hunjus t

economi c discriminatio n a s t o landin g fe e rates... " [FA A Exhibi t 1 , Ite m26 , pag e 26. ] Th e Associat e Adminisfrato r note s th e Directo r

di dno t findth e Authorit y i n violatio n o f gran t assuranc e 22
. Appellant s further

argu e Complainant s coul dnot establis hthe y ha dbee n subjecte dt o unjus t economi c discriminatio n a s t o renta l rates . [FAA Exhibi t 1 , Ite m26 , pag e 27. ] Again , th e Associat e Administrato r note s th e Directo r

di dno t findth e Authorit y i n violatio n o f

gran t assuranc e 22
. Appellant s argu e "th e Authorit y submitte devidenc e tha t Amendmen t

No
. 3 wa s consisten t withth e Authority' s non-discriminator y polic y o f providin g Ren t

Credit s i n recognitio n o f

airlin e tenan t

investments. " Appellant s acknowledge , "Whil e n o othe r ai r carrie r ha s receive dacredi t

a s larg e a s that

whic h\ s potentiall y availabl e t o FedEx , n o othe r ai r carrie r ha s investe dnearl y a s muc hcapita l a s FedE x i n facilitie s that wil l revert t o Authorit y ownership. " [FA A Exhibi t 1 , Ite m26 , pag e 28. ] Onc e again , th e Associat e Administrato r

note s th e Directo r

di dno t findth e Authorit y i n violatio n o f gran t assuranc e 22
. Appellant s argu e FedE x an dth e Complainant s are not similarl y situate da s t o renta l rates . [FA A Exhibi t

1 , Ite m26 , pag e 29. ] Th e Directo r documente dth e Authority' s argument s

24that

th e partie s ar e not

similarl y situate di n th e Determination
. [Se e FA A Exhibi t 1 , Ite m24 , page s 33-34. ] Nonetheless , th e Directo r foun dFedE x an dal l o f

th e Signatory Airline s "ar e similarl y situate dunde r th e term s o f

th e [Airport

Use ] Agreement. " [FAA Exhibi t 1 , Ite m24 , pag e 34. ] Appellant s admi t

th e partie s are similarl y situate dfor landin g fe e rates , but

argu e the y are not similarl y situate dfor

renta l rates . [FA A Exhibi t 1 , Ite m26 , pag e 29. ] Appellant s state , "Th e ren t

tha t FedE x an dth e Complainant s pa y can an dshoul db e differen t becaus e the y are not

similarl y situate dwit hrespec t t o thos e rates. " [FA A Exhibi t 1 , Ite m26 , pag e 29. ] Thi s i s irrelevant
. FedE x renta l rate s wer e not th e subjec t

o f th e Complain t an dDetermination
. Th e issu e wa s whethe r th e Complainant s woul dpa y highe r landin g fee s tha n the y woul dpa y absen t th e Landin g Fe e Ren t

Credit
. FedE x ren t

i s not th e issue ; landin g fe e rate s are . [Se e FA A Exhibi t 1 , Ite m24 , pag e 15. ] Th e Directo r foun dthat sinc e th e landin g fe e rate s wer e frozen a t 200 8 level s throug hDecembe r 31 , 2010 , ther e i s n o curren t

noncompliance
. [FA A Exhibi t 1 , Ite m24 , pag e 35. ] Eve n thoug hth e Directo r foun dth e Authorit y i n curren t complianc e wit hthei r

federal obligations
. Appellant s argu e that th e Director' s "hypothetica l findings abou t ho w Gran t Assuranc e 2 2 migh t

appl y i f th e Authorit y ha dno t

offere dt o freeze th e landin g fe e rate s a t 200 8 level " ar e inconsisten t withth e Director' s acknowledgemen t tha t i t i s no t appropriat e a

t thi s tim e t o rul e o n th e Authority' s possibl e fiiture applicatio n o f th e Landin g Fe e Ren t

