Q

',j
...
or iransporTOTion
Federal Aviation
Administration

Office of the Associate

Administrator for Airports

800 Independence Ave., SW.

Washington, DC 20591

DEC 1 7 2C07
Mr. Garry L. Montanari
MICHAELIS, MONTANARI & JOHNSON, P.C.
4333 Park Terrace Drive, Suite 110
Westlake Village, CA 913 59
^ - J

Mr. Scott Lewis

ANDERSON & KREIGER LLP
One Canal Park, Suite 200
Cambridge, MA 02141
Re: FAA Docket No. 16-06-07

CD
CD
^ 3
.<
C!)

'

t: J
- '"T
.-

:;

Si

1
.."1

J
i^j

^5zio

'- 3

Dear Messrs.Montanari and Lewis:

-O

Enclosed is a copy of the Final Decision and Order of the Federal Aviation
Administration (FAA) with respect to the above-referenced matter.
Based on the record in this proceeding, FAA finds that the Determination made by the
Director of Airport Safety and Standards is supported by a preponderance of reliable,
probative, and substantial evidence. I affirm the Director's Determination that the City
of Los Angeles is not currently in violation of its federal grant assurances relative to the
issues argued in the Complaint.
The reasons for upholding the Director's Determination are set forth in the enclosed
Final Decision and Order.
Sincerely,

D. K(rk Shaffer
Associate Administrator
for Airports
Enclosure

Q^

5;^

s:

UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION
WASHINGTON, D.C.

Thermco Aviation, Inc. and A-26 Company,

COMPLAINANTS
V,

Docket No. 16-06-07

City of Los Angeles, Los Angeles Board of Airport

Commissioners, and Los Angeles World Airports,
RESPONDENTS

FINAL AGENCY DECISION

I. INTRODUCTION
This matter is before the Federal Aviation Administration (FAA) Associate Administrator
for Airports on appeal filed by Thermco Aviation and A-26 Company (Thermco or
Complainants) from the Director's Determination of June 21, 2007, issued by the
Director of the FAA Office of Airport Safety and Standards, pursuant to the FAA Rules of
Practice for Federally Assisted Airport Enforcement Proceedings found in Title 14 Code
of Federal Regulations (CFR) Part 16 (FAA Rules of Practice).
Thermco argues on appeal to the Associate Administrator for Airports that the Director
made errors in interpreting the evidence and making conclusions from the evidence.
Specifically, Thermco argues that the Director erred in concluding the City of Los
Angeles is not currently in violation of grant assurances 22, Economic Nondiscrimination,
and "other actionable conduct suffered by Thermco." [FAA Exhibit 1, Item 21, page 14.]
Upon an appeal of a Part 16 Director's Determination, the Associate Administrator must
determine whether (a) the findings of fact made by the Director are supported by a
preponderance of reliable, probative, and substantial evidence, and (b) each conclusion of
law is made in accordance with applicable law, precedent, and public policy. [See e.g.
Ricks V Millington Municipal Airport, FAA Docket No. 16-98-19, (December 30, 1999)
(Final Decision and Order), page 21, and 14 CFR, Part 16, 16.227.]
In arriving at a final decision on this Appeal, the FAA has reexamined the record,
including the Director's Determination, the administrative record supporting the
Director's Determination, the Complainant's Appeal and Respondent's Reply in light of
applicable law and policy. Based on this reexamination, the FAA affirms the Director's

Page 2

Determination. The Associate Administrator concludes that the Director's Determination

is supported by a preponderance of reliable, probative, and substantial evidence, and is
consistent with applicable law, precedent, and FAA policy. The Appeal does not contain
persuasive arguments sufficient to reverse any portion of the Director's Determination.
This decision constitutes the final decision of the Associate Administrator for Airports
pursuant to 14 CFR 16.33(a).

II. SUMMARY OF THE DIRECTOR'S DETERMINATION

In the June 21, 2007, Director's Determination, the Director concluded:

The Respondents are not currently in violation of their federal obligations including grant assurances 5, Preserving Rights and Powers, 22, Economic
Nondiscrimination, 23 Exclusive Rights, and 24, Fee and Rental Structure, as
well as the 1949 Quitclaim D e e d - a s a result of Respondents' actions in
redeveloping the aeronautical property where Complainants have been renting a
hangar for their propeller aircraft.
While Respondents have historically used aeronautical property for
nonaeronautical purposes without FAA approval, these actions did not prevent
Complainants from having access to Van Nuys Airport on fair and reasonable
terms. The FAA Western-Pacific Region is monitoring compliance with the
Respondents' land use requirements at Van Nuys Airport. [FAA Exhibit 1, Item
20, page 2.]

Originally, Thermco's formal Complaint alleged:

Respondents improperly initiated a request-for-proposals to redevelop
aeronautical property where Complainants are located, thereby forcing
Complainants out of their leased hangar without providing a reasonable
opportunity for the Complainants to lease the same or comparable hangar space
and without yielding the highest financial benefit to Van Nuys Airport in
violation of Title 49 United States Code (U.S.C.) 40103(e) and 47107(a)(1),
(4), and (13) and related grant assurances 22, Economic Nondiscrimination 23,
Exclusive Rights, and 24 Fee and Rental Structure. The Complainants also
allege the request-for-proposals represents a sale ofAirport property in violation
ofgrant assurance 5, Preserving Rights and Powers. In addition. Complainants
allege the Respondents' actions regarding the request-for-proposals violate
covenants in the 1949 Quitclaim Deed. [FAA Exhibit 1, Item 20, page 1.]

' The Complainants named multiple respondents, including the County of Los Angeles, the Los Angeles
Board of Airport Commissioners and Los Angeles World Airports. Thermco refers to these parties as the
"Respondents." The Respondent refers to itself as 'the City.' The City of Los Angeles (City) is the sponsor
of Van Nuys Airport.

Page 3

Thermco also alleged that, "Respondents improperly permitted non-aviation use of

Airport property needed for aeronautical purposes without FAA approval, directly
preventing Complainants from being able to enter into a lease with the Respondents."
[FAA Exhibit 1, Item 20, page 2]

III. THE PARTIES TO THE COMPLAINT

The Airport
Van Nuys Airport (Airport) is a public use general aviation airport with 712 based
aircraft and 52 helicopters. It is one of the busiest general aviation airports in the world.
For the 12 months ending June 1, 2003, the Airport had 504,502 operations. [FAA
Exhibit 1, Item 1; and Item 10, exhibit 12.] The Airport has been operating since 1928.
It was acquired by the United States Army during World War II for use as an Army
airfield and subsequently deeded back to the City of Los Angeles February 10, 1949,
under a quitclaim deed, pursuant to the Surplus Property Act. [FAA Exhibit 1, Item 5,
page 2; and Item 5, exhibit A.]
The City of Los Angeles, Department of Airports, owns the Airport (Respondents or
City). Los Angeles World Airports (LAWA) operates four airports for the City of Los
Angeles, including Van Nuys Airport (VNY), Los Angeles International Airport (LAX),
Ontario International Airport (ONT), and Palmdale Regional Airport (PMD). Van Nuys
Airport is a reliever airport for Los Angeles International Airport. LAWA has accepted
over $270 million in federal grants under the Airport Improvement Program (AIP),
including over $10 million in AIP funds for Van Nuys Airport since 1987. [FAA Exhibit
1, Item 5, page 3; Item 10, page 2; Item 10, exhibit 12; and Item 2.]
Complainants on Appeal
Complainants own and operate two Douglas propeller aircraft. [FAA Exhibit 1, Item 5,
page 2.] They are aeronautical tenants at Van Nuys Airport under a subtenant agreement
with Western Commander Associates. Complainants currently occupy Hangar #3 in the
area referred to as the Jet Center, located at 16200 Daily Drive. [See FAA Exhibit 1, Item
5, page 2; and Item 10, pages 1-2.] This area consists of seven acres of land and includes
three hangars, two office buildings, and a fiael farm. [FAA Exhibit 1, Item 5, page 5.]
The Jet Center area has been identified for redevelopment by the Airport. The planned
redevelopment will require Complainants' current hangar to be demolished; as a result.
Complainants will ultimately have to relocate their propeller aircraft. [See FAA Exhibit 1,
Item \0, exhibit 13.]

^ As stated above, Complainants are Thermco Aviation and A-26 Company. Complainants throughout
refer to themselves as "Thermco." The DD refers to Thermco Aviation and A-26 Company as "Thermco"
or "Complainants." This document adheres to this practice.

Page 4

IV. FACTUAL BACKGROUND and PROCEDURAL HISTORY

Thermco and Hangar #3
The Complainants have been tenants at Van Nuys Airport occupying Hangar #3 at 16200
Daily Drive in the area referred to as the 'Jet Center' under various subtenant agreements
since that hangar was constructed in 1987. [FAA Exhibit 1, Item 5, page 5.]
In 2003, the master tenant for this area elected not to renew its lease. A subtenant.
Western Conunander Associates, offered to lease the entire property, or - pending a
potential request-for-proposals - to continue to lease Hangar #3, which houses the
Complainants' propeller aircraft. [FAA Exhibit 1, Item 5, page 5 and; Item 10, page 4.]
Complainants also offered to enter into negotiations to lease Hangar #3 directlyfi-omthe
City. [FAA Exhibit 1, Item 5, exhibit C ] The City declined to negotiate with the
Complainants and entered into a short-term agreement with Western Commander
Associates for Hangar #3. [FAA Exhibit 1, Item 10, page 5.] Complainants continue to
occupy Hangar #3 as a subtenant of Western Commzinder Associates. [FAA Exhibit 1,
Item 5, page 1; and Item 10, page 2.]
At some point, Complainants also offered to enter into a 30-year lease directly wdth the
City for Hangar #3. The City declined to enter into such an agreement. [See FAA
Exhibit 1, Item 5, page 7; and Item 10, page 10.]
The City decided to lease the entire property previously held by the master tenant, which
included Complainants' hangar, to a single lessee and opted to issue a request-forproposals. The City eventually issued two requests-for-proposals for the Jet Center
property, one on November 3, 2003, and a subsequent one on May 1, 2006. [FAA Exhibit
1, Item 10, exhibits 7 and 13.]
The requirement to demolish the existing structures would ultimately force Complainants
from their hangar. Complainants were concerned they would be unable to find a suitable
replacement hangar and worried that the City would not establish sufficient space on the
Airport for propeller aircraft. [FAA Exhibit 1, Item 5, page 6.]
Redevelopment Process
The redevelopment area imder discussion in this Complaint is located at 16200 Daily
Drive, and has been referred to as the 'Jet Center.' It consists of seven acres of land and
includes three hangars, two office buildings, and a fuel farm. At the time this Complaint
was filed. Complainants occupied one of the hangars. Hangar #3, built in 1987. [FAA
Exhibit 1, Item 5, page 5.]
In 2003, the master tenant for this area elected not to renew its lease. The City decided at
that time to lease the entire property to a single lessee. The City eventually issued two

Page 5

requests for proposals for the Jet Center property: one on November 3, 2003, and a
subsequent one on May 1, 2006.

