AVIATION NOISE LAW
City of Pompano Beach v. FAA
Cite as: 774 F.2d 1529


U.S. COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

The CITY OF POMPANO BEACH, a Florida municipal corporation, Petitioner,
v.
FEDERAL AVIATION ADMINISTRATION, Respondent

James C. Brettman, Intervenor

No. 84-5331
Nov. 4, 1985


COUNSEL:

Donald C. Roberge, City Atty., Pompano Beach, Fla., for petitioner.

Mark L. Gerchick, Paul, Hastings, Janofsky & Walker, Judith Richards Hope, Leonard A. Ceruzzi, Washington, D.C., for J. Brettman.

On Petition for Review of an Order of the Federal Aviation Administration.


Before RONEY and TJOFLAT, Circuit Judges, and BROWN [FN *], Senior Circuit Judge.

[FN *] Honorable John R. Brown, U.S. Circuit Judge for the Fifth Circuit, sitting by designation.
TJOFLAT, Circuit Judge:

Petitioner, the City of Pompano Beach, Florida, seeks direct review of a determination by the Federal Aviation Administration (FAA) [FN 1] that the City has been operating its airport in violation of section 308(a) of the Federal Aviation Act of 1958, as amended, 49 U.S.C.App. 1349(a) (1982), [FN 2] and in noncompliance with the terms and conditions of the deed which transferred ownership of the airport property from the United States to the City. [FN 3] The FAA based this determination on a finding that the City was unjustly discriminating against an applicant for a lease to do business at the City's airport and was, in effect, granting an exclusive right to the incumbent lessees. Holding that there was substantial evidence in the record to support the factual findings of the agency and that the agency's application of the governing law to those facts was reasonable, we affirm.

[FN 1] This court has jurisdiction to review final orders of the Administrator of the Federal Aviation Administration. 49 U.S.C.App. 1486(a) (1982). Following a four-day hearing, a hearing officer issued his "Findings and Decision of the Hearing Officer," followed by a "Specific Order." The City, petitioner before us, declined to appeal the hearing officer's order to the Administrator pursuant to section 13.20(g) of the Federal Aviation Administration Regulations. 14 C.F.R. 13.20(g) (1984). The order of the hearing officer therefore became the final order of the Administrator. 14 C.F.R. 13.20(h) (1984).

[FN 2] 49 U.S.C.App. 1349(a) (1982) provides in pertinent part:

s. 1349. Expenditure of Federal funds for certain airports and air navigation facilities; location of airports, landing areas, and missile and rocket sites

(a) No Federal funds, other than those expended under this chapter, shall be expended, other than for military purposes ..., for the acquisition, establishment, construction, alteration, repair, maintenance, or operation of any landing area, or for the acquisition, establishment, construction, maintenance, or operation of air navigation facilities thereon, except upon written recommendation and certification by the Secretary of Transportation that such landing area or facility is reasonably necessary for use in air commerce or in the interests of national defense.... There shall be no exclusive right for the use of any landing area or air navigation facility upon which Federal funds have been expended. For purposes of the preceding sentence, the providing of services at an airport by a single fixed-based operator shall not be construed as an exclusive right if it would be unreasonably costly, burdensome, or impractical for more than one fixed- based operator to provide such services, and if allowing more than one fixed-based operator to provide such services would require the reduction of space leased pursuant to an existing agreement between such fixed-based operator and such airport.

[FN 3] The Pompano Beach Air Park was formerly a World War II naval training facility; it was conveyed to the City by the federal government by quitclaim deed in 1947, pursuant to the Surplus Property Act of 1944. That Act, today at 50 U.S.C.App. 1622(g) (1982), provides that all property disposed of shall be used and maintained for the benefit of the public interest without unjust discrimination, 50 U.S.C.App. 1622(g)(2)(B) (1982), and that no exclusive right for the use of the airport shall be granted. 50 U.S.C.App. 1622(g)(2)(C) (1982). The deed also contains specific covenants providing that the airport property "shall be used for public airport purposes, and for only such purposes, on reasonable terms and without unjust discrimination and without grant or exercise of any exclusive right for use of the airport within the meaning of Section 303 of the Civil Aeronautics Act of 1938," the predecessor to 49 U.S.C.App. 1349(a) (1982). See supra note 2. The deed of conveyance provides that, in the event any of the conditions or covenants contained therein are breached by the City, the property shall revert to the federal government at its option sixty days after the date of its demand, unless the City cures the breach within the sixty-day period.

