Timberview Helicopters, Inc. v. Okaloosa County, Florida - No. 16-21-14
FAA Docket No:
16-21-14
Author:
Kevin C. Willis, Director of Airport Compliance
Complainant(s):
Timberview Helicopters, Inc.Respondent(s):
Okaloosa County, FloridaAirport(s):
Okaloosa Executive Airport (DTS)
Holding:
Violation of Grant Assurance 22, Economic Nondiscrimination; No Violation of Grant Assurance 1, General Federal Requirements; Grant Assurance 5, Preserving Rights and Powers; Grant Assurance 19, Operation and Maintenance; Grant Assurance 21, Compatible Land Use; Grant Assurance 29, Airport Layout Plan; Grant Assurance 38, Hangar ConstructionAbstract:
Okaloosa County, Florida (Okaloosa or County) is the owner and sponsor of Destin Executive Airport (DTS) at which Timberview Helicopters, Inc. (Timberview) was a commercial aeronautical tenant subject to an Operating Agreement with a 37-year term, which Okaloosa terminated in 2021 after only 4 years. (Director’s Determination, p. 1.)
Beginning in 2010, Timberview conducted operations from several locations in the County, but not directly on the airport. (Director’s Determination, p. 3.) Okaloosa required Timberview to begin conducting its operations on-airport beginning in 2014, and, in fact, Timberview operated commercial air tours at DTS on a year-to-year agreement between approximately 2014 and 2017. (Director’s Determination, p. 3.) In April 2017, the County entered into the 37-year 2017 Agreement with Timberview, which required a lease arrangement with a fixed-based operator (FBO); the 2017 Agreement prohibited Timberview from conducting commercial operations on the FBO ramp and required Timberview to comply with a DTS Air Traffic Control Letter of Agreement (for helicopter operations surrounding the airport). (Director’s Determination, p. 3.) The County terminated Timberview’s 2017 Agreement via a Notice of Termination letter in 2021, however, while indicating that the parties would enter into a new agreement that would address a list of past alleged breaches of the 2017 Agreement and determine the full scope of Timberview’s operations. (Director’s Determination, p. 3.)
County airport staff and Timberview negotiated a new draft Operating Agreement, but the Okaloosa County Board of Commissioners voted not to approve the deal, at which point County’s outside counsel emailed a termination letter to Timberview’s outside counsel, which indicated that all commercial operations must cease effective August 2021. (Director’s Determination, p. 4.) However, noncommercial operations, such as nonrevenue flights, hangar lease for storing and maintenance of helicopters, and fueling from the FBO, were permitted to continue. (Director’s Determination, p. 4.)
Timberview, as Complainant, alleged that the County violated numerous grant assurances in doing so, i.e., Grant Assurance 1, General Federal Requirements; Grant Assurance 5, Preserving Rights and Powers; Grant Assurance 19, Operation and Maintenance; Grant Assurance 21, Compatible Land Use; Grant Assurance 22, Economic Nondiscrimination; Grant Assurance 29, Airport Layout Plan; and Grant Assurance 38, Hangar Construction. Timberview further alleged that there were violations of the Airport Noise and Capacity Act of 1990 (49 U.S.C. § 47521(2) (ANCA) in that DTS terminated the 2017 written operating agreement which had “contractually entitled [Timberview] to operate until April of 2048,” thereby forcing Timberview “to immediately vacate the premises and cease all commercial flight operations.” (Director’s Determination, p. 1.) Timberview thus alleged that the County did not allow it to conduct commercial helicopter operations at the Airport because of noise and safety concerns. (Director’s Determination, p. 1.)
The County denied these allegations and sought dismissal on the basis that Timberview violated the 2017 Agreement and the applicable Minimum Standards and Operating Policy. (Director’s Determination, p. 1.)
