BMI Salvage Corp. v. Federal Aviation Administration ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 07-12058 April 8, 2008
________________________ THOMAS K. KAHN
CLERK
FAA No. 16-05-16
BMI SALVAGE CORPORATION, a
Florida corporation and
BLUESIDE SERVICES, INC., a Florida
Corporation,
Petitioners,
versus
FEDERAL AVIATION ADMINISTRATION,
MIAMI-DADE COUNTY, FL,
Respondents.
________________________
Appeal from an Order of the
Federal Aviation Administration
_________________________
(April 8, 2008)
Before BIRCH and FAY, Circuit Judges, and HINKLE,* District Judge.
________
* Honorable Robert L. Hinkle, United States Chief District Judge for the Northern District of
Florida, sitting by designation.
FAY, Circuit Judge:
We review a final decision of the Associate Administrator for Airports (the
“Administrator”) of the Federal Aviation Administration (“FAA”) dismissing the
complaint filed by BMI Salvage Corporation (“BMI”) and Blueside Services, Inc.
(“Blueside”), alleging that Miami-Dade County, Florida has violated applicable
federal law and related FAA sponsor assurances by engaging in unjust
discrimination in its operation of the Opa-Locka Airport.
Finding the current record lacks sufficient evidence for a meaningful
review, we remand to the Administrator in order to give the parties the opportunity
to present additional evidence. Should Miami-Dade County (the “County”) fail to
support its actions with non-discriminatory justifications, corrective steps and
relief should be ordered.
I. Background
In 1961, pursuant to the Surplus Property Act of 1944, the federal
government conveyed Opa-Locka Airport (the “Airport”), a public-use, general
aviation airport, to the County.1 As a result, the County is bound by the terms of a
1
See 49 U.S.C. § 47151-53.
2
quitclaim deed incorporating legal duties that arise from the Surplus Property Act.2
Furthermore, as the sponsor for federal grants received by the Airport as part of
the Airport Improvement Program (the “AIP”), the County is obligated to comply
with federal law and related FAA sponsor assurances. See 49 U.S.C. § 47107.3In August 2005, Stephen O’Neal (“Appellant”), the owner and President of
BMI and Blueside, initiated this case by filing a formal complaint on behalf of
both companies with the FAA.4 The complaint alleged many grievances with the
County and its management of the Airport, including claims that the County
violated specific provisions of federal law and related FAA sponsor assurances
requiring it to make the Airport available to the public without unjust
discrimination.
2
Although the County is owner of and sponsor for federal grants received by the Airport,
the Miami-Dade Aviation Department (“MDAD”) actually operates the Airport. For simplicity,
our references to the County include MDAD.
3
The AIP was authorized by the Airport and Airway Improvement Act of 1982
(“AAIA”), as amended, 49 U.S.C. § 47101, et seq.
4
In the interest of safety, security and development of civil aeronautics, the Federal
Aviation Act of 1958, as amended, 49 U.S.C. § 40101, et seq., delegates to the FAA
Administrator significant responsibilities for the regulation of air commerce. A person directly
and substantially affected by an airport sponsor’s alleged noncompliance with its legal duties is
entitled to file a complaint with the FAA. See 14 CFR § 16.23 (West 2008) (“Part 16”). The
complaint must provide a concise but complete statement of the facts relied upon to substantiate
each allegation. The complaint must also describe how the complainant was directly and
substantially affected by the things done or omitted by the airport sponsor. See 14 CFR §
16.23(b)(3, 4) (West 2008) .
3
BMI is a small aviation business specializing in the deconstruction and
demolition of numerous categories of aircraft. In 1999, after relocating to the
Airport from nearby Miami International Airport, BMI executed a five-year lease
(the “1999 Lease”) and began operating from 2.2 acres of a large concrete ramp at
the Airport.
Since 1999, BMI has operated on the ramp from 13 temporary work
containers and a mobile office. Beginning in 2002, because BMI’s ramp
contained no constructed facilities, plumbing or access to utilities, BMI made
numerous formal and informal requests to the County to enter into a new lease that
would permit BMI to occupy existing or develop new constructed facilities at the
Airport. BMI alleges that the County ignored, delayed responding to or denied its
numerous requests.
