AVIATION NOISE LAW
Centennial Express Airlines v. Arapahoe Co. Public Airport Auth.
Director's Determination
FAA Docket No. 16-98-05


UNITED STATES DEPARTMENT OF TRANSPORTATION
FEDERAL AVIATION ADMINISTRATION (F.A.A.)

CENTENNIAL EXPRESS AIRLINES AND GOLDEN EAGLE CHARTERS D/B/A CENTENNIAL EXPRESS AIRLINES
v.
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY

Docket No. 16-98-05

THOMAS KEHMEIER
v.
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY

Docket No. 13-94-25

CENTENNIAL EXPRESS AIRLINES AND GOLDEN EAGLE CHARTERS D/B/A CENTENNIAL EXPRESS AIRLINES
v.
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY

Docket No. 13-95-03

DIRECTOR'S DETERMINATION

August 21, 1998


INTRODUCTION

This matter is before the Federal Aviation Administration (FAA) based on the formal complaint filed in accordance with our Rules of Practice for Federally Assisted Airport Proceedings (FAA Rules of Practice), 14 C.F.R. Part 16.

Centennial Express Airlines (CEA) has filed a formal complaint pursuant to the FAA Rules of Practice against the Arapahoe County Public Airport Authority (ACPAA), owner and operator of the Centennial Airport, alleging that the Airport Authority has unlawfully prohibited scheduled passenger service at Centennial Airport under FAR Part 135, with aircraft having a maximum capacity of 30 seats and under.

The Airport: Centennial Airport (APA) is a public-use airport located approximately 14 miles southeast of Denver, Colorado. The airport is owned and operated by the Arapahoe County Public Airport Authority (ACPAA). In 1996 there were 635 based aircraft and 402,735 annual operations at the airport. [FAA Exhibit 1, Item 1] APA does not hold an airport operating certificate issued under 14 CFR Part 139, Certification and Operations: Land Airports Serving Certain Air Carriers.

The planning and development of the airport has been financed, in part, with funds provided by the FAA under the Airport Improvement Program (AIP), authorized by the Airport and Airway Improvement Act of 1982, as amended, 49 U.S.C. 47101, et seq. [FAA Exhibit 1, Item 2] [FN 1] Since 1983, the ACPAA has entered into numerous AIP grant agreements with the FAA and has received a total of $18,625,636 in federal airport development assistance. In 1996, the ACPAA received its most recent AIP grant in the amount of $898,733 to rehabilitate taxiway lighting and runway/taxiway signs. FAA Exhibit 1, Item 1] [FN 2]

[FN 1] FAA Exhibit 1, Item 2, Grant History.

[FN 2] FAA Exhibit 1, Item 1, Airport Master Record (5010)


Colorado State Litigation

On December 20, 1994, CEA, in accordance with its Air Carrier Certificate, began scheduled air carrier operations with one 6 passenger Beechcraft aircraft. CEA based its operation at Centennial Airport in building space it subleased from Colorado Air Center, Inc. (now known as Denver JetCenter).

On December 22, 1994, the District Court, County of Arapahoe, State of Colorado, issued a temporary restraining order prohibiting Centennial Express Airlines from providing scheduled service at Centennial Airport. [FAA Exhibit 1, Item 5, Permanent Injunction Order, page 1]

On January 10, 1995, a permanent injunction was issued by the District Court, County of Arapahoe, State of Colorado. [FAA Exhibit 1, Item 4, Tab A, Permanent Injunction Order]

On July 18, 1995, CEA appealed the Permanent Injunction Order through the Court of Appeals, State of Colorado, Case No. 95 CA 307. [FAA Exhibit 1, Item 7, Exhibit H]

On December 12, 1996, the Colorado Court of Appeals reversed the permanent injunction entered in favor of the ACPAA. Appeal from the District Court of Arapahoe County, 942 P.2d 1270 Colorado App. 1996 [FAA Exhibit 1, Item 4, attachment A]

On April 13, 1998, the Supreme Court, State of Colorado issued its decision on review of the Court of Appeals decision in Arapahoe County Public Airport Authority v. Centennial Express Airlines, Inc. No.97-SC-123 The Supreme Court, with two justices dissenting and one abstaining, ruled that the Court of Appeals erred in reversing the permanent injunction entered in favor of the ACPAA.

The Court declined to defer to the FAA's primary jurisdiction over the matter, finding that the issue was not Federally preempted under the 49 U.S.C. 41713(b)(1) provision prohibiting state or local regulation of "price, route or service of an air carrier" but rather fell within the provisions of s 41713(b)(3), proprietor exception.

