Petition for Writ of Certiorari — Arapahoe County Public Airport Authority v. Federal Aviation Administration

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~ Supreme Court, U.S.

(\ FILEN

“01 230 AUG 6 - 2001

No. ___g €FICE OF THE CLERK

In The

Supreme Court of the United States

CITY OF GREENWOOD VILLAGE, COLORADO,

Petitioner,

FEDERAL AVIATION ADMINISTRATION,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

PETITION FOR WRIT OF CERTIORARI

CONSTANCE E. BRooxs

Counsel of Record

MiIcHAEL B. MARINOVICH

C.E. Brooxs & Associates, P.C.

999 18th Street, Suite 1605

Denver, CO 80202

(303) 297-9100

Counsel for Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

1. Whether the Airline Deregulation Act’s preemp-

tion of state laws relating to a “price, route, or service” of

a properly certificated air carrier, while reserving to the

airport proprietor its rights and powers, permits an air-

port proprietor to exclude certain categories of aviation

services to conform to regional airport planning, existing

airport facilities, the safe operation of the airport, and the

civil aviation needs of the public.

2. Whether a local airport proprietor’s ban on

scheduled passenger service is a lawful exercise of the

airport’s proprietary rights and powers under the Airline

Deregulation Act, when authorized by state law and

where the prohibited use has never been allowed, when it

is deemed necessary to meet the airport’s role as a gen-

eral aviation reliever airport within the regional and local

aviation and land use plans, consistent with the existing

facilities at the airport, and necessary for the safe opera-

tion of the airport.

PARTIES TO THE PROCEEDING

The following entities are parties in the court of

appeals: The City of Greenwood Village; the Arapahoe

County Public Airport Authority; and the Federal Avia-

tion Administration.

RULE 29.6 STATEMENT

Petitioner Greenwood Village is a home-rule city and

is not a corporation.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .........----0-0e++eeeeee i

PARTIES TO THE PROCEEDING .........-----++++- ii

RULE 29.6 STATEMENT.......------++++: ae ii

TABLE OF AUTHORITIES ...........--000002+000 vi

OPINIONS BELOW..........--00eeecceeeeeeeeeeees 1

JURISDICTION ... 2.2... 2s cece eee cece eee eee ee eees 2

STATUTORY PROVISIONS INVOLVED.........---. 2

STATEMENT OF THE CASE........-.---++++++++5> +

A. Summary of Proceedings .......-. ; idaneseawae 5

B. Factual Background............---+++++ee++5: 7

1. Centennial Airport..........---++--++++- 7

2. Proposed Scheduled Service........---. 9

C. State Court Proceedings ...........---++++++ 12

D. FAA Proceedings............+.+++++eeeeeeees 14

E. The Tenth Circuit’s Decision ........---.---+-- 16

REASONS FOR GRANTING THE PETITION ....... 18

I. The Court Should Grant Review on the Important

Question of the ADA’s Preemption Provision and

the Scope of an Airport Proprietor’s Powers In

Light of the Diametrically Opposite Decisions of

the Tenth Circuit and the Colorado Supreme

TABLE OF CONTENTS —- Continued

Page

II. This Court Should Grant Review To Resolve The

Inconsistency Between Two 1995 Decisions of

This Court: American Airlines v. Wolens and Trav-

c7. an

Ill. This Court Needs to Clarify the Scope of An

Airport Proprietor’s Powers Given the Contra-

dictory Decisions of The State and Federal

RR I AR Oe Ape tere er eRe Riad ale oh ll

APPENDIX A:

Opinion, Arapahoe County Public Airport Authority

v. FAA, 242 F.3d 1213 (10th Cir. 2001)..........

APPENDIX B:

Final Agency Decision and Order, Centennial

Express Airlines et al. v. Arapahoe County Public

Airport Authority, FAA Order No. 1999-1, 1999

Pen, SORT GO By SON ccc ccncerasscvesbanss

APPENDIX C:

Initial Decision of the Hearing Officer, Centennial

Express Airlines et al. v. Arapahoe County Public

Airport Authority, Docket Nos. 16-98-05,

13-94-03, 13-94-25, 1999 WL 500027 (F.A.A.

SE CU, SOS bh cess ckbcakbduwcseconedeads

APPENDIX D:

Director’s Determination, Centennial Express Air-

lines et al. v. Arapahoe County Public Airport

Authority, Docket Nos. 16-98-05, 13-95-03,

13-94-25, 1998 WL 1083382 (F.A.A. August 21,

RAE aie Rakes ay Natal einri tke anpey Oe.

TABLE OF CONTENTS - Continued

Page

APPENDIX E:

Opinion, Arapahoe County Public Airport Authority

v. Centennial Express Airlines, Inc., 956 P.2d 587

GEO. TP oc kcasns cansdsapoevinheseussoasaeess 173a

APPENDIX F:

Order of the Tenth Circuit denying Petitioner’s

and Intervenor’s Petitions for Rehearing and

Requests for Rehearing En Banc, Case No.

SD-S508 Chay 7, BOGE) 6. isacsacvivcdecenaavesaess 224a

TABLE OF AUTHORITIES

Page

FeperRat Cases

Air Transport Ass'n of America v. City and County of

San Francisco, 992 F. Supp. 1149 (N.D. Cal. 1998) .... 28

Air Transportation Ass'n of America v. Crotti, 389

F Supp. 5B (N.D. Cal. 1975) .....cccccccccccccccss 24

Aircraft Owners and Pilots Ass'n v. Hinson, 102 F.3d

Pout, Ya B. | Mreerrr e 29

American Airlines, Inc. v. Dept. of Transp., 202 F.3d

788 (5th Cir.), cert. denied, 530 U.S. 1274 (2000) .... 26

American Airlines, Inc. v. Wolens, 513 U.S. 219

CR < 60caksenscecsehecnsaniee 17, 20, 21, 22, 23, 25

British Airways Bd. v. Port Auth. of N.Y. & N.J., 564

Rae SOG5 Ch Gin Bere cconcevctééanscenssee 28

City of Burbank v. Lockheed Air Terminal, Inc., 411

UG, G6 (26S) oo ccccceutvnssececidiveseveuuuces 4, 25

City & County of San Francisco v. FAA, 942 F.2d

1391 (9th Cir. 1991), cert. denied, 503 U.S. 983

CIOTE) . oe ccnncccccccccccsvcsdsctacctsnuasseneeeeens 28

Duncan v. Northwest Airlines, Inc., 208 F.3d 1112

(9th Cir. 2000), cert. denied sub nom. Northwest

Airlines, Inc. v. Duncan, 121 S.Ct. 650, ____~ U.S.

means CHEMO « oc cccdavevccnesnbansnaéseuhbieneuaeeen 21

Gustafson v. City of Lake Angelus, 76 F.3d 778 (6th

Che, BODE) «cc vcccscocecccscencasenensaesunaeeuueas 28

Hodges v. Delta Airlines, Inc., 44 F.3d 334 (5th Cir.

BOD «wc cncccccaécusessenenteadceesusweeeneeeaane 21

Midway Airlines, Inc. v. County of Westchester, N.Y.,

584 F. Supp. 436 (S.D. N.Y 1984)............... 24, 27

Vii

TABLE OF AUTHORITIES - Continued

Page

Montauk-Caribbean Airways, Inc. v. Hope, 784 F.2d

DE GOR GO, TOD ese cccncccccccescaccectdcacssases 26

Morales v. Trans-World Airlines, Inc., 504 U.S. 374

Cb kapate eens skectiers ceeds auerelneement passim

New England Legal Found. v. Massachusetts Port

Auth., 883 F.2d 157 (1st Cir. 1989)................. 28

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co., 514 U.S.

ip ee cbccnacudedudacad suneuddusadaaueaean passim

Sea Air Shuttle Corp. v. Virgin Islands Port Author-

ity, 800 F. Supp. 293 (D. V.I. 1992)................ 27

Western Airlines, Inc. v. Port Auth. of N.Y. & N.J.,

658 F. Supp. 952 (S.D. N.Y. 1986), aff'd, 817 F.2d

222 (2d Cir. 1987), cert. denied sub nom. Delta

Airlines, Inc. v. Port Auth. of N.Y. & N.J. , 485

CB, BEES CHOU hc ecccctisvcunnedhectetsccosvas 27, 28

State Cases

City of Burbank v. Burbank Glendale-Pasadena Air-

port Auth., 85 Cal. Rptr.2d 28 (Cal. Ct. App.

BOs ankdnccnnsscecstassdcedasnteswardeseatewneas 28

State by Minnesota Public Lobby v. Metropolitan Air-

ports, 520 N.W.2d 388 (Minn. 1994) .......-....... 28

FEDERAL STATUTES

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es Se 0 ov td nnddncceceessandenndenseedse 15

DD UU. Br otk on boc ncnnnddsssecddeencccecn 2, 17

viii

TABLE OF AUTHORITIES - Continued

Page

49 U.S.C. §41713(b)(1)......-c.ccccccececeeeeeee. passim

OP Wes ET ES cbdccnundcesenceneecniaaes passim

i en EE 5 Nh Gid as ba bsnnssccavnrdnasacaned 10

ee es I dbtidhenksedesGbuend susased cae ues 16

49 U.S.C. §§47101-47113........... insddaheduaan anes 4,8

Ss oe iene eau eas 2

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ee ee a Ss one pdkcuyastewneomenee bea0%s 5

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STATE STATUTES

Rees Ce Ge I gc wa dee dudctwncasweaseabeads 1

as Ss Sy SOND bab kcdcdackdccnedinacsoause 1

Colo. Rev. Stat. §§41-3-101 to 41-3-108 (1997)......... 7

Colo. Rev. Stat. §41-3-106(1)(h)............ 3, 13, 19, 26

FEDERAL REGULATIONS

pt POST T YT PTET TTT OTe eT e reer rer es 14

14 C.FR. Part 152, §152, Appdx. D, 418............ a

ie Gee Is sax cccexasivedsccbudusuaseeaes 6, 15

a ae es ee 10

TABLE OF AUTHORITIES - Continued

Page

LEGISLATIVE MATERIALS

Bae Ge. GN. Br eee COT hh 50:60 06 eo 0s vk Kos 0n 8s 24

BAG Cones. Tee. Bee COGTO) so ncsc ccadeasasassisares 24

S. Rep. No. 95-631, 95th Cona., 2nd Sess. 39 (1978) .... 24

PETITION FOR WRIT OF CERTIORARI

The City of Greenwood Village respectfully petitions

for writ of certiorari to review the judgment of the United

States Court of Appeals for the Tenth Circuit in this case.!

The Arapahoe County Public Airport Authority

(“Authority”) filed its own petition for writ of certiorari

on August 2, 2001.

OPINIONS BELOW

The opinion of the court of appeals is reported at 242

F.3d 1213, and is reprinted in the Petitioner’s Appendix

(“App.”). (App. la-22a). The FAA Director’s Determina-

tion, Initiai Decision, and Final Agency Decision and

Order are publicly available at 1998 WL 1083382 (F.A.A.),

1999 WL 500027 (F.A.A.), and 1999 WL 499647 (F.A.A.),

and are reprinted in the Appendix at (App. 106a, App.

60a, and App. 23a, respectively).

1 The City of Greenwood Village is a home-rule city

incorporated in 1950 pursuant to the Colorado Constitution,

Art. 20, §1, and Colo. Rev. Stat. §31-1-201. Greenwood Village is

located in Arapahoe County, Colorado, one of the four counties

comprising the metropolitan area of Denver, Colorado.

Greenwood Village is adjacent to Centennial Airport, whose

operations directly affect the City’s interests. Greenwood

Village intervened in the Federal Aviation Administration

(“FAA”) proceeding and the petition for review before the Tenth

Circuit Court of Appeals. C.A. Vol. VII.64 at 3-12; C.A. Vol.

VII.69.

JURISDICTION

The court of appeals entered its judgment on March

9, 2001. The court of appeals denied a timely request for

rehearing en banc and petition for panel rehearing on May

7, 2001. (App. 224a-225a). The jurisdiction of this Court is

invoked pursuant to 28 U.S.C. §1254(1).

STATUTORY PROVISIONS INVOLVED

This case involves the following provisions of the

federal aviation laws: Section 4(a) of the Airline Dereg-

ulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 1707

(1978), now codified at 49 U.S.C. §41713(b), states in

pertinent part:

(1) Except as provided in this subsection, a

State, political subdivision of a State, or political

authority of at least 2 States may not enact or

enforce a law, regulation, or other provision

having the force and effect of law related to a

price, route, or service of an air carrier that may

provide air transportation under this subpart.

* * *

(3) This subsection does not limit a State, polit-

ical subdivision of a State, or political authority

of at least 2 States that owns or operates an

airport served by an air carrier holding a certifi-

cate issued by the Secretary of Transportation

from carrying out its proprietary powers and

rights.

Section 502(b) of the Airport and Airway Improve-

ment Act, Pub. L. No. 97-248, 96 Stat. 673, now codified at

49 U.S.C. §47101(g), requires the Secretary of Transporta-

tion to:

. cooperate with State and local officials in

developing airport plans and programs that are

based on overall transportation needs. The air-

port plans and programs shall be developed in

coordination with other transportation planning

and considering comprehensive long-range land

use plans and overall social, economic, environ-

mental, system performance, and energy conser-

vation objectives. The process of developing

airport plans and programs shall be continuing,

cooperative, and comprehensive to the degree

appropriate to the complexity of the transporta-

tion problems.

_ Section 511(a)(1) of the Airport and Airway Improve-

ment Act, now codified at 49 U.S.C. §47107(a)(1), pro-

vides that the Secretary of Transportation must receive

written assurances that an “airport will be available for

public use on reasonable conditions and without unjust

discrimination.” See also 14 C.F.R. Part 152, §152, Appdx.

D, 118.

The Colorado Public Airport Authority Law, Colo.

Rev. Stat. §41-3-106(1)(h), grants enumerated powers to

the Authority, including the power to:

. .. provide rules and regulations governing the

use of such airport and facilities and the use of

other property and means of transportation

within or over said airport, landing field, and

navigation facilities; to perform any duties, nec-

essary or consistent with the regulation of air

traffic ... and to exercise such powers as may be

required or consistent with the promotion of

aeronautics and the furtherance of commerce

and navigation by air.

STATEMENT OF THE CASE

This case presents a direct conflict between the deci-

sion of the Tenth Circuit Court of Appeals and the

Supreme Court of the State of Colorado regarding

whether the Arapahoe County Public Airport Authority

(“Authority”) may exclude scheduled passenger service

pursuant to its powers and rights as an airport proprietor

or whether such regulation is preempted by the Airline

Deregulation Act (“ADA”). This case involves the impor-

tant question regarding the scope of federal preemption

under the Airline Deregulation Act (“ADA”), 49 U.S.C.

§41713(b)(1), and the exception for the rights and powers

of an airport proprietor exercising state authority. 49

U.S.C. §41713(b)(3). The ADA does not define proprietor

powers and this Court has never ruled on the precise

scope. City of Burbank v. Lockheed Air Terminal, Inc., 411

U.S. 624, 635-36 n.14 (1973). The resulting extensive and

contradictory litigation between the Federal Aviation

Administration (“FAA”) and airports or between airports

and local communities regarding what powers are pre-

empted and what are not demonstrates that there is a

compelling need for this Court to grant review.

The Colorado Supreme Court has ruled that the

Authority has the power to ban scheduled passenger

service on the grounds that it would interfere with the

safe operation of the airport and the civil aviation needs

of the public. (App. 195a). The Tenth Circuit disagreed

and ruled that the FAA was correct in concluding that the

Authority does not have that power. (App. 19a-21a). At

issue is whether the FAA or the Authority can decide that

the airport must add scheduled passenger service, even if

that would change the essential character of the airport as

a general aviation-reliever facility.?

A. Summary of Proceedings

For almost seven years, the Authority has defended

in state and federal courts its power to exclude scheduled

passenger service based on the classification of the air-

port as a general aviation-reliever facility in the Denver

regional aviation system plan, the limitations of the exis-

ting airport facilities, and the Authority’s determination

that Centennial Airport should not become a full-service

commercial airport, in part because it could not provide

for passenger safety in the event of a crash or fire. When

Centennial Express Airlines (“Centennial Express”) first

sought to begin scheduled passenger service, the Author-

ity adopted a moratorium on its review of applications

and sought direction from the FAA.3 (App. 177a). When

Centennial Express began scheduled passenger service at

Centennial Airport without any operating approval, the

2 A general aviation airport “means an airport that is not a

commercial service airport.” 49 U.S.C. §47134(m). A commercial

service airport “means a public airport in a State that the

Secretary determines has at least 2500 passengers boarding a

year and is receiving scheduled passenger service.” Id.

§47102(7). A reliever airport is intended “to relieve congestion

at a commercial service airport and to provide more general

aviation access to the overall community.” Id. §47102(18).

3 Centennial Express was originally incorporated as

Centennial Express Airlines, Inc. but its operations were under

the corporate name of Golden Eagle Charters, Inc. d/b/a

Centennial Express Airways. C.A. Vol. IX.86. The companies

were owned by the same individual and will be referred to as

Centennial Express.

Authority secured an injunction barring Centennial

Express from flying. (App. 181a). Centennial Express suc-

cessfully appealed to the state court of appeals arguing

that scheduled passenger service was governed by fed-

eral law which preempted any state or local rule and that

FAA had primary jurisdiction. (App. 181a). The Colorado

Supreme Court reversed, finding that federal law did not

preempt the Authority’s proprietary powers and that the

Authority correctly exercised such powers in this case.

(App. 188a-189a).

