FAA Docket No. 16-09-01 Director’s Determination

UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C.

Final Dec. 17, 2009

Docket No. 16-09-01 Gary R. Ernest

COMPLAINANT

v.

Leitchfield-Grayson County Airport Board

RESPONDENT

DIRECTOR’S DETERMINATION

I. INTRODUCTION

This matter is before the Federal Aviation Ad ministration (FAA), Director of the Office of Airport Compliance and Field Operations , to investigate pursuant to the Rules of Practice for Federally Assisted Airport Enforcement Proceedings found in Title 14 Code of Federal Regulations (CFR), Part 16.

Gary R. Ernest (Complainant) filed this fo rmal Complaint pursuant to 14 CFR Part 16 against the Leitchfield-Grays on County Airport Board (Board/Respondent), which owns and operates the Grayson County Airport (A irport) in Grayson County, Kentucky. The Complainant alleges that the Re spondent is in violation of its Federal grant assurances 22,

Economic Nondiscrimination ; and 23, Exclusive Rights by allegedly denying his aeronautical access to the Airport and granting a prohibited exclusive right to others who allegedly enjoy such access. In this case, the particular airport access in question is through-the-fence access (TTF access) by which air port users taxi aircraft onto the Airport from an off-airport storage loca tion. [FAA Exhibit 1, Item 1, p. 6]

Based on the Director’s review and consideration of the evidence submitted, the administrative record designate d as FAA Exhibit 1, the releva nt facts, and pertinent law and policy, the Director conclude s, as set forth herein, that the Respondent is currently not in violation of grant assurances 22, Economic Discrimination or 23, Exclusive Rights.

II. PARTIES

Grayson Airport (Airport) is a public-use airport owned by th e Leitchfield-Grayson County Airport Board, Grayson County, Kentuck y. Grayson County Airport is a general aviation airport with a 4,000 f oot runway. [FAA Exhibit 1, Item 8] Since FY 2004, the

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FAA has financed the planning and devel opment of the Airport under the Airport Improvement Program (AIP) authorized by th e Airport and Airway Improvement Act of 1982, as amended, 49 U.S.C. § 47101, et seq. This AIP funding exceeds one million

dollars. The Board received its first AIP grant that contains the full set of grant assurances, including grant assurances 22, 23 a nd 24, in FY 2005. [FAA Exhibit 1, Item 9]

The Complainant, Gary R. Ernest resides in Saline, Michigan. [FAA Exhibit 1, Item 1, p. 2] He owns land with a hangar, near th e Airport, with a pe rmanent appurtenant nonexclusive easement for purposes of egress over and across a parcel of property lying adjacent to and west of the Airport. [FAA Exhibit 1, Item 1, p. 3]

III. PROCEDURAL HISTORY and BACKGROUND

Complainant’s Part 16 Procedural History

On March 9, 2009, Gary R. Ernest filed this Part 16 Complaint. [F AA Exhibit 1, Item 1]

On March 25, 2009, the FAA issued its Notice of Docketing. [FAA Exhibit 1, Item 2]

On March 31, 2009, the Complainant notified the FAA that he re-mailed the Complaint to the Respondent after being notified of delivery failure. [FAA Exhibit 1, Item 3] On May 4, 2009, the Complainant submitted a motion s eeking “a ruling from the Administrator deeming Respondent’s failure to file an answer as an admission of the truth of each allegation contained in the complain t.” [FAA Exhibit 1, Item 4, p. 2]

On June 23, 2009, the FAA demanded an Answer from the Respondent. [FAA Exhibit 1, Item 5]

On June 30, 2009, the Respondent filed its Answer. [FAA Exhibit 1, Item 6]

On July 11, 2009, the Complainant filed its Reply. [FAA Exhibit 1, Item 7]

The Respondent did not file a Rebuttal.

Factual Background

On November 5, 2005, the Complainant purchased a 10,000 square foot parcel of land a short distance west of the Airport for the purpose of building a hanga r (Hangar Parcel). He purchased the Hangar Parcel from John L. Madison and Shar on Madison; and Sonny Johnson and Mary Johnson for $1,800.00. [FAA Exhibit 1, Item 1, exh. 1, p. 1]

The deed to the Hangar Parcel (Hangar Pa rcel Deed) also conveyed a Non-Exclusive Easement (Madison/Johnson Easement) on prope rty between the Hangar Parcel and the Airport (Madison/Johnson Property) . [FAA Exhibit 1, Item 1, exh. 1, p. 2] The Easement

states:

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[FAA Exhibit 1, Item 1, exh. 1, p. 2]

The signatures on these documents include only those of John L. Madison, Sharon Madison, Sonny Johnson, Mary Johnson, Gary R. Ernest and the Notary Public, Cynthia Bailey. [FAA Exhibit 1, Item 1, exh. 1] The Complainant points to no other, underlying right of access to the Airport from the Madison/Johnson Easement.

In his sworn statement, the Complainant stated:

1. On November 5, 2005, I purchased a trac t of land that lies a short distance west of Grayson County Airport. The property was conveyed to me with the understanding that it would be improved and used as an aircraft hangar. The

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deed to the property also conveyed a non-exclusive easement for purposes of ingress and egress to Grayson County Airport. 2. Prior to my purchase of the property , Jim (James) Davis, Airport Manager, Grayson County Airport actively enc ouraged my purchase and use of the property as an aircraft hangar. 3. At no time until on or around June 30, 2007 1 (after my hangar was built and I had already started using the hangar), wa s I made aware that I would be required to sign a lease in order to gain access to airport facilities. 4. In fact, prior to June 30, 2007, I regul arly made use of the airport and the airport facilities. I was provided a k ey to access the FBO on the airport so I could utilize restroom and flight planning facilities. 5. I am aware of several other hangar owne rs who are also own property just off the airport, including Leon Harrison 2

.... 6. All of these hangar owners continue to enjoy the use of the airport and access to the FBO on the airport..... 8. At this point I do not know if I am th e only party that has been singled out to sign the lease I was presented on June 30, 2007. [FAA Exhibit 1, Item 1, exh. 2]

In the summer of 2007, the Board presented a draf t lease agreement to the Complainant. The Lease Agreement contains provisions which a ppear to be irrelevant or inapplicable to a Lessee not leasing real pr operty for the purpose of constructing improvements on the airport. However, some of the terms of the Lease Agreement provide some standard protections typical in use agreements at air ports. This Lease Agre ement states, in part:

1. That for and in consideration of th e covenants and agreements hereinafter set forth. Lessor does lease and Lessee does leas e that certain parcel located on the Leitchfield -Grayson County Airport, and more particularly described as follows: Taxiways; Runways to and from Lessors' Airplane Hangar; Fuel Stations; Maintenance Facilities, and Roadways for ingress and egress from Airport Road to the above-stated locations. (Hereinafter referred to as premises). 2. TO HAVE AND TO HOLD the leased pr emises for the term of one year, beginning on the 1'l day of Januar y, 2007, and ending on the 31'l day of December, 2007, inclusive, with the Lessee to have the right to renew this Lease according to the terms herein for an additional one year period by furnishing Lessor with annual payment to renew no later than thirty days prior to expiration of the first lease period.

