UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION

Washington, D.C.

SPA RENTAL , LLC, D/B /A MSI AVIATION ,

Complainant,
v. Docket No.: AGC-16-13-02

S OMERSET

- PULASKI C OUNTY A IRPORT B OARD ,

Respondent.

S UPPORTING M EMORANDUM OF POINTS AND A UTHORITIES FOR THE A IRPORT B OARD ’ S M OTION TO D ISMISS The complaint filed by SPA Rental, LLC d/b/a MSI Aviation (“SPA”) against the Somerset-Pulaski County Airport Board (the “Airport Board”) is procedurally and substantively deficient. SPA failed to include the required certification that its actions toward the Airport Board were “substantial and reasonable good faith” efforts. See 14 C.F.R. § 16.21. While SPA has complained about its treatment versus that of Somerset Regional Aviation, LLC, it has not alleged any harm or claimed that it is similarly situated with Somerset Regional Aviation to justify its demand for the same treatment. See 14 C.F.R. § 16.23. SPA’s general grievances are not a basis for an investigation or action by the FAA. See 14 C.F.R. § 16.25. SPA’s complaint should be dismissed with prejudice.

1. SPA failed to include the required certification that it engaged in substantial and reasonable good faith efforts to resolve the issues raised in its complaint. Nowhere in the complaint does SPA allege that it engaged in “substantial and reasonable good faith” efforts to resolve its issues. Part 16 states that the Federal Aviation Administration will not consider a complaint unless the complainant “certifies that substantial and reasonable- 2-

good faith efforts to resolve the disputed matter informally prior to filing the complaint have been made.” 14 C.F.R. § 16.21 (emphasis added). SPA’s complaint refers to its informal complaint to the FAA and its communications with the Airport Board, but never goes so far as to certify that those actions were taken in a “good faith” effort to reach a resolution or that they were undertaken in a reasonable manner. In fact, the parties reached an impasse after months of discussions when SPA sought to add a new party as a condition of proceeding. ( See Answer Exh. N). The history of this matter and substance of SPA’s complaints suggest that they were not taken in good faith and were not part of a reasonable effort to resolve its issues, but instead were an attempt to induce the Airport Board to subsidize the SPA owner’s hobby.

2. SPA is not directly and substantially affected by the incentives provided to Somerset Regional Aviation. SPA has not alleged, and cannot allege, that it is directly and substantially affected by the incentives provided to Somerset Regional Aviation or by the alleged violation of Grant Assurance 24. Part 16 allows complaints to be filed only by “[a] person directly and substantially affected by any alleged noncompliance.” 14 C.F.R. § 16.23(a). SPA has suffered no injury as a result of the incentive program or as a result of the alleged violation of Grant Assurance 24. Specifically, SPA has not alleged that its rents are unreasonable or that it is similarly situated with Somerset Regional Aviation such that it merits the same incentives. SPA admits in its complaint that it is different from Somerset Regional Aviation and claims that it would have to “alter its fundamental business” and “abandon its traditional business model” to become similarly situated with Somerset Regional Aviation. ( See, e.g. , Compl. ¶ 15(B)). Despite this, while complaining that the Airport Board will not allow SPA to continue holding over without a lease, SPA has refused to execute new leases unless it receives the same incentives as Somerset Regional Aviation. SPA has suffered no harm.- 3-

3. SPA fails to state a claim that warrants further action or investigation by the FAA. (a) The Airport Board’s incentive program is designed to promote its self-sufficiency, and SPA has not alleged that the Airport Board is not self-sufficient. Grant Assurance 24 establishes a goal of self-sufficiency for airport sponsors. The FAA has explained: At some airports, market conditions may not permit an airport proprietor to establish fees that are sufficiently high to recover aeronautical costs and sufficiently low to attract and retain commercial aeronautical services. In such circumstances, an airport proprietor’s decision to charge rates that are below those needed to achieve self-sustainability in order to assure that services are provided to the public is not inherently inconsistent with the obligation to make the airport as self-sustaining as possible in the circumstances. FAA Policy and Procedures Concerning the Use of Airport Revenue, 64 Fed. Reg. Vol. 30 (Feb. 16, 1999). Lake Cumberland Regional Airport (the “Airport”) users have complained to the Airport Board regarding the availability of aircraft maintenance services. ( See Answer Exh. I). SPA was not meeting this need. Accordingly, the Airport Board solicited proposals for providers of aircraft maintenance services and received only two proposals in response, neither of which was from SPA ( See Answer Exh. G (describing solicitation process); see also Compl. Exh. E p. 50 (attaching the solicitation and Somerset Regional Aviation’s proposal). Both proposals required the Airport Board to provide incentives to the service providers, rather than having the service providers pay fees to the Airport Board. (See id. ). The competitive proposal process demonstrates that market conditions are such that the Airport Board cannot demand the payment of fees at this time. Recognizing this challenge, the Airport Board designed the incentive program and modified it in consultation with the FAA to meet its need for aircraft maintenance services. Ultimately, the goal of the program is to- 4-

