U.S. Department of Transportation Federal Aviation Administration
August 4, 2016



### Via Federal 

### Express
Complainant
Aaron Holly, President Skydive Myrtle Beach, Inc. 3032 Falls River Ave. Raleigh, NC 37614
Counsel for Respondent
David Y. Bannard, Esq

. Foley & Lardner LLP I II Huntington Avenue Boston, MA 02199 dbannard@foley.com Jeffrey R. B lease, Esq. Foley & Lardner LLP 111 Huntington Avenue B oston, MA 02199 jblease@foley.com Jaclyn V. Piltch, Esq. Foley & Lardner LLP 111 Huntington Avenue Boston, MA 02199 jpiltch@foley.com Re: FAA Docket No. 16-14-05
Dear Counsel: Office of the Associate Administrator for Airports 800 Independence Ave

. , SW. Washington, DC 20591

Enclosed is a copy ofthe final decision and order ofthe Federal Aviation Administration (FAA) with respect to the above-referenced matter.
In arriving at a final decision on this Appeal, the FAA has reexamined the record, including the Director's Determination, the administrative record supporting the Director's Determination, the Complainants' Appeal, and the Respondent's Reply for consistency with applicable law and

### policy. Based on this reexamination, the FAA Associate Administrator for Airports affirms the Director's Determination. The Associate Administrator concludes that the Director's analysis and conclusions with regard to Grant Assurance 22, Economic Nondiscrimination 

### are supported by a preponderance of reliable, probative, and substantial evidence , and is consistent with applicable law, precedent, and FAA policy

. The Complainants' Appeal does not have persuasive arguments sufficient to reverse any portion ofthe Director's Determination. The reasons for upholding the Director's Determination are set forth in the enclosed final agency decision.



# sincr:_(j~

Kevi C. Willis , Acting Director

**Off\~** 

### of Airport Compliance

an<'1 Management Analysis Enclosure

### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASIDNGTON,DC
Skydive Myrtle Beach, Inc. Complainant/ Appellant



### v. FAA Docket 16-14

-05 Horry County Department of Airports Respondent

FINAL AGENCY DECISION

I. 

### INTRODUCTION This matter is before the Federal Aviation Administration (FAA) Associate Administrator for Airports on appeal filed by Skydive Myrtle Beach, Inc., (Complainant) of the Director's Determination of October 7, 2015 , issued by the Director ofthe FAA Office ofAirport Compliance and Management Analysis, pursuant to the Rules of Practice for Federally Assisted Airport Enforcement Proceedings found in 14 CFR part 16. The Director's Determination dismissed the Complainant's allegation ofeconomic nondiscrimination against the Horry County Department of Airports (Respondent, or sponsor) regarding its operation of Grand Strand Airport (CRE). The Complainant argues on appeal that the Director's findings and conclusions are "arbitrary, capricious, and not in accordance with the law since the facts and conclusions relied on by the Director: (a) violated [Complainant's] due process rights; (b) were not raised by the pleadings; (c) were not part ofthe administrative record provided Complainant; (d) were biased unsubstantiated self-serving statements submitted by Respondent to the Director exparte 

### in contravention to 14 CFR 

### §§ 16.13(h) and 16.23(j); and (e) should not have been considered." [FAA Exhibit 2, Item 1, page 7] The Complainant raises two (2) specific issues on Appeal. The issues raised were determined by the Associate Administrator to be "substantial" in accordance with 14 CFR 

### § 16.33(e) since the Complainant challenges whether the Director followed the prescribed regulatory requirements in 14 CFR part 16 in making his Determination. The Associate Administrator determines that the two specific issues raised on appeal essentially pose the same argument with little discemable variation. [FAA Exhibit 2, Item 1, page 1] Accordingly, the Associate Administrator consolidates both ofthe Complainant's claims into a single issue and evaluates it accordingly.Substantial Issue Evaluated on Appeal

1. Whether the Director's Determination relied on facts and evidence not properly submitted into the Part 16 proceedings and received exparte. Upon an appeal ofa Part 16 Director's Determination, the Associate Administrator will use the following analysis: 