1 Elsewhere in his Complaint, Complainant cites on or around July 30, 2007 as the date that the Complainant “was presented with a ‘Lease Agreement’ by the Leitchf ield-Grayson County Airport Board.” [FAA Exhibit 1, Item 1, p. 3] The precise date of th e presentation of the Lease is not essential. We accept that the Complainant is stating that in the summer of 2007, the Board presented the Complainant with a Lease for access to the airport, included as FAA Exhibit 1, Item 1 exh. 3.]

2 Leon Harrison identifies himsel f as Chairman of the Leitchfield-Grayson County Air Board in correspondence to the Complainant on November 8, 2007. [FAA Exhibit 1, Item 1, exh. 5]

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3. Lessee agrees to pay rentals to th e Lessor the sum of $500.00 per year for the initial term of this Lease. Said rent als shall be due and payable on January 1st for each lease year... [FAA Exhibit 1, Item 1, exh. 3]

In response, on August 13, 2007, the Complain ant wrote the Board to object to the offered Lease Agreement, stating:

The ‘Lease Agreement’ documentation r eceived from the Leitchfield-Grayson County Airport Board dated July 30 th 2007 does not reflect the proposed agreement properly for the sole purpose or arrangement for a “license”/permission agreement to acce ss my personal hangar via the existing taxiways. Instead, I would like to offer an appr opriate “license agreement” which would properly address this issue. This licens e would cover an initial term of 10 years

w/automatic renewal and maintain a mo re appropriate annual fee amount of $200.00 annually. [FAA Exhibit 1, Item 1, exh. 4]

This letter does not state th at the Madison/Johnson Easement conveyed access into the airport property or ‘through-th e-fence (TTF). Also, at this time, the Complainant did not present a draft offer of an access or license agreement to the Board. Instead, on October 26, 2007, the Complainant wrote a check to the Board in the amount of $500. The Complainant included a statement in the me mo line, “KM20 Airport & FBO Access Fee’s Pd in Full.” [FAA Exhibit 1, Item 1, exh. 6] According to the Complainant, in November 2007, Mr. Harrison, Board Chairman, returned Complainant’s $500 check. [FAA Exhibit 1, Item 1, p. 4 and Exh. 6]

On November 8, 2007, the Complainant received unsigned correspondence from Leon Harrison, Chairman, Leitchfield County Air Board, stating:

Please be advised that you have 10 days from the date of receipt of this letter to comply with the contract you received or you will be blocked from using M20 taxiways and runways. Please send on of the copys [sic] of the contract, signed & notarize along with a check w/memo to read-access fee for taxiways and runways for 2007. [FAA Exhibit 1, Item 1, exh. 5]

On December 3, 2007, Complainant’s counsel wrote to Leon Harrison, Board Chairman, informing Mr. Harrison that he represents Mr. Ernest, stating:

My client asked me to contac t you in order to sort out the issue of the "lease" he was presented several months ago. I have reviewed that draft lease. It has several fundamental problems that would need to be corrected before I could counsel Mr. Ernest to sign the document. The most problematic issue is that the lease casts Mr. Ernest as leasing pr operty on the airport's land. As I understand it, this is simply not the case. The prop erty Mr. Ernest owns is located off the

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property owned by the airport proprietor. All he is seeki ng is access to the airport from his off-airport property. [FAA Exhibit 1, Item 1, exh. 7]

Starting in July 2008, the Complainant’s couns el contacted the FAA to get guidance, present information and seek assistance in resolving the matter before filing a formal Part 16 complaint. [FAA Exhibit 1, Item 1, exh. 9] In an email to the FAA, Complainant’s

counsel also stated:

I understand that prior to filing (a formal Part 16 complaint), I need to try informal resolution facilitated throu gh the FAA. To date, the airport has ignored several requests for info rmation and attempts to settle. I need a contact FAA airports office and person so I can meet my obligations for pre-complaint resolution under FAR Sec. 16.21. 3 [FAA Exhibit 1, Item 1, exh. 8]

Complainant’s counsel included a draft License Agreement between Gary Ernest and the Board for review by the FAA on December 1, 20 08, but has not stated that it provided the License Agreement in a proposal to the Board. [FAA Exhibit 1, Item 1, exhs. 12 & 13]

The Respondent in its answer replied that th e “Board stands by the lease agreement sent to Mr. Ernest which requires the lessee to pay a $500 access fee per year for access to the Airfield”. The Respondent also advised that the “Airport is operated by an appointed Airport Board along with local citizens whom all volunteer their time”. [FAA Exhibit 1, Item 6]

IV. ISSUES

The Complainant alleges that the Respondent is in violation of its Fe deral grant assurances 22, Economic Nondiscrimination ; and 23, Exclusive Rights. However, the Complainant

does not make a concise statement of exac tly how the Board’s actions violate these Federal obligations. Rather, the Complainan t presents one list of alleged facts [FAA Exhibit 1, Item 1, pp. 2-4] as the basis for th is alleged unjust econom ic discrimination and constructive granting of an exclusive right.

The Complainant summarizes, “The Airport’s ac tions aimed at [the Complainant] violate the [grant] assurances..... Th ere are several Airport users similarly situated to [the Complainant] with off-airport hangars..., in cluding Leon Harrison, chair of the airport board.” [FAA Exhibit 1, Item 1, p. 6]

More specifically, the Complain ant characterizes the relevant grant assurances as follows:

The FAA requirements implement a congression al policy that is expressed in the Airport and Airway Improvement Act of 1982. as amended. 49 U.S.C. Sec.

