Flamingo Express, Inc. v. Fed Aviation Admin ( 2008 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 08a0280p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
Petitioner, -
FLAMINGO EXPRESS, INC.,
-
-
-
No. 07-4226
v.
,
>
FEDERAL AVIATION ADMINISTRATION, -
Respondent. N
The Petition for Review of a Decision and Order
of the Federal Aviation Administration.
No. 16-06-04.
Submitted: July 31, 2008
Decided and Filed: August 7, 2008
Before: KENNEDY, GILMAN, and GIBBONS, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Michael J. Schulte, LAW OFFICE, Covington, Kentucky, for Petitioner. Christopher
J. Walker, Michael Jay Singer, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Respondent.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. The City of Cincinnati is the municipal owner and
operator of the Cincinnati Municipal Lunken Airport (Lunken). Flamingo Express, Inc., which was
already using Lunken to conduct chartered and unscheduled air service, sought an additional permit
from the City in 2004 to operate scheduled commuter air service with seating for up to 30 passengers
per flight. After the parties had unsuccessfully negotiated for more than a year and the City had still
not approved Flamingo Express’s application, Flamingo Express filed a complaint with the Federal
Aviation Administration (FAA). The complaint alleged that the City had violated its obligations
under federal law by, among other things, failing to approve Flamingo Express’s application and
requiring that the company obtain unreasonably high liability insurance coverage.
Following an informal investigation, the Director of the FAA Office of Airport Safety and
Standards (the Director) dismissed Flamingo Express’s complaint on the basis that the City had not
violated its federal obligations. Flamingo Express then filed an administrative appeal with the FAA
Associate Administrator for Airports (the Administrator). After the Administrator affirmed the
Director’s decision, this appeal followed. For the reasons set forth below, we AFFIRM the decision
of the FAA.
1
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 2
I. BACKGROUND
A. Regulatory framework
The City’s ability to operate Lunken depends in part on the receipt of funds provided by the
FAA as part of the Airport Improvement Program (AIP). See Airport and Airway Improvement Act
of 1982, 49 U.S.C. § 47101 et seq. As a condition of receiving AIP funds, the City is required to
comply with the “written assurances” set forth in 49 U.S.C. § 47107. The Administrator explained
that “[u]pon acceptance of an AIP grant, the assurances become binding obligations between the
airport sponsor and the Federal government.” Federal law, in turn, gives the Secretary of
Transportation the authority to require that airport owners comply with these assurances. See, e.g.,
49 U.S.C. §§ 40101(c) & (d) (directing the Administrator of the FAA to consider safety, the public
interest, and other factors in carrying out the provisions of the Federal Aviation Act);
§ 47107(a) & (b) (outlining the required assurances).
At issue in the present case is the City’s obligation under Grant Assurance 22 (“Economic
Nondiscrimination”), which implements subsections (1) through (6) of 49 U.S.C. § 47107(a). That
assurance requires that the sponsor of an airport receiving AIP funding “make the airport available
as an airport 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.” Fed. Aviation Admin., Assurances, Airport Sponsors,
Part C: Sponsor Certification, ¶ 22(a), available at http://www.faa.gov/airports_airtraffic/airports
/aip/grant_assurances/media/airport_sponsor_assurances.pdf (“Grant Assurance 22(a)”); see also
49 U.S.C. § 47107(a)(1) (permitting approval of a grant application only if written assurance is
provided that “the airport will be available for public use on reasonable conditions and without
unjust discrimination”). An airport sponsor, however, “may 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.” Fed. Aviation Admin., Assurances: Airport Sponsors
¶ 22(h).
Also relevant is the FAA’s authority to issue Airport Operating Certificates (AOCs) to
airports that serve passenger-carrying operations of certain air carriers and to establish safety
standards for those airports. See 49 U.S.C. § 44706. The regulations governing the issuance of
AOCs are contained in 14 C.F.R. Part 139, which was revised by an FAA rule that took effect in
June of 2004. See 69 Fed. Reg. 6380. Prior to that time, there were two categories of AOCs:
limited and unlimited. The new certification process requires airports to be reclassified into one of
four new classes (I-IV).
