Author:
Kevin C. Willis, Director, Office of Airport Compliance and Management Analysis
Complainant(s):
Resort Aviation Service, Inc.
Respondent(s):
Kootenai County, Idaho
Airport(s):
Coeur d’Alene Airport – Pappy Boyington Field (COE)
Holding:
Dismissed (summary judgment granted).
Abstract:
Complainant alleged that the County violated several federal grant assurances by failing to negotiate in good faith by withdrawing a request for proposal (“RFP”) and allowing another competing entity to operate at the airport in violation of minimum standards. (p. 1, 2.) As such, Complainant alleged that the County violated the Fifth and Fourteenth Amendments of the Constitution by damaging its business as the only fixed-base operator (“FBO”) on the Airport and allowing a competitor, StanCraft Jet Center, to acquire another fueling operation and to lease an area known as the North Ramp and build/improve its facilities. (p. 1.)
Additionally, as a procedural matter, Complainant asserted that allowing the County and StanCraft Jet Center to develop and/or operate an FBO, or approve an FBO at the Airport while Resort’s claims were pending before the Federal Aviation Administration (“FAA”), would irreparably harm Resort and other aviation users of the Airport. Finally, in this context, the Complainant claimed that this would undermine the FAA’s authority to enforce airport grant assurances, other federal regulations, and federal law. (p. 1.)
In response, the County argued against the extraordinary relief sought, e.g., a cease and desist order, particularly given that the Complainant asserted its claims for the first time some two years after the County began lease negotiations with StanCraft Jet, 10 months after a lease was executed, and four months after construction began. (p. 3.) As such, the County argued, the Complainant merely feared that its business would be harmed by competition and sought only to “advance its private commercial interests by limiting future competition” and stopping construction mid-stream. (p. 3.)
Respondent filed a motion to dismiss or, in the alternative, for summary judgment, raising two procedural arguments. First, the County argued that the Complainant failed to demonstrate that good faith efforts were made to resolve the dispute. (p. 1.) Second, the County argued that the complaint failed to state a claim that warranted an investigation or further action by the FAA. The County also asserted in the alternative that to the extent the FAA relied on facts not presented in the Complaint, the County moved for summary judgment pursuant to 14 C.F.R. § 16.26(a). (p. 1-2.)
The FAA treated the County’s motion as one for summary judgment and the Director, therefore, analyzed the motion from the perspective of grant assurance compliance as provided in 14 C.F.R. § 16.26. The Director considered two issues.
First, the Director considered whether the County was in violation of Grant Assurance 22, Economic Nondiscrimination, by allowing past non-compliance with the airport’s minimum standards. (p. 5.) Indeed, the Complainant had alleged examples of the County permitting certain tenants to operate in violation of operative lease agreements and minimum standards adopted by the County. (p. 7.) The County noted, however, that all such minimum standards issues had been addressed through a Part 13 proceeding, and the County was implementing an FAA-approved corrective action plan. (p. 6.) Consequently, upon review of the summary judgment motion, the Director found that no issues of material fact existed, and that the complaint, when viewed in a light most favorable to the Complainant, should be summarily adjudicated in the County’s favor as a matter of law. (p. 7.) The issues were resolved because aeronautical tenants would be required to comply with airport minimum standards. (p. 7.)
Second, the Director evaluated whether the County was in violation of Grant Assurance 22, Economic Nondiscrimination, by granting a lease to StanCraft Jet Center by direct negotiation rather than pursuant to an RFP. (p. 7.)
As evidence of alleged unfair treatment, the Complainant argued that the County entered into a lease agreement with StanCraft Jet Center to operate its FBO on property owned by Kootenai County (referred to as the North Side Ramp). (p. 7.) The Complainant alleged that this property was originally scheduled to go out to bid under an RFP, but instead was reserved for StanCraft Jet Center without notice or an opportunity “to be heard.” (p. 7.)
In response, the County explained that its airport staff intended to publish an RFP for the lease, but the RFP was postponed while the County updated its minimum standards. (p. 8.) Moreover, the County explained that StanCraft Jet Center submitted a proposal that was presented to the Board of County Commissioners in public session and that the Board approved airport staff to negotiate a lease with StanCraft Jet Center for the North Side Ramp area, but the County reserved the right not to execute a lease and to issue an RFP if necessary. (p. 8.)
Furthermore, the County referenced (correctly in the view of the Director) FAA guidance regarding methods for leasing airport property for aeronautical purposes. The airport sponsor assurances allow an airport operator to award a lease by any of several methods, including direct negotiation. (p. 8.) The grant assurances do not prohibit an airport sponsor from entering into long-term leases with commercial entities by negotiation, solicitation, or other means. (p. 8.) An airport sponsor, moreover, may choose to select FBOs or other aeronautical service providers through a RFP process (see FAA Order 5190.6B, 8.9(b)). (p. 8.)
The Director further noted that an airport sponsor is not required to develop any and all parcels of land in a manner consistent with the wishes of any one party, but rather may exercise its proprietary rights and powers to develop and administer the airport’s land in a manner consistent with the public’s interest. (p. 8., citing Santa Monica Airport Association, Krueger Aviation, Inc. and Santa Monica Air Center v. City of Santa Monica, FAA Docket No. 16-99-21 (February 4, 2003) (Final Decision and Order).) In this regard, the Director noted, a sponsor may exclude an incumbent on-airport service provider from responding to a RFP by eliminating the provider from eligibility for the RFP based on the sponsor’s desire to increase competition in airport services. (p. 8.)
In all, the Director found that the County was within its proprietary powers to make leasing decisions on airport property by direct negotiation. (p. 8.) The Complainant had not shown in its pleading that it attempted to compete for the North Ramp, nor had it indicated that it even desired the parcel. (p. 8.) Rather, the gravamen of the Complainant’s claim seemed to be that it objected to competition from a similar business. (p. 8.) In this regard, while the Complainant claimed to be the only full-service FBO on the airport since 1986, and claimed that unfair competition resulted in damage, the Director nevertheless concluded that the commitment by the County to require aeronautical tenants to comply with the Airport’s minimum standards would protect fair competition at the airport. (p. 8.)
Finally, even accepting the Complainant’s contention that it was the only full-service FBO on the airport, Grant Assurance 23, Exclusive Rights, precluded a sponsor from granting a special privilege or a monopoly to anyone providing aeronautical services on the airport or engaging in an aeronautical use. (p. 8-9.) Consequently, the Director noted, if the Complainant’s assertions were true, arguably it might have been granted an impermissible exclusive right for use of the airport as its only FBO. (p. 9.) Moreover, “the public should benefit from the flow of competitive enterprises,” the Director reasoned, and the County’s lease of land for the development of StanCraft Jet Center’s operation would avoid any potential claim of a violation of Grant Assurance 23, Exclusive Rights.
In all, upon review of the motion for summary judgment, the Director found that there was no issue of material fact, and that the complaint, when viewed in a light most favorable to the Complainant, should be summarily adjudicated in the County’s favor as a matter of law.
Index Terms:
Cease and Desist; Direct Negotiation; FAA Order 5190.6B, 8.9(b); Fifth Amendment; Fixed-Base Operator (“FBO”); Fourteenth Amendment; Fueling Operation; Good Faith (Negotiation); Grant Assurance 22, Economic Nondiscrimination; Grant Assurance 23, Prohibition against Exclusive Rights; Proprietary Powers; RFP; Summary Judgment