The Administrator of the FAA is charged with "the sole responsibility for determining and enforcing compliance with the terms, conditions, reservations, and restrictions contained in any instrument of disposal by which surplus property is or has been transferred to ... municipalities ... pursuant to the Surplus Property Act of 1944" for use as an airport. 50 U.S.C.A.App. 1622b (West Supp.1985). Because in this case the Administrator is pursuing a remedy under the Federal Aviation Act of 1958, 49 U.S.C.App. 1349(a), rather than the remedy contained in the City's deed of conveyance, we focus our analysis upon the requirements of the Federal Aviation Act.


I.

The facts in this case are crucial to our holding; they involved the protracted attempt by Pompano Beach businessman and aviator James Brettman, [FN 4] starting May 30, 1979, to lease between ten and twelve acres at the Pompano Beach Air Park (Air Park) to construct aircraft hangars and covered storage space for airplanes. From the beginning, Brettman sought a lease from the City which would allow him to be competitive with incumbent lessees providing similar services at the Air Park. Brettman's original plan was only to sell hangar and storage space to the owners of small, single and twin-engine airplanes using the Air Park and not to offer the general aviation services provided by the other Air Park tenants. Any services not provided by the other tenants might be made available at the Brettman facility solely for aircraft based there, he said.

[FN 4] James Brettman appears in this case as an intervenor, pursuant to 14 C.F.R. 13.51 (1984), as he has no private right of action under 49 U.S.C.A. App. 1349(a), see Hill Aircraft & Leasing Corp. v. Fulton County, 561 F.Supp. 667, 670 (N.D.Ga.1982), aff'd, 729 F.2d 1467 (11th Cir.1984), or pursuant to the deed conveying the airport property from the federal government to the City.
At the time of Brettman's request, aircraft storage services were being provided at the Air Park by two incumbent fixed base operators, [FN 5] Pompano Air Center and Pompano Aviation. Pompano Air Center was owned and operated by John Becker. In 1977, Pompano Air Center entered into a twenty-one-year lease with the City. The lease imposed upon Pompano Air Center no obligation to spend money for the improvement of its facilities and provided that Pompano Air Center would be governed by the City's standards for fixed base operators and Air Park tenants adopted in 1967. Pompano Air Center's lease was amended in August 1978; the City agreed that, in return for Pompano Air Center's commitment to construct $200,000 worth of airplane hangars and other facilities at the Air Park, the City would extend the company's lease to thirty years, beginning in 1978. The lease of the second fixed base operator on the Air Park at the time of Brettman's application, Pompano Aviation, is not pertinent to these proceedings.
[FN 5] A "fixed base operator" is one who "'provides services [at an airport] similar to those that a service station provides for those who operate automobiles.'" Guthrie v. Genesee County, 494 F.Supp. 950, 952 n. 1 (W.D.N.Y.1980) (quoting Pinehurst Airlines, Inc. v. Resort Air Services, Inc., 476 F.Supp. 543, 553 (M.D.N.C.1979)).
Brettman's application for a lease was referred to the Pompano Beach Air Park Advisory Board. The Board formally considered the matter for the first time at its June 19, 1979 meeting. At that meeting, the Board tabled Brettman's application for three months pending further study of his proposed "condominium/cooperative" building concept and the impact additional hangar facilities would have upon the existing fixed base operators. Significantly, several members of the Advisory Board said they were concerned that the Brettman proposal would take lucrative hangar service business away from Pompano Air Center and Pompano Aviation, leaving them with the less profitable fuel service, parking facilities, line service, and flight school. They also noted that Pompano Air Center had thirty-six vacant hangar units and that the two existing fixed base operators were leasing land they were not yet using. Becker, the owner of Pompano Air Center, suggested that, if the Board were subsequently to recommend the City's acceptance of Brettman's application, it should require Brettman to come onto the Air Park as a full fixed base operator, providing a litany of aviation services over and above just hangar storage space. He protested that it would be unfair to make the two existing fixed base operators provide such services, at great expense to them, and not to impose the same obligation on Brettman.