The majority also held that the ban did not violate FAA grant assurances requiring the sponsor to "make its airport available as an airport for public use on fair and reasonable terms without unjust discrimination, to all types, kinds and classes of aeronautical users." Furthermore, the majority said that "the authority's ban on scheduled service is necessary to ensure safe operation of the airport...since increased congestion is sure to have an impact on safety." [FAA Exhibit 1, item 5]

As an expert administrative agency, the FAA (along with the Secretary of Transportation (Secretary) in connection with certain economic issues) is charged with interpreting and implementing the Federal aviation statutes, including the airport grant program and the program for the transfer of surplus property for airport purposes. Moreover, Federal courts, including the Supreme Court, have recognized the unique expertise of the FAA and the Secretary in interpreting the Federal statutory provisions at issue. See New England Legal Foundation v. Massachusetts Port Authority, 883 F.2d 157 (1st Cir. 1989); Interface Group, Inc. v. Massachusetts Port Authority (816 F.2d 9 (1st Cir. 1987); and, Northwest Airlines, Inc. v. County of Kent, Michigan, 510 U.S.355 (1994). The FAA is not bound to follow the reasoning of the Colorado Supreme Court's decision and has conducted a de novo review of the matters raised in the complaint.


Issues

The complainants present the following issues for decision:

Under the specific circumstances at Centennial Airport, discussed below, and based on the evidence of record, we find that the ACPAA, by denying access to Centennial Express Airlines, Inc., is in non-compliance with the provisions of 49 U.S.C. 47107(a)(1) regarding economic nondiscrimination; with the provisions regarding exclusive rights as set forth in 49 U.S. C. Sections 47107(a)(4) and 40103(e); with 49 U.S.C. 41713(b)(1), regarding federal preemption over regulations relating to air carrier prices, routes, and services; and with the Authority's Federal grant agreements. By virtue of the violation of section 41713(b)(1), the ACPAA has exceeded its authority, as a state or local government, under the Supremacy Clause of the United States Constitution.

Our decision in this matter is based on the applicable law and FAA policy, review of the arguments and supporting documentation submitted by the parties, and the administrative record in this proceeding. [FAA Exhibit 1].


APPLICABLE LAW AND POLICY

The Federal Aviation Act of 1958, as amended (FAAct), 49 U.S.C. Section 40101, et seq., assigns the FAA Administrator broad responsibilities for the regulation of air commerce in the interests of safety, security, and development of civil aeronautics. The Federal role in developing civil aviation has been augmented by various legislative actions, which authorize programs for providing funds and other assistance to local communities for the development of airport facilities. In each such program, the airport sponsor assumes certain obligations, either by grant assurance or by restrictive covenants in property deeds and conveyance instruments, to maintain and operate its airport facilities safely, efficiently, and in accordance with specified conditions.

Commitments assumed by airport sponsors in property conveyance or grant agreements are important factors in maintaining a high degree of safety and efficiency in airport design; construction, operation and maintenance as well as ensuring the public reasonable access to the airport. Pursuant to 49 USC 47122, the FAA has a statutory mandate to ensure that airport owners comply with their sponsor assurances.

FAA Order 5190.6A, Airport Compliance Requirements, (hereinafter Order) provides the policies and procedures to be followed by the FAA in carrying out its legislatively mandated functions related to federally obligated airport owners' compliance with their sponsor assurances.


The Airport Sponsor Assurances

As a condition precedent to providing airport development assistance under the AAIA, the Secretary of Transportation receives certain assurances from the airport sponsor.

The AAIA, 49 USC 47101(a), et seq., sets forth assurances to which an airport sponsor receiving Federal financial assistance must agree as a condition precedent to receipt of such assistance. These sponsorship requirements are included in every airport improvement grant agreement. Upon acceptance of an AIP grant by an airport sponsor, the assurances become a binding obligation upon the airport sponsor.


Enforcement of Airport Sponsor Assurances

Enforcement procedures regarding airport compliance matters are set forth in the FAA Rules of Practice for Federally-Assisted Airport Proceedings, 14 CFR Part 16. These enforcement procedures were published in the Federal Register (61 FR 53998, October 16, 1996) and were effective on December 16, 1996. For complaints filed before that date, the enforcement procedures are set forth in 14 CFR Part 13.


The FAA Airport Compliance Program

The FAA discharges its responsibility for ensuring airport sponsor compliance with Federal obligations through its Airport Compliance Program. The FAA's airport compliance efforts are based on the contractual obligations, which an airport owner accepts when receiving Federal grant funds or the transfer of Federal property for airport purposes. These obligations are incorporated in grant agreements and instruments of conveyance in order to protect the public's interest in civil aviation and to ensure compliance with Federal laws.