Credi t for th e FedE x apron . [FA A Exhibi t 1 , Ite m26 , pag e 25. ] Th e Directo r

di dnot findth e Authority i n violatio n o f gran t assuranc e 22 , bu t

di dstat e th e Complainants ' argumen t that the y wil l incu r

additiona l cost s a s aresul t o f Amendmen t

No
. 3 coul db e vali dz/th e Authorit y impose s thi s arrangement o n th e airline s withou t

thei r concurrence . [FA A Exhibi t 1 , Ite m24 , pag e 32. ] Th e Directo r fiirther stated , "Th e responsibilit y for resolvin g th e disput e ove r aCredi t tha t ha s ye t t o b e applie drest s first

withth e Authorit y an dthe n Complainants , not th e FAA. " [FA A Exhibi t 1 , Ite m24 , pag e 33. ] Th e Directo r offere dthre e scenarios : "I f th e Complainant s agre e t o includ e th e [Landin g Fe e Rent ] Credi t i n a futur e methodology , i t

woul dno t

violat e th e FA A gran t

assurance s o r Rate s an dCharge s Policy. " "I f th e Authority impose s landin g fee s o n th e carriers , thos e fee s wil l b e subjec t t o th e reasonablenes s principl e o f th e Rate s an dCharge s Policy.''' ' "I f th e Complainant s agre e t o exten dth e [Airport Use ] Agreemen t

an dno t amen di t t o recogniz e th e [Landin g Fe e Rent ] Credit , an dth e Credi t i s not applied , thi s matte r

woul dcontinu e t o b e acontrac t disput e an dPart

1 6 woul dno t b e th e appropriat e venue. " [FAA Exhibi t

1 , Ite m24 , pag e 33
. Se e als o Errat at o th e Director' s Determinatio n a t FA A Exhibi t

1 , Ite m25. ]

2 5Appellant s d o no t explai n ho w an y o f

thes e statement s ar e incorrect
. I f th e Complainant s an dAppellant s agre e t o amethodology , ther e wil l b e n o issue
. I f the y d o not

agree , th e FA A Rate s an dCharge s Polic y wil l apply
. I f th e issu e remain s aconfrac t disput e no t subjec t t o th e Par t

1 6 proceeding , th e FA A wil l no t b e involve dan dwil l no t render a finding. A specifi c finding o n apossibl e fiiture even t i s not predetermined
. Dependin g o n th e resolutio n betwee n th e Complainant s an dAppellants , th e issu e ma y b e subjec t

t o th e Rate s an dCharge s Polic y an dwoul dhav e t o b e reviewe di n ligh t o f th e fact s an dthat polic y a t that time
. Th e Associat e Adminisfrato r finds n o erro r

withthes e statements . Th e Associat e Administrato r

finds th e Directo r

di dnot er r i n hi s guidanc e o r

discussio n regardin g possibl e fiiture applicatio n o f gran t assuranc e 22 , Economi c Nondiscrimination
. Issu e F : Residua l Rate s Appellant s argu e o n appea l th e Determinatio n erre di n failin g t o recogniz e that residua l rate s frequently includ e cost s o f facilitie s not

benefitin g al l airlines
. [FA A Exhibi t 1 , Ite m26 , pag e 31. ] Appellant s poin t

t o th e Director' s statement , "Th e [Rate s an dCharges ] Polic y woul dno t permi t th e authority t o unilaterall y impos e th e cost s o f on e carrie r

o n al l othe r

carrier s b y addin g suc hcost s t o it s coimno n rat e bas e unles s approve db y thos e carriers. " [FA A Exhibi t 1 , Ite m24 , pag e 33 ; an dIte m26 , pag e 31. ] Appellant s poin t

ou t that "Federa l la w clearl y establishe s tha t airport s ma y us e aresidua l methodolog y for

computin g airport

fees. " [FA A Exhibi t

1 , Ite m26 , pag e 32. ] Appellant s explai n th e basi s o f aresidua l methodolog y versu s acompensator y methodolog y i n settin g rates . Unde r acompensatory fee methodology , th e fee s charge d wil l b e basedo n th e cost s attributabl e t o th e user s o f tha t facility o r

service
. Unde r

a residua l methodology , th e landin g fee s provid e th e revenu e neede db y th e airport t o offset th e differenc e betwee n th e airport' s tota l expense s an dth e revenu e collecte db y th e airport fromothe r