3 Part 16 does not require FAA facilitated informal co mplaint resolution. Complainant’s must certify an attempt to resolve the conflict informally, but they need not involve the FAA in such attempts.

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47101 et seq. The Act provides that recipi ents of AIP grants must assure that "the airport will be available for public use on reasonable conditions and without unjust discriminati on." 49 U.S.C. Sec. 47107(a)(1). [FAA Exhibit 1, Item 1, pp. 5-6]

The FAA has also determined that an airport's unjustified prohibition or restriction of an aeronautical activity c onstitutes a violati on of the statutory prohibition on exclusive right s in the Federal Aviation Act, 49 U.S.C. Sec. 40103(e). The Act provides that "A pe rson does not have an exclusive right to use an air navigation facility on whic h Government money has been expended." [FAA Exhibit 1, Item 1, p. 5]

The Director construes this presentation in th e Complaint as an overall allegation that the Board disfavored the Complainant in a manne r that unjustly discriminates against the Complainant’s interest in TTF access to th e Airport; and that the Board’s allegedly “unjustified prohibition” 4 on the Complainant’s TTF access grants a prohibited exclusive right to others who allegedly enjoy such access. 5 [FAA Exhibit 1, Item 1, p. 5-6]

The Board provides a very limited one-page An swer, citing established FAA policy: “The Leitchfield-Grayson County Airport Board believes that FAA Order 5190.6A 6-6 substantiates the Board’s request for airfield access fee.” [FAA Exhibit 1, Item 6]

Considering the above, the FAA has determined that the following issues require analysis in order to provide a comple te review of the Respondents’ compliance with applicable Federal law and policy:

1. Whether the Board has provided more favorab le treatment to other Airport users in a manner that unjustly discriminates agains t Ernest in violatio n of Federal grant assurance 22, Economic Nondiscrimination , 49 U.S.C. § 47107(a).

2. Whether the Board’s actions with regard to the Complainant constitute the constructive granting of an exclusive right by means of an unreasonable denial of access in violation of grant assurance 23, Exclusive Rights , 49 U.S.C. § 40103(e) and 49 U.S.C. § 47107(a)(4).

4 ‘Justification’ is not the standard of compliance in the case of a denial of access. The language and standard of compliance is discussed below in the Applicable Law and Policy Section.

5 The Complainant also takes exception to an alle ged denial of nonaeronauti cal access to on-airport conveniences. The Complainant’s most concise statement with regard to this issue in his Complaint appears at paragraph 31: “To the best of Petitioners k nowledge theses off-airport hangar owners have full access to the airport FBO in addition to airport access. [sic]” [FAA Exhibit 1, Item 1, p. 6] However, in the Complainant’s sworn statement, he states, “I was prov ided a key to access the FBO on the airport so I could utilize restroom and flight planning fac ilities.” [FAA Exhibit 1, Item 1, exh. 2, p. 1] By the Complaint, it is unclear whether the Complainant can or cannot access this on-airport fac ility. It is not clear whether the facility in question is a public accommodation available to transient users, since it is locked. However, it is clear from the record that the Complain ant cannot taxi his aircraft from his hangar to the on-airport facility.

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V. APPLICABLE FEDERAL LAW AND FAA POLICY

The Federal role in civil aviation has been augmented by various legislative actions that authorize programs for providing Federal funds to local communities for the development of airport facilities. In each such program, the airport sponsor assumes certain obligations to maintain and operate its airport facilities safely and efficiently and in accordance with specified conditions. Commitments assumed by airport sponsors in grant agreements are important factors in maintaining a high degree of safety and efficiency in airport design, construction, operation and maintenance, as well as ensuring the public reasonable

aeronautical access.

Title 49 U.S.C. § 47101, et seq ., provides for Federal airpor t financial assistance for the development of public-use airports unde r the Airport Improvement Program (AIP) established by the Airport and Airway Impr ovement Act of 1982, as amended. Title 49 U.S.C. § 47107, et seq ., sets forth assurances to which an airport sponsor agrees as a condition of receiving Federal financial assist ance. Upon acceptance of an AIP grant, the assurances become a binding contractual oblig ation between the airport sponsor and the Federal government. The assurances made by airport sponsors in AIP grant agreements are important factors in maintaini ng a viable national airport system.

Airport Sponsor Assurances

As a condition precedent to providing airport development assistance under the Airport Improvement Program, 49 U.S.C. § 47107, et seq. , the Secretary of Transportation and, by extension, the FAA must receive certain assurances from the airport sponsor. Title 49 U.S.C. § 47107(a) sets forth the statutory sponsorship requirements to which an airport sponsor receiving Federal financ ial assistance must agree.

The FAA has a statutory mandate to ensure that airport owners comply with these sponsor

assurances. 6 FAA Order 5190.6B, Airport Compliance Manual (FAA Order 5190.6B), issued on September 30, 2009, provides the policies and procedures to be followed by the FAA in carrying out its legislatively mandate d functions related to Federally obligated airport owners' compliance with their spons or assurances. The FAA considers it inappropriate to provide Fe deral assistance for improveme nts to airports where the benefits of such improvements will not be fully realized due to inherent restrictions on aeronautical activities. The following grant assu rances are relevant to this Complaint:

Grant Assurance 5, Preserving Rights and Powers

Grant Assurance 5, Preserving Rights and Powers , implements the provisions of Title 49 U.S.C. § 47107, and requires, in pertinent part , that the sponsor of a Federally obligated airport:

6 See

, e.g. , the Federal Aviation Act of 1958, as amended an d recodified, Title 49 U.S.C. §§ 40101, 40113,

40114, 46101, 46104, 46105, 46106, 46110; and th e Airport and Airway Improvement Act of 1982, as amended and recodified, Title 49 U.S.C. §§ 4710 5(d), 47106(d), 47107(k), 47 107(l), 47111(d), 47122

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“...will not take or permit any action which w ould operate to deprive it of any of the rights and powers necessary to perform any or all of the terms, conditions, and assurances in the grant agreement without the written approval of the Secretary, and will act promptly to ac quire, extinguish or modify any outstanding rights or claims of right of others which would in terfere with such performance by the sponsor. This shall be done in a manner acceptable to the Secretary.”

