FAA Docket 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
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY
Docket No. 16-98-05
CENTENNIAL EXPRESS AIRLINES AND GOLDEN EAGLE CHARTERS D/B/A
CENTENNIAL EXPRESS AIRLINES
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY
Docket No. 13-94-03
ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY
Docket No. 13-94-25
INITIAL DECISION OF THE HEARING OFFICER PURSUANT TO 14 C.F.R. 16.241
Deputy Assistant Chief Counsel, Procurement Law Division, Anthony L. Washington, acting as Hearing Officer.
December 23, 1998
Nancy D. Lobue, Karl B. Lewis, Kathleen A. Connon, and Frank San Martin, Office of Chief Counsel, Federal Aviation Administration, U.S. Department of Transportation, Washington, DC for the Federal Aviation Administration Office of Safety and Standards.
Ronald S. Loser and Brian A. Magoon, Brega & Winters P.C., Attorneys for Arapahoe County Airport Authority.
William H. Shawn, Gary L. Stanley, and David Fuentes, Shawn, Mann & Steinfeld, Attorneys for City of Greenwood Village, Colorado.
John Andrews, pro se, Centennial Express Airlines, Inc. and Golden Eagle Charters, d/b/a Centennial Express Airlines.
Thomas Kehmeier, pro se.
On September 9, 1998, the Arapahoe County Public Airport Authority (hereinafter referred to as the "ACPAA" or the "Authority") filed a request for a hearing under 14 C.F.R. Part 16, Subpart F. This request followed the Director of the Office of Airport Safety and Standards' determination issued on August 21, 1998, under 14 C.F.R. 16.31(d) ("Director's Determination"). This determination found that the Authority, by denying access to Centennial Express Airlines, Inc. ("CEA") was in not in compliance with the provisions of 49 U.S.C. 47107(a)(1), economic nondiscrimination; 49 U.S.C. 47107(a)(4) and 40103(e), provisions regarding exclusive rights; 49 U.S.C. 41713(b)(1), regarding federal preemption over regulations relating to air carrier prices, routes, services; and with the Authority's Federal grant agreements. The Director also found that by virtue of the violation of section 41713(b)(1), the Authority exceeded its authority as a state or local government, under the Supremacy Clause of the United States Constitution.
On September 25, 1998, the Federal Aviation Administration (hereinafter referred to as the "FAA") through the Deputy Chief Counsel issued a hearing order under 14 C.F.R. 16.201. The Hearing Order, identified the Federal Aviation Administration Office of Airport Safety and Standards, the ACPAA, Thomas Kehmeier, and John Andrews (President), representing Centennial Express Airlines and Golden Eagle Charters, as parties to the proceeding. However, on October 2, 1998, the City of Greenwood Village, Colorado (hereinafter referred to as "Greenwood Village") moved, and was subsequently granted by the Hearing Officer interested party status as an intervenor to the proceeding pursuant to 14 C.F.R. 16.207.
A hearing was held on November 12 and 13, 1998 in Denver, Colorado. Under this proceeding and pursuant to 14 CFR 16.202(k), the Hearing Officer was directed to be address the following issues:
1. Whether the ACPAA may prohibit Centennial Express from operating scheduled air service at Centennial Airport without violating its federal obligations regarding economic nondiscrimination as set forth in 49 U.S.C. 47107(a)(1) and the Authority's grant agreements.
2. Whether the ACPAA may prohibit Centennial Express from operating scheduled air service at Centennial Airport without violating its federal obligations regarding exclusive rights as set forth in 49 U.S.C. 40103(e), 47107(a)(4), and the grant agreements.
3. Whether the ACPAA can prohibit Centennial Express from operating scheduled air services at Centennial Airport without violating provisions of federal law prohibiting state and local regulations of air carrier prices, routes, and services as setforth in 49 U.S.C. 41713(b)(1), and thereby exceeding its lawful authority under the Supremacy Clause of the United States Constitution.
4. Whether the Colorado Supreme Court opinion is binding on the Federal government.
5. Whether circumstances exist at Centennial Airport which permit action by the airport sponsor, acting within its proprietary powers, to prohibit or restrict scheduled passenger service for the safe operation of an airport.
