Wilson Air Center v. FAA ( 2004 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Wilson Air Center v. FAA No. 01-4037
ELECTRONIC CITATION: 2004 FED App. 0194P (6th Cir.)
File Name: 04a0194p.06 _________________
COUNSEL
UNITED STATES COURT OF APPEALS
ARGUED: David Wade, MARTIN, TATE, MORROW &
FOR THE SIXTH CIRCUIT MARSTON, Memphis, Tennessee, for Petitioner. Anthony
_________________ A. Yang, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Respondent. ON BRIEF: David
WILSON AIR CENTER , LLC, X Wade, Richard M. Carter, MARTIN, TATE, MORROW &
Petitioner, - MARSTON, Memphis, Tennessee, for Petitioner. Anthony
- A. Yang, Michael Jay Singer, UNITED STATES
- No. 01-4037 DEPARTMENT OF JUSTICE, Washington, D.C., for
v. - Respondent. R. Grattan Brown, Jr., GLANKLER BROWN,
> Memphis, Tennessee, Rise J. Peters, Jeffrey A. Schwarz,
, Pablo O. Nuesch, SPIEGEL & McDIARMID, Washington,
FEDERAL AVIATION -
ADMINISTRATION , D.C., for Intervenor.
-
Respondent, - _________________
-
MEMPHIS -SHELBY COUNTY - OPINION
- _________________
AIRPORT AUTHORITY ,
-
Intervenor. - BOYCE F. MARTIN, JR., Circuit Judge. Wilson Air
N Center, LLC appeals from the final decision of the Federal
On Appeal from a Final Decision of the Aviation Administration. Wilson filed a complaint with the
Federal Aviation Administration. Administration alleging that the Memphis-Shelby County
No. 16-99-10. Airport Authority’s differing treatment of Wilson and
Wilson’s competitor, AMR Combs, Incorporated,1 violated
Argued: March 12, 2003 its obligations under federal law prohibiting unjust economic
discrimination, 49 U.S.C. § 47107(a)(1), (5), as well as
Decided and Filed: June 23, 2004 prohibiting the creation of “exclusive rights,” 49 U.S.C.
§ 40103(e). The Administration rejected Wilson’s claims; we
Before: MARTIN and ROGERS, Circuit Judges; AFFIRM.
EDMUNDS, District Judge.*
1
Memp his Aero C orpo ration is the predec essor to AM R Co mbs,
*
which purchased Memphis Aero in 1987. Thereafter, Signature Flight
The Honorable Nancy G. Edmunds, United States District Judge for Support purchased AM R. This opinion will collectively refer to these
the Eastern District of Michigan, sitting by designation. corporations as “AM R.”
1
No. 01-4037 Wilson Air Center v. FAA 3 4 Wilson Air Center v. FAA No. 01-4037
I. BACKGROUND AMR also held preexisting leasehold agreements with the
Authority covering parcels in the North Complex. In 1986,
Memphis International Airport is a public-use, commercial- AMR entered into a “Consolidated and Restated Lease
service airport owned and operated by the Memphis-Shelby Agreement” for parcels of land located at Airport’s North
County Airport Authority, which serves as FedEx’s principal Complex. After AMR exercised an option to increase the
hub for its cargo operations. AMR and Wilson function as duration of the lease, the lease term was extended to January
the Airport’s fixed-base operators, commonly referred to as 1998.
FBO’s, which “are small plane gas and repair stations which
service private, nonscheduled aircraft.” Kemmons Wilson, In 1987, after making the requisite capital improvements,
Inc. v. FAA, 882 F.2d 1041, 1042 (6th Cir. 1989). AMR requested an extension of its lease term on the South
Complex parcel. AMR also requested that the Authority
The Airport’s development has been financed partly by extend the lease terms on its other properties to coincide with
federal funds pursuant to the Airport Improvement Program the 2005 expiration date of its South Complex lease. The
as authorized by the Airport and Airway Improvement Act of Authority granted this request. By 1993, when Wilson began
1982. See 49 U.S.C. § 47101, et. seq. As a recipient of funds its own fixed-based operation, with certain parcels removed
under the Program, the Authority must give assurances that it from AMR’s lease in the meantime, AMR’s total acreage
will not engage in “unjust discrimination,” 49 U.S.C. under its various leases was approximately 38.45 acres.