### 2

(1) Are the findings offact each supported by a preponderance ofreliable, probative, and substantial evidence contained in the record? (2) Are conclusions made in accordance with law, precedent, and policy? (3) Are questions on appeal substantial? (4) Have any prejudicial errors occurred? [14 CFR § 16.33(e)][See also, e.g., Ricks v Millington Municipal Airport, FAA Docket No. 16- 98-19, December 30, 1999, Final Decision and Order, p. 21.) In arriving at a final decision on this Appeal, the FAA has reexamined the record, including the Director's Determination, the administrative record supporting the Director's Determination, the Complainant's Appeal, and the Respondent's Reply for consistency with applicable law and policy. Based on this reexamination, the FAA Associate Administrator for Airports affirms the Director's Determination

. The Associate Administrator concludes that the Director's Determination is supported by a preponderance ofreliable, probative, and substantial evidence, and is consistent with applicable law, precedent, and FAA policy. The Complainant's Appeal does not make persuasive arguments sufficient to reverse any portion ofthe Director's Determination.
This decision constitutes the fmal decision ofthe Associate Admini strator for Airports pursuant to 14 CFRpart 16. 

### II. SUMMARY OF THE DIRECTOR'S DETERMINATION Skydive Myrtle Beach, Inc., an on-airport skydiving proprietor, filed a formal complaint pursuant to 14 CFR part 16 against the Horry County Department ofAirports, sponsor ofthe Grand Strand Airport, alleging that the Respondent has engaged in unreasonably restrictive and discriminatory actions against the operator in the performance of its skydiving operations. The Director evaluated the numerous allegations against the requirements of Grant Assurance 22, Economic Non-discrimination, and Grant Assurance 19, Operations andMaintenance. In his Determination, the Director found that substantial and recurring safety concerns had arisen from the Complainant's skydiving operation. The Director concluded that the Respondent's "act ions were implemented to mitigate valid and substantiated safety deficiencies" and thus "has not imposed unreasonable restrictions on or unjustly discriminated" against the Complainant, but rather has implemented mitigat ions that are consistent with its obligations under Grant Assurance 22(h) and (i). [Director's Determination, pg. 63-64] The Director also found that, although the Respondent has made significant efforts to mitigate unsafe skydiving operations, the fact that those unsafe operations still take place on a regular and recurring basis is grounds to compel the sponsor to take " immediate steps

... up to and including closure ofthe DZ" in order to not be considered

### 3

to be in violation ofGrant Assurance 19. [Director' s Determination, pg. 66] The Director's finding under GA 19 was pre-conditioned with specific corrective actions. 

### III. PARTIES TO THE COMPLAINT 1. Respondent/Airport Grand Strand Airport (CRE) is a county

-owned, public-use general aviation airport located one mile northwest ofthe central business district ofNorth Myrtle Beach, in Horry County, South Carolina. CRE is located in the City ofNorth Myrtle Beach between Highway 17 Business and the Intracoastal Waterway (ICW), and close to the Atlantic Ocean shoreline. The Airport is operated by Horry County Department ofAirports (Respondent, sponsor, or HCDA). HCDA is also the owner and operator ofthree other airports located within its jurisdiction, including Myrtle Beach International Airport (MYR), Conway Horry County Airport (HYW), and Twin City Airport (5J9). [Director's Determination , pg. 4) CRE covers an area of427 acres and has one runway designated 5/23 with an asphalt surface measuring 5 ,997 by 100 feet. For the 12-month period ending March 11 , 2015 , the airport had 46 , 670 aircraft operations and approximately 60 based aircraft. CRE has a designated parachuting landing zone (Drop Zone or DZ) on airport property, which is adjacent to the airport's runway and taxiway system. It also has an operational contract ATCT, and thus is classified as Class D airspace when the tower is in operation. [Director's Determination, pg. 4] Partial funding for most major capital improvements for the County's airports , including CRE, is obtained through the FAA and from the South Carolina Division ofAeronautics. The development ofthe Airport was fmanced , in part, with FAA Airport and Improvement Program (AlP) funding, authorized by theAirport and Airway Improvement Act of 1982, 

### as amended, 49 U.S.C. 47101 , et seq. Under the provisions ofthis Act, the County is obligated to comply with the FAA sponsor grant assurances and related Federal law, 49 U.S.C. 47107. Since 1982 , the County has accepted 19 AlP grants for CRE 

