ACI-NA Weekly Legal Briefing--Issue 11

 

                                                                                                 ACI-NA’s Weekly Legal Briefing 

Volume 2012, Issue 11

Week of June 11 – 15, 2012

Legal Affairs Committee Members:

Regulatory Issues of Interest:

  • ACI-NA Applauds FAA’s Recommended  Improvements in Handling Part 16 Complaints Against Airports

In February of 2011, several members of the ACI-NA Legal Affairs Committee met with representatives of the FAA’s Office of Airports Compliance and Airports and Environmental Law Division to discuss concerns regarding current administrative practices in the handling of formal complaints brought to the FAA against airport sponsors.  As a result of that meeting, the FAA held “listening sessions” with other stakeholder groups to receive their input on the issues raised by ACI-NA.  Following those meetings, the FAA issued a Notice of Proposed Rulemaking (“NPRM”) on March 5, 2012 (77 Fed. Reg. 13027), in which it proposed administrative enhancements to its procedures for the handling and disposition of airport-related complaints, recognizing that its procedures had not been reviewed and/or modified since their initial implementation in 1996.

In its NPRM, the FAA proposed to update, simplify and streamline the rules of practice and procedures for filing and adjudicating complaints against federally-assisted airports.  The proposed rule changes offer the potential for significant improvements in the efficiency of the FAA’s review of complaints filed under 14 CFR Part 16 and ACI-NA applauded the agency’s initiative in comments submitted in the rulemaking procedure on June 7, 2012.  While ACI-NA expressed appreciation for the FAA’s proposed changes, which include the use of procedures allowing for early disposition of complaints in certain cases, electronic filings and the implementation of other rule clarifications, the comments also suggested ways of ensuring that the objectives of the proposed enhancements in the administrative rules and procedures are best accomplished.

More specifically, ACI-NA’s comments pointed out that “under the existing rules—which make no provision for early dispositive motion—the defense of even manifestly unwarranted complaints has been a costly exercise for airport sponsors.”    ACI-NA pointed out that the FAA’s proposed implementation of rules offering defending airports the ability to file motions to seek dismissals of meritless complaints and motions for summary judgment to seek dismissals of complaints that could not be proven offer great efficiencies for the adjudication of formal complaints brought against airport sponsors.  In its comments, ACI-NA recommended a change in the language of proposed rule Section 16.26(a), which requires that motions to dismiss or for summary judgment be filed “within 20 days after the FAA receives the complaint,” to substitute the word “docketed” for the word “receives,” because a respondent should have no obligation to answer a complaint that the FAA has not yet docketed.  ACI-NA also pointed out differences between motions to dismiss and motions for summary judgment as they are recognized under the Federal Rules of Civil Procedure.  In its comments, ACI-NA suggested the following language in lieu of that contained in the NPRM with respect to the processes and time periods for the filing of each of those dispositive motions:

“(b)      (1)        A motion to dismiss may be based upon the grounds that the complaint:

(A)       Fails to state a claim that the respondent has violated any obligations subject to adjudication under this part;

(B)       Fails to state a claim within the jurisdiction of the FAA; or

(C)       Fails to meet the requirements for filing a complaint under this part. 

(2)        A motion to dismiss may seek dismissal of the entire complaint or the dismissal of specified claims in the complaint.  A motion to dismiss shall be accompanied by a supporting memorandum of points and authorities.  

(3)        A complainant may file an opposition to a motion to dismiss, with a supporting memorandum of points and authorities, within 10 days of the date the motion is served on the complainant, or within any other period set by the Director.    

(c)        (1)        A motion for summary judgment may be based upon the ground

that there is no genuine issue of material fact and that the respondent is entitled to dismissal of the complaint as a matter of law.  A motion for summary judgment may seek dismissal of the entire complaint or dismissal of specified claims in the complaint. 