sources , suc ha s concessions
. [Se e FA A Exhibi t 1 , Ite m26 , pag e 32. ] Appellant s fail t o poin t

ou t that a n airport ma y elec t

t o us e acompensator y fee methodolog y withou t

an y agreemen t

fromth e ai r

carriers , bu t

aresidua l methodolog y require s agreemen t

b y th e ai r

carriers
. In aresidua l methodology , th e Signatory Airline s agre e t o bear

th e burde n o f

an y financial shortfal l i n exchang e for reapin g th e benefi t

o f applyin g concessio n revenue s t o offset airfiel dcosts . Th e residua l methodolog y require s agreement . Th e Complainant s are al l Signatory Airline s unde r th e Airport

Us e Agreement
. That

agreemen t

provide s th e processe s th e Authorit y an dSignatory Airline s hav e agree dt o for

th e developmen t

an drecover y o f

cost s for capita l improvement s o n th e Airport
. [Se e FA A Exhibi t 1 , Ite m24 , pag e 26. ] Th e Directo r

noted , "Unde r

th e existin g [Airpor

t Use ] Agreement , th e FedE x [Landin g Fe e Rent ] Credi t

canno t b e impose dunilaterall y o n th e Complainants. " [Se e FA A

2 6Exhibi t

1 , Ite m24 , pag e 21. ] Suc ha n impositio n ma y b e subjec t t o th e reasonablenes s principl e o f

th e FA A Rate s an dCharge s Policy
. Appellant s argu e "Th e Determination' s rul e woul dforeclos e th e Authorit y fromusin g th e fee methodolog y o n whic hi t ha s relie dfor

year s t o finance Airport

expansion. " [FA A Exhibi t 1 , Ite m26 , pag e 34. ] Thi s i s incorrect
. Th e Determinatio n contemplate s tha t th e Authorit y woul dimplemen t th e residua l rat e methodolog y a s agree dt o withth e Signatory Airline s i n th e Airport Us e Agreement
. Th e Airport

Us e Agreemen t

i s aseparat e stand-alon e agreemen t betwee n th e Authority an dth e Signator y Airlines , includin g th e Complainants
. A s note dunde r Issu e E above , "I f th e Complainant s agre e t o includ e th e [Landin g Fe e Rent ] Credi t i n a future methodology , i t

woul dnot

violat e th e FA A gran t

assurance s o r Rate s an dCharge s Policy. " "I f th e Authorit y impose s landin g fee s o n th e carriers , thos e fee s wil l b e subjec t t o th e reasonablenes s principl e o f th e Rate s an dCharge s Policy. " "I f th e Complainant s agre e t o exten dth e [Airport Use ] Agreemen t

an dno t amen di t t o recogniz e th e [Landin g Fe e Rent ] Credit , thi s matte r woul d continu e t o b e aconfrac t

disput e an dPart

1 6 woul dnot

b e th e appropriat e venue. " [Se e VA A Exhibi t 1 , Ite m24 , pag e 33. ] Th e Associat e Administrato r finds th e Directo r

properl y explaine dan danalyze dho w compensator y an dresidua l fe e settin g methodologie s coul dappl y i n th e presen t case . Residua l fe e settin g methodologie s - whic hth e Authorit y use s - requir e agreemen t from th e Signatory Airline s i n th e for mo f th e Airport

Us e Agreement
. Unilatera l charge s applie dthat

are not consisten t

withth e term s o f

th e Airport

Us e Agreemen t

a s agree dt o b y th e Signatory Airline s wil l b e subjec t t o th e reasonablenes s principl e o f th e FA A Rate s an dCharge s Policy
. Th e Associat e Administrato r finds th e Directo r

di dnot er r i n explainin g o r

interpretin g ho w th e rat e settin g methodolog y i s applie da t Indianapoli s Internationa l Airport
. Issu e G : BAA-Indianapoli s Appellant s argu e o n appeal that BAA-Indianapoli s shoul dno t hav e bee n name da s aco responden t

i n th e Complain t

becaus e BAA-Indianapoli s was th e Authority' s managin g agen t for operation s onl y an dwa s not a n Airport sponsor . [FA A Exhibi t