### totaling over $10.5 million. [Director's Determination, pg. 4] 

### 2. The 

### Complainant Complainant, Skydive Myrtle Beach (SDMB) , located at CRE, is a commercial skydiving operator that engages in the air transportation of individuals for the purpose of skydiving, instruction in skydiving, and rental and sales of skydiving equipment. SDMB currently uses CRE as a base ofoperations for its skydiving business and also uses CRE' s designated DZ. [Director' s Determination, pg. 4] 

### IV. PROCEDURAL HISTORY On October 07 , 2015 , the Director issued the Director's Determination in this matter. On November 7, 2015 , the Complainant filed its Appeal from the Director' s Determination. [FAA Exhibit 2 , Item 1] On November 24, 2015 , the Respondent fi led its Reply to Complainant Skydive Myrtle Beach, Inc. ' s Appeal ofthe Director' s Determination. [FAA Exhibit 3, Item 1]

### V. APPLICABLE FEDERAL LAW AND FAA POLICY Grant Assurance 22, Economic Nondiscrimination
Grant Assurance 22 requires , in part, that the sponsor ofa federally obligated airport assure:

a. 

### It will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types , kinds , and classes ofaeronautical activities, including commercial aeronautical activities offering services to the public at the airport.4

h. The sponsor may establish such reasonable, and not unjustly discriminatory, conditions to be met by all users ofthe airport as may be necessary for the safe and efficient operation ofthe airport

... i. The sponsor may prohibit or limit any given type, kind or class ofaeronautical use of the airport if such action is necessary for the safe operation ofthe airport or necessary to serve the civil aviation needs ofthe public. " Subsection (h) qualifies subsection (a) and subsection (i) represents an exception to subsection (a) to permit the sponsor to exercise control ofthe airport sufficient to preclude unsafe and inefficient conditions that would be detrimental to the civil aviation needs ofthe public. Grant A ssurance 22 deal s with both the reasonableness ofairport access and the prohibition ofadopting unjustly discriminatory conditions as a potential for limiting access. In all cases involving restrictions on airport use imposed by airport owners for safety and efficiency reasons, the FAA will make the final determination on the reasonableness ofsuch restrictions when they appear to deny or limit access to , or use of, the airport. 

### VI. PRELIMINARY ISSUES Before addressing the issues raised on appeal, the Associate Administrator discusses several preliminary issues raised by the Complainant's appeal. First, the Complainant broadly asserts that the Director's Determination was unconstitutional. The FAA does not havejurisdiction over allegations ofviolations ofthe Constitution ofthe United States under 14 CFR part 16, or otherwise, and therefore di smisses that claim. The Associate Administrator evaluates the issues consistent with his authority and the standard set forth in 14 CFR 

### § 16.33. 

### {See Gina Michelle Moore, individually, and d/b/a Warbird Sky Ventures, Inc. v. Sumner County Regional Airport Authority, FAA Docket No. 16

-07-1 6 , (February 27, 2009) (Director's Determination) , page 18.] Second, the Complainant indirectly asserts the Director's Determination was defective for not considering alleged violations ofthe Anti-Head Tax Act (49 U.S.C. 

### § 40116(b)). [FAA Exhibit 2, Item 1, pg. 10] Section 16.33(f) allows a party to raise new arguments on Appeal, but only if accompanied by a petition showing good cause as to why the new issue or evidence was not

### 5 presented to the Director. The Complainant made no effort to satisfy the foregoing requirements, and the Associate Administrator dismisses that argument. Finally, the Complainant attaches an appendix to its briefon appeal that contains a number of documents dated after the Direct or's Determination was issued. [FAA Exhibit 2, I tem 2] The Complainant's brief also discusses facts that occurred after the Director's Determination was issued. The Complainant did not petition for inclusion ofthis information or make a showing of good cause to include it as required under 14 CFR 

### § 16.33(f). Accordingly, this evidence is not considered by the Associate Administrator in this Final Agency Decision. 

