Brown Transp. Co. v. City of Holland, Mich.-24 – ACRP Legal Research Digest 21

FAA Docket No:

16-05-09

Author:

Bennett, David L., Director

Author Title:

Director

Complainant(s):

Brown Transport Co.

Respondent(s):

Holland (Mich.)

Airport(s):

Tulip City Airport (BIV)

Holding:

Finding violation.

Abstract:

Complainant, Brown Transport Co. filed a complaint against Respondent, City of Holland, Michigan, which owned and operated the Tulip City Airport, alleging that some of the self-fueling requirements imposed by Respondent, namely the $1 million additional ability to pay and the $5 million liability coverage, were unreasonable and unjustly discriminatory in violation of Grant Assurance 22 and Respondent had therefore granted an exclusive right in violation of Grant Assurance 23. The Director found Respondent in violation of Grant Assurance 22.|Economic Nondiscrimination (Grant Assurance 22):|There was no conflict of interest where the Assistant City Attorney who was involved in the writing and interpretation of the fueling regulations also performed some legal work for Respondent's FBO. This potential conflict was not, per se, related to a violation of the grant assurances. (pp. 9-10).|Because an airport user was able to meet a particular requirement for use of the airport did not necessarily mean that the requirement was reasonable under the grant assurances. (p. 11).|Although the requirement for a self-fueler to carry $5 million in liability insurance was not inherently unreasonable as applied to the Complainant, who fuels a C-550 aircraft, the requirement was unreasonable if it was applied to all users wanting to self-fuel, regardless of the size of the fuel truck and the aircraft being fueled. "[T]he level of insurance, as with other self-fueling requirements, should reflect the risk of the operation being conducted." Therefore, although this requirement was not inherently inconsistent with Grant Assurance 22, Respondent should reassess the requirement. (pp. 14-15).|Respondent's $1 million "ability to pay" requirement violated Grant Assurance 22 because the amount was unreasonable. "Requiring any self-fueler to have at least $1 million set aside in pledged personal assets or a letter of credit or bond in order to self-fuel, is, on its face, unreasonable." (p. 16).|The fact that another self-fueler at the Airport was not subject to the same requirements as the Complainant, namely the $5 million liability insurance and $1 million ability to pay, was unjustly discriminatory in violation of Grant Assurance 22, even though this self-fueler chose to have the FBO fill its tanks and dispense fuel. What it chose to do is irrelevant; the fact that it had the right to self-fuel means it should be treated the same as another party who had the right to self-fuel. (p. 20).|When an airport changes its safety and environmentally related fueling requirements it does not need to wait for existing leases to expire before applying these requirements to those leases. (p. 21).|Despite being dissimilar entities, Complainant self-fueler and FBO were similarly situated with respect to fueling aircraft because Respondent's exposure to risk existed for the operation of both entities. (p. 22).|It was unjustly discriminatory in violation of Grant Assurance 22 to impose the $5 million liability insurance and $1 million ability to pay requirements on Complainant and not on the FBO, because both entities produced risk to the Airport. (p. 23).|Exclusive Rights (Grant Assurance 23):|Because the Director found that the $5 million liability insurance and $1 million ability to pay requirements violated Grant Assurance 22, it did not need to determine whether they granted an exclusive right in violation of Grant Assurance 23. (p. 24).

Index Terms:

Brown Transp. Co. v. City of Holland, Mich. -- No. 16-05-09 -- No. FAA-2005-22373