UNITED STATESDEPARTMENT OF TRANSPORTATION FEDERALAVIATIONADMINISTRATION WASHINGTON,D.C. 

## RECEIVED JUN 

## 242015 National BusinessAviation Association, Inc., et 

### a!. PART 16 DOCKETS Complainants, FAADocketNo. 16-15-08 

### v. Town ofEast Hampton,NY Respondent.
RESPONDENT TOWNOFEASTHAMPTON,NEWYORK'S MEMORANDUMOFPOINTS ANDAUTHORITIESIN SUPPORT OFITS MOTIONTO DISMISSTHE COMPLAINT Designation ofpersons to receive servicefor theTown ofEastHampton, New York:

ElizabethVail Town Attorney Town ofEast Hampton !59Pantigo Road East Hampton, NY 11937 EVail@EHamptonNY.Gov W. Eric Pilsk Catherine vanHeuven KaplanKirsch & Rockwell LLP I00I ConnecticutAve.,NW, Suite 800 Washington, D.C. 20036 epilsk@kaplankirsch.com cvanheuven@kaplankirsch.com Telephone: (202) 955-5600 Facsimile: (202) 955-5616INTRODUCTION The Complaint filed by National Business Aviation Association, Inc. ("NBAA"); Shoreline Aviation, Inc. (Connecticut); PlaneSense, Inc.; Fly the Whale, Inc.; Eastern Air Express, Inc.; FL Aviation Corporation; Tuckaire, Inc.; Autonomic Controls, Inc.; Shoreline Aviation, Inc. (Massachusetts); Wes Rae Contracting Corporation; Eagle Air, Inc.; and JETAS, Inc. (collectively, "Complainants") is another effortbyusers ofEast Hampton Airport ("Airport"
or "HTO") to challenge the legality ofthree Local Laws adopted bythe Town ofEast Hampton
on April 16, 2015, as amended on May 7, 2015, that: (1) impose a curfew on all operations between 11:00 p.m. and 7:00a.m., (2) impose an extended curfewon aircraft defined as "noisy" 1 between 8:00 p.m. and 9:00 a.m., and (3) limit operations by noisy aircraft to two operations (one takeoffand one landing) per week for the summer season (defined as May 1

- September 30)2 A number ofPlaintiffs, including NBAA, have challenged the Local Laws in the U.S. District Court for the Eastern District ofNew York, Case No. 15-Civ-2246 (Filed April 22, 2015), on preemption and Commerce Clause grounds. In addition, another Part 16 Complaint, Docket No. 16-15-02 challenges the Local Laws indirectly based on Assurances 19 and 24.
The term "Noisy Aircraft" is defined as: "any airplane or rotorcraft for which there is a published Effective Perceived Noise in Decibels (EPNdB) approach (AP) level of 91.0 or greater." Town ofEast Hampton, Local Law 5 of2015 at Section 2, codified in the Code ofthe TownofEastHampton at§ 75-38 (A)(4). 2 In response to Complainants' comment that the Town's list of "noisy aircraft" is incorrect, 