### VII. ISSUES ON APPEAL The Complainant raised the following two (2) issues on Appeal: 1. Did the FAA violate the Complainant's due process rights when it received evidence ex parte from the Respondent and refused the Complainant's FOIA requests for al l documents in FAA possession relating to skydiving operations at CRE? 2. Was the FAA Director's Determination arbitrary, capricious and an abuse ofdiscretion in violation of the 5 1h Amendment Due Process Clause ofthe United States Constitution, 5 USC§ 557(d) ofthe Administrative Procedures Act, and 14 CFR 

### § 16.303 when it relied on facts and evidence not properly submitted into the Part 16 proceedings and received ex parte? [FAA Exhibit 2 , Item 1, pg. 1] The Complainant argues that the Director's findings and conclusions are "arbitrary, capricious, and not in accordance with the law since the facts and conclusions relied on by the Director: (a) violated [Complainant's] due process rights; (b) were not raised by the pleadings; (c) were not part ofthe adm inistrative record provided Complainant; (d) were biased unsubstantiated self-serving statements submitted by Respondent to the Director exparte in contravention to 14 CFR §§ 16.13(h) and 16.230); and (e) should not have been considered." [FAA Exhibit 2, Item 1, page 7] The Associate Administrator determines that the two issues raised on appeal essentially pose the same argument. [FAA Exhibit 2, Item 1, page 1] Accordingly, the Associate Administrator consolidates the issues and evaluates them as a single issue below. 

### ISSUE: Whether the Director's Determination relied on facts and evidence not properly submitted into the part 16 proceeding and received ex parte. The Complainant argues that the Director, in making his Determination under part 16, improper ly relied on prohibited exparte communications and inquiries from the FAA to the Respondent, from the Respondent to the FAA, and internal communications between the Director and other FAA offices. [FAA Exhibit 2, Item 1, pg. 4-5] The Complainant cites a number offederal statutes , laws ,

### 6
and court precedents 1 

### to support its overarching argument that exparte 

### communications are relevant to the merits ofa proceeding between the Complainant, Respondent, and an agency decision

-maker and that, in this case, the Director was provided exparte 

### communications that the Complainant was never given the opportunity to evaluate and respond to. [FAA Exhibit 2 , Item 1 , pg. 8] Specifically, the Complainant argues that "none" ofthe "safety incidents" relied upon in the Director' s Determination "have ever been presented" to the Complainant. [FAA Exhibit 2, Item 1, pg. 8] The Complainant also argues that at least "five exparte 

### communications with FAA employees" have resulted in " at least 93 ' safety incident' reports , letters of inquiry, safety data, and memoranda that have never been provided" to the Complainant but relied on the Director. [FAA Exhibit 2, Item 1 , pg . 10] Lastly, the Complainant argues that none ofthe cited safety incidents "referred to any statutory, regulatory, or county violation" and that each ofthe incident reports received by the FAA " was generated after the initiation ofthe Part 16 proceedings " by the Respondent and/or the airport air traffic control tower (ATCT). Consequently, the Complainant claims that reported incidents " were anecdotal, inherently biased, and unreliable. " [FAA Exhibit 2 , Item 1, pg. 9] Based on these allegations , the Complainant's Appeal requests the Associate Administrator to vacate the Director's Determination and fmd the Respondent in violation of Grant Assurance 22, Economic Nondiscrimination

. 

### For its part, the Respondent argues that: 1) the Complainant failed to state an appealable is sue under 14 CFR 

### § l6.33(e) , 2) the four available grounds for evaluating an appeal under 14 CFR 

### § 16.33(e) affirm the Director's Determination, and 3) new issues and evidence in the Appeal should not be considered by the Associate Administrator. [FAA Exhibit 3 , Item 1, pgs. 2

-3] Regarding ex parte communications, the Associate Administrator reviewed 14 CFR 

### § 16.301 , Prohibited 

### Ex Parte Communications 

### in totality to evaluate the merits ofthe Complainant' s claims under appeal. Section 16.30 1 (a) and (b) provides that: (a) The prohibitions ofthis section shall apply from the time a proceeding is noticed for hearing 

### [emphasis added] unless the person responsible for the communication has knowledge that it will be noticed, in which case the prohibitions shall apply at the time of the acquisition ofsuch knowledge. (b) Except to the extent required for the disposition of exparte 

### matters as authorized by law: (I ) 

### No interested person outside the FAA and no FAA employee participa ting as a party shall make or knowingly cause to be made to any decisional employee an exparte 