The FAA Airport Compliance Program is designed to ensure the availability of a national system of safe and properly maintained public-use airports operated in a manner consistent with the airport owners' Federal obligations and the public's investment in civil aviation. The Airport Compliance Program does not control or direct the operation of airports; rather, it monitors the administration of the valuable rights pledged by airport sponsors to the people of the United States in exchange for monetary grants and donations of Federal property to ensure that the public interest is being served.

FAA Order 5190.6A sets forth policies and procedures for the FAA Airport Compliance Program. The Order is not regulatory and is not controlling with regard to airport sponsor conduct; rather it establishes the policies and procedures to be followed by FAA personnel in carrying out the FAA's responsibilities for ensuring airport compliance. It provides basic guidance for FAA personnel in interpreting and administering the various continuing commitments made to the United States by airport owners as a condition for the grant of Federal funds or the conveyance of Federal property for airport purposes. The Order, inter alia, analyzes the various obligations set forth in the standard airport sponsor assurances; addresses the nature of those assurances; addresses the application of these assurances in the operation of public-use airports; and facilitates interpretation of the assurances by FAA personnel.


Airport Owner Rights and Responsibilities

Assurance 5, "Preserving Rights and Powers," of the prescribed sponsor assurances implements the provisions of the AAIA, 49 USC Section 47107(a), et seq., and requires, in pertinent part, that the sponsor of a federally obligated airport "...will not take or permit any action which would operate to deprive it of any of the rights and powers necessary to perform any or all of the terms, conditions, and assurances in the grant agreement without the written approval of the Secretary, and will act promptly to acquire, extinguish or modify any outstanding rights or claims of right of others which would interfere with such performance by the sponsor."

In addition to obligating the airport sponsor to preserve its rights and powers to carry out all grant agreement requirements, this assurance also places certain obligations on the sponsor regarding land upon which Federal funds have been spent, including the operation and maintenance of other airports managed by the sponsor.

FAA Order 5190.6A, Airport Compliance Requirements, (Order) describes the responsibilities under Assurance 5 assumed by the owners of public use airports developed with Federal assistance. Among these is the responsibility to enforce adequate rules, regulations, or ordinances as are necessary to ensure the safe and efficient operation of the airport. See Order, Sec. 4-7 and 4-8.


Use on Reasonable and Not Unjustly Discriminatory Terms

Assurance 22, of the prescribed sponsor assurances, "economic nondiscrimination," implements the provisions of 49 U.S.C. 47107(a)(1) through (6), and requires, in pertinent part, that the sponsor of a federally obligated airport

"...will make its airport available as an airport for public use on fair and reasonable terms, and without unjust discrimination, to all types, kinds, and classes of aeronautical uses." Assurance 22(a)

"...may establish such fair, equal, 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." Assurance 22(h)

"...may...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." Assurance 22(i)

Subsection (h) qualifies subsection (a) and subsection (i) represents an exception to subsection (a) to permit the sponsor to exercise control of the airport sufficient to preclude unsafe and inefficient conditions which would be detrimental to the civil aviation needs of the public.

FAA Order 5190.6A describes the responsibilities under Assurance 22 assumed by the owners of public use airports developed with Federal assistance. Among these is the obligation to treat in a uniform manner those users making the same or similar use of the airport and to make all airport facilities and services available on reasonable terms without unjust discrimination. See Order, Sec. 4-14(a)(2) and 3-1.

The FAA considers it inappropriate to provide Federal assistance for improvements to airports where the benefits of such improvements will not be fully realized due to inherent restrictions on aeronautical activities. See Order, Sec. 3-8(a).

The owner of any airport developed with Federal grant assistance is required to operate the airport for the use and benefit of the public and to make it available to all types, kinds and classes of aeronautical activity on fair and reasonable terms, and without unjust discrimination. See Order, Sec. 4-13(a).


The Prohibition Against Exclusive Rights

Section 308(a) of the FAAct, 49 USC 40103(e), provides, in relevant part, that "there shall be no exclusive right for the use of any landing area or air navigation facility upon which Federal funds have been expended."

Section 511(a)(2) of the AAIA, 49 USC 47107(a)(4), similarly provides, in pertinent part, that "there will be no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public."

Assurance 23, of the prescribed sponsor assurances, "Exclusive Rights," requires, in pertinent part, that the sponsor of a federally obligated airport "...will permit no exclusive right for the use of the airport by any persons providing, or intending to provide, aeronautical services to the public...and that it will terminate any exclusive right to conduct an aeronautical activity now existing at such an airport before the grant of any assistance under the Airport and Airway Improvement Act of 1982."