The 1999 Lease expired by its terms on December 31, 2004. Despite
negotiations for a new long-term lease that occurred from October 2004 to August
2005, BMI currently operates on a month-to-month lease by operation of law.
More than two years after the filing of the complaint, there has been no agreement
on a new long-term lease. However, there is no evidence that the Airport has
taken action to remove BMI from its premises. BMI continues to operate from a
ramp at the Airport. In fact, twice during the proceedings below, in May and
4
December 2005, the County and BMI executed two Lease Modification Letters,
which enlarged the Airport ramp space available to BMI on a month-to-month
basis.
Appellant established Blueside, a Florida corporation and proposed tenant at
the Airport, to provide fixed-base operator and aircraft repair services, as well as
to eventually absorb BMI’s demolition business.5 In October 2004, Blueside
executed a sublease agreement to develop and construct facilities at the Airport
with the Opa-Locka Community Development Corporation (“CDC”), which has a
30-year lease with the County that enables it to develop significant portions of the
Airport. Yet, Blueside currently does not operate at the Airport.
Sublease agreements entered into by CDC require the approval of the
County. The County has not approved CDC’s sublease with Blueside. There is
some evidence in the record to the effect that the County’s failure to approve the
Blueside sublease is due, at least in part, to a default on CDC’s development lease
with the County. The decision of the Administrator and the determination of the
Director of the Office of Airport Safety and Standards (“Director”) do not probe
into the specifics of the default or the reasons for the County’s delay in approving
5
A fixed-base operator is a commercial entity providing aeronautical services, such as
fueling, maintenance, storage, ground and flight instruction to the public. See FAA Order
5190.6A, Airport Compliance Requirements (October 2, 1989).
5
the sublease.
Sometime shortly before Appellant filed his complaint, the County offered
Blueside a five-year lease to occupy space on a ramp at the Airport. The lease
appears similar, if not identical for all intents and purposes, to the 1999 lease.
Appellant rejected the proposed lease because he argues that the lease is
inadequate due to the five-year term and an opt-out provision that precludes him
from obtaining the requisite financing necessary to develop constructed facilities
on the ramp.
The Director reviewed the record evidence concerning Appellant’s
allegations of unjust discrimination in the awarding of long-term development
leases and determined that the County’s treatment of BMI and Blueside did not
violate its federal obligations under 49 U.S.C. § 47107(a) and related Grant
Assurance 22 (Economic Nondiscrimination). On administrative appeal, the
Administrator affirmed the Director’s decision and dismissed the complaint.
The issues on appeal have been distilled from the sweeping allegations in
the complaint.6 In this Court, Appellant focuses his argument on the County’s
6
Appellant’s complaint included claims that the County was treating BMI and Blueside
unfairly due to rule violations allegedly committed by BMI with respect to derelict aircraft and
aircraft notification procedures. We do not address these allegations because the County denies
the alleged violations had any impact on its decision whether to grant BMI and Blueside leases to
occupy or develop constructed facilities. Therefore, we refrain from addressing whether such
alleged violations, if they had been considered by the County, could be a basis for denying or
6
allegedly unjust discrimination in awarding certain Airport tenants leases to
occupy or develop constructed Airport facilities, but refusing BMI and Blueside
such leases. In addition to citing evidence that the County awarded leases to
occupy or develop constructed Airport facilities to similarly-situated tenants,
Appellant points to the County’s failure to approve, or even offer a lease
comparable to, Blueside’s sublease with CDC.
According to Appellant, the Administrator erred when he accepted the
County’s legally insufficient reasons to explain why BMI and Blueside are not
similarly-situated with tenants who received allegedly favorable leases. Further,
Appellant argues that the County’s defense that leases offered to BMI and
Blueside were comparable to leases awarded to similarly-situated tenants is
unsupported by the record.
II. Standard of Review
We must apply the standard of review articulated in the Federal Aviation
Act, 49 U.S.C. § 46110(c) (West 2008), and by default, the Administrative
Procedure Act, 5 U.S.C. § 706 (West 2008), when reviewing a final decision of the
Federal Aviation Administration dismissing a complaint filed under Part 16.