(2)        A motion for summary judgment shall be accompanied by a supporting memorandum of points and authorities and by a concise statement of the material facts as to which the respondent contends there is no genuine issue. 

(3)        A complainant may file an opposition to a motion for summary judgment, with a supporting memorandum of points and authorities and a concise statement of any material facts as to which the complainant contends there is a genuine issue, within 10 days of the date the motion is served on the complainant, or within any other period set by the Director. 

(4)        A party asserting that a fact cannot be or is genuinely disputed must support its assertion by either (1) offering supporting affidavits or documentary evidence, or (2) showing that that the adverse party’s supporting evidence does not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support its assertion.”

Other suggested revisions in the FAA’s proposed rules related to:   the timing of post-motion answers and other pleadings; the FAA’s encouragement of the filing of complaints with concise pleadings set forth in short, sequentially-numbered paragraphs; the FAA’s holding of complainants to the standards of its procedural rules related to “ripeness” and “standing” in adjudicating complaints; clarifications of the proposed handling of Corrective Action Plans issued by the Director, especially if an appeal of the Director’s decision is taken to the Associate Administrator; clarification of the standards that need to be met for an appellant’s request for rehearing of the  Director’s Determination;  the mechanics of computing the time after the FAA dockets a complaint for purposes of determining when an Answer to the complaints must be filed; the treatment of supplemental pleadings; the handling of affirmative defenses by the FAA; the treatment of new issues and/or evidence in an appeal or a reply following an initial Director’s Determination; and clarification of what parties are capable of “intervening” and/or “participating” in a pending FAA hearing.

ACI-NA also supported several other recommendations submitted by the Port Authority of New York and New Jersey, which it commended to the FAA for further consideration.

For a copy of the NPRM, click here

Special thanksare extended to ACI-NA associate law firm menbers Tom Devineof Kaplan Kirsch and Rockwell, Scott Lewis of Anderson & Kreiger and Pablo Nuesch of Spiegel & McDiarmid for their input and assistance in finalizing the ACI-NA comments that were submitted to the FAA.

 

  • ACI-NA Submits Comments to the Federal Aviation Administration Regarding Revised Long-Term and Exclusive Concessions Agreements Guidance

You may recall that about a year and a half ago, in  November of 2010, the Federal Aviation Administration’s Office of Civil Rights’ National Airport Policy and Compliance Team issued a draft guidance ("2010 Draft Guidance") providing guidelines for evaluating long-term and exclusive agreements with respect to their potential impact on the contracting requirements of federally-assisted airports under the airport disadvantaged business enterprise (“ACDBE”) program.  ACI-NA’s Business Diversity Committee worked with member airports to review that draft guidance and provided comments to the agency in a submission dated November 29, 2010.   The FAA considered those comments, along with others submitted by affected stakeholders and issued a revised draft guidance on May 12, 2012 (“2012 Revised Guidance”).  Again, the Business Diversity Committee of ACI-NA undertook a review of the 2012 Revised Guidance and submitted comments to the agency on June 4, 2012.

In its comments, ACI-NA applauded the efforts of the FAA’s Office of Civil Rights’ NationalAirport Policy and Compliance Team in updating the FAA’s 2010 Draft Guidance with the 2012 Revised Guidance on long-term and exclusive agreements associated with ACDBE programs. After comparing the 2010 and 2012 draft guidance documents developed by the FAA, however, we noted that that while some of the questions raised in ACI-NA’s letter dated November 29, 2010, concerning the 2010 Draft Guidance were addressed in the 2012 Revised Guidance, a number of fundamental policy points still need to be clarified.

In its comments, ACI-NA stated that its “fundamental concern continues to be that the 2012 [Revised] Guidance interprets the concept of an “exclusive” agreement more broadly than one would expect based on past practices. In addition,  there appears to be an expansion of what constitutes a “long term” agreement in the 2012 guidance. The combined interpretations of “exclusive” and “long term” result in a burdensome regulatory scheme where virtually every concession agreement must be reviewed by the FAA unless the concessionaire is itself an ACDBE.”