On November 3, 2003, the Airport issued a "Request for Proposals for Lease of
Hangar Complex Located at 16200 Daily Drive at Van Nuys Airport" (November
2003 RFP). [FAA Exhibit 1, Item 10, exhibit 7.] The November 2003 RFP did not
require the demolition of structures on the site, but did permit the proposer to offer a
plan that included redeveloping the property.^ Although the Airport sponsor
recommended that a proposal in response to this November 2003 RFP be accepted,
the Board of Airport Commissioners did not accept the proposal. [See FAA Exhibit
1, Item 10, exhibit 10, pages 12 and 19-20.]
On May 1, 2006, the Airport issued a subsequent "Request for Proposals for the
Demolition of the Hangar Complex Located at 16200 Daily Drive and Development
of a New Aviation Facility at Van Nuys Airport Notice Inviting Proposals" (May
2006 RFP). The May 2006 RFP required the Lessee to "purchase and demolish
existing structures, and to then design, construct and operate a high quality aviationrelated business that will serve the local community." [FAA Exhibit 1, Item 10,
exhibit 13, Part I - General Information, page 1.] '*

Proposed Propeller Park and Continued Hangar Occupancy by Thermco

The Airport Master Plan designates an area previously used for a nonaeronautical
piupose to be developed as a new propeller aircraft park (Propeller Park). [FAA Exhibit
1, Item 10, page 3.] The City stated that another section of the Airport would be used as
a short-term propeller aircraft area while the Propeller Park is being developed. [FAA
Exhibit 1, Item 10, pages 3-4.]
The City's attorney confirmed that on April 11, 2007, that the Propeller Park request-forproposals had been issued and proposals were due on May 31, 2007. At the same time,
the City's attorney confirmed that two interim propeller park leases were on target to go
to the Board for approval on May 7, 2007. The City's attorney also stated the City had
processed a consent-to-sublease for Complainants to lease space from another tenant. In
the meantime, the City's attorney stated that Complainants remain in Hangar #3 in the Jet
Center pending results of the May 2006 request-for-proposals for the Jet Center.
Complainants' attorney confirmed on March 20, 2007, and again on June 19, 2007, that
Complainants remain in Hangar #3. [See FAA Exhibit 1, Item 19.]

The November 2003 RFP states, "The successful Proposer will execute a Lease for land, hangar, office
space and/or a redevelopment plan upon which successful Proposer or Lessee will operate a high-quality
aviation/aeronautical related business." [FAA Exhibit 1, Item 10, exhibit 7, Part I - General Information,
page 1.]
The City determined the demolition was necessary to permit airport improvements in the redevelopment
area consistent with the Airport's Strategic Business Plan and its goal to develop a "modem, more
economically viable airport." [See FAA Exhibit 1, Item 10, exhibit 12.]
These facts established during the Director's investigation by a phone call to the City's attorney on March
20, 2007, to confirm that the request-for-proposals for the Propeller Park had been issued and that
another section of the Airport was currently available for use by propeller aircraft.

Page 6

Nonaeronautical-Use of Airport Property

As stated in the Director's Determination, "the administrative record substantiates
Complainants' contention that Van Nuys Airport has a history of failing to use Airport
property strictly for aeronautical purposes." [FAA Exhibit 1, Item 20, page 25]
The City admitted that Airport property was leased for the storage of automobiles
beginning in 1995 and that two nonaeronautical businesses - C&M Relocation Services^
and JEC Enterprises - had leases on the Airport at the time the current Complaint was
filed. [FAA Exhibit 1, Item 10, pages 2-3.] The City stated, however, that the City
terminated the automobile storage leases effective June 21, 2004, and August 8, 2005,
and sent notices to C&M Relocation Services and JEC Enterprises terminating their
leases effective December 31, 2006.'' [FAA Exhibit 1, Item 10, page 3.]
While the Airport has had a history of using Airport property for nonaeronautical
purposes in violation of the 1949 Quitclaim Deed, the record shows the FAA has been
actively involved in bringing the Airport into compliance with the use obligations
identified in the deed.
In 1985, the FAA did not object to the Airport's use of approximately seven acres of land
conveyed by the 1949 Quitclaim Deed - but separated from the Airport by the Bull Creek
Flood Control Channel - for the production of revenue, provided certain conditions and
restrictions were met regarding use of the land and the revenue derived from the land.
[FAA Exhibit 1, Item 10, exhibit 5.] However, for other Airport property, the FAA did
inform the Airport that increased aeronautical demand required nonaeronautical uses of
property with Airport access to be converted to aeronautical uses. [See FAA Exhibit 1,
Item 10, exhibit 1.]
In 2002, the FAA advised the City of Los Angeles that it would not grant any new
releasesfi-omthe aeronautical use obligation that have the effect of reducing the facilities
available to accommodate urrniet current or future aeronautical demand. [FAA Exhibit 1,
Item 10, exhibits.]
On January 13, 2006, the FAA Western-Pacific Region wrote a letter to the Airport
sponsor stressing that there is no lack of aviation demand at the Airport. In that letter, the
FAA advised the Airport sponsor that it was in violation of its obligation to make the Van
Nuys Airport available for aeronautical activities as a result of continuing leases with
non-aviation entities. The Airport was instructed to eliminate nonaeronautical uses of

* This nonaeronautical business is referred to throughout the administrative record variously as "C&M
Trucking," "C&M Relocation Company," and "C&M Relocation Services." For purposes of this
determination, we refer to it consistently as "C&M Relocation Services."
^ The administrative record includes a letter dated August 29,2006, advising C&M Relocation Services that
its lease would be terminated on December 31, 2006, and the property must be vacated by that date. A
similar letter was sent to JEC Enterprises August 23, 2006. [FAA Exhibit 1, Item 10, exhibits 2 and J.]

Page 7

Airport property and to implement a plan to convert the Aerolease parcel to aviation uses
without fiirther delay. [FAA Exhibit 1, Item 10, exhibit 1.] The City terminated the two
nonaeronautical leases with C&M Relations Services and JEC Enterprises. [See FAA
Exhibit 1, Item 10, exhibits 2 and 3.] In addition, the City stated it has negotiated a new
lease with Aerolease Associates that prohibits all nonaeronautical activities on the leased
site. [FAA Exhibit 1, Item 10, page 3.] [See Also FAA Exhibit 1, Item 20, pages 25-26]
The City stated that the non-aviation uses have been eliminated or are appropriate under
the Airport Master Plan.

As noted above, the leases for Galpin Ford,^ C&M Relocation Services, and JEC
Enterprises were terminated prior to this Director's Determination.
The City admitted that Balboa Brick & Supply, Balboa Equipment Rentals, and
Valley Sod Farms continue to lease Airport property, but state these businesses are
on sites without Airport access and are properly designated for nonaeronautical use
on the Airport Master Plan. [FAA Exhibit 1, Item 16, page 8.]
The City stated Parkwood Landscape Maintenance is no longer at the Airport.
[FAA Exhibit 1, Item 16, page 8.]

Procedural History
Complainants filed the current Complaint July 12, 2006, received by the FAA on July 14,
2006. [FAA Exhibit 1, Item 5.]
The City submitted their Answer to the Complaint, received by the FAA September 26,
2006. At the same time, the City filed a Motion to Dismiss. [FAA Exhibit 1, Items 10
and 11.]
Complainants filed their Reply to Respondents' Answer and Motion to Dismiss, received
October 11, 2006. [FAA Exhibit 1, Item 13.]
The City filed their Rebuttal, received October 17, 2006. [FAA Exhibit 1, Item 16.]
The FAA issued the Director's Determination on June 21, 2007. [FAA Exhibit 1, Item 20.]
On August 22, 2007, Complainants appealed the Director's Determination. [FAA Exhibit
Litem 21.]
On September 13, 2007, the City submitted a Reply to Appeal of Director's
Determination. [FAA Exhibit 1, Item 22.]
' The Aerolease parcel consists of seven acres of land with a ramp and warehouse at the northeast comer of
the Airport.
' As stated by the City, "the City terminated the Galpin leases, effective June 21, 2004 for the West Side
parcel and August 8, 2005 for the East Side parcel. The [Airport Master Plan] designates the Galpin
Ford sites for aviation use in connection with the development of a new propeller aircraft park
("Propeller Park")." [FAA Exhibit 1 Item 10, page 3]

Page 8

V. APPLICABLE FEDERAL LAW AND FAA POLICY

The federal role in civil aviation has been augmented by various legislative actions that
authorize programs for providing federal ftinds and other assistance to local communities
for the development of Airport facilities.'" In each such program, the Airport sponsor
assumes certain obligations, either by contract or by restrictive covenants in property
deeds and conveyance instruments, to maintain and operate its Airport facilities safely
and 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 fair and reasonable access to
the Airport.
Title 49 U.S.C. 47101, e/ seq., provides for federal airport financial assistance for the
development of public-use airports under the Airport Improvement Program (AIP)
established by the Airport and Airway Improvement Act of 1982, as amended. Title 49
U.S.C. 47107, et seq., sets forth assurances to which an airport sponsor agrees as a
condition of receiving federal financial assistance. Upon acceptance of an AIP grant, the
assurances become a binding contractual obligation between the airport sponsor and the
federal government. The assurances made by airport sponsors in AIP grant agreements
are important factors in maintaining a viable national airport system.
FAA Order 5190.6A, Airport Compliance Requirements, dated October 2, 1989, (Order)
covers all aspects of the airport compliance program except enforcement procedures.
Enforcement procedures regarding airport compliance matters may be foimd at FAA
Rules of Practice for Federally Assisted Airport Enforcement Proceedings (14 CFR Part
16). These enforcement procedures were published in the Federal Register (61 FR
53998, October 16, 1996) and became effective on December 16, 1996.
Airport Sponsor Assurances
As a condition precedent to providing airport development assistance under the Airport
Improvement Program, 49 U.S.C. 47107, et seq., the Secretary of Transportation and,
by extension, the FAA must receive certain assurances fi:om the airport sponsor. Title 49
U.S.C. 47107 et seq. sets forth the statutory sponsorship requirements to which an
airport sponsor receiving federal financial assistance must agree.
Pursuant to 49 U.S.C. 47107(g)(1), the Secretary is authorized to prescribe project
sponsorship requirements to ensure compliance with 49 U.S.C. 47107. These
sponsorship requirements are included in every AIP agreement as explained in the Order,
Chapter 2, Sponsor Assurances. The Order provides the policies and procedures to be
followed by the FAA in carrying out its legislatively mandated fiinctions related to
federally obligated airport owners' compliance wdth their sponsor assurances. The FAA
considers it inappropriate to provide federal assistance for improvements to airports

See the Federal Aviation Act of 1958, as amended and recodified. Title 49 U.S.C. 40101 et seq.

Page 9

where the benefits of such improvements will not be fiilly realized due to inherent
restrictions on aeronautical activities.
Grant Assurance 5, Preserving Rights and Powers
Grant assurance 5, Preserving Rights and Powers, requires the airport owner or sponsor
to retain all rights and powers necessary to ensure the continued operation of the airport
consistent with its federal obligations. This assurance implements the provisions of 49
U.S.C. 47107 et seq., and requires, in pertinent part, that the owner or 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."
Grant assurance 5 states in pertinent part:
a. [The airport owner or sponsor] 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. This shall be done in a
maimer acceptable to the Secretary.
b. [The airport owner or sponsor] will not sell, lease, encumber, or otherwise
transfer or dispose of any part of its title or other interests in the property
shown on Exhibit A to this application or, for a noise compatibility program
project, that portion of the property upon which federal funds have been
expended, for the duration of the terms, conditions, and assurances in the
grant agreement without approval by the Secretary. If the transferee is found
by the Secretary to be eligible imder Title 49, United States Code, to assume
the obligations of the grant agreement and to have the power, authority, and
financial resources to carry out all such obligations, the sponsor shall insert in
the contract or document transferring or disposing of the sponsor's interest,
and make binding upon the transferee all of the terms, conditions, and
assurances contained in this grant agreement.
The Order describes the responsibilities under grant assurance 5 assumed by the owners
or sponsors of public-use airports developed with federal assistance. Among these is the
responsibility for enforcing adequate rules, regulations, or ordinances as are necessary to
ensure the safe and efficient operation of the airport. [See Order 5190.6A, Sees. 4-7 and
4-8.]