Grant Assurance 5
Timberview alleged that Okaloosa violated Grant Assurance 5, Preserving Rights and Powers, “when it allowed other activities, including permitting ongoing residential development to encroach into the immediate vicinity of the Airport, and allowing a small but vocal number of Airport neighbors to demand Okaloosa County address their noise complaints by attacking Timberview and its helicopter tour flight operations.” (Director’s Determination, p. 6.) The County responded that “all areas in the immediate vicinity of DTS are in the City of Destin and the City of Destin approves or disapproves residential and other development within its borders. The County does not.” (Director’s Determination, p. 6.) The Director dismissed Timberview’s Grant Assurance 5 allegations, noting that under Part 16, “the burden of proof is on the complainant to show noncompliance with an Act or any regulation, order, agreement or document of conveyance issued under the authority of an Act” (14 C.F.R. § 16.23(k)(l)), that the record showed that Okaloosa County did not control development around the airport, that Okaloosa took reasonable measures to oppose residential development or other incompatible land uses around the airport even though the City of Destin did not always accept Okaloosa’s suggestions, and that Timberview failed to provide the Director substantive evidence supporting its allegation that Okaloosa is in noncompliance with Grant Assurance 5, Preserving Rights and Powers. (Director’s Determination, p. 6.)
Grant Assurance 21
Timberview alleged that Okaloosa violated Grant Assurance 21, Compatible Land Use, when it permitted developers to continue to develop land adjacent to and immediately abutting the airport perimeter, resulting in additional noise complaints and making the airport less efficient, more dangerous, less safe, and less usable by the public at large. (Director’s Determination, p. 6.)
The County answered that Timberview failed to identify any development that the County has approved “adjacent to or in the immediate vicinity of DTS,” and that “those areas are within the City of Destin, which has exclusive land use authority” and thus outside of the County’s authority. (Director’s Determination, p. 6.) Okaloosa also conducted a 14 C.F.R. Part 150 noise study, and the FAA approved the Noise Exposure Map in 2013. (Director’s Determination, p. 6.)
The Director dismissed the claims concerning Grant Assurance 21, Compatible Land Use, deciding that the record substantiated that the City, not the County, had the responsibility for development immediately around the airport and that Okaloosa took reasonable measures to oppose residential development or other incompatible land uses. (Director’s Determination, p. 7.) Timberview had failed to provide the Director “reliable, probative, and substantial evidence” supporting its allegation that Okaloosa is in noncompliance with this grant assurance (14 C.F.R. § 16.3l(b)(2)), therefore. (Director’s Determination, p. 7.)
Grant Assurance 29
Timberview alleged that Okaloosa violated Grant Assurance 29, Airport Layout Plan (ALP), when “it failed to maintain an up-to-date ALP and has allowed alterations, operations, and development Timberview believes to be in conflict with the ALP.” (Director’s Determination, p. 7.) Timberview also alleged that the County “created a condition that diversely affects safety, efficiency, or utility of the Airport, i.e., by permitting the unparalleled and explosive growth in adjacent neighborhoods and areas since the Airport was initially constructed directly resulting in the complaints of noise and flight paths, impact which should have been reasonably anticipated by Okaloosa County.” (Director’s Determination, p. 7.)
The County answered that “Timberview’s complaint fails to state a claim under Assurance 29.” (Director’s Determination, p. 7.)
The Director decided the record showed that the ALP was current, and Timberview did satisfy its burden of proof by offering evidence of airport development that was inconsistent with the FAA-approved ALP. (Director’s Determination, p. 7.)
Grant Assurance 38
Timberview alleged that Okaloosa violated Grant Assurance 38, Hangar Construction, when the County terminated commercial tour flights, thereby preventing Timberview from making a return on the investment it had made in the 37-year lease for Hangar 7-1. (Director’s Determination, p. 7.) Timberview alleged that this action dramatically reduced the time for Timberview’s amortization of the leased hangar space. (Director’s Determination, p. 7.)
The County responded that, “Timberview’s Assurance 38 claim fail[ed] to identify any agreement with Timberview for the construction of a hangar or that Okaloosa refused to enter into such an agreement.” (Director’s Determination, p. 8.)