§ 47107(a), and will not grant any aeronautical service
provider an “exclusive right” to use the airport, 49 U.S.C. In 1995, AMR indicated its intent to expand its fixed-base
§40103(e). Wilson, believing that the Authority breached operation by requesting that the Authority extend its North
these assurances, filed a complaint with the Administration Complex lease beyond its 2005 termination date. The
pursuant to 14 C.F.R. Part 16, alleging that the Authority had Authority declined this request, explaining that the extension
violated its federal obligations. The facts underlying this would interfere with FedEx’s planned expansion. Thereafter,
complaint are developed as follows. on June 5, 1995, AMR indicated its desire to terminate the
North Complex lease in favor of a thirty-year lease of the
A. Lease agreements with AMR South Complex, where it would relocate its entire operation
and build a “new world-class executive terminal building
Before Wilson began its fixed-based operation, AMR was along with additional hangar space to accommodate all
the Airport’s only fixed-based operator. AMR had several tenants currently at the . . . North facility.” From 1995
preexisting leasehold agreements with the Authority, which through 1998, AMR and the Authority negotiated the terms
were consolidated into a new lease agreement in December of this transition–i.e., AMR’s surrender of its North Complex
1979. The lease, which covered the area located in the central leaseholds and its relocation to the South Complex.
part of the airfield–the South Complex, granted AMR an
option to extend the lease term through 2005 if it invested In February 1998, the Authority and AMR entered into a
over a million dollars in capital improvements on the “Consolidated and Restated Lease Agreement.” This lease,
property. In 1985, AMR supplemented a preexisting lease which is the source of Wilson’s complaints, provided for
agreement, which concerned its right to occupy the AMR’s incremental abandonment of its North Complex
Administration’s old control tower, by adding a parcel holdings to be completed by the end of 1999–approximately
described as the General Aviation Building. six years before AMR’s lease of these parcels terminated.
No. 01-4037 Wilson Air Center v. FAA 5 6 Wilson Air Center v. FAA No. 01-4037
After securing AMR’s release from the North Complex, the provided for an incremental development schedule that AMR
Authority, on March 1, 1998, entered into a lease agreement was required to meet in order to retain the parcels.
with FedEx for these same parcels.
B. Prior Lease Agreements with Wilson: 1993-1997
On May 21, 1998, the Authority and AMR entered into a
restated lease agreement for the South Complex, which was In 1993, Wilson negotiated a lease with the Authority
to expire on June 30, 2025. Under the lease, AMR agreed to allowing it to begin operating as the Airport’s second fixed-
“expend a minimum of $4,500,000 in capital investments to based operator. Wilson began its operation, however, only
construct a minimum of two (2) new 10,000 square foot after a litigious battle with the Authority. Indeed, after the
hangars and to rehabilitate the General Aviation Building Authority declined Wilson’s application to begin its own
over a period of seven (7) years beginning June 1, 1998 with fixed-base operation to compete with AMR, Wilson filed a
a completion date of June 30, 2005.” complaint with the Administration alleging that the Authority
had created an “exclusive right” in favor of AMR in violation
The lease maintained the 1979 lease’s rental rates for the of federal law. The Administration concluded that the
South Complex until 2005–the original expiration date of the Authority’s refusal was based upon its spatial restrictions and
1979 lease. The lease also maintained the rental rate for the that any available space was earmarked for other uses.
General Aviation Building that was established in the 1985 Therefore, the Administration dismissed Wilson’s complaint.
lease covering that building. The Authority, however, agreed
to abate AMR’s rent for the General Aviation Building for a Wilson timely appealed to this Court. We found that the
one year period, in exchange for AMR’s rehabilitation of the Administration’s “perfunctory adjudication” based upon only
aging building. This rehabilitation included the removal of “cryptic evidence” constrained our ability to determine
asbestos and lead and the updating of the building’s whether the Administration’s decision was supported by
plumbing, electrical and HVAC systems. A separate substantial evidence. See Kemmons Wilson, 882 F.2d at1045-
agreement provided the rental rate for the 6.09 acres of 47. Thus, we vacated the Administration’s decision and
taxiway that was conveyed to AMR by the 1998 South remanded the case for an administrative hearing. Id. at 1047.
Complex lease.2 On remand, the Administration determined that the
Authority’s refusal to lease land to Wilson in order for it to
Additionally, the lease granted AMR options to lease three open a fixed-base operation was not motivated by “nefarious
parcels of land adjacent to the South Complex. AMR was intent.” To comply with federal law, however, the
required to pay “option fees” for these parcels and could Administration ordered that the Authority negotiate with
originally exercise its option at any time during the 1998 lease Wilson for the opening of a second fixed-base operation.
term. In response to Wilson’s complaints, however, the
Authority and AMR entered into an amended agreement that In July 1993, as a result of these negotiations, the Authority
allowed Wilson to begin its own fixed-based operation by
granting it a thirty-year lease of approximately twelve acres
of undeveloped land for twelve cents per square foot.