Page 10

Grant Assurance 22, Economic Nondiscrimination

The owner of any airport developed with federal grant assistance is required to operate
the airport for the use and benefit of the public. Grant assurance 22, Economic
Nondiscrimination, deals with both the reasonableness of airport access and the
prohibition of adopting unjustly discriminatory conditions as a potential for limiting
access. Grant assurance 22 of the prescribed sponsor assurances implements the
provisions of 49 U.S.C. 47107(a)(1) through (6), and requires, in pertinent part:
[The airport owner or sponsor] will make the airport available as an airport for
public use on reasonable terms eind without unjust discrimination to all types,
kinds and classes of aeronautical activities, including commercial aeronautical
activities offering services to the public at the airport. [Assurance 22(a).]
Each fixed-base operator at the airport shall be subject to the same rates, fees,
rentals, and other charges as are uniformly applicable to all other fixed-base
operators making the same or similar uses of such airport and utilizing the same
or similar facilities. [Assurance 22(c).]
[The airport owner or sponsor] will not exercise or grant any right or privilege
which operates to prevent any person, firm, or corporation operating aircraft on
the airport from performing any services on its own aircraft with its own
employees (including but not limited to maintenance, repair, and fueling) that it
may choose to perform. [Assurance 22(f).]
In the event the sponsor itself exercises any of the rights and privileges referred to
in the assurance, the services involved will be provided on the same conditions as
would apply to the fiimishing of such services by commercial aeronautical service
providers authorized by the sponsor imder these provisions. [Assurance 22(g).]
The sponsor may establish such reasonable, 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).]
The sponsor may prohibit or 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 that would be detrimental to the civil aviation
needs of the public.
In all cases involving restrictions on airport use imposed by airport owners for safety and
efficiency reasons, the FAA will make the final determination on the reasonableness of

Page 11

such restrictions when those restrictions deny or limit access to, or use of, the airport.
[FAA Order 5190.6A, para. 4-8.]
Grant Assurance 23, Exclusive Rights
Title 49 U.S.C. 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 ftmds
have been expended."
Title 49 U.S.C. 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."
Grant assurance 23, Exclusive Rights, of the prescribed sponsor assurances implements
both statutory provisions, and states in its entirety:
[The airport owner or sponsor] will permit no exclusive right for the use of the
airport by any person providing, or intending to provide, aeronautical services to
the public. For purposes of this paragraph, the providing of the services at an
airport by a single fixed-base operator shall not be construed as an exclusive right
if both of the following apply:
a. It would be imreasonably costly, burdensome, or impractical for more than
one fixed-base operator to provide such services, and
b. If allowing more than one fixed-base operator to provide such services
would require the reduction of space leased pursuant to an existing
agreement between such single fixed-base operator and such airport.
[The airport owner or sponsor] fiarther agrees that it will not, either directly or
indirectly, grant or permit any person, firm, or corporation, the exclusive right at
the airport to conduct any aeronautical activities, including but not limited to,
charter flights, pilot training, aircraft rental and sightseeing, aerial photography,
crop dusting, aerial advertising and surveying, air carrier operations, aircraft sales
and services, sale of aviation petroleum products whether or not conducted in
conjunction with other aeronautical activity, repair and maintenance of aircraft,
sale of aircraft parts, and any other activities which because of their direct
relationship to the operation of aircraft can be regarded as an aeronautical activity,
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 Title 49,
United States Code.
Grant Assurance 24, Fee and Rental Structure
Grant assurance 24, Fee and Rental Structure, addresses fees the owner or sponsor levies
on airport users in exchange for the services the airport provides.

Page 12

Section 47107(a)(13) of 49 U.S.C. requires, in pertinent part, that the owner or sponsor of
a federally obligated airport "will maintain a fee and rental structure for the facilities and
services being provided to airport users which will make the airport as self-sustaining as
possible under the circumstances existing at that particular airport." In addition, under
47107(a), fees levied on aeronautical activities must be reasonable and not unjustly
discriminatory.
Grant assurance 24 satisfies the requirements of 47107(a)(13). It provides, in pertinent
part, that the owner or sponsor of a federally-obligated airport agrees that it will maintain
a fee and rental structure consistent with assurances 22, Economic Nondiscrimination,
and 23, Exclusive Rights. The airport owner or sponsor agrees to establish a fee and
rental structure that will make the airport as self-sustaining as possible under the
circimastances existing at the particular airport, taking into accoimt such factors as the
volume of traffic and economy of collection. The intent of the assurance is for the airport
operator to charge fees that are sufficient to cover as much of the airport's costs as is
feasible.
Moreover, the Order states that the owner or sponsor's obligation to make an airport
available for public use does not preclude the owner or sponsor from recovering the cost
of providing the facility. The owner or sponsor is expected to recover its costs through
the establishment of fair and reasonable fees, rentals, or other user charges that will make
the airport as self-sustaining as possible under the circumstances existing at the particular
airport. [See Order, 4-l4(a).]
Surplus Property Obligations
The City of Los Angeles is also obligated by the restrictive deed covenants that arise from
the 1949 conveyance of land imder the February 10, 1949 quitclaim deed (1949 Quitclaim
Deed) executed under the powers and authority contained in the provisions of the Surplus
Property Act of 1944 (Public Law 80-289), as amended, 49 U.S.C. 47151-153."
Surplus property instruments of transfer issued by the War Assets Administration (WAA)
and its successor, the General Services Administration (GSA), are one of the means by
which the federal government provides airport development assistance to public airport
sponsors. The conveyance of surplus federal land to public agencies for airport purposes
is administered by the FAA in conjunction with the U.S. Department of Defense and the
GSA and pursuant to 49 U.S.C. 47151, 47152, and, 47153. Pursuant to 49 U.S.C.
47151, the FAA has the statutory power to ensure that airport owners comply with their
federal obligations contained within surplus property deeds of conveyance.
Under each surplus property conveyance, the airport sponsor assumes certain obligations,
reservations, and conditions. These usually occur in the property deeds and conveyance
instruments in the form of restrictive covenants to maintain and operate the airport
" This 1949 Quitclaim Deed is the surplus airport property instrument of disposal for Van Nuys Airport.
[See FAA Exhibit 1, Item 5, exhibit A.]

Page 13

facilities safely, efficiently, and in accordance with specified conditions. Upon

acceptance of a surplus property conveyance by an airport sponsor, the obligations in the
instrument of disposal become a binding obligation between the airport sponsor and the
federal goverrmient. Commitments assumed by airport sponsors in property conveyances
are important factors in maintaining a high degree of safety and efficiency in airport
design, construction, operation, and maintenance, as well as ensuring public access to the
airport on reasonable, nondiscriminatory terms.
Three restrictions listed in the 1949 Quitclaim Deed executed between the federal
government and the City of Los Angeles are applicable in this case.
Restriction 1
"...the land, buildings, structures, improvements, and equipment in which this
instrument transfers any interest shall be used for public airport purposes for the
use and benefit of the public, on reasonable terms and without unjust
discrimination and without grant or exercise of any exclusive right for use of the
airport ..." [FAA Exhibit 1, Item 5, exhibit A.]
Restriction 2
"That no exclusive right for the use of the airport at which the property transferred by
this instrument is located shall be vested (directly or indirectly) in any person or
persons to the exclusion of others in the same class..." [FAA Exhibit 1, Item 5,
exhibit A.]
Restriction 3
"That no property transferred by this instrument shall be used, leased, sold,
salvaged, or disposed of by the Grantee for other than airport purposes without the
written consent of the Civil Aeronautics Administrator,' which shall be granted
only if the Administrator determines that the property can be used, leased, sold,
salvaged or disposed of for other than airport purposes without materially and
adversely affecting the development, improvement, operation or maintenance of
the airport at which such property is located; provided that no structures disposed
of hereunder shall be used as an industrial plant, factory, or similar facility..."
[FAA Exhibit 1, Item 5, exhibit A.]
Today, 49 U.S.C. 47152 (2) contains the reasonableness and unjust discrimination
requirements originally stipulated under the Surplus Property Act and set forth in the
1949 Quitclaim Deed.
Section 303 of the Civil Aeronautics Act of 1938 contained language prohibiting the
granting of an exclusive right for the use of any landing area or air navigation facility
upon which federal ftmds have been expended. The language in Section 303 of the 1938
Act was later incorporated in Section 308(a) of the Federal Aviation Act of 1958. Today,
the exclusive rights prohibition is codified at 49 U.S.C. 40103 (e).
'^ The Federal Aviation Administration has replaced the Civil Aeronautics Agency. Therefore, currently,
if written consent were to be given, it would have to comefi-omthe FAA Administrator.

Page 14

The FAA Airport Compliance Program

The FAA discharges its responsibilities for ensuring airport owners' compliance with
their federal obligations through its Airport Compliance Program. The FAA's airport
compliance efforts are based on the contractual obligations an airport owner accepts
when receiving federal grant ftmds 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 airjxjrt 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 of receiving a grant of federal
fiinds or the conveyance of federal property for airport purposes. The Order analyzes the
various obligations set forth in the standard airport sponsor assurances, addresses the
nature of those assurances, addresses the application of those assurances in the operation
of public-use airports, and facilitates interpretation of the assurances by FAA personnel.
The FAA Compliance program is designed to achieve voluntary compliance with federal
obligations accepted by owners and/or operators of public-use airports developed vrith
FAA-administered assistance. Therefore, in addressing allegations of noncompliance, the
FAA will make a determination as to whether an airport sponsor is currently in
compliance with the applicable federal obligations. Consequently, the FAA will consider
the successftil action by the airport to cure any alleged or potential past violation of
applicable federal obligation to be grounds for dismissal of such allegations. [See e.g.
Wilson Air Center v. Memphis and Shelby County Airport Authority, FAA Docket No.
16-99-10, (August 30, 2001) (Final Decision and Order).]
The Complaint Process
Pursuant to 14 CFR, Part 16, 16.23, a person directly and substantially affected by any
alleged noncompliance may file a complaint with the FAA. The complainant shall
provide a concise but complete statement of the facts relied upon to substantiate each
allegation. The complaint shall also describe how the complainant was directiy and