### communication relevant to the merit s ofthe proceeding ;

1 The Complainant cit es, among other s, Pr ofessio na l A ir T ra

ffic Co ntr oll

er

s Or gani zati on v. F ed

e ral Labo r Re latio ns Authoriry (685 F.2d 547, 565 (C.A.D

.C 1982); Public Law No. 94

-409 , Government in the S unshineAct§ 4(a), 90 Stat. 1241 (1976) ; and 5 U .S.C

. § 557(d){l)(A), Administrativ e Procedure Act.(2) No FAA employee shall make or knowingly cause to be made to any interested person outside the FAA an exparte communication relevant to the merits ofthe proceeding; or 7

(3) Ex parte communica tions regarding solely matters ofagency procedure or pra ctice are not prohibited by this section. Upon review, the Associate Administrator concludes that the Complainant has misinterpreted 14 CFR § 16.301. A party raising a defense under§ 16.301 would have to show that an exparte communication was made to a " decisional employee" after the case was "noticed for hearing. " A "decisional employee" is " the Administrator, Deputy Administrator, Associate Administrator, Director, hearing officer, or other FAA employee who is or who may reasonably be expected to be involved in the decisional process ofthe proceeding." [14 CFR § 16.3] This part 16 proceeding has not been and is not sub j ect to a hearing, consistent with 14 CFR § 16.109, and therefore§ 16.301 does not apply. Nevertheless, in order to provide a fair and complete consideration ofthe issues before the agency, the FAA general ly avoids exparte communications during the entire part 16 proceeding. Especia ll y at the initial determination stage, the Director must balance exparte concerns, which may provide one party with an unfair advantage, against the investigatory responsibilities in determining whether a grant assurance violation exists.
A formal investigation by the Director includes a " review ofthe written submissions or pleadings ofthe parties, as supplemented by any informal investigation the FAA considers necessary and by additional information furnished by the parties at FAA request." [ 14 CFR § 16.29(b)(1)] Section 16.29(b )(2) provides direct authority for the Director to obtain "additional oral and documentary evidence" for use in the FAA's investigation. Lastly, 14 CFR § 16.31(a) provides that the FAA will issue its determination " [a ] fter consideration ofthe pleadings and any other information obtained by the FAA after investigation." [Emphasis added] The FAA evaluated the various internal and external correspondence that the Complainant argues constitutes inappropriate exparte communications between the FAA and the Respondent, including :

• April 7 , 2015 letter from the FAA Southern Region Airport's Division to the Respondent • April 27, 2015 letter from the Respondent in reply to the FAA letter ofApril 7, 2015 • July 31, 2015 internal FAA memorandum from FAA FSDO 13 to FAA AS0-200 • August 4, 2015 internal FAA memorandum from FAA ATO to FAA EJT-ES • CRE Safety Incident data compiled by the Director (AC0-100) • September 1 , 2015 letter from FAA AAS- 1 (Safety and Standards) to the Respondent • September 17, 2015 letter from Respondent 

### in reply to AAS letter of September 1, 2015 • September 30, 2015letter from Respondent to AAS-1 [FAA Exhibit 2 , Item 1 , pgs. 4-5] Upon review , it is clear that in each letter and inquiry, the FAA exercised its statutory and regulatory duties to investigate known or potentially unsafe operations at CRE and/or to

### 8
communicate such concerns internally with appropriate FAA stakeholders. Moreover, when the alleged denial of access was based on unsafe conditions, those unsafe conditions are a reasonable basis for further investigation under 14 CFR 