On June 22, 1979, Brettman wrote the FAA's regional compliance specialist about the situation, saying that his application for a lease met the City's published minimum standards [FN 6] for leasing land at the Air Park and that the City's delay in taking action thereon was discriminatory. On July 10, 1979, the Advisory Board unanimously reaffirmed its previous decision to table Brettman's application.

[FN 6] In his original application for a lease at the Air Park, Brettman sought to qualify as an Air Park tenant, rather than as a fixed base operator, as provided by the City's minimum standards published at that time.
On July 26, 1979, Pompano Aviation was sold to Executive Aviation of Pompano, which commenced doing business under a new lease with the City on that same day. One of the conditions of the sale was that the City could update and modify Pompano Aviation's lease. The City did so, making a new lease with Executive which provided that the company would be a fixed base operator at the Air Park for a term of thirty years and would expend $100,000 on improvements to the leased property. The new lease also required Executive to adhere to the provisions of the City's 1967 minimum standards for fixed base operators and tenants.

Two days before Executive Aviation's new lease was signed, the Pompano Beach City Commission adopted by resolution a revised set of minimum standards applicable to Air Park tenants and fixed base operators. These revised standards, formulated by the Air Park Advisory Board, had been under development for some time, according to Air Park's manager.

Brettman next discussed his application with the Advisory Board at its regular monthly meeting of September 11, 1979; [FN 7] Brettman presented the Board with a scale model of his proposed hangar facility. Becker appeared and objected to Brettman's proposal because the City presently had two operators providing aviation services at the Air Park seven days a week. He renewed his position that Brettman should not be permitted to come onto the Air Park and siphon the existing fixed base operators' profitable hangar business, taking "the gravy off the top" and leaving them with only labor intensive and less profitable services. Despite Becker's opposition, the Advisory Board voted three to two to recommend that the City Commission approve Brettman's proposal.

[FN 7] The Board did not hold a meeting during the month of August 1979.
On October 10, 1979, the Pompano Beach City Attorney advised the city manager that the City's minimum standards did not permit a lessee, as a mere Air Park tenant, to rent aircraft storage space; rather, to rent such space the lessee must qualify as a fixed base operator, under one of five categories set out in the City's minimum standards, and provide more complete aviation services. In response, Brettman, on November 11, 1979, changed his request and sought a fixed base operator lease.

During the next year, Brettman and the city attorney attempted to negotiate a lease. Brettman wanted a fixed base operator lease under the flight instruction category of the standards; he proposed a lease for thirty years with a required minimum investment of $150,000. In addition to providing aircraft storage space, Brettman was proposing a flight training facility with at least one instructor, two aircraft, and classroom space. The city attorney counteroffered the City's "standard lease," which contained provisions and requirements not included in the existing fixed based operators' leases.

On December 16, 1980, the Air Park Advisory Board recommended to the City Commission that the City enter into a twenty-year lease with Brettman with two provisos: that Brettman be required to spend at least $200,000 on facilities and that his ability to sublease hangar space be limited to a period of one year, a limitation not included in the existing leases. The City offered Brettman the recommended lease. He rejected the offer because the lease term was shorter than those of existing fixed base operators and he would be required to make a larger capital investment. Brettman returned to the Advisory Board on several occasions during the next eighteen months in an attempt to eliminate these objectionable conditions. He failed, and in February 1981, November 1981, and April 1982 the City repeated the same offer, a twenty-year lease with a minimum required investment of $200,000.

On February 10, 1981, Brettman notified the Air Park manager that he wished to amend his application for a fixed base operator lease, under the flight instruction category of the City's standards, to request a fixed base operator lease encompassing the same services and facilities as Pompano Air Center and Executive Aviation. In essence, Brettman sought permission to operate at the Air Park on precisely the same basis as the incumbent fixed base operators. The City repeated its twenty-year lease offer, provided that Brettman demonstrate his financial responsibility to the City's satisfaction; thus, they asked him to submit to the Air Park Advisory Board detailed financial information about his proposed fixed base operation. Brettman countered with a proposed lease that reflected the changes necessitated by his decision to become a full-service fixed base operator. The form of Brettman's proposed lease replicated exactly the form of the leases held by Pompano Air Center and Executive Aviation. The city attorney, on April 9, 1981, rejected Brettman's proposal out of hand, saying that the City's offer, a twenty-year lease with a required investment of $200,000, represented an improvement over the City's previous offers.