In FAA Order 5190.1A, Exclusive Rights, the FAA published its exclusive rights policy and broadly identified aeronautical activities (any activity which involves, makes possible, or is required for the operation of aircraft, or which contributes to or is required for the safety of such operations) as subject to the statutory prohibition against exclusive rights. While public use airports may impose qualifications and minimum standards upon those who engage in aeronautical activities, we have taken the position that the application of any unreasonable requirement or a standard that is applied in an unjustly discriminatory manner may constitute a constructive grant of an exclusive right. See FAA Order 5190.1A, Para. 11.c.

FAA Order 5190.6A provides additional guidance on the application of the statutory prohibition against exclusive rights and FAA policy regarding exclusive rights at public-use airports. See Order, Ch. 3.


Minimum Standards

The FAA encourages airport management, as a matter of prudence, to establish minimum standards to be met by all who would engage in a commercial aeronautical activity at the airport. It is the prerogative of the airport owner to impose conditions on users of the airport to ensure its safe and efficient operation. Such conditions must, however, be fair, reasonable and not unjustly discriminatory. They must be relevant to the proposed activity, reasonably attainable, and uniformly applied. See, Order Sec. 3-12.

While an airport sponsor may impose minimum standards on those engaged in aeronautical activities, an unreasonable requirement or any requirement which is applied in an unjustly discriminatory manner could constitute the grant of an exclusive right. A standard which a tenant operator is required to meet must be uniformly applicable to all operators seeking the same franchise privileges. See Order Sec. 3-17[c]

The FAA ordinarily makes an official determination regarding the relevance and/or reasonableness of the minimum standards only when the effect of a standard denies access to a public-use airport. Such determination is limited to a judgment as to whether failure to meet the qualifications of the standard is a reasonable basis for such a denial, or whether the standard results in an attempt to create an exclusive right. See Order Sec. 3-17(b)

The airport owner may quite properly increase the minimum standards from time to time in order to ensure a higher quality of service to the public. Manipulating the standards solely to protect the interest of an existing tenant, or tenants, however, is unacceptable. See Order Sec. 3-17(c).


Federal Preemption of Authority Over Air Carrier Service

49 U.S.C. 41713 prohibits a state or local government from regulating the rates, routes or services of an air carrier authorized to provide air transportation. 49 U.S.C. 41713(b)(1) provides, in relevant part, that

"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 [49 U.S.C. 41101 through 42112]."
However, 49 U.S.C. 41713(b)(3) establishes an exception to this general prohibition by providing, in pertinent part, that
"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."


Air Taxi Operations and Commercial Air Service

49 U.S.C. 44101, et seq., authorizes the FAA, among other things, to establish rules and regulations for the safe operation of aircraft. Federal Aviation Regulations (FAR) Part 135, Air Taxi Operators and Commercial Operators, in pertinent part, prescribes rules governing the carriage in air commerce of persons or property for compensation or hire as a commercial operator ... "in common carriage operations solely between points entirely within any state of the United States in aircraft having a maximum seating capacity of 30 seats or less. [FN 3]" 14 CFR Part 135 also provides, in pertinent part, "that no person may operate an aircraft under this part without, or in violation of, an air taxi/commercial operator ... operating certificate and appropriate operations specifications issued under this part, or, for operations with large aircraft having a maximum passenger seating configuration ... of more than 30 seats ... without, or in violation of, appropriate operations specifications issued under [FAR] Part 121 [Certification and Operations: Domestic, Flag, and Supplemental Air Carriers and Commercial Operators of Large Aircraft]. [FN 4]"

[FN 3] FAR Section 135.1(a)(3).

[FN 4] FAR Section 135.5.

In addition, 14 CFR 121.590 prohibits air carriers and air carrier pilots from operating an aircraft with 31 or more seats, into a land airport in any State of the United States unless the airport is certificated under 14 CFR Part 139.


Commuter Fitness Requirement

The FAAct, 49 USC 41101 prohibits any person from engaging in air transportation, without a certificate authorizing air transportation issued by the Department of Transportation, unless otherwise authorized by Federal statute or regulation. In turn, 49 USC 40109(f) authorizes passenger air transportation with aircraft having a maximum capacity of 55 seats without regard to the requirements of section 41101. Section 40109(f) also authorizes the Secretary of Transportation to raise the maximum seating capacity for aircraft operating under this statutory provision.

The Department of Transportation has adopted 14 CFR Part 298 "exemptions for Air Taxi and Commuter Air Carrier Operations" to implement the provisions of section 40109(f). Part 298 defines "commuter air carrier" as "an air taxi operator that carries passengers on at least five round trips per week on at least one route according to a public schedule." 14 CFR 298.2(e). An air taxi operator in turn is an air carrier that does not operate aircraft with a seating capacity of more than 60 seats. 14 CFR 298.2(a) and 14 CFR 298.3.