Page 15

substantially affected by the things done or omitted by the respondents. [14 CFR, Part 16,
16.23(b)(3,4).]
If, based on the pleadings, there appears to be a reasonable basis for ftirther investigation,
the FAA will investigate the subject matter of the complaint. In rendering its initial
determination, the FAA may rely entirely on the complaint and the responsive pleadings
provided. Each party shall file documents that it considers sufficient to present all relevant
facts and arguments necessary for the FAA to determine whether the sponsor is in
compliance. [14 CFR, Part 16, 16.29.]
The proponent of a motion, request, or order has the burden of proof. A party who has
asserted an affirmative defense has the burden of proving the affirmative defense. This
standard burden of proof is consistent with the Administrative Procedure Act (APA) and
federal case law. The APA provision states, "[ejxcept as otherwise provided by statute, the
proponent of a rule or order has the burden of proof." [5 U.S.C. 556(d).] [See also.
Director, Office of Worker's Compensation Programs, Department of Labor v. Greenwich
Collieries, 512 US 267, 272 (1994); Air Canada et al. v. Department of Transportation, 148
F3d 1142, 1155 (DC Cir, 1998).] Title 14 CFR 16.229(b) is consistent with 14 CFR
16.23, which requires that the complainant submit all documents then available to support
his or her complaint. Similarly, 14 CFR 16.29 states that "[e]ach party shall file
documents that it considers sufficient to present all relevant facts and argument necessary
for the FAA to determine whether the sponsor is in compliance."
Right to Appeal the Director's Determination
A party to the Complaint adversely affected by the Director's Determination may file an
appeal with the Associate Administrator within 30 days after the date of service of the
initial determination. If no appeal is filed within the time period specified, the Director's
Determination becomes the final decision and order of the FAA without further action. A
Director's Determination that becomes final because there is no administrative appeal is
not judicially reviewable. [14 CFR, Part 16, 16.33]
Part 16 requires all relevant facts to be presented in the complaint documents. [14 CFR,
Part 16, 16.23(b)(3).] New allegations or issues should not be presented on appeal.
Review by the Associate Administrator is limited to an examination of the Director's
Determination and the administrative record upon which such determination was based.
Under Part 16, Complainants are required to provide with the complaint and reply all
supporting documentation upon which it relied to substantiate its claims. Failure to raise
all issues and allegations in the original complaint documents may be cause for such
issues and allegations to be deemed waived and not reviewable upon appeal. This is
consistent with the Supreme Court's recognition that courts may require administrative
issue exhaustion as a general rule because it is usually appropriate under an
[administrative] agency's practice for contestants in an adversarial proceeding before it to
develop fully all issues there. The Court concluded that where parties are expected to
develop the issues in an adversarial administi-ative proceeding, the rationale for requiring
issue exhaustion is at its greatest. [See Sims v. Apfel, 530 US 103, 108-110 (2000) citing

Page 16

Hormel v. Helvering, 312 US 552 (1941) and US v. LA Tucker Truck Lines. 344 US 33,
(1952).]
FAA's Responsibility with Regard to an Appeal
Pursuant to 14 CFR, Part 16, 16.33, the Associate Administrator will issue a final
decision on appeal from the Director's Determination, without a hearing, where the
complaint is dismissed after investigation.
In such cases, it is the Associate Administrator's responsibility to determine whether (a)
the findings of fact made by the Director are supported by a preponderance of reliable,
probative, and substantial evidence, and (b) each conclusion of law is made in accordance
with applicable law, precedent, and public policy. [See e.g. Ricks v Millington Municipal
Airport. FAA Docket No. 16-98-19, (December 30, 1999) (Final Decision and Order)
page 21; and 14 CFR, Part 16, 16.227.]

VI. ANALYSIS AND DISCUSSION

Upon consideration of the Complaint, the Director of the Office of Airport Safety and
Standards determined that the City is not currently in violation of federal obligations
under grant assurances 5, Preserving Rights and Powers, 22, Economic
Nondiscrimination, 23 Exclusive Rights, and 24, Fee and Rental Structure, nor the 1949
Quitclaim Deed - as a result of the City's actions in redeveloping the aeronautical
property where the Complainants have been renting a hangar for their propeller aircraft.
Also the Director determined that while the City has "historically used aeronautical
property for nonaeronautical purposes without FAA approval, these actions did not
prevent Complainants from having access to Van Nuys Airport on fair and reasonable
terms." [FAA Exhibit 1, Item 20, page 2.]
Issues on Appeal
On Appeal, Thermco alleges the Director made errors in interpreting the evidence and
making conclusions from the evidence. Specifically, Thermco argues that the Director
erred in concluding the City is not currently in violation of grant assurance 22, Economic
Nondiscrimination, and "other actionable conduct suffered by Thermco." [FAA
Exhibit 1, Item 21, page 14.]'^
The City states:
Thermco seeks to prevent the City from exercising its proprietary powers to
improve the Airport's aeronautical facilities as the City sees fit and to force the
City to allow Thermco to continue to occupy a hangar on the site of the proposed
" The Appeal is not specific as to precisely where in the Determination the Director erred in a manner that
would have altered a fmding. Despite this, this Final Agency Decision addresses the main areas of concern
expressed by the Complainants.

Page 17

"Jet Center " redevelopment. In its Director's Determination, the FAA properly
found that the City has the right to allocate Airport land between competing
aeronautical activities; that it is not unreasonable for the City to modernize the
Jet Center facilities; and that the City has no obligation to yield to Thermco's
desire to remain in Hangar #3. [FAA Exhibit 1, Item 22, pages 1-2.]
Thermco makes five allegations regarding the Director's Determination:
1. The Director's findings are contrary to the substantial evidence that Thermco will
be displaced from its hangar.
2. The remedy of an interim propeller park is conjecture.
3. The Director fails to consider the substantial evidence of discrimination against
piston-type aircraft such as Thermco's.
4. The Director ignores the long history of non-aviation uses which remained at the
time of the filing of this complaint.
5. The new RFP (request-for-proposal) is discriminatory as to the tenant and runs
counter to LAWA's business plan. [FAA Exhibit 1, Item 21, page 2.]
As stated in the above five points, Thermco does not clearly state how the Director relied
on faulty facts, or, specifically, misapplied Federal law. Instead, Thermco focuses on
how the Director made incorrect conclusions, generally, from the facts and finds fault
with these conclusions. More broadly, the Appeal questions the Director's conclusions
regarding:
A)
B)
C)
D)

reasonable access to aircraft storage (Present and Future);

past non-aviation use of Airport property;
the City's leasing practices and tenant selection (RFP); and
discrimination against piston-type aircraft.

As discussed below, the Associate Administrator's review of the record concurs with the
Director's finding of the facts and the application of law and FAA policy.
A. Reasonable Access to Aircraft Storage
Allegation #1: The Director's findings are contrary to the substantial evidence that
Thermco will be displaced from its hangar. (Current Occupancy)
Thermco's Appeal focuses on the original allegation of an unreasonable denial of access
under grant assurance 22, in regard to the loss of Thermco's occupancy of Hangar #3,
discussed as Issue 4 in the DD.
On appeal, Thermco states that despite the alleged 'certainty' of Thermco's loss of
occupancy of Hangar #3, "the Determination nevertheless characterizes the loss of hangar
issue as 'conjecture.'.... This reliance is misplaced." [FAA Exhibit 1, Item 21, page 4.]

Page 18

The City answers, "The Director properly concluded - given the evidence that Thermco
is currently operating at the Airport and the absence of any proof that access will be
denied in the future - that Thermco had not proven a current violation of the City's grant
assurances (Director's Determination at 22-23). Accordingly, the Director rejected
Thermco's denial of access claims." [FAA Exhibit 1, Item 22, pages 2-3.]
The Director accepted the premise that Thermco is likely to lose occupancy of Hangar
#3. However, the Director notes that Thermco currently enjoys occupancy at the
Airport under reasonable terms. The Director stated that it is not clear that the loss
Hangar #3, along with the prospective development of the Airport and other options for
hangar occupancy, will deprive Thermco of reasonable access, without unjust economic
discrimination, to aircraft storage at the Airport:
Complainants do not allege they were denied access to the Airport. In fact, they
leased Hangar #3 under a sublease agreement. ... Complainants did remain in
Hangar #3 under the sublease agreement throughout the RFP process, but would
ultimately be displaced by the redevelopment of the Jet Center....
Neither grant assurance 22 nor the 1949 Quitclaim Deed obligates the Airport
sponsor to enter into specific lease arrangements to suit a particular Airport
tenant so long as the aeronautical user is provided access on reasonable,
nondiscriminatory terms. Complainants acknowledge the sponsor is not
obligated to agree to a specific lease proposal, but argue the Respondents must
provide facilities in a manner consistent with their federal obligations. [FAA
Exhibit 1, Item 13, page 18.] The Respondents 'federal obligations require them
to make the airport available to all types, kinds, and classes of aeronautical
users on reasonable, nondiscriminatory terms. The administrative record shows
Complainants had reasonable access. In fact, at the time Complainants filed this
Complaint, they were Airport tenants in Hangar #3. The terms of their
agreement have not been shown to be unreasonable or discriminatory. [FAA
Exhibit 1, Item 20, pages 20-21]
Standards for reasonable terms of airport access do not include a guarantee of occupancy
by tenants and subtenants in their current hangar facilities. In fact, the FAA recognizes
the value in airport sponsors retaining flexibility to provide for the fiiture development of
aeronautical facilities and the need to periodically demolish and reconstruct existing
facilities to respond to change in the civil aviation market. Simply put, the grant
assurances and federal obligations do not require that an airport sponsor recognize past
occupancy as a preference for fiiture occupancy. Nor do the federal obligations require
sponsors to adhere to the location preferences of current tenants and subtenants when
planning for the fiature development of the airport. [See Santa Monica Airport
Association, Krueger Aviation, Inc. and Santa Monica Air Center v. City of Santa
Monica, FAA Docket No. 16-99-21 (February 4, 2003) (Final Decision and Order)
[Santa Monica], discussed more fiilly, below.]
'* Thermco quotes the Director's Determination in its Appeal: "'In this case, it is known that Hangar
#3 will be demolished and that Complainants will be displaced...' [DD at p. 22]" [FAA Exhibit 1,
Item 21, page 4.]

Page 19

The record, in this case, does not display a pattern of behavior by the City that is so
capricious, confounding or deceptive as to constitute an unreasonable denial of access.'^
The Associate Administrator finds the Director did not err in concluding that the City is
not currently denying access to aircraft storage to Thermco.
Allegation #2: The remedy of a propeller park is conjecture (Future Access)
As stated in its Appeal, Thermco is most concerned about fixture hangar occupancy.
[FAA Exhibit 1, Item 21, page 4.]
The Director recognized this as the central concern, stating, "In this particular case.
Complainants have expressed concern that in the fiiture they may not have suitable
hangar space for their propeller aircraft once Hangar #3 in the redevelopment area is
demolished." [FAA Exhibit 1, Item 20, page 21] [See FAA Exhibit 1, Item 5, page 3.]
On appeal, Thermco states, "Respondents and the Director essentially acknowledge the
access issues in connection with propeller aircraft by their reference to the 'propeller
park.' [Propeller Park]... The park is nothing more than a concept which is years away
from reality." [FAA Exhibit 1, Item 21, page 5.]
In its Answer, the City states, "Although Thermco will be displaced from Hangar #3
when the Jet Center is redeveloped, it is not known when that will occur eind what options
Thermco will have at that time to park its aircraft elsewhere at the Airport." [FAA
Exhibit 1, Item 22, page 3.] Here, the City recognizes the possible options beyond those
discussed most directly in the record: continued occupancy of Hangar #3 or occupancy in
the proposed Propeller Park.
Thermco fails to show an error in regard to the Director's discussion and decision on the
Propeller Park. The Director discusses the proposed Propeller Park as proffered by the
City as one of the many future developments that may provide a reasonable opportunity
for access for Thermco and others. With regard to the Propeller Park, the Director stated:
Respondents further state the Airport Master Plan designates an area previously
usedfor a nonaeronautical purpose to be developed as a new propeller aircraft
park (Propeller Park). [FAA Exhibit 1, Item 10, page 3.] The Respondents state
they expected to issue a request-for-proposals to develop the Propeller Park
before the end of 2006. They indicated another section of the Airport would be
used as a short-term propeller aircraft area while the Propeller Park is being
developed. [FAA Exhibit I, Item 10, pages 3-4.J[AA Exhibit 1, Item 20, page
21.]

