Aviation Business Journal 1st Quarter 2013 - 17

Federal law includes constitutional and legislative
law as conveyed in United States Code (U.S.C.). Federal
regulations are conveyed in Code of Federal Regulations.
Other key regulations for airports include executive orders/
proclamations, which are ancillary or subordinate to laws
and Office of Management and Budget circulars.
State law includes constitutional and legislative law
or statutes. For the most part, state regulations are
promulgated by state agencies. Many states have statutes
pertaining to leasing public (airport) property. Such statutes
may limit the term of a lease agreement. Local laws and
regulations are typically conveyed in municipal ordinances
or codes that address such areas as zoning, fire, electrical,
building, safety, and procurement.
Case law includes federal, state, and local judicial
decisions or precedent.
In order to secure funding through the Airport
Improvement Program (AIP), a sponsor must give certain
assurances to the Federal Aviation Administration (FAA). In
essence, sponsors must agree to comply with the assurances
as a condition of receiving AIP funds. Additionally, airports
conveyed by the federal government under the Surplus
Property Act have deed restrictions, which are similar to the
assurances, and the sponsors of such airports must comply
with the deed restrictions — even if AIP funds have not been
secured.

Key Airport Assurances and Guidance
To achieve a successful outcome, a business needs to
have a solid understanding of the assurances and related
guidance, such as:

Assurance 23. Exclusive Rights
This assurance states that the 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.” Readers frequently misinterpret this assurance
– it does not mean that a sponsor is violating the assurance
if there is only one fixed base operator (FBO) at an airport.
Order 5190.6B, FAA Compliance Manual/Handbook,
September 30, 2009 (Order 6B) states:
“… the FAA does not consider the presence of only
one provider engaged in an aeronautical activity as
a violation of the exclusive rights prohibition” [Order
6B, 8.6.] and “A single enterprise may expand as

needed, even if its growth ultimately results in the
occupancy of all available space” [Order 6B, 8.9.d.].
However, a sponsor cannot allow an existing business
to “bank” land and/or facilities. An existing business must
be able to put the land and/or facilities (it can demonstrate
that it needs) to gainful aeronautical use within a reasonable
period of time (or immediate productive use) [Order 6B,
8.7.b. and 8.9.d].
Order 6B also indicates that a sponsor can deny the
request of a qualified (prospective) business when the
following conditions exist:
“… (1) It can be demonstrated that it would be
unreasonably costly, burdensome, or impractical for
more than one entity to provide the service, and (2)
The sponsor would have to reduce the leased space
that is currently being used for an aeronautical
purpose by the existing provider in order to
accommodate a second provider” [Order 6B, 8.7.a.].
There are a number of additional provisions in Order
6B relating to leasing airport property for commercial
aeronautical purposes.
“The grant assurances do not prohibit… [a]
sponsor from entering into long-term leases
with commercial entities, by negotiation,
solicitation, or other means… sponsor may
choose to select… FBOs… or other aeronautical service
providers through a request for proposals (RFP)
process. If it chooses to do so… sponsor may use this
process each time a new applicant is considered”
[Order 6B, 8.9.d.]. Bold for author’s emphasis.
As such, a sponsor is not obligated to use an RFP
process to select an FBO. If a sponsor chooses to use an
RFP process, it may use this method each time “new” (or
prospective) applicants are being considered.
If a sponsor chooses to select an FBO through an RFP
process, the sponsor can choose one FBO (even if multiple
qualified parties respond to the RFP) and if only one
qualified FBO responds, the sponsor could select that
entity [Order 6B, 8.9.d.]. If a sponsor chooses to select an
FBO through an RFP process, a sponsor can, but is “not”
required to, exclude an incumbent FBO from participating
in the process [Order 6B, 8.9.d.]. In addition, Advisory
Circular 150/5190-6, Exclusive Rights at Federally-Obligated
Continued on page 19

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Aviation Business Journal 1st Quarter 2013

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