6. Whether the statutory requirement for an airport certificate under Subpart (a) of 49 U.S.C. 44706 is self-executing and took effect upon the passage of the statute or whether the requirements under 49 U.S.C. 44706(a) and (b) do not take effect until the FAA has promulgated and adopted a regulation in accordance with the Administrative Procedures Act. [FN 1]
The Post Hearing Briefs of the parties, those documents submitted by the parties in accordance with the Hearing Officer's October Hearing Order, those documents identified in the Director's Determination (including the Director's Determination), the Hearing Transcripts (November 12 and 13, 1998) and exhibits, constitute the record in this matter.
1. In 1967, Centennial Airport opened as a public use airport and to serve as a general aviation reliever airport for the Denver community. (Phifer Testimony, Para. 6.) Centennial Airport is approximately 14 miles southeast of Denver Colorado. (Director's Determination, page 2.)
2. The airport is owned and operated by Arapahoe County Public Airport Authority ("ACPAA"), which was created by the Arapahoe County Commissioners in 1975. (ACPAA Exh. 2(d); Director's Determination, page 2.)
3. The planning and development of the airport has been financed, in part, with funds provided by the FAA under the Airport Improvement Program (hereinafter referred to as "AIP") as authorized by the Airport and Airway Improvement Act of 1982, as amended, 49 U.S.C. 47101. Since 1983, according to the to Grant History for the subject Airport, the ACPAA has entered into numerous AIP grant agreements with the FAA and has received over $18.5 million in federal airport development assistance. The FAA makes the grants to the airport in exchange for "binding commitments in the form of grant assurances designed to assure that the public interest would be served." The assurances are required by 49 U.S.C. 47107(a). The statute states that a project grant application may not be approved unless the Secretary receives confirmation that the conditions of the grant assurances will be met. Further, under 49 U.S.C. 47122, the FAA has a statutory mandate to ensure that airport owners comply with the sponsor assurances. (Molar Testimony [FN 3], pages 3 and 4.)
5. On February 20, 1989, in the Centennial Aerogram, a newsletter published by the ACPAA, the authority stated its position regarding Part 135 aeronautical activities. In pertinent part, it states, as follows:
6. In the October 3, 1989, Centennial Aerogram, the Authority stated as follows:
7. On March 12, 1992, the Authority adopted and promulgated a policy statement which states:
8. Centennial Express Airway began its commercial operations at Centennial airport having purchased Golden Eagle Charters from Air Methods, Inc. CEA requested and was granted an Air carrier certificate, for a doing business as ("d/b/a") name of Centennial Express Airways and was subsequently reissued such certificate by the FAA. (Roy Rebuttal Testimony, Para. 6.)
9. On May 7, 1993 Centennial Express Airlines, Inc. ("CEA") filed an application with the ACPAA to Conduct Scheduled Passenger Service at Centennial. (ACPAA Exhibit 20(a).)
10. The CEA application proposed to operate 30-seat aircraft directly to eight cities, six scheduled flights per day. (ACPAA Exhibit 20(a), Executive Summary.) This proposed operation, at a sixty-percent load factor, would result in approximately 630,000 passengers a year at Centennial Airport. (Hearing Transcript at 323-28.)
11. Almost 1 year later, on April 8, 1994, CEA, by letter executed by its president John Andrews, filed an amended application. The amended application proposed operation for 30-seat aircraft to five major cities with seventeen departures per day. (ACPAA Exhibit 20(j), Executive Summary.)
12. On August 7, 1994, Thomas Kehmeier filed a complaint against the Airport Authority pursuant to 14 C.F.R. Part 13, Docket No. 13-94-25. (Director's Determination page 11.)
13. Mr. Kehmeier complained about Airport Authority actions dating from 1985, which actions denied access to scheduled passenger service, and also that such actions violated the Airport Authority's grant agreements with the Federal Aviation Administration. (ACPAA Exhibit 21(f).)