" The issues of the RFP, leasing and planning processes are discussed below.

Page 20

However, in the interest of thoroughness, the Director explored the support behind this
suggestion by the City. A footnote in the Director's Determination stated:
We placed a phone call to Respondents' attorney on March 20, 2007, to confirm
that the request-for-proposals for the Propeller Park had been issued and that
another section of the Airport was currently available for use by propeller
aircraft. Respondents' attorney confirmed on April II, 2007, that the Propeller
Park request-for-proposals had been issued and proposals were due on May 31,
2007. At the same time. Respondents' attorney confirmed that two interim
propeller park leases were on target to go to the Boardfor approval on May 7,
2007. Respondents' attorney also stated Respondents had processed a consent to
sublease for Complainants to lease space from another tenant. In the meantime.
Respondents' attorney stated that Complainants remain in Hangar #3 in the Jet
Center pending results of the May 2006 request-for-proposals for the Jet Center.
[See FAA Exhibit 1, Item 19.] Complainants' attorney confirmed on March 20,
2007, and again on June 19, 2007, that Complainants remain in Hangar #3. [See
FAA Exhibit 1, Item 19.] As such, the fact that the request-for-proposals for the
Propeller Park or the establishment of the interim propeller aircraft area may or
may not have proceeded on schedule has not prevented Complainants from
operating at the Airport at the time of this determination. Nonetheless, the
Director will ask the FAA Western-Pacific Region to follow up with the Airport
sponsor to ensure propeller aircraft access is maintained at Van Nuys Airport.
[FAA Exhibit 1, Item 21, page 21, fii. 16.]
The Director's findings in the Determination do not rely on the certainty that the
Propeller Park will be developed for seekers of propeller aircraft storage. The evidence
that the City is moving forward with many possible solutions to the question of propeller
aircraft occupancy is relevant to the findings. The existence of fiiture plans (or lack
thereof) does not alter a sponsor's ongoing obligation to provide reasonable aeronautical
access. The Propeller Park is one option. Again, the City has the proprietary right to
market the Airport to specific types of aeronautical users, and may make plans to market
the Airport in a marmer that current tenants dislike.
The Director correctly observes that the circumstances under which Thermco may be
denied access to the Airport, or unjustly discriminated against, in the future, is conjecture.
[FAA Exhibit 1, Item 20, page 30.] In any case, the exact circumstances under which
Thermco might be denied access in the fiiture is not described in the record, because the
circumstances have not yet occurred. In fact, the FAA has examined numerous
circumstances in formal Part 16 complaints in which a complainant has lost all or some
degree of access to an airport. On occasion, the FAA has found that a denial of access is
reasonable, therefore, not a violation of the grant assurances. Such a determination
depends on the exact circumstances of the denial. The record in this case does not
support the notion that Thermco is, or will be, denied reasonable access, simply because
it is not a jet operator. Even if the Director were to suspect that the City would deny
access in the future (and the Associate Administrator does not make that conclusion

Page 21

here), the Director would be unable to make such a finding of noncompliance because
there is no preponderance of evidence upon which to base such a finding.
In fact, the Director recognized this when stating in the Determination, "If Complainants
are unable to obtain hangar space in the future that they believe is suitable for their
propeller aircraft after the redevelopment, the FAA would address that issue at that time."
[FAA Exhibit 1, Item 20, page 23.]
The record in this case does not establish a pattern of deception in producing plans or
terms for fiiture tenancy or in selecting developer/tenants (see below). In fact, the record
supports the conclusion that the City is making plans to accommodate seekers of aircraft
storage (see below). The FAA acknowledges that redevelopment and construction of
aeronautical facilities may create displacement and inconvenience for existing tenants
and subtenants. [See Pacific Coast Flyers. Inc. v. County of San Diego, FAA Docket No.
16-04-08 (July 25, 2005) (Director's Determination) [Pacific Coast], discussed more
fully, below.] The City's actions thus far, do not constitute an unreasonable denial of
airport access or unjust economic discrimination and the Director did not err.
Summary of Reasonable Access to Hangar Occupancy
The FAA acknowledges the different interests of aeronautical tenants and subtenants and
airport operators responding to changes to the aviation market. Each party wishes to
optimize their interests. Thermco seeks to maintain its long-term, advantageous
occupancy in Hangar #3. The Airport sponsor seeks to maximize the utility of the
Airport to respond to new aeronautical opportunities. The grant assurances do play a role
in this balance of interests. In this case, as stated by the Director and established by the
record, the City has not acted to unreasonably deny access to the Airport or unjustly
discriminate against Thermco. Finally, the City's federal obligations do not require that
past occupancy establishes preference for fiiture occupancy by a tenant or subtenant of
the same aeronautical facility.
Thermco has presented evidence that it now enjoys reasonable access to the Airport.
Also, Thermco has not presented a preponderance of substantial evidence that the City
will deny Thermco access under reasonable terms in the fiiture, because such evidence
does not exist. Thermco has the burden of proof to show unreasonable denial of access,
not just denial of access to the facility it desires to lease. The City does not have to prove
how it will accommodate Thermco in the fiiture. Finally, if Thermco is not
accommodated on the Airport in the fiiture that, itself, may not amount to a grant
assurance violation. [See Robert Kihlstrom v. Port of Orcas, FAA Docket No. 16-02-07
(September 1, 2004) (Director's Determination, page 26.) (Orcas)] Such a finding would
depend on the specific facts, which are not evident at this time. In any case, without
regard to the circumstances of development, the City remains obligated to provide
Airport access on reasonable terms. As stated by the Director:
Grant assurance 22, Economic Nondiscrimination, and the 1949 Quitclaim Deed
obligate the Airport sponsor to provide Airport access; they do not obligate the

Page 22

sponsor to provide specific hangars or hangar types. The Director notes,

however, that while the airport owner is not required to construct hangars, it
does have an obligation to make available suitable areas or space on reasonable
terms to those who are willing and otherwise qualified to offer flight services to
the public or support services to aircraft operators. [See FAA Order 5190.6A,
Airport Compliance Requirements, October 2, 1989, section 4-15.] [FAA Exhibit
Litem 20, page 23]
The City's obligation to provide reasonable access to seekers of airplane storage exists
whether or not the Propeller Park is developed. Furthermore, the City must ensure that
its aeronautical service providers provide reasonable access to facilities offered to
aeronautical tenants without unjust economic discrimination.
The Associate Administrator finds the Director did not err in concluding that the City is
not currently in violation of grant assurance 22 by electing not to enter into a direct lease
with Thermco for Hangar #3 or to guarantee terms for fiiture airport facilities preferred
by the Complainants. Also, the Director properly used his discretion to reiterate that the
City remains obligated to provide reasonable access without unjust discrimination and
that the FAA will continue monitoring the actions of the City in this regard.
B. History of Non-Aviation Use of Airport Property
Alleeation #4: The Director ignores the long history of non-aviation uses which
remained at the time of the filing of this complaint. "^
In its Complaint, Thermco argues that the City has violated the use restrictions in the
1949 Quitclaim Deed by allowing repeated and continued non-aviation uses of the
Airport. Thermco alleges these non-aviation uses resulted in Thermco being denied a
lease on Airport property in violation of grant assurance 22, Economic
Nondiscrimination, and also placed Thermco in jeopardy of losing hangar space currently
rented under a sublease. [FAA Exhibit 1, Item 5, page 3.]
In his Determination, the Director states:
The Director finds that the Complainants have not been directly and
substantially affected by the Airport's failure to comply historically with its
federal land use obligations under the 1949 Quitclaim Deed. ... In addition, the
Director notes the Complainants were not denied access to the Airport; In fact,
they were operating on the Airport under a sublease at the time this Complaint
was filed. [FAA Exhibit 1, Item 20, page 29]

'* The Director did not 'ignore the long history of non-aviation uses.' The Director summarized the landuses; the FAA action to achieve voluntary compliance in a manner consistent with our policy and practice;
and the City's steps to achieve corrective action. [See Background Section of this Decision for extensive
quotations of the Determination.]

Page 23

The Director acknowledged the issues with nonaeronautical use of certain airport parcels
at the Airport. As stated above, Thermco's primary concerns are the pending demolition
of the hangar it currently occupies and the possibility that the City will not accommodate
Thermco's preference for aircraft storage in the future. With regard to these concerns,
the Director noted:
These may be legitimate concerns. However, Complainants do not relate either
of these situations to the Airport's history of allowing nonaeronautical tenants to
lease Airport property that should be reservedfor aeronautical uses. Indeed,
while the Airport has had a history of using Airport property improperly, the
Complainants have, nonetheless, had a hangar for their aeronautical business.
The fact that their continued use of this hangar is in jeopardy is related to the
planned redevelopment of the area, not to the sponsor's use ofAirport property
for nonaeronautical purposes. In fact, the redevelopment of the area in question
- which will result in the demolition of Complainants' current hangar - is for
aeronautical purposes. [FAA Exhibit 1, Item 20, page 20]
On Appeal, Thermco does not dispute the facts, but rather, contests the Director's
reasoning and conclusions. Thermco states:
The Director repeatedly asserts that only current, not past, violations are
relevant. This 'snapshot' evaluation fails to consider Thermco has been seeking
a permanent hangar since 2003 while the non-aviation uses continued to thrive.
Thermco was not consideredfor airport property while moving companies, car
dealerships, masonry and building material suppliers were occupying airport
property
None of this non-aeronautical space was made available to
Thermco or to any other propeller aircraft operator.'^ [FAA Exhibit 1, Item 21,
page 11]
The City states in its Reply to the Appeal:
Even if the alleged violations [of nonaeronautical land-use] had persisted, the
Director correctly found that Thermco would have no standing to challenge
them. As the Director accurately pointed out, Thermco has use of Hangar #3
when, it is alleged, the City improperly devoted Airport property to non-aviation
uses; the fact that Thermco's use of Hangar #3 is now in jeopardy is related to
" Thermco does not state, or demonstrate, that it requestedfi-omthe City specific aeronautically-suitable
parcels for long-term lease and development and that the City denied Thermco in favor of a
nonaeronautical use. Rather, Thermco states here: "space was not made available to Thermco." Also,
Thermco does not object to the Director's observation:
The administrative record shows Complainants requested to negotiate a direct lease with the Airport
sponsor for Hangar #3 ... [FAA Exhibit 1, Item 5, exhibit C ] ... While Complainants show they
requested a lease with Respondents, they do not present supporting evidence to show they were denied
a lease at any time in favor of a nonaeronautical tenant or that they were denied a lease because
aeronautical space was not available. On the contrary, the record shows Complainants have leased
Airport property under various sublease agreements since 1987. [FAA Exhibit 1, Item 5, pages 2 and
5.] [FAA Exhibit 1, Item 20, page 27]