Many other comments were offered on issues that need to be clarified in the 2012 Revised Guidance.  Among the issues for which clarification is sought are the following:

  • Treatment of bona fide short-term concession agreements of 2 years or less as “de facto long-term” and subject to FAA scrutiny if, over the prior five years, no ACDBE firm has won that particular concession;
  • Treatment of “management contracts, goods and service suppliers and advertisers” which are now included in the definition of concessions;
  • The time period for the amortization of investment or developments costs with respect to examples, hotels and other large airport shopping complexes, as well as full-kitchen restaurants that require expensive build-out and need longer than five-year amortization periods;
  • How the 2012 Revised guidelines would be applied in the geographical areas of the U. S. Court of Appeals for the Ninth Circuit, or other jurisdictions that may be working under a race and gender neutral program; and
  • What the expectation should be for receiving a response from the FAA with respect to processing of exemption requests from the application of the five-year exclusive period.
  • During this week’s Business Diversity Conference sponsored by the Airport Minority Advisory Council (“AMAC”), representatives of the FAA’s Office of Civil Rights made a number of presentations to conference attendees, including a presentation by Marcus England, Manager of the Office of Civil Rights’ National Airport Policy and Compliance Team.  Mr. England advised that the FAA has received comments from a number of interested stakeholders, including some ACI-NA  airport and associate members,  regarding the 2012 Revised Guidance.  He stated further that additional comments can be submitted to him at marcus.england@faa.gov    The FAA hopes to issue the final guidance sometime during the month of August 2012.

 

  • Congress Loosens Rules for Use of Mineral Revenues at GA Airports

Do you remember the theme song for the television series Beverly Hillbillies?: “And up through the ground came a bubblin’ crude. Oil that is, black gold, Texas tea.” With new oil and gas deposits being located across the country and with new extraction technologies, many more airports across the country are discovering they may be sitting atop that “bubblin’ crude.”

The FAA’s definition of airport revenue includes the royalty revenues that an airport earns from the extraction of minerals on airport property. For airports that are subject to the FAA policy on revenue use; these mineral revenues may be used only for the capital or operating costs of the airport, the airport system, or other local facilities of the airport. To account for the situation where these mineral revenues may exceed the capital and operating costs of an airport, Congress earlier this year in Section 813 of the FAA Modernization and Reauthorization Act of 2012 included a provision to allow a limited exemption from the revenue use restriction for mineral revenue at certain general aviation airports. The act defines a “general aviation airports” as a public airport that has no scheduled service or has scheduled service with less than 2,500 yearly enplanements.

Section 813 authorizes the FAA to declare a defined amount of revenue derived from mineral extraction, production, or lease at a general aviation airport to be greater than the amount required to carry out the airport’s five-year projected maintenance needs required to comply with applicable FAA design and safety standards. However, the law limits the use of this “excess” revenue to federal, state, or local transportation infrastructure projects performed by the airport sponsor or by a governing body within the geographical limits of the airport sponsor’s jurisdiction.

The act also establishes certain conditions and thresholds that the airport sponsor must fulfill before the FAA may grant the sponsor with an exemption on the use of a defined amount of the mineral revenues:

(1) The sponsor and the FAA must enter a written agreement that contains a five-year capital improvement program for the airport; the projected costs for the operation, maintenance, and capacity needs of the airport for compliance with applicable FAA design and safety standards; and an inflation adjustment for such costs.

(2) The sponsor agrees to waive all rights to receive entitlement or discretionary funds during the five-year period of the capital improvement plan; to perpetually comply with the revenue use restrictions; and to operate the airport as a public-use airport.

(3) The sponsor agrees to comply with all grant assurance obligations in effect on Feb. 14. The act states that this obligation runs for 20 years from the date of enactment of the law. The FAA guidance states that the sponsor must comply with all grant assurance obligations in effect as of the date of the exemption and that this obligation runs for 20 years from the date the FAA grants the exemption.