14. On September 8, 1994, the Airport Authority adopted revised and restated Minimum Standards. These Minimum Standards defined Centennial's "Airport Purpose" as:
15. These Minimum Standards also defined "Air Carrier" as:
16. At the time that Centennial Express Airlines was enjoined from operating at Centennial, CEA held both Department of Transportation ("DOT") economic authority and FAA safety authority to operate scheduled passenger service at Centennial Airport. According to Jeffery A. Roy, Manager of the Denver Flight Standards District Office ("FSDO), who is responsible for Flight Standards Service programs in the states of Colorado and Wyoming the individuals intending to operate aircraft for commercial purposes, including carriage of persons, must comply with applicable DOT economic regulations and with FAA safety regulations before the FAA can issue the Air Carrier an operating certificate. (Roy Rebuttal Testimony, Para. 13.)
17. In April of 1994, Centennial Express Airlines submitted an amendment to its original application to ACPAA. Centennial Express Airlines proposed now to use 30 seat turbo-prop aircraft to five major cities, with 17 departures per day. The various business plans were determined by Mr. Andrews to be unrealistic in light of various cost estimates. (ACPAA Exhibit, 20 (b) and Hearing Transcript at 343.)
18. Regardless of the business proposal, CEA, according to the testimony of its President John Andrews, continued to make the necessary provisions for acquiring or establishing the necessary facilities, i.e. parking, ticketing and baggage area to handle the proposed operations. (Hearing Transcript at 346.) At no time during this process did representatives of the Centennial Airport raise any safety or security concerns to CEA in response to any of these various business proposals. (Hearing Transcript at 350.)
19. Mr. Andrew's admitted that the flight from Centennial Airport ("a nine seat operation conducted with a very quiet turbo-prop aircraft") was a test of ACPAA's authority to prohibit scheduled service at the airport and may not have reflected the scope of service CEA ultimately planned to offer at the airport. (Andrew's Rebuttal Testimony, Para. 6 and Hearing Transcript at 332.)
20. On December 20, 1994, Centennial Express Airlines initiated scheduled passenger service between Centennial and Dalhart, Texas. (ACPAA Exhibits 21(b) and Director's Determination, page 2.)
21. The Airline proposed to make four round trips a week between Centennial and Dalhart and five round trips a week between Centennial and Grand Junction Walker Field. The Airline also announced plans to add Amarillo, Texas and, in 1995, thirty passenger commuter flights between Centennial and Colorado Springs, Grand Junction and other western slope airports. The planned service would be consistent with their authority granted by the FAA. (ACPAA Exhibit 21(b) and Roy Rebuttal Testimony, Para. 8.)
22. Centennial Express Airlines voluntarily surrounded its part 135 certificate to the FAA in January 1995. Approximately 2 years later, on May 1, 1997, Centennial Express Airlines' wholly owned subsidiary, Golden Eagles Charters, Inc. was dissolved for failure to file its state of Colorado corporate report. (Roy Rebuttal Testimony, Para. 7.)
23. At the present time Centennial is ranked as the 24 superth busiest FAA air traffic control tower. (Administrator's Handbook-October 1998 issue.) (FAA Exhibit, R-1). The Administrator's Handbook indicates that Centennial Airport had approximately 275,000 operations during the period of January-July 1998. The Airport's Master Plan forecasts steady growth through the year 2015. The projection is that Centennial will be at 461,000 operations by the year 2015. The Airport's full capacity is projected to be 525,000 per year. Roy concluded that since a 3rd fixed based operator (FBO) is building at Centennial, it would accommodate these increased operations in the future. (Roy Rebuttal Testimony, Para. 13.)
24. While ACPAA has placed no limits on the growth of operations at Centennial, except for its ban on scheduled operations of CEA and Air One Charter, which proposed to operate a charter under 14 CFR part 380. Neither of the companies operates on any schedule but could do so under their respective FAA safety authority. The air carriers could operate as long as the operations did not exceed 4 round trips per week, on at least one route between two or more points. Neither the Village of Greenwood or the ACPAA challenged Mr. Roy on this point nor there is no evidence in the record to the contrary. (Roy Rebuttal Testimony, Para. 14.)