### see Complaint at n. 1, the Town notes that the List ofNoisy Aircraft clearly instructs readers that: "Published data for shaded aircraft types include ranges ofnoise levels that extend across the 91.0 EPNdB threshold. These ranges result from multiple published noise levels for varying aircraft configurations (e.g., differing powerplants, maximum operating weights, etc.)." The Bombardier Challenger 600/601/604/605 entry is a shaded entry, thus clearly signaling to readers that some ofthese aircraft types could be exempt and further inquiry is appropriate. The Town further notes that Complainants have cited to a now out-of-date version ofthe List. See Complaint Exhibit 4. The current version was released on April 2, 2015. It is available at http://www.htoplanning.com/docs/Town Documents/150402 Updated List of Noisy Aircraft Types.PDF
2Finally, a number of Airport users have filed a related lawsuit against the Federal Aviation Administration ("FAA") in the U.S. District Court for the Eastern District ofNew York, Case No. 15-Civ-246 (filed January 29, 2015). That lawsuit challenges the FAA's stated position adopted in a 2005 Settlement Agreement between the FAA and a citizens group called the Committee to Stop Airport Expansion. In the 2005 Settlement Agreement, FAA committed to not enforce Grant Assurance 22(a) against the Town after December 31, 2014. FAA subsequently announced that its position in the Settlement Agreement "also means that unless the town wishes to remain eligible to receive future grants ofFederal funding, it is not required to comply with the requirements under the Airport Noise and Capacity Act of 1990 (ANCA), as implementedby title 14 C.F.R., Part 161, inproposing newairportnoise and access restrictions." That case is also currentlypending. Rather than wait for the resolution ofthose lawsuits, Complainants initiate yet another piece oflitigation challenging the Local Laws alleging that the Local Laws violate Assurance 23's prohibition against exclusive rights and that the Town has violated Assurance 25 by using Airport revenue to pay the legal costs ofdefending the Local Laws. Both claims, however, rest
on false legalpremises and must be dismissed as amatteroflaw. Complainants' Assurance 23 claim rests on the notionthat an exclusive rightsviolation is
a "mirror image" ofan Assurance 22(a) violation, such that any "unreasonable restriction" on
access to an airport automatically violates Assurance 23. Complaint**at~** 33. Complainants are wrong. Not only has the FAA expresslyrejectedthe "mirrorimage" theory ofAssurance 23, but also, the agency requires explicit proofthat a measure would have an anti-competitive or monopolistic effect before it will find a violation ofAssurance 23. In the Matter of the City of SantaMonica, FAA DocketNo. 16-02-08, at46-53 (July 8, 2009) (Final AgencyDecision).

3Complainants' revenue diversion claim rests on the notion that the Town may not use airport revenue to pay legal fees and other costs it has and will incur in defending the Local Laws. Complainants' apparenttheory is that defendingthe Local Laws is not an airportpurpose. There is no support for that notion. The FAA explicitly recognizes that an airport sponsor may
use airport revenues to pay legal fees. Moreover, to the Town's knowledge, the FAA has never required an airport sponsor to forego using airport revenue to defend itself, 

### even in cases where
a sponsor was ultimately found to be in violation ofsponsor assurances. Tellingly, Complainants can cite no decision to the contrary. Complainants' theory, if adopted, would wreak havoc with airport finances by prohibiting airport sponsors from using airport revenue to defend Part 16 cases, civil litigation alleging unlawful sponsor action, and would further prevent
an airport sponsor from using airport revenue to adopt appropriate corrective measures. In short, Complainants' theory is baseless and fraught with difficulty, and shouldbe dismissed as amatter oflaw. ARGUMENT I. COMPLAINANTSFAILTO STATEA CLAIMTHATTHETOWNHAS VIOLATEDTHEPROHIBITIONAGAINST GRANTINGAN EXCLUSIVE RIGHT Complainants assert that Local Laws 4 and 5, restricting operations by noisy aircraft, violate Assurance 23. Grant Assurance 23 provides, in relevant part, that an airport sponsor "willpermit no exclusive right for the use ofthe airport by any personproviding, orintending to provide, aeronautical services to the public." The FAA has explained that "the intent of [the prohibition against exclusive rights] is to promote aeronautical activity and protect fair competition at federally obligated airports." FAA Compliance Handbook, Advisory Circular 150/5190.6B at

**~** 8.1. (Sept. 30, 2009). Accordingly, in order to state a claim that a sponsor violates Assurance 23, the FAA requires that there be some demonstrable nexus between the
4sponsor's action and a monopolistic, anticompetitive result. In the Matter ofthe City of Santa Monica, FAA DocketNo. 16-02-08, at 51 (July 8, 2009) (Final AgencyDecision). Complainants fail to state aviolation ofAssurance 23 for two reasons. First, they do not allege that the Local Laws have a monopolistic or anti-competitive effect and they fail to make any factual allegations thatcould support such afinding. A. The Local Laws Do NotImplicate TheKind OfMonopolistic OrAntiCompetitiveEffectNecessary To Constitutean Exclusive Rights Violation 1. Complainants Rely on aLegal Theory that FAAhas Expressly Rejected Complainants' claim of an exclusive rights violation rests entirely on the simplistic theory that the prohibition against economic discrimination in Assurance 22(a) and the prohibition against exclusive rights in Assurance 23 are "mirror images" such that any unjustly discriminatory rule necessarily confers a prohibited exclusive right. Complaint