When the Colorado Supreme Court issued its deci-

sion in April, 1998, the FAA had not taken any action on

the pending discrimination complaints filed by a Centen-

nial Express shareholder in August, 1994 and by Centen-

nial Express in January, 1995, or intervened in the state

court proceedings. On August 21, 1998, the FAA declared

that the Authority was ineligible for federal grants on the

basis that it had violated federal law and the terms of its

grant assurances not to unjustly discriminate among

rates, route or class of service. (App. 29a.) The Authority

appealed the FAA Director’s Determination and Green-

wood Village intervened in the administrative proceed-

ings under 14 C.F.R. §16.207(b). (App. 29a). After a

hearing and initial appeal, the FAA Administrator

affirmed on the same grounds and for the same reasons

as stated in the Director’s Determination. (App. 41a-58a).

The Authority sought review in the Tenth Circuit and

Greenwood Village joined as an intervenor. (App. 1a, 6a).

In affirming the FAA’s order, the Tenth Circuit rejected

the earlier decision of the Colorado Supreme Court,

which upheld the Authority’s ban. (App. 13a-22a).

B. Factual Background

1. Centennial Airport

Centennial Airport was built in 1967 to serve the

growing general aviation needs of the Denver metro-

politan region and to relieve Stapleton International Air-

port of its general aviation traffic. (App. 174a-175a).

Newspaper accounts of open meetings confirm that in

1966 the Arapahoe County approved funding for the

construction of Centennial Airport in order to “serve

general aviation, not scheduled carriers or military

planes.” (App. 175a-176a). At the time, the FAA area

director explained that Centennial was a “much needed

reliever terminal for general aviation.”* (App. 176a).

Arapahoe County established the Authority in 1975

pursuant to the Colorado Public Airport Authority Law

(“CPAAL”), Colo. Rev. Stat. §§41-3-101 to 41-3-108 (1997),

to own and operate Centennial as a political subdivision

of the State. (App. 175a). The Authority owns all of the

land and facilities at Centennial except for two runways

which it leases from Arapahoe County. (App. 175a).

Since 1983, the Authority has received $18.5 million

in federal grants from the FAA to fund airport land

purchases, construction and rehabilitation of runways,

taxiways, navigation aids, buildings, and even signs,

(App. 64a-65a). Funds granted to general aviation-

4 In addition to the statutory definitions, the FAA classifies

airports in terms of their respective transportation roles,

including commercial passenger service, cargo-transport,

transport-reliever, general aviation, and military for funding

purposes. C.A. Vol. IX.82.

reliever airports are discretionary and are administered

under the Airport Improvement Program (“AIP”) estab-

lished by the Airport and Airway Improvement Act of

1982 (the “AAIA”), 49 U.S.C. §§47101-47113. In exchange

for these grants, the Authority has given its assurance

that “it will make its airport available as an airport for

public use on fair and reasonable terms and without

unjust discrimination, to all types, kinds, and classes of

aeronautical uses,” as required by the AAIA, 49 U.S.C.

§47107(a)(1). FAA regulations allow the Authority to

“limit any given type, kind, or class of aeronautical use of

the airport, if such action is necessary for the safe opera-

tion of the airport or necessary to serve the civil aviation

needs of the public.” 14 C.F.R. Part 152, §152, Appdx. D,

718.

Local, regional, and national airport plans all desig-

nate Centennial Airport as a reliever airport for Denver

International Airport (“DIA”), which replaced Stapleton

International in 1995, and not as a commercial passenger

airport. (App. 175a-176a). The Denver Regional Council

of Governments (“DRCOG”), a planning organization of

50 county and municipal governments in the Denver

metropolitan area, designates Centennial as a “non-com-

mercial passenger, transport-category, general aviation

reliever airport.” (App. 73a-74a; 176a). The National Plan

of Integrated Airport Systems (“NPIAS”), and the 1991

and 1999 Secretary of Transportation congressional

reports also list Centennial Airport as a reliever airport

intended to alleviate general aviation congestion at

Denver’s primary commercial airport, not as a commer-

cial service airport. DIA is the only commercial service

eee

emg eRe Fabiani se 6 er

airport which has scheduled passenger service in the

Denver metropolitan area. (App. 176a-177a).

Centennial Airport is one of several hundred general

aviation reliever airports in the United States and most

general aviation-reliever airports do not have commercial

passenger service.° Due to its planned role as a general

aviation reliever airport and based on the strong opposi-

tion from citizens who live near the airport, including the

residents of Greenwood Village, scheduled passenger

operations have never been permitted at Centennial Air-

port; the airport also lacks a terminal, baggage facilities, a

passenger security system, and fire on emergency medi-

cal facilities to deal with passenger plane accidents. (App.

177a).

2. Proposed Scheduled Service

Beginning in 1985, Centennial Express contacted the

Authority about starting scheduled passenger service at

Centennial Airport. (App. 24a). On April 8, 1993, the

Authority imposed a moratorium on the review of appli-

cations for scheduled passenger service while the issue of

whether the Authority may prohibit such operations was

resolved. (App. 3a-4a, 26a). One month later, undaunted

by the moratorium, Centennial Express filed an applica-

tion with the Authority to conduct scheduled passenger

service at Centennial. Centennial Express’ application

> The 1996 National Plan of Integrated Systems (“NPIAS”)

report indicates that there are 285 reliever airports. C.A. Vol.

XIX(21)(r). The 1999 NPIAS report states that there are 334

reliever airports.

proposed to operate 30-seat aircraft directly to eight cities

with up to six flights a day to each city.® (App. 69a-70a).

Centennial Express’ proposed operation, assuming a

sixty-percent load factor, would have resulted in approxi-

mately 630,000 passengers a year at Centennial and

36,000 additional flight operations a year. (App. 67a);

C.A. Vol. X-XIII Tr. pp. 325-330.

In July, 1993, the Authority sent a letter to the United

States Department of Transportation (“DOT”) requesting

policy guidance on the issue, and arguing that federal

airport grant obligations should not be construed to

require Centennial Airport to accept scheduled passenger

service. (App. 126a, 177a). The Authority pointed to the

original, and continued, purpose of the airport as a

reliever to Denver’s passenger airport, the lack of on-the-

ground facilities to safely support passenger operations,

and the impacts of scheduled passenger service would

have on the airport’s capacity. (App. 177a-178a).

Before DOT responded, but more than one year after

the Authority had requested guidance, on September 8,

1994, the Authority adopted a policy barring scheduled

passenger service at Centennial Airport. (App. 4a,

68a-69a, 177a). The policy explains the need to preserve

the airport’s funding category as a “Reliever Airport”

6 14 C.FR. §139.1 limits scheduled passenger service at

uncertificated airports, such as Centennial Airport, to aircraft

with less than 31 seats. In 1996, after several commuter air

carrier accidents, Congress amended the aviation laws to

prohibit scheduled passenger service at uncertificated airports,

except for service in aircraft with less than 10 passenger seats.

49 U.S.C. §44706(b). FAA did not issue rules under this

subsection until Congress required it in 2000.

allel

serving general aviation, and provides in part, “[u]nder

no circumstances shall the Airport Purpose include

scheduled passenger service.” The Authority also

adopted minimum standards, which state that scheduled

passenger service is inconsistent with the “Airport Pur-

pose and will not be allowed to operate at the airport

unless required by final court order.” (App. 68a-69a).

The policy and standards reflected the Authority’s

conclusions that scheduled operations would create

ground congestion at the Airport, would require substan-

tial construction and investment in Centennial’s infra-

structure, including parking, passenger terminal, and

baggage handling facilities, and would exceed the air-

port's capacity. (App. 191a, 194a). Centennial Airport has

a maximum operational capacity of 525,000 annual opera-

tions, and in 1994, its annual operations were about

402,325.7 Centennial Express’ proposed scheduled ser-

vices would have added at least 36,000 operations and

630,000 passengers, and the resulting mix of small, low-

speed private aircraft and large, high-speed commercial

planes would have created unsafe conditions. (App. 67a,

79a); C.A. Vol. X-XIII.91 Tr. pp. 325-330. The Authority

also recognized that Centennial Airport does not have

on-site Air Rescue and Fire team to deal with a passenger

plane crash. (App. 75a).8 Centennial Airport’s role as a

7 C.A. Vol. XVII(14). By 1998, Centennial Airport's

operations increased significantly. In only the first seven

months of 1998, Centennial Airport reported 275,000

operations. (App. 71a).

8 Centennial Airport is served by the South Metro

(formerly Castlewood) Fire District. The station house near the

airport also serves several thousand homes and businesses and

general aviation reliever airport and the above consider-

ations prompted the Authority to conclude that the exclu-

sion of scheduled passenger service was necessary for the

safe operation of the airport and necessary to serve the

civil aviation needs of the public. (App. 49a-52a).

The DOT did not respond to the Authority’s request

for guidance until 17 months later, a few days after

Centennial Express began its short-lived passenger oper-

ation. The DOT letter stated that it was arbitrary to

exclude a particular class of service due to factors not

reasonably related to the impacts of the service, and that

the Authority had not provided sufficient information to

support such a restriction. (App. 178a-179a).

C. State Court Proceedings

1. Two days after Centennial Express’ unauthorized

maiden flight, the Authority obtained a temporary

restraining order in Colorado state court prohibiting Cen-

tennial Express from conducting scheduled passenger

service operations at Centennial Airport. A permanent

injunction was entered against the airline on January 10,

a fire truck would require at least six minutes io reach the

runway in event of a crash or fire. C.A. Vol. VIII.80; C.A. Vol.

XV.3(c). This situation does not meet the National

Transportation Board’s (“NTSB”) recommended three-minute

response time for fire safety, and, therefore, the chance of

survivable crash victims was zero. (App. 75a). While the NTSB

report came out in 1996, it confirmed the concerns voiced by the

Castlewood Fire Chief that passenger deaths were unavoidable

in the event of a fire or crash. (App. 75a).

1995. (App. 4a, 178a, 181a). Centennial Express suc-

cessfully appealed the injunction to the Colorado Court

of Appeals, but a plurality of the Colorado Supreme

Court reversed and reinstated the permanent injunction

on April 13, 1998. (App. at 174a).

2. In the state court, Centennial Express argued that

the FAA had primary jurisdiction and that the ADA

preempted the Authority’s ban on scheduled passenger

service. The Colorado Supreme Court held that the ban

was not preempted, relying on this Court’s direction in

New York State Conference of Blue Cross & Blue Shield Plans

v. Travelers Insurance Co., 514 U.S. 645 (1995) (“Travelers”), -

that a court should first presume “that Congress does not

intend to supplant state law,” id. at 654, and then review

the objectives of the statute to define “the scope of the

state law that Congress understood would survive.” Id. at

656. In applying this analysis, the Colorado Supreme

Court found that the purpose of the ADA preemption

clause was to prevent inconsistent or conflicting state

regulations from interfering with the national air travel

system and ruled that the Authority’s ban on scheduled

passenger service concerns only an area of local and

regional planning, and thus, was not within the intended

scope of the congressional preemption. (App. 188a-189a).

The Colorado Supreme Court also held that the

Authority’s ban fell squarely within the proprietor’s

exception to preemption under the ADA, 49 U.S.C.

§41713(b)(3), which does not prohibit a political subdivi-

sion from “carrying out its proprietary powers and

rights.” (App. 191a). The court reasoned that the CPAAL,

C.R.S. §41-3-106(1)(h), clearly gave the Authority the

power to define and limit the scope of permissible opera-

tions at Centennial Airport. The court held that the ban

on scheduled passenger service was reasonable, because,

inter alia, the prohibited use had never been previously

allowed. (App. 191a-192a).

Lastly, the court held that the Authority was in com-

pliance with its federal grant assurance to make the air-

port available on “fair and reasonable terms and without

unjust discrimination.” (App. 192a-195a). The court

agreed with the Authority’s concerns over the safe opera-

tion of the airport, increased congestion, and insufficient

airport facilities. (App. 194a). The court also emphasized

the importance of Centennial’s status as a general avia-

tion-reliever airport, and agreed that the imposition of

scheduled service would result in increased commercial

operations and force general aviation operators out of the

airport. The court also concluded that the Authority was

not unjustly discriminating against a particular operator

because the ban on scheduled passenger service applied

to all airport users equally. (App. 194a-195a).

D. FAA Proceedings

FAA received two complaints alleging discrimination

and violation of Centennial Airport’s grant assurances,

from Thomas Kehmeier, a shareholder of Centennial

Express in August, 1994, and Centennial Express in Janu-

ary, 1995, respectively. (App. 27a). After FAA adopted 14

C.F.R. Part 16, which established simpler complaint pro-

cedures for enforcement proceedings against federally

funded airports, Centennial Express filed a second com-

plaint under this Part 16 in 1998. (App. 27a). The FAA

consolidated the previous complaints and their adminis-

trative records into a single Part 16 proceeding. (App.

27a).

Notwithstanding the existence of administrative

complaints against Centennial Airport since 1994 and

FAA’s knowledge of the permanent injunction order, the

FAA took no action until after the Colorado Supreme

Court announced its decision in April, 1998. On August

21, 1998, the Director of FAA’s Office of Airport Safety

and Standards issued a determination, finding that: (1)

the FAA was not bound by the Colorado Supreme Court's

decision, because FAA was not a party; (2) the Author-

ity’s ban was contrary to the prohibition on state and

local regulations relating to a price, route or service of an

air carrier, 49 U.S.C. §41713(b)(1); and (3) the Authority

violated the terms of the grant assurance regarding eco-

nomic nondiscrimination, as provided for in 49 U.S.C.

§47107(a)(1), as well as the grant assurance regarding

exclusive rights, as set forth in 49 U.S.C. §§47107(a)(4)

and 40103(e). (App. 139a-161a). The Authority requested

a formal evidentiary hearing in September, 1998. (App.

29a). Greenwood Village intervened as a party under 14

C.F.R. §16.207(b), over FAA’s objections. (App. 29a). The

hearing officer issued his initial decision on December 23,

1998, and affirmed the Director’s determination on all

findings of fact and law. (App. 83a-105a).

The Hearing Officer and later the FAA Administrator

rejected the Authority’s determination of adverse safety,

efficiency, and environmental effects from scheduled ser-

vice on the assumption there was no difference between

charter or air taxi and private non-scheduled operations

i ll els

and scheduled passenger service using the same or simi-

lar aircraft. (App. 93a-95a). The FAA concluded that there

was no evidence that increased operations would result

in safety problems, especially since the Authority had not

banned non-scheduled air taxi or private jet service using

the same type of aircraft. Initial Decision (App. 94a). FAA

also summarily dismissed the Authority’s and Green-

wood Village’s concerns with increased air and ground

traffic and congestion as speculative. (App. 94a). Nor was

the lack of passenger facilities like a public terminal,

baggage handling and security, sufficient to justify the

ban, since on-demand air taxi operations had been pro-

viding services without those facilities. (App. 94a-95a).

E. The Tenth Circuit’s Decision

The Authority petitioned the Tenth Circuit for review

of the FAA’s final agency order. As a party to the pro-

ceeding below, Greenwood Village filed a notice of inter-

vention pursuant to Tenth Circuit Local Rule 15.1. The

jurisdiction of the Tenth Circuit as the court of first

instance was invoked under 49 U.S.C. §§46110 and

47106(d)(3).

In denying the Authority’s petition for review and

affirming the FAA’s order, the Tenth Circuit held that “the

strong policy of federal supremacy in the field of aviation

prevails over full faith and credit principles in this case.”

(App.14a). The Tenth Circuit bluntly stated that the Colo-

rado Supreme Court decision “has no bearing on the FAA

decision before us.” (App. 14a-15a). In direct conflict with

the Colorado Supreme Court’s decision, the Tenth Circuit

“easily” concluded that the ADA, 49 U.S.C. §41713(b)(1),

expressly preempted the Authority’s ban on scheduled

passenger service because it related to a “service” and

“route” of an air carrier. The court relied on precedent in

Morales v. Trans-World Airlines, Inc., 504 U.S. 374, 384

(1992), and American Airlines, Inc. v. Wolens, 513 U.S. 219,

222 (1995), concluding that the ADA preempts all state

enforcement actions having a connection with or refer-

ence to airline rates, routes, or services. (App. 16a-17a).

With regard to the ADA’s proprietor exception, 49

U.S.C. §41713(b)(3), and in stark contrast with the deci-

sion of the Colorado Supreme Court, the Tenth Circuit

took the position that local proprietors play an extremely

limited role in the regulation of aviation. (App. 18a). The

court then concluded that a proprietor can only issue

reasonable, nonarbitrary, and nondiscriminatory rules

that advance the local interest. (App. 18a-19a).

The Tenth Circuit also concluded that the administra-

tive record did not support the Authority’s claim that the

ban on scheduled service was necessary for the safe oper-

ation of the airport or necessary to serve the civil aviation

needs of the public, notwithstanding the Colorado

Supreme Court decision to the contrary. (App. 20a-21a).

In applying a “substantial evidence” standard of review,

the court upheld the FAA’s finding that the Authority

unreasonably exercised its proprietary powers in banning

scheduled passenger service, and held that the Authority

exceeded the legitimate scope of power as an airport

proprietor under 49 U.S.C. §41713(b) and the Supremacy

Clause of the United States Constitution, U.S. Const. art.

V1, cl. 2, and therefore, the ban was preempted by federal

law. (App. 21a).

REASONS FOR GRANTING THE PETITION

I. The Court Should Grant Review on the Important

Question of the ADA’s Preemption Provision and

the Scope of an Airport Proprietor’s Powers In Light

of the Diametrically Opposite Decisions of the

Tenth Circuit and the Colorado Supreme Court

1. The Tenth Circuit’s ruling is in fundamental dis-

agreement with the decision of the Colorado Supreme

Court over the breadth of express or implied preemption

under the ADA and the permissible scope of an airport

proprietor’s powers and rights. This conflict is well

suited for resolution as the underlying facts arise from

the same events and legal controversy and resolution

turns on the legal questions of whether the ADA pre-

empts the airport proprietor’s authority and whether the

Authority’s scheduled passenger service ban is unjust

discrimination.