I , Ite m26 , page s 34-35. ] In addition
. Appellant s argu e th e contrac t betwee n th e Authorit y an d BAA-Indianapoli s expire db y it s term s o n Decembe r 31 , 2007
. [FA A Exhibi t 1 , Ite m26 , pag e 35. ]

2 7I n it s initia l Answer , Respondent s argue dtha t th e entir e Complain t

shoul db e dismisse d becaus e neithe r

BAA-Indianapoli s no r

th e Airport

shoul dhav e bee n name da s partie s t o th e action
. [FA A Exhibi t 1 , Ite m10 , pag e 12 , Motio n t o Dismiss. ] Th e Directo r

rejecte dth e Respondents ' motio n t o dismis s th e entfre Complain t withth e followin g statement : "Th e Authorit y requeste dth e FA A dismis s th e complain t becaus e th e Join t Complainant s misname dth e responsibl e party . FA A Exhibi t 1 , Ite m10 , page s 12-13
. Th e Complainant s liste dth e Authority , th e Airpor t an dBAA

Indianapolis , th e airport

operato r a s partie s t o th e complaint
. Th e FA A agree s it s enforcemen t

authoritie s unde r

Part 16. 1 ar e generall y limite dt o action s take n b y th e sponsor , especiall y withregar dt o th e Gran t assurances , bu t th e FA A wil l not

dismis s th e Complain t

basedo n thi s assertio n b y th e Authority
. Unde r

Part 16 , th e Authorit y i s generall y responsibl e fo r th e action s take n b y th e Airport an dBAA-Indianapolis , an dFA A wil l hol dth e Authorit y responsibl e for action s take n b y th e Airport and/o r BAA

Indianapolis. " [FA A Exhibi t 1 , Ite m24 , Director' s Determination , pag e 15 , footnot e #59. ] I n it s appeal , th e Appellant s argu e tha t BAA-Indianapoli s shoul dhav e bee n dismisse da s aname dparty . I t i s unclear

wha t th e Appellant s hop e t o achiev e b y arguin g BAA-Indianapoli s shoul d not hav e bee n aname dparty . Th e adminisfrativ e recor dshow s that negotiation s with FedE x for th e expansio n o f

it s domesti c carg o facilitie s an doperation s at th e Airport wer e ongoin g durin g 200 6 an d200 7 whe n BAA-Indianapoli s wa s th e operatin g manage r at th e Airport
. [Se e FA A Exhibi t 1 , Ite m24 , Director' s Determination , "background " page s 4-6. ] A s operatin g manager , the y ma y hav e bee n directl y o r indirectl y involve di n som e o f th e negotiation s withFedEx
. Whethe r the y wer e o r

not di dnot affec t th e Director' s finding s that

th e Airport

wa s i n curren t

complianc e wit hit s federal obligations
. Appellan t doe s no t demonstrat e that

th e Directo r

erre db y (1 ) makin g findings o f fac t that wer e not supporte db y apreponderanc e o f reliable , probative , an dsubstantial evidence , o r (2 ) b y makin g conclusion s o f law tha t wer e no t i n accordanc e wit happlicabl e law , precedent , an dpubli c polic y b y includin g BAA-Indianapoli s a s aResponden t t o thi s Complaint
. Neithe r

doe s th e Appellan t

sho w that

thi s inclusio n o f

BAA-Indianapoli s a s a Responden t

i n an y way affecte dth e outcom e o f th e Determination
. Th e Associat e Adminisfrato r

finds th e Directo r

di dno t er r i n includin g BAA-Indianapoli s a s a Responden t

i n thi s matter . VII
. FINDING S an dCONCLUSION S FAA' s rol e in thi s appeal i s t o determin e whethe r th e Directo r

erre di n finding s o f

fact o r conclusion s o f

law in issuin g th e Director' s Determinatio n o f Augus t 19 , 2008
.