In 14 CFR Part 204, "Data to Support Fitness Determinations," the Department of Transportation has established data filing requirements support applications to conduct operations as a commuter air carrier. The effect of Part 204 is to require air carriers proposing to conduct commuter air carrier operations within the meaning of Part 298 to be found fit by the Department before commencing their operations. Based on the definition of commuter air carrier, this fitness requirement does not apply to air taxi operators conducting no more than four scheduled flights per week on any route.


Airport Operating Certificates

49 U.S.C. 44706 authorizes the FAA to issue airport operating certificates. Federal Aviation Regulations (FAR) Part 139, Certification and Operations: Land Airports Serving Scheduled Air Carriers Operating Large Aircraft (14 CFR Part 139), provides for the issuance of such airport operating certificates. This part prescribes rules governing the certification and operation of airports which serve any scheduled or unscheduled passenger operation of an air carrier that is conducted with an aircraft having a seating capacity of more than 30 passengers.

Section 404 of the Federal Aviation Authorization Act of 1996, amended to 49 U.S.C. 44706, authorizes the FAA to certify airports, except those located in Alaska, that serve scheduled air carrier operations operating aircraft with 10 to 30 seats.

The FAA has initiated a rulemaking project to amend Part 139 to include certification of these airports. A Notice of Proposed Rulemaking (NPRM) is scheduled to be published in early 1999. Upon the publication of the NPRM, the public will be provided ample opportunity to comment on the proposal and all comments received will be considered before the FAA takes action on the proposal. The statute requires that any regulation related to the certification of commuter airports shall undergo Congressional review prior to implementation. If the final rule is adopted, that rule would prohibit scheduled operations at the airport by aircraft having 10 or more passenger seats unless the airport holds a Part 139 operating certificate. The FAA will not require ACPAA to obtain a Part 139 certificate.


BACKGROUND

Part 13 Proceedings

A. Docket No. 13-94-25, Thomas Kehmeier v. ACPAA

On August 7, 1994, formal complaint No. 13-94-25 was filed by Thomas Kehmeier against the Arapahoe County Public Airport Authority, in accordance with the FAA Investigative and Enforcement Procedures (14 CFR Section 13.5).

Mr. Kehmeier, a private citizen, alleged that banning scheduled service at Centennial Airport violated provisions of the ACPAA's grant assurances.

On February 2, 1995, the Arapahoe County Public Airport Authority responded to the complaint by Mr. Thomas Kehmeier denying the allegations and requesting that the FAA dismiss the complaint, or, in the alternative, decline to institute an investigation as provided for in Part 13.5(h). [FAA Exhibit 1, Item 4, Tab F]


B. Docket No. 13-95-03, Centennial Express Airlines v. ACPAA

On June 18, 1986, the FAA Denver Flight Standards District Office, issued an Air Carrier Certificate to Golden Eagle Charters, Inc., d/b/a. Centennial Express Airlines, 7625 South Peoria Street, Englewood, CO. 80112. On December 20, 1994, this Certificate was reissued with the following language. [FAA Exhibit 1, Item 3 Ex. A. "Copy of Air Carrier Certificate"]

"Centennial Express Airways, Inc. has met the requirements of the Federal Aviation Act of 1958, as amended, and the rules, regulations, and standards prescribed thereunder for the issuance of this certificate and is hereby authorized to operate as an air carrier and conduct common carriage operations in accordance with said Act and the rules, regulation, and standards prescribed thereunder and the terms, conditions and limitations contained in the approved operations specifications."
Beginning in 1985, CEA established contact with the Arapahoe County Airport Authority (ACPAA) and/or the airport manager regarding the startup of scheduled 14 CFR Part 135 passenger service at Centennial Airport. [FAA Exhibit 1, Item 3, page 3]

On February 20, 1989, in the Centennial Aerogram, a newsletter published by the ACPAA, the Authority stated its position regarding Part 135 aeronautical activities. The Authority stated:

"It should be recognized that commercial service has always existed at Centennial in the form of Part 135 charter/air taxi certification, which permits "for hire" passenger and freight service, whether scheduled or unscheduled. Such activity may not be prohibited but is limited to aircraft with 30 seats or less." [FAA Exhibit 1, Correspondence C-6]
In the Centennial Aerogram of October 3, 1989, the ACPAA published the following statement:
"No scheduled air carrier, either large or small, has applied to the Authority to operate at the airport. Should any apply, the Authority will consider only the smaller, regional air service applications. No action will be taken by the Authority to consider such applications, however, without extensive community input and public hearing." [FAA Exhibit 1, Correspondence C-6 "Aerogram", page 3]
On December 12, 1991, a letter was sent to the ACPAA from CEA asking the airport to set standards which would allow CEA to operate. CEA alleges that the ACPAA notified them that it was revising its airport policy statement and that the new policy statement would need to be completed prior to the enactment of minimum standards for scheduled passenger service under Part 135. [FAA Exhibit 1, Item 3, page 3"]

On March 12, 1992, the Airport adopted and promulgated a policy statement, which states that:

"The Authority reaffirms the original intent of the airport to service the general aviation community. To this end, Centennial will continue to accommodate aircraft operating under Federal Aviation Regulations Part 135/Operations Specifications 135 (30 or fewer seats.) Requests for scheduled air service shall be reviewed for compliance with this policy, the established weight limit, and the application minimum standards." [FAA Exhibit 1, Correspondence C-5, "Centennial Airport Policy Statement"]
In the May 1, 1992 Centennial Aerogram, (which included the Report of Airport Authority Board Meetings of March 12 superth and April 23 superrd ) published and disseminated to the public the same policy statement. [FAA Exhibit 1, Correspondence C-5,]

On April 8, 1993, the ACPAA adopted minimum standards for Part 135. At the same time, the ACPAA also adopted a Resolution that states in pertinent part that:

"There is hereby imposed a moratorium on the review or consideration of any applications for Scheduled Air Carrier Operations filed under the Airport's Minimum Standards for Commercial Aeronautical Activities and this moratorium shall be in effect until lifted by further order of the Authority or by final court order."
In the same document, the ACPAA went on to state that:
"The Authority Board hereby directs the attorneys for the Authority to commence legal action on behalf of the Authority and in conjunction with the Arapahoe County Attorney's Office to determine whether Scheduled Air Carrier Operations are allowed to operate at the Airport and/or whether the Authority Board may prohibit Scheduled Air Carrier Operations at the Airport." [FAA Exhibit 1, Correspondence C-1]
On July 21, 1993, the ACPAA sent a letter to the United States Department of Transportation (USDOT) requesting policy guidance on the relationship between Centennial Express' proposal and commitments made in exchange for Federal airport development grants. The Airport Authority argued that federal airport grant obligations should not be construed to require airports to accept commuter service. The Airport Authority provided voluminous supporting documentation with its letter. [FAA Exhibit 1, Correspondence C-5]

In the course of preparing a response, the FAA met with officials from Arapaho County and the City of Denver, heard directly from CEA, and received substantial amounts of correspondence from supporters and opponents of the proposed air service.

The FAA conducted a comprehensive review of the material provided by the airport Authority, Centennial Express, and supporters and opponents of the proposed air service and provided policy guidance to the Airport Authority on December 23, 1994. [FAA Exhibit 1, Correspondence, C-11]

In August 9, 1993, a letter was received by Patrick V. Murphy, Deputy Assistant Secretary for Policy and International Affairs and Leonard E. Mudd, Director, Office of Airport Safety and Standards from the law firm of Brownstein, Hyatt, Farber & Strickland, P.C,. (The intent of the letter was to comment directly about the July 21, 1993 letter to the DOT from the ACPAA. Interest from this firm had previously been indicated in letters dated 6/28/93 and 8/4/93 and the 8/9/93 letter was supportive of CEA's proposal. [FAA Exhibit 1, Correspondence C-6]

On September 8, 1994, the ACPAA adopted an airport policy statement/minimum standards banning any scheduled passenger service. The policy stated in part that: "Under no circumstances shall the Airport purpose include scheduled air carrier service." [FAA Exhibit 1, Item 6,]

On December 23, 1994, DOT responded to the July 21, 1993 letter from the ACPAA by stating that the ACPAA has taken numerous AIP grants over the years and has a continuing obligation to comply with the grant assurances based on current FAA policy. The letter in which the DOT advised the ACPAA of the DOT's policy review stated that "The issue that this raises is whether the Department should change its policy to extend the flexibility now afforded to multiple airports under joint ownership to individually-owned multiple airports which are planned and operated under a regional agreement." The letter also advised that "in addressing similar cases in the past, FAA has found it arbitrary to exclude any particular class of service due to factors that are not reasonably related to the impacts of the Service." The DOT went on to conclude that the ACPAA had not proved that the number of passengers or operations at Centennial would warrant a ban on scheduled service.