The ADA preemption clause provides that no state or

political subdivision may “enact or enforce a law, regula-

tion, or other provision having the force and effect of law

related to a price, route, or service of an air carrier that

may provide air transportation under this subpart.” 49

U.S.C. §41713(b)(1). The ADA qualifies this preemption

by stating: “This subsection does not limit a State, politi-

cal subdivision of a State, or political authority . . . that

owns or operates an airport served by an air carrier

holding a certificate issued by the Secretary of Transpor-

tation from carrying out its proprietary powers and

rights.” 49 U.S.C. §41713(b)(3). Colorado law grants the

Authority broad powers to regulate the use of airport

land and facilities, as well as air traffic. C.R.S.

§41-3-106(h).

2. The Colorado Supreme Court began its analysis

of the preemption issue with this Court’s decision in

Morales, which held, relying on an earlier interpretation

of similar language in the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. §1144(a), that

“state enforcement actions having a connection with or

reference to airline rates, routes and services” were pre-

empted by the ADA. (App. 186a-188a citing Morales, 504

U.S. at 384). In ruling that the Authority’s ban was not

preempted, however, the Colorado Supreme Court turned

to the more recent Travelers decision in which this Court

explained that it may have interpreted the “relating to”

language in prior ERISA cases, too broadly and that

ERISA’s preemption provision should be applied in a

more limited fashion.

The Colorado Supreme Court applied the Travelers

decision to analyze the preemption question “with the

starting presumption that Congress does not intend to

supplant state law,” 514 U.S. at 654, and to examine the

statutory objectives as a guide to determine “the scope of

the state law that Congress understood would survive.”

Id. at 656. The Colorado Supreme Court found that the

ADA preemption clause reflected Congress’ concern that

individual states would pass inconsistent and conflicting

laws regulating the airline industry. (App. 188a-189a).

The court then held that the Authority’s ban did not

undermine the purpose of the ADA because it concerned

an area of local and regional planning which would not

lead to inconsistent or conflicting state regulation. (App.

188a-189a). It only applied to Centennial’s regional role

as a general aviation reliever for DIA, Denver’s primary

commercial airport. (App. 188a-189a).

3. In contrast, the Tenth Circuit’s preemption anal-

ysis begins and ends with Morales and American Airlines v.

Wolens, and does not use the analysis required under the

Travelers decision. (App. 16a-17a). Thus, the Tenth Circuit

did not recognize the presumption against preemption

established in Travelers, and failed to consider whether

the Authority’s ban contradicted the ADA’s objectives

and purposes. Instead, the Tenth Circuit summarily con-

cluded that the Authority’s ban is connected with and

relates to both services and routes and, thus, was pre-

empted. (App. 17a).

4. The Tenth Circuit and the Colorado Supreme

Court also fundamentally disagree on the permissible

scope of an airport proprietor’s rights and powers. The

Colorado Supreme Court held that the Authority’s ban on

scheduled passenger service did not relate to “a price,

route, or service of an air carrier” under 49 U.S.C.

§41713(b)(1), because it did not concern typical service-

oriented tasks, such as ticketing, boarding procedures,

providing meals and drinks to passengers, and baggage

handling. (App. 189a). Similarly, the court concluded, the

Authority was not regulating fares or routes because the

ban on scheduled service did not “delineate what airlines

can charge or where they can fly.” (App. 189a).

The Tenth Circuit disagreed, holding that a prohibi-

tion on all commercial passenger service was a regulation

of routes. The Tenth Circuit held that the Authority affir-

matively curtailed an air carrier’s business decision to

offer a particular service in a particular market (i.e.,

route), and that the ban also “significantly impacts the

scope of services available to public citizens desiring to

travel by air from Centennial Airport.” (App. 17a). Iron-

ically, both courts cite to the same case, Hodges v. Delta

Airlines, Inc., 44 F.3d 334, 340 (5th Cir. 1995), in reaching

opposite conclusions. (App. 17a, 189a, respectively).

These different outcomes only underscore the significant

confusion and inconsistent interpretations on this ques-

tion.

5. This case also raises the legal question of the

meaning and scope of the term “service” in the ADA.

Three justices would have granted certiorari in Duncan v.

Northwest Airlines, Inc., 208 F.3d 1112 (9th Cir. 2000), cert.

denied sub nom. Northwest Airlines v. Duncan, 121 S.Ct. 650,

__ U.S. __ (2000), because the Courts of Appeals are

divided on the meaning of the term “service” in 49 U.S.C.

§41713(b)(1), and this is an important issue, which has

broad ramifications. Id.

Il. This Court Should Grant Review To Resolve The

Inconsistency Between Two 1995 Decisions of This

Court: American Airlines v. Wolens and Travelers

1. In American Airlines v. Wolens, this Court applied

the Morales decision to hold that the ADA preempted

consumer litigation against the airline in state court on

_ fraud, because the plaintiffs’ claims related to “ ‘rates’,

i.e., American’s charges in the form of mileage credits for

free tickets and upgrades, and to ‘services,’ 1.e., access to

flights and class-of-service upgrades” charged by the

defendant airline. American Airlines, Inc. v. Wolens, 513

U.S. at 223, citing Morales, 504 U.S. at 378-379. Several

months later, this Court in Travelers held that the previous

decisions went too far in finding preemption based on the

“relating to” language and adopted a different analysis,

which recognized a presumption against preemption.

Travelers, 514 U.S. at 656. This Court in Travelers further

held that preemption issues must be analyzed by deter-

mining whether the state law contradicted the congres-

sional objectives in enacting the preemption provision. Id.

The Travelers decision did not directly discuss the Ameri-

can Airlines v. Wolens or Morales decisions but narrowed

the analysis used in Morales, upon which the decision

rested.

2. The different approaches taken by the Tenth Cir-

cuit and the Colorado Supreme Court in attempting to

define the scope of preemption under the ADA clearly

illustrate the potential contradiction between American

Airlines v. Wolens and Travelers, when construing ADA

preemption. In holding that the Authority’s ban on

scheduled passenger service was not preempted by the

ADA, the Colorado Supreme Court began its analysis

with the broad test under Morales but then turned directly

to Travelers’ more narrow approach based on an examina-

tion of Congress’ purpose in enacting the ADA preemp-

tion provision. (App. 186a-188a). The Colorado Supreme

Court found that Congress adopted the ADA preemption

clause out of concern over the potential for conflicting

state laws attempting to regulate the airline business.

(App. 185a). It then wrote: “Because the regulation con-

cerns an area of local and regional planning, it will not

lead to inconsistent or conflicting state regulations.

Therefore, the regulation does not undermine the pur-

pose of the ADA preemption provision.” (App.

188a-189a). The Colorado Supreme Court did not discuss

the American Airlines v. Wolens decision in its opinion.

The Tenth Circuit, on the other hand, found that the

ADA preempted the Authority’s ban on scheduled pas-

senger service flights. (App. 16a-17a). In its opinion, the

Tenth Circuit applied the broad Morales test in the ADA

context, citing-American Airlines v. Wolens. The Tenth Cir-

cuit wrote: “The Supreme Court has interpreted this pro-

vision broadly to preempt all ‘State enforcement actions

having a connection with or reference to airline “rates,

routes, or services.” ’ .. . We easily conclude the Author-

ity’s ban is connected with and relates to both services

and routes. By banning scheduled passenger service, the

Authority has affirmatively curtailed an air carrier’s busi-

ness decision to offer a particular service in a particular

market. The ban also significantly impacts the scope of

services available to public citizens desiring to travel by

air from Centennial Airport.” (App. 16a-17a). The Tenth

Circuit does not discuss the Travelers decision in its opin-

ion.

Thus, the Tenth Circuit and the Colorado Supreme

Court reached separate, contradictory and diametrically

opposed decisions employing the standards set by this

Court. Given the importance of the ADA and preemption

issues generally, the Court needs to resolve this question.

3. The Tenth Circuit could not have found preemp-

tion had it followed the analytical process required under

Travelers. 514 U.S. at 655. While Congress intended the

ADA’s preemption provision to ensure that States would

not undo federal deregulation by adopting their own

regulations, 49 U.S.C. §41713(b)(1); Morales, 504 U.S. at -

378, the ADA “does not limit” a state or local government

from “carrying out its proprietary powers and rights.” 49

U.S.C. §41713(b)(3). Congress did not intend “to limit in

any way the normal exercise of a proprietor’s powers to

determine the level and nature of service to be provided

at airports, subject to constitutional and statutory limita-

tions... ” 124 Cone. Rec. 38,526 (1978) (statement of

Cong. Anderson). See also Midway Airlines, Inc. v. County

of Westchester, N.Y., 584 F. Supp. 436, 440 n.18 (S.D. N.Y

1984), quoting 124 Conc. Rec. 37,419 (1978) (remarks of

Sen. Kennedy) (“The legislative history is unmistakably

clear” that Congress did not intend to “interfere with

‘long recognized powers of the airport operators to deal

with noise and other environmental problems at the local

level’ ”).

Congress also intended to preserve proprietary

powers as they existed before the enactment of the ADA.

A Senate Report, for example, states that the preemption

provision “should not be construed to affect or limit

existing proprietary rights of airport operators to man-

age, operate, or regulate airports.” Air Transportation

Ass'n of America v. Crotti, 389 F. Supp. 58, 64 (N.D. Cal.

1975), citing S. Rep. No. 95-631, 95th Conc., 2nd Sess. 39,

99 (1978). In this context, a pre-ADA case explains that

“such proprietary control necessarily includes the basic

right to determine the type of air service a given airport

proprietor wants its facilities to provide, as well as the

type of aircraft to utilize those facilities.” Id.

III. This Court Needs to Clarify the Scope of An Air-

port Proprietor’s Powers Given the Contradictory

Decisions of the State and Federal Courts

There is a compelling need for this Court to more

precisely define the scope of the airport proprietor’s

exception to preemption under the ADA to resolve the

conflict in the case law, to guide the FAA and regional

and local authorities when planning for and operating the

nation’s airports.

1. This is an important question, which should be

resolved by this Court. None of the preemption cases,

Morales, American Airlines v. Wolens, or Travelers con-

cerned the scope of an airport proprietor’s rights and

powers under the ADA. This Court has never defined the

scope of the airport proprietor’s exception, City of Bur-

bank v. Lockheed Air Terminal, Inc., 411 U.S. at 635-36 n.14.

(“We do not consider here what limits, if any, apply to a

municipality as a proprietor”). When Congress adopted

the ADA in 1978, it did not define the proprietor’s rights

and powers. The lack of a clear definition has led to

widely disparate decisions by the federal and state

courts.

2. This case illustrates the conflict. The Colorado

Supreme Court’s held:

[We] believe that an airport proprietor’s ban

on scheduled passenger service falls squarely

within the proprietor’s exception. While regula-

tions concerning aircraft noise and ground con-

gestion restrict the manner in which airport

users conduct their operations, a ban on sched-

uled service seeks to accomplish a more funda-

mental goal in setting the boundaries of

permissible operations at the airport. The power

to control an airport's size exists at the core of the

proprietor’s function and is especially strong where,

as here, the prohibited use has never been

allowed. ...

(App. 191a-192a) (emphasis added).

The Colorado Supreme Court looked to the delega-

tion of an airport authority’s powers as delineated by

state law in holding that the Authority has the power to

define and limit the scope of permissible operations at

Centennial Airport. (App. 192a). Under the CPAAL, the

Authority is empowered to “provide rules and regula-

tions governing the use of such airport and facilities,” to

“perform any duties, necessary or consistent with the

regulation of air traffic,” and to “exercise such powers as

may be required or consistent with the promotion of

aeronautics and the furtherance of commerce and naviga-

tion by air.” C.R.S. §41-3-106(1)(h). In contrast, the Tenth

Circuit “recognized that local proprietors play an

extremely limited role in the regulation of aviation,”

(App. 18a quoting American Airlines, Inc. v. Dept. of

Transp., 202 F.3d 788, 806 (5th Cir.), cert. denied, 530 U.S.

1274 (2000)).

3. Nor is this an isolated issue. State and federal

courts reach very different conclusions when reviewing

the exercise of an airport’s proprietary powers under 49

U.S.C. §41713(b)(3). While the Tenth Circuit held that the

Authority could not ban scheduled passenger service,

other courts have held that an airport can deny year-long

operating authority, Montauk-Caribbean Airways, Inc. v.

Hope, 784 F.2d 91, 97 (2d Cir. 1986), or allow wid one

Ee gate & See See ae 0 ae

carrier to serve the airport, Sea Air Shuttle Corp. v. Virgin

Islands Port Authority, 800 F. Supp. 293, 304 (D. V.I. 1992).

The Tenth Circuit rejected the Authority’s rationale

that scheduled passenger service contradicted Centennial

Airport’s general aviation-reliever role in regional and

local plans and that the lack of on-the-ground facilities

for passengers made such service unsafe or unsuited to

Centennial Airport. However, several other courts recog-

nize that these functions which roughly correlate to “on-

the-ground” facilities and activities, such as fire and res-

cue, land use, environmental permits, and airport facili-

ties, like hangars, parking lots, and taxiways, are

uniquely those of the airport proprietor. Midway Airlines,

Inc. v. County of Westchester, 584 F. Supp. at 440 n.18

(airport proprietor has a legitimate need to ensure the

safety of passengers while on the ground).

While the Tenth Circuit also rejected the Authority’s

decision that Centennial Airport’s capacity, traffic and

congestion, and ground facilities made scheduled pas-

senger service inappropriate, other courts have upheld

similar exclusions. For example, LaGuardia Airport's

perimeter rule, which prohibited airlines from using the

airport for nonstop flights beyond a set distance, is valid.

Western Airlines, Inc. v. Port Auth. of N.Y. & N.J., 658

F. Supp. 952, 956-57 (S.D. N.Y. 1986), aff'd, 817 F.2d 222

(2d Cir. 1987), cert. denied sub nom. Delta Airlines, Inc. v.

Port Auth. of N.Y. & N.J., 485 U.S. 1006 (1988). The stated

purpose of the rule was to reduce ground congestion and

to maintain LaGuardia as a short and medium haul air-

port (its role in New York’s regional plan) by diverting

longer haul air traffic to other airports. Id. at 953. In

upholding the rule as a valid exercise of an airport's

proprietary powers, the court noted that the scope of

proprietary powers often arose in the context of noise

regulations, but that the ADA “does not expressly limit

proprietary powers to the regulation of noise, although

presumably Congress would have so limited the section if

that is what it had in mind.” Id. at 957. The court added,

“A proprietor’s interest in regulating ground congestion

at its airports would appear to be at the core of the

proprietor’s function as airport manager, perhaps even

more so than the regulation of noise.” Id. See also Air

Transport Ass'n of America v. City and County of San Fran-

cisco, 992 F. Supp. 1149, 1188 (N.D. Cal. 1998).

Some courts take a contrary view, reflecting FAA’s

narrow viewpoint of a proprietor’s powers. City and

County of San Francisco v. FAA, 942 F.2d 1391, 1394-1397

(9th Cir. 1991), cert. denied, 503 U.S. 983 (1992) (airport

could not exclude certain types of air cargo jets); New

England Legal Found. v. Massachusetts Port Auth., 883 F. 2d

157, 170 (1st Cir. 1989) (setting aside landing fees as

discriminatory); and British Airways Bd. v. Port Auth. of

N.Y. & N.J., 564 F.2d 1002, 1011 (2d Cir. 1977) (proprietary

powers very limited). However, other decisions show that

an airport proprietor has broad authority over land use

planning at the airport, law enforcement, approval of

tenants and leases, and fire fighting. See, e.g., City of

Burbank v. Burbank Glendale-Pasadena Airport Auth., 85 Cal.

Rptr.2d 28, 36 (Cal. Ct. App. 1999); State by Minnesota

Public Lobby v. Metropolitan Airports, 520 N.W.2d 388, 392

(Minn. 1994) (distinguishing between noise rules adopted

by the state versus those by the airport proprietor);

Gustafson v. City of Lake Angelus, 76 F.3d 778, 786-87 (6th

Cir. 1996).

Even the FAA can be inconsistent. In Aircraft Owners

and Pilots Ass’n v. Hinson, 102 F.3d 1421, 1425 (7th Cir.

1996), the FAA withdrew its opposition to Chicago’s deci-

sion to close Meigs Field and decided not to compel the

city to operate the airport pursuant to its grant agree-

ment.

4. Whether the proprietor’s exception allows a local

airport proprietor to regulate the scope of permissible

operations based on regional planning objectives is a

fundamentally important issue that directly affects the

334 general aviation reliever airports listed in the NPIAS.

FAA approves and funds regional and national aviation

plans which assign specific transportation roles to the

public airports within a given community or region. The

Denver regional plan limits commercial passenger service

to DIA and classifies all regional airports, including Cen-

tennial Airport, as reliever airports. This is typical of

aviation plans throughout the country where other gen-

eral aviation airports are assigned reliever-non-passenger

roles. If FAA can unilaterally require an airport to change

its role without regard to the regional and local aviation

transportation plans (which ironically are funded and

approved by FAA), then the airport proprietor who par-

ticipates in and relies on the plan has lost powers clearly

provided to it under federal and state law.

The implications also extend far beyond local airport

proprietors and their users. Communities like the City of

Greenwood Village, which surround or are near these

airports, rely on regional transportation decisions and the

allocation of air service in making comprehensive plan-

ning and zoning decisions which include the location of

residential development and the construction of schools.

These communities need certainty regarding both the

location and purpose of transportation facilities and need

to be able to rely on those decisions in making their own

governmental decisions.

CONCLUSION

For the foregoing reasons, the petition for writ of

certiorari should be granted.

Respectfully submitted,

CONSTANCE E. - BROOKS

Counsel of Record

MICHAEL B. MARINOVICH

C.E. Brooxs & Associates, P.C.

999 18th Street, Suite 1605

Denver, Colorado 80202

(303) 297-9100

Counsel for Petitioner

August 6, 2000.

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

ARAPAHOE COUNTY PUBLIC

AIRPORT AUTHORITY, a

political subdivision of the State

of Colorado, No. 99-9508

Petitioner,

FEDERAL AVIATION

ADMINISTRATION,

Respondent,

CITY OF GREENWOOD

VILLAGE,

Intervenor.