Page 24

the planned redevelopment of the Jet Center for aeronautical purposes. [FAA
Exhibit 1, Item 22, page 5]
As stated above, the record does not support that the City was or is required to provide
Thermco with a long-term lease specifically for Hangar #3 in order to ensure reasonable
aeronautical access.'* The record shows and Thermco admits that it has had a short-term
lease to Hangar #3. Thermco has failed to show that it does not enjoy a long-term hangar
lease at the Airport because of the City's past land-use practices. In fact, Thermco fails
to show that it has proposed a specific long-term lease of any Airport property other than
Hangar #3. Finally, Thermco fails to show it was denied a lease in favor of a nonaeronautical use. Consequently, the Director correctly exercised his discretion,
determining that Thermco had not shovm that it was directly and substantially affected by
the City's failure to use Airport property for strictly aviation uses. Also, the record,
itself, fails to establish an unreasonable denial of access or unjust economic
discrimination against Thermco in relationship to the occupancy or development of
Airport property.
In its Appeal, Thermco questions the validity of this 'geographical' distinction: "Should
it be any less of a violation simply because a proponent of aeronautical development is
denied development at a different location?" [FAA Exhibit 1, Item 21, page 9.] The
Director cannot make a finding of a violation, because the record does not establish
exactly what type of development Thermco would have proposed at some other location
or how it should be valued. Since Thermco never made such a proposal, there is no
rational answer to Thermco's question.
Finally, the Director summarized the City's actions in pursuit of cortective action with
regard to federal land-use obligations. [See Background Section of this Final Decision,
pp. 7-8.] The City's voluntary corrective action appears appropriate. In its Appeal,
Thermco finds fault with the Director's reasoning, citing that the Director's use of
precedence is 'dicta.' [FAA Exhibit 1, Item 21, page 10.] Regardless of Thermco's
opinion, the Director may exercise his discretion over what he finds persuasive. Here,
the Director relies on established FAA policy, stating:
The FAA Compliance program is designed to achieve voluntary compliance with
federal obligations accepted by owners and/or operators of public-use airports
developed with FAA-administered assistance. Therefore, in addressing
allegations of noncompliance, the FAA will make a determination as to whether
an airport sponsor is currently in compliance with the applicable federal
" A sponsor may maintain flexibility to alter and develop its airport to maximize utility, business success
and the interests of the community in aviation. In Jimsair Aviation Services. Inc.. v. San Diego County
Regional Airport Authority. FAA Docket No. 16-06-8 (April 12, 2007) (Director's Determination), the
FAA agreed with the airport sponsor that it would be unwise to negotiate a lease extension prematurely for
a facility expansion when the facility may need to be relocated.
" Thermco simply states in its Complaint, "THERMCO and A-26 through their conunon ownership have
offered to lease the hangar and its land for the 30-year term with rental income to LAWA at a net present
value in excess of $5 million. Petitioners have also offered to make improvements on the hangar, if
necessary." [FAA Exhibit 1, Item 5, page 7.]

Page 25

Applicability of FAA Part 16 Precedent

Thermco finds fault in the Director's discussion of Santa Monica Airport Association,
Krueger Aviation, Inc. and Santa Monica Air Center v. City of Santa Monica, FAA
Docket No. 16-99-21 (February 4, 2003) (Final Decision and Order) [Santa Monica].
The Director discusses the applicability of Santa Monica with regard to the City's
prerogative to choose to develop the Jet Center to cater to jets, not with regard to the RFP
process. However, based on the structure of the Appeal, the issue is discussed here.
The Director correctly stated that Santa Monica stands for the concept that, "A sponsor is
not required to develop any and all parcels of land in a maimer consistent with the wishes
of any one party, but rather may exercise its proprietary rights and powers to develop and
administer the airport's land in a marmer consistent with the public's interest." [FAA
Exhibit 1, Item 20, page 22.] The Director appropriately applied this long-standing
precedent in this case, by supporting the conclusion that the City's planning process for
change at the Airport is not determined by the wishes of a particular tenant: in this case,
Thermco's preference for long-term occupancy of Hangar #3, despite its lack of a longterm lease for the hangar.
Thermco attempts to distinguish itself from Santa Monica:
That case, however, did not involve demolition of the premises occupied by any
of the complainants therein. Moreover, that case involved a unique feature
which was controlling: the 1984 Santa Monica Airport Agreement entered into
as part of litigation in the U.S. District Court, approved by the FAA, and
properly within the scope of Part 16 proceedings. No such agreement is
applicable to the case at bar. [FAA Exhibit 1, Item 21, page 11.]
Thermco incorrectly elevates the relevancy of its current short-term tenancy as a
protection from change, including demolition of structures. The very nature of lease
agreements is that they are for a definite term, so that both parties may change plans and
arrangements to suit their respective interests. Federal obligations do not prevent this
sponsor from exercising such change, even if it results in the demolition of a hangar
currently occupied by a short-term subtenant. In fact, the terms of the lease agreement
are the primary protection of tenants for continued occupancy of a leasehold, not the
grant assurances. As discussed throughout the Director's Determination and this Final
Decision, Thermco has failed to show that the City is acting unreasonably in its plan for
change at the Airport; and Thermco has failed to show that the implementation of that
change will unreasonably deny airport access to Thermco in the fiiture. [See Roadhouse
Aviation v. City of Tulsa, FAA Docket No. 16-05-08 (June 26, 2007) (Final Decision and
Order), p. 15] The fact that this case involves current short-term tenancy and hangar
demolition does not alter tiie applicability of the concepts applied from Santa Monica.

Page 27

Current Tenants and Proposing Tenants

Again, Thermco elevates its status as current subtenant in its disagreement with the
Director's application of federal law and policy, stating, "Assurance 22, however,
obligates the sponsor to also treat similarly situated 'tenants' in a like manner. The
Director's equating of 'tenants' with 'proposers' is troublesome. Any member of the
public could submit a proposal. In contrast, Thermco is a longstanding tenant seeking a
continuation of aeronautical uses." [FAA Exhibit 1, Item 21, page. 12]
The City responds, "The Director correctly found, however, that the RFP imposes 'the
same, nondiscriminatory terms' on all proposers for the Jet Center redevelopment
project." [FAA Exhibit 1, Item 22, page 6.]
The Director's application of federal law and policy is accurate. Federal law, policy and
the grant assurances serve the interests of the aeronautical public in civil aviation,
generally. This is the prime obligation as stated in the Order:
The prime obligation of the owner of a federally-assisted airport is to operate it
for the use and benefit of the public. The public benefit is not assured merely by
keeping runways open to all classes of users. While the owner is not required to
construct hangars and terminal facilities, it has the obligation to make available
suitable areas or space on reasonable terms to those who are willing and
otherwise qualified to offer fiight services to the public.. . or support service
(i.e. fuel, storage, tie down, flight line maintenance, etc.) to aircraft operators.
This means that unless it undertakes to provide these services itself, the airport
owner has a duty to negotiate in goodfaith for the lease of such premises as may
be available for the conduct of aeronautical activities. [See Order, Sec. 4-15]
That interest cannot be sufficiently served if change is stymied by an elevated
accommodation of current users' preferences. Issuing a Request-for-Proposals and
selecting a proposer to develop an aeronautical facility is an appropriate method of
serving the public's interest. [See Robert Kihlstrom v. Port of Orcas, FAA Docket No.
16-02-07 (September 1, 2004) (Director's Determination, page 26.) {Orcas)] There is no
established policy or precedence that federal law, policy or obligation requires a sponsor
to provide preference to current tenants over fiiture tenants. In deed, such a practice
diminishes the utility and federal investment in a grant obligated airport and may create
an unreasonable or discriminatory barrier to airport access for fiiture aeronautical users.
Proposed rent schedule for Jet Center and self-sustaining requirement
In its Appeal, Thermco implies that the City is pursuing a rent schedule that is not as
financially self-sustaining as possible:

Page 28

Rent for the new improvements/structures [for the Jet Center] commences in
thirty (30) years only after the improvements revert to the respondents. Rent for
the existing structures ceases at demolition....
The Director recounts that for aeronautical uses, the self-sustaining element is
satisfied by cost recovery. However, respondents own strategic business plan
states that a "key objective " is "to achieve the highest net return on hangars by
January 1, 2006. " [FAA Exhibit 1, Item 21, page 12.] ^
The City replies:
Thermco concludes by asserting that the City will receive less rent at the Jet
Center under the May 2006 RFP than it would receive if it were to continue
leasing the present hangars. The Director concluded that this was not evidence
that the RFP violated the City's obligation to maintain a self-sustaining rental
structure at the Airport. Thermco does not challenge this conclusion. [FAA
Exhibit 1, Item 22, page 6.]
Although Thermco alleges that the Director erred, its Appeal fails to explain how the
Director erred. In fact, the Director's conclusions with regard to the City's RFP process
appear correct. The Director stated:
While Complainants may disagree with the financial business decisions of the
Respondents regarding the development of Van Nuys Airport, the Respondents
retain the proprietary right to make such decisions. The May 2006 RFP clearly
indicates the Airport must receive fair market value for the existing structures to
be demolished. The administrative record contains nothing to suggest the
Respondents 'financial business decisions regarding the May 2006 RFP are
inconsistent with grant assurance 24. The Director finds the Respondents are
not currently in violation ofgrant assurance 24, Fee and Rental Structure, as a
result of issuing a request-for-proposals that includes the purchase and
demolition of existing Airport structures rather than to accept Complainants' 30year lease offer. [FAA Exhibit 1, Item 20, page 17]
The City's federal obligations allow, but do not require, the City to pursue fair-market
value for aeronautical use of airport property. Fair-market value and bidding allows the
market to determine the best use of the property among competing aeronautical uses. As
discussed above, the competing interests for the exclusive development and business use
of the Jet Center property are aeronautical interests.

^^ The Associate Administrator notes, however, that Thermco also makes a point to argue in its Complaint
that the City is incorrect to insist that the proposer 'purchase' the buildings before demolishing them:
"There is no other known proposal at [the Airport] which has required the tenant to first purchase existing
structures at a cost of $3.5 million and then demolish those improvements at a cost certainly exceeding
$500,000." [FAA Exhibit 1, Item 5, page 7.]

Page 29

hi Robert Kihlstrom v. Port of Orcas, FAA Docket No. 16-02-07 (September 1, 2004)
(Director's Determination) [Orcas], the Director discussed lease rates, bidding and fairmarket value for hangar development:
Federal grant assurance 24 requires that the sponsor establish a rental structure
for the facilities at the airport, which will make the airport as self-sustaining as
possible. While the sponsor is not required to demandfair market value for nonairfield aeronautical fees, ^' it may do so and thus may consider leasing or
selling non-airfield aeronautical facilities to the highest bidder making
aeronautical use of the facilities. A sponsor is not required to disregard
competing interests for the use of non-airfield aeronautical facilities. The FAA
has found, as demonstrated by the common industry practice of issuing Requestsfor-Proposals, providing a widely circulated call for aeronautical interest in
airport facilities is an appropriate method of ensuring the highest and best use
for limited airport facilities. [Orcas DD, page 26.]
Finally, Thermco states that the City's 'own strategic business plan, upon which the
"May 2006" RFP is based, is inconsistent with demolition of Hangar 3 and the long term
interruption or diminution of rental revenues contemplated by the RFP."^^ The federal
obligations do not require the City to adhere to any strategic business plan. The
allegation that the City may have diverted from such a plan does not undermine the
Director's conclusions regarding the City's RFP process.
Summary of RFP findings
The Director concluded:
Complainants understandably disagree with airport business decisions regarding
the redevelopment process that will ultimately cause Complainants to lose their
current hangar space. Nonetheless, those airport business decisions are within the
airport sponsor's proprietary right to make and, based on the administrative
record, are not in conflict with the Respondents 'federal obligations.
-

The administrative record does not contain evidence sufficient to show the
Respondents 'financial business decisions regarding the requests-forproposals - including the decision not to lease vacant hangars in the
redevelopment area pending the outcome of the request-for-proposals process
- are inconsistent with grant assurance 24, the FAA's Revenue Use Policy, or
the 1949 Quitclaim Deed. The Director finds the Respondents are not
currently in violation ofgrant assurance 24, Fee and Rental Structure, or the

^' In this context, this refers specifically to exclusive-use leaseholds of airport property for hangar
development.
^^ However, as stated above, Thermco specifically complains that the May 2006 RFP required the
successftil proposer to purchase and then demolish existing structures in the Jet Center area. Thermco
suggests that its 'offer' to lease Hangar #3 had a greater net-present value than that suggested by the May
2006 RFP.