**at~~** 33-34, 37. Accordingly, Complainants argue, the Local Laws create an exclusive right because they allow non-noisy aircraft to operate without restriction while imposing limits on operations by noisy aircraft. Id

**at~** 35. The FAA expressly rejected the "mirror image" theory ofexclusive rights in 2009 and has determined that a violation of Assurance 23 requires a showing of "anti-competitive, monopolistic behavior." In the Matter of the City of Santa Monica, FAA Docket No. 16-02-08, at 51 (July 8, 2009) (Final Agency Decision). The history ofthe Santa Monica Part 16 litigation underscores the lack ofmerit to Complainants' theory. In Santa Monica, the FAA initiated an investigation into the City of Santa Monica's proposal to ban Approach Category C and D aircraft from Santa Monica Municipal Airport ("SMO"). After the City adopted the ban, the Director ofthe FAA Office ofAirport Compliance andManagementAnalysis issued aDirector's

5Determination finding that the ban violated Assurance 22(a) and 23 because it unreasonably distinguishedbetween aircrafttypes. Director'sDetermination at 52-53. The City requested an evidentiary hearing and challenged, inter alia, the Director's findings on exclusive rights arguing that exclusive rights were only implicated when sponsors created effective monopolies or anti-competitive conditions similar to those prohibited by antitrust laws. Following an evidentiary hearing, the Hearing Officer agreed with the City on the exclusive rights issue eventhough he affirmed the Director on the Assurance 22(a) issue. After carefully reviewing the language and legislative history of Assurance 23, 49 U.S.C. § 47104(a)(4), and 49 U.S.C. §40103, relevant Attorney General Opinions and case law, the Hearing Officer concluded that Assurance 23's "purpose is to prohibit anti-competitive, monopolistic behavior at airports receiving federal funds." In the Matter ofthe City ofSanta Monica, FAA DocketNo. 16-02-08, at 101 (May 14, 2009) (Hearing Officer's Decision).3 The Hearing Officer also relied on language from the FAA Advisory Circular 150.5190-6, Exclusive Rights atFederally-ObligatedAirports,**at~** 1.2 (January 4, 2007), stating that: "The purpose of the exclusive rights provision as applied to civil aeronautics is to prevent monopolies and combinations in restraint oftrade and to promote competition at federally obligated airports." (Hearing Officer's Decision at I05). Accordingly, the Hearing Officerheldthatin orderto show
a violation ofAssurance 23, the Directorhad to show a nexus betweenthe City's Category C &

3 For example, the Hearing Officer cited a 1941 Attorney General Opinion discussing the predecessor statute to 49 U.S.C. §40103 explaining that "the purpose of the provision [prohibiting exclusive rights] is to prohibit monopolies and combinations in restraint oftrade or commerce and to promote and encourage competition in civil aeronautics
...." 40 U.S. Op. Atty. Gen. at 72, citing, 83 Cong. Rec. 6729, 6730 (Hearing Office Decision at I02). The Hearing Officer also citedAircraft Owners andPilotsAssoc. v. PortAuthorityof New York, 305 F. Supp. 93, I05 (E.D.N.Y. 1969) ("the type of'exclusive' right there forbidden [in the statute] is one ofthe sort noxious to the anti-trust laws
....") and City of Pompano Beach v. FAA, 774 F.2d 1529, 1542 (11th Cir. 1985) (same). (Hearing Officer'sDecision at I05).