Under the Federal Aviation Act, the Administration's findings of fact are
delaying the approval of the desired leases.
7
conclusive if supported by substantial evidence. See 49 U.S.C. § 46110(c) (West
2008) (“Findings of fact by the . . . Administrator, if supported by substantial
evidence, are conclusive.”). We consider the record in its entirety “including the
body of evidence opposed to the [FAA’s] view,” when reviewing the record for
substantial evidence. NLRB v. S. Fla. Hotel & Motel Ass’n, 751 F.2d 1571, 1579
(11th Cir. 1985) (quoting Universal Camera v. NLRB, 340 U.S. 474, 488, 71 S.Ct.
456, 465, 95 L.Ed. 456 (1951)). “Substantial evidence is such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.” Singer v.
Garvey, 208 F.3d 555, 558 (6th Cir. 2000).
Even if two different conclusions can be drawn from the evidence, we may
still find that the agency’s factual findings are supported by substantial evidence.
See S. Fla. Hotel & Motel Ass’n, 751 F.2d at 1579. Substantial evidence review
“gives the agency the benefit of the doubt, since it requires not the degree of
evidence which satisfies the court that the requisite fact exists, but merely the
degree which could satisfy a reasonable factfinder.” Allentown Mack Sales &
Serv., Inc. v. NLRB, 522 U.S. 359, 377, 118 S.Ct. 818, 139 L.Ed.2d 797 (1998)
(italics omitted).
In addition, we must ascertain whether there is a rational connection
between the facts found and the decision made by the agency. See Bowman
8
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285, 95 S.Ct. 438,
442, 42 L.Ed.2d 447 (1974); Nat’l Wildlife Fed’n v. Marsh, 721 F.2d 767, 780
(11th Cir. 1983). Thus, not only must the agency’s factual findings be supported
by substantial evidence, but the agency’s nonfactual analysis, including its
interpretation of the governing statute, application of that statute to the facts, and
conclusion must also be reasonable and not arbitrary and capricious. See South
Dakota v. Civil Aeronautics Bd., 740 F.2d 619, 621 (8th Cir.1984); Starr v. FAA,
589 F.2d 307, 310 (7th Cir. 1978).
III. Discussion
The federal government plays an important role in developing civil aviation
through various legislative acts designed to develop airport facilities. Under
programs that provide funds and surplus federal property to local communities, an
airport’s sponsor or owner is bound by certain obligations, either through contract
or a restrictive covenant in the property deed or conveyance instrument, to
maintain and operate the airport facilities safely, efficiently, and in accordance
with specified conditions.
The Airport receives federal funds under such a program: the AIP. This
program provides financial assistance to airport sponsors in exchange for binding
9
commitments designed to ensure that the public interest is served.7 These
commitments were detailed in the County’s applications for federal assistance and
in the grant agreement, which includes a list of sponsor assurances incorporating
applicable federal laws, regulations, executive orders, statute-based assurances,
and other requirements binding on the County. After acceptance of an AIP grant,
the assurances become a binding obligation between the airport sponsor and the
federal government, and the FAA has a statutory obligation to ensure that airport
sponsors comply with their sponsor assurances. See 49 U.S.C. § 47122 (West
2008).
In this case, Appellant alleges that the County has violated Federal Grant
Assurance 22 (Economic Nondiscrimination), which provides that the County
must make the Airport available “for public use on reasonable terms, and without
unjust discrimination, to all types, kinds, and classes of aeronautical activities,
including commercial aeronautical activities offering services to the public at the
airport.”8 Grant Assurance 22(a) (implementing 49 U.S.C. § 47107(a)(1)).9
7
The Secretary of Transportation is authorized to prescribe project sponsorship
requirements to ensure compliance with the AAIA. See 49 U.S.C. § 47107(g)(1) (West 2008).
8
As noted, the County’s operation of the Airport is also bound by the terms of a
quitclaim deed issued under the Surplus Property Act. Property deeds issued under that Act
provide in relevant part that “the property transferred hereby . . . shall be used for public airport
purposes, and only for such purposes, on reasonable terms and without unjust discrimination.”