Under the new rule, airports may either surrender their AOCs or apply to the FAA to modify
and/or downgrade their AOC classification. Airport Safety & Operations Div., Fed. Aviation
Admin., Program Policy and Guidance, Policy No. 75: Designation of Class of Certificate Under
the Revised 14 C.F.R. Part 139 (June 10, 2004) (“FAA Policy 75”). Airports holding a limited AOC
can seek reclassification as either a Class II or Class IV airport. 69 Fed. Reg. 6380-81. Class II
airports may serve both unscheduled large passenger aircraft (30+ seats) and scheduled small air
carrier aircraft (10-30 seats), but Class IV airports may not serve the latter category. Id. Either type
of airport, however, may serve aircraft with nine seats or less.
Although certified airports have some flexibility in determining which class of AOC to seek,
airports receiving federal assistance are limited by their “independent obligation, under the AIP
grant assurances, to provide reasonable, not unjustly discriminatory access to the airport.” FAA
Policy 75. Airports receiving federal assistance are therefore required to ensure that scheduled and
planned services are not impacted by the reclassification process, and cannot decline to meet the
requirements for a certain AOC in order to prevent an air carrier from continuing or beginning such
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 3
service. Id. As the Director explained, “the FAA would generally expect an airport operator to meet
the requirements of the AOC that corresponds to the kinds of commercial operations at the airport
at the time it applies for the new certificate, in order to meet the obligation for
reasonable . . . access.”
FAA Policy 75, issued in conjunction with the implementation of the revised AOC
procedures, specifically addresses how an airport must account for planned service when applying
for a new AOC:
The FAA generally treats planned service the same as existing service if the operator
(1) is able to actually begin service, i.e. to have the use of necessary facilities and
equipment, and have the necessary Department of Transportation and FAA authority
to operate scheduled air transportation, and (2) has filed formal notice with the
airport operator of intent to begin service within a reasonable time, e.g. 2-6 months.
FAA Policy 75.
B. Factual background
Lunken is a “reliever airport” located in Cincinnati, Ohio whose primary function is to
“serve[] the aviation needs in the tri-state area by providing needed runway capacity and landside
support facilities relief to the Cincinnati/Northern Kentucky International Airport.” Prior to 2004,
Flamingo Express conducted various air services at Lunken with a nine-seat, single-engine Piper
Cherokee aircraft. The company operated these services with a certificate issued by the FAA under
14 C.F.R. Part 135.
In April of 2004, Flamingo Express submitted a permit application to the City in which the
company sought approval to operate scheduled commuter service with aircraft seating less than 30
passengers but more than 9 passengers. Such service requires Flamingo Express to obtain
certification from the FAA pursuant to 14 C.F.R. Part 121. Flamingo Express does not dispute that
it never sought such certification from the FAA. At the time that Flamingo Express submitted its
application to the City, Lunken held a limited AOC. The Director noted that “[t]his level of
certification allowed it to serve charter or unscheduled operations and scheduled operations of 30
seats or less.”
Both the City’s airport manager and its risk manager approved Flamingo Express’s
application within a month of its submission. Flamingo Express then proceeded to submit a
preliminary proposal to the City in the form of an operating agreement. In August of 2004, the City
held a public hearing on the permit and the proposal. After receiving complaints from Flamingo
Express about the delay in approving the permit and proposal, the City responded to Flamingo
Express in January of 2005 by providing its own proposed operating agreement. The agreement
would have permitted Flamingo Express to operate scheduled commuter flights using aircraft with
only nine seats or less, required a $200-per-month fee for up to 40 flights with a $5 surcharge for
each flight thereafter, and mandated that Flamingo Express obtain liability insurance coverage in
the amount of $20 million per occurrence.
Between February and July of 2005, Flamingo Express and the City exchanged numerous
letters in an attempt to solidify the terms of the proposed agreement. Flamingo Express argued that
the City’s proposal was unreasonable because it (1) did not permit Flamingo Express to conduct the
service that it had requested, (2) required a $20 million minimum insurance policy even though the
company’s current insurance coverage of $1 million was consistent with industry standards, and
(3) included an excessive monthly fee.
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 4
The City, in turn, alleged that the agreement under consideration was for aircraft with nine
seats or less because that was what Flamingo Express
proposed when [it] applied for this license. At that time, it was discussed and agreed
upon with [Flamingo Express] that we would revisit this issue if and when [Flamingo
Express] was going to upgrade to bigger planes. Since we have not received any
indication from them of such an intention, we developed the agreement based on
their proposal and our mutual concurrence on this issue.
