41 North 73 West Inc v. United States Dep't Of Transp., No. 09-4810-ag

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtDEBRA ANN LIVINGSTON,DENNY CHIN,Circuit ,DAVID G. LARIMER, .*
Parties41 NORTH 73 WEST, INC., doing business as Avitat Westchester and Jet Systems, Petitioner, v. UNITED STATES DEPARTMENT OF TRANSPORTATION, RAY LAHOOD, Secretary of Transportation, FEDERAL AVIATION ADMINISTRATION, J. RANDOLPH BABBITT, Administrator, Federal Aviation Administration, Respondents, COUNTY OF WESTCHESTER, NEW YORK, Intervenor.
Decision Date02 November 2010
Docket NumberNo. 09-4810-ag

41 NORTH 73 WEST, INC., doing business as Avitat Westchester and Jet Systems, Petitioner,
v.
UNITED STATES DEPARTMENT OF TRANSPORTATION, RAY LAHOOD, Secretary of Transportation, FEDERAL AVIATION ADMINISTRATION,
J. RANDOLPH BABBITT, Administrator, Federal Aviation Administration, Respondents, COUNTY OF WESTCHESTER, NEW YORK, Intervenor.

No. 09-4810-ag

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

Filed: November 2, 2010


SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 2nd day of November, two thousand and ten.

PRESENT:

DEBRA ANN LIVINGSTON,

DENNY CHIN,

Circuit Judges,

DAVID G. LARIMER,

District Judge.*

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BARBARA E. LICHMAN and STEVEN M. TABER, Chevalier, Allen & Lichman, LLP, Costa Mesa, California, for Petitioner.

TONY WEST, Assistant Attorney General (Michael J. Singer and Sydney Foster, on the brief), Washington, D.C., for Respondents.

W. ERIC PILSK, PETER J. KIRSCH, and ARTHUR P. BERG, Kaplan Kirsch & Rockwell LLP, Washington, D.C., for Intervenor.

UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, and DECREED that the petition for review is DENIED.

Petitioner 41 North 73 West, Inc., d/b/a Avitat Westchester and Jet Systems ("Avitat"), seeks review of a September 21, 2009 final decision and order of respondent the Federal Aviation Administration ("FAA"), which found that intervenor County of Westchester, New York ("County") did not violate its conditions to funding under the FAA's Airport Improvement Program, authorized under the Airport and Airway Improvement Act of 1982 ("AAIA"), 49 U.S.C. § 47101 et seq. We assume the parties' familiarity with the underlying facts and procedural history, which we reference only as necessary to explain our decision.

A. Background

1. The AAIA

The FAA provides monetary grants to "airport sponsors," or public agencies that own and operate airports, through its Airport Improvement Program. Congress has required that grant

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applications contain certain written assurances that an airport sponsor seeking federal funds will abide by a variety of requirements. 49 U.S.C. § 47107(a). Under the AAIA, the Secretary of Transportation is responsible for ensuring compliance with these assurances, 49 U.S.C. § 47107(g), and is authorized to approve grant applications only if the airport sponsor's assurances are "satisfactory to the Secretary." 49 U.S.C. § 47107(a). Accordingly, the Secretary of Transportation has promulgated and revised a set of standardized grant assurances ("Grant Assurances"), including the three at issue in this case.

Grant Assurance 22, entitled "Economic Nondiscrimination," requires the airport sponsor to make its airport available for public use "without unjust discrimination to all types, kinds and classes of aeronautical activities," and to subject businesses based at the airport "making the same or similar uses" of the airport to the same rates, fees, and other charges.1 64 Fed. Reg. 45, 008, 45, 011 (Aug. 18, 1999); 62 Fed. Reg. 29, 761, 29, 766 (June 2, 1997). Grant Assurance 23, entitled "Exclusive Rights," requires the airport sponsor to assure that "[i]t will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public." 62 Fed. Reg. at 29, 766. Further, the airport sponsor must agree that "it will not, either directly or indirectly, grant or permit any person, firm, or corporation, the exclusive right at the

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airport to conduct any aeronautical activities." Id. Finally, Grant Assurance 24, entitled "Fee and Rental Structure," requires an airport sponsor to assure that it "will maintain a fee and rental structure for the facilities and services at the airport which will make the airport as self-sustaining as possible under the circumstances existing at the particular airport, taking into account such factors as the volume of traffic and economy of collection."2 62 Fed. Reg. at 29, 767.