25. Mr. Roy also testified that that the type of operations proposed by CEA would have required no more services than those that currently exist at Centennial at the two existing FBO's. These operations would include ground handling services, fueling, maintenance, catering, rental cars, and passenger handling. (Roy Rebuttal Testimony, Para. 15.)
26. Mr. Andrews testified that CEA had entered into a sub-lease with Denver Jet Center, which would have provided the needed facilities to operate a fleet of aircraft of 30 seats or less. The sublease provided that Golden Eagle would be permitted to carry on certain operations approved in the lease between the Denver Jet Center and the ACPAA. This would have permitted use of the premises for the "purpose of operating aircraft charter, air freight, and commuter service" and have included space for a ticket counter, baggage handling, and a flight operator's area. Mr. Andrews also testified that a plan had been submitted for use of an existing parking lot adjacent to the Denver Jet Center and that CEA had also entered into discussions with another entity for additional parking space, if needed. (Andrews Rebuttal Testimony, Hearing Transcript at 346-352 and Director's Determination, page 15.)
27. There are several corporate flight departments in addition to air carriers based at Centennial Airport. The record indicates that the aircraft operating at Centennial Airport are consistent with the types of aircraft, which CEA owned or planned on operating. The aircraft (King Air and SAAB 340) are within the weight limits at the airport and operate within the speed s consistent with the rest of the aircraft operating at Centennial Airport in many cases the aircraft which operate at Centennial Airport are much larger than the type of airplane utilized or planned to be utilized by CEA. (Roy Rebuttal Testimony, Para. 11 and 20.)
28. At the present time the ACPAA has no plans to make any design changes to the airport with respect to passenger terminal, adequate parking, security, or baggage system. According to the testimony of Mr. Brackney, the ACPAA has no financial resources to undertake such an endeavor. Mr. Brackney testified, at hearing, as follows:
29. The Denver Regional Council of Government ("DRCOG") is a regional planning commission created under Colorado law to coordinate transportation issues in the Denver area. DRCOG has developed plans with FAA funding. DRCOG 2020 Denver Regional Aviation System Plan (prepared since 1974) and its 2020 Metro Vision Plan have concluded that Centennial Airport should continue as the "non-scheduled passenger service, transport-category, general aviation/reliever airport. DRCOG concluded that to permit scheduled services at Centennial airport would not preserve Centennial Airport for the anticipated growth in general aviation operations. (Ryan Testimony, Para. 1-2 and 9.)
30. The ACPAA in the last year has entered into an agreement for a third FBO which will have the effect of increasing the number of aviation users at the airport in terms of tie down space and fueling, among other items. (Hearing Transcript at 122.)
31. The FAA Supervisor in the Denver Airports District Office (ADO), Nance Earley, who, among other responsibilities, is responsible for the district's capital improvement program, airports grant -- in-aid, and passenger facility charge program, testified that Centennial Airport, despite the recent growth at the airport in terms of operations per year (408,000 operations in 1997 -- capacity, 525,000 operations per year), is in a position to sufficiently accommodate the air carrier operations proposed by CEA. Mr. Earley further testified that the annual capacity figure "is not a hard, rigid, operational lid on the airport" because of all the variables involved in deriving the annual practical capacity number, e.g. weather conditions, winds, runway utilization and configuration and that in his experience, airports continue to operate safely and efficiently in excess of the projected annual capacity cap. (Earley Rebuttal Testimony, Para. 11 and Transcript 469 and 489.)
32. In 1994 and 1996, the National Transportation Safety Board recommended restricting scheduled services to airports certified under 14 C.F.R. Part 139. Commissioner John Brackney, appearing on behalf of the ACPAA testified that the November 1994 NTSB recommendation formed an additional basis for the ACPAA ban on scheduled services at Centennial Airport. The ban on scheduled services however, occurred prior to the initial NTSB recommendation and therefore could not have been a basis for the prohibition. (Brackney Testimony, Para. 12-15.)
