Opinion ID: 2976822
Heading Depth: 3
Heading Rank: 2

Heading: Flamingo Express’s claims

Text: The only two issues before us on appeal are whether the FAA erred in rejecting Flamingo Express’s claim that the City violated its federal obligations by (1) failing to approve Flamingo Express’s application seeking to operate scheduled air service with seating for 10 to 30 passengers per flight, and (2) requiring Flamingo Express to obtain $20 million in liability insurance coverage. We will address each of these issues in turn. 1. Application to operate aircraft with between 10 and 30 seats Flamingo Express argues that both the Director and the Administrator erred in concluding that the City did not violate Grant Assurance 22(a) by failing to approve the company’s permit application. Specifically, Flamingo Express points to the fact that the City has refused to even acknowledge that the application was for aircraft seating 10 to 30 passengers and has instead consistently claimed that the initial application was for aircraft with 9 seats or less. According to Flamingo Express, this blatant mischaracterization of the application is evidence that “the permit was wrongfully denied by the City.” The company also disputes the FAA’s conclusion that Flamingo Express’s service was not sufficiently “planned” to require the City to seek a Class II, rather than a Class IV, AOC. With respect to the City’s mischaracterization of Flamingo Express’s application, both the Director and the Administrator acknowledged that the City’s position on this issue was erroneous, and that the version of Flamingo Express’s application submitted by the City had been “visibly altered.” The Director explicitly stated that, contrary to the City’s contention, Flamingo Express never “agree[d] to limit its operations to only nine seats or less” and that such a limitation “has always been at the insistence of the City.” According to Flamingo Express, the Director and Administrator erred by failing to draw the proper legal conclusion from that factual finding (i.e., that its application had been “wrongfully denied”). Based on the record, Flamingo Express has reason to believe that the City engaged in inappropriate conduct to prohibit Flamingo Express from beginning the scheduled service that it had requested. The Director determined as much, noting that “information in the record supports the conclusion that the City intended to limit the air carrier service sought by Complainant.” But the problem with Flamingo Express’s argument is that it has provided no legal authority whatsoever for the proposition that the City’s actions—even if intentional—constituted a per se violation of its obligation to “make its airport available . . . for public use on reasonable terms.” See Grant Assurance § 22(a). No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 7 Rather, as the Director and the Administrator both explained, the relevant issue under FAA policy and regulations is whether Flamingo Express’s proposed service was “sufficiently realistic to be considered ‘planned,’ for the purpose of determining reasonable access.” Only under such circumstances would the City have wrongfully sought a Class IV AOC in violation of its federal obligations, because FAA policy “generally treats planned service the same as existing service.” FAA Policy 75. But the FAA does not require an airport to maintain a certain certification level on the basis of “unsubstantiated or unrealistic proposals.” FAA regulations also impose certain requirements on the service operator. Thus, before an airport is required to ensure reasonable access through its AOC classification, an operator must demonstrate that it (1) “is able to actually begin service, i.e. to have the use of necessary facilities and equipment, and have the necessary Department of Transportation and FAA authority to operate scheduled air transportation,” and (2) “has filed formal notice with the airport operator of intent to begin service within a reasonable time.” FAA Policy 75 (emphasis added). Because Flamingo Express had given notice of its intent to begin service by filing its permit application, the City would have violated its federal obligations by seeking to downgrade its AOC if Flamingo Express had been “able to actually begin service.” See id. (“The FAA has considered an operator prevented from starting service to be ‘directly and substantially affected’ by the airport’s actions, and has accepted a complaint from the operator.”). But the Director found that Flamingo Express was not able to actually begin service because it did not have a Part 121 certificate from the FAA—a necessary precondition to conducting the type of air service that it had proposed. According to the Director, Flamingo Express had also failed to “engage[] the FAA for its Part 121 certification, such as a Pre-Application Statement of Intent (PASI) and Schedule of Events (SOE) submitted to the Cincinnati FAA Flight Standards District Office (FSDO).” Flamingo Express has not challenged these factual findings, and a review of the record demonstrates that the findings are supported by substantial evidence. Moreover, both the Director and the Administrator agreed that, under FAA policy, “[f]or an applicant to be considered a realistic prospective operator necessitating action from an airport sponsor in terms of changing an existing Part 139 Airport Operating Certificate (AOC), the prospective Part 121 operator should, at a minimum, have filed its PASI and SOE with the local FAA FSDO.” Based on Flamingo Express’s failure to do so, the FAA maintains that the company “had not established ‘planned service’ for FAA purposes, and thus the City of Cincinnati had no federal obligation to accept the proposal and refrain from downgrading to a Class IV airport.” Flamingo Express, for its part, contends that “[w]hether Flamingo obtained Part 121 Certification, or contractually aligned