Michael Pelzer and Pegasus Parachuting Services v. State of Michigan – No. 16-16-05
FAA Docket No:
FAA Docket No. 16-16-05
Author:
Kevin C. Willis, Director, Office of Airport Compliance and Management Analysis
Complainant(s):
Michael Pelzer; Pegasus Parachuting ServicesRespondent(s):
State of MichiganAirport(s):
Romeo State (D98)
Holding:
No Violation of Grant Assurance 5, Preserving Rights and Powers, or Grant Assurance 23, Exclusive Rights; Violation of Grant Assurance 22, Economic Nondiscrimination.Abstract:
Complainant contacted Airport Management about setting up a commercial skydiving operation and a PDZ—Parachute Landing Area. However, the Complainant alleges that the Sponsor violated Grant Assurance 5, Preserving Rights and Powers, by permitting the Airport Manager to employ processes and procedures for review of aeronautical service that lacked transparency and acted as a deterrent to new aeronautical tenants. (p. 12.) Additionally, the Complainant alleged that its skydiving business was effectively denied by the sponsor, in violation of Grant Assurance 23, because “it’s airport management company, has implemented a de facto policy of prohibiting skydiving and implanted it through continuously imposing new barriers, conditions, and pricing structures and refusal to live up to agreement reached in face-to-face meetings.” (p. 13.)
The airport sponsor claimed that its conduct was appropriate, its proposed rates reasonable and inline with similar tenants, and that the Complainant’s allegation were without merit given that it “has continually offered to lease space to the Complainant’s commercial, for profit, parachuting service at approximately the same square rate as other existing non-commercial tenants. Complainant has failed to offer any proof whatsoever to the contrary.” Second, the sponsor denied that it has violated Grant Assurance 22 and noted that its changes in lease terms and delay in a final agreement stemmed from the Complainant’s own changing requests. Finally, the Respondent asserted that it had not prohibited or limited any given type of aeronautical use at the airport and that it had acted in a reasonable manner to ensure safe and effective aeronautical operations at the airport, which were available for public use.
The Director found no violation. First, the Director noted that “[t]he record shows changes in the conditions and leasing rates and errors and/or omissions in the Sponsor’s negotiations process, but these do not represent an action that deprived the Sponsor of its authority to carry out its ‘rights and powers necessary to perform any or all of the terms, conditions, and assurances.” (p. 13.) Additionally, “[t]he record shows no evidence that the Sponsor granted a person or entity an exclusive right to use the airport as prohibited by Grant Assurance 23 … While the Sponsor’s building permit directions appear to have been initially incorrect the Sponsor did inform Complainant and others of the correct procedure. Although the errors added to delays in the negotiation process, the fact remains that Complainant did not continue the process as provided by the Sponsor.” (p. 15.)
Notwithstanding the above, the Director determined that the sponsor had violated Grant Assurance 22(a), Economic Nondiscrimination, by failing to make the airport available to the Complainant under reasonable and nondiscriminatory terms. In reaching this conclusion, the Director analyzed two central issues as related to Grant Assurance 22 between the parties—leasing negotiations (including sub-issues of leasing rates, space requirements, building permit, self-fueling, and insurance) and temporary commercial operations. (p. 16.)
While the Director found the evidence on many of these issues inconclusive, he noted that “negotiations started in February and Airport Management did not make its insurance requirements known until five months later. In addition, the Sponsor made the leasing negotiations less transparent and more problematic for the Complainant by not providing supportive documentation showing the additional airport insurance costs for accommodating the Complainant’s operations.” (p. 25.) Moreover, the Director noted: “From the record it is not clear how the leasing rates were derived and/or if they were based on market rates. While the Sponsor made corrections, the instructions provided to prospective tenants regarding building permits were misleading and contributed to negotiation delays. The lack of clarity and details about what an Aviation Self-Fuel Agreement may entail added additional uncertainties. The insurance requirements were not made known at the beginning of the negotiations and were initially misleading. The combination of the above factors as presented acted as a barrier for airport access and a violation of Grant Assurance 22.” (p. 25.)
Finally, the Director noted that the “Sponsor’s statement that ‘the State of Michigan does not provide temporary agreements for commercial operations at our airports’ without the legal grounds for prohibiting temporary aeronautical commercial operations appears to be unreasonable, arbitrary, and a violation of the Sponsor’s Federal obligations.” (p. 27.)