2 8Upo n a

n appeal o f

aPart 1 6 Director' s Determination , th e Associat e Administrato r mus t determin e whethe r

(a ) th e findings o f

fact mad e b y th e Directo r

ar e supporte db y a preponderanc e o f

reliable , probative , an dsubstantial evidence , an d(b ) eac hconclusio n o f law i s mad e i n accordanc e withapplicabl e law , precedent , an dpubli c policy
. [Se e e.g . Rick s V MiUingto n Municipa l Airport , FA A Docke t No
. 16-98-1 9 (Decembe r 30,1999 ) (Fina l Decisio n an dOrder) , pag e 21 , an d1 4 CF R§ 16.227. ] I n arrivin g a

t afinal decisio n o n thi s appeal , th e FA A ha s reexamine dth e record , includin g th e Director' s Determination , th e adminisfrativ e recor dsupportin g th e Director' s Determination , an dth e appea l an drepl y (i f any ) submitte db y th e parties , i n ligh t o f applicabl e law an dpolicy
. Base do n thi s reexamination , th e Associat e Administrato r

conclude s that

th e Director' s Determinatio n i s supporte db y a preponderanc e o f

reliable , probative , an dsubstantial evidence , an di s consisten t wit h applicabl e law , precedent , an dFA A policy
. Withth e exceptio n o f

statin g "FedEx' s additiona l operation s wil l impose cost s o n th e airfiel dproportionat e t o th e additiona l fee s i t i s payin g i n th e for

mo f pavemen t

wear an d airpor t operation s costs " withou t conductin g analysi s t o confirmo r den y that FedEx' s additiona l operation s wil l impose cost s o n th e airfiel dproportionat e t o th e additiona l fee s i t wil l b e paying,'* ' th e appeal doe s no t contai n persuasiv e argument s sufficient t o revers e an y portio n o f

th e Director' s Determination
. Thi s statemen t b y th e Directo r

i s not afata l erro r an ddoe s no t

affec t th e conclusion s o r

findings o f

th e Determination
. Whil e th e Director' s conclusion s turne do n th e lac k o f ripeness o f

th e Complaint , i t

wa s appropriat e an dpermissibl e for th e Directo r

t o includ e guidanc e o n th e FA A Rate s an d Charge s Polic y i n th e Determination
. In thi s case , th e challenge dfe e methodolog y wa s raise db y Complainants ; th e challenge dfee methodolog y coul dg o int o effec t a s soo n a s th e curren t

Airport Us e Agreemen t

expire s i n 2010 ; th e Appellan t lA A ha s alread y signe daleas e (Amendmen t No
. 3 ) withon e carrie r

that woul dimpos e th e challenge d charg e o n othe r

carriers ; an dth e challenge dcharg e ha s bee n defende db y th e Appellant s i n thi s proceeding
. Accordingly , th e Directo r properl y reasone dtha t

guidanc e o n th e FA A Rate s an dCharge s Polic y wa s appropriat e bot ht o addres s th e incomin g Complain t an dt o ensur e that

future fee s compl y withapplicabl e federal policies
. Moreover , th e Directo r mad e it clear that th e guidanc e provide do n thi s issu e wa s no t itsel f afinding o r conclusio n o f

complianc e o r

noncomplianc e withth e gran t assurances . Th e Directo r woul dissu e suc hfindings an dconclusion s onl y after apresentatio n o f

th e fact s an d circumstance s i n effec t

a t suc htim e a s th e charg e wa s actuall y implemente db y th e Appellants
. Th e Associat e Administrato r affirm s th e Director' s Determination
. Thi s decisio n constitute s th e final decisio n o f th e Associat e Administrato r for Airport s pursuan t

t o 1 4 CFR § 16.33(a)
.

4 9 Se e discussio n in thi s documen t unde r Issu e D (2)
. 2 9ORDE R

ACCORDINGLY , i t

i s ordere dtha t

(1 ) th e Director' s Determinatio n i s affirmed , an d(2 ) th e appea l i s dismissed , pursuan t t o 1 4 CF R§ 16.33
. RIGH T T O APPEA L A part y t o thi s decisio n disclosin g asubstantia l interes t i n th e final decisio n an dorde r o f th e Federa l Aviatio n Administratio n ma y file apetitio n for revie w pursuan t

t o 4 9 U.S.C
. § 46110 , i n th e Unite dState s Court o f Appeal s for

th e Distric t

o f Columbi aCircui t

o r i n th e court o f appeal s o f

th e Unite dState s for

th e Circui t

i n whic hth e perso n reside s o r ha s it s principa l plac e o f

business
. Th e petitio n mus t b e filed not

late r tha n 6 0 day s after

a Fina l Decisio n an dOrde r ha s bee n serve do n th e party . [1 4 CFR, Part 16 , § 16.247(a). ]