The City refused to offer Brettman a lease containing the identical provisions appearing in the existing leases. On June 23, 1981, the Air Park's manager wrote Brettman that, because negotiations had reached an impasse, he planned to take no further action on Brettman's request. His stated reason for the breakdown in negotiations was the consistent opposition among city officials to Brettman's "condo hangar" concept, i.e., the long-term leasing of aircraft storage facilities. The manager advised Brettman to search for another airport with which to do business.

On July 6, 1981, Brettman filed a complaint with the FAA in which he stated that the City "has refused to grant an additional lease under the same terms and conditions they have granted two others for similar operations on the Air Park, therefore, the City appears to confer an exclusive right of enjoyment of a privilege to some which they deny to others." Brettman alleged that the City's conduct constituted a violation of federal law.

On September 2, 1981, Becker presented the Air Park Advisory Board with a proposal that he purchase the financially foundering Executive Aviation and assume its fixed base operator lease with the City. Within two months Becker arranged a lease agreement between his son, Brian, and the City that permitted Brian to take over Executive's fixed base facilities at the Pompano Air Park, subject to Executive's $100,000 minimum investment obligation, and to operate them during the remaining twenty-eight years of Executive's lease term. The City did not require Brian Becker to adhere to the revised minimum standards adopted in 1979 and imposed upon Brettman; it would be enough if he adhered to the 1967 standards applicable to his father's fixed base operation. Nor did the City request of Brian Becker the detailed financial information -- such as projected gross revenues and operating costs for each year of the lease, pricing policies, and a proposed schedule of charges -- it had asked Brettman to present nine months earlier, in February 1981.

For tax purposes, the senior Becker chose to set up a separate corporation for his newly acquired fixed base operation, rather than have Pompano Air Center absorb it. Becker called the new corporation Bec-Air, Inc. The stock in Bec-Air was held by Brian Becker, who, in addition to being an officer in Pompano Air Center, was made president, treasurer, and director of Bec-Air. The two Becker facilities, which are adjacent to each other on the Air Park, essentially have been operated and maintained as a single business entity. Pompano Air Center employs a staff of between thirty to fifty persons, including pilots, mechanics, and office staff. All the mechanics have mechanics' licenses, and the pilots are qualified to instruct. The company provides a full range of aeronautical services, including flight instruction, aircraft maintenance, fuel, oil, rental hangar storage space, and outside aircraft tie-down service. It also holds a dealership for at least two aircraft manufacturers, selling both propeller and small jet aircraft, and is the headquarters for the United States aerobatic team. In contrast, Bec-Air employs three persons, a clerk and two line persons who hold no professional FAA certificates. Bec-Air provides no mechanical service or maintenance to aircraft but simply refers all maintenance work to Pompano Air Center; a plane with mechanical problems must either taxi to Pompano Air Center or wait for a tow from a Pompano Air Center truck, as Bec-Air has no equipment with which to provide towing service. The only aeronautical service Bec-Air provides is fuel. Bec-Air also is not an authorized aircraft manufacturer's representative.

Despite the flat rejection from the Air Park manager in July 1981, Brettman continued to pursue a lease at the Air Park. On November 10, 1981, a week after the City approved its lease with Bec-Air, Brettman renewed his proposal and presented a detailed scale model of his plan to the Air Park Advisory Board. The Board repeated its recommendation to the Commission that Brettman be offered a twenty-year lease with a required investment of $200,000. Becker again voiced his objection to the Commission, this time in the form of a letter to its members dated February 12, 1982. The Commission responded as it had before; in April 1982 Brettman was offered a twenty-year lease with a $200,000 investment obligation. Though the City called the lease its "standard" lease, the City had modified it three times since 1977. According to the City, the changes were made to reflect its "evolving concerns" and to protect its, and thus, the public's, interest. By 1982, the City's "standard" lease, which incorporated the latest revised minimum standards for Air Park fixed base operators and tenants, contained numerous differences from the leases held by Pompano Air Center and Bec-Air. Brettman refused to accept the City's "standard" lease.

