Various parties sought the Authority's permission to initiate scheduled passenger service at Centennial Airport and were denied. On July 21, 1993, the Authority sent a letter to the DOT requesting the DOT's opinion on whether the Authority could deny applications for scheduled passenger service without violating federal law. In September of 1994, the Authority amended the Minimum Standards to prohibit scheduled passenger service. [FN 17]
An Air Carrier operator is an entity that provides scheduled passenger services and operates under the appropriate [federal aviation regulations] . . . with aircraft that provide no more than 30 passenger seats and are within the weight limitations established for the Airport in its Rules and Regulations. (This category is not consistent with the Airport Purpose and will not be allowed to operate at the Airport unless required by final court order.)
(Emphasis in original.)
Shortly thereafter, the DOT mailed a letter to the Authority in response to the Authority's inquiries. In this letter, the FAA stated that although the information provided by the Authority was not sufficient to allow the FAA to reach a conclusive determination, the exclusion of a particular class of service, such as the Authority's ban on scheduled passenger service, is generally arbitrary and invalid. The FAA then stated that the Authority's ban on scheduled passenger service raised important policy questions regarding harmonizing regional planning with national aviation requirements, and that the FAA would commence a proceeding to "obtain a full range of views on this issue."
Centennial Express operates charter services out of Centennial Airport under an agreement with the Authority in which Centennial Express agreed to use the airfield in accordance with state and federal law and in conformity with the Minimum Standards. On December 20, 1994, Centennial Express obtained a Part 135 air carrier certificate from the FAA. The air carrier certificate authorized Centennial Express to provide scheduled passenger services in the contiguous United States, Alaska, Canada, and Mexico. The certificate further authorized Centennial Express to carry up to thirty passengers for four scheduled round trips per week, per destination. The same day, Centennial Express, acting unilaterally, began its FAA-approved scheduled passenger service on its King Air aircraft, [FN 18] with routes including service to Centennial Airport.
Upon learning that Centennial Express was conducting scheduled passenger service in violation of the Minimum Standards, the Authority filed suit against Centennial Express in district court. The Authority sought a permanent injunction prohibiting Centennial Express from providing scheduled passenger service at Centennial Airport.
Centennial Express raised several affirmative defenses. It argued that the Authority's prohibition on scheduled passenger service was not valid because the ban violated the Authority's grant agreements with the federal government by discriminating unjustly between classes of airport users. In its view the Authority's ban discriminated against scheduled passenger service because the Authority permitted unscheduled passenger services in the form of
charter service, air cargo service, corporate jet service, private aircraft of all sizes and kinds, planes noisier than Centennial Express planes, or planes identical to or larger than Centennial Express planes. [The Authority] does not seek to exclude all holders of Part 135 air carrier certificates, the certificate held by Centennial Express. [The Authority] does not seek to prohibit the frequency of any kind of flight in and out of the Airport, but merely seeks to discriminate against scheduled passenger service.
Additionally, Centennial Express argued that the ban was unenforceable because it was preempted by 49 U.S.C. § 41713(b)(1), which provides in pertinent part:
Preemption. (1) Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.
The Authority countered that the prohibition on scheduled passenger service was not preempted by 49 U.S.C. § 41713(b)(1) because subsection (3) of the same statute contains an exception that allows airport proprietors to promulgate regulations necessary to protect their rights as proprietors. Subsection (3) provides:
This subsection does not limit a State, political subdivision of a State, or political authority of at least 2 States that owns or operates an airport served by an air carrier holding a certificate issued by the Secretary of Transportation from carrying out its proprietary powers and rights.
49 U.S.C. § 41713(b)(3). Centennial Express argued that the proprietary powers exception did not apply because this exception is narrow and does not permit a proprietor to enact discriminatory regulations in direct conflict with federal anti-discrimination requirements.
The district court determined that Centennial Express's operation of scheduled passenger service violated the Minimum Standards. The district court rejected the affirmative defenses raised by Centennial Express, stating that the ban did not constitute unjust discrimination under the federal grant agreements and that the ban was not preempted because it was within the scope of the Authority's proprietary powers.
