Grant Assurance Compliance

1. Grant Assurance Compliance Principles & Processes ACA Fall Conference 2013 David Cushing, Manager, Los Angeles Airports District Office

2. 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. ACA Fall Conference

3. Our Grant Assurances are our Principles Surplus Property Deeds are the Same Principles of Compliance • 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 ACA Fall Conference 3

4. 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 ACA Fall Conference 4

5. 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: • keep up to date at all times an airport layout plan (ALP) • 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. ACA Fall Conference 5

6. 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 ACA Fall Conference 6

7. 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 ACA Fall Conference 7

8. Principles of Compliance What do Grant Assurances 4, 5, 19, 23, 24, 25 and 29 mean for Economic Development? • Tend the aeronautical garden first. • Use strategic and balanced aeronautical business incentives. • Always use prudent business practices with regard to land ownership. • Protect the civil aviation interests of the public. • Be realistic when you’re altering the market. ACA Fall Conference 8

9. 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. ACA Fall Conference

10. Standard of ComplianceReal-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. … ACA Fall Conference

11. Standard of ComplianceNo 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.” [SeeDrake Aerial Enterprise, LLC v. City of Cleveland, Ohio, FAA Docket No. 16-09-02, (February 22, 2010) (Director’s Determination) at 12] ACA Fall Conference

12. Informal Complaints14 CFR Part 13.1 FAA Goals (Order 5190.6B, 5.4.a.): • Evaluate the facts and identify potential sponsor violations. • 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. • Provide the sponsor with the opportunity to comply with its federal obligations voluntarily when a violation is identified. ACA Fall Conference

13. 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. ACA Fall Conference

14. 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. ACA Fall Conference

15. Formal ComplaintsLessons for Parties Do • Take it seriously • Understand the process • Respond to each allegation • Tell us the story • Recognize your obligations • Send pertinent supporting documentation Don’t • Call names • 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 ACA Fall Conference

16. QUESTIONS ?

17. 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. ACA Fall Conference 17