Catherin e M
. Lan g \'DA e Actin g Associate/(<^inisfrato r for Airport s ^- ^

30FA A Exhibi t 1 Docke t No
. 16-07-0 3

Fina l Decisio n an dOrde r INDE X O FTH E ADMINISTRATIV E RECOR D

Docke t No
. 16-07-0 4
Northwes t

Airlines , Inc. , Delt aAirlines , Inc
. AirTra n Airway s Inc. , Continenta l Airiines , Inc. , Southwes t

Airlines , Inc
.

Complainant s /

Appellee s V Indianapoli s Airpor t

Authority , Indianapoli s Internationa l Airport , BAA-Indianapoli s Respondent s /

Appellants
Th e followin g document s (items ) constitut e th e administrativ e recor din thi s proceeding : Item s 1-23 mak e u p th e administrativ e recor dfor th e Director' s Determination
. Item s 24-3 6 an dIte m16(b ) represen t th e additiona l item s receive da s part o f th e appea l an d document s prepare dafte r th e Director' s Determinatio n wa s issued
. Ite m1 Complain t date dApri l 13,2007 , includin g appendice s containin g th e followin g documents :

• Exhibi t

1 Amendmen t

No
. 3 t o Amende dan drestate dLan dLeas e Agreemen t betwee n Indianapoli s Airport Authority an dFedera l Expres s Corporation , date dApri l 14 , 2006
. aExhibi t

2 IN D FedE x Sort Facility Apron-Airport

Leas e Dea l - Projections
. Q Exhibi t

3 Declaratio n o f

Eri n L
. Heitkamp , Apri l 12,2007
. aExhibi t

4 Lette r

fromEri n L
. Heitkamp , Chairperso n IN D AAA C t o Mr
. Lac y Johnson , Boar dPresident , Indianapoli s Airport Authority , Ma y 5,2006
. Ite m 2
Item s
Ite m 4 Motio n o f Continenta l Airlines , In c t o Joi n Complain t a s aJoin t

Complainant , Apri l 20 , 2007
. Answe r t o Motio n o f

Continenta l Airlines , Inc
. t o Joi n Complain t a s aJoin t Complainant , May 1 , 2007
. Motio n Requestin g Extensio n o f Time , May 1 , 2007
.

3 1Ite m5 Answe r o f Northwes t

Airlines , Inc. , Delt aAirlines , Inc. , an dAirtra n Airways , Inc
. t o Motio n Requestin g a n Extensio n o f

Time , May 2 , 2007
. Ite m6 Motio n o f Southwes t

Airline s Co
. t o Joi n Complain t a s aJoin t Complainant , Ma y 4 , 2007
. Ite m7 FA A Orde r t o gran t Continental' s Motio n t o joi n Complain t a s aJoin t Complainant , Ma y 4,2007
. Ite m8 Answe r

t o Motio n t o Southwes t

Airline s Co
. t o Joi n Complain t a s aJoin t Complainant , Ma y 9,2007
. Ite m9 Notic e t o Al l Partie s t o delet e Ro n Rick s an dDebora hAckerma n a s

representative s o f

Southwes t

Airlines , Co. , Jun e 4 , 2007
. Ite m1 0 Answe r

an dMotio n t o Dismiss , Jun e 4 , 2007 , includin g th e followin g exhibits :

• Exhibi t

A Affidavi t

o f Joh n J
. Kish , Jun e 1 , 2007
. • Exhibi t

B Federa l Expres s Apro n Expansio n (Draft) , Apri l 3 , 2006 , Lette r from Patric k F
. Dooley , SCMD , Airport Director , BA A Indianapoli s LL C t o Mr
. Da n Hindes , Northwes t Airlines , Inc , Apri l 5 , 2006 , an d Agreemen t

an dLeas e o f

Premise s at

Indianapoli s Internationa l Airport withIndianapoli s Airport Authority , Indiana , Marc h15 , 2001
.