6D ban and the kind ofanti-competitive result covered by Assurance 23. !d. at 106. In sum, the Hearing Officer found that, standing alone, a showing that the ban was unreasonable was not sufficientto find a violation ofAssurance 23. The Director appealed the Hearing Officer's decision to the Associate Administrator4 Among other arguments, the Director attempted to rely on prior Directors' Determinations that had found violations ofAssurance 23 based onthe "mirrorimage"theory that Complainants rely upon. Final Agency Decision at 50-51. The Associate Administrator expressly rejected that approach holding that "to the extent that those decisions conflict with the instant decision, they
are incorrect." !d. at 51. The Associate Administrator also agreed and found that the Hearing Officer had correctly considered and applied prior FAA Advisory Circulars, the legislative history ofthe exclusiverights statutes, and case lawto concludethat an exclusiverights violation mustdepend on a showing on monopolistic, anticompetitive conduct. Final Agency Decision at 47-51. The Associate Administrator also expressly rejected the Director's arguments that existinglanguage from the Compliance Handbook and Advisory Circulars "supportits expansive reading of 'exclusive right' as a right that applies broadly to use of an airport and notjust to activities thatinvolve competition." !d. at 49. To the contrary, the Associate Administratorheld that any broad language inthe Compliance Handbook or FAA Advisory Circulars mustbe read consistently with the language in the "statutes, legislative history, and other FAA publications" limiting the scope of exclusive rights to monopolistic, anticompetitive conduct. !d. Accordingly, the Associate Administrator concluded that in order to find a violation of Assurance 23, the FAA "needed to prove that an anti-competitive result would occur if the Ordinance wereimplemented." !d. at 51.

4 The City appealed other aspects ofthe decision as well.
72. Complainants OfferNo Controlling LegalAuthority Complainants rely expressly and exclusively on the "mirror image" theory ofexclusive rights that the Associate Administrator rejected in Santa Monica. Complaint at

**~~33,** 34, 37. None ofthe legal authority cited by Complainants overrules Santa Monica or otherwise supports their Complaint. First, Complainants cite to three legal authorities that pre-date the Santa Monica Final Agency Decision and rely on the now-rejected "mirror image" theory. See Complaint at

**~** 36 (citing 1965 FAA guidance); id

**at~** 38 (citing the 2001 Director's Determination in Bardin v. County of Sacramento, California); and id.

**at~** 38 n. 6 (citingthe 2008 Director's Determination in SelfServe Pumps, Inc. v. Chicago Executive Airport). Those determinations must be considered incorrect for the same reason that the Associate Administrator found the Director's Determinations citedbythe Directorin SantaMonica to be incorrect. See supra, n. 4. Second, the two post-Santa Monica decisions cited by Complainants are inapposite. Hinshaw v. State of Hawaii, FAA DocketNo. 16-12-04 (Aug. 18, 2014) (Director's Preliminary Determination) cannot overrule the Associate Administrator's decision in Santa Monica, nor does it purport to do so. Moreover, as this document is merely a preliminary determination, it does not represent a final decision by either the Director or FAA. Similarly, the decision in 41 North 73 West, Inc. v. County ofWestchester. New York, FAA DocketNo. 16-07-13 at 37 (Sept. 18, 2009) (Final Agency Decision) is not contrary to Santa Monica, and certainly does not overrule or modifySanta Monica. On the facts ofthat case, the Associate Administrator simply concluded that the sponsor's leasing practices did not bar complainant from conducting a particular aeronautical activity, and therefore could not constitute an exclusive right. Final Agency Decision at 37. There was no reason to look further into any possible monopolistic or anti-competitive effect. Furthermore, as Santa Monica instructs, the general rule relied upon in
841 North 73 West, Inc. mustbeunderstood andapplied in lightofthe purpose ofAssurance 23 to preventanticompetitive actions. The reasoning ofboth 41 North 7 3 West, Inc. and Santa Monica underscores the fact that Complainants have simply failed to state a claim ofexclusive rights violation that merits further investigation. None ofComplainants' respective members is barred from conducting aparticular aeronautical activity to any extent different than any other Airport user. The Local Laws apply equally to all users and no aeronautical user enjoys a right that cannot be shared by any other aeronautical user. 3. Complainants Fail To PresentAny Facts RegardingAny Monopolistic orAnti-Competitive Result ThatMerits FurtherInvestigation Not only do Complainants fail to state a claim that meets the legal requirements ofan exclusiverights violation,but also, theyfail to offeranybasis that could support an investigation by the Director. Under Santa Monica, Complainants have failed to make any allegation or provide any factual support that could show that the Local Laws would create a monopoly or hinder competition in a manner implicated by Assurance 23. The FAA regulations at 14 C.F.R. 16.23(b)(2) and (3) require Complainants to present all documents and facts in support ofits claims. Yet, the only facts and documents set forth in the Complaint relate to historical information about the Airport, the adoption ofthe Local Laws themselves, and certain details about the substance ofthe Local Laws.