Page 30

1949 Quitclaim deed as a result of issuing a request-for-proposals that

includes the purchase and demolition of existing Airport structures rather
than to accept Complainants', or another tenant's, long-term lease offer. [See
Issues 1, 2, and 3.]
The administrative record shows that all proposers under the May 2006
request-for-proposals had the same information and the same opportunity to
submit proposals. The fact that this particular request-for-proposals is
different from past requests-for-proposals is not a violation ofgrant assurance
22, Economic Nondiscrimination. The request-for-proposals process was an
open process available to all qualified proposers, consistent with grant
assurance 23, Exclusive Rights. The Director finds the Respondents are not
currently in violation ofgrant assurances 22 and 23 or the 1949 Quitclaim
Deed by issuing a request-for-proposals that includes the purchase and
demolition of existing Airport structures. [See Issues 2 and 6.][?AA Exhibit
1, Item 20, pages 29-30]

As discussed above, the Associate Administrator finds that the Director did not err in the
use of his discretion determining that the record did not support Thermco's allegations
that the City had unreasonably denied access to Thermco or unjustly discriminated
against Thermco under grant assurance 22 by its RFP process. Also, the Director did not
err determining that the City has not failed to make the Airport as self-sufficient as
possible according to the requirements of grant assurance 24.
D: Discrimination against piston-type aircraft.
Allegation #3: The Director fails to consider the substantial evidence of
discrimination against piston-type aircraft such as Thermco's.
Thermco states in its Appeal, "The Director fails to consider the substantial evidence of
discrimination against piston-type aircraft." [FAA Exhibit 1, Item 21, page 6] However,
Thermco does not point to any factual evidence that the Director failed to consider. The
Director did extensively consider Thermco's allegations. The Director did find the facts
in this case and apply federal law, policy and obligations, appropriately. Specifically,
Thermco states, "Thermco's continuing precarious possession of Hangar 3 does not
negate the unjust discrimination and propeller aircraft access issues which arise from the
plarmed demolition and dispossession and the acknowledged present inadequacy of
facilities for propeller aircraft." [FAA Exhibit 1, Item 21, page 7.] Thermco does not
point to or mention any evidence of lack-of-access to propeller aircraft in this section of
its Appeal, other than the facts and findings discussed herein and in the Director's
Determination.
The City replies, stating, "Even on appeal... Thermco has been unable to offer any
coherent proof of discrimination that might conceivably undermine the Director's finding
that the City properly exercised its proprietary rights in allocating airport land between jet
and propeller aircraft use." [FAA Exhibit 1, Item 22, page 3.]

Page 31

In addressing the Director's reasoning, Thermco offers two Part 16 cases: Bombardier
Aerospace Corp., and Dassault Falcon Jet Corp. v. City of Santa Monica, FAA Docket
No. 16-03-11 [Bombardier], and Henrihetta and Lindsay Tulloch v. City of Harlingen,
Texas, FAA Docket No. 16-05-07 [Tulloch].
Citing Bombardier, Thermco states:
Where a sponsor's landing fee ordinance discriminated against jet aircraft, the
FAA ruled against the sponsor. [Bombardier Aerospace Corp., and Dassault
Falcon Jet Corp. v. City of Santa Monica, FAA Docket No. 16-03-11 (January 3,
2005)(DD).]... In Bombardier, the Director stated that continued access and
even a slight increase in jet operations under the challenged ordinance did not
negate the unjust discrimination. [Bombardier at p. 47-48] [FAA Exhibit 1, Item
21, pages 6-7.]
The Associate Administrator finds that Bombardier is not applicable to the case at bar.
Specifically, in Bombardier, the Director stated,
the Director finds that the ... landing fees, as currently implemented by the City,
constitute unjust discrimination as it imposes all of the airfield pavement
maintenance costs on one group of aviation users while exempting another group
of aviation users from any costs for airfield pavement maintenance.
[Bombardier. DD, page 52.]
First, Bombardier applies to unjust discrimination concerning the application of airport
landing fees. In a proposed distribution of benefits and costs, in Bombardier, there was
an unreasonable application of landing fees to one group of aeronautical users and not to
another group of aeronautical users. The case at bar involves exclusive-use lease rates.
The landing fee allocation method employed in Bombardier is not in practice here.
Consequently, Bombardier is not inconsistent with the Director's Determination in the
case at bar.
Thermco's Appeal also cites Tulloch:
In Henrihetta and Lindsay Tulloch v. City of Harlingen. Texas, FAA Docket No.
16-05-07 (DD), [Tulloch] the Director found no unjust discrimination in the
planned demolition of a hangar, where the hangar was a sixty year oldformer
military hangar which had "surpassed its useful life, " and where the demolition
of the hangar had been recommended in Airport Master Plans for a decade.
Contrast that scenario with the case at bar: a 20 year old hangar the demolition
of which has only recently been suggested (for the purpose of adding another jet
facility), and the additional issue of airport access ^ and hangar access by
propeller aircraft. [FAA Exhibit 1, Item 21, page 7.]

^ The Associate Administrator notes that Thermco does not point to an instance where any propeller
aircraft have been denied access to the Airport, other than the hangar development and lease issues

Page 32

The City replies, "Thermco misreads Tulloch, which clearly supports the Director's
Determination in this case that the City is well within its proprietary rights to develop the
Jet Center." [FAA Exhibit 1, Item 22, page 4.]
In Tulloch, the Director stated:
Complainants allege that the City unjustly discriminated against them by
threatening to tear down the Emair hangar. FAA disagrees. The City has stated
that the Emair hangar is a 60-year-old military hangar that has surpassed its
useful life and is scheduledfor demolition. The Record indicates that the 1991
and 2000 Airport Master Plan updates both recommend the demolition of the
Emair hangar. It is within the City's rights and powers and its responsibility for
the planning and development of the Airport to determine how land and public
facilities should best be used to support the planning and development of the
Airport. [Tulloch, DD, page 20.]
The Associate Administrator notes that, in some respects, Tulloch does differ from the
case at bar. However the findings in Tulloch are not inconsistent with the findings in this
case. Specifically, the difference in hangar age between the case in Tulloch and the case
at bar does not undermine the Director's Determination. Moreover, Tulloch stands for
the proposition that a sponsor has the right and responsibility to determine the best use of
airport land for airport development. That is the opinion of the Director. [Tulloch, DD,
page 20.] The Associate Administrator agrees with this well established proposition.
Although Thermco raises Bombardier and Tulloch, it applies them incorrectly and fails to
show how the findings in these cases are inconsistent with the case at bar. The Associate
Administrator also points to Pacific Coast Flyers, Inc. v. County of San Diego, FAA
Docket No. 16-04-08 (July 25, 2005) (Director's Determination) [Pacific Coast]. In
Pacific Coast, the Complainant alleged that the Sponsor's airport development plans
discriminated against small piston aircraft types by reducing accessibility through
leasehold development in favor of jet aircraft. [Pacific Coast, DD, page 32]
In Pacific Coast, the Director stated:
The proposed new facilities will accommodate both types ofGA operations,
albeit not in the ratio the Complainant would expect, i.e. accommodating all
existing small piston aircraft types. One class of aeronautical user cannot expect
to indefinitely lay claim to airport facilities at the expense of another class of
aeronautical users or jeopardize the airport's ability to manage its facilities....
[Pacific Coast, DD, page 34.]
The thresholdfor assessing an alleged compliance violation lies with the
County's action in reasonably accommodating the demandfor all types and
classes or aeronautical users. The County, as the airport sponsor, may
discussed at length elsewhere. The record does not establish that a propeller aircraft has been turned away
fi'om the Airport.

Page 33

accommodate the needs of the small piston aircraft operators in any variety of
means... That is, some small piston aircraft operators may be accommodated on
other leaseholds at [the Airport] or other County airports. There is no Federal
requirement that all existing tenants on the existing PAC/Burrows leasehold must
be accommodated in the future PAC/Burrows facility.
The Director recognizes that the current [Airport Master Plan], as the County's
"vision "for the future of the airport, plays a role in its decision-making process,
andfor development of the airport. Having said that, the Director also notes
that deviating from the [master plan], to accommodate changing airport
conditions or new requirements, is not only permissible, but may be necessary
and expected. ^
Therefore, based on the record and analysis presented above, the Director
finds that the County's action in replacing certain substandardfacilities'^ with
newer ones, even if it results in the relocation of some tenants in those
substandardfacilities is not inconsistent with the County's Federal obligations
and in addressing the future needs of all classes of aeronautical users, the
County is acting in a reasonable manner in meeting its responsibilities as an
airport sponsor. [Pacific Coast, DD, pages 35-36.]
In light of the above analysis, the Associate Administrator concurs with the Director's
application of FAA precedent, federal law and policy, and the City's federal obligations
to the facts established by the record. Also, the Associate Administrator finds the
Director did not ert in concluding that the City's actions regarding its treatment of pistontype aircraft do not currently constitute unjust economic discrimination in violation of
grant assurances 22, Economic Nondiscrimination.

VII. CONCLUSION
The FAA's role in this Appeal is to determine whether the Director erred in findings of
fact or conclusions of law in issuing the Director's Determination. In fact, much of the
Appeal, discussed above, does not posit an allegation of error, but rather states
disagreement with the discretion of the Director. Despite this, the Associate
Administrator addressed the issues raised by Thermco and finds that the Director has not
erred.
Specifically, upon an appeal of a Part 16 Director's Determination, the Associate
Administrator must determine whether (a) the findings of fact made by the Director are
supported by a preponderance of reliable, probative, and substantial evidence, and (b)
each conclusion of law is made in accordance with applicable law, precedent, and public

^* The plaiming processes employed by the sponsor in Pacific Coast are much more fiilly developed than in
the case at bar. However, as the Director noted in Pacific Coast, strict adherence to a planning process is
not required for compliance.
" In Pacific Coast, the record established that the hangars in question were substandard. [Pacific Coast,
DD, page 34.] However, as discussed above, this fact does not contradict a sponsor's ability to remove
newer facilities as a business decision to reconfigure the airport.

Page 34

policy. [See e.g. Ricks v Millington Municipal Airport, FAA Docket No. 16-98-19
(December 30, 1999) (Final Decision and Order), page 21, and 14 CFR 16.227.]
In arriving at a final decision on this Appeal, the FAA has reexamined the record,
including the Director's Determination, the administrative record supporting the
Director's Determination, the Appeal and Reply submitted by the parties, and applicable
law and policy. Based on this reexamination, the Associate Administrator concludes that
the Director's Determination is supported by a preponderance of reliable, probative, and
substantial evidence, and is consistent with applicable law, precedent, and FAA policy.
The Appeal does not contain persuasive arguments sufficient to reverse any portion of the
Director's Determination.
The Associate Administrator affirms the Director's Determination. This decision
constitutes the final decision of the Associate Administrator for Airports pursuant to 14
CFR 16.33(a).