The City also defended the reasonableness of the monthly-fee and minimum-insurance requirements.
No agreement was reached during this exchange of correspondence, and at one point the City
suggested that if Flamingo Express was “not willing to move on these issues[, it] should consider
withdrawing [its] application.”
At some point during the time period that Flamingo Express’s application was pending, the
City applied to the FAA for a Class IV AOC reclassification. In December of 2005, the City
received the Class IV AOC. The Director explained that this reclassification means that “[a]lthough
the City’s Limited AOC would have allowed Lunken to serve scheduled operations of 30 seats or
less . . . , the new Class IV AOC does not.”
In summary, the parties contemplated three possible options for air services by Flamingo
Express at Lunken. The pre-2004 arrangement, in which Flamingo Express conducted chartered and
unscheduled air services using a nine-seat plane, continued to be a viable option even after Lunken
became a Class IV airport. Flamingo Express’s new proposal, on the other hand, contemplated
scheduled air service for 10 to 30 passengers per flight and carried with it Flamingo Express’s
current liability insurance coverage of $1 million. The third option, proposed by the City, would
have permitted Flamingo Express to operate scheduled service using a nine-seat plane and carried
with it a $20-million-insurance requirement. Flamingo Express refused to accept the City’s
proposal.
C. Procedural background
In March of 2006, Flamingo Express filed a complaint with the Director. See 14 C.F.R.
§§ 16.21, 16.23 (permitting persons “doing business with an airport” to file a complaint with the
FAA, provided that they first “engage in good faith efforts to resolve the disputed matter
informally”). That complaint was subsequently dismissed without prejudice because it was
incomplete. Flamingo Express refiled its complaint two months later. The complaint alleged that
the City had violated its obligation to comply with federal statutes and FAA regulations by (1)
failing to allow Flamingo Express to conduct the requested aircraft service and seeking
recertification from the FAA that would prohibit Flamingo Express from operating such service at
Lunken, (2) demanding unreasonable fees, and (3) requiring insurance coverage that was “contrary
to industry standards as well as the City’s own Airport Minimum Liability Insurance Requirements.”
Flamingo Express also argued that the City’s undue delay in processing the application constituted
a violation of federal regulations.
In February of 2007, the Director issued a Director’s Determination, concluding that the City
had not violated its obligation under 49 U.S.C. § 47101(a) to operate Lunken on reasonable terms
and without economic discrimination. The Director found no evidence indicating that the City had
deliberately delayed the application process and concluded that the time lapse was reasonable. It
then proceeded to address Flamingo Express’s substantive complaints and determined that although
Flamingo Express had submitted an application for the use of 10-to-30-seat aircraft, the City had not
violated its federal obligation to provide reasonable access by seeking to downgrade its FAA
classification. Specifically, the Director found that Flamingo Express had not taken sufficient steps
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 5
“to be considered a realistic prospective operator” of the proposed service and that, therefore, the
City was not obligated to refrain from downgrading its certification.
The Director also concluded that although the City “cannot impose a $20 million in liability
coverage requirement for operation of a 9-seat . . . aircraft,” such a requirement would be reasonable
for the type of service that Flamingo Express had actually proposed in its application. Finally, the
Director determined that the monthly fee required by the City was reasonable.
Flamingo Express then pursued an administrative appeal with the Administrator. See 14
C.F.R. §§ 16.31(c), 16.33 (permitting such appeals and providing procedures for filing). That appeal
challenged the Director’s Determination only with respect to (1) the City’s refusal to approve the
application for 10-to-30-seat aircraft service, and (2) the $20-million-liability-insurance requirement.
In August of 2007, the Administrator issued a Final Decision and Order affirming the Director’s
decision. The Administrator concluded that the factual findings made by the Director “are supported
by a preponderance of reliable, probative, and substantial evidence,” and that the legal conclusions
reached are “in accordance with applicable law, precedent, and public policy.”