REGIONAL AIRLINE

ASSOCIATION,

Amicus Curiae.

Appeal from the Federal Aviation Administration

(Filed March 9, 2001)

Brian A. Magoon (Ronald S. Loser with him on the briefs)

of Brega & Winters, P.C., Denver, Colorado, for Petitioner.

Christine N. Kohl (David W. Ogden, Acting Assistant

Attorney General, and Michael Jay Singer, Department of

I Coutinho? Mie beet PP PNR eS alte eh

Justice, with her on the brief), Department of Justice,

Washington, DC, for Respondent.

-Constance E. Brooks (Michael B. Marinovich and Chris-

tine A. Longhitano with her on the briefs) of C.E. Brooks

& Associates, P.C., Denver, Colorado, for Intervenor.

Before BRORBY and McWILLIAMS, Circuit Judges, and

ELLISON,” District Judge. |

BRORBY, Circuit Judge.

This case involves the Federal Aviation Administra-

tion’s (FAA) decision to suspend petitioner’s eligibility

for discretionary federal grants, based on claimed viola-

tions of federal statutes and existing grant provisions.

Petitioner Arapahoe County Public Airport Authority

(Authority) and Intervenor City of Greenwood Village

(City) urge us to set aside the decision for various rea-

sons, not the least of which is the decision is incompatible

with an earlier opinion issued by the Colorado Supreme

Court. We exercise jurisdiction pursuant to 49 U.S.C.

§§ 46110 and 47106(d)(3). For the reasons set forth below,

we deny the Petition for Review and affirm the FAA’s

order.

* The Honorable James O. Ellison, Senior United States

District Judge for the Northern District of Oklahoma, sitting by

designation.

BACKGROUND!

The Authority owns and operates Centennial Air-

port, which is located just south of Denver, Colorado.

Operations at the airport historically have consisted of

“unscheduled” commercial passenger and cargo service.

In the course of operating the airport, the Authority has

accepted millions of dollars in discretionary grants from

the FAA. As part of the grant process, the Authority

made assurances the airport would be “available . . . for

public use on reasonable terms and without unjust dis-

crimination, to any person, firm, or corporation to con-

duct or to engage in any aeronautical activity for

furnishing services to the public at the airport.” However,

within the same grant assurance, the FAA also recognized

the Authority “may prohibit or limit any given type, kind

or class of aeronautical use . . . if such action is necessary

for the safe operation of the airport or necessary to serve

the civil aviation needs of the public.”

Over the course of several years, Centennial Express

Airlines (Centennial Express) divulged an interest in pro-

viding scheduled passenger service at Centennial Air-

port, culminating in an official application in May 1993.

Centennial Express submitted its application despite the

Authority’s actions one month earlier placing a mor-

atorium on the consideration of applications for sched-

uled passenger service. The moratorium was designed to

1 The Authority states in its brief the only issues on appeal

are legal in nature. Therefore, the facts presented in the

background section of this opinion draw extensively from the

FAA’s decision.

provide the Authority time to determine whether it could

legally prohibit scheduled serwice. While the Authority

asked for guidance from the FAA on the question, it

ultimately decided to completely ban all scheduled air

carrier service without waiting to hear from the FAA.? In

contravention of the Authority’s ban, Centennial Express

initiated scheduled passenger service between Centennial

Airport and Dalhart, Texas on December 20, 1994. The

Authority immediately sought and obtained a temporary

injunction in state district court to prevent Centennial

Express from offering scheduled passenger service.

The state district court eventually granted the

Authority a permanent injunction. Centennial Express

successfully appealed the injunction to the Colorado

Court of Appeals, but a plurality of the Colorado

Supreme Court reversed the state court of appeals and

reinstated the permanent injunction. See Arapahoe County

Pub. Airport Auth. v. Centennial Express Airlines, Inc., 956

P.2d 587 (Colo. 1998) (en banc). The Colorado Supreme

Court issued its opinion despite concurrent complaints

on file with the FAA, and in so doing decided federal law

2 The Authority wrote the FAA in July 1993, and adopted

the ban in September 1994. The FAA responded in December

1994. The FAA response was not favorable to the ba.., stating:

“In addressing similar cases in the past, [the] FAA has found it

arbitrary to exclude any particular class of service due to factors

that are not reasonably related to the impacts of that service.”

The FAA also found the Authority submitted insufficient

information “to demonstrate that a restriction of any particular

category of operation could be adequately supported,” and

concluded “existing policy on airport access must be complied

with.”

did not preempt the Authority’s ban on scheduled pas-

senger service and the ban dic not violate the terms of

‘the non-discrimination grant assurances. See id. at 592-97.

The FAA was not a party to this state litigation.

As alluded to in the previous paragraph, the agency

decision-making process under review here got its start at

the same time as the state litigation, and involves the

same basic facts. Thomas Kehmeier, a Centennial Express

stockholder, filed the first complaint with the FAA in

August 1994, claiming the Authority’s ban violated fed-

eral law and the grant assurances. Centennial Express

filed its own complaint in January 1995. As the Colorado

Supreme Court noted, the FAA had yet to rule on either

complaint in 1998 when the court issued its opinion.

Arapahoe County Pub. Airport Auth., 956 P.2d at 592. These

initial complaints were filed pursuant to 14 C.FR. Part 13.

New rules, found at 14 C.FR. Part 16, and entitled “Rules

of Practice for Federally-Assisted Airport Enforcement

Proceedings,” went into effect December 16, 1996. Cen-

tennial Express filed a second complaint under the new

part 16 rules on February 23, 1998, just two months prior

to the Colorado Supreme Court’s decision. Centennial

Express filed the second complaint even though the com-

pany had voluntarily surrendered its FAA operating cer-

tificate in January 1996.

After consolidating the three complaints, and despite

the then-existing Colorado Supreme Court decision to the

contrary, FAA’s Director of the Office of Airport Safety

and Standards issued an initial determination on August

21, 1998, concluding the ban violated the grant assur-

ances and federal law. The Authority requested a hear-

ing,* which was held over two days in November 1998,

and resulted in an affirmance of the director’s initial

decision. The Authority and the City subsequently

appealed the hearing officer’s decision to the FAA Asso-

ciate Administrator for Airports, who issued the FAA’s

Final Agency Decision and Order affirming the previous

decisions. The Authority then filed the current petition

for review, and the City filed a Notice of Intervention

pursuant to 10th Circuit Rule 15.2(A).4

> The hearing officer granted the City’s motion to

intervene; therefore, the City also participated in the hearing.

4 The FAA argues the City is without statutory authority to

intervene in this review. We assume for purposes of this

opinion, but do not decide, that the City’s intervention is

proper. However, as an intervening party, the City may join

issue only on matters brought before the court by the Authority

as petitioner. See Illinois Bell Tel. Co. v. FCC, 911 F.2d 776, 786

(D.C. Cir. 1990) (citing Vinson v. Washington Gas Light Co., 321

U.S. 489, 498 (1944) (“an intervenor is admitted to the

proceeding as it stands, and in respect of the pending issues, but

is not permitted to enlarge those issues”)). We acknowledge this

limitation is a prudential determination as opposed to a

mandate of rule or statute, see Synovus Fin. Corp. v. Board of

Governors, 952 F.2d 426, 433-34 (D.C. Cir. 1991); nonetheless, we

agree it should be avoided only in “extraordinary cases.” New

York v. Reilly, 969 F.2d 1147, 1154.n.11 (D.C. Cir. 1992). This is not

an extraordinary case. The City’s issues, as a whole, are directed

toward the complainants’ standing, alleged due process

deficiencies, mootness and laches. Although the City summarily

characterizes these issues as related to “prudential

jurisdictional deficiencies,” after careful examination we

conclude the City’s issues are not “essential predicates” or

substantively connected to the issues the Authority presented in

its brief and Petition for Review. See United States Tel. Ass'n v.

STANDARD OF REVIEW

Our review of the FAA’s final decision and order

suspending the Authority’s eligibility for discretionary

federal grants is governed by the Administrative Pro-

cedure Act, 5 U.S.C. § 706.5 Within this context, we

review matters of law de novo. See Wyoming Farm Bureau

Fed'n v. Babbitt, 199 F.3d 1224, 1231 (10th Cir. 2000). How-

ever, the FAA’s findings of fact are conclusive if sup-

ported by substantial evidence. See id; 49 U.S.C.

§ 46110(c). The substantial-evidence standard does not

allow us to displace the FAA’s “choice between two fairly

conflicting views, even though the court would justifiably

have made a different choice had the matter been before

it de novo.” Babbitt, 199 F.3d at 1231 (quotation marks and

citation omitted); see also Trimmer v. United States Dep't of

Labor, 174 F.3d 1098, 1102 (10th Cir. 1999) (same).

FCC, 188 F.3d 521, 530-31 (D.C. Cir. 1999). Moreover, the City

presents no reason why it could not have petitioned tor review

in its own right. See id. at 531. We therefore decline to consider

issues raised by the City but not the Authority.

5 A reviewing court may set aside an agency determination

pursuant to 5 U.S.C. § 706(2) if it is (a) arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law; (b)

contrary to constitutional right, power, privilege, or immunity;

or short of statutory right; (d) without observance of procedure

required by law; (e) unsupported by substantial evidence; or (f)

unwarranted by the facts to the extent they are subject to de

novo review. 5 U.S.C. § 706(2); see Lewis v. Babbitt, 998 F.2d 880,

881-82 (10th Cir. 1993).

ANALYSIS

The Authority contends the final FAA decision and

order should be set aside for the following three “errors

of law:” (1) the Colorado Supreme Court opinion reinstat-

ing the permanent injunction against Centennial Express

“is final, preclusive and dispositive;” (2) the Authority

and not the FAA determines whether scheduled pas-

senger service will be prohibited as necessary for the safe

operation of the airport and to serve the public’s civil

aviation needs; and (3) any allowable scheduled pas-

senger service must be limited to aircraft designed for

nine or fewer passenger seats.© We address each alleged

error in turn.

The Colorado Supreme Court Decision

The Authority argues, pursuant to the Full Faith and

Credit Act, 28 U.S.C. § 1738, that Arapahoe County Public

Airport Authority v. Centennial Express Airlines, 956 P.2d

587, “is final, preclusive and dispositive” of the issues

resolved in the FAA’s final order. The Full Faith and

Credit Act provides that the “judicial proceedings of any

court of any such State . . . shall have the same full faith

and credit in every court within the United States . . . as

6 The City, as Intervenor, joins in this third issue,

contending “FAA acted outside or abused its authority when it

prosecuted [the Authority] for banning scheduled passenger

service after Congress amended the federal aviation laws to

prohibit scheduled passenger service of more than 10 seats at

uncertified airports and to further provide that no airport can be

compelled to secure a certificate.”

they have by law or usage in the courts of such State .. .

from which they are taken.” 28 U.S.C. § 1738.

The FAA asserts 28 U.S.C. § 1738 is not technically

implicated here because it is an agency rather than a

court, see American Airlines, Inc. v. Dep’t of Transp., 202

F.3d 788, 799 (Sth Cir.), cert. denied, 120 S.Ct. 2762 (2000);

however, “[b]ecause most agency decisions may be

reviewed in federal courts, and those courts must follow

section 1738, [the FAA] therefore assume[s] that a com-

mon law rule of preclusion, like that embodied in section

1738, governs federal agency proceedings.” We agree

with the FAA and the Fifth Circuit that the preclusive

effect, if any, of the Colorado Supreme Court decision

derives from the common law doctrines of res judicata

and issue preclusion (collateral estoppel), not § 1738. See

id. at 799-800 & n.6. We further agree these common law

doctrines extending full faith and credit to state court

determinations are trumped by the Supremacy Clause if

the effect of the state court judgment or decree is to

restrain the exercise of the United States’ sovereign

power by imposing requirements that are contrary to

important and established federal policy. See id. at 800; see

also Midgett v. United States, 603 F.2d 835, 845 (Ct.Cl.

1979). Balancing, de novo,” the common law justification

a ne ee ied

7 See American Airlines, 202 F.3d at 799 (declining to defer to

agency’s ruling on full faith and credit issue); see also Adams

Fruit Co., Inc. v. Barrett, 494 U.S. 638, 650 (1990) (acknowledging

a reviewing court need not afford deference to agency

interpretation of statute or law it is not charged with

administering); American Forest & Paper Ass'n v. EPA, 137 F.3d

. 291, 297 (5th Cir. 1998) (same).

10a

for full faith and credit with the competing policy sup-

porting the Supremacy Clause, we conclude the FAA is

not required to give preclusive effect to the Colorado

Supreme Court’s decision in Arapahoe County Public Air-

port Authority v. Centennial Express Airlines.

We begin our analysis on the full faith and credit side

of the equation. A close look at the Colorado Supreme

Court decision reveals the primary issue before that court

was the propriety of a permanent injunction enjoining

Centennial Express from conducting scheduled air carrier

service in and out of Centennial Airport. As such, the

Colorado Supreme Court focused from the outset on Cen-

tennial Express’ conduct in contravention of state regula-

tions. Arapahoe County Pub. Airport Auth., 956 P.2d at 593,

596 (stating that to defer to federal agency jurisdiction

would be to “allow future airport users to unilaterally

conduct and continue operations in violation of airport

rules so long as they implicate federal jurisdiction in

some way”). To the extent the Colorado Supreme Court

addressed federal preemption issues and the Authority’s

obligations under the federal grant assurances, it did so

in the narrow context of rejecting Centennial Express’

defenses. Id. at 593-97. Further examination reveals that

the court’s conclusion the Authority did not violate the

terms of the federal grant assurances lacks the depth and

breadth of analysis given to those same issues by the

Director of the FAA’s Office of Airport Safety and Stan-

dards, the Hearing Officer, and ultimately, the Final

Agency Decision and Order issued by the Associate

Administrator for Airports. Id. at 596-97.

The credit to be given to the state court opinion is

further influenced by the fact the Colorado Supreme

lla

Court was seriously divided in this case, as evidenced by

its plurality opinion — three of seven justices participated

in the majority, one justice concurred, two justices dissen-

ted, and one justice abstained. Id. at 597. Of particular

note here, Justice Scott, while concurring in the result,

considered it “inappropriate” to address preemption in

light of the fact the FAA had not yet acted under its

authority. Id. at 597-98 (Scott, J. concurring). He justified

the Colorado Supreme Court’s holding based on its inher-

ent authority to “issue an injunction to preserve the sta-

tus quo pending resolution of the dispute in an

appropriate forum.” Id. at 599. Given Justice Scott’s posi-

tion, and the additional fact the two dissenting justices

concluded that “in keeping with the doctrine of primary

jurisdiction” the FAA is the appropriate forum to deter-

mine issues pertaining to preemption and grant compli-

ance under federal statute, id. at 599 (Bender, J. and

Martinez, J. dissenting), only half the participating court

(three of six) ostensibly precluded the FAA from issuing a

contrary ruling.

Last, but certainly not least, the FAA was not a party

to, nor in privity with a party to, the state court proceed-

ings. The FAA’s interest in fulfilling its statutory respon-

sibility to ensure airport compliance with federal aviation

laws and grant assurances, and to protect the public

interest, is obviously independent of the interests of any

particular air carrier (e.g., Centennial). Mere knowledge

of the state court proceedings did not oblige the FAA to

participate in those proceedings. See Martin v. Wilks, 490

U.S. 755, 762-65 (1989). Without the FAA as a party, the

Colorado Supreme Court decision does not satisfy a fun-

damental requirement of issue preclusion under federal

12a

or Colorado law. See, e.g., Baker v. General Motors Corp.,

522 U.S. 222, 237 n.11 (1998) (“In no event. . . can issue

preclusion be invoked against one who did not partici-

pate in the prior adjudication.”); Meredith v. Beech Aircraft

Corp., 18 F.3d 890, 895 (10th Cir. 1994) (“collateral estop-

pel fails here simply because [plaintiff] was not a party to

the first suit”); O’Neill v. Simpson, 958 P.2d 1121, 1123 n.5

(Colo. 1998) (en banc) (“party against whom estoppel is

asserted [must have] been a party to or... in privity with

a party in the prior proceeding”). This, together with the

other circumstances discussed above, weighs heavily

against extending full faith and credit to Arapahoe County

Public Airport Authority v. Centennial Express Airlines.® See,

8 The Authority’s reliance on Town of Deerfield v. FCC, 992

F.2d 420 (2d Cir. 1993), is misplaced. In Deerfield, the FCC was

not a party in the state or federal court proceedings initiated by

Mr. Joseph Carino to challenge municipal zoning regulations

prohibiting the installation of a satellite dish in his backyard.

Because the FCC did not want to become “a national zoning

board,” it required complainants like Mr. Carino to pursue other

legal remedies before filing administrative complaints. Id. at

423. Only after the federal district court gave preclusive effect to

the state court ruling in favor of the town, did the FCC “review”

the federal district court’s decision and issue an order, which,

contrary to the federal district court, ruled that FCC regulations

preempted the town’s zoning regulation. Id. at 426. The Second

Circuit Court of Appeals held the FCC impermissibly rendered

the federal Article III court’s decision a mere advisory opinion.

Id. at 428-30.

The complexion of this case obviously is very different from

Deerfield. In Deerfield, the FCC acted as a disinterested

adjudicator to resolve a zoning dispute between two outside

parties; the FCC never disputed state or federal jurisdiction

over Mr. Carino’s lawsuits. In this case, the FAA became an

interested party in the administrative proceedings to determine

13a

e.g., Acacia Villa v. United States, 24 Cl. Ct. 445, 448 (1991)

(acknowledging the doctrine of issue preclusion is “based

on a court’s exercise of its equitable powers,” and “is not

mandated in the Constitution or by statute”); United

States v. Kaytso, 868 F.2d 1020, 1022 (9th Cir. 1989) (stating

“[e]ven when the elements of collateral estoppel are pre-

sent, the decision whether to apply the doctrine is within

the [court’s] discretion”); Western Group Nurseries, Inc. v.