33. The Castlewood Fire Protection District serving Centennial Airport is not in a position to meet the 3 minute response time (reaching the mid-point of the runway being used for scheduled passenger service) test recommended by the NTSB for scheduled service for Part 139 Airports, according to the Fire Chief, Thomas P. Montoya. In part, the Castlewood Fire Protection District serving the airport is unable to meet the recommended 3-minute response time is due the offsite location of the unit. Chief Montoya, who is concerned about the safety of all passengers utilizing Centennial Airport, admitted that that there is no difference in the survivability of passengers between scheduled and nonscheduled service at Centennial Airport, assuming similar types of aircraft. (Hearing Transcript 165 and 169. Montoya Testimony, Para. 3.)
34. The airport is not a Part 139 airport an accordingly is not required to meet the 3 minute response time. The 3 minute response time test has nothing to do with "getting control or mostly extinguishing a fire within 3 minutes." The 3 minute response time is only to test the response time of fire fighting equipment. Further, the aircraft proposed for use by CEA in scheduled air carrier service are the same type of aircraft that presently use Centennial Airport. (Castellano Rebuttal Testimony, page 5.)
35. All commercial scheduled services are expected by the FAA to operate in a safe manner. Before the airline, e.g., Centennial Express Airlines may operate it must satisfy the applicable requirements contained in the Federal Aviation Regulations. Centennial Airport (the ACPAA) is obligated to operate the airport in a safe and serviceable condition by allowing the proponent operator "to provide what is needed for a safe terminal situation. The ultimate burden for airline safety lies with the air carrier. The airport should provide the air carrier with a reasonable opportunity to provide the minimum facilities to conduct a safe operation. The air carrier (operator) can be responsible for any necessary ground facilities. It is normal practice in the aviation community for the carrier to assume certain costs, either directly or through lease arrangement payments." (Earley Rebuttal Testimony, Para. 20.)
36. At the present time the ACPAA has no plans to make any design changes to the airport with respect to passenger terminal, adequate parking, security, or baggage system. According to the testimony of Mr. Brackney, the ACPAA has no financial resources to undertake such an endeavor. Mr. Brackney testified, at hearing, as follows that:
37. The restrictions imposed by the ACPAA relating to CEA or any commercial airline is not related to any identified environmental problem that the restriction was designed to control. The ACPAA admitted that safety and civil aviation needs of the public were the only reasons for restriction on scheduled service. The County Commissioner admitted that "neither congestion, capacity, or environmental impacts" were considered as reasons for the ACPAA's prohibition against regularly scheduled passenger service. (Hearing Transcript at 119-21.)
38. The Mayor of Greenwood Village testified that environmental concerns are a "very big concern" to Greenwood Village but that the overriding concern was in relationship to airport growth in general, and for the "unmitigated impacts of that growth" upon the Greenwood Village. (Hearing Transcript at 226.)
39. Greenwood Village proffered the testimony of Dr. Louis Cohn on environmental issues. Dr. Cohn testified that although Centennial Airport has additional capacity to accommodate additional aircraft arrivals and departures, the environmental resources of the surrounding community, specifically in relationship to noise, were "approaching saturation levels." Dr. Cohn also testified that the increased general aviation use at the airport directly increased automotive and truck traffic, which had the effect of straining local roads, police, and fire public services. Dr. Cohn was unaware of any analysis or studies quantifying the impact of scheduled passenger service at the airport. (Hearing Transcript at page 251.) Dr. Cohn did admit that CEA's proposed service, which was to have included a Beech King Air E90, would not have significantly increased noise problems at Centennial Airport. Such aircraft, as used by CEA at the time of the prohibition of scheduled service was one of the quieter aircraft using Centennial Airport. (Hearing Transcript at 253-256.)
40. Mr. Earley of the FAA testified that the ACPAA, as the airport sponsor has not taken prudent and timely lands use regulations in the past. The result is residential dwellings located in sensitive areas. In addition, the county has not taken effective action, to the extent reasonable and consistent with its grant assurances, "to restrict the use of land adjacent to or in the vicinity of the airport to activities and purposes compatible with normal operations, including the landing and take off of aircraft." (Earley Rebuttal Testimony, Para. 27.)