2
Generally, there is no rental rate for taxiways as they are accessible Additionally, the lease contained an option to lease an
to the public. Because this taxiway, by virtue of changes in the Airport’s additional two and a half acres, which Wilson exercised. In
design, became usable only to AMR, a rental agreement was reached for December 1997, Wilson leased, under a separate agreement,
the exc lusive use of the taxiway.
No. 01-4037 Wilson Air Center v. FAA 7 8 Wilson Air Center v. FAA No. 01-4037
an additional 1.35-acre parcel at twelve cents a square foot, C. Procedural Background
thereby increasing its leasehold to just over sixteen acres.
On August 16, 1999, unhappy with the Authority’s
Wilson continually sought to expand its fixed-based response to its effort to expand its fixed-base operation,
operation at the Airport from 1997 through 1999. Wilson filed a complaint under 14 C.F.R. Part 16, alleging
Specifically, Wilson expressed interest in leasing several that the Authority’s treatment of Wilson as compared to its
pieces of Airport property including: a plot of land referred treatment of AMR constituted unjust economic discrimination
to as Hurricane Creek that was under a lease agreement with in violation of 49 U.S.C. § 47107(a), and created “exclusive
FedEx, a plot of land on which the Northwest Airlink rights” in violation of 49 U.S.C. § 40103(e).
Building was located, and the option parcels that, unknown to
Wilson, the Authority had leased to AMR one week before its The Director of the Administration’s Office of Airport
inquiry. The Authority entered into negotiations with Wilson Safety and Standards after evaluating Wilson’s complaint and
regarding the Hurricane Creek and Northwest Airlink parcels. the parties’ pleadings, concluded that the Authority did not
The negotiations included Wilson’s proposals that the violate its federal obligations and dismissed the complaint.
Authority lease Wilson the Northwest Airlink Building rent- Wilson appealed to the Administration, which affirmed the
free until June 2010, that the Authority demolish certain factual findings and legal conclusions in the Director’s
buildings on the Northwest plot and that the Authority, at its decision. This timely appeal followed. On appeal, Wilson
own expense, construct a ramp for Wilson’s exclusive use raises several arguments, which will be addressed in turn.
across the Hurricane Creek parcel to provide access to the
airfield. II. STANDARD OF REVIEW
For its part, with regard to the Northwest Airlink property, When reviewing an order of the Federal Aviation
the Authority agreed to relocate FedEx at its own expense, Administration, we apply the standards of review as
demolish the buildings on the Northwest plot, and consider articulated in the Federal Aviation Act, 49 U.S.C. § 46110(c),
abating the rent for the Northwest Airlink building for one and by default, the Administrative Procedure Act, 5 U.S.C.
year in exchange for capital improvements. The Authority § 706. Under the Federal Aviation Act, the Administration’s
also noted that it would charge eighteen cents per square foot findings of fact are conclusive if supported by substantial
for unimproved ground rent and twenty cents per square foot evidence. 49 U.S.C. § 46110(c) (“Findings of fact by the . . .
for improved ground rent through the fifth year of any new Administrator, if supported by substantial evidence, are
lease term, at which time, the rent would be based upon the conclusive.”). “Substantial evidence is such relevant
land’s appraisal value. In response to Wilson’s proposal for evidence as a reasonable mind might accept as adequate to
the Hurricane Creek Parcel, the Authority noted that it would support a conclusion.” Singer v. Garvey, 208 F.3d 555, 558
not install the ramp as requested, but it would consider its (6th Cir. 2000). We “must consider ‘the record in its entirety
other proposals once Wilson had provided the Authority with . . ., including the body of evidence opposed to the [agency’s]
its master plan for development of the property. view.’” Loral Def. Systems-Akron v. NLRB, 200 F.3d 436,
448 (6th Cir. 1999) (quoting Am. Textile Mfrs. Inst. v.