This deed covenant mirrors Grant Assurance 22 thus, we do not address whether the County’s
10
Specifically, BMI and Blueside claim the County violated Grant Assurance 22
when it awarded certain tenants, but not others, leases to occupy or develop
constructed Airport facilities.10
BMI and Blueside claim in general that they are similarly situated with the
Airport tenants who received favorable leases from the County. The
Administrator and Director both acknowledged, however, that facts supporting
these claims had not been clearly, concisely, or completely described as required
by Part 16. Further complicating the effort to determine whether the tenants are
similarly situated, the record includes what could be considered conflicting
statements from BMI and Blueside.
For example, as noted by the Administrator, when describing how the
County allegedly favored fixed-base operator Miami Executive Aviation,
Appellant compares the County’s treatment of Blueside, but then suddenly
obligations arise from the deed or contractual sponsor assurances because the analysis would be
identical for purposes of our review.
9
The obligation to make the Airport available to the public without unjust discrimination
is necessarily balanced by provisions permitting the County “to establish such reasonable, and
not unjustly discriminatory, conditions to be met by all users of the airport as may be necessary
for the safe and efficient operation of the airport.” Grant Assurance 22(h). Moreover, under
Grant Assurance 22(i), the County may “prohibit or limit any given type, kind or class of
aeronautical use of the airport if such action is necessary for the safe operation of the airport or
necessary to serve the civil aviation needs of the public.”
10
By failing to raise a violation of Grant Assurance 23 (Exclusive Rights) in his
complaint, Appellant has waived his right to argue such a violation in this Court.
11
switches to statements regarding BMI, only then to jump back to statements
regarding Blueside. The Administrator used this inconsistency to suggest that the
record is not clear regarding which corporate entity wishes to establish a new
aircraft repair station.
We must agree that while arguing their case below BMI and Blueside did
themselves a disservice by muddying the record with the revolving use of
corporate names and presenting indistinct business plans. However, certain record
evidence deemed inconsistent by the Administrator is not, in our view, contrary to
Appellant’s express plans to eventually merge BMI and Blueside. We are able to
reconcile many of these seeming inconsistencies by recognizing that these
statements reflect both failed past efforts to expand BMI and present efforts to
offer additional services through Blueside, which plans to possibly absorb BMI in
the future.11
Our reading of the record clearly shows that BMI is an established aircraft
demolition business that made numerous requests to obtain a more permanent
leasing arrangement at the Airport. The record also clearly shows that Blueside is
11
For example, the statement: “BMI Salvage Corporation made repeated requests to
lease . . . in an effort to open a new aircraft repair station business” is not necessarily inconsistent
with “Blueside is proposing to offer [fixed-base operator] services, which includes the creation of
a . . . repair station which are totally different services from BMI, which [presently] offers aircraft
teardown services.”
12
a separate entity established by Appellant for the primary purpose of entering into
a long-term lease to operate a fixed-base operator business. Further, we read the
record as clearly demonstrating that Appellant attempted numerous times in vain
to obtain permission to occupy or develop constructed facilities at the Airport for
the purpose of opening an aircraft repair business.
There is potential confusion regarding the corporate name under which that
aircraft repair business was to operate. However, there can be no mistake that
Appellant made several requests, first through BMI then through Blueside, for a
lease to occupy or develop constructed facilities at the Airport in order to open an
aircraft repair business. The record may be lacking in certain specific details,
some of which the County or third parties are likely in a better position to provide
than BMI or Blueside. Nevertheless, we believe Appellant has stated with
sufficient particularity his allegations that the County unjustly discriminated
against BMI and Blueside by refusing to grant either company a lease to occupy or
develop constructed facilities at the Airport.
Extracting from the record that BMI and Blueside wish to occupy or
develop constructed facilities at the Airport for the purpose of operating
aeronautical businesses, we must address Appellant’s allegations that the County
repeatedly delayed or denied BMI and Blueside leases to occupy or develop
13
constructed facilities while granting such leases to similarly situated tenants. The
two specific tenants alleged to have received favorable treatment are Clero
Aviation and Miami Executive Aviation. We begin with Clero Aviation.