In particular, the Administrator agreed with the Director’s determination that Flamingo
Express had not taken “steps sufficient to demonstrate substantial or realistic intent” to operate the
requested service and that the FAA “would not expect an airport sponsor” to maintain a certain
certification level “based on ‘unsubstantiated and unrealistic’ proposals.” The Administrator also
affirmed the Director’s conclusions with respect to the insurance requirement, explaining that the
required amount would be reasonable for the operations that Flamingo Express wanted to conduct.
Moreover, the Administrator noted that Flamingo Express could request a new operating agreement
from the City if it wished to conduct scheduled service of nine seats or less. In that circumstance,
the City “must be given an opportunity to revise its insurance requirement for aircraft seating 9 or
less passengers to reflect the Director’s finding.” The Administrator also recognized that if future
informal efforts to resolve the issue were unsuccessful, Flamingo Express would also have the
option of filing a new formal complaint against the City.
Flamingo Express timely filed a Petition for Review with this court. See 14 C.F.R.
§ 16.247(a) (authorizing judicial review of an Administrator’s final decision). Although both the
City and the FAA were listed as respondents, the FAA correctly points out that the FAA is the
proper respondent and that the City is not a party to this appeal.
II. ANALYSIS
A. Standard of review
“When reviewing an order of the [FAA], we apply the standards of review as articulated in
the Federal Aviation Act, 49 U.S.C. § 46110(c), and by default, the Administrative Procedure Act,
5 U.S.C. § 706.” Wilson Air Ctr., LLC v. FAA, 372 F.3d 807, 812 (6th Cir. 2004). We apply the
standards articulated in the Administrative Procedure Act only where the Federal Aviation Act does
not provide the appropriate standard. See id. at 813.
The Federal Aviation Act dictates that findings of fact made by the FAA are “conclusive”
if supported by substantial evidence. 49 U.S.C. § 46110(c). “Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.” Wilson Air Ctr.,
372 F.3d at 812-13 (internal quotation marks omitted). We must consider the entire record,
including evidence that contradicts the FAA’s findings. Id. at 813. But “[s]ubstantial evidence
review gives the agency the benefit of the doubt,” requiring “not the degree of evidence which
satisfies the court that the requisite fact exists, but merely the degree which could satisfy a
reasonable factfinder.” Id. (internal quotation marks and emphasis omitted). Thus, “[e]ven if two
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 6
different conclusions can be drawn from the evidence, we may still find that the agency’s factual
findings are supported by substantial evidence.” Id.The Federal Aviation Act is silent as to the standard that an appellate court must employ in
reviewing the FAA’s nonfactual findings, so “we must look to the Administrative Procedure Act to
supply the appropriate standard of review.” Id. Although questions of law are reviewed de novo,
5 U.S.C. § 706, “we must give some deference to the agency because it is charged with
administering the statute.” Wilson Air Ctr., 372 F.3d at 813. Under the Administrative Procedure
Act, moreover, the FAA’s interpretation of its own regulations “must be given controlling weight
unless it is ‘plainly erroneous or inconsistent with the regulation.’” See Battle Creek Health Sys.
v. Leavitt, 498 F.3d 401, 409 (6th Cir. 2007) (quoting Thomas Jefferson Univ. v. Shalala, 512 U.S.
504, 512 (1994)). All other findings and conclusions are reviewed to determine whether they are
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A).
B. Flamingo Express’s claims
The only two issues before us on appeal are whether the FAA erred in rejecting Flamingo
Express’s claim that the City violated its federal obligations by (1) failing to approve Flamingo
Express’s application seeking to operate scheduled air service with seating for 10 to 30 passengers
per flight, and (2) requiring Flamingo Express to obtain $20 million in liability insurance coverage.
We will address each of these issues in turn.
1. Application to operate aircraft with between 10 and 30 seats
Flamingo Express argues that both the Director and the Administrator erred in concluding
that the City did not violate Grant Assurance 22(a) by failing to approve the company’s permit
application. Specifically, Flamingo Express points to the fact that the City has refused to even
acknowledge that the application was for aircraft seating 10 to 30 passengers and has instead
consistently claimed that the initial application was for aircraft with 9 seats or less. According to
Flamingo Express, this blatant mischaracterization of the application is evidence that “the permit
was wrongfully denied by the City.” The company also disputes the FAA’s conclusion that
Flamingo Express’s service was not sufficiently “planned” to require the City to seek a Class II,
rather than a Class IV, AOC.