itself with a Part 121 operator, as was its intent, it could not effectuate its plan . . . without a permit” from the City. But the Administrator addressed Flamingo Express’s contention that it intended to contract with a Part 121 operator, finding no evidence in the record to support this assertion. More fundamentally, however, Flamingo Express’s argument fails because it is at bottom an attempt to sidestep both the FAA’s policy and the agency’s factual findings. Flamingo Express essentially seeks to reverse the order in which it was required to take the steps necessary to begin operating the service that it had requested. FAA policy clearly states that certification from the FAA is essential to qualifying as planned service. See FAA Policy 75. Flamingo Express’s assertion to the contrary, without the support of any legal authority, is simply not enough to persuade us that the FAA’s interpretation of its policy on planned service was either “plainly erroneous or inconsistent with the regulation.” See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (“We must give substantial deference to an agency’s interpretation of its own regulations. Our task is not to decide which among several competing interpretations best serves the regulatory purpose.” (citations No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 8 omitted)). For these reasons, we agree with the FAA that, the City’s motivations notwithstanding, the City did not violate its federal obligations by refusing to approve Flamingo Express’s proposed scheduled service with aircraft seating 10 to 30 passengers. 2. Liability-insurance requirement Flamingo Express also challenges the FAA’s conclusion that the City’s proposed $20 million liability-insurance requirement was neither unreasonable nor unjustly discriminatory. The FAA, in response, contends that Flamingo Express has failed to “challenge any of the FAA’s determinations on point.” We agree with the FAA. The relevant findings made by the Director are that (1) the City’s $20 million coverage requirement would be reasonable for a “twin-engine turboprop seating 20 or so passengers engaged in Part 121 scheduled air service operations,” and (2) such a requirement would not be reasonable for an aircraft that seats up to 9 passengers. A review of the record demonstrates that the Director conducted significant independent investigation in determining how much insurance coverage would be reasonable for scheduled service with both a 9-seat aircraft and a 10-to-30-seat aircraft. Flamingo Express provides no evidence to contradict the Director’s findings on this score and, in any event, those findings are conclusive because they are supported by substantial evidence. Nevertheless, we again feel obliged to note that the City’s position in its negotiations with Flamingo Express was at best contradictory. The City maintained, on the one hand, that Flamingo Express was requesting 9-seat service when the company had clearly submitted an application for 10-to-30-seat service. At the same time, however, the City’s proposed liability-insurance requirement was consistent with the latter type of service and, as the Director found, “unobtainable” for the former. These inconsistencies support the inference that the City intended to prevent Flamingo Express’s proposed service, in violation of its assurance to make Lunken available “for public use on reasonable terms, and without unjust discrimination, to . . . commercial aeronautical activities offering services to the public at the airport.” See Grant Assurance 22(a). But according to the FAA, the agency “refused to find the City noncompliant for requiring the $20 million requirement for a 9-seat aircraft, because Flamingo Express’s complaint specified the fact that it wanted to conduct scheduled operations with aircraft seating less than 30 but more than 9 passengers.” Flamingo Express, therefore, was not “directly and substantially affected by the City’s insurance requirement for such an aircraft.” In other words, Flamingo Express’s own insistence on the type of service that it wished to conduct precluded a finding that the insurance requirement was unreasonable, because such a requirement would actually be reasonable for the requested service. We agree with the analysis presented by the FAA. Both the Director and the Administrator recognized that the City’s insurance requirement was inconsistent with its own position, but correctly noted that such a requirement was not actually unreasonable for the type of service being sought by Flamingo Express. The FAA’s conclusion is therefore neither inconsistent with the regulations at issue nor an abuse of the agency’s discretion. For these reasons, we decline to reverse its resolution of Flamingo Express’s claim. Finally, we note that Flamingo Express’s contention that the FAA has effectively endorsed the City’s attempts to prohibit Flamingo Express “from operating any scheduled service, even scheduled service of aircraft up to nine seats,” is a substantial exaggeration. The Administrator specifically stated that Flamingo Express could accept the City’s proposal for scheduled service of up to nine seats and that the City could not impose a $20-million-coverage requirement for such service. We also note that the FAA has consistently maintained that if good-faith efforts at informal dispute resolution fail, Flamingo Express may file a new formal complaint pursuant to 14 C.F.R. No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 9 Part 16. The FAA has thus left open the possibility of a compromise between the parties that would permit Flamingo Express to operate scheduled service using a nine-seat plane, while preventing the City from requiring an unreasonable amount of insurance for that service. We likewise hope that the City and Flamingo Express will reach a negotiated resolution that elevates the public’s interest over their own past disagreements.