Grant Assurance 22, Economic Nondiscrimination

The owner of any airport developed with Federa l grant assistance is required to operate the airport for the use and be nefit of the public. Fe deral grant assurance 22, Economic

Nondiscrimination , (Assurance 22) deals wi th both the reasonable ness of airport access and the prohibition of adopting unjustly disc riminatory conditions as a potential for limiting access. Assurance 22 of the prescr ibed sponsor assurances implements the provisions of 49 U.S.C. § 47107( a)(1) through (6), and requ ires, in pertinent part:

[The airport owner or sponsor] will make the airport available as an airport for public use on reasonable terms and without unj ust discrimination to all types, kinds and classes of aeronautical activities, in cluding commercial aeronautical activities offering services to the public at the airport. [Assurance 22(a)]

The sponsor may establish such reas onable, and not unjustl y discriminatory, conditions to be met by all users of the ai rport as may be necessary for the safe and efficient operation of the airport. [Assurance 22 (h)]

Subsection (h) qualifies subsection (a).

Grant Assurance 23, Exclusive Rights

Federal grant assurance 23, Exclusive Rights , (Assurance 23) implemen ts the provisions of 49 U.S.C. §§ 40103(e) and 47107(a)(4), and requir es, in pertinent part , that the owner or sponsor of a Federally obligated airport:

...will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aer onautical services to the public.... It further agrees that it will not, either directly or indirec tly, grant or permit any person, firm, or corporation, the exclusive right at the ai rport to conduct any aeronautical activities. [Assurance 23]

While public-use airports may impose qualifications and minimum standards upon those who engage in aeronautical activ ities, FAA has taken the posit ion that the application of any unreasonable requirement or any standard that is applied in an unjustly discriminatory manner may constitute the constructive grant of an exclusive right. Courts have found the grant of an exclusive right where a significant burden has been placed on one competitor that is not placed on another. [ See e.g. Pompano Beach v FAA , 774 F2d 1529 (11 th Cir, 1985)]

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The FAA has updated exclusive rights guida nce in FAA Advisory Circular 150/5190-6 Exclusive Rights at Federa lly-Obligated Airports, January 4, 2007, stating:

An exclusive rights violation can occur through the use of leases where, for example, all the available airport l and and/or facilities suitable fo r aeronautical activities are leased to a single aeronau tical service provider who cannot put it into productive use within a reasonable period of time, th ereby denying other qualified parties the opportunity to compete to be an aeronautic al service provider at the airport. An airport sponsor’s refusal to permit a si ngle FBO to expand based on the sponsor’s desire to open the airport to competition is not a violation of the grant assurances. Additionally, an airport sponsor may exclude an incumbent FBO from participating under a competitive solicitati on in order to bring a second FBO onto the airport to create a more competitive environment. [Exclusive Rights AC, Section 1.3(b)(3)]

Grant Assurance 24, Fee and Rental Structure

Grant assurance 24, Fee and Rental Structure , addresses fees the ow ner or sponsor levies on airport users in exchange for th e services the ai rport provides.

Title 49 U.S.C. § 47107(a)(13) requires, in per tinent part, that the owner or sponsor of a Federally obligated airport “will maintain a sc hedule of charges for use of facilities and services at the airport that will make the airport as self-sustain ing as possible under the circumstances existing at the airport.”

Grant assurance 24 satisfies the requirements of § 47107(a)(13). It provides, in pertinent part, that the owner or sponsor of a Federally-obligated air port agrees to establish a fee and rental structure that will make the airp ort as self-sustaining as possible under the circumstances existing at the particular airpor t, taking into account such factors as the volume of traffic and economy of collection. This sponsor will maintain a fee and rental

structure consistent with assurances 22, Economic Nondiscrimination , and 23, Exclusive Rights. The intent of the assurance is for the airport operator to charge fees that are

sufficient to cover as much of th e airport’s costs as is feasible.

Airport Agreements Granting “Through-the-Fence” Access

An agreement that permits access to the airfie ld by aircraft based on land adjacent to, but not a part of, the airport property has been referred to as a “through-the-fence'' operation. “Through-the-fence” arrangements can place an encumbrance upon the airport property and reduce the airport’s ability to meet its fede ral obligations. As a general principle, the FAA does not support agreements that grant acc ess to the public la nding area by aircraft stored and serviced offsite on adjacent prope rty. Under no circumstances is the FAA to support any “through-the-fence” agreement associ ated with residential use since that action will be inconsistent with the federal obligation to ensure compatible land use adjacent to the airport.

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The federal obligation to make an airport available for the use and benefit of the public does not impose any requirement to permit acces s by aircraft from adjacent property. The existence of such an arrangement c ould conflict with the sponsor’s federal obligations unless the sponsor re tains the legal right to require the off-site property owner or occupant to conform in all respects to the requirements of a ny existing or proposed
grant agreement.

The sponsor is entitled to seek recovery of capital and operating costs of providing a public use airfield. The deve lopment of aeronautical enterp rises on land off airport and not controlled by the sponsor can result in an economic competitive advantage for the “through-the-fence” operator to the detriment of on-airport tenants. To equalize this imbalance, the sponsor should obtain from any of f-base enterprise or entity a fair return for its use of the airfield by assessing access fees from those entities having “through-thefence” access. For example, if the airport sponsor charges $100 per month for a singleengine aircraft tie-down on the airport to pa y for the costs of airport operation, then any other single-engine aircraft operator using the airport “thr ough-the- fence” should be charged no less than a similar fee. The same is true for the ground lease on a privately owned hangar and the fees charged to “through-the-fence” operators with a hangar off the airport. The airport sponsor must not discri minate against those aeronautical users within the airport. NOTE: “Through-the-fence” ope rators are not protected by the grant assurances. The airport sponsor may assess any level of fee it deems appropriate for “through-the-fence” operators so long as that f ee is not less than the comparable fee paid by on-airport tenants. See F AA Order 5190.6B, Section 12-7.

The FAA Airport Compliance Program

The FAA discharges its responsibilities for en suring airport owners’ compliance with their Federal obligations through its Airport Compliance Program. The FAA’s airport compliance efforts are based on the contractual obligations an airport owner accepts when receiving Federal grant funds or the transfer of Federal property for airport purposes. These obligations are incorporated in grant agreements and instruments of conveyance in order to protect the public’s interest in ci vil aviation and to en sure compliance with

Federal law.

The FAA Airport Compliance Program is designed to ensure the availability of a national system of safe and properly maintained public-u se airports operated in a manner consistent with the airport owners ’ Federal obligations and the public’s investment in civil aviation.