Centennial Express filed a formal complaint against the Authority with the FAA, alleging that the Authority's ban on scheduled passenger service is invalid because it is discriminatory, in violation of federal funding regulations. [FN 19] Centennial Express also appealed to the court of appeals. The court of appeals reversed, holding that the prohibition was preempted by 49 U.S.C. § 41713(b)(1) and that the applicability of the proprietor's rights exception contained in 49 U.S.C. § 41713(b)(3) was a matter that must be determined by the FAA rather than the state courts. The court of appeals did not address the issue of federal funding. The Authority then petitioned this court for certiorari review.
II. Preemption
The majority holds that the Authority's ban on scheduled passenger service is enforceable because the ban does not fall within the scope of the express preemption statute, 49 U.S.C. § 41713(b)(1). See maj. op. at 18. I disagree.
The Supremacy Clause of the United States Constitution authorizes Congress to enact legislation that preempts state law. See U.S. Const. art. VI, cl. 2. Preemption occurs in one of three ways: by express terms, by implication when Congress regulates an area in a comprehensive fashion, or by a conflict between federal and state law. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995).
In 1978, Congress enacted the Airline Deregulation Act ("ADA") which largely deregulated domestic air transport. "To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision, prohibiting the States from enforcing any law 'relating to rates, routes, or services' of any air carrier.'" Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378-79 (1992).
In Morales, the United States Supreme Court explained that the phrase "relating to" should be interpreted broadly and that "[s]tate enforcement actions having a connection with or reference to airline 'rates, routes, or services'" are preempted. Id. at 384. For example, in Morales, the court held that state requirements on the airlines' advertisement of fares was preempted. The Court determined that the restrictions would have a significant impact on the airlines' ability to market their product, which in turn would have a significant impact on the fares the airlines charged. Thus, the restrictions "related to" rates and were preempted.
Similarly, the Authority's ban on scheduled passenger service at Centennial Airport significantly impacts the service that Centennial Express provides at the airport and the services available at Centennial Airport to the citizens of our state who wish to travel to the destinations that Centennial Express seeks to serve -- Dalhart and Amarillo, Texas; Colorado Springs; and Grand Junction.
The policy underlying the ADA supports the view that the Authority's ban on scheduled passenger service is preempted. The ban is inconsistent with the ADA's goals of furthering "the availability of a variety of adequate, economic, efficient, and low-priced services," 49 U.S.C. § 40101(4) (1994), and "encouraging entry into air transportation markets by new and existing air carriers and the continued strengthening of small air carriers to ensure a more effective and competitive airline industry." 49 U.S.C. § 40101(13) (1994).
The majority relies upon Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 (5th Cir. 1995), for the proposition that the ban does not relate to "services" because the definition of "services" provided by an airline does not include the transportation itself. See maj. op. at 18-19. I agree with the majority that Hodges is instructive in this case; however, I read Hodges to compel the opposite conclusion--that the transportation provided by an airline is a "service":
Elements of the air carrier service . . . include items such as ticketing, boarding procedures, provision of food and drink, and baggage handling, in addition to the transportation itself.
Hodges, 44 F.3d at 336 (emphasis added); see also Butcher v. City of Houston, 813 F. Supp. 515, 517-18 (S.D. Tex. 1993). [FN 20] Thus, I disagree with the majority's determination that transportation is not a "service" for purposes of 49 U.S.C. § 41713(b)(1).
[O]ne can imagine the effect of different states requiring a certain frequency of airline service to certain of their cities, or mandating that airline service be nonstop between certain cities . . . . These kinds of "services" . . . are distinctively incident to the provision of airline service to the public and, just like rates and routes, are beyond the power of states to regulate or otherwise affect by local law.
Butcher, 813 F. Supp. at 517-18.
In my view, Travelers is not similar to the Authority's ban on scheduled passenger service at Centennial Airport because the ban on scheduled service substantially relates to the services offered by Centennial Express. This connection is significantly greater than the tenuous connection presented in Travelers. The Authority's ban is more analogous to the prohibition in Morales, which "'plainly does not present a borderline question.'" Morales, 504 U.S. at 390 (quoting Shaw, 463 U.S. at 100); see also American Airlines, Inc. v. Wolens, 513 U.S. 219, 226 (1995) (stating that frequent flier programs unquestionably "related to" rates for purposes of 49 U.S.C. § 41713(b)(1)).
