Grant Assurance Compliance

Principles & Processes ACA Fall Conference 2013

David Cushing, Manager, Los Angeles Airports District Office

Federal Aviation Administration

Airport Compliance Program

To enforce sponsor commitments to protect the public’s interest in civil aviation; To ensure Surplus Properties and Airport Improvement Program investments serve their intended purposes; To achieve balance between proprietary rights and business goals and the public interest in the aeronautical utility; To be convincing, consistent and legally sufficient.

FAA is constantly thinking about our principles abstractly, strategically and in practice.

September 11, 2013 ACA Fall Conference Federal Aviation Administration 2

2

    

Principles of Compliance Our Grant Assurances are our Principles Surplus Property Deeds are the Same

If an airport has accepted AIP funding or is otherwise obligated, (e.g. surplus property), then it must abide by certain rules.

Sponsors voluntarily agree to this rules.

Grant assurances (and deed covenants) most commonly at issue are 19, 22, 23, 24 and 29.

Revenue-Use Requirements are Federal Law Civil Rights Requirements are Federal Law

September 11, 2013 ACA Fall Conference Federal Aviation Administration

3

Principles of Compliance

Preserving Rights and Powers and Good Title

Grant Assurance 4 states

: A sponsor holds good title to the landing area of the airport or site thereof, or will satisfy the Secretary that it will acquire good title.

Grant Assurance 5 states:

A sponsor will (retain) all rights and powers necessary to perform any or all of the terms, conditions, and assurances. It will not sell, lease or encumber its title or interest in Exhibit A property September 11, 2013 ACA Fall Conference Federal Aviation Administration

4

Principles of Compliance

Operate and Maintain and Airport Layout Plan

Grant Assurance 19 states:

The airport and all facilities which are necessary to serve the aeronautical users of the airport … shall be operated at all times in a safe and serviceable condition...

Grant Assurance 29 states that the sponsor will:

a) keep up to date at all times an airport layout plan (ALP) b) eliminate any change or alteration to the airport that the Secretary determines to be adverse to the airport and inconsistent with the ALP and pay for the change. September 11, 2013 ACA Fall Conference Federal Aviation Administration

5

Principles of Compliance

Exclusive Rights and Fee and Rental Structure

Grant Assurance 23 states a sponsor will NOT:

Either directly or indirectly, grant or permit any person, firm, or corporation, the exclusive right at the airport to conduct any aeronautical activities

Grant Assurance 24 states a sponsor will:

Maintain a fee & rental structure for facilities and services which will make the airport as self-sustaining as possible September 11, 2013 ACA Fall Conference Federal Aviation Administration

6

Principles of Compliance

Revenue Retention is Law and G.A. 25

All revenues generated by the airport (or system) plus fuel taxes apres 87 will go to capital or operating costs of the airport or system.

Non-fuel tax levying is not included in revenue.

Economic Development is specifically called-out in law.

It matters if you’re doing a deal with the sponsor or non sponsor, sometimes.

Less rent for jobs or direct payment might be probable cause September 11, 2013 ACA Fall Conference Federal Aviation Administration

7

Principles of Compliance

What do Grant Assurances 4, 5, 19, 23, 24, 25 and 29 mean for Economic Development?

1) Tend the aeronautical garden first.

2) Use strategic and balanced aeronautical business incentives.

3) Always use prudent business practices with regard to land ownership.

4) Protect the civil aviation interests of the public. 5) Be realistic when you’re altering the market.

September 11, 2013 ACA Fall Conference Federal Aviation Administration

8

Standard of Compliance

“A sponsor meets its commitments when: (1). The federal obligations are understood; (2). A program (e.g., preventive maintenance, leasing policies, operating regulations, etc.) is in place that the FAA deems adequate to carry out the sponsor’s commitments; (3). The sponsor satisfactorily demonstrates that such a program is being carried out; and, (4). Past compliance issues have been addressed.”

FAA Order 5190.6B, 2.8.b.

September 11, 2013 ACA Fall Conference Federal Aviation Administration 9

9

Standard of Compliance Real-Time Compliance Corrective Action

“The FAA generally takes punitive compliance actions, such as withholding funds under 49 U.S.C. § 47114, when reasonable efforts have failed to achieve voluntary compliance. [See FAA Order 5190.6B ¶2.4.(a.)] This is because aviation users receive direct benefits from the Federal investments made at public use airports via grants from the FAA to airport sponsors. …

September 11, 2013 ACA Fall Conference Federal Aviation Administration 10

10

Standard of Compliance No Damages Resolution Seeking

…The FAA’s decision to withhold these funds can potentially deprive aeronautical users of the benefit of capital improvements which may enhance safety or expand capacity. Such a decision is not made lightly, and this action is not used to penalize sponsors who may have unknowingly breached their commitments, but corrected past errors after becoming aware of their full obligations.” [See Drake Aerial Enterprise, LLC v. City of Cleveland, Ohio, FAA Docket No.

16-09 02, (February 22, 2010) (Director’s Determination) at 12]

September 11, 2013 ACA Fall Conference Federal Aviation Administration 11

11

Informal Complaints 14 CFR Part 13.1

FAA Goals (Order 5190.6B, 5.4.a.): 1.

Evaluate the facts and identify potential sponsor violations.

2.

3.

Clarify the rights and responsibilities of the sponsor and the complainant.

Offer assistance to resolve the dispute in a manner consistent with the sponsor’s assurances.

4.

Provide the sponsor with the opportunity to comply with its federal obligations voluntarily when a violation is identified.

September 11, 2013 ACA Fall Conference Federal Aviation Administration 12

12

Formal Complaints

• 14 CFR Part 16 is a formal process • Good faith efforts prior to filing • Complainant must have standing • Appeal process • Threshold issue: is the sponsor in violation of its federal obligations?

• NO DAMAGES • It’s not about what’s fair to complainant.

• It’s about whether the sponsor is within compliance. September 11, 2013 ACA Fall Conference Federal Aviation Administration 13

13

Formal Complaints

Initial Complaint 20 days Docketing Notice 20 days Answer

( address the facts and the allegation)

10 days Reply 10 days Rebuttal

(address changed argument conglomeration)

120 days Director’s Determination 30 days for Appeal

(point out specific error)

20 days for Appeal Reply

(just agree with Director!)

60 days for Final Agency Decision 60 days for Court of Appeals appeal.

September 11, 2013 ACA Fall Conference Federal Aviation Administration 14

14

Formal Complaints Lessons for Parties

• • • • • • •

Do Take it seriously Understand the process

• •

Respond to each allegation

• • •

Tell us the story Recognize your obligations

•

Send pertinent Don’t Call names supporting documentation Send a copy of the grant assurances Ignore deadlines Send unnecessary exhibits Bring up unrelated issues Get off track – focus on your obligations Be afraid to admit past mistakes that you have fixed

September 11, 2013 ACA Fall Conference Federal Aviation Administration 15

15

QUESTIONS ?

Federal Aviation Administration 16

16

Principles of Compliance

Grant Assurance 22 states a sponsor must/may:

a) Must make the airport available as an airport for public use on reasonable terms and without unjust discrimination b) Must apply nondiscriminatory and substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges to airport businesses….

h) May establish reasonable, and not unjustly discriminatory, conditions on all users

necessary

for the safety and efficiency… i) May prohibit or limit a type of aeronautical use if such action is

necessary

for the safe operation of the airport or

necessary

to serve the civil aviation needs of the public.

September 11, 2013 ACA Fall Conference Federal Aviation Administration

17