In 2002, on at least two occasions, Appellant expressed to the County an
interest in entering into a long-term lease that would enable BMI to expand and
offer aircraft repair services. In February 2002, Appellant notified the County that
he wanted to develop property at the Airport in a letter complaining that his phone
calls to County-approved developers authorized to provide a long-term lease went
unreturned for several years. In March 2002, Appellant sent a facsimile to a
County official requesting permission to lease Building 407 at the Airport , a
condemned building BMI offered to renovate at its own cost provided the County
would partially offset such costs with lease credits. That request was not granted
and the record provides no reason.
In contrast, the record shows that the County provided Clero Aviation a
five-year lease to occupy a condemned building (Building 66). When that
building failed inspection, the County and Clero Aviation promptly entered into a
new three-year lease for a separate condemned building (Building 137). The
recitals to the three-year lease state that Clero Aviation intended to occupy
Building 137 while negotiations were simultaneously underway with the County
14
for Clero Aviation to construct a new facility on Airport property. The record also
appears to demonstrate that the County agreed to finance, at least in part, the
refurbishment and re-certification of those condemned buildings.
In the face of what could be reasonably interpreted as discriminatory
treatment, the Administrator concluded that BMI and Clero Aviation were not
similarly situated tenants and, in any event, the BMI and Clero Aviation leases
were in fact comparable. The Administrator reasoned that Clero Aviation was not
similarly situated because it entered into a lease to operate its existing repair
station business, whereas the purpose of BMI’s request was to open a new aircraft
repair business and possibly continue its existing demolition business.
Yet, we find no evidence in the record regarding the relevance of this
distinction to the County’s decision whether to award an existing tenant access to
a condemned building. Further, as we discuss below with respect to Miami
Executive Aviation, a policy that awards leases merely based on whether a lessee
operates an existing business or a new business likely violates the County’s duty
to refrain from granting exclusive rights to certain tenants.
In addition to Clero Aviation’s operation of an existing repair station, the
decision below noted there existed a non-aeronautical element to BMI’s aircraft
demolition business that gave the County a sufficient basis to discriminate in favor
15
of Clero Aviation, which does not have a non-aeronautical element to its business.
The decision below clarified that BMI obtains aircraft and dismantles them,
resulting in the aircraft never flying again, while Clero Aviation repairs
non-flyable aircraft, permitting the aircraft to fly again. If we understand this
distinction correctly, a demolition business is not similarly-situated with an
aircraft repair business for purposes of awarding a lease to occupy a condemned
building because the former has a non-aeronautical element.
The FAA concedes that “the receipt of aircraft onto the leasehold for
demolition, along with a reasonable time period after the aircraft is last parked
under its own power, is an aeronautical activity.” BMI Salvage Corp. & Blueside
Services, Inc. v. Miami-Dade County, Florida, FAA Docket No. 16-05-16, 2006
WL 2512974, at *10 (Dep’t Transp. July 25, 2006) (Director’s Determination).
The implication, however, is that at some point in the demolition process BMI is
no longer engaged in a completely aeronautical activity. The arguably hybrid
nature of any aircraft salvage or demolition operation understandably presents
challenges for the management of the Airport. We must consider these challenges
in the context of reviewing a complaint alleging a violation of an airport sponsor’s
16
federal obligations.12
We do not refute the obvious fact that the two businesses are engaged in
different activities at the Airport. BMI is in the aircraft demolition business, while
Clero Aviation is in the aircraft repair business. Thus, leases between these parties
and the County would apply to businesses with different purposes. However, it is
unstated in the record what relevance the different business purposes have to the
decision whether to grant these particular existing tenants the right to refurbish
and occupy condemned buildings. If, as the County argues and the record
supports, BMI made proposals to expand its operation and add an aircraft repair
business, the record is silent on what effect the proposed expansion has on
whether BMI and Clero Aviation are similarly situated for purposes of leasing and
refurbishing a condemned building. If BMI proposed to offer aircraft repair
services, the parties’ business purposes are less distinct.