Donovan, 452 U.S. 490, 487-88 (1981)), when reviewing the
record for substantial evidence. Even if two different
conclusions can be drawn from the evidence, we may still
No. 01-4037 Wilson Air Center v. FAA 9 10 Wilson Air Center v. FAA No. 01-4037
find that the agency’s factual findings are supported by III. ANALYSIS
substantial evidence. Id. Substantial evidence review “gives
the agency the benefit of the doubt, since it requires not the A. Evidentiary Hearing
degree of evidence which satisfies the court that the requisite
fact exists, but merely the degree which could satisfy a On appeal, Wilson argues that the Administration abused
reasonable factfinder.” Allentown Mack Sales & Serv., Inc. its discretion by failing to provide it with an evidentiary
v. NLRB, 522 U.S. 359, 377 (1998). hearing, as he argues the statute requires. Before addressing
the merits of this claim, however, we must address the
Given the Act’s silence regarding the appropriate standard Administration’s argument that Wilson has waived its right to
for reviewing the Administration’s nonfactual findings, we argue this issue on appeal by not presenting it to the agency
must look to the Administrative Procedure Act to supply the for review.
appropriate standard of review. Penobscot Air Servs., Ltd. v.
FAA, 164 F.3d 713, 717 (1st Cir. 1999). Thus, we review de “The administrative waiver doctrine, commonly referred to
novo questions of law, see 5 U.S.C. § 706, but we must give as issue exhaustion, provides that it is inappropriate for courts
some deference “to the agency because it is charged with reviewing agency decisions to consider arguments not raised
administering the statute.” Am. Nuclear Res., Inc. v. U.S. before the administrative agency involved.” Coalition for
Dep’t. of Labor, 134 F.3d 1292, 1294 (6th Cir. 1998). Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d 435,
461-62 (6th Cir. 2004). Administrative issue exhaustion is
This Court reviews an agency’s other findings and typically required by statute. Sims v. Apfel, 530 U.S. 103, 107
conclusions to determine whether they are “arbitrary, (2000) (“Initially, we note that requirements of administrative
capricious, an abuse of discretion, or otherwise not in issue exhaustion are largely creatures of statute.”). The
accordance with law.” 5 U.S.C. § 706(2)(A); Penobscot, 164 statute at issue in this case requires that an objection be made
F.3d at 719 (“With respect to other agency action, findings, before the agency or that there exists a reasonable ground for
and conclusions, the [Administrative Procedure Act] requires not having made the objection in order to obtain review of
the reviewing court to hold them unlawful and set them aside that objection. 49 U.S.C. § 46110(d). Section 46110(d)
if they are found to be arbitrary, capricious, an abuse of provides:
discretion, or otherwise not in accordance with law.”)
(internal quotation marks omitted). Generally, we consider an (d) Requirement for prior objection. --In reviewing an
agency’s action “arbitrary and capricious” when the agency order under this section, the court may consider an
“‘has relied on factors which Congress has not intended it to objection to an order of the Secretary, Under Secretary,
consider, entirely failed to consider an important aspect of the or Administrator only if the objection was made in the
problem, offered an explanation for its decision that runs proceeding conducted by the Secretary, Under Secretary,
counter to the evidence before the agency, or is so implausible or Administrator or if there was a reasonable ground for
that it could not be ascribed to a difference in view or the not making the objection in the proceeding.
product of agency expertise.’” Henry Ford Health Sys. v.
Shalala, 233 F.3d 907, 911 (6th Cir. 2000) (quoting Motor 49 U.S.C. § 46110(d).
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43 (1983)). Our review of the record convinces us that Wilson has
waived the argument that the Administration abused its
No. 01-4037 Wilson Air Center v. FAA 11 12 Wilson Air Center v. FAA No. 01-4037
discretion by failing to conduct an evidentiary hearing. As B. Failure to Conduct a Site Visit, Allow A Surreply,
the Administration notes, Wilson expressly stated that it was Grant Limited Discovery and Further Investigate
not asking that the Administration conduct a full evidentiary
hearing. In its motion for limited discovery, Wilson noted: Wilson also argues that the Administration erred in failing
“To be clear, Wilson is not requesting at this stage a full- to further investigate its complaint by limiting its review to
blown ‘evidentiary hearing.’” Again in its motion for limited the pleadings; by refusing to grant its motion for limited
discovery, Wilson noted that it “is not requesting a hearing at discovery; by refusing to conduct a site visit and by striking
this time. Wilson is simply requesting that the Director its surreply from the record. Relatedly, Wilson argues that
exercise the FAA’s discretionary powers . . . in order to the Administration’s failure to conduct an investigation and
permit leave for Wilson to conduct limited discovery . . . .” permit discovery constituted a denial of its due process rights.