After receiving an airport sponsor’s application to declare that certain mineral revenue is not needed to carry out the airport’s five-year capital improvement program, the FAA has 90 days to determine whether to grant the sponsor’s request.

To implement Section 813, the FAA published in the Federal Registeron May 22 guidance on the use by general aviation airports of this revenue stream. In addition, the FAA has posted on its website a Mineral Rights Revenue Exemption Tool Kit. The toolkit contains FAA’s Compliance Guidance Letter 2012–01 which outlines the implementation of Section 813 and provides guidance to FAA and state personnel responsible for general aviation airports that may request exemptions on use of mineral revenues.

To assist airport sponsors with filing an exemption request, the toolkit contains a submission application that provides guidance for developing a complete five-year capital improvement program, which must include a list of the projects, a current airport layout plan, identification of funds for the extraction activities, compliance with the National Environmental Policy Act, identification of noise mitigation projects, identification of non-AIP eligible projects, operations and maintenance costs, identification and assessment of the airport’s design and safety standards, and assessment of the airport’s capacity needs.

The toolkit also contains a copy of the sponsor agreement that the airport sponsor must sign and submit to the FAA. The agreement contains provisions relating to the sponsor’s liability for maintaining and operating the airport, for accepting responsibility for catastrophic incidents affecting the airport, and for accepting responsibility for compliance with all new and existing regulations (including self-funding). The agreement also contains provisions whereby the sponsor waives all rights to receive entitlement and discretionary funding, agrees to perpetually comply with the airport revenue use requirements, agrees to operating the airport as a public-use airport, agrees to comply with all grant assurance obligations for twenty years, and to submit yearly financial statements.

Other items included in the toolkit are the identification statement the sponsor must submit for the federal, state, and local transportation infrastructure projects funded by the exempted mineral revenues, a sample of the FAA’s final determination approving an exemption agreement, a flowchart for the exemption process, and the sponsor’s annual project financial statement.

Of course, obtaining an exemption for use of revenues derived from mineral extraction activities is only part of the process. During any extraction activities, the airport must maintain safe airport operations, preserve its rights and powers, maintain good title to the real estate, obtain fair market value for the extraction activities, and prevent hazards and obstructions. In addition, many state and local public entities have enacted regulations involving the extraction of minerals. In those areas with newly discovered mineral resources, state and local public entities are examining the implementation of mineral extraction regulations. Airport sponsors considering permitting mineral extraction activities should become well versed in the federal, state, and local laws and regulations for mineral extraction and the local public concerns with mineral extraction activities.

Reproduced from an article prepared  by James Briggs and published in ACI-NA’s June 2012 issue of CEO Brief.

 

Conferences,  Events, and Publications of Interest

 

July 16, 2012 - July 17, 2012

Grand Rapids, MI

 

  • Recent Development Involving Trademark Applications for Three Letter Airport Codes by Anheuser-Bush

Attorneys Anheuser-Busch have filed federal trademark applications for the registration of over 40 three-letter U.S. commercial airport codes, according to a recent article on the stltoday.com website.  A-B seeks to trademark airport codes; Draftmark line grows

INTERESTED members of the ACI-NA Legal Affairs Committee are encouraged to send any information they have on this issue to me so that the Legal Steering Group can determine what action, if any, ACI-NA should formally take on behalf of member airports on this issue.

 

If you have information of interest to share, forward it to me by COB on Thursday of each week.

  Send it to:  mhargrove@aci-na.org

Have a great weekend!

Monica

Monica R. Hargrove
General Counsel

Direct: (202) 861-8088

Please be advised that ACI-NA’s office has moved.  As of June 11, our new address is:

ACI-NA
1615 L Street, NW

Suite 300
Washington, DC 20036

Our phone and e-mail contacts remain unchanged.