promote use of the Airport, increase Airport revenues, and have the Airport operate on a more self-sustaining basis. SPA does not dispute the market conditions facing the Airport Board or the legitimate purposes behind the incentive program. Similarly, SPA does not allege that it provides aircraft maintenance services to the public or that the Airport Board would be able to obtain higher rental rates at the present. It admits that it does not provide annual aircraft inspections to the public. SPA demands the opportunity to participate in the program without meeting the program’s requirements, which were specifically designed to promote increased Airport usage and the Airport’s self-sustainability. SPA has stated no claim that warrants investigation or action by the
FAA. See 14 C.F.R. § 16.25.
(b) The Airport Board funds the incentive program with non-airport revenue. The FAA’s Airport Compliance Manual states that “[t]axes assessed by a special taxing district surrounding the airport for support of the airport, but not derived from the use of the airport, are generally not considered airport revenue . . . .” FAA Order 5190.6B, p. 15-3. Here, the incentives made available to providers of aircraft maintenance services to the public are completely funded by an occupational license fee imposed by Pulaski County and dedicated to the Airport Board under a Pulaski County ordinance. ( See Answer Exh. J (Pulaski County Ordinance Nos. 220.28 & 220.30)). They are not paid to the Airport Board for use of the Airport, sale of Airport assets, or aviation fuel taxes. See FAA Order 5190.6B, p. 15-3. Moreover, the incentive program is consistent with the FAA’s statement that “prohibited direct subsidies do not include waivers of fees . . . during a promotional period,” especially if funded from non-airport revenue. See id. at p. 15-11. Again, SPA’s only claim is that it should be able- 5-

to participate in the program without meeting its requirements, which is not a claim that warrants investigation or action by the FAA. See 14 C.F.R. § 16.25.
(c) The Airport Board has not unjustly discriminated against SPA because SPA is not similarly situated with Somerset Regional Aviation. As explained above, SPA admits that its business model differs substantially from that of Somerset Regional Aviation. The FAA’s Airport Compliance Manual defines a fixed base operator as “a commercial entity providing aeronautical services such as fueling, maintenance, storage, ground and flight instruction, etc., to the public.” FAA Order 5190.6B, p. 9-3 (emphasis added). To the knowledge of the Airport Board and based on SPA’s admissions in its complaint, SPA does not provide aircraft maintenance services to the public. It services only its own aircraft or the aircraft of its owners and, therefore, is not a fixed base operator. In contrast, Somerset Regional Aviation is a limited fixed base operator providing aircraft maintenance services to the public. ( See Answer Exh. F). The Airport Board is not required to treat an entity that provides needed maintenance services, such as annual aircraft inspections, to the public the same as an entity that admits it does not provide such services to the public. The FAA’s Compliance Manual provides that “if the services are not similar, sponsors are not required to charge the FBOs the same rates.” FAA Order 5190.6B, p. 9-7. SPA has made no claims with respect to its treatment in comparison to that of Somerset Regional Aviation that warrant FAA investigation or action. See 14 C.F.R. § 16.25.- 6- By: /s/ Bethany A. Breetz Bethany A. Breetz bbreetz@stites.com Rachel L. Owsley rowsley@stites.com S TITES & HARBISON , PLLC 400 West Market Street, Suite 1800 Louisville, KY 40202-3352 Telephone: (502) 587-3400 Attorneys for Respondent, Somerset - Pulaski County Airport Board

CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was sent by electronic mail this 30th day of May, 2013 to: Konrad Kuczak 130 West Second Street Suite 1010 Dayton, OH 45402 your_lawyer@sbcglobal.net FAA Docket Clerk 9-AWA-AGC-PART-16@faa.gov

/s/ Bethany A. Breetz Bethany A. Breetz

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