Pomeranz, 867 P.2d 12, 15 (Colo. Ct. App. 1993) (ruling

collateral estoppel is an equitable doctrine applied at the

court’s discretion).

Turning to supremacy principles, we reiterate that

the issue before the FAA was whether the Authority

complied with the conditions imposed on it by federal

law and agreement with a federal administrative agency,

in return for the Authority’s receipt of federal funds. This

federal scheme regulating airport grant compliance is

“designed in part to insure the maintenance of conditions

essential to an efficient national air transport system,

including access to airports on a reasonable and non-

discriminatory basis.” City, & County of San Francisco v.

FAA, 942 F.2d 1391, 1395 (9th Cir. 1991), cert. denied, 503

U.S. 983 (1992). On this point, we must agree with the

Fifth Circuit that in the arena of aviation regulation “fed-

eral concerns are preeminent,” and the Department of

the Authority’s compliance with the grant assurances, and

never deferred its right to determine compliance issues in the

first instance. Moreover, although the FAA issued its decision

after the Colorado Supreme Court ruled on the propriety of the

permanent injunction against Centennial Express, the agency’s

decision in no way purported to “review, alter, or prevent

enforcement of the judgment of an Article III court.” Id. at 430.

14a

Transportation, through the FAA, is statutorily mandated

to represent those concerns. American Airlines, Inc., 202

F.3d at 800-01. Indeed, it is “difficult to visualize a more

comprehensive scheme of combined regulation, subsidiz-

ation, and operational participation than that which Con-

gress has provided in the field of aviation.” New England

Legal Found. v. Massachusetts Port Auth., 883 F.2d 157,

172-73 (1st Cir. 1989) (discussing the FAA’s primary role

in administering and ensuring compliance with grant

assurances) (quotation marks and citation omitted). This

certainly tilts the balance toward the application of

supremacy principles to protect against state courts

trumping the federal interests and concerns embodied

within the airport grant program.

As to the potential impact of the Colorado Supreme

Court’s ruling in Arapahoe County Public Airport Authority

v. Centennial Express Airlines on federal regulation of the

airport grant program, we perceive a direct and signifi-

cant conflict inasmuch as this and similar state court

rulings, if deemed preclusive, would frustrate the FAA’s

ability to discharge its statutory duty to interpret and

implement federal aviation statutes governing the

enforcement of grant assurances. See 49 U.S.C. § 47122. If

given preclusive effect, state court rulings favoring local

airport authorities in actions tangentially involving fed-

eral grant assurances would further lead to inconsistent

enforcement of the federally mandated assurances, poten-

tially jeopardizing the efficiency and equality of access to

our Nation’s air transportation system. For these reasons,

we hold the strong policy of federal supremacy in the

field of aviation prevails over full faith and credit princi-

ples in this case. The Colorado Supreme Court’s decision

I las ee ee eee

15a

in Arapahoe County Public Airport Authority v. Centennial

Express Airlines therefore has no bearing on the FAA

decision before us. 7

Determinations based on Safety and

Other Civil Aviation Needs

The Authority argues that as the proprietor of Cen-

tennial Airport responsible for local and regional aviation

planning, it, and not the FAA, determines whether sched-

uled passenger service will be prohibited at the Airport

as necessary for the safe operation of the airport and to

serve the civil aviation needs of the public. In support of

this argument, the Authority relies largely on the Colo-

rado Supreme Court’s conclusion the ban on scheduled

passenger service was, indeed, necessary for the safe

operation of Centennial Airport and to serve the public’s

civil aviation needs. As discussed above, that state court

conclusion has no bearing on our decision.

Aside from its reliance on the state court decision, the

Authority attempts to retry its case here by convincing us

it has good reasons for imposing the ban (including, but

not necessarily limited to, the design of and lack of

facilities at Centennial Airport; local and regional plan-

ning objectives; and the recommendations incorporated

in the National Transportation Safety Board’s Commuter

Airline Safety Study). Our job, however, is not that of

fact-finder. We are called on here to review the decision

of a federal administrative agency, and we will adhere to

the appropriate standards governing such review, as pre-

viously articulated in this opinion. See 49 U.S.C.

§ 46110(c); Wyoming Farm Bureau Fed’n, 199 F.3d at 1231.

l6a

We begin by addressing what we consider the thresh-

old legal issue —- whether the Authority is preempted by

federal statute from imposing such a ban. The Airline

Deregulation Act of 1978 expressly provides that a politi-

cal subdivision of a state “may not enact or enforce a law,

regulation, or other provision having the force and effect

of law related to a price, route, or service of an air

carrier.” 49 U.S.C. § 41713(b)(1). The Supreme Court has

interpreted this provision broadly to preempt all “State

enforcement actions having a connection with or refer-

ence to airline ‘rates, routes, or services.’ ” Morales v.

Trans World Airlines, Inc., 504 U.S. 374, 383-84 (1992)

(interpreting 49 U.S.C. § 1305(a)(1), the substantively

identical, pre-1994 version of the Airline Deregulation

Act preemption provision); see also American Airlines, Inc.

v. Wolens, 513 U.S. 219, 223 & n.1 (1995). The preemption

provision does not, however, prevent a state or political

subdivision of a state from carrying out its “proprietary

powers,” 49 U.S.C. § 41713(b)(3), so long as the exercise

of proprietary powers is reasonable, nondiscriminatory,

nonburdensome to interstate commerce, and designed

not to conflict with the Airline Deregulation Act and its

policies. See 14 C.F.R. § 399.110(f). The validity of the

Authority’s ban therefore depends on (1) whether the

Authority’s ban “is related to a price, route, or service of

an air carrier” implicated by 49 U.S.C. § 41713(b)(1); (2) if

so, whether the Authority’s ban amounts to an exercise of

its propriety powers; and (3) if it is an exercise of propri-

etary powers, whether such exercise is reasonable, non-

discriminatory, nonburdensome and not in conflict with

the Airline Deregulation Act, and thus exempted from

preemption by 49 U.S.C. § 41713(b)(3).

BI eae ie in ar i i ee

Sea Cina sist aati aed tae:

17a

We easily conclude the Authority’s ban is connected

with and relates to both services and routes. See Morales,

504 U.S. at 384. By banning scheduled passenger service,

the Authority has affirmatively curtailed an air carrier’s

business decision to offer a particular service in a particu-

lar market. The ban also significantly impacts the scope

of services available to public citizens desiring to travel

by air from Centennial Airport. We reject any contention

that “service” as used in 49 U.S.C. § 41713(b)(1) is not

intended to include transportation itself, considering the

Airline Deregulation Act’s objective to enhance “the

availability of a variety of adequate, economic, efficient,

and low-priced services,” 49 U.S.C. § 40101(4), and to—

“encourag[e] entry into air transportation markets by

new and existing air carriers and the continued strength-

ening of small air carriers to ensure a more effective and

competitive airline industry.” 49 U.S.C. § 40101(13); see

also Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 (Sth Cir.

1995) (en banc) (“Elements of the air carrier service

... include items such as ticketing, boarding procedures,

provision of food and drink, and baggage handling, in

addition to the transportation itself.”).

The effect of such a ban further extends to route

determinations because the carrier cannot conduct regu-

lar operations over any route involving the banned air-

port. We agree with the FAA that a prohibition on

operating over any route is no less a regulation of routes

than a restriction on the number of routes a carrier can ©

operate from an airport.

Having determined the Authority’s ban on scheduled

passenger service constitutes a state regulation of air

carrier service and routes, the ban is permissible only if it

18a

constitutes an exercise of the Authority’s propriety

power. Although the Authority largely evades a direct

discussion of the preernption issue in its briefs to this

court, it suggests the scheduled passenger service ban is

per se an exercise of its propriety power, because Grant

Assurance 22i (patterned after Standard Assurance 22i,

see 62 Fed. Reg. 29761, 29766 (1997)) permits the Author-

ity to “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.” Thus, because the

Authority determined “the ban was necessary for the safe

operation of Centennial [Airport] and to serve the civil

aviation needs of the public,” it argues the proprietary

powers exception to the statutory preemption provision

applies.

“The precise scope of an airport owner’s proprietary

powers has not been clearly articulated by any court.”

American Airlines, Inc., 202 F.3d at 806. Courts have, how-

ever, “recognized that local proprietors play an extremely

limited role in the regulation of aviation.” Id. (quotation

marks and citation omitted). This acknowledgment alone

undermines the Authority’s apparent assertion that so

long as they declare their regulatory action necessary for

safety or to satisfy aviation needs, they enjoy carte

blanche power. For purposes of this review, however, we

will assume, without deciding, that regulatory conduct

related to safety and civil aviation needs may fall under

the “proprietary powers” umbrella, because under any

circumstances, grant assurance language notwithstand-

ing, “[i]n defining the permissible scope of a proprietor’s

power to regulate under § 14713(b)(3) . . . an airport

0 OL

PO ata sed 4 Seis AS Sb A eR Bo ve

“i

19a

proprietor can issue only ‘reasonable, nonarbitrary, and

nondiscriminatory rules that advance the local interest.’ ”

Id. (quoting Western Air Lines v. Port Auth. of New York &

New Jersey, 658 F.Supp. 952, 958 (S.D.N.Y. 1986)). We

therefore proceed to the third and final preemption

inquiry.

At this point, we focus on whether the Authority’s

proclaimed “safety” and “civil aviation needs” justifica-

tion is reasonable or nonarbitrary. We agree with the FAA

this determination is a factual one for which the Author-

ity, as the party asserting the justification, bears the bur-

den of proving before the agency. See 14 C.F.R.

§ 16.229(c). Because of the fact-based nature of this

inquiry, we must defer to the FAA’s findings (1) the

Authority failed to demonstrate the ban is necessary for

the safe operation of the airport, and (2) the Authority

failed to demonstrate the ban is necessary to satisfy the

public’s civil aviation needs, so long as those findings are

supported by substantial evidence in the record.’ 49

U.S.C. § 46110(c); Wyoming Farm Bureau Fed’n, 199 F.3d at

1231. We conclude they are.

Our careful review of the administrative record con-

firms a dearth of evidence to support the Authority's

claim that the ban on scheduled service is necessary due

9 Although the Authority did not directly challenge the

reasonableness of the FAA’s findings on economic

discrimination and exclusive rights, having carefully reviewed

the administrative record, we conclude those findings are

supported by substantial evidence, and therefore deem them

conclusive.

20a

to ground congestion, operational safety and environ-

mental impact concerns. As noted by the FAA hearing

officer, the testimony of individuals representing both the

Authority and the City was largely speculative. The

Authority and City submitted no quantitative analysis of

the probable impacts of scheduled passenger airline ser-

vice at Centennial airport. Conversely, the testimony of

Mr. Barry Molar, Manager of FAA’s Office of Airport

Compliance, and other FAA representatives effectively

rebutted the Authority’s and City’s evidence,!° demon-

strating that the Authority’s concerns pertain to impacts

that are “largely a function of the total number of opera-

tions at the airport,” and are not particularized to sched-

uled passenger service. In other words, the record

10 For example, the Authority relies heavily on a general

National Transportation Safety Board (NTSB) recommendation,

derived from a Commuter Airline Safety Study (and Quincy

Aircraft Accident Report), that scheduled passenger service be >

permitted only at airports certified pursuant to 14 C.F.R. Part

139. According to the Authority, it is not certified under Part 139

and has no intent to become certified. Moreover, the Authority

claims it must rely on off-the-airport and non-exclusive fire

protection services, which cannot respond to an airport

emergency within three minutes. The Authority further claims it

does not have the financial resources to provide exclusive, on-

the-airport fire and rescue services.

In rebuttal, the FAA put into evidence proof the NTSB

recommendation is a nonbinding recommendation which

neither the Authority nor the FAA must follow, and Centennial

Airport is not subject to a three-minute fire response time

requirement. The FAA also elicited testimony the fire safety

concern is no different for scheduled passenger service than it is

for unscheduled, charter passenger service. Finally, the FAA

demonstrated the Authority imposed the ban on scheduled

passenger service prior to publication of the NTSB report.

2la

substantiates the FAA’s ruling that “[iJnasmuch as the

Authority permits unscheduled passenger services using

similar airplanes, flight patterns, making the same

amount or more of noise, and does not limit the number

of operations at the airport,” the Authority fails to dem-

onstrate how the ban on scheduled passenger service will

alleviate the safety concerns and civil aviation needs the

Authority and the City raise.

Because the record supports the FAA’s findings that

the Authority unreasonably exercised its proprietary

powers to ban scheduled passenger service at Centennial

Airport, we hold the Authority has exceeded its legiti-

mate scope of power as a state or local government-under

49 U.S.C. § 41731(b) and the Supremacy Clause of the

United States Constitution. See U.S. Const. art. VI, cl. 2.

The Authority’s ban therefore is preempted by federal

law.

Limitations on Scheduled Passenger Service

The Authority and the City assert that even if the ban

on scheduled passenger service is unlawful, we should

require the FAA to rule that passenger operations at

Centennial Airport must be limited to nine-passenger

aircraft in light of 1996 legislative amendments requiring

airports to have a Part 139 certificate for scheduled pas-

senger operations involving aircraft of more than nine

passenger seats. See 49 U.S.C. § 44706(a)(2). Centennial

Airport does not have such a certificate. Furthermore, the

statute provides that the FAA cannot force the Authority

to obtain a certificate. See id. at § 44706(f).

22a

The FAA concluded it was unnecessary to resolve

this issue because (1) the amended statute had not taken

effect; and (2) the ban on scheduled passenger service at

issue is total, providing no exception for aircraft with

nine or fewer passenger seats, as evidenced by the fact

the Authority sought and obtained an injunction against

Centennial Express’s six-passenger aircraft. We likewise

decline to resolve this issue as it is not presented by the

facts in this case. The Authority does not dispute that its

ban on passenger service, as considered by the FAA, is

indeed a total ban; nor does the Authority claim it has a

pending request to provide service which would justify

further consideration of the amended statute.

CONCLUSION

Because we hold (1) the Colorado Supreme Court’s

decision in Arapahoe County Public Airport Authority v.

Centennial Express Airlines is not final, preclusive or dis-

positive of the issues resolved in the FAA’s final order; (2)

the Authority’s ban on scheduled passenger service is

preempted by statute and the Supremacy Clause; and (3)

the present facts do not warrant prospective consider-

ation of how 49 U.S.C. § 44706, as amended in 1996,

might apply, we DENY the Authority’s Petition for

Review and AFFIRM the FAA’s final Order.

23a

UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, DC

CENTENNIAL EXPRESS -~ FAA Order No. 1999-1

AIRLINES, GOLDEN (Part 16, Subpart G)

EAGLE CHARTERS d/b/a

CENTENNIAL EXPRESS 2°*

AIRLINES Docket Nos. 16-98-05,

13-94-03

ARAPAHOE COUNTY

PUBLIC AIRPORT

AUTHORITY

THOMAS KEHMEIER Docket No. 13-94-25

Vv.

ARAPAHOE COUNTY

PUBLIC AIRPORT

AUTHORITY :

No Separate Docket

FEDERAL AVIATION Number!

ADMINISTRATION

Vv.

ARAPAHOE COUNTY

PUBLIC AIRPORT

AUTHORITY

FINAL AGENCY DECISION AND ORDER

1 Under 14 C.FR. § 16.203(b)(1), the agency became a party

when the Director of the FAA Office of Airport Safety and

Standards issued his determination providing the Airport

Authority the right to a hearing.

24a

I. Introduction

The question at the heart of this appeal is the lawful-

ness of a Federally-assisted airport operator’s ban on all

scheduled passenger service. At stake is the airport oper-

ator’s eligibility for additional Federal grants.

Il. Background

Arapahoe County Public Airport Authority (the Air-

port Authority) owns and operates Centennial Airport,

which is outside of Denver, Colorado. Over the years, the

Airport Authority has received millions of dollars in air-

port improvement grants from the Federal Aviation

Administration (FAA). In exchange for the funds, the

Airport Authority signed a grant assurance promising not

to grant any person or persons exclusive rights, and

another promising to make the airport “available for pub-

lic use on reasonable conditions and without unjust dis-

crimination.” Under the latter assurance, however, the

airport operator may “prohibit or limit any given type,

kind, or class of aeronautical use .. . if such action [is]

necessary for the safe operation of the airport or neces-

sary to serve the civil aviation needs of the public.”

Beginning in 1985, Centennial Express contacted the

Airport Authority about starting scheduled 14 C.F.R. Part

135 passenger service at Centennial Airport. On February

20, 1989, the Airport Authority published the following

statement in its newsletter:

. . . [C]Jommercial service has always existed at

Centennial in the form of Part 135 charter/air

25a

taxi certification, which permits “for hire” pas-

senger and freight service, whether scheduled or

unscheduled Such activity may not be prohibited

but is limited to aircraft with 30 seats or less.

(Director’s Determination at 12; emphasis added.) On

October 3, 1989, the Airport Authority’s newsletter con-

tained the following statement:

No scheduled air carrier, either large or small,

has applied to the Authority to operate at the

airport. Should any apply, the Authority will

consider only the smaller, regional air service

applications. No action will be taken by the

Authority to consider such applications, how-

ever, without extensive community input and

public hearing.

Id.

On December 12, 1991, Centennial Express sent the

Airport Authority a letter asking the Airport Authority to

set standards that would allow Centennial Express to

operate scheduled passenger service. Centennial Express

alleges that the. Airport Authority notified Centennial

Express that it was revising its airport policy statement

and needed to complete the revision before it would

enact minimum standards for scheduled passenger ser-

; vice under Part 135.

: On March 12, 1992, the Airport Authority adopted a

policy statement that stated as follows:

The Authority reaffirms the original intent of

the airport to service the general aviation com-

munity. To this end, Centennial will continue to

accommodate aircraft operating under Federal

26a

Aviation Regulations Part 135/Operations Spec-

ifications 135 (30 or fewer seats). Requests for

scheduled air service shall be reviewed for com-

pliance with this policy, the established weight

limit, and the application minimum standards.