The Director reasoned that, “[a]lthough Timberview obtained an ownership stake in Hangar 7-1, the record contains no evidence that Timberview entered into an agreement with Okaloosa to construct a hangar, or that it was denied the ability to enter into a long-term lease to construct a hangar.” (Director’s Determination, p. 8.) “Grant Assurance 38 pertains only to the rights of an aircraft owner with respect to entering into a long-term lease to construct a hangar,” the Director noted, “it does not provide the type of protection on return on investment which Complainant seeks.” (Director’s Determination, p. 8.)
Breach of Contract
Finally, Timberview filed an action for breach of contract and tortious interference of contract against the County in Florida state court. (Director’s Determination, p. 8.) Okaloosa provided the Director with a copy of the state court’s order denying a motion for injunctive relief, which the Director reviewed and determined: “Although a contract may be valid under state law, it may be in violation of the applicable Federal obligations. Even where a state court ruling has found contracts between an airport tenant and the airport sponsor to be valid and enforceable, a state court ruling cannot limit the FAA’s ability and responsibility to adjudicate grant assurance matters. … the state court did not even rule on an aviation law claim (FAA Exhibit 1, Item 21). Accordingly, regardless of the state court ruling, the FAA will continue this Part 16 investigation whether the sponsor is in compliance with its Federal obligations.” (Director’s Determination, pp. 8-9.)
Grant Assurance 22
Upon review of the allegations and the relevant airport-specific circumstances, the FAA further considered and adjudicated issues under Grant Assurance 22, Economic Nondiscrimination:
(1) Whether the County violated Grant Assurance 1, General Federal Requirements, through ANCA, by denying Timberview the opportunity to commercially operate at the airport; and
(2) Whether the County violated Grant Assurance 22, Economic Nondiscrimination, by not approving Timberview’s Draft Agreement to conduct commercial operations.
As to the first issue, the Director noted that the County had articulated several concerns with respect to Timberview’s helicopter operations, including its incompatibility with the residential nature of the surrounding community and need to minimize the impacts of flights through operational requirements, including flights after sunset. (Director’s Determination, pp. 10, 11.)
The record, however, showed that Timberview continued to lease an airport hangar for storing and maintaining its helicopters and Okaloosa allowed Timberview to operate noncommercial flights at the airport. (Director’s Determination, p. 12.) Timberview also provided evidence that other helicopters operated at DTS, and, relatedly, a Google map search showed other helicopters parked at the Airport in 2022. (Director’s Determination, p. 12.) What is more, no helicopter restrictions were noted in the Airport Master Record. (Director’s Determination, p. 12.)
As such, although “Timberview did not question the overall validity of the … hour and frequency restrictions” imposed by the County against it, “the FAA ha[d] concerns,” the Director noted: The County’s actions “reasonably support Timberview’s argument that Okaloosa knowingly used noise, in part, to support its commercial helicopter flight operational restrictions against Timberview in the 2017 and Draft Agreements. Furthermore, Okaloosa recognizes that there are specific requirements for establishing those restrictions, but chose not to follow the 14 CFR Part 161 requirements or obtain FAA approval.” (Director’s Determination, p. 12.)
The County argued that Timberview’s commercial operations were terminated from the airport, not to restrict noise, but because of violations of Minimum Standards and the terms of the parties’ 2017 Agreement. (Director’s Determination, p. 13.)
The Director rejected this argument, however, determining that the sponsor airport had placed unreasonable restrictions on Timberview’s commercial helicopter operations and prevented access to DTS in contravention of Grant Assurance 22, Economic Nondiscrimination. The Director specifically reasoned that, “[a]irport sponsors have limited proprietary authority to restrict access as a means of reducing aircraft noise impacts in order to improve compatibility with the local community. To accomplish this, airport sponsors must comply with the national program for review of airport noise and access restrictions under ANCA. ANCA requires that certain review and approval procedures be completed before a proposed restriction that impacts Stage 2 or Stage 3 aircraft is implemented.” (Director’s Determination, pp. 12-13.) Okaloosa counsel had publicly noted that an ANCA study needed to be conducted for any access restrictions on Robinson helicopters since they are Stage 2 aircraft. (Director’s Determination, p. 13.) Thus, as the Director reasoned in a prior case, “if enacted for purposes of limiting noise, all noise and access restrictions (unless grandfathered) that do not comply with ANCA’s procedural requirements constitute a violation per se of Grant Assurance 22.” (Director’s Determination, p. 13) (citing Captain Errol Forman v. Palm Beach County, Florida, and Palm Beach County Board of County Commissioners, FAA Docket 16-17-13 (2019)).