The FAA enforces compliance with these and other Grant Assurances by applying procedures delineated in the Rules of Practice for Federally-Assisted Airport Enforcement Proceedings. 14 C.F.R. § 16.1(a)(1), (5). 14 C.F.R. Part 16 permits a person "directly and substantially affected" by an airport sponsor's alleged noncompliance with a Grant Assurance to file a formal complaint with the FAA. 14 C.F.R. § 16.23(a). If the pleadings reveal a "reasonable basis for further investigation," the FAA investigates the allegations, after which the Director of the Office of Airport Safety and Standards issues an "initial determination." 14 C.F.R. §§ 16.29(a), 16.31(a). If the Director dismisses a complaint, the petitioner can file an administrative appeal to the Associate Administrator for Airports, who examines the existing record and issues a final decision without a hearing. 14 C.F.R. §§ 16.31(c), 16.33(a)(1). This final decision is then reviewable by a federal appellate court via petition. 49 U.S.C. § 46110; 14 C.F.R. § 16.247(a).

2. Factual Background

Much of this litigation centers around a category of aircraft operations known as "general aviation." General aviation is a generic term that refers to all flights other than commercial airline, cargo, and military aviation activity. Within this category are two market segments relevant to this case: "Light General Aviation" ("LGA"), and "Large" or "Heavy General Aviation" ("HGA"). LGA refers to smaller general aviation aircraft and services-typically piston or propeller-driven aircraft and smaller jets whose maximum gross takeoff weight ("MGTOW") is less than 12, 500

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pounds. LGA aircraft are used primarily for personal or recreational purposes. HGA, meanwhile, refers to larger general aviation aircraft typically used for corporate purposes, whose MGTOW exceeds 12, 500 pounds. LGA piston-driven aircraft are generally fueled with 100 octane fuel (known as "AvGas"), while LGA turbo-prop and jet aircraft, along with most HGA aircraft, require jet fuel.

Westchester County Airport ("Airport"), located in White Plains, New York, is a public-use airport owned by the County. The planning and development of the Airport was financed with funds provided by the FAA under the Airport Improvement Program, for which the County accepted obligations under Grant Assurances 22, 23, and 24. Avitat is the largest "fixed-base operator" ("FBO") at the Airport.3 Avitat is one of three HGA FBOs that provide services and fuel sales to all general aviation users, but primarily cater to HGA corporate and private jets. Two FBOs, Westair Aviation Services, LLC and Panorama Flight Service, Inc. ("LGA FBOs") mainly service LGA aircraft.

In 1992, after having issued a series of policy statements voicing the need to improve general aviation facilities and to support the LGA community, the County submitted to the FAA an application to impose a Passenger Facility Charge ("PFC") at its Airport.4 The County's application specified that the funds would be used to develop new areas for FBOs to serve primarily light general aviation aircraft. The FAA approved the plan, and authorized the use of PFC funds for the construction of the LGA facilities.

With funding secured, the County issued a "Request for Proposals for the Operation and Management of a Light General Aviation Fixed Base Operation at Westchester County" ("RFP").

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The stated goal of the RFP was to "fulfill the County's commitment to support light general aviation at Westchester County Airport" by providing "Light General Aviation Fixed Base Operation services to the owners and operators of light general aviation aircraft under 12, 500 pounds." In 1999, the County executed 30-year leases with the LGA FBOs. Due to concerns that rent calculated at a market rate would "seriously challenge the health of the FBO or the price to the public," the County agreed to a discounted rent rate structure based on a percentage of the gross revenues of the LGA FBOs. The County anticipated a yearly rent of approximately $60,000 from each LGA FBO.

The LGA FBO leases require the LGA FBOs to provide a number of services for the LGA community. In addition, the leases expressly limit the number of aircraft with an MGTOW over 12, 500 pounds that can be based at the LGA FBOs. The terms of the leases do not permit the sale of jet fuel, but state that "the parties agree to meet to discuss the possibility of the County granting Tenant the right to...

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