(Director’s Determination at 13.)

On April 8, 1993, the Airport Authority imposed a

moratorium on considering applications for scheduled

passenger service. Nevertheless, on May 7, 1993, Centen-

nial Express Airlines (Centennial Express) - having

acquired Golden Eagle Charters and its operating certifi-

cate, aircraft, and organization - applied to the Airport

Authority to conduct scheduled passenger service at Cen-

tennial Airport. The Airport Authority did not approve

Centennial Express’s application. On September 8, 1994,

the Airport Authority issued a policy statement banning

scheduled passenger service at Centennial Airport.

On December 20, 1994, Centennial Express initiated

scheduled passenger service between Centennial Airport

and Dalhart, Texas with one six-passenger Beechcraft air-

craft.2 At the time, Centennial Express possessed both

Federal safety and Federal economic authority to conduct

scheduled passenger service operations at Centennial

Airport. Two days later, the Airport Authority obtained a

temporary restraining order from the District Court,

County of Arapahoe, State of Colorado, prohibiting Cen-

tennial Express from providing scheduled service at Cen-

tennial Airport. On December 23, 1994, the U.S.

Department of Transportation sent the Airport Authority

an opinion letter stating that it was arbitrary to exclude a

2 FAA Exhibit 1, Item 6.

ANEW RR Ratan beens z8

27a

particular class of service for factors not reasonably

related to the impacts of that service. On January 10,

1995, the Airport Authority obtained a permanent injunc-

tion from the same court. In January 1995, Centennial

Express voluntarily surrendered its Part 135 operating

certificate to the FAA.

On August 7, 1994, Thomas Kehmeier, a shareholder

of Centennial Express, filed a formal complaint with the

FAA, in Docket No. 13-94-25, as a private citizen, alleging

that the Airport Authority violated Federal law and its

grant assurances by imposing a moratorium on consider-

ing applications for scheduled passenger service at Cen-

tennial Airport. On January 30, 1995, Centennial Express

also filed a formal complaint with the FAA, in Docket No.

13-95-03, alleging that the Airport Authority had improp-

erly prohibited scheduled passenger service at Centennial

Airport. Both complaints were filed under 14 C.FR. Part

13, entitled “FAA Investigative and Enforcement Pro-

cedures.” 14 C.E.R. Part 13, Subpart D. After the Rules of

Practice for Federally-Assisted Airport Proceedings con-

tained in 14 C.F.R. Part 16 went into effect,3 Centennial

Express filed a second complaint under Part 16 on Febru-

ary 23, 1998 (Docket No. 16-98-05). Centennial Expiess’s

Part 16 complaint contained the same allegations as its

Part 13 complaint. The FAA consolidated the Part 13

dockets and their administrative records into the Part 16

proceeding to avoid duplicative proceedings and to

assure that the agency met the Part 16 time requirements

for the Part 16 complaint.

3 The Rules of Practice contained in Part 16 went into effect

on December 16, 1996. 61 Fed. Reg. 53,998 (October 16, 1996).

28a

Meanwhile, Centennial Express was appealing the

permanent injunction through the Colorado courts. On

December 12, 1996, the Colorado Court of Appeals

reversed the permanent injunction granted by the District

Court. Arapahoe County Public Airport Authority v. Centen-

nial Express Airlines, Inc., 942 P.2d 1270 (Colo. App. 1996).

While the case was on appeal to the Colorado Supreme

Court, the state of Colorado dissolved Golden Eagle

Charters, the subsidiary of Centennial Express, in May

1997 after Golden Eagle-failed to file its 1997 corporate

report.

On April 13, 1998, the Colorado Supreme Court ruled

that the Court of Appeals erred in reversing the perma-

nent injunction. Arapahoe County Public Airport Authority

v. Centennial Express Airlines, Inc., 956 P.2d 587 (Colo.

1997) (en banc). The FAA was not a party to the state

court proceedings and did not participate in developing

the state court record. The Colorado Supreme Court

declined to defer to the FAA’s primary jurisdiction. It

found that the issue was not Federally preempted under

the 49 U.S.C. § 41713(b)(1) provision prohibiting state or

local regulation of “price, route or service of an air car-

rier” but rather fell within the proprietor exception in

§ 41713(b)(3). The majority also held that the ban did not

violate the FAA grant assurance requiring the sponsor to

“make its airport available as an airport for public use on

fair and reasonable terms without unjust discrimination

to all types, kinds, and classes of aeronautical users.”

Additionally, the majority said that “the authority’s ban

on scheduled service is necessary to ensure safe operation

of the airport” and that “increased congestion is sure to

have an impact on safety.” Id. at 596.

oie SEL

29a

After investigation, the Director of the FAA’s Office

of Airport Safety and Standards rendered an initial deter-

mination on August 21, 1998, under 14 C.FR. § 16.31

regarding the complaints filed by Centennial Express and

Thomas Kehmeier. The Director found that the FAA was

not bound by the Colorado Supreme Court’s decision. He

determined that the Airport Authority violated Federal

law and its grant assurances by banning scheduled ser-

vice at Centennial Airport.

The Airport Authority requested a hearing under 14

C.F.R. Part 16, Subpart F. On September 28, 1998, the

Deputy Chief Counsel issued a Hearing Order identifying

the parties and issues. Prior to the hearing, Greenwood

Village moved to intervene as a party under 14 C.FR.

§ 16.207, and the hearing officer granted the motion.

The hearing was held on November 12-13, 1998, in

Denver, Colorado. The hearing officer’s initial decision

affirmed the Director’s determination on all issues. The

Airport Authority and Greenwood Village have filed the

instant appeal of the hearing officer’s initial decision.4

4 Citing 14 C.F.R. § 16.19, the City of Greenwood Vitlage has

filed a motion to strike a number of alleged factual

misstatements in the reply brief of the FAA Office of Airport

Safety and Standards. In response, counsel for the FAA Office of

Airport Safety and Standards has filed a document in which it

claims that Greenwood’s motion was actually an impermissible

additional brief that should be stricken.

The FAA Office of Airport Safety and Standards is correct

that additional lega’ argument would be impermissible, because

the rules of practice permit only one brief per party. 14 C.F.R.

§ -16.241(f)(2) (“parties may file one brief on review to the

Associate Administrator”). Greenwood’s motion, however,

30a

Under the Rules of Practice the Hearing Officer may

“issue an initial decision or rule in a party’s favor only if

the decision or ruling is supported by, and in accordance

with, reliable, probative, and substantial evidence con-

tained in the record and is in accordance with law.” 14

C.F.R. § 16.227. Otherwise, the Hearing Officer’s decision

or ruling is subject to reversal. This standard of proof will

guide the following discussion of the parties’ arguments

on appeal.°

III. Standing

Greenwood Village argues that the Hearing Officer

should have dismissed the complaints because Complain-

ants Centennial Express/Golden Eagle Charters and

Thomas Kehmeier lack standing under 14 C.F.R. Part 16.

Greenwood points out that Centennial Express no longer

holds a Part 135 air carrier certificate and Golden Eagle

Charters has been dissolved. As for Kehmeier, Green-

wood argues that he can no longer benefit from sched-

uled service at Centennial Airport because he has moved

away from Denver. Greenwood contends that as a share-

holder of Centennial Express, Kehmeier is simply a proxy

for Centennial Express and thus he lacks standing just as

Centennial Express does.®

briefly lists alleged factual misstatements. Thus, it does not

constitute an improper additional brief and it has been

considered in reaching this decision.

5 Any arguments not specifically addressed have been

considered and found to be without merit.

6 Greenwood has several additional arguments relating to

standing. Greenwood argues that the Hearing Officer erred in

3la

At the outset, it should be noted that standing

requirements in administrative adjudications are less

strict than in Federal court actions. As the court stated in

ECEE, Inc. v. Federal Energy Regulatory Commission, 645

F.2d 339, 349 (5th Cir. 1981):

Administrative adjudications ... are not...

article III proceeding[s] to which either the

“case or controversy” or prudential standing

requirements apply; within their legislative

mandates, agencies are free to hear actions

brought by parties who might be without stand-

ing if the same issues happened to be before a

federal court. Gardner v. FCC, 530 F.2d 1086,

1090-91 (D.C. Cir. 1976). Accord, Koniag, Inc.,

Village of Uyak v. Andrus, 580 F.2d 601, 611-17

(D.C. Cir.) (Bazelon, J., concurring), cert. denied,

439 U.S. 1052 (1978).

The Rules of Practice for Federally-Assisted Airport

Enforcement Proceedings in 14 C.F.R. Part 16 provide that

“[a] person directly and substantially affected by any

allered non-compliance may file a complaint with the

Administrator.” 14 C.F.R. § 16.23(a). Assuming, arguendo,

suggesting that the Part 13, Subpart D complaints could cure the

lack of standing under Part 16, and that it is unfair for the

agency to apply only the sections of Part 16 that favor the

agency. Moreover, Greenwood believes that the Hearing Officer

erred in reasoning that because the FAA could have brought its

own case under 14 C.F.R. § 16.101, it is irrelevant whether these

particular Complainants lack standing. According to

Greenwood, the agency chose not to bring a case of its own, and

even if had it done so, it could not have based it on a live

controversy, because there is currently no Part 135-certificated

carrier seeking to offer scheduled service at Centennial Airport.

32a

that the standing requirement of Part 16 applies,” it is

difficult to imagine a stronger case for a direct and sub-

stantial effect on Complainants. The Airport Authority

obtained an injunction that immediately brought Centen-

nial Express’s scheduled passenger operations at Centen-

nial Airport to a halt, forcing it out of business there.

Kehmeier is a shareholder of Centennial Express and

therefore is directly and substantially affected by any

prohibition on Centennial Express’s revenue operations.

The very facts thai Greenwood points to — the surrender

of the Part 135 cert:ficate and the dissolution of Golden

Eagle Charters — are perhaps the most compelling evi-

dence possible that the Airport Authority’s alleged non-

compliance had a direct and substantial effect on Com-

plainants.® As Kenneth Culp Davis states in § 24.1 of the

7 Arguably, the less stringent standing requirements of Part

13, Subpart D apply because Centennial Express and Thomas

Kehmeier filed their complaints under Part 13, Subpart D before

Part 16 came into existence. (Part 16 applies to complaints filed

and investigation initiated by the FAA on or after December 16,

1996. 14 C.F.R. § 16.1(d). For complaints filed earlier, Part 13,

Subpart D continues to apply.)

Part 13, Subpart D permits any person to file a complaint

with the Administrator with respect to anything done or

omitted to be done by any person in contravention of any

provision of any Act or any regulation or order issued under it,

as to matters within the jurisdiction of the Administrator. 14

C.F.R. § 13.5. For the agency to apply the stricter Part 16 rules for

standing and pleading to the complaints already accepted and

pleaded under more lenient rules in Part 13, Subpart D arguably

would have violated Complainants’ due process rights.

8 Section 16.23(a) does not state that the person directly and

substantially affected must hold a Part 135 certificate. Note that

the Airport Authority has admitted that it has the discretion to

‘

PAR Ries RTS RO Bein

33a

Administrative Law Treatise (2nd ed. 1983), “A main

objective in reforming the law of standing should be to

strip down the law to one simple proposition: one who is

adversely affected in fact should never be denied stand-

ing.”?

Even if Complainants lacked standing, dismissal of

the proceeding would be inappropriate at this point

because the FAA, with its statutory mandate to ersure

that Federally-funded airports comply with their grant

assurances, would remain as party and as prosecutor. The

FAA became a party after the Director of the FAA’s Office

consider an application for scheduled passenger service even

where the applicant does not possess an FAA operating

certificate at the time of application, Exhibit 20e.

9 Greenwood argues that the Airport Authority’s ban on

scheduled passenger service caused neither the surrender of

Centennial Express’s Part 135 certificate nor the dissolution of

Golden Eagle Charters. It is hard to believe that no causal

connection exists, given the timing of the surrender

(immediately after the Airport Authority obtained an injunction

again [sic] Centennial Express’s scheduled operation).

Centennial Express went to some trouble to set up scheduled

operations at Centennial Airport. The injunction the Airport

Authority obtained halting Centennial Express/Golden Eagle

Charters’ scheduled passenger operations certainly would not

have helped the financial situation of Centennial Express and

Golden Eagle Charters.

Regardless, even if there was no causal connection between

the ban on the one hand and the surrender of the operating

certificate and dissolution of Golden Eagle Charters on the

other, the ban still had a direct and substantial effect on

Centennial Express - Centennial Express/Golden Eagle

Charters sought to operate scheduled passenger service at

Centennial Airport, but the Airport Authority obtained an

injunction stopping it from doing so.

34a

of Airport Safety and Standards issued his initial deter-

mination finding the Airport Authority in violation of

Federal law and its grant assurances and the Airport

Authority requested a hearing. The Rules of Practice pro-

vide that: “The parties to the hearing are the respon-

dent(s) named in the hearing order, the complainant(s),

and the agency.” 14 C.F.R. § 16.203(b)(1) (emphasis

added). They further provide, in relevant part, that, “the

agency attorney will serve as prosecutor for the agency from

the date of issuance of the Director’s determination pro-

viding an opportunity for hearing.” 14 C.F.R.

§ 16.203(b)(2) (emphasis added). In accordance with these

provisions, the Hearing Order named the FAA Office of

Airport Safety and Standards as a separate party, “as

prosecutor for the agency.” (Emphasis added.) See also 14

C.F.R. § 16.3, which defines “agency attorney” as an

attorney “who represents the FAA during the investigation

of a complaint or at a hearing on a complaint, and who

prosecutes on behalf of the FAA ....”

10 The FAA Office of Safety and Standards has indicated in

its reply brief that if the complaints were dismissed, the Director

would begin an investigation under 14 C.F.R. § 16.101. The FAA

does not need a “live” complainant to initiate an investigation.

Notice and the opportunity for informal resolution under

Section 16.101 at this point would be pro forma. The Airport

Authority has had ample notice of the FAA’s position, and the

Airport Authority’s refusal to comply with its grant assurances

after an FAA investigation and several decisions does not

suggest an interest in informal resolution. Under the

circumstances, complaint dismissal would be wasteful of

agency and taxpayer resources.

aaa

35a

Thus, the role of the FAA Office of Airport Safety and

Standards is not to represent Complainants, but to repre-

sent the agency, acting to protect the public interest. The

role of the private complainant is simply to bring to the

agency’s attention apparent violations of airport grant

assurances. See 61 Fed. Reg. at 53,999 (October 16, 1996),

noting that the FAA is the party with the burden of proof

and that the Rules of Practice give Complainants party -

status only to assist the FAA in the development of the

factual record.

In summary, Complainants Centennial Express and

Thomas Kehmeier have standing because the Airport

Authority’s ban on scheduled passenger service substan-

tially and directly affected them. In addition, the FAA has

standing by operation of the rules.1?

IV. Mootness

As for the Airport Authority’s and Greenwood’s

argument that this proceeding is moot, it is undisputed

that the ban on scheduled passenger service continues in

11 While Greenwood claims that the FAA intentionally

destroyed evidence “highly relevant” to its standing claim —i.e.,

the Part 135 operator file for Centennial Express/Golden Eagle

Charters - the record indicates that the local FAA Flight

Standards District Office destroyed the file along with other

inactive files several years ago when moving FAA Denver-

based field offices to the new Denver International Airport. In

any event, Greenwood has not shown how the Part 135 file is

relevant to this proceeding.

36a

place at Centennial Airport.!? Thus, this case presents a

live controversy because the FAA, as a party, has a genu-

ine interest in enforcing the applicable Federal statutory

provisions and grant assurances.}5

“

V. Due Process

Under the Rules of Practice in Part 16, a Hearing

Officer rather than an Administrative Law Judge presides

over the hearing. (See, e.g., 14 C.F.R. § 16.202, detailing

the powers of the Hearing Officer, which include presid-

ing over the hearing and issuing an initial decision.)

Greenwood argues that the FAA Deputy Chief Counsel

violated its due process rights by declining to amend the

hearing order to include the issue of whether the Hearing

Officer should have referred the case to an Administra-

tive Law Judge for a hearing under the Administrative

Procedure Act (APA).

12 To support its mootness argument, Greenwood states

that there are currently no Part 135-certificated carriers seeking

to offer scheduled service at Centennial Airport. Assuming,

arguendo, that Greenwood’s representation is still accurate,

these proceedings are not moot because the Airport Authority

has conceded that one need not have a Part 135 certificate at

time of application. In addition, the Airport Authority’s ban

would likely discourage potential carriers from applying to

operate scheduled service.

13 Also, because the mootness doctrine arises from the case

or controversy requirement for Article III courts, it does not

necessarily apply to proceedings before Article I executive

branch administrative proceedings.

wl. Sr Se tae ee a)

ise

37a

Greenwood’s Standing to Raise Issues

In this proceeding, the Director withheld approval of

the Airport Authority's new grants — not Greenwood’s.

Greenwood is merely an intervenor.14 Under 49 U.S.C.

§ 47106(d),the statute under which the Director’s Deter-

mination withheld approval of new grants, only the Air-

port Authority, as the airport sponsor, may request a

hearing. Significantly, the Airport Authority, the only

respondent with the statutory right to a hearing, has not

argued that an Administrative Law Judge rather than the

Hearing Officer should have heard its case.

Greenwood, having no right to request a hearing, is

outside the “zone of interests” protected by 49 U.S.C.

§ 47106(d). Clarke v. Securities Industry Association, 479

U.S. 388 (1987). As a result, Greenwood is without stand-

ing to raise the issue of who should have heard this case.