DOT also indicated that unless ACPAA obtains an airport operating certificate under Part 139, scheduled passenger operations at Centennial Airport would be limited to aircraft with 30 or fewer seats. The DOT also stated that CEA could not serve any two points with five or more scheduled round trips per week without additional certification from DOT. [FAA Exhibit 1, Correspondence C-11]

The letter went on to state that:

"separate from the matter of the airport's obligations under the grant assurances, your letter also raises a policy issue relating to how to harmonize several important goals..."
Additionally, the letter stated:
"The issue that this raises is whether the Department should change its policy to extend the flexibility now afforded to multiple owners under joint ownership to individually-owned multiple airports which are planned and operated under a regional agreement. Therefore, we will be initiating early next year a process to obtain a full range of views on this issue."
However, the letter also stated that "[c]urrently, existing policy on airport access must be complied with. DOT initiated the process by publishing a Notice of Proposed Policy (NPP) (Policy Encouraging Metropolitan Planning Organizations and Airport Operators to Cooperate in Transportation Planning) on January 28, 1997, (62 FR 4091). Docket No. OST-97-2085 was established to receive comments. The focus of the NPP is regional planning of airports and improved integration of airport planning with overall regional transportation planning. The NPP did not propose to authorize a single sponsor to enter into agreements with other airport sponsors to allocate traffic among regional airports.


Sublease with Colorado Jet Center

In 1979, ACPAA, pursuant to its proprietary rights as owner of the Airport, entered into a lease with Colorado Jet Center (now known as the Denver Jet Center). Paragraph 5B provides as follows:

"Operations by Lessee. Lessee shall have the exclusive right at the Airport, to use and occupy the leased premises, in the areas as depicted on Exhibit A, for any one or more general aviation and related uses and any one or more purposes customarily related and incidental to the conduct of a full- service and full facility fixed base operation or the general conduct of any aviation related business, including the following permitted uses (1) Aircraft and Rotorcraft (sic), charter, air taxi, air freight and commuter service, scheduled and nonscheduled air carrier service."
On December 19, 1994, Golden Eagle Charter entered into a sublease with the Denver Jet Center. The sublease provided that Golden Eagle may carry on certain operations approved in the lease between Jet Center and the Airport Authority (ACPAA). Under the sublease, Golden Eagle was allowed to use the premises for the "purpose of operating aircraft charter, air taxi, air freight, and commuter service as provided for in paragraph 5B(1) of the Arapahoe County Fixed Base Operation Lease between Sub-lessor and ACPAA. [FAA Exhibit 1, Item 5, Brief in Opposition to Preliminary Injunction Order, pages 16-17]

In accordance with its Air Carrier Certificate, Golden Eagle (d/b/a Centennial Express) began scheduled air carrier operations on December 20, 1994. Golden Eagle began its operations with one, six-passenger Beechcraft King Air aircraft, the only aircraft approved by the FAA for Golden Eagle use. CEA's Air Carrier Certificate entitled it up to four (4) round trips per week, per destination, both intra and interstate. In order to exceed four round trips per week per city pair, the air carrier becomes a commuter air carrier, subject to different regulatory requirements. [FAA Exhibit 1, Item 3, exhibit H, page 4]

On January 30, 1995, CEA filed a formal complaint in Docket No. 13-95-03 alleging that the ACPAA had prohibited scheduled passenger service at Centennial Airport under FAR Part 135.

On April 24, 1995, the Arapahoe County Public Airport Authority answered Formal Complaint No. 13-95-03 stating that the ACPAA has not violated Federal transportation laws or its Airport Improvement Program (AIP) grant assurances. [FAA Exhibit 1, Item 4, Tab G]

In its answer, the ACPAA raised seven points:

1. That complainant alleges that a regulation adopted by the ACPAA limiting use of Centennial Airport for conducting scheduled passenger services violates the Federal air transportation laws and grant assurances associated with the ACPAA's acceptance of Federal funds under the Airport Improvement Program but in fact, the Complainant has neither been found fit nor been granted certification as an air carrier.

2. That the Complaint's allegation that the Authority has violated preemption provisions of the Federal Air Transportation Law and Airport Grant Assurances is misguided;

3. That CEA has not been found fit and therefore is not affected by the Authority's policy; (see 1.)

4. That the Authority's regulation preserving Centennial Airport as a general aviation reliever facility is a reasonable limitation on the use of the airport.

5. That an FAR Part 13.5 enforcement proceeding is an inappropriate forum to resolve the issue of retaining Centennial Airport as a general aviation reliever airport.