**Complaint~~** 19-27. Complainants present no facts or documents that showhowthe Local Laws affect the respective Complainants or their members. Nor do they present any facts or documents that could possibly provide a basis on which the Director should investigate further. The Local Laws do not prevent any aircraft from operating at the Airport, no user is prevented from using the Airport, and no user is given any preferential right to use the Airport. Quite simply, Complainants present no basis whatsoever for the

9Director to believe thatthe Local Laws have the monopolistic, anticompetitive effectrequired to implicate Assurance 23. Nor could they. As the Local Laws themselves make clear, the Local Laws are intended to address noise and environmental concerns. They are not intended to regulate economic activity as such, and certainly are not intended to limit competition for aeronautic services at the Airport. The Local Laws do not prevent any aeronautic user from competing atthe Airport and do not give any aeronautic user amonopolyto provide any aeronautic serviceatthe Airport. The Local Laws are simply not the monopolistic, anticompetitive measures barred by Assurance 23. Accordingly, Complainantshave failed to state aclaim ofa violation ofAssurance 23 that merits further investigation. TheirAssurance 23 claim should be dismissed. II. COMPLAINANTSFAIL TO STATE ACLAIM OF REVENUE DIVERSION THAT MERITS FURTHERINVESTIGATION Complainants arguethatthe Townhas violated Assurance 25 by spending airport revenue to pay legal and other professional fees in order to defend the Local Laws from the many legal challengesbroughtbyNBAA and others. Complaint

**at~**45. As Complainants concede, there is
no dispute that the Town can use airport revenues to pay for legal fees. Complaint

**at~** 42; 

### see also Compliance Handbook

**at~** 15.9(d). Thus Complainants' argument rests on the theory that the Local Laws are not related to an airport purpose because they are the product of what Complainants call an "anti-airport agenda," and as such that the Town may not use airport
revenue to defend these laws. Id.

**at~~**42 & 43. This argument lacks merit and fails to state a claim ofrevenue diversionthatwarrants further investigation. First, by their very nature the Local Laws serve an airport purpose because they relate directly to the operation ofthe Airport. Complainants may not agree with the substance ofthe Local Laws, but their aversion to the adopted restrictions cannot erase the plain fact that the

10Local Laws are related to the Airport and serve a legitimate airport purpose- i.e., the regulation ofaircraftnoise. Second, the Complaint rests on a bootstrap argument that it is impermissible for the Town to use airport revenue to defend the Local Laws because Complainants have alleged that those laws are contrary to federal law. Complaint**at~~**42-43. As apreliminary matter, neither the FAA nor any court has determined that the Local Laws violate any law. More importantly, Complainants cannot conjure a violation of any sponsor assurance by simply asserting a conclusion oflaw. Third, Complainants' theory lacks any legal support. The key authority they cite, In the Matter ofCompliance with Federal Obligations by the City ofChicago, Illinois, FAA Docket No. 16-04-09, is a Notice of Investigation, not a decision document. Moreover, that case involved actions to close an airport andterminate all aeronautical activity at the airport, which is entirely different than a sponsor's effort to adopt rules for the continued use of an airport. Complainants also cite BocaAirport, Inc., d/b/a BocaAviation v. BocaRatonAirportAuthority, FAA DocketNo. 16-00-10 at 42 (April26, 2001) (Director's Determination) for the proposition that the use ofairport revenue to fund general economic development is improper. Complaint at
n. 8. General economic development is plainly not an airport purpose. See Compliance Handbook**at~** 15.13(d). But that conclusion in no way bolsters Complainants' argument that defending airport operatingrules is notan airport purpose. The Town is not aware ofany reported decision oreven informal guidance from the FAA either prohibiting an airport sponsor from using airport revenue to defend challenges to local
access restrictions, or advising them not to do so. Over the years many airport sponsors have proposed and/or implemented access restrictions that have been challenged in courts and before