• Exhibi t

C Amende dan dRestate dLan dLeas e Agreemen t an dexhibits , Augus t 19 , 1993 , Amendmen t

No
. 1 t o Amende dan dRestate dLan d Leas e Agreemen t

an dexhibits , Octobe r

26 , 1994 , an dAmendmen t No
. 2 t o Amende dan dRestatedLan dLeas e Agreemen t an dexhibits , Jun e 5 , 2000
. Q Exhibi t

D Amendmen t

No
. 3 t o Amende dan drestate dLan dLeas e Agreemen t betwee n Indianapoli s Airport Authorit y an dFedera l Expres s Corporation , date dApri l 14 , 2006
.

• Exhibi t

E Airlin e Activity Report , Decembe r 2006
. aExhibi t

FE-mai l Heitkamp , Eri n t o Patric k Dooley , Februar y 8 , 2007
. Include s tabl e attachment
.

• Exhibi t

GE-mai l exchang e betwee n Heitkamp , Eri n an dPatric k Dooley , Januar y 31 , 2007
. Include s tabl e insert
.

• Exhibi t

H None
. aExhibi t

I Indianapoli s Airport Authority Analysi s o f

FedE x Amendmen t

Ju n 2007
. (Table)
. aExhibi t

J Indianapoli s Airport Authorit y Analysi s o f

FedE x Lande dWeight s Fo r th e Perio d200 5 throug hMarc h2007
. (Table)
.

3 2• Exhibi t K Affidavit , Joh n George , Jun e 1 , 2007
. aExhibi t

LLette r

fromPatric k

F
. Dooley , SCMD , Airport Director , BA A Indianapoli s LL C t o Eri n Heitkamp , Northwes t Airlines , Inc. , Ma y 3 , 2006 , an dLeas e Synopsi s Federa l Expres s [1 3 pages]
. Report date d Januar y 31 , 2007
.

• Exhibi t

M IN D Lande dWeights , Passenge r v . cargo , 1990-2005
. Q Exhibi t

N Lette r

fromDavi dL
. Bennett , Assistan t Chie f Counse l for

Airport s an dEnvironmenta l Law , FAA , t o Josep hR
. Niemarm , Genera l Counsel , Cit y o f

St
. Loui s Airport

Authority , Decembe r

2 , 1993
.

• Exhibi t

H New s Articl e entitle dAddin g Multimedi aFedE x Express , Indianapoli s Airport Authorit y Unvei l Plan s for Expansio n o f

Carrier' s Hub , May 4 , 2006
. Ite m1 1 Unoppose dMotio n for Extensio n o f

Time , Jun e 8 , 2007
. Ite m1 2 Repl y an dAnswe r t o Motio n t o Dismis s o f

Northwes t

Airlines , Inc. , Delt aAi r Lines , Inc. , Airtra n Airways , Inc. , Continental Airlines , Inc. , an dSouthwes t Airlines , Inc. , Jun e 25 , 2007
. Include dDeclaratio n o f Eri n L
. Heitkamp , Jun e 22 , 2007
. Ite m1 3 Rebuttal , Jul y 16 , 2007 , includin g th e followin g exhibits :
aExhibi t

A Rebutta l Affidavi t

o f Joh n J
. Kish , Jul y 12 , 2007
.

• Exhibi t

B Financia l tables , numbere dExhibit s C throug hG
.