Inapplicability of APA

Even if the Airport Authority, rather than Green-

wood, had raised the same argument - i.e., that the APA

requires that an administrative law judge hear this case —

it would still fail. Greenwood argues as follows:

14 The section in the Rules of Practice regarding

intervention provides that “Participation under this section is at

the discretion of the FAA, and no decision permitting

participation shall be deemed to constitute an expression by the

FAA that the participant has such a substantial interest in the

proceeding as would entitle it to judicial review of such

decision.” 14 C.F.R. § 16.207(d).

38a

... the Hearing Officer did not satisfy the APA’s

separation of functions doctrine because he is an

FAA attorney in the Procurement Legal Division

of the Office of the Chief Counsel. The Office of

the Chief Counsel is responsible, inter alia, for

investigations and enforcement actions by the

FAA. The Hearing Officer, therefore, was con-

spicuously under the supervision and direction

of an agency employee who is engaged in the

performance of investigative or prosecuting

functions for the agency. Since the Hearing Offi-

cer and FAA investigators are responsible to the

FAA Administrator through the same chain of

authority (the Chief Counse!), the Hearing Offi-

cer’s role as adjudicator in this case violated the

APA.

(Appeal Brief at 33.)

The APA, however, does not apply to hearings pro-

vided under 49 U.S.C. §§ 47106(d) & 47111(d).15

15 The wording of 49 U.S.C. § 47106(d) indicates that

Congress did not intend to require full agency adherence to all

APA Section 554 components. Unlike another part of the same

statute (the Airport and Airway Improvement Act of 1982, as

amended) which is subject to the APA and which expressly

requires a hearing before an administrative law judge under 14

C.F.R. Part 302 [see 49 U.S.C. 47129(c)], 49 U.S.C. § 47106(d) only

requires “an opportunity for a hearing.” Section 554 of the APA

does not apply where the statute, rather than requiring a

hearing on the record, simply requires an opportunity for a

hearing without more. Friends of the Earth v. EPA, 966 F.2d 690,

6593 [sic] (D.C. Cir. 1992); St. Louis Fuel and Supply Co. v. FERC,

890 F.2d 446, 448 (D.C. Cir. 1989).

“1

ARNE ON a gle Ei iet e DNIE K EIN

39a

Part 16’s Separation of Functions Provision

Although the APA does not apply, to ensure the

integrity of the decisionmaking process, the Rules of

Practice in 14 C.F.R. Part 16 include a provision separat-

ing investigative/prosecutorial functions from adjudica-

tive/decisionmaking functions. See 14 C.F.R. § 16.5(b),

providing that an agency employee who investigates or

prosecutes will not advise or communicate substantively

about the case with the hearing officer or the Associate

Administrator regarding their respective decisions

(except as counsel or witness in public proceedings).’°

Contrary to Greenwood’s argument, the Chief Coun-

sel is not an investigator/prosecutor under the Rules of

Practice in Part 16. Instead, the Chief Counsel advises the

Associate Administrator, who issues the agency’s final

decision in Part 16 cases. See 14 C.F.R. § 16.5(c), stating

that “[t]he Chief Counsel . . . advises the Associate

Administrator . . . regarding any case brought under this

part.” Thus, the Chief Counsel’s function in Part 16 cases

is adjudicative, not investigative or prosecutorial.

The only attorneys who investigate and prosecute

Part 16 cases are “agency attorneys.” See 14 C.F.R. § 16.5,

providing that “[p]roceedings under this part . . . will be

prosecuted by an agency attorney.” The Rules of Practice

16 As the FAA explained in the Notice of Proposed

Rulemaking for 14 C.F.R. Part 16: “Separation of functions is not

required by statute because hearings under part 16 would not be

subject to APA hearing requirements; however, the separation is

provided to promote confidence in the impartiality and

integrity of decisions under the new procedures.” 59 Fed. Reg.

29,880, 29,883 (June 9, 1994).

40a

specifically define “agency attorney” to exclude the Chief

Counsel. See 14 C.F.R. § 16.3, providing that “an agency

attorney shall not include the Chief Counsel....” The

record contains no evidence that any agency employee

violated Section 16.5(b). The Hearing Officer was com-

pletely independent of the Chief Counsel in all matters

pertaining to this case from the date of his appointment

until he issued his initial decision.

VI. Collateral Estoppel

Both the Airport Authority and Greenwood argue

that the Hearing Officer erred in failing to find that the

FAA.must extend full faith and credit to the Colorado

Supreme Court’s decision.!7 They argue that collateral

estoppel bars relitigation of the issues in the instant pro-

ceeding.

Collateral estoppel, or issue preclusion, is the branch

of the res judicata doctrine that prevents a party from

relitigating an issue of fact or law that has been decided

in an earlier suit. Wilder v. EPA, 854 F.2d 605, 616 (2d Cir.

1988). Section 1738 of 28 U.S.C. requires Federal courts to

give effect to the collateral estoppel rules of the state that

rendered a prior judgment where the same issues are

raised later in a Federal proceeding. Id. Section 1738 of 28

17 The Colorado Supreme Court upheld the State District

Court’s injunction on Centennial Express’s scheduled passenger

operations at Centennial Airport. The court held that Federal

law does rot preempt the Airport Authority’s ban on scheduled

passenger service. It also held that the ban is necessary for the

safe operation of the airport and that it serves the civil aviation

needs of the public.

{

4la

U.S.C. directs that judicial proceedings of the court of any

State “shall have the same full faith and credit in every

court within the United States .. . as they have by law or

usage in the courts of such State . . . from which they are

taken.” Federal administrative agencies as well as courts

must adhere to 28 U.S.C. § 1738. Midgett v. United States,

221 Ct: Cl. 171, 169 (7979).

To accord full faith and credit to a given state-court

judgment, a Federal court or administrative agency must

give a prior state-court judgment “the same preclusive

effect as would be given that judgment under the law of

the State in which the judgment was rendered.” Town of

Deerfield v. FCC, 992 F.2d 420, 428 (2nd Cir. 1993), quoting

Migra v. Warren City School District Board of Education, 465

U.S. 75, 81 (1984). See also American Mannex Corp. v.

Rozands, 462 F.2d 688, 690 (5th Cir. 1972) (stating that

“lujnder 28 U.S.C. § 1738, the Federal court follows the

state rule of repose”). Thus, Colorado’s rules relating to

collateral estoppel bear examination.

Colorado’s Estoppel Requirements Unmet

Colorado’s highest court has held as follows:

Collateral estoppel, or issue preclusion, bars

relitigation of an issue determined in a prior

proceeding if: (1) the issue precluded is identical

to an issue actually determined in the prior pro-

ceeding; (2) the party against whom estoppel is

asserted has been a party to or is in privity with

a party in the prior proceeding; (3) there is a

final judgment on the merits in the prior pro-

ceeding; and (4) the party against whom the

doctrine is asserted has had a full and fair

42a

opportunity to litigate the issue in the prior

proceeding.

O'Neill v. Simpson, 958 P.2d 1121 (Colo. 1998).

In the instant case, several of the above-listed

requirements under Colorado law for collateral estoppel

are unmet. First, the Airport Authority and Greenwood

have attempted to assert estoppel not just against Centen-

nial Express and Thomas Kehmeier, but also against the

FAA.18 The FAA, however, was not a party to, nor was it

in privity with a party to, the prior proceeding.’ As a

result, the FAA did not have a full and fair opportunity to

litigate the issues in the prior proceeding.?°

While the Airport Authority and Greenwood argue

on appeal that Town of Deerfield v. FCC, 992 F.2d 420 (2d

18 For a discussion of the agency’s role as party to the

proceeding under the regulations, see supra p. 9.

19 Arguably, neither was Thomas Kehmeier. Kehmeier was

not a party to the prior proceeding and under Colorado law, he

may not have been in privity with any party, even though he

was a shareholder of Centennial Express, which was a party to

the prior proceeding. In Falkenberg v. Sternberg, 388 P. 2d 771

(Colo. 1964), the Colorado Supreme Court held that a corporate

president who owned 98% of the corporate stock was not

precluded from asserting a claim in his individual capacity

against an architect even though a similar claim by the

corporation had been dismissed in a prior proceeding. See also

Foley Custom Homes v. Flater, 888 P.2d 383, 364 [sic] (Ct. App.

1994), citing Falkenberg v. Sternberg, 388 P. 2d 771 (Colo. 1964)

and holding that Foley Custom Homes, a closely held

corporation, and Daniel Foley, who owned 50% of the

company’s stock, were not in privity.

20 The FAA simply does not have the resources to intervene

in the innumerable state court proceedings in which aviation

issues arise.

43a

Cir. 1993) supports their argument that collateral estoppel

applies, Deerfield is distinguishable. In Deerfield, in the

proceeding before the FCC, the party against whom

estoppel was sought (an individual named Joseph Car-

ino) had been a party to the prior proceedings in both

state and Federal court. The FCC was not a party to either

the prior proceedings in state or Federal court, or to the

proceedings before the FCC. Thus, in Deerfield, the collat-

eral estoppel requirement under Colorado law of identity

of parties was met, whereas the requirement is not met in

the instant case.?!

Second, even if collateral estoppel applied to some of

the issues in the instant proceeding, it would still not

apply to all of them. The Colorado Supreme Court did

not decide all of the issues in the instant proceeding. A

close examination of the court’s opinion reveals that it

did not decide whether the Airport Authority violated

Federal law relating to the granting of exclusive rights,

which forms the basis for two of the six independent

findings in the Director’s Determination.

21 Deerfield is also distinguishable because the FCC issued

an order that conflicted with that of a Federal Article III court.

Under the Constitution, Federal Article III courts may decide

only “Cases” or “Controversies.” U.S. Const. Art. III, § 2, cl. 1.

They are not permitted to render advisory opinions. Deerfield,

992 F.2d at 427. The U.S. Court of Appeals for the Second Circuit

held that the FCC, by issuing a decision that conflicted with that

of a Federal District Court, had improperly attempted to render

a Federal Article III court’s decision a mere advisory opinion. Id.

at 428-29.

In contrast, in the instant case, a Federal Article III court has

never decided any of the issues.

44a

Supremacy Clause Trumps 28 U.S.C. § 1728

In any event, 28 U.S.C. § 1728, which directs that

Federal courts and agencies must give state court judg-

ments full faith and credit, is limited by the Supremacy

Clause of the U.S. Constitution. Midgett, 221 Ct. Cl. at 189.

Federal courts will not give effect to a judgment or decree

of a state court that would restrain the exercise of sover-

eign power of-the United States by imposing require-

ments that are contrary to important and established

Federal policy. Id., citing Byrd v. Blue Ridge Cooperative,

356 U.S. 525 (1957); Red Fox v. Red Fox, 564 F.2d 361, 365

n.3 (9th Cir. 1977); American Mannex Co. v. Rozands, 462

F.2d 688, 690 (5th Cir.), cert. denied, 409 U.S. 1040 (1972).?2

The Colorado Supreme Court’s decision restrained

the sovereign power of the United States by upholding

and imposing a ban by a state authority on scheduled

passenger flights at a Federally-funded airport. The ban

violates Congress’ express prohibition, in 49 U.S.C.

§ 41713(b)(1), on state and local regulation of air carrier

rates, routes, or services. In the Airline Deregulation Act,

Congress preempted state and local regulation of rates,

routes, or services of air carriers to ensure that the states

-would not undo Federal deregulation of domestic air

transport. Morales v. TWA, 504 U.S. 374, 378-379 (1992).

The Airport Authority’s ban on scheduled service is

inconsistent with the Airline Deregulation Act’s goals of

22 Even under Colorado law, collateral estoppel is an

equitable doctrine and need not be applied in every case.

Western Group Nurseries v. Pomeranz, 867 P. 2d 12, 15 (Ct. App.

Colo. 1993).

em acn |

45a

furthering “the availability of variety of adequate, eco-

nomic, low-priced services without unreasonable dis-

crimination” (49 U.S.C. § 40101(4)), and “encouraging

entry into air transportation markets by new and existing

air carriers and the continued strengthening of small air

carriers to ensure a more effective and competitive airline

industry” (49 U.S.C. § 40101(13)).

A safe and efficient system of public use airports

cannot be maintained if each Federally-funded airport is

free to impose its own ban on certain types of air service

without an adequate basis in fact or law. The national

system would weaken and balkanize. See New England

Legal Foundation v. Massachusetts Port Authority, 883 F.2d

157, 172 (1st Cir. 1989), referring to the “[b]alkanizing

forces of state and local regulation,” and stating that in

reducing Federal economic regulation of aviation, Con-

_ gress did not intend to leave a vacuum for state and local

governments to fill.

VII. Burden of Proof

According to Greenwood, the Hearing Officer erred

in finding that the Airport Authority and Greenwood

bore the burden of proving that a ban on scheduled

passenger operations was necessary for the safe opera-

tion of the airport. Instead, Greenwood argues, the Hear-

ing Officer should have required the FAA to show that

the Director’s Determination (finding unlawful the Air-

port Authority’s ban on scheduled passenger service)

would “enhance safety and security” in air commerce in

the Denver region. To support its argument, Greenwood

cites 49 U.S.C. § 40101(d), which provides as follows:

a a Tem

46a

§ 40101. Policy

(d) Safety Considerations in Public Inter-

est. — In carrying out subpart III ° this part [49

U.S.C. §§ 44101 - 45304, entitled “saiety”] and

those provisions of subpart IV [49 U.S.C.

§§ 46101 - 46507, entitled “Enforcement and

Penalties”] applicable in carrying out subpart

III, the Administrator shall consider the follow-

ing matters, among others, as being in the pub-

lic interest:

(1) assigning, maintaining, and enhancing

safety and security as the highest priorities in

air commerce.

49 U.S.C. § 40101(d).

Section 40101 of Title 49 does not apply. First, it does

not deal with the issue of the proper allocation of the

burden of proof. Second, it expressly applies only to

subpart 111 (49 U.S.C. §§ 44101 - 45304) and subpart IV

(49 U.S.C. §§ 46101 - 46507), whereas the authority for the

instant proceeding (the statute under which the Direc-

tor’s Determinati¢n withheld approval of new grants) is

49 U.S.C. § 4710)(d). The Airport Authority allegedly

violated 49 U.S.C. § 47107(a)(1) regarding economic idis-

crimination; 49 U.S.C. §§ 47107(a)(4) and 40103(e), regard-

ing exclusive rizhts; and 49 U.S.C. § 41713(b)(1),

regarding Federal preemption of state regulation of air

carrier prices, rowes, and services. None of these provi-

sions are found ir subparts III and IV.

The allocation of the burden of proof in these pro-

ceedings is set by 14 C.FR. § 16.229. Under Section

alae

47a

16.229, the agency has the burden of proving noncom-

pliance with Federal law and the grant assurances, but a

party who asserts an affirmative defense has the burden

of proving the affirmative defense. 14 C.F.R. § 16.229(a) &\

(b).

The following facts are undisputed:

e As a precondition for receiving Federal

funds, the Airport Authority agreed to make

the airport available for public use on rea-

sonable conditions and not to discriminate

unjustly.

e When the Airport Authority accepted Fed-

eral funds, no ban on scheduled passenger

service existed.

e After the Airport Authority had accepted

millions of dollars in Federal funds, it

imposed the ban.

e The Airport Authority’s ban leaves the air-

port unavailable for a certain type of public

use - specifically, scheduled passenger ser-

vice. The ban also discriminates between

scheduled and unscheduled passenger ser- -

vice.

The Airport Authority’s defense in this proceeding

has been that its discrimination against scheduled pas-

senger service is justified. It argues that the grant assur-

ance regarding non-discrimination expressly permits the

airport sponsor to “prohibit . . . any type, kind, or class of

aeronautical use at the airport if . . . necessary for the safe

operation of the airport or . . . to serve the civil aviation —

needs of the public.”

i a el

48a

In determining what constitutes an affirmative

defense, fairness and convenience are relevant consider-

ations. WricHt & MILLER, FEDERAL Practice & PROCEDURE:

Crit 2p § 1271. Thus, if all or most of the relevant

information is within the control of the defending party,

then fairness and convenience suggest that the matter

should be considered an affirmative defense. Id. In the

instant case, the Airport Authority determined that safety

and the civil aviation needs of the public required its ban

on scheduled passenger service. The Airport Authority is

in the best position to provide the evidence on which it

based its safety and public needs determination.

Another relevant consideration in determining

whether a matter constitutes an affirmative defense is

whether the party bringing the action will be taken by

surprise by the assertion of the defense at the trial or

hearing if the defense is not pleaded affirmatively. Id.

This consideration also supports the Hearing Officer’s

determination that safety constituted an affirmative

defense. In the instant case, the agency and complainants

would have been taken by surprise if the Airport Author-

ity had not affirmatively pleaded the “safe operation and

public civil aviation needs” defense in its answer.

For these reasons, the Hearing Officer did not err in

ruling that the Airport Authority’s justifications for dis-

crimination constitute affirmative defenses which the Air-

port Authority had the burden of proving.

49a

XIII. Reasonableness of Justifications for Ban

A. Safe Operation of the Airport

The Airport Authority and Greenwood claim that the

ban on scheduled passenger service is necessary for the

safe operation of the aircraft. To support their claim, they

argue as follows:

e Centennial Airport lacks a terminal, baggage

claims system, and passenger security sys-

tem.

e There was testimony at the hearing that it is

a safety problem to mix different types of

aircraft in the same airspace environment.

e The National Transportation Safety Board

(NTSB) has recommended, as a class 2 prior-

ity action,23 that the FAA seek legislative

action limiting scheduled passenger service

to airports holding Part 139 certificates* and

Centennial Airport lacks a Part 139 certifi-

cate.

e The local fire department chief testified that

his personnel could not respond to fires at

Centennial Airport within 3 minutes, and

therefore, the chance of survivable crash vic-

tims was nearly zero.

23 Tr. 599.

24 14 C.E.R. Part 139 contains the rules governing the

certification and operation of land airports that serve any

scheduled or unscheduled passenger operations of air carriers

that are conducted with aircraft having a seating capacity of

more than 30 passengers. 14 C.F.R. § 139.1.