The Supreme Court instructs us to interpret the words "relate to" in 49 U.S.C. § 41713(b)(1) broadly. See Morales, 504 U.S. at 383-84 (citing numerous cases in which the court emphasized the broad scope of the phrase "relate to"). The majority's determination that the Authority's ban does not "relate to" services is inconsistent with this mandate. For the above reasons, I would hold that the Authority's ban on scheduled passenger service "relates to" services and is explicitly preempted by 49 U.S.C. § 41713(b)(1).
III. Doctrine of Primary Jurisdiction
The majority chooses to address the scope of the proprietary powers exception and Centennial Express's assertion that the Authority's ban is unenforceable because it conflicts with the Authority's federal funding assurances. The majority chooses not to defer to the FAA on these issues, in part because of the failure of the FAA to act promptly in this matter and Centennial Express's unilateral action of conducting scheduled passenger service in direct conflict with the Authority's Minimum Standards. I agree that the delay in the administrative forum and Centennial Express's violation of the Minimum Standards are regrettable and unfortunate. However, on balance, I believe this court should defer to the FAA's jurisdiction on both the proprietary powers question and the federal funding issue in keeping with the doctrine of primary jurisdiction.
The doctrine of primary jurisdiction, also known as the deference doctrine, is "a means of coordinating administrative and judicial machinery" to promote consistent decisions that reflect agency expertise. Mashpee Tribe v. New Seabury Corp., 592 F.2d 575, 580 (1st Cir. 1979). The doctrine does not determine the existence of jurisdiction. Instead, it "comes into play only when both the court and the agency have jurisdiction over at least portions of the dispute." Id. at 581 n.1. The issue "is one of harmony, efficiency, and prudence." Id.
In determining whether to defer to an agency, courts should examine three factors: "(1) whether the agency determination lay at the heart of the task assigned the agency by Congress; (2) whether agency expertise was required to unravel intricate, technical facts; and (3) whether, though perhaps not determinative, the agency determination would materially aid the court." Id. at 580-81. Another consideration may be whether the agency has an established procedure designed to resolve particular kinds of disputes. See id. at 581.
Here, Centennial Express has filed a formal complaint with the FAA alleging that the Authority's ban on scheduled passenger services is discriminatory and therefore invalid under federal funding regulations. The state court system is confronted with the same question: whether the Authority's ban is non-discriminatory. This is because both the applicability of the proprietary powers exception and Centennial Express's federal funding argument depend on the determination of that question. See Midway Airlines, Inc. v. County of Westchester, 584 F. Supp. 436, 440-41 (S.D.N.Y. 1984) (airport regulations imposed pursuant to proprietary powers must be reasonable, non-arbitrary, and non-discriminatory); City of Dallas v. Southwest Airlines Co., 371 F. Supp. 1015, 1028-29 (N.D. Tex. 1973) (an airport regulation that conflicts with federal non-discrimination requirements will not be upheld and is in violation of the federal funding assurances). [FN 21] I agree with the majority that we possess concurrent jurisdiction with the FAA on whether the Authority's ban is non-discriminatory. See County of Broome v. Commuter Airlines, Inc., 442 N.Y.S.2d 652, 654-55 (N.Y. App. Div. 1981) (stating that state courts have jurisdiction to determine the applicability of the proprietary powers exception); City of Dallas, 371 F. Supp. at 1028-29 (finding an airport proprietor in violation of federal funding requirements).
As I read the sparse precedent in this area, discrimination may occur not only within a class of aeronautical users, but also between classes of aeronautical users. See City of Dallas, 371 F. Supp. at 1031. In City of Dallas, the court held that prohibition of scheduled passenger service at an airport that permitted passenger charter flights impermissibly discriminated between classes of airport users. See id. In reaching this conclusion, the court stated:
[C]harter flights carrying passengers for hire on an unscheduled basis will continue to operate out of Love Field . . . . [S]ome of the operations to remain at Love Field will use planes larger than Southwest's; some will use planes noisier than Southwest's; some will use planes identical to Southwest's . . . .
. . . .