Absent further explanation, we find the alleged non-aeronautical aspects of
12
According to the Director, the challenges for a sponsor include the requirement to
reserve aeronautical facilities for aeronautical activities; the requirement to charge fair-market
value for the use of airport facilities for non-aeronautical purposes; the requirement to operate
and maintain the airport in a safe and serviceable condition; and retaining the ability to develop
aeronautical areas of the airport for purely aeronautical activities. Grant Assurance 24 includes
the requirement to charge non-aeronautical, fair-market value rates for non-aeronautical activities
at the airport. Further, the County’s property deed and its Airport Layout Plan (ALP) designate
aeronautical areas of the airport that must be used for aeronautical purposes, unless specifically
authorized by FAA pursuant to a possible ALP change and notice to the public of the change
from aeronautical to non-aeronautical use.
17
BMI’s business to be an unpersuasive basis on which to conclude that the parties
are not similarly situated.13 The record provides no reason why the non-
aeronautical element, if there is one, is a reasonable justification to distinguish
between BMI and Clero Aviation. It is our understanding that presence at the
airport is a prerequisite for BMI’s demolition business. Aircraft must be flown to
the site of BMI’s business for demolition to begin. Therefore, the natural, perhaps
only logistically feasible, place for such a business to operate is within the
designated aeronautical area of the Airport.
The non-aeronautical element of BMI’s business is at most de minimis in
light of the need to locate an aircraft demolition business in proximity to
aeronautical areas in the Airport. Until the County can explain how the hybrid
nature of BMI’s business is crucial to its decision whether to award a lease to
occupy a condemned building, we find the current explanation for the apparently
disparate treatment in this case to be deficient.14
13
The FAA’s definition of aeronautical activities does not explicitly rule out the
possibility that a business such as BMI’s is a completely aeronautical activity. A demolition
business is not specifically included on the list of aeronautical activities; however, the list is by
its terms not exhaustive. See Appendix 5 of FAA Order 5190.6A, Airport Compliance
Requirements.
14
The Director suggested the County could simultaneously accommodate BMI’s
demolition business and assure compliance with its federal grant assurances by providing a time
limit to remove non-aeronautical parts from designated aeronautical areas. See BMI Salvage
Corp. & Blueside Services, Inc., FAA Docket No. 16-05-16, 2006 WL 2512974, at *14 (Dep’t
Transp. July 25, 2006) (Director’s Determination).
18
Importantly, the decision below also concluded that the leases under which
BMI and Clero Aviation operate are in fact comparable. BMI operated on a ramp
at the Airport pursuant to a standard five-year lease with a 30-day relocate or
vacate clause. Clero Aviation initially operated in Building 66 pursuant to a
standard five-year lease with a 30-day relocate or vacate clause. Clero Aviation
currently has a three-year lease for a separate building (Building 137) including an
option for an extension and a 30-day relocate or vacate clause.
During oral argument, Appellant emphasized the crippling nature of the
30-day relocate or vacate clause, which he argued prevents BMI from obtaining
financing to refurbish or construct facilities at the Airport. While we are
unpersuaded by the County’s claims that the 30-day clause was included merely
for BMI’s benefit (in which case the clause could be drafted to grant BMI a
unilateral right), it appears from the record that the 30-day relocate or vacate
clause is a standard provision in Airport leases. Even so, notwithstanding the
presence of a 30-day relocate or vacate clause in both leases, the leases are
glaringly different in a fundamental way: Clero is granted access to a building and
BMI is denied access to a building. Further, a 30-day relocate or vacate clause is
less damaging to a lessee where the lessor agrees to assume certain costs
associated with re-certifying and refurbishing the condemned building, as the
19
County agreed to do in the case of Clero Aviation.
We find the current record lacks sufficient legal and factual justification to
support the conclusion that BMI and Clero Aviation are not similarly situated for
purposes of leasing a condemned building. Substantial evidence in the record also
indicates that BMI and Clero Aviation’s leases are not comparable.