### § 16.29. The results ofthis investigation were then included in the administrative record. The part 16 procedures for appealing a Director's Determination permit the parties to reply to those portions ofthe record. The Complainant also argues that the incident data reported by the Respondent and incorporated i nto the Director's Determination constituted an improper exparte communication involving the merits of the case. [FAA Exhibit 2, Item 1, pg. 7] The Associate Administrator disagrees. The Director' s purview in a part 16 proceeding is to protect the Federal interest in a federally funded airport; therefore, the Complainant's view ofthe part 16 procedures would limit the ability ofthe FAA to perform formal/informal investigations, to communicate internally, and/or to communicate with an airport sponsor (or complainant) who has a pending matter under part 16. While an FAA investigation ofan airport sponsor may be related to the merits ofan ongoing proceeding under part 16, the various components ofan investigation do not themselves constitute a prohibited exparte communication. Again, the results ofthis investigation were included in the record , and thus provide an opportunity for the parties to respond under the part 16 appeal procedures.
The Director, in the role ofneutral and objective adjudicator, may consider the totality ofthe data and/or conclusions of an informal FAA investigation, even ifthe data are not included in the original pleadings ofthe case.[§ 16.29(b)(l)] The Associate Administrator notes, however, that the Director will include in the public record all information, data, and communications collected and used in the part 16 deliberative process in order demonstrate a fair and complete consideration ofthe issues. [§ 16.11] Although the Complainant had the opportunity in its appeal to produce persuasive evidence in opposition to that evidence resulting from the Director' s investigation, or to argue the Director's conclusions were inconsistent with the evidence in the record, the Complainant made no such production or arguments. On review, the Associate Administrator concludes all evidence was properly included in the administrative record and supportive ofthe Director's findings.
In consideration of the foregoing, the Associate Administrator rejects the Complainant's argument that the Director relied on improper exparte communications, facts, and evidence in making his formal Determination. Likewise, the Associate Administrator concludes that the Director' s Determination under Grant Assurance 22 is not arbitrary, capricious or an abuse of discretion. The Director' s findings are supported by reliable, probative, and substantial evidence and are made in accordance with applicable law, precedent, and policy. The Associate Administrator upholds the Director's finding under Grant Assurance 22, Economic Nondiscrimination. 

### VIII. CONCLUSION Upon an appeal ofa Part 16 Director's Determination, the Associate Administrator will use the following analysis: ( 1) Are the findings of fact each supported by a preponderance ofreliable, probative, and substantial evidence contained in the record?

### 9
(2) Are conclusions made in accordance with law, precedent, and policy? (3) Are questions on appeal substantial? (4) Have any prejudicial errors occurred? 14 CFR § 16.33(e); 

### see also , e.g., Ricks v Mill ington Municipal Airport, FAA Docket No. 16- 98-19, December 30, 1999, Final Decision and Order, p. 21

. In arriving at a final decision in this Appeal, the FAA has reexamined the record, including the Director's Determination, the administrative record supporting the Director' s Determination, the Appeal, and Reply submitted by the parties, and applicable law and policy. Based on this reexamination, this decision concludes that the Director's Determination is supported by a preponderance ofreliable, probative, and substantial evidence, and is consistent with a pplicable law, precedent, and F 

### AI\ policy. The Director' s Determination is affirmed. This decision constitutes a final decision ofthe Associate Administrator pursuant to 14 CFR § 16.33. 

### ORDER ACCORDINGLY, it is hereby ORDERED that (1) the Director's Determination is affirmed, and (2) the Appeal is dismissed pursuant to 14 CFR § 16.33. 

### RIGHT OF APPEAL
A party to this decision disclosing a substantial interest in the Final Decision and Order ofthe Federal Aviation Administration may file a petition for review pursuant to 49 U.S.C. 46110, in the United States Court of Appeals for the District of Columbia Circuit or in the Court of Appeals ofthe United States for the Circuit in which the person resides or has its principal place of business . The petition must be filed not later than 60 days after a Final Agency Deci sion has been served on the party. [14 CFR§ 16.247(a)]



# Ed **(:! ~?** 

# 4'2-

Associate Administrator for Airports

### CERTIFICATE OF SERVICE

Complainant
Aaron Holly, President Skydive Myrt le Beach, Inc. 3032 Falls River Ave. Raleigh, NC 37614 Counsel for Respondent David Y

. Bannard, Esq. Foley 

### & Lardner LLP 1 1 1 Huntington Avenue Boston, MA 02199 dbannard@foley.com Jeffrey R. Blease, Esq

. Foley & Lardner LLP 1 1 1 Huntington Avenue Boston, MA 02199 jblease@ foley.com Jaclyn V. Piltch, Esq. Foley 

### & Lardner LLP 1 11 Hun tington Avenue Boston, MA 02199 jpiltch@ foley.com Hand/Electronically Delivered to: FAA Part 16 Airport Proceedings Docket FAA Airport Compli ance and Management Analysis, ACO-l 00 FAA Southern Region, AS0-620

Claudia Roberts Airport Compliance and Management

Analysis 10