Timberview argued that it “ha[d] continuously met all financial obligations and all other obligations of the 2017 Operating Agreement” while Okaloosa had allowed other aeronautical activities at the Airport without the restrictions that it placed on Timberview. (Director’s Determination, p. 14.) The County responded that Timberview’s commercial operations were terminated from the airport because of violations of the Minimum Standards and terms of the 2017 Agreement and that Okaloosa, over the years, had dealt with a large number of compliance issues with Timberview, including numerous breaches of the 2017 Agreement and DTS Minimum Standards, revealing a pattern of noncompliance with procedures, duty of care, and authorities. (Director’s Determination, pp. 14-15.)
Given these competing positions, the Director sided with Timberview, noting that the record reflected that Okaloosa “reasonably questioned whether Timberview was complying with the terms of the 2017 Agreement. However, the record does not show that during negotiations of the Draft Agreement—or written into the Draft Agreement itself—that Okaloosa specifically required Timberview to submit reasonable accounting documentation to support its past adjusted gross revenue payment … or for [ ] alleged gross revenue underpayments.” (Director’s Determination, p. 15.) “Nor did Okaloosa provide a default notice that Timberview was held in violation with the terms of the 2017 Agreement,” the Director observed. (Director’s Determination, p. 15.) Rather, “the insurance certificate requirement was resolved in the Draft Agreement. Furthermore, the Record clearly shows that Okaloosa allowed other tenants who were in noncompliance not to meet airport requirements while requiring Timberview to adhere to different practices and standards.” (Director’s Determination, p. 15.)
An airport sponsor can restrict aeronautical access on a reasonable basis, the Director recounted, and the failure to pay rent or to provide proof-of-insurance seem like substantial bases to the agreements. (Director’s Determination, p. 15.) Relatedly, it is not imprudent for a sponsor to require resolution of outstanding financial matters prior to entering into additional financial arrangements with the same airport tenant. (Director’s Determination, p. 15.) But “[t]he Director expects Okaloosa County to treat similarly situated tenants in similar circumstances in a fair and reasonable manner. However, the Board failed to do so when it failed to enforce the terms of its agreements with other similarly situated airport tenants while not approving the Draft Agreement. Consequently, Okaloosa’s own actions support a finding that the sponsor is unreasonably discriminating against Timberview.” (Director’s Determination, p. 16.)
Finally, the Director noted that, “Okaloosa negotiated operational requirements in the Draft Agreement above and beyond 14 CFR Part 91, which provides the Federal requirements for aircraft equipment and flight operations outside of the Airport [including requiring] aircraft operators to adhere to canceled Letter of Agreement flight routes and times, and [taking] pictures of a helicopter after a hard landing even though it occurred at a private helipad.” (Director’s Determination, p. 18).
“It is inappropriate for an airport sponsor or manager to negotiate or impose conditions or flight patterns beyond the Federal requirements, or to assign personnel to conduct oversight and safety evaluations despite the FAA having determined that the operator is conducting its operations in accordance with applicable Federal regulations,” the Director stated. (Director’s Determination, p. 18.) “If the operation does not meet FAA safety standards, Okaloosa’s exclusive remedy [was] to continue to bring that conduct to the attention of the FAA Regional Office or local FSDO, which will take the appropriate action. The record also showed no similar operational flight restrictions imposed on other similarly situated aeronautical operations or commercial operators that use DTS facilities.” (Director’s Determination, p. 18.)
Consequently, the Director ruled: “Okaloosa’s actions imposing local flight operational requirements on Timberview beyond what is federally required is unreasonable … Okaloosa is applying discriminatory terms and conditions in its lease terms and minimum standards against Timberview as well as unfair practices against other aeronautical users at the Airport. Therefore, the Director finds Okaloosa is in violation of Grant Assurance 22, Economic Nondiscrimination.” (Director’s Determination, p. 18.)