Walker AG Supply LLC, Midwest Spray Service LLC, and Better Airports LLC v. Wahoo Municipal Airport and Wahoo Airport Authority
FAA Docket No:
16-14-08
Author:
D. Kirk Shaffer, Associate Administrator for Airports
Complainant(s):
Walker AG Supply LLC, Midwest Spraying Company LLC, Better Airports LLCRespondent(s):
Wahoo Municipal Airport, Wahoo Airport AuthorityAirport(s):
Wahoo Municipal Airport (AHQ)
Holding:
Affirming Director's Determination of No Violation.Abstract:
Complainants, commercial aerial agricultural operators, alleged that the airport sponsor was in violation of Grant Assurance 23, Exclusive Rights, because it did not uniformly enforce its minimum standards for conducting fixed-base aerial application operations and favored a commercial aerial application business—Storm Flying Services—operated by a board member of the Wahoo Airport Authority. (According to the Director, another complainant—Better Airports LLC and its owner, William Foster—lacked standing; this was not challenged on appeal. (Final Agency Decision and Order, p. 2.).)
Complainant further alleged that the sponsor hid behind a rationale based on “safety and efficiency” to create “entitlements” for itself and for the board member who is also the owner of the fixed-based aerial application business. Complainants also alleged that the Respondents established unreasonable minimum standards that were used as a weapon to block competition, prevent free trade and commerce, and create exclusive rights. They also alleged that the sponsor’s denial of their access and use of the airport as itinerant and/or seasonal commercial aerial applications caused the Complainant and the farmers he serves hundreds of thousands of dollars in lost revenue over the last three years. (Director’s Determination, p. 2.)
The Respondent denied all of the Complainant’s allegations, asserting that the minimum standards were established in 2012 to assure a safe, efficient, and organized development at the airport. In addition, the Respondent countered that the Complainants did not meet the minimum standards by not having a facility to house or store their aircraft and a permanent containment pad to curb chemical and fuel leaks or spills.
The Director noted that “FAA policy provides examples of restrictions relating to agricultural operations due to conflict with other types of operations or lack of facilities to handle pesticides safely that are used in this specialized operation. The FAA allows public-use airports the authority to establish reasonable minimum standards for aeronautical activities, in part to prevent aircraft owners from using equipment or practices at the airport that would be unsafe or detrimental to public welfare.” (Director’s Determination, p. 14.) In this context, the Director found the sponsor’s actions to be reasonable and consistent with Grant Assurance 22, Economic Nondiscrimination.
The Director also found that an exclusive right did not exist in violation of Grant Assurance 23 “since the Complainants still have an opportunity to lease other available airport property and construct a commercial agricultural operator spray facility at WMA that meets any reasonable requirements of the airport sponsor.” (Director’s Determination, p. 16.) Also, the Director concluded that the Respondent was not in violation of other grant assurances raised by the Complainants. For example, the Complainants repeatedly misidentified Grant Assurance 1, General Federal Requirements, as covering the subject of “Truthful and Accurate Information,” and in any case “[a]llegations of plagiarism of air traffic counts also are not a violation of any federal obligation that is cognizable under Part 16.” (Director’s Determination, p. 10.)
The Complainants also alleged that the sponsor violated Grant Assurance 5, Preserving Rights and Powers—by negligently entering into an agreement by not including the correct name of an independent contractor and thus having an unenforceable contract for airport maintenance services—was a moot issue as the sponsor corrected the error. The Director also found allegations under Grant Assurance 24, Fee and Rental Structure, and Grant Assurance 25, Airport Revenues (e.g., failure to lease available hangar space, thereby losing the opportunity to collect revenue) were moot because the Sponsor had taken curative action relating to the non-aeronautical storage of vehicles. (Director’s Determination, p. 17.) The Director found the Complainants’ numerous allegations under Grant Assurance 29, Airport Layout Plan, to be moot as the Sponsor committed to update its ALP.