41. Witnesses for the Greenwood Village, including its Mayor, David Phifer and City Council Member, Clark Upton, testified that transportation in the vicinity of Centennial Airport is presently at a "crisis level" and that the main thoroughfare has been designated by the county as one of the county roads with the lowest levels of service. They also testified that the airport would suffer a more serious problem if scheduled flights were permitted at Centennial Airport. According to Mr. Upton, the majority of scheduled passengers for scheduled flights would use individual cars to travel to the airport in contrast to corporate business travelers or private pilots who would travel in only one car in order to travel on their company's plane. The difference in behavior, Mr. Upton believes would increase traffic. (Upton Testimony, Para. 2. Phifer Testimony Para. 10.)
42. The surface transportation congestion problems result not from aircraft growth but rather from the growth of the business community in the Denver Tech Center/southern metropolitan area over the past several years. (Earley Rebuttal Testimony, Para. 23.)
43. There are currently 12 part 135 air carriers based at Centennial Airport. Centennial Airport is used by other part 135 operators not based at the airport on a daily basis. These operators are in the business of supporting corporate flight departments as supplemental or primary charter sources. (Roy Rebuttal Testimony, Para. 9.)
44. CEA's original May 1993 application to the ACPAA proposed that through a two year, four phase plan that it would ultimately operate a minimum of six scheduled flights per day to each of the eight identified cities. CEA's operation was targeted to executives and employees of companies in the Denver area and was specifically planned to commence operations at or about the time of the Denver Airport opening and the closing of Stapleton Airport. It was contemplated that the proposed service would attract business travelers who desired to be closer to the South Metro Denver area. In addition, Centennial Airline proposed to use "Stage III (quiet) jet aircraft" and to build permanent passenger facilities, in order to be "best possible corporate neighbor to those who live near Centennial Airport." (ACPAA Exhibit, 20(a).)
45. Mr. James A. Dunlap, Deputy Director of Aviation /Operations for Denver International Airport testified that there are significant safety problems and economic inefficiencies presented when air traffic controllers are attempting to control different types of aircraft moving at materially different speeds using the same air space environment. He, however, provided no empirical data in support of his conclusions. (Dunlap Testimony, Para. 5. Hearing Transcript at 194-95.) Mr. Dunlap, appearing on behalf of the ACPAA, on cross-examination also testified that even with the Denver International Airport's mix of various aircraft, "large air craft to small air craft and speed" that the air traffic of these varied air craft are being conducted safely. (Hearing Transcript at 200.)
Director's Determination / Hearing Order
46. On August 21, 1998, the Director's Determination was issued. Docket Nos. 13-94-25, 13-95-03, and 16-98-05 were consolidated. (Director's Determination, page 18.)
47. The Director's Determination concluded that the Airport Authority, by unreasonably delaying adoption of Minimum Standards for the operation of scheduled Part 135 Air Carrier Services at Centennial and by adopting a moratorium on consideration of applications for scheduled Part 135 Air Carrier Services at Centennial in conjunction with the adoption of Minimum Standards for such services, violated its federal obligations regarding economic non- discrimination, violated its federal obligations regarding exclusive rights, and violated the prohibition on state and local regulations relating to a price, route or service of an air carrier. (Director's Determination, pages 32- 33.)
48. The Director's Determination also concluded that the Airport Authority, by banning scheduled air carrier service on or about September 8, 1994, violated its obligations regarding economic non-discrimination, violated its federal obligations regarding exclusive rights, and violated the prohibition on state and local regulations relating to a price, route or service of an air carrier. (Directors' Determination, pages 32 and 33.)
49. The sanction specified in the Director's Determination is that the Airport Authority is ineligible to apply for new FAA grants pursuant to 49 U.S.C. s 47106(d). (Director's Determination, page 33.)
50. On September 9, 1998, the Airport Authority filed a Request for Hearing. The Airport Authority requested an evidentiary hearing.
51. On September 25, 1998, the Deputy Chief Counsel issued his Hearing Order.