IIthe FAA. The Town is not aware ofa single instance in which the FAA has advised that it was impermissible for the airport sponsor to use airport revenue to defend those restrictions

- even whenthe underlying restrictions were ultimately found to violate federal law. Ifaccepted, Complainants' theory would create anew operating realitythat would wreak havoc with the ability ofairport sponsor's ability to defend actions the sponsor takes in the best interests ofthe airport. Specifically, it is emphatically an airport purpose for a sponsorto assure compliance with federal obligations. Yet Complainants' theory would effectively hamstring an airport sponsor's ability to dojustthat because it would fundamentally undermine the sponsor's financial ability to defend itselfagainst any alleged violation ofits federal obligations, including
common claims by FBOs and other commercial tenants.5 Further, the same principle would prevent an airport sponsor from using airport revenue to develop and implement a corrective actionplanto cure any violation. Moreover, the logic ofComplainants theory extends beyond the compliance context and applies to any litigation alleging unlawful conduct by a sponsor. This would fundamentally undermine airport sponsors' ability to obtain legal counsel to defend themselves because airport sponsors are frequently accused of violating the law. In addition to "routine" legal actions involving contracts and torts, airport sponsors would be prevented from using airport revenue to defend against inverse condemnation claims, which necessarily rest on an allegation ofunlawful conduct, or politically motivated litigation seeking to change airport policy. Complainants' theory would simply prevent airport sponsors from being able to mount a professional legal defense to the myriad legal challenges airport sponsors face. And, although not directly

5 Indeed, Complainants argue that the Town may not use airport revenue to defend against this Complaint. Complaintat 'lf43.
12implicated here, this theory would all but cripple independent airport authorities who have no non-airport sources ofrevenue. There is no legal authority to support, and no principled basis upon which to accept Complainants' argument. Even when a sponsor's actions are ultimately found to violate a federal obligationorother law, such as in the inverse condemnationcontext, an airport needs the ability to use airport revenue to defend itself and seek to vindicate its conduct. To hold otherwise would place airport sponsors in an impossible position ofhaving to secure non-airport funding for any measurethatmightultimatelybe deemedunlawful. Because Complainants claim ofrevenue diversion lacks any support in the law and fails toprovide avalidbasis for further investigation, it shouldbedismissed. CONCLUSION
Forthe reasons set forth above, the Complaint should be dismissed. Respectfully submittedthis 24thday ofJune, 2015.

ElizabethVail Town Attorney Town ofEastHampton !59Pantigo Road EastHampton, NY 11937 EVail@EHamptonNY.Gov W. Eric Pilsk Catherine vanHeuven Kaplan Kirsch & Rockwell LLP I00I ConnecticutAve.,NW, Suite 800 Washington, DC 20036 epilsk@kaplankirsch.com cvanheuven@kaplankirsch.com Telephone: (202) 955-5600 Facsimile: (202) 955-5616

13CERTIFICATE OF SERVICE Ihereby certifythatIhavethis 24thday ofJune, 2015, servedthe foregoing Respondent TownofEast Hampton, New York's Memorandum ofPoints and Authorities in Support of Its Motion to Dismiss the Complaintonthe following partiesbyhand delivery atthe following addresses: Officeofthe ChiefCounsel Attn: FAA Part 16 Airport Proceedings Docket, AGC-610 FederalAviation Administration 800 Independence Avenue, SW Washington, D.C. 20591
SteveBrown ChiefOperating Officer National BusinessAviationAssociation, Inc. 1200 GStreet, NW Suite II00 Washington, D.C. 20005
Datedthis 24thday ofJune, 2015. W. Eric Pilsk

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