The Director also dismissed the Complainants’ allegations under Grant Assurance 8, Consultation with Users, and Grant Assurance 9, Public Hearings, given a lack of evidence to support the allegations, including any showing that the Respondents failed to provide any opportunity for communicating with the users on any AIP funded project. (Director’s Determination, p. 11.)
Next, the Complainants made at least 30 allegations about the Respondents based on safety and efficiency concerning Grant Assurance 19, Operation and Maintenance. The allegations included standards of snow removal, apron use, chemical containment pads, open fires, trash, model aircraft operations, vehicular parking, aircraft demonstrations for K-12 students, vehicular fuel tank bollards, law enforcement actions, and leased hangar maintenance. (Director’s Determination, p. 11.) The Director dismissed these allegations because the airport appeared to have addressed the concerns raised by the Complainants and successful action by an airport to cure any alleged or potential past violation of applicable federal obligations is grounds for dismissal under FAA precedent. (Director’s Determination, p. 12.) The Complainants’ remaining allegations—arising under the Spill Prevention and Countermeasure Plan—were deemed outside the jurisdiction of Part 16.
Notwithstanding its dismissal of all allegations against the Sponsor, the Director made certain recommendations and required the Sponsor to take corrective actions: (1) remove the “right of first refusal” in a hangar lease and other airport-owned facilities and assure that the lease rates are tied into a CPI; (2) maintain a current Airport Layout Plan with new facilities with pen and ink changes within 30 days of the determination; (3) update the Spill Prevention, Control, and Countermeasure Plan to correct mistakes that were identified in the Complaint; (4) if an aerial applicator agrees to construct an aircraft storage facility and permanent containment pad and a long-term lease is signed, then provide that aerial applicator with the right to lease a hangar and operate at the airport under similar terms and conditions enjoyed by other operators; (5) renegotiate the aircraft maintenance business lease agreement to have a date certain ending financial assistance with Wahoo Aviation; and (6) assure the FAA that commercial non-aeronautical activities are kept to a minimum, and establish a non-aeronautical business rates and charges schedule to ensure the airport collects fair market value rent and a percentage of gross sales from tenants conducting commercial non-aeronautical activity during the off season. In addition, confirm that if the airport conducts non-aeronautical activities on any designated aeronautical use property, the airport receives in writing approval from the FAA regional airports office, and that the Airport Layout Plan is current. (Director’s Determination, p. 20.)
Finally, the Sponsor admitted failing to include required language under a solicitation in violation of Grant Assurance 30, Civil Rights. Accordingly, the Director ruled that the FAA Office of Civil Rights External National Operations (“ACR”) team would provide technical assistance as necessary to ensure Sponsor compliance.
Complainant filed an administrative appeal, asking the Administrator to find the Sponsor in violation of their grants assurances and asserting that the airport’s minimum standards were arbitrary and unreasonable. (Final Agency Decision and Order, p. 1.) The Associate Administrator affirmed the Director’s Determination, however.
In reaching this conclusion, the Associate Administrator considered four issues on appeal. The first issue was whether new evidence presented in the Complainant’s motion to supplement complied with the rules and was proper for consideration on appeal. The documents the Complainant sought to introduce included meeting minutes and e-mails that the Complainant asserted were “not available to the complainants when they filed their Initial Formal complaint or the Complaints [sic] reply.” (Final Agency Decision and Order, p. 7.) The Associate Director noted that this argument failed to explain why such new evidence could not have been discovered in the exercise of due diligence prior to the date on which the evidentiary record closed—only that it was simply not available. (Final Agency Decision and Order, p. 7.) Additionally, the Associate Director noted that it was inappropriate for the Complainants to use the documents it sought to introduce pursuant to a court opinion that prohibited disclosure of the documents. (Final Agency Decision and Order, p. 7.) As such, the Associate Director concluded that the motion to supplement violated two of the three regulatory requirements under 14 C.F.R. § 16.33(f).