With respect to the City’s mischaracterization of Flamingo Express’s application, both the
Director and the Administrator acknowledged that the City’s position on this issue was erroneous,
and that the version of Flamingo Express’s application submitted by the City had been “visibly
altered.” The Director explicitly stated that, contrary to the City’s contention, Flamingo Express
never “agree[d] to limit its operations to only nine seats or less” and that such a limitation “has
always been at the insistence of the City.” According to Flamingo Express, the Director and
Administrator erred by failing to draw the proper legal conclusion from that factual finding (i.e., that
its application had been “wrongfully denied”).
Based on the record, Flamingo Express has reason to believe that the City engaged in
inappropriate conduct to prohibit Flamingo Express from beginning the scheduled service that it had
requested. The Director determined as much, noting that “information in the record supports the
conclusion that the City intended to limit the air carrier service sought by Complainant.” But the
problem with Flamingo Express’s argument is that it has provided no legal authority whatsoever for
the proposition that the City’s actions—even if intentional—constituted a per se violation of its
obligation to “make its airport available . . . for public use on reasonable terms.” See Grant
Assurance § 22(a).
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 7
Rather, as the Director and the Administrator both explained, the relevant issue under FAA
policy and regulations is whether Flamingo Express’s proposed service was “sufficiently realistic
to be considered ‘planned,’ for the purpose of determining reasonable access.” Only under such
circumstances would the City have wrongfully sought a Class IV AOC in violation of its federal
obligations, because FAA policy “generally treats planned service the same as existing service.”
FAA Policy 75.
But the FAA does not require an airport to maintain a certain certification level on the basis
of “unsubstantiated or unrealistic proposals.” FAA regulations also impose certain requirements on
the service operator. Thus, before an airport is required to ensure reasonable access through its AOC
classification, an operator must demonstrate that it (1) “is able to actually begin service, i.e. to have
the use of necessary facilities and equipment, and have the necessary Department of Transportation
and FAA authority to operate scheduled air transportation,” and (2) “has filed formal notice with
the airport operator of intent to begin service within a reasonable time.” FAA Policy 75 (emphasis
added).
Because Flamingo Express had given notice of its intent to begin service by filing its permit
application, the City would have violated its federal obligations by seeking to downgrade its AOC
if Flamingo Express had been “able to actually begin service.” See id. (“The FAA has considered
an operator prevented from starting service to be ‘directly and substantially affected’ by the airport’s
actions, and has accepted a complaint from the operator.”). But the Director found that Flamingo
Express was not able to actually begin service because it did not have a Part 121 certificate from the
FAA—a necessary precondition to conducting the type of air service that it had proposed.
According to the Director, Flamingo Express had also failed to “engage[] the FAA for its Part 121
certification, such as a Pre-Application Statement of Intent (PASI) and Schedule of Events (SOE)
submitted to the Cincinnati FAA Flight Standards District Office (FSDO).”
Flamingo Express has not challenged these factual findings, and a review of the record
demonstrates that the findings are supported by substantial evidence. Moreover, both the Director
and the Administrator agreed that, under FAA policy, “[f]or an applicant to be considered a realistic
prospective operator necessitating action from an airport sponsor in terms of changing an existing
Part 139 Airport Operating Certificate (AOC), the prospective Part 121 operator should, at a
minimum, have filed its PASI and SOE with the local FAA FSDO.” Based on Flamingo Express’s
failure to do so, the FAA maintains that the company “had not established ‘planned service’ for FAA
purposes, and thus the City of Cincinnati had no federal obligation to accept the proposal and refrain
from downgrading to a Class IV airport.”
Flamingo Express, for its part, contends that “[w]hether Flamingo obtained Part 121
Certification, or contractually aligned itself with a Part 121 operator, as was its intent, it could not
effectuate its plan . . . without a permit” from the City. But the Administrator addressed Flamingo
Express’s contention that it intended to contract with a Part 121 operator, finding no evidence in the
record to support this assertion.