Wilson has not argued that there was a “reasonable ground for We find these arguments unpersuasive.
not making the objection,” 49 U.S.C. § 46110(d), nor does
our independent consideration of the issue supply one. First, we address Wilson’s argument that the
Administration erred in refusing to conduct a site visit. As
Given the foregoing, we refuse to allow Wilson to bypass the Administration notes, Wilson never explicitly requested
the statutory requirement of administrative issue exhaustion a site visit, but rather simply offered to provide one. Because
by raising this issue for the first time in this appeal. See Sims, Wilson never explicitly objected to the Administration’s
530 U.S. at 108. Furthermore, we find Wilson’s due process failure to conduct a site visit, this argument is unexhausted
claims that are predicated upon the argument that the and has been waived.
Administration erred in failing to conduct an evidentiary
hearing similarly unexhausted, thereby foreclosing our ability Second, we address Wilson’s argument that the
to review those claims.3 Administration erred in striking its surreply from the record.
On November 14, 2000, Wilson filed a motion for leave to
file a surreply. The Administration, citing 14 C.F.R. § 16.33,
denied the motion, noting that Part 16 proceedings provide
only for an appeal and a reply. Thus, the Administration
3
concluded that the record was complete without Wilson’s
W hile W ilson arg ues that it did “raise the hearing issue in its appeal surreply. While acknowledging that the right to file a
of the Initial Determination and the Administrator even quoted that surreply is permissive, Wilson argues that the Administration
concern,” our review of the record demonstrates that Wilson’s argument
challenged only the adequacy of the Administration’s investigation and used its discretionary powers to “abdicate its search for the
that it did not request or argue that the Administration erred by failing to truth.” Specifically, Wilson argues that the surreply was
hold an evidentiary hearing. In its appeal of the D irector’s Determination, necessary to correct a misstatement that the Administration
W ilson noted: “The explicit statutory and regulatory language under made concerning Wilson’s failure to file a master plan for the
which the FAA is to conduct Part 16 proceedings requires the FAA to Northwest Airlink Building. We find Wilson’s argument
conduct a ‘fair and com plete hearing.’ The FAA has broad latitude in its
discharge of that requirement. In this case, however, the FA A no t only
unpersuasive. As the Administration notes, Wilson does not
failed to carry out its exp licit statutory requirement to conduct a full and argue that these materials contain new evidence or were
fair investigation, it also denied Complainant’s Motion for Limited unavailable to it to file with its administrative appeal, and
Discovery.” We do not understand this argument as a request for an under these circumstances we conclude that the
evidentiary hearing, nor do we understand it as an argument that the
Administration erred by failing to conduct an evidentiary hearing.
No. 01-4037 Wilson Air Center v. FAA 13 14 Wilson Air Center v. FAA No. 01-4037
Administration did not abuse its discretion in striking the Part 16, it is clear that the Administration has the discretion
surreply. to determine its own need for further investigation and what
that investigation should entail. Even Wilson apparently
Third, we address Wilson’s argument that the recognizes the Administration’s discretion in conducting
Administration erred in failing to conduct further investigations as it notes in its appellate brief that “the
investigation and permit limited discovery. On September 7, procedure is permissive . . . and not mandatory.”
1999, Wilson filed a motion for limited discovery. The
Director denied this motion reasoning that Part 16 Wilson’s argument rests on its misreading of the
proceedings contemplate an expedited process, which does regulations at issue. Wilson contends that “[t]he regulatory
not provide for discovery during the investigation stages of a language concerning further investigation ‘based on the
complaint. See 14 C.F.R. § 16.213. We find no error in this pleadings’ cannot reasonably be interpreted to mean only a
ruling, nor do we find that the Administration improperly pleadings review.” We find this argument contrary to the
investigated Wilson’s complaint. plain language of the regulation. See Henry Ford Health Sys.,
233 F.3d at 910 (“We read statutes and regulations with an
The regulations require the Administration to conduct eye to their straightforward and commonsense meanings.”).
further investigation of a complaint when the pleadings set As quoted above, the plain language of the regulation
forth a reasonable basis for doing so. 14 C.F.R. § 16.29. indicates that “further investigation” may entail only a review
Wilson argues that its complaint set forth a reasonable basis of the pleadings, but that requirement may also involve more,
for investigation and as such the complaint necessitated if the Administration determines it is necessary. 14 C.F.R.