• Exhibi t

C Indianapoli s Internationa l Airport , Mem o fro mJeanni e Weis s t o Bo b Duncan , (undated )

• Exhibi t

D Signatory Airlin e Rate s an dCharge s for th e Las t Te n Year s Ende d Decembe r

31
. Q Exhibi t

E Lette r

fromJoh n J
. Kish , Midfiel dProjec t Director , Ne w Indianapoli s Airport , t o Eri n Heitkamp , Northwes t Airlines , Inc. , Jun e 13 , 2007
. Include s tw o financial tables
. Ite m1 4 Motio n for Leav e t o Fil e an dRespons e o f Northwes t

Airlines , Inc. , Delt aAi r Lines , Inc. , Airtra n Airways , Inc. , Continental Airlines , Inc. , an dSouthwes t Airiine s Co. , Jul y 30 , 2007
. Ite m1 5 Respondent' s Answe r t o Complainin g Airlines ' Motio n for Leav e t o Fil e an d Response , Augus t

9 , 2007
. Ite m1 6 (a ) FA A Form5010 , date dNovembe r 14 , 200 7 Ite m1 6 (b ) FA A Form5010 , date dSeptembe r 25 , 200 8 Ite m1 7 Notic e o f Extensio n o f

Time , Decembe r

5 , 2007
. 3 3Ite m1 8 AI P gran t history for

IND. , date dDecembe r

10 , 2007
. Ite m1 9 Official Statemen t for th e Indianapoli s Loca l Publi c Improvemen t Bon dBan k Bonds , Serie s 200 6 (Indianapoli s Airport Authorit y Project)
. Ite m2 0 Respons e o f th e Indianapoli s Airport

Authorit y t o FAA' s Reques t for Additiona l Informatio n - Ma y 12 , 200 8 Ite m2 1 Repl y o f th e Northwes t

Airlines , Inc. , Delt aAirlines , Inc. , Airtra n Airways , Inc. , Continenta l Airlines , Inc. , an dSouthwes t Airline s Co. , t o th e Respons e o f th e Indianapoli s Airport

Authority , Jun e 11,2008
. Ite m2 2 Reques t

for Additiona l Informatio n Fro mRespondent s an dNotic e o f Extensio n o f Time , Marc h28 , 2008
. Ite m2 3 Notic e o f Extensio n o f

Time , date dJun e 23,2008
. Ite m2 4 Director' s Determination , date dAugus t 19 , 200 8 Ite m2 5 Errat at o th e Director' s Determination , date dOctobe r 7 , 2008
. Ite m2 6 Appea l o f th e Indianapoh s Airport

Authority , date dSeptembe r 22 , 2008
. Attachmen t

A Septembe r

18,200 8 lette r

fromRober t

E
. Coh n an dPatric k

R
. Rizz i o f Hoga n & Hartson , L.L
. P
. representin g complainan t ai r carrier s requestin g clarificatio n o f th e Director' s Determination
. Ite m2 7 Novembe r 21 , 2008 , Notic e o f

Extensio n o f

Tim e extendin g th e dat e b y whic h th e Complainant' s Repl y i s du e t o Decembe r 5 , 2008
. Ite m2 8 Repl y o f th e Complainants , receive dDecembe r 4 , 2008
. Ite m2 9 Februar y 3 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic hth e Fina l Agenc y Decisio n wil l b e issue dt o Marc h3 , 2009
. Ite m3 0 Februar y 26 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic hth e Fina l Agenc y Decisio n wil l b e issue dt o Apri l 2 , 2009
. Ite m3 1 Marc h24 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic hth e Fina l Agenc y Decisio n wil l b e issue dt o Ma y 14 , 2009
. Ite m3 2 Ma y 12 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic h th e Fina l Agenc y Decisio n wil l b e issue dt o Jun e 24 , 2009
. Ite m3 3 Jun e 19 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic h th e Fina l Agenc y Decisio n wil l b e issue dt o Augus t 19 , 2009
. Ite m3 4 Jul y 30 , 2009 , Notic e o f Extensio n o f

Tim e extendin g th e dat e b y whic h th e Fina l Agenc y Decisio n wil l b e issue dt o Septembe r 28 , 2009
.
3 4Ite m3 5 Septembe r 28 , 2009 , Notic e o f

Extensio n o f

Tim e extendin g th e dat e b y whic hth e Fina l Agenc y Decisio n wil l b e issue dt o Novembe r 2 , 2009
. Ite m3 6 Septembe r 25 , 2008 , lette r

t o Randal l S
. Fiertz , Director , Offic e o f Airport Complianc e an dFiel dOperations , from Spiegel & McDiarmid , LLP , regardin g lette r

fromComplainant s date dSeptembe r 18 , 2008
.

3 5