The Airport Compliance Program does not control or direct the operation of airports. Rather, it monitors the administration of the valuable rights pledged by airport sponsors to the people of the United States in exchange for monetary grants and donations of Federal property to ensure that the public interest is being served. FAA Order 5190.6B sets forth policies and procedures for the FAA Airpor t Compliance Program. The Order is not regulatory and is not controlling with regard to airport sponsor conduct. Rather, it establishes the policies and pr ocedures to be followed by FAA personnel in carrying out the FAA’s responsibilities for ensuring airport compliance. It provides basic guidance for

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FAA personnel in interpreting and administ ering the various c ontinuing commitments made to the United States by airport owners as a condition of receiving a grant of Federal funds or the conveyance of Federal property fo r airport purposes. Th e Order analyzes the various obligations set forth in the standard airport sponsor assurances, addresses the nature of those assurances, addresses the appl ication of those assurances in the operation of public-use airports, and f acilitates interpreta tion of the assurances by FAA personnel.

The FAA Compliance Program is designed to achieve voluntary compliance with Federal obligations accepted by owners a nd/or operators of public-use airports developed with FAA-administered assistance. Therefore, in addressing allegations of noncompliance, the FAA will make a determination as to whether an airport sponsor is currently in compliance with the applicable Federal obliga tions. Consequently, the FAA will consider the successful action by the ai rport to cure any alleged or potential past violation of applicable Federal obligation to be grounds for dismissal of such allegations. [ See e.g. Wilson Air Center v. Memphis a nd Shelby County Airport Authority , FAA Docket No. 16-99-10, (August 30, 2001) (Final Decision and Order)]

Enforcement procedures regarding airpor t compliance matters may be found at FAA Rules of Practice for Federally Assisted Airport Enforcement Proceedings (14 CFR Part 16). These enforcement procedures were publis hed in the Federal Register (61 FR 53998, October 16, 1996) and became effective on December 16, 1996.

VI. ANALYSIS AND DISCUSSIO N

This case is about the Complainant’s acquisiti on of rights from a non-airport, third party to store and taxi his aircraft on certain pr operty adjacent to the Airport and the Airport Board’s subsequent blocking of his TTF access to the Airport. The Complainant states, in a sworn statement, that the Airport manage r “actively encouraged my purchase and use of the property as an airc raft hangar.” [FAA Exhibit 1, Item 1, exh. 2, p. 1] The Complainant does not represent this as an unw ritten verbal contract with the Board, nor does the Complainant present any evidence of his due diligence beyond this verbal encouragement. Rather, the Complainant is relying on the Board’s grant assurances 22 and 23 to compel the Board to grant Compla inant’s TTF access to the Airport because the Board has allegedly granted such TTF access to others. 7

Before addressing the allegedly discriminato ry treatment, alleged unjustified prohibition or alleged constructive granting of an exclus ive right to other users, we discuss the

7 In Penobscot Air Service v. Knox County , FAA Docket No. 16-97-04 (September 25, 1997) (Director’s Determination) ( Penobscot ), the FAA stated: “The purpose of the grant assurances is to protect the public interest in the operation of Federally obligated airports. The purpose is not to provide alternative or supplemental rights to those normally available to comme rcial tenants in disputes with their landlords, i.e. negotiation or commercial litigation under applicable state and local laws....” [ Penobscot at page 24; decision upheld on appeal, Penobscot Air Service v. FAA, 164 F3d 713 (1 st Cir., 1999) ] The lack of private right of action as found in Penobscot is pr udently applied to noncommercial users, as well as

commercial ones.

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reasonability of an airport sponsor limiting, mitigating or eliminating TTF access to its airport.

One of the key fundamental principles at issue here is the proprietary rights of an airport sponsor. Federal obligations limit a sponsor’s proprietary rights, but do not eliminate them. [ See, Kent J. Ashton and Jacquelin R. Ashton v. City of Concord, North Carolina

, FAA Docket No. 16-02-01 (Director’s Dete rmination Issued August 22, 2003) (Final Agency Decision Issued February 27, 2004) Ashton III , DD, p. 27]

One example of where an airport sponsor may ex ercise its proprietary rights is to protect itself as a going concern by limiting, mitigati ng or eliminating aeronautical access from adjacent off-airport property ‘through-the- fence.’ These actions against TTF access preserve an airport sponsor’s ability to char ge fees and leases for on-airport uses and operate in a self-sustaini ng manner consistent with the grant assurances.

The FAA has been clear on its position regard ing TTF access. Specifically, in JetAway v

Montrose , FAA Docket No. 16-06-01 (Director’s Determination) (November 6, 2006) (JetAway I) , the Director stated:

... the Federal obligation to make an airport available for the use and benefit of the public does not impose any requirement to permit access by ai rcraft from adjacent property and the airport sponsor may, from FAA’s perspective, simply deny “through-the-fence” ac cess if it so chooses. [JetAway I, DD, p. 13] [ See Also, JetAway v. Montrose II, FAA Docket No. 16-08-01 (Director’s Determination) (July 2, 2009) JetAway II ]

In addition to the proprietary rights and pow ers reserved to an airport owner, grant assurance 5, Preserving Rights and Powers , prohibits the airport sponsor from giving away rights and powers it needs to control and operate the ai rport in a manner consistent with its grant assurances. It obligates the s ponsor to retain financial and legal control of airport property to ensure the airport’s cont inued operation as an ai rport. [JetAway II, DD, p. 21] Because TTF access may undermine a spons or’s ability to be as financially selfsustaining as possible, continui ng to grant TTF access may cede a right or power to adhere to grant assurance 24, Fee and Rental Structure . Retaining revenue to the airport account by requiring based-aircraft to be stored on the airport in leased facilities is a common

method to ensure financial se lf-sustainability.

Issue 1

Whether the Board has provided more favorable treatment to other Airport users in a manner that unjustly discriminates against the Complainant in violation of Federal grant assurance 22, Economic Nondiscrimination , 49 U.S.C. § 47107(a).