. . . In place of the preference accorded mass transportation . . . Plaintiffs herein, in determining who shall have access to Love Field, have preferred private aircraft, corporate jets, unscheduled cargo flights, maintenance flights, and ferry flights over Southwest's commercial service. . . .
. . . .
. . . Plaintiffs' unsystematic classification discriminates . . . between uses within the same general class . . . . Charter flights, which may use larger or smaller aircraft than Southwest Airlines, may remain at Love Field, while Southwest Airlines must go.
Id. at 1028, 1029, 1031; see also Midway, 584 F. Supp. at 440-41 (holding application for access to airport in abeyance was a valid exercise of proprietary powers because airport board was not banning a particular user from the airport, only asking for adequate time to formulate plans to allocate scarce resources).
The majority's discussion of proprietary powers fails to address the non-discrimination requirement of the proprietary powers doctrine. In a separate discussion dealing with the issue of whether the Authority is in violation of its grant assurances of non-discrimination, the majority states that "the Authority is not discriminating against a particular operator because the ban on scheduled passenger service applies to all airport users equally." Maj. op. at 23. In other words, the majority holds that the ban is not discriminatory because the Authority has never allowed scheduled passenger service at Centennial Airport. See id. at 23 n.12. The majority attempts to distinguish City of Dallas on the basis that the ban on scheduled passenger services in that case prohibited operations previously allowed at the airport, while the Authority has never permitted unscheduled passenger services at Centennial Airport. See id. (discussing City of Dallas).
However, the rationale of the opinion in City of Dallas did not turn on the airport's previous consent to the operations they subsequently sought to prohibit. Rather, the critical holding of City of Dallas is that discrimination occurs not only within a class, but also between classes. See City of Dallas, 371 F. Supp. at 1031. Although it is accurate to say that the Authority's ban on scheduled passenger services applies equally to all airport users, this fact does not cure the discrimination occurring in this case when the Authority permits other carriers to provide unscheduled passenger services using similar planes, similar flight patterns, making the same or more noise, and carrying the same or greater number of passengers as Centennial Express would in providing scheduled passenger service, as our record here shows. Hence, even assuming that the Authority's ban on scheduled passenger service falls within the scope of the proprietary powers exception, 49 U.S.C. § 41713(b)(3), the Authority's ban on scheduled passenger service may be unenforceable because it impermissibly discriminates between classes of airport users.
Our record reflects that there are numerous other Part 135 air carriers--air carriers conducting similar flight operations using the similar aircraft and carrying the same number of passengers--at Centennial Airport. Some of these carriers are operating under an air carrier certificate identical to the one that the FAA issued to Centennial Express. With respect to noise, the King Air aircraft operated by Centennial Express is quieter than a number of other aircraft currently in use at the airport, and there are at least twenty planes operating out of the airport similar to those used by Centennial Express. The only difference between these services and those offered by Centennial Express is that Centennial Express makes its rates and destinations known to the public in advance.
Complicating matters further, the Authority's ban appears to be contrary to the purpose of a public airport--operation "for the use and benefit of the public . . . open to all types, kinds, and classes of aeronautical use on fair and reasonable terms without discrimination between such types, kinds, and classes." 14 C.F.R. § 152, app. D, ¶ 18 (1997). Absent extraordinary circumstances, a public airport, such as Centennial Airport, should not be permitted to cater to special private interests, i.e., those individuals and corporations possessing the financial resources to either own aircraft or pay the high cost of charter flights. In addition, the Authority's ban may run afoul of the FAA's long-standing policy in favor of mass-transportation over private aircraft. See City of Dallas, 371 F. Supp. at 1029 ("Since commercial aviation represents the right of a greater number of people to use the navigable airspace of the United States, implementation of the Congressional policy requires a preference for commercial aircraft over private aircraft (and by implication over air cargo).").
Although other courts have discussed the definition of "discrimination" in the context of aeronautical operations, [FN 22] whether this ban constitutes impermissible discrimination presents a complex and troublesome question because the FAA indicated in its informal letter to the Authority that it may change its policies to allow the proprietor of a single airport to discriminate against classes of users so long as the proprietor adheres to a regional plan which, as a whole, satisfies federal anti-discrimination requirements.