Still holding Brettman's complaint of July 6, 1981, the FAA, on March 10, 1983, issued a "Notice of Proposed Order" finding the City in noncompliance with federal law. The FAA charged that the City was engaging in conduct which was unjustly discriminatory and was in effect granting an exclusive right to the Beckers. Detailing fifty proposed findings of fact, the FAA concluded that the City's limitation of Brettman's lease term to twenty years with an obligation to expend $200,000 was unreasonable and unjustly discriminatory, particularly because the City had made other Air Park leases with more favorable terms while it was negotiating with Brettman. Additionally, the FAA said that, since Brettman had been attempting to secure a lease at the Air Park, the City had made a number of modifications in its minimum standards for Air Park leases, changed its interpretation of those standards, and applied those standards inconsistently. The FAA said the inconsistent application of the standards included, but was not limited to: restricting Brettman's ability to sell, assign, or sublease an interest in his leasehold; imposing a one-year maximum term on any sublease; requiring Brettman to qualify as a full fixed base operator before being permitted to rent aircraft storage space; requiring Brettman to operate under more than one category for fixed base operators and to construct facilities required by more than one category of the City's minimum standards; requiring Brettman to comply with unspecified future amendments to the City's minimum standards while exempting other lessees from the same obligation; and refusing to agree to the same or substantially parallel lease terms and conditions with Brettman as existed between the City and the incumbent lessees. The FAA said that the unexplained delays caused by the City were unreasonable and had the effect of unjustly discriminating against Brettman and granting an exclusive right to the existing Air Park lessees. The FAA notified the City that, as a result of its conduct, it faced several possible sanctions: ineligibility for any future federal funds for its Air Park; a civil penalty as provided in 49 U.S.C.App. 1471(a) (1982); and loss of necessary FAA approval on any matter related to use of the airport property.

FAA's notice prompted the City into action. City officials contacted their Congressmen and arranged for a meeting between themselves and representatives of the FAA, which came to pass in Washington, D.C. on June 17, 1983. There the FAA heard the City's explanation for the differences between the "standard" lease offered Brettman in 1982 and the leases held by Pompano Air Center and Bec-Air. The FAA requested that the City send the agency a copy of its new "standard" lease and an analysis of the investments made by Pompano Air Center and Bec-Air. Pursuant to an apparent agreement reached at the Washington meeting, the City notified the FAA on June 23, 1983 that it would offer Brettman its current standard fixed base operator lease for a thirty-year term, provided that Brettman commit to an investment of $500,000. [FN 8] The City forwarded the FAA a copy of its latest standard lease, omitting its revised minimum standards for Air Park fixed base operators which were incorporated by reference into the lease.

[FN 8] The City reported that, adjusted for increases in the Cumulative Price Index, Pompano Air Center had, over the years, made a cumulative investment at the Air Park of $1,016,781, and Bec-Air had made a cumulative investment of $550,060. Based upon these figures, the City said it was willing to offer Brettman a thirty-year lease if Brettman would commit to an investment of $500,000.
The assistant chief counsel for the FAA responded on July 7, 1983 that he had "reviewed the lease as submitted and it appears to be reasonable and not unjustly discriminatory...." The FAA did not comment upon the City's proposal to require Brettman to invest $500,000, saying that it would not negotiate the financial aspects of a lease for the parties. The FAA recommended that the
City offer the standard lease which was sent to the FAA to Mr. Brettman and that the parties negotiate the financial terms of that lease between themselves, providing, of course, that any financial terms required by the City are reasonable and not unjustly discriminatory when compared to the financial terms of existing [fixed base operator] leases at the airport.
Accompanying the FAA's response was a withdrawal of its March 10, 1983 Notice of Proposed Order, contingent upon the City's agreeing to a stipulation requiring the City to offer Brettman its "standard fixed base operator lease which was enclosed in its letter to the FAA," to "negotiate in good faith the investment required" and to require an investment which "reflect [s] terms approximating those required of existing fixed base operators," and to amend its lease with Pompano Air Center to limit the term of subleases to one year so as to bring its lease in line with Brettman's lease.

Immediately thereafter, the City offered Brettman a thirty-year lease calling for a minimum investment of $500,000. The City said it would agree to reduce the required investment only if Brettman would accept a shorter lease. In addition to offering Brettman the standard lease reviewed and approved by the FAA, the City also attached its latest version of its minimum standards. As a result, a number of the provisions in the lease offered to Brettman differed from those in the leases held by Pompano Air Center and Bec-Air, including the provisions relating to transfer of control, compliance with future standards, the initial deposit, disclosure of financial information and business plans, gasoline taxes, the amount of the lessee's required investment, bankruptcy and liens, advance City approval of construction, and the rental rate.

Continued in Part TWO