FAA’s long standing policy regarding TTF access is that off-airport users are not protected by the grant as surances. In JetAway I , the FAA stated, “Users having access to the airport under a “through- the-fence” agreement are not protected by the sponsor’s

Page 13 of 20FAA Docket No. 16-09-01 Director’s Determination

obligations to the FAA.” [JetAway I , DD, p. 20, fn. 169] Likewise in Carey/Davenport v. Afton-Lincoln County Municipal Airport Joint Powers Board , FAA Docket No. 16-06-06 (January 19, 2007) (Director’s Determination) [Carey ], the FAA stated, “through-thefence users are not protected by the grant assurances.” [Carey , DD, p. 43] These precedents follow long-standing FAA guidance found in both FAA Order 5190-6A, Airport Compliance Requirements (FAA Order 5190.6A), issued on October 2, 1989 and its recent replacement, FAA Order 5190-6B, Airport Compliance Manual , issued September 30, 2009. FAA Order 5190-6A states, “The obligation to make an airport available for the use and benefit of the public does not impose any requirement to permit access by aircraft from adjacent property.” [FAA Order 5190.6A, sec. 6-6a, p. 44] The replacement FAA Order 5190-6B con tinues this policy, re-stating:

The federal obligation to make an airport available for the us e and benefit of the public does not impose any requirement to permit access by ai rcraft from adjacent

property

. [FAA Order 5190.6B, sec. 12-7a]

Thus, through-the-fence users are not prot ected by the unjust economic discrimination provisions of grant assurance 22. Furthermor e, in this case, the Complainant has not acquired TTF access from the Board. The Complainant has not stated that he has sought the exercise of any such property right to enter the Airport fr om the Madison/Johnson Easement in state court. Rather, it appear s that the Complainant is relying on FAA policy and the Board’s grant assurances to force the Board to grant access at the location of his

Madison/Johnson Easement. This is in dir ect opposition with FAA’s long-standing policy questioning the wisdom of permitting TTF access and the applicability of the grant assurances with regard to TTF access. Finally , an airport sponsor’s Exhibit A attachment to its grant agreements defines the limits of ai rport property that is su bject to the force of the grant assurances.

Despite the inapplicability of grant assurance 22 to TTF access, we address the Complainant’s allegations. The Complainant summarizes, “The Airport’s actions aimed at [the Complainant] violate the [grant] assu rances..... There are se veral Airport users similarly situated to [the Complainant] with off-airport hangars..., including Leon Harrison, chair of the airport board.” [FAA Exhibit 1, Item 1, p. 6]

In addition to the Board’s attempts to improve its business practices by acting to limit, mitigate or eliminate TTF access, the Board states that the allegedly preferred parties differ from the Complainant with regard to the performance of in-kind services. The Board answers:

The Airport Board has agreed that Mr. Erne st may perform in-kind services which equate to the yearly access fee (which is at the discretion of the Airport Board) for the betterment of the airport facilities in lieu of the access fee as other hangar

owners do. The in-kind servic es include but are not limited to mowing, maintenance, donation of adjacent property, etc. and must be approved by the Airport Board. [FAA Exhibit 1, Item 6]

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The Complainant contends that the Respondent ’s position further supports “Mr. Ernest’s complaint that he’s been singled out with th e lease presented to him by the Airport Board. The Airport Board fails to provide any eviden ce that any similarly si tuated Airport users actually provide any bartered services in exchange for access to the Airport.” [FAA Exhibit 1, Item 7] The Complainant contends in his Reply that he is the only Airport user now required to pay fees to gain access to the Airport fr om his off-airport hangar.

In any case, the Complainant has not stated th at he has agreed to provide personal in-kind services to the Board, nor has the Complain ant donated property. Also, the Complainant identifies himself as residing in Michiga n. The above quote from the Board’s Answer reveals a casual business practice that is more suitable to a non-ob ligated airport. A transition from such casual practices to a state of more formalized business relationships is common in situations, such as this, where a small airport sponsor initially becomes obligated to the Federal government. 8 These transitions can be difficult. However, it is critical that airport sponso r’s understand their Federal oblig ations and be responsive to reasonable FAA requests, including those arising during the course of a Part 16 proceeding. 9

This discussion of how the Complainant may not be similarly-situated to allegedly preferred airport users is sepa rate from the parallel conclusion that TTF access is not protected by the grant assu rances, including the grant assurance prohibiting unjust

economic discrimination.

The Complainant is due the consideration of any other seeker of a leasehold on the Airport, and is due the consideration of any ot her seeker of transient-use of the Airport. The Complainant has presented no evidence or argument that the Bo ard is prohibiting the Complainant from seeking any kind of leas ehold on the Airport, or is in any way disfavoring the Complainant’s use of the Airport as a transient user. 10

Also, the Board has valid reasons to exercise more care before entering into TTF access agreements, since the Board was entering in to a new relationship with the Federal

8 The Director addressed an airport sponsor’s casual bus iness practices in a recent Part 16 decision. The Director advised the sponsor that a casual approach to airport management erodes the sponsor’s ability to establish a program to address its respective grant obligations and effectively implement the program and that a ceding of the sponsor’s ability to preserve its rights and powers occurs. [See Warbirds v. Sumner County , FAA Docket No. 16-07-16, (Director’s Determination) (February 27, 2009)]

9 See FAA Exhibit 1, Items 2 and 5.

10 The Complainant fails to clearly allege a violation of a grant assurance with regard to the key to the onairport facility, which he characterizes as an FBO. [FAA Exhibit 1, Item 1, exh. 2, p. 1] As stated above, the Complainant states that he does possess a key to th e restroom and flight planni ng facility. [FAA Exhibit 1, Item 1, exh. 2, p. 1] The Board answers, “Access keys to the administrative building are limited to

individuals at the discretion of the Airport Board. Not all hangar owners have access keys to the administrative building nor do all Airport Board Memb ers.” [FAA Exhibit 1, It em 6] The Complainant notes in his reply that the “facility in question is the only restroom facility provided at the Airport.” [FAA Exhibit 1, Item 7] It would be imprudent for the Board to distribute keys to an FBO or administrative building to all transient users of the Airport. The Complainant has not established that the facility is a public accommodation, or that it is aeronautical in nature. Finally, the alleged preference to others appears

di minimis

.