50a

e Scheduled passenger service would require

changes to Centennial Airport’s infrastruc-

ture to maintain crowd control.

There are a number of matters that undercut the

Airport Authority’s arguments that safety requires the

ban. First, the Airport Authority has failed adequately to

explain how a terminal and baggage system are necessary

for passenger safety. The connection is unclear.*> As for a

passenger security system, the FAA introduced into the

record evidence that there is no legal requirement for

security screening for the type of operation Centennial

Express proposed.?6

Second, while the~Airport Authority has banned all

scheduled passenger operations, it permits the same sizes

and types of aircraft to carry passengers in unscheduled

operations.?” Thus, the testimony at the hearing that it is

2° A county commissioner testified at the hearing that a

terminal was needed to protect passengers from hail storms. Tr.

97. He admitted, however, that Centennial Express had

obtained, through a sublease, facilities through which to process

passengers. Tr. 99. The commissioner was unable to offer any

explanation as to how the lack of a baggage system presented a

safety problem, though previously he had signed an affidavit

stating that it did. Tr. 103.

26 Tr. 105-07. The FAA’s expert in aviation security testified

that the size of the aircraft determines whether FAA regulations

require screening. Tr. 426. Even when screening is required, the

air carrier rather than the airport operator ordinarily provides

for it. Tr. 430.

27 The airport already has weight limits for its runways that

would keep out aircraft that are too large to operate safely at the

airport. Tr. 90. In any event, FAA regulations prohibit aircraft

with a seating capacity of more than 30 passengers — scheduled

5la

a safety problem to mix different types of aircraft in the

same airspace, even if accurate, is inapplicable. Further-

more, the fire department response time is no different

for passengers in unscheduled operations than it is for

passengers in scheduled operations.” If the scheduled

passenger operations using the same types of aircraft are

unsafe, then how can the Airport Authority consider the

unscheduled passenger operations safe, given that the

only difference in the operations is whether the flights are

scheduled?29 Also, all operations at the airport, whether

scheduled or unscheduled, would be conducted by pilots

tested and licensed by the FAA, would use aircraft certifi-

cated by the FAA for airworthiness, would follow FAA

operating rules, and would follow the direction of FAA

air traffic controllers.

Third, if the Airport Authority’s concern was that a

high level of operations was causing congestion in the air

or on the runways, affecting safety, then the Airport

Authority should have attempted more narrowly focused

alternatives first. The Airport Authority, however, admit-

ted in its answers to interrogatories that congestion,

or unscheduled - from operating at Centennial Airport, because

the airport lacks a Part 139 certificate. 14 C.FR. § 139.101. See

also Tr. 229-30. Oi cae

28 The fire station is located about a mile and a half from the

airport runways. Tr. 493.

29 At the hearing, the Mayor of Greenwood was asked the

following question: “There is nothing inherently more unsafe

about the fact that a Beechcraft King Air is flying over your

homes and schools on a scheduled basis as opposed to an

unscheduled basis, is there?” His :eply was no. Tr. 232. See also

Tr. 417 (another witness to the same effect).

52a

capacity, and environmental effects were not among the

reasons for its ban on scheduled passenger service.*°

Fourth, the record does not support Greenwood Vil-

lage’s argument that crowd control would be a problem.

The Airport Authority banned Centennial Express’s oper-

ation with a single six-passenger aircraft. It is difficult to

believe that a scheduled operation using one six-pas-

senger aircraft could cause crowd control problems.

As for the NTSB recommendation, the Airport

Authority’s claim that the NTSB recommendation formed

the basis for the ban lacks credibility, given that the NTSB

issued its recommendation after the Airport Authority

banned scheduled operations. Thus, the Airport Author-

ity’s claim bears all the hallmarks of a post hoc rationaliza-

tion.3! Moreover, the NTSB recommendation was only a

recommendation. The FAA’s statutory duty is to decide if

the recommendation should be implemented, either in its

original or in a modified form. The FAA is not required to

follow NTSB recommendations.#2

For these reasons, the Airport Authority has failed to

bear its burden of proving that the safe operation of the

airport requires the ban.

30 Tr. 119-20.

31 Note too that numerous airports in the region, as well as

—~______ in the country as a whole, permit scheduled passenger service at

predominantly general aviation airports without a Part 139

certificate. Tr. 111.

32 Tr. 599.

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53a

B. Civil Aviation Needs of the Public

The Airport Authority and Greenwood claim that the

ban on scheduled passenger service is necessary to serve

the civil aviation needs of the public. They argue that

permitting scheduled passenger service would conflict

with Centennial Airport’s designation as a general avia-

tion reliever airport, and that the FAA should defer to

regional and local planning.

Although Centennial Airport’s primary function may

be to serve general aviation, it does not logically follow

that any level of scheduled Part 135 service is inconsis-

tent with that primary function. The initiation of sched-

uled passenger service at Centennial Airport is unlikely

to change the predominately general aviation role of the

airport.33 The claim that permitting both scheduled and

unscheduled passenger operations would alter the char-

acter of the airport is speculative.54 There have been no

33 The term “general aviation” does not have one generally

accepted meaning. In some FAA definitions, “general aviation”

does not include any air carriers, whether scheduled or

unscheduled. Nevertheless, a county commissioner conceded at

the hearing that the Airport Authority permits “a lot” of

unscheduled air carriers to operate at Centennial Airport. Tr.

122. The commissioner also conceded that the Airport Authority

has taken no significant actions to limit overall growth at the

airport other than to ban Centennial Express’s operation. For

example, in the past year, it signed a 40-year lease plus an

option to extend for 50 more years with a development

company that plans on spending at least $3 million on

infrastructure for a third fixed base operation on the airport. Tr.

122-23.

34 Note that there was testimony at the hearing that

Centennial Express’s proposed operations would have had an

54a

studies suggesting that scheduled passenger service

would reduce general aviation use of the airport.3> In the

unlikely event that scheduled passenger service ever

undermined the airport's reliever role, there were reason-

able and nondiscriminatory restrictions short of a total

ban which could have been attempted first. The Airport

Authority admitted in its answers to interrogatories that

it did not consider any of these alternatives to meet the

civil aviation needs of the public before imposing the

ban.%¢ In fact, the Denver Regional Aviation System Plan

itself recognizes that an airport may be required by its

grant obligations to accept service that is inconsistent

with its primary purpose. The Airport Authority and

Greenwood do not dispute the Hearing Officer’s factual

finding that prior to 1993, the Airport Authority’s policies

permitted scheduled passengers [sic] service at Centen-

nial Airport, notwithstanding its general aviation desig-

nation in regional planning documents.

If anything, the civil aviation needs of the public

support the opposite policy — permitting scheduled ser-

vice as well as unscheduled service at Centennial Airport.

If the public does not want or need scheduled passenger

service at Centennial Airport, market forces will lead to

that result. The ban is both unnecessary and unlawful.

“insignificant” impact on the operations at Centennial Airport.

See, e.g., Tr. 496.

35 Tr. 251.

36 See also Tr. 118-19.

55a

Multi-Airport Proprietor Rule

Congress made the receipt of Federal funds contin-

gent upon an airport owner’s agreement to make the

airport available for public use and without unjust dis-

_ crimination. As a result, a Federally-funded airport may

not ordinarily ban a whole class of service. In light of case

law, however, the FAA has carved out the following

exception to the general rule. This exception is referred to

as the multi-airport proprietor rule. It provides as fol-

lows:

Where the volume of air traffic is approaching

or exceeding the maximum practical capacity of

an airport, an airport Owner may designate a

certain airport in a multiple airport system

under the same ownership and servicing the

same community for use by a particular class or

classes of aircraft. The owner must be in a posi-

tion to assure that all classes of aeronautical

needs can be fully accommodated within the

system of airports under the owner’s control

and without unreasonable penalties to any class

and that the restriction is fully supportable as

being beneficial to overall aviation system

capacity.

FAA Order No. 5190.6A.

The Airport Authority and Greenwood take issue

with the FAA’s multi-airport proprietor rule. They argue

that there is no valid distinction between multiple air-

ports controlled by the same owner, and multiple airports

acting under a plan devised by a regional planning orga-

nization. However, the Airport Authority has failed to

show that air traffic at Centennial Airport is approaching

56a

or exceeding the maximum practical capacity. For exam-

ple, in its answers to interrogatories, the Airport Author-

ity conceded that capacity was not a basis for the ban on

scheduled passenger service.*” Thus, it is unnecessary to

reach the issue of whether the Airport Authority has met

the other requirements of the multi-airport proprietor

rule.

For all of the reasons noted above, the Airport

Authority has failed to bear its burden of proving that the

civil aviation needs of the public require the ban.

IX. Proprietary Powers

The Hearing Officer determined that the Airport

Authority’s ban on scheduled passenger service violated

the Federal statute that preempts state and local regula-

tion of air carrier prices, routes, and service.*® He rejected

the Airport Authority’s claim that the ban falls within the

“proprietary powers” exception to the statute.9? The Air-

port Authority and Greenwood argue on appeal that he

erred in so doing.

37 See also Tr. 129, 250, 414.

38 49 U.S.C. § 41713(b)(1) provides, in relevant part, that “a

State [or] political subdivision of a State ... may not enact or

enforce a law, regulation, or other provision having the force

and effect of law related to a price, route, or service of an air

carrier that may provide air carrier transportation... .”

39 49 U.S.C. § 41713(b)(3) provides, in relevant part, as

follows: “This subsection does not limit a State [or] political

subdivision of a State . .. that owns or operates an

airport... from carrying out its proprietary powers and rights.”

57a

The Airport Authority argues in its appeal brief that

the ban falls within the “proprietary powers” exception

because the ban is necessary for the safe operation of the

airport and to serve the civil aviation needs of the public.

As discussed above, the Airport Authority has failed to

bear its burden of proving that the ban is necessary either

for the safe operation of the airport* or to serve the civil

aviation needs of the public.*! Hence, its argument that

the ban falls within the “proprietary powers” exception

fails. The Hearing Officer did not err in finding that

Federal law preempts the ban.*

40 See supra p. 21.

41 See supra p. 24.

42 The Airport Authority and Greenwood also argue that

even if the Airport Authority’s total ban on scheduled

operations was unlawful, operations at Centennial Airport

would still be limited to nine-passenger aircraft, because a

Federal statute went into effect in 1996 requiring airports to

have a Part 139 certificate for scheduled operations involving

aircraft of more than nine-passenger seats (49 U.S.C. § 44706),

Centennial Airport does not have such a certificate, and the

statute provides (in 49 U.S.C. § 44706(f)) that airport sponsors

may not be forced to obtain a certificate.

While the Airport Authority and Greenwood argue that the

statute is self-executing, the agency’s position is that under 49

U.S.C. § 44706(e), the statute does not apply until 120 days after

the agency sends implementing regulations and an economic

impact report to Congress, and until that occurs, 30-passenger

aircraft may operate at Centennial Airport. This issue will not

be decided because it is not presented by the facts of this case. It

is undisputed that the Airport Authority’s ban on scheduled

passenger service is total. The Airport Authority sought and

obtained an injunction against Centennial Express’s six-

passenger aircraft. :

58a

XI. Conclusion

The Hearing Officer correctly affirmed the Director’s

determinations that the Airport Authority violated the

following:

e 49 U.S.C. § 47107(a)(1) and standard Airport

Improvement Program (AIP) grant assurance

no. 22 (prohibiting economic discrimination).

e 49 U.S.C. §§ 47107(a)(4) and 40103(e) and

standard AIP grant assurance no. 23 (prohib-

iting granting exclusive rights).

e 49 U.S.C. § 41713 (prohibiting state and local

regulation of air carrier prices, routes, or ser-

vices).

XII. Corrective Action

ACCORDINGLY, it is ordered that:

1. Arapahoe County Public Airport Authority (the

Airport Authority) present a plan to the Airports Divi-

sion, Northwest Mountain Region of the FAA within 60

days from the date of this final agency decision on how it

intends to address the FAA’s concerns by eliminating the

violations outlined above;

2. Pending FAA approval of the corrective action

plan specified in Ordering Paragraph 1, or until further

notice, the Airport Authority is ineligible to apply for

new FAA grants under 49 U.S.C. § 47106(d).49

43 The 180-day limit on suspension of eligibility contained

in Section 47106(d) applies only to applications to receive AIP

funds apportioned under 49 U.S.C. §§ 47114(c) and (e). The

59a

FURTHER:

If the Airport Authority does not submit a corrective

action plan in accordance with Ordering Paragraph 1

above, or petition for judicial review of this decision as

set forth below, the FAA proposes to issue an order under

49 U.S.C. § 47122 directing the Airport Authority to elimi-

nate the violations outlined above. The failure to comply

with that order would result in termination of the Airport

Authority’s eligibility for new FAA grants.#

/s/ Susan L. Kurland

SUSAN L. KURLAND

Associate Administrator

for Airports

Issued on this 18th day of February, 1999.

Airport Authority is not eligible to receive these apportioned

funds. Therefore, the 180-day limit does not apply.

44 Persons with standing may seek judicial review of this

decision in an appropriate United States Court of Appeals. The

petition for review must be filed within 60 days. See 14 C.F.R.

§ 16.247 (“Judicial review of a final decision and order”) for

further information regarding judicial review.

60a

UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, D.C.

Centennial Express Airlines

and Golden Eagle Charters

d/b/a Centennial Express Airlines

)

“ ) Docket No.

) 16-98-05

Arapahoe County Public )

Airport Authority )

: )

Centennial Express Airlines )

and Golden Eagle Charters )

d/b/a Centennial Express Airlines )

m ) Docket No.

) 13-94-03

Arapahoe County Public )

Airport Authority )

)

Thomas Kehmeier

- Docket No.

13-94-25

Arapahoe County Public

Airport Authority

— ~~ SS Se ee

INITIAL DECISION OF THE HEARING OFFICER

PURSUANT TO 14 C.ER. 16.241

Nancy D. Lobue, Karl B. Lewis, Kathleen A. Connon, and

Frank San Martin, Office of Chief Counsel, Federal Avia-

tion Administration, U.S. Department of Transportation,

Washington, DC for the Federal Aviation Administration

Office of Safety and Standards.

6la

Ronald S. Loser and Brian A. Magoon, Brega & Winters

P.C., Attorneys for Arapahoe County Airport Authority.

William H. Shawn, Gary L. Stanley, and David Fuentes,

Shawn, Mann & Steinfeld, Attorneys for City of Green-

wood Village, Colorado.

John Andrews, pro se, Centennial Express Airlines, Inc.

and Golden Eagle Charters, d/b/a Centennial Express

Airlines.

Thomas Kehmeier, pro se.

Before the Deputy Assistant Chief Counsel, Procurement

Law Division, Anthony L. Washington, acting as Hearing

Officer.

Introduction:

On September 9, 1998, the Arapahoe County Public Air-

port Authority (hereinafter referred to as the “ACPAA”

or the “Authority”) filed a request for a hearing under 14

C.F.R. Part 16, Subpart F. This request followed the Direc-

tor of the Office of Airport Safety and Standards’ deter-

mination issued on August 21, 1998, under 14 C.F.R.

16.31(d) (“Director’s Deterrnination”). This determination

found that the Authority, by denying access to Centennial

Express Airlines, Inc. (“CEA”) was in [sic] not in compli-

ance with the provisions of 49 U.S.C. 47107(a)(1), eco-

nomic nondiscrimination; 49 U.S.C. 47107(a)(4) and

40103(e), provisions regarding exclusive rights: 49 U.S.C.

41713(b)(1), regarding federal preemption over regula-

tions relating to air carrier prices, routes, services; and

with the Authority’s Federal grant agreements. The

Director also found that by virtue of the violation of

62a

‘section 41713(b)(1), the Authority exceeded its authority

as a state or local government, under the Supremacy

Clause of the United States Constitution.

On September 25, 1998, the Federal Aviation Administra-

tion (hereinafter referred to as the “FAA”) through the

Deputy Chief Counsel issued a hearing order under 14

C.ER. 16.201. The Hearing Order, identified the Federal

Aviation Administration Office of Airport Safety and

Standards, the ACPAA, Thomas Kehmeier, and John

Andrews (President), representing Centennial Express

Airlines and Golden Eagle Charters, as parties to the

proceeding. However, on October 2, 1998, the City of

Greenwood Village, Colorado (hereinafter referred to as

“Greenwood Village”) moved, and was subsequently

granted by the Hearing Officer interested party status as

an intervenor to the proceeding pursuant to 14 C.FR.

16.207.

A hearing was held on November 12 and 13, 1998 in

Denver, Colorado. Under this proceeding and pursuant to

14 CFR 16.202(k), the Hearing Officer was directed to be

[sic] address the following issues: |

1. Whether the ACPAA may prohibit Centennial

Express from operating scheduled air service at Centen-

nial Airport without violating its federal obligations

regarding economic nondiscrimination as set forth in 49

U.S.C. 47107(a)(1) and the Authority’s grant agreements.

2. Whether the ACPAA may prohibit Centennial

Express from operating scheduled air service at Centen-

nial Airport without violating its federal obligations

regarding exclusive rights as set forth in 49 U.S.C.

40103(e), 47107(a)(4), and the grant agreements.

63a

3. Whether the ACPAA can prohibit Centennial Express

from operating scheduled air services at Centennial Air-

port without violating provisions of federal law prohibit-

ing state and local regulations of air carrier prices, routes,

and services as setforth in 49 U.S.C. 41713(b)(1), and

thereby exceeding its lawful authority under the Suprem-

acy Clause of the United States Constitution.

4. Whether the Colorado Supreme Court opinion is

binding on the Federal government.

5. Whether circumstances exist at Centennial Airport

which permit action by the airport sponsor, acting within

its proprietary powers, to prohibit or restrict scheduled

passenger service for the safe operation of an airport.

6. Whether the statutory requirement for an airport cer-

tificate under Subpart (a) of 49 U.S.C. 44706 is self-execut-

ing and took effect upon the passage of the statute or

whether the requirements under 49 U.S.C. 44706(

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