We turn next to Appellant’s allegations that the County has unjustly
discriminated against BMI and Blueside in favor of Miami Executive Aviation
(“MEA”). According to Appellant, the County granted a 35-year development
lease to MEA, which is a similarly situated aeronautical service provider that was
not required to use an approved developer. However, as with Clero Aviation, the
Administrator concluded that MEA is not similarly situated with BMI and
Blueside.
By April 2005, the County was in the process of awarding a 35-year
development lease to MEA, which is a fixed-base operator. We understand that
when aeronautical tenants propose the same or similar use of the airport, if the
level of investment and business aspects are dissimilar, the FAA may find the
aeronautical users are not similarly situated. See Skydance Helicopters, Inc. d/b/a
Skydance Operations, Inc. v. Sedona Oak-Creek Airport Auth. and Yavapai
County, Ariz., FAA Docket No. 16-02-02, 2003 WL 1524500, at *27-28 (March
20
7, 2003) (Director's Determination). In this case, however, we do not believe the
record sufficiently demonstrates that BMI and Blueside are comparing themselves
to an entity with dissimilar business aspects or levels of investment.
From the record we are able to discern that, prior to receiving a long-term
35-year lease, MEA conducted business through a standard five-year lease with a
30-day relocate or vacate clause. However, once the five-year lease expired, the
County provided MEA an opportunity to avoid the potential risk of developing on
a short-term lease by entering into a long-term lease. In contrast, since BMI’s
five-year lease expired, the County has not offered BMI a similar long-term lease
and BMI operates from a ramp on a month-to-month basis.
The record sheds no light on why BMI’s demolition business is sufficiently
distinct from MEA’s fixed-base operator business to justify differential treatment
with respect to a long-term lease. There may be numerous factors that could serve
as the basis for legitimate distinctions, but we fail to see them in the record.
Merely stating that one business is an existing tenant while another is a proposed
tenant, or that one business is a fixed-base operator while another is a demolition
business, is alone insufficient to justify differential treatment.
Even assuming arguendo that BMI’s demolition business is sufficiently
distinct from MEA’s to justify differential treatment regarding the right to receive
21
a long-term lease to develop constructed facilities, Blueside and MEA have
exactly the same business purpose. Aside from any confusion regarding the entity
proposing to offer aircraft repair services, the record clearly shows that Blueside
proposed to offer fixed-base operator services under a long-term sublease with
CDC. Thus, there is scant evidence to conclude that the County’s reliance on
different business purposes was a legitimate justification to refuse to approve
Blueside’s long-term development sublease.
We note that Blueside finally secured a long-term development by entering
into a sublease with an approved developer. However, more than three years later,
the County has not ratified that sublease thereby preventing Blueside from
developing at the Airport.15 There is testimony in the record stating that the
County has not approved the sublease because CDC is currently in default on its
lease with the County. Nevertheless, the record shows only superficial efforts by
the County to accommodate Blueside’s plans to develop, which according to the
County have been thwarted due to CDC’s actions and not by any fault of Blueside.
The decision below gives dramatic consideration to the fact that MEA is a
current tenant operating an established fixed-base operator business. Blueside, in
15
Ratification by the County is required even though CDC is an approved developer at
the Airport.
22
contrast, has never had a lease with the Airport and was proposing to introduce a
new fixed-base operator business. The decisions below relied on this distinction
to conclude that Blueside is not similarly situated with MEA. We find this
distinction troubling. Permitting the County to award favorable leases to parties
merely because they are established businesses would erect a potentially
unsurmountable barrier to entry for new operators.
If the County were permitted to rely on this proffered reason alone, it would
have a chilling effect on new businesses and operators seeking to establish
themselves at the Airport.16 There is no record evidence to explain why this
particular new fixed-base operator should not be treated the same way as this
particular established fixed-base operator. Because a lease for constructed
facilities is essential to establish a fixed-base operation, the record should include
details about MEA and Blueside that can serve as legitimate justifications for
discriminating in favor of the established business over the new business.
The record indeed indicates that the County has offered Blueside a direct
five-year lease. However, the proposed lease does not grant Blueside access to an
existing building. Further, the lease is drafted for a term of five years, working
16
Further, such a policy could be implemented in a way that would violate Federal Grant
Assurance 23 (Exclusive Rights) by granting exclusive rights to existing businesses.