Page 15 of 20FAA Docket No. 16-09-01 Director’s Determination

government at roughly the same time. 11 With regard to allegations of unjust economic

discrimination the Director has stated:

The FAA has acknowledged that several fa ctors can distinguish parties that a sponsor can justly treat diff erently, without violating its Federal obligations. Such factors may [include] ... the enlistment of prudent business practices that may change over time. [Gate 9 v. De Kalb County , FAA Docket No. 16-05-13, (Director’s Determination) (February 1, 2006), p. 11]

No grant assurance requires an airport sponsor to perpetuate poor bus iness practices from the past into the future. 12 The Associate Administrator stated, “ airport sponsors may change lease terms, rates, and conditions of occupancy in order to balance the various legitimate interests of the public, including improved business practices.” [Rick Aviation v Penins ula Airport Commission, FAA Docket No. 16-05-08 (Final Agency Decision) (November 6, 2007), p. 2] (Rick ) When an airport sponsor is in a ‘p ioneering phase’ of development, such as the Board having only received its first Federal grant in FY 2004, the F AA expects the sponsor to transition from past casual practices suitable for a non-obligated airpor t to future formal business-like practices suitable for a Federally obligated airport. One wa y to do this is to start to limit, mitigate or eliminate TTF access and to profes sionalize its business practices.

Considering (1) the above rational basis for the Bo ard’s practice; and (2) the fact that airport sponsors may modify lease terms, rates and condi tions of occupancy in order to more nearly balance the various legitimate interests of th e public, including impr oved business practices; 13
and (3) most importantly, the fact that gran t assurance 22 does not protect TTF access, the

Director cannot conclude that the Board has unjustly discriminated against the Complainant by declining to grant TTF access.

11 FAA grant records indicate that the Board signed its fi rst planning grant, with limited Federal assurances, on July 19, 2004. The Board signed its first improv ement grant, with full Federal assurances, including grant assurances 22, 23 and 24, on August 24, 2005. [FAA Exhibit 1, Item 9]As such, the Board would have been becoming familiar with the FAA requ irements and FAA’s gene ral objection to TTF access during this time.

12 The FAA recognizes that a sponsor can pursue agreements with more recent leaseholders that more nearly serve the interests of the public and provide for more professional business practices. See Penobscot

Air Service . Moreover, a Complainant does not establish a per se violation of Assurance 22 (unjust discrimination) simply by showing differences between two parties. The FAA has found that differences in lease terms executed at different points in time can be justified by the market conditions present at the time of lease execution. [ See , FAA Docket No. 16-99-09, Wilson Air Center, LLC v. Memphis-Shelby County Airport Authority , Final Decision and Order (August 30, 2001), hereinafter, Wilson ] Additionally, FAA policy provides that an airport sponsor may quite properly increase its standards from time to time in order to ensure a higher quality of service to the public. [ See , FAA Order 5190.6A, Sec. 3-17(c)] In Wilson , the

FAA held that differences in lease terms that result from an airport sponsor improving its business practice

does not result in a per se violation of Assurance 22. [ Wilson , p. 17] That said, an airport sponsor that increases its standards may be required to apply those same standards to previously executed leases at the time those leases are modified or renewed. [ See , FAA Docket No. 16-01-10, Maxim United, LLC. v. Board of County Commissioners of Jefferson County, Colorado , Final Decision of Director’s Determination (April 2, 2002)]

13 See Rick, DD, p. 29.

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Consequently, the Director finds that the Boar d is not in violation of grant assurance 22,

Economic Nondiscrimination

.

Issue 2

Whether the Board’s actions with regard to the Complainant constitute the constructive granting of an exclusive right by means of an unreasonable denial of access in violation of grant assurance 23, Exclusive Rights , 49 U.S.C. § 40103(e) and 49 U.S.C. § 47107(a)(4).

We have already discussed the allegation of unjust economic discrimination under grant assurance 22, above. Here, we discuss the quest ion of the denial of reasonable access in a manner to constructively grant an exclusive ri ght. In the past, the FAA has found that unreasonable restrictions, delay, or unjust di scrimination could constructively grant a prohibited exclusive right. Generally, however , the Director consid ers these allegations under grant assurance 22 as a test for unreasonab le terms, as a prerequisite for the finding of a constructive grant of an exclusive right. 14

The Complainant styles his allegation as a c onstructive granting of an exclusive right, stating: “The FAA has also determined th at an airport’s unjus tified prohibition or restriction of an aeronautical activity constitu tes a violation of the statutory prohibition on the exclusive rights....” [FAA Exhibit 1, Item 1, p. 5]

The Board answers that its restriction, or in this case, its insistence on a lease with the Complainant and a $500 per year access fee, is not unjustified, stating, “The LeitchfieldGrayson County Airport Board believes that FAA Order 5190-6A 6-6 substantiates the Board’s request for airfield access fee.” [FAA Exhibit 1, Item 6]

The Board’s offered reason for agreeing to the Complainant’s specific TTF access by means of a lease agreement and a $500 per ye ar access fee is supporte d by the prior longstanding guidance in FAA Order 5190-6A, and restated and strengthened by the FAA’s replacement guidance FAA Order 5190-6B. Sp ecifically, the reasons cited by the Board include the following excerpt:

The obligation to make an airport available for the use and benefit of the public does not impose any requirement to permit acce ss by aircraft from adjacent property..... The owner of an airport is entitled to seek recovery of initial and continuing costs of providing a public use landing area. [FAA Order 5190-6A, sec. 6-6]

This reference to cost recovery refers directly to the Board’s obligati on to be a financially self-sustaining as possible under its grant assurance 24, Fee and Rental Structure . Grant assurance 24 obligates the airport sponsor to maintain a fee and rental structure that will make the airport as self-susta ining as possible under the part icular circumstances existing at that airport. [ See Applicable Law and Policy , above] With regard to the Complainant’s contribution to the Airport’s financial self-sustainability, the Complainant states:

14 See Self Serve Pumps v Chicago Executive Airport , FAA Docket No. 16-07-02 (Director’s Determination Issued March 17, 2008) p. 28.

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On November 5, 2005, I purchased a tract of land that lies a short distance west of Grayson County Airport.....At no tim e until on or around June 30, 2007 (after my hangar was built and I had already started using the hangar), was I made aware that I would be required to sign a lease in order to gain access to airport facilities. In fact, prior to June 30, 2007, I regularly made use of the airport and the airport facilities. [FAA Exhibit 1, Item 1, exh. 2, p. 1]

From the Complainant’s own statement, it a ppears that the Complainant believed he was obtaining TTF access to the Airport without any stated compensation to the Airport account. The Complainant has made no claim of providing any in-kind services to the benefit of the Airport or Bo ard or donating any property.