ORDER
ACCORDINGLY, it is hereby ORDERED that (1) the Director's Determination is
affirmed, and (2) the Appeal is dismissed, pursuant to 14 CFR 16.33.

RIGHT OF APPEAL
A party to this decision disclosing a substantial interest in the Final Decision and Order
of the Federal Aviation Administration may file a petition for review pursuant to 49
U.S.C. 46110, in the United States Court of Appeals for the District of Columbia
Circuit or in the Court of Appeals of the United States for the Circuit in which the person
resides or has its principal place of business. The petition must be filed not later than 60
days after a Final Decision and Order has been served on the party. [14 CFR, Part 16,
16.247(a).]

ii^n^oy
-

Date

Associate Administrator
for Airports

Page 35

FAA Exhibit 1
Docket No. 16-06-07
Index of Administrative Record
Final Agency Decision

Thermco Aviation, Inc. and A-26 Company,

COMPLAINANTS
v.
City of Los Angeles, Los Angeles Board of
Airport Commissioners, and Los Angeles World
Airports,
RESPONDENTS

Item 1

FAA Form 5010

Item 2

Grant History

Item 3

Complainants' Complaint, received April 4, 2006

exhibit A

Quitclaim Deed, February 10, 1949.

exhibit B

March 14, 2005, letter to Jim Richie, Deputy Executive Director,

Los Angeles World Airports, from Tony Garcia, Airport
Compliance Specialist, FAA Western-Pacific Region Airports
Division, regarding "Van Nuys Airport, Airport Master Plan and
Land Use Issues."

Item 4

April 20, 2006, letter to Garry L. Montanari, attorney for Complainants,

from David Bennett, Director, FAA Office of Airport Safety and
Standards, advising that the Complaint submitted April 4, 2006, was
determined to be incomplete; the Director dismissed the complaint without
prejudice.

Item 5

First amended Complaint, received July 14, 2006.

exhibit A

Quitclaim Deed, February 10, 1949.

exhibit B

March 14, 2005, letter to Jim Richie, Deputy Executive Director,

Los Angeles World Airports, from Tony Garcia, Airport
Compliance Specialist, FAA Western-Pacific Region Airports
Division, regarding "Van Nuys Airport, Airport Master Plan and
Land Use Issues."

Page 36

exhibit C

September 4, 2003, letter to Ron Domash, Property Manager of

Van Nuys Airport, from Garry Montanari, attorney for Howard
Keck, Jr., regarding "Lease of Hangar on Former Jet Center
Leasehold."

exhibit D

January 23, 2006, Board of Airport Commissioners Report.

exhibit E

June 23, 2006, letter to Lynn Mayo, Deputy City Attorney, from
Garry Montanari regarding efforts to resolve issues informally.

exhibit F

July 10, 2006, letter to Garry Montanari from Lynn Mayo, Deputy
City Attorney, regarding "Proposed Amended Part 16 Complaint
Against LAWA."

Item 6

Notice of Docketing, August 3, 2006.

Item 7

Respondents' Motion to Extend Time, received August 30, 2006.

Item 8

Affidavit of Scott P. Lewis, attorney for Respondent the City of Los

Angeles, in support of Respondents' Motion to Extend Time, received
August 31, 2006.

Item 9

September 5, 2006, letter to Scott P. Lewis, attorney for Respondents,

from Jonathan W. Cross, FAA Office of the Chief Counsel, granting an
extension of time.

Item 10

Respondents' Answer, received September 26, 2006.

exhibit 1

January 13, 2006, letter to Lyle W. Haynes, Asset Management

Division , Los Angeles World Airports, from Tony Garcia, Airport
Compliance Specialist, FAA Western-Pacific Region, regarding
"Van Nuys Airport Redevelopment Plans."

exhibit 2

August 29, 2006, letter to Courtland W. Weber, Micor

Transportation Group, etc., from Patricia V. Tubert, Deputy
Executive Director, Real Estate and Economic Development, Los
Angeles World Airports, regarding "90 Day Notice of Termination Lease No. VNA-8305 with C&M Relocation Services at Van Nuys
Airport."

exhibit 3

August 23, 2006, letter to Judge James DiGuiseppe, President, JEC

Enterprises, Inc. from Lyle W. Haynes, Manager, Economic
Development Services, Real Estate & Economic Development
Group, Los Angeles World Airports, regarding "Notice of
Termination..."

Page 37

exhibit 4

Van Nuys Airport Plan, January 2006.

exhibit 5

April 1, 1985, letter to Donald A. Miller, Manager, Airport Property,

City of Los Angeles, Department of Airports, from Robert C.
Bloom, Supervisor, Standards Section, FAA Western-Pacific
Region, regarding "Van Nuys Airport, Los Angeles, California, Use
of Land - Letter of Consent." (Stamped as "exhibit B")

exhibit 6

January 7, 2002, letter to Bret Lobner, Office of the City Attorney,

City of Los Angeles, Airport Division, from Brian Armstrong,
Airport Planner, FAA Western-Pacific Region.

exhibit 7

Request for Proposals for the Lease of a Hangar Complex Located at

16200 Daily Drive at Van Nuys Airport, November 3, 2003.

exhibit 8

June 10, 2003, letter to Ron Domash, Property Manager, Van Nuys
Airport, from Robert B. Mays, President, Western Commander
Associates, regarding "Land & Leasehold Improvements covered
under lease #LAA-1119."

exhibit 9

March 5, 2004, memo to Eduardo Angeles from Jess L. Romo, Los

Angeles World Airports, regarding "Request for Review - Proposals
in Response to the Request for Proposals for Lease of Hangar
Complex located at 16200 Daily Drive at Van Nuys Airport."

exhibit 10

July 19, 2004, Minutes of the Board of Airport Commissioners of the

City of Los Angeles.

exhibit 11

Request for Proposals for the Lease of a Hangar Complex Located at

16200 Daily Drive at Van Nuys Airport, February 19, 2004.

exhibit 12

Draft Strategic Business Plan, Van Nuys Airport, Los Angeles

World Airports, undated. (Labeled "For Internal Discussion
Purposes Only.")

exhibit 13

Request for Proposals for the Demolition of the Hangar Complex

Located at 16200 Daily Drive and Development of a New Aviation
Facility at Van Nuys Airport Notice Inviting Proposals, February 1,
2006.

Item 11

Respondents' Motion to Dismiss, received September 26, 2006.

Item 12

Memorandum in Support of Respondents' Motion to Dismiss, received

September 26, 2006.

Page 38

Item 13

Complainants' Reply to Respondents' Answer and Motion to Dismiss,

received October 11, 2006.

Item 14

Complainants' Declaration of Garry L. Montanari and Exhibits in Support

of Reply to Respondents' Answer and Motion to Dismiss, received
October 11,2006.

exhibit A

Declaration of Howard Keck Jr., in Support of Reply, dated

October 5, 2006.

exhibit B

December 15, 2003, letter to Mayor Hahn, City Attorney

Delgadillo, and Members of the Council, from Laura N. Chick,
City Controller, regarding an audit of contracting practices of the
Department of Los Angeles World Airports.
December 15, 2003, letter to Kim Day, Interim Executive Director,
Los Angeles World Airports, from Laura N. Chick, City
Controller, enclosing a report on the Review of Contracting
Practices at the Los Angeles World Airports.
December 15, 2003, letter to Laura Chick, Controller, from Kurt R.
Sjoberg, regarding their report entitled "Review of Contracting
Practices at the Los Angeles World Airports."
Report: "Review of Contracting Practices at the Los Angeles
Worid Airports," December 15, 2003.

exhibit C

Stipulation, Decision and Order Pursuant to Commission Infraction

Policy, stamped April 5, 2006, "Before the City Ethics
Commission, City of Los Angeles," CEC Case No. 05-57, in the
Matter of Castle & Cooke, Inc. and Castle & Cooke Aviation
Services, Inc.

exhibit D

July 17, 2006, Board of Airport Commissioners Report.

exhibit E

Various reports for Van Nuys Airport for the 12 months ending
June 30:
Air Traffic Activity (years 2001-2015);
Profit & Loss (years 2001-2015);
Revenues (yezirs 2001-2015);
Building Rentals (years 2006-2015);
Ground Lease (years 2006-2015);
Fuel Flowage Fee and Landing Fees (years 2001-2015);
Expenses (years 2001-2015);
Salaries and Benefits Forecast (years 2005-2015);
FY 2005 Budget Expenses.
Page 39

exhibit F

January 26, 2006, letter to Mark McClardy, Airports Division

Manager, FAA Western-Pacific Region, from Bill Dunn, Vice
President, Aircraft Owners and Pilots Association (AOPA),
regarding the use of aviation property for non-aviation purposes at
the Van Nuys Airport.

exhibit G

February 7, 2006, letter to George Aiken, Manager, FAA Safety

and Standards Branch, from Paul Green, Chief Operating Officer,
Los Angeles World Airports, responding to a January 13, 2006
letter from Tony Garcia, Airport Compliance Specialist, FAA
Western-Pacific Region.

exhibit H

February 6, 2006, Board of Airport Commissioners Report.

exhibit I

September 18, 2006, Board of Airport Commissioners Report.

exhibit J

October 17, 2005, minutes of the Board of Airport Commissioners

meeting.

Item 15

February 15, 2007, Notice of Extension of Time extending the date by

which the Director's Determination will be issued to May 10, 2007.

Item 16

Respondents' Rebuttal, received October 17, 2006.

Item 17

Notice of change of address for counsel for Respondents, effective

January 1, 2007.
May 2, 2007, Notice of Extension of Time extending the date by which
the Director's Determination will be issued to June 21, 2007.

Item 18

Item 19

June 19, 2007, Memorandum for the Record, regarding telephone contacts
with attorneys for Respondents and Complainants to confirm whether or
not Complainants currently (a) remain on the Airport in Hangar #3, (b)
have been relocated to another site on the Airport, or (c) are no longer
tenants on the Airport.

Item 20

June 21, 2007, Director's Determination.

Item 21

August 22, 2007, Complainant's Appeal of Director's Determination.

Item 22

September 13, 2007, Respondent's Reply to Appeal of Director's

Determination.

Item 23

November, 15, 2007, Notice of Extension of Time of the due date of the
Final Agency Decision to December 21, 2007.

Page 40

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on December 18, 2007,1 caused to be placed in the United
States mail (first class mail, postage paid) a true copy of the foregoing document
addressed to:
Mr. Scott P. Lewis,
Mr. Timothy J. Roskelley
ANDERSON & KREIGER LLP
One Canal Park, Suite 200
Cambridge, MA 02141
Mr. Rockard J. Delgadillo
Mr. Eduardo A. Angeles
Ms. M. Lynn Mayo
OFFICE OF THE LOS ANGELES CITY ATTORNEY
AIRPORT DIVISION
Los Angeles World Airports
One World Way
P.O. Box 92216
Los Angeles, CA 90009-2216
Mr. Garry L. Montanari
Mr. Nathan B. Rand
MICHAELIS, MONTANARI & JOHNSON, P.C.
4333 Park Terrace Drive, Suite 110
Westlake Village, CA 91359
FAA Part 16 Airport Proceedings Docket

David F. Cu:
Airport Com