Next, the Associate Administrator considered whether the Director was correct in finding that the airport did not violate Grant Assurance 22, Economic Nondiscrimination, when it denied the Complainant’s application to base its aerial spraying operation at the airport and when it failed to amend its minimum standards to allow itinerant operations at AHQ. The Sponsor denied the Complainant’s itinerant aerial spraying operation at AHQ because Complainant did not have a hangar to store his aircraft or a containment pad to prevent the spread of spills—requirements under the AHQ Minimum Standards. (Final Agency Decision and Order, p. 7.) The Associate Administrator found that “[m]aking an exemption to the Minimum Standards from having to use permanent containment pads to store agricultural aircraft in hangars for itinerant operators is not logical.” (Final Agency Decision and Order, p. 9.)
The Associate Director further reasoned that “[r]equiring hangars for storage of permanent based ag aircraft and containment pads to control spills for safety reasons should also apply to itinerant operators” just as it did for permanent tenants operating ag aircraft. (Final Agency Decision and Order, p. 9.) For that matter, the Associate Director noted, “[t]here is an additional consideration of creating an unfair business advantage for itinerant operators who would not be required to hangar their aircraft and use containment pads over permanent tenants who must follow the rules to house their ag aircraft in a hangar and use a containment pad.” (Final Agency Decision and Order, p. 9.) The Associate Administrator also referenced FAA Advisory Circular No. 150/5190-7, which states in Section 1.2.d that the airport sponsor has the prerogative to ensure that the standards “reasonably protect the investment of providers of aeronautical services to meet minimum standards from competition not making a similar investment.” (Final Agency Decision and Order, p. 9.) On this bases, the Associate Administrator found that it was correct for the Director to find that the sponsor did not violate Grant Assurance 22, Economic Nondiscrimination, when it established Minimum Standards that protected the investment of based operators that did not convey an unfair business advantage to the seasonal operator. (Final Agency Decision and Order, p. 9.)
Third, the Associate Administrator considered whether the Director erred in finding that the sponsor did not violate Grant Assurance 23, Exclusive Rights, when, according to the Complaint, it ignored the Complainant’s request to lease hangar space when it became available even though the Complainant was next on the waiting list. (Final Agency Decision and Order, p. 11.) Moreover, the Complainant alleged that the sponsor would not renew an EAA Hangar Lease (indicating that the lease was needed for airport equipment), but then gave exclusive rights to other tenants by virtue of not renting the EAA hangar simply because the Complainant’s aircraft could not physically fit into the EAA hangar. (Final Agency Decision and Order, p. 11.) The Associate Administrator characterized this position as “disingenuous.” (Final Agency Decision and Order, p. 11.) That is, the Associate Administrator found the sponsor’s actions to be consistent with accepted business practices and that the right of first refusal when employed at the beginning of a lease term and limited to one property and not a majority of the airport’s properties, did not confer an exclusive right. (Final Agency Decision and Order, p. 11.) “Such practices are not economically discriminatory to similarly situated parties. And it follows that such practices are not economically discriminatory to parties who are not similarly situated such as Walker in this case.” (Final Agency Decision and Order, p. 11.)
Finally, the Associate Administrator assessed whether the Director was correct in finding that the sponsor did not violate Grant Assurance 24, Fee and Rental Structure, when it charged different fees for itinerant and non-itinerant operations, when it charged different rents for the ag hangar, when it did not lease the EAA hangar to the Complainant, and/or when it allowed non-aeronautical items to be stored in hangars. (Final Agency Decision and Order, p. 11.) In its appeal, the Complainant specifically asked “that the FAA determine if the past actions and initial implementation of the (Minimum Standards) by (Wahoo) did in fact violate grant assurances.” (Final Agency Decision and Order, p. 14.) But, the Associate Administrator noted that the Director had been clear in his analysis and findings that the successful action by an airport to cure any alleged or potential past violation of applicable federal obligations to were grounds for dismissal of such allegations. (Final Agency Decision and Order, p. 14.) “Walker’s persistence in pursuing past alleged violations will not persuade the Associate Administrator to address matters beyond the scope of the Part 16 process.” (Final Agency Decision and Order, p. 14.)