The Complainant rebuts the Board’s stated justifi cation, stating:

In its answer, the Airport Board attempts to justify its actions based on FAA Order 5190.6A 6-6. However, the Airport Board’s re liance on this authority is misguided. The cited section of FAA Order 5190.6A addr esses through-the-fence operators.

Section 6-6 d. indicates that the FAA recommends that airport owners refrain from entering into arrangements where access to airports can be gained from adjacent property. However, the Airport Board fails to consider the fact that an easement was granted in this case. [FAA Exhibit 1, Item 7, pp. 4-5]

The Director disagrees with both the Complainant’s characterization of the Madison/Johnson Easement and the applicability of such easement to this proceeding. The Complainant appears to argue that the easement that was included with his purchase of the parcel provides him with an automatic ri ght to access the airport. This is not the case. Here, this easement appears only to provide him with access across the adjacent property up to the airport boundary – but no furthe r. The Director no tes that the easement conveyance has an express termination clause . This clause states, “In the event the property subject to this ease ment should ever be conveyed to the Leitchfield-Grayson County Airport Board, this easement shall te rminate.” [FAA Exhibit 1, Item 1, exh. 1] While no evidence has been submitted to show that the the Board acquired the parcel subject to the easement, the facts would not change – the Complainant would still appear to only have access up to the relocated airport boundary, i mmediately adjacent to the Complainant’s Hangar Parcel, and no further.

In JetAway II , the Director stated that state cour ts should properly determine the legal effect and significance of an easement or othe r TTF property right obtained by agreement. In furtherance of this, the Director conclude d that the TTF operato r’s “rights to conduct

commercial activities that involve the transit of aircraft 'through-the-fence' of the Airport may be protected by the Off- Airport Agreement, but not the County's Federal grant assurance.” [ See JetAway II , DD p. 20] This precedent applies to non-commercial TTF access as well. Unlike in JetAway II , there has been no showing that the Board approved or executed an easement granting airport acce ss to the Complainant from his off-airport parcel. Furthermore, the Complainant does not present any information that he has

Page 18 of 20FAA Docket No. 16-09-01 Director’s Determination

defended any legal right to gain TTF access in local courts, or that any court of proper jurisdiction has ordered such access.

The Board’s offered justification for an ag reement and access fee is reasonable and consistent with long-standing FAA guidance and precedent on the subject of TTF

access. 15 As stated in FAA Order 5190.6B, the FAA recognizes that an airport sponsor is entitled to seek recovery of capital and operating costs of pr oviding a public use airfield. The development of aeronautical enterprises on land off airport and not controlled by the sponsor can result in an economic comp etitive advantage for the “through-the-fence” operator to the detriment of on- airport tenants. To equalize this imbalance, the sponsor should obtain from any off-base enterprise or en tity a fair return for its use of the airfield by assessing access fees from those entities ha ving “through-the-fence” access. In this case, the Board has set the access fee at $500 or suitable in-kind services. 16

The Director notes that while the Board’s lease agreement format may be overly broad when granting airport access rights rather than a leasehold, the Respondent is not at fault by being too demanding upon the Complainant. 17 To sustain an alleged unreasonable application would require the Board to actually apply an inapplicable term. This has not

occurred. The Director has taken in consideration that (1) the Complainant is not alleging that the Board has been too permi ssive with TTF access; (2) this is a newly obligated airport sponsor; and (3) the Board is attempting to move in a more documented, formal business-like direction with regard to its relationship to its users. Accordingly, the

Director declines to find fault with the issu e of the Board’s casual business practices in this proceeding, but does expect the Board to work to understand its Federal obligations and to conduct its airport operations in a more business-like manner.

Considering the above, the Director finds that the Board is not in violation of grant assurance 23, Exclusive Rights

.

VII. FINDINGS and CONCLUSIONS

It is again important to note th at as a general principal, th e FAA does not support agreements that grant access to the public landing area by ai rcraft stored off-site on adjacent property. Through-the-fence arrangements are disfavored by the FAA and can place an encumbrance upon the airport property. Thus re ducing the airport’s ability to meet its Federal obligations. Accordingly, under its grant assurances, the Bo ard is free to act to limit, mitigate, or eliminate the effects of TTF access. [ See JetAway II, DD]

15 The FAA recognizes that the Complainant tries to distin guish this situation from prior issues in which the FAA has opposed residential TTF access. [FAA Exhibit 1, Item 7, p. 5, fn. 2] However, the policy and precedent with regard to TTF access is applicable to residential and non-residential; commercial and noncommercial. The FAA is more opposed to commerc ial or residential TTF access than simple hangar storage TTF access. But it remains oppose d for the reasons discussed herein.

16 The airport sponsor may assess any level of fee it deems appropriate fo r “through-the-fence” operators so long as that fee is not less than the comparable fee paid by on-airport tenants. [See FAA Order 5190.6B]

17 It is not uncommon for inapplicable lease provisions to be stricken during the course of reasonable lease negotiations.

Page 19 of 20FAA Docket No. 16-09-01 Director’s Determination

In a time of transition, such as here, the standard of compliance does not require that airport sponsors enforce standa rds so rigidly as to require identical tone and posture toward all competitors that have different records and history with the sponsor. [See Rick Aviation v Peninsula Airport Commission , FAA Docket No. 16-05-18 (May 8, 2007) (Director’s Determination) p. 16] However, th e Board should continue to professionalize and formalize its business practices, as well as to increase the Board’s ability to be as financially self-sustaining as possible.

Upon consideration of the submissions and re sponses by the parties, the record herein, applicable law and policy, and for the reasons stated above, the Di rector of the FAA Office of Airport Compliance and Field Operatio ns finds and concludes that the Board is not currently in violation of grant assurance 22, Economic Nondiscrimination; or 23, Exclusive Rights.

ORDER

Accordingly, it is ordered that:

1. The Complaint is dismissed.

2. All Motions not expressly granted in this Determination are denied.

RIGHT OF APPEAL

This Director’s Determination, FAA Dock et No. 16-09-01, is an initial agency determination and does not constitute a final ag ency decision and order subject to judicial review. [14 CFR § 16.247(b)(2)] A party to this proceeding adversely affected by the Director’s Determination may appeal the in itial determination to the FAA Associate Administrator for Airports pursuant to 14 CF R § 16.33(b) within thir ty (30) days after

service of the Director’s Determination.

Date: December 17, 2009

Randall S. Fiertz Director, Office of Airport Compliance and Field Operations

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