23
against Appellant’s plans to develop at the Airport over the long-term.
Negotiations for this lease appear to have stalled. There is some indication that
Blueside may be rejecting the lease solely due to the five-year term and the 30-day
relocate clause.
If the County can provide further evidence that the 30-day clause is standard
in all Airport leases and that similarly situated tenants have used five-year leases
with 30-day relocate clauses to successfully develop Airport property, Blueside
will have less footing from which to argue that the proposed lease is
discriminatory.17 And, if the County’s claim is genuine that the 30-day clause
exists merely for the benefit of the lessee, the County should be willing at
Blueside’s request to revise the proposed lease to make the clause unilateral.
We do not suggest that the County has avoided negotiating in good faith
with BMI and Blueside. The decisions below noted that the County had offered to
work through various issues and even had expanded the amount of ramp space
available to BMI under its month-to-month lease. Nevertheless, the record
evidence paints a picture that over numerous years BMI and Blueside have been
continuously denied without legitimate justification the right to occupy or develop
constructed facilities at the Airport.
17
The record is devoid of any such evidence.
24
The proponent of a motion, request, or order has the burden of proof.
Likewise, a party who has asserted an affirmative defense has the burden of
proving the affirmative defense. This standard burden of proof is consistent with
federal case law and the Administrative Procedure Act provision stating, “[e]xcept
as otherwise provided by statute, the proponent of a rule or order has the burden of
proof.” 5 U.S.C. § 556(d) (West 2008). Therefore, we believe the County should
have the opportunity to supplement the record, if it can, with legitimate
explanations for its differential treatment of BMI and Blueside as compared to
MEA and Clero Aviation.
We are not in a position to speculate concerning unarticulated motives the
County may have had in denying BMI and Blueside the right to occupy or develop
constructed facilities at the Airport. The record provides abundant instances of
personal friction between Appellant and various County employees. Yet, having
disclaimed any unarticulated motives and relying only on those discussed above,
the County has not proffered valid, particularized reasons for denying BMI and
Blueside the right to occupy or develop constructed facilities at the Airport.
Operating the airport for aeronautical use is a sponsor’s primary obligation.
Part of this primary obligation is the opportunity for leaseholders to develop
airport property for aeronautical use. See United States Constr. Corp. v. City of
25
Pompano Beach, Fl., FAA Docket No. 16-00-14, 2002 WL 1821882 (July 10,
2002) (Final Agency Decision). Federal assistance is not available for
improvements to airports where the benefits of such improvements will not be
fully realized due to inherent restrictions on aeronautical activities.
IV. Conclusion
It would seem rather basic that the County would require all applicants who
desired to do business at the Airport to provide evidence of financial stability,
competence in the specific area of activity, the ability to comply with the laws and
regulations governing such activity and similar fundamentals. However, this
record reflects nothing of the sort. What we are holding is that it is not adequate
under the law to deny an applicant the opportunity to operate at the Airport simply
because there is an existing operator present. There may be some maximum
number of fixed-base operations that the activity at the Airport would support, but
this record contains no such evidence. It may be that some existing buildings are
simply beyond refurbishing. But this record is silent in that regard. Negotiations
can go on for extended periods. However, when they go on for years, that fact
alone raises serious questions about the lack of “good faith.” This record is simply
inadequate for us to make a meaningful review.
Accordingly, we REMAND this case to the Administrator in order that he
26
may give the County the opportunity to present legally and factually sufficient
justifications for its refusal or delay in awarding BMI and Blueside the
opportunity to occupy or develop constructed facilities at the Airport.18 In the
absence of such, corrective steps should be ordered.
REVERSED and REMANDED with instructions.
18
We note that the County stated that it was “ready, willing and available” to work
towards executing a lease that will accommodate Appellant’s business needs. We are
encouraged by this statement and, given that several years have passed since this statement was
made, this case could become moot if the parties were to set aside their past disagreements and
agree on a lease that will enable Appellant to occupy or develop constructed facilities at the
Airport.
27