More fundamentally, however, Flamingo Express’s argument fails because it is at bottom
an attempt to sidestep both the FAA’s policy and the agency’s factual findings. Flamingo Express
essentially seeks to reverse the order in which it was required to take the steps necessary to begin
operating the service that it had requested. FAA policy clearly states that certification from the FAA
is essential to qualifying as planned service. See FAA Policy 75. Flamingo Express’s assertion to
the contrary, without the support of any legal authority, is simply not enough to persuade us that the
FAA’s interpretation of its policy on planned service was either “plainly erroneous or inconsistent
with the regulation.” See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (“We must
give substantial deference to an agency’s interpretation of its own regulations. Our task is not to
decide which among several competing interpretations best serves the regulatory purpose.” (citations
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 8
omitted)). For these reasons, we agree with the FAA that, the City’s motivations notwithstanding,
the City did not violate its federal obligations by refusing to approve Flamingo Express’s proposed
scheduled service with aircraft seating 10 to 30 passengers.
2. Liability-insurance requirement
Flamingo Express also challenges the FAA’s conclusion that the City’s proposed $20 million
liability-insurance requirement was neither unreasonable nor unjustly discriminatory. The FAA, in
response, contends that Flamingo Express has failed to “challenge any of the FAA’s determinations
on point.”
We agree with the FAA. The relevant findings made by the Director are that (1) the City’s
$20 million coverage requirement would be reasonable for a “twin-engine turboprop seating 20 or
so passengers engaged in Part 121 scheduled air service operations,” and (2) such a requirement
would not be reasonable for an aircraft that seats up to 9 passengers. A review of the record
demonstrates that the Director conducted significant independent investigation in determining how
much insurance coverage would be reasonable for scheduled service with both a 9-seat aircraft and
a 10-to-30-seat aircraft. Flamingo Express provides no evidence to contradict the Director’s
findings on this score and, in any event, those findings are conclusive because they are supported
by substantial evidence.
Nevertheless, we again feel obliged to note that the City’s position in its negotiations with
Flamingo Express was at best contradictory. The City maintained, on the one hand, that Flamingo
Express was requesting 9-seat service when the company had clearly submitted an application for
10-to-30-seat service. At the same time, however, the City’s proposed liability-insurance
requirement was consistent with the latter type of service and, as the Director found, “unobtainable”
for the former. These inconsistencies support the inference that the City intended to prevent
Flamingo Express’s proposed service, in violation of its assurance to make Lunken available “for
public use on reasonable terms, and without unjust discrimination, to . . . commercial aeronautical
activities offering services to the public at the airport.” See Grant Assurance 22(a).
But according to the FAA, the agency “refused to find the City noncompliant for requiring
the $20 million requirement for a 9-seat aircraft, because Flamingo Express’s complaint specified
the fact that it wanted to conduct scheduled operations with aircraft seating less than 30 but more
than 9 passengers.” Flamingo Express, therefore, was not “directly and substantially affected by the
City’s insurance requirement for such an aircraft.” In other words, Flamingo Express’s own
insistence on the type of service that it wished to conduct precluded a finding that the insurance
requirement was unreasonable, because such a requirement would actually be reasonable for the
requested service.
We agree with the analysis presented by the FAA. Both the Director and the Administrator
recognized that the City’s insurance requirement was inconsistent with its own position, but
correctly noted that such a requirement was not actually unreasonable for the type of service being
sought by Flamingo Express. The FAA’s conclusion is therefore neither inconsistent with the
regulations at issue nor an abuse of the agency’s discretion. For these reasons, we decline to reverse
its resolution of Flamingo Express’s claim.
Finally, we note that Flamingo Express’s contention that the FAA has effectively endorsed
the City’s attempts to prohibit Flamingo Express “from operating any scheduled service, even
scheduled service of aircraft up to nine seats,” is a substantial exaggeration. The Administrator
specifically stated that Flamingo Express could accept the City’s proposal for scheduled service of
up to nine seats and that the City could not impose a $20-million-coverage requirement for such
service. We also note that the FAA has consistently maintained that if good-faith efforts at informal
dispute resolution fail, Flamingo Express may file a new formal complaint pursuant to 14 C.F.R.
No. 07-4226 Flamingo Express, Inc. v. Federal Aviation Administration Page 9
Part 16. The FAA has thus left open the possibility of a compromise between the parties that would
permit Flamingo Express to operate scheduled service using a nine-seat plane, while preventing the
City from requiring an unreasonable amount of insurance for that service. We likewise hope that
the City and Flamingo Express will reach a negotiated resolution that elevates the public’s interest
over their own past disagreements.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the FAA.