6. That forcing Centennial to accept scheduled service would needlessly undermine the Federal investment in the Denver International Airport; and;

7. That compelling Centennial to accept scheduled operations would be at least premature in light of pending action to extend the airport certification requirement. (Aviation Rulemaking Advisory Committee; Airport Certification Issues -- New Task 60 Fed. Reg. 21582) [FN 5]

[FN 5] The Aviation Rulemaking Advisory Committee (ARAC) is currently reviewing its task as assigned. To date, no official notice has been published requesting public comment on this issue.
On July 31, 1995, CEA responded to the ACPAA's Answer (13-95-03) generally asserting that the allegations contained in the Complaint have merit and responding point by point to each of the County's contentions as follows: [FAA Exhibit 1, Item 3, Attachment C]

1. The ACPAA's accusation that CEA did not have proper Department of Transportation (DOT) authority is incorrect because Golden Eagle Charters, Inc., d/b/a Centennial Express Airways, Inc. holds a valid part 135 Air Carrier Certificate (attached as Exhibit A) which is limited to four (4) round trips per week both inter-and intrastate.

2. The Federal government should invoke the AIP grant assurances to compel ACPAA to allow scheduled service under 14 CFR Part 135 (30 seats or less).

3. CEA was and always had been in compliance with all rules and regulations set by DOT and FAA governing CEA's actions.

4. The allegations from ACPAA that Centennial Airport was conceived as a general aviation reliever airport and would serve all types of civil service other than scheduled air carriers was erroneous.

5. ACPAA should not be permitted under FAA Order 5190.6A to approve limitations on the use of an airport by a particular type, kind, or class or aeronautical use, because such action is not necessary for the safe operation of the airport or necessary to serve the civil aviation needs of its public.

6. There is no justification to have a forced monopoly at the Denver International Airport (DIA) for all Denver residents; there are certain local areas and regional routes that could be better served by the outlying airports, such as Centennial.

7. CEA believes that nothing will change under the action referenced by the ACPAA.

On September 21, 1995, the ACPAA responded to CEA's reply by stating generally that the issue is "whether the fundamental role of the Centennial Airport should be compelled to change...on the basis of Complainant's intentions." ACPAA also states that "based on the evidence provided by Complainant itself, there is no question that Complainant's objective...is to have Centennial Airport transformed into a full-fledged commercial service facility." [FAA Exhibit 1, Item 4, Exhibit H]

The ACPAA's answer and CEA's reply were included as exhibits in each party's pleading in the Part 16 proceeding discussed below. Because the ACPAA's answer represented the most comprehensive statement of its position, its answer is addressed in detail in this determination.


Part 16 Proceeding

On February 23, 1998, CEA re-filed its original Part 13 complaint under FAR Part 16. In this new submission (FAA Docket No. 16-98-05), CEA raised the same allegations as had previously been alleged under FAR Part 13. Substantially the same documents were used in this Part 16 proceeding as were considered in the Part 13 complaint. [FAA Exhibit 1, Item 3]

On April 8, 1998, ACPAA answered the Part 16 complaint and continued to present its argument that the airport should not be required to accept scheduled commercial air carrier service. [FAA Exhibit 1, Item 4]

The ACPAA states in their Answer that CEA is not entitled to any relief; and that it is not preempted by federal law from banning scheduled passenger service because of its reserved proprietary powers to ban such service. ACPAA also states that the Minimum Standards for commercial aeronautical activities banning scheduled passenger service is, as determined by the trial court, consistent with the safe operation of Centennial Airport. [FAA Exhibit 1, Item 4, page 3]

On April 16, 1998, John Andrews submitted a letter to Docket No. 16-98-05 that stated that "we are in receipt of the answer by the Arapahoe County Public Airport Authority, to our complaint...we choose not to reply." [FAA Exhibit 1, Item 8]

On April 29, 1998, the ACPAA submitted a rebuttal to the Docket. Because CEA did not submit a reply to ACPAA's answer, and so stated by letter, there is no pleading to rebut. Part 16 complainants and respondents are each entitled to two (2) submissions to the Docket, however, a party to the proceeding may choose not to exercise this right. In that case, the Docket would then be closed. ACPAA's rebuttal is therefore being rejected as an unauthorized pleading.

However, we will take this opportunity to note that the rebuttal presented by the ACPAA consisted entirely of the Opinion of the Colorado Supreme Court Case No. 97-SC-123. The FAA is taking official notice of this Opinion as discussed below.

FAA is consolidating the Part 13 dockets and their administrative records into the Part 16 proceeding. Consolidation into Part 16 will avoid duplicative proceedings and assure that the Part 16 complaint is addressed within the time requirements of that regulation. Exhibits provided by the ACPAA in response to the Part 13 proceedings are also included as exhibits in the Part 16 proceeding.

Continued in Part Two