“further investigation.” We agree with this statement, but we § 16.29(b) (“The investigation may include one or more of the
believe that Wilson’s complaint was further investigated as following, at the sole discretion of the FAA . . . .”) (emphasis
articulated in the regulations and therefore, we reject the added). The Administration apparently determined more
factual basis for this argument. documentation was unnecessary and we cannot, from our
The regulations provide the Administration with
considerable discretion in choosing how best to fulfill its
investigatory duties.4 Under the process as delineated in FAA considers necessary and by additional information
furnished by the parties at FA A requ est. In ren derin g its
initial determination, the F AA may rely entirely on the
4
complaint and the responsive pleadings prov ided und er this
The regulations on which W ilson’s argument relies in pertinent subpart.
parts, provide:
14 C.F.R. § 16 .29 (emphasis added).
(a) If, based on the pleadings, there appears to be a reasonable
basis for further investigation, the FAA investigates the subject (a) Under the authority of 49 U.S.C. § 40113 and 47121 , the
matter of the co mpla int. Director may conduct investigations, issue orders, and take such
actions as are necessary to fulfill the purpose s of this part,
(b) The investigation may include one or more of the following, including the extension of any time period prescribed where
at the sole discretion of the FAA: necessary or appropriate for a fair and complete hearing of
matters before the agency.
(1) A review of the written submissions or pleadings of the
parties, as supplemented by any informal investigation the 14 C.F.R. § 16 .11 (emphasis added).
No. 01-4037 Wilson Air Center v. FAA 15 16 Wilson Air Center v. FAA No. 01-4037
review of the record, conclude that this was an abuse of discussed we believe is not properly before this Court–we
discretion. find that this argument lacks merit. To implicate the
protections of the due process clause, there must be a
Further, we note that the Administration clearly understood deprivation of a property interest. Bd. of Regents v. Roth, 408
its authority to request supplemental information in the event U.S. 564, 576 (1972). Wilson argues that it has a property
that it determined that this information was necessary for interest as a beneficiary of the restrictive covenant in the
resolution of the complaint.5 Moreover, the Administration Airport’s deed prohibiting the creation of exclusive rights.
indicated that it was not reluctant to request additional, Even assuming that Wilson has alleged a sufficient property
needed information.6 The Administration apparently felt that interest so as to trigger the due process protections, we hold
it could decide the case without any additional materials, and that the Administration’s actions did not violate the due
we find no basis to conclude otherwise. process clause.
Finally, to the extent that Wilson argues that its due process The balancing test that we apply to determine how much
rights were violated by the Administration’s alleged failure to process is due under these circumstances is “flexible and calls
conduct further investigation and permit discovery–as distinct for such procedural protections as the particular situation
from its failure to hold an evidentiary hearing, which as demands.” Mathews v. Eldridge, 424 U.S. 319, 334 (1976)
(internal quotation marks omitted). Thus, we consider the
5
following three interests:
In denying the motion for limited discovery, the Director noted:
First, the private interest that will be affected by the
The record shows that Wilson filed a reply to the answer with 38 official action; second the risk of an erroneous
exhibits and su bexhibits without the need for limited discovery.
The parties’ other plead ings also contain ample supporting
deprivation of such interest through the procedures used,
documentation. We are not convinced that production of and the probable value, if any, of additional or substitute
additional documents is required. Should we find during the procedural safeguards; and finally, the Government’s
investigation of this matter that a sp ecific document or category interest, including the function involved and the fiscal
of documents are required to supp lement the record we will and administrative burdens that the additional or
request the same from the parties pursuant to our authority under
14 C .F.R. § 16.2 9.
substitute procedural requirements would entail.
J.A. 1073 Id. at 335. We find that the balance of these interests weighs
in favor of the Administration.
6
The order denying the discovery motion noted:
The first factor–the private interest at stake–weighs in favor
Depositions of witnesses are not required at this juncture and of the Administration. As the First Circuit described in
would unnecessarily delay the proceedings. Should the Penobscot, Wilson “essentially benefits from the covenant as
investigation find that there are rele vant facts in dispute the FAA any member of the public benefits from the requirement of
may adjudicate them based on the record, or it may exe rcise its
discretion, and supplement the record by compelling production non-exclusive access to the airport. [Wilson] stands to earn
of additional documentary and/or oral evidence. 14 C.F.R. a certain amount of profits if the requirement is enforced,
§ 16.29. while members of the public as consumers, would benefit
J.A. 1074.
No. 01-4037 Wilson Air Center v. FAA 17 18 Wilson Air Center v. FAA No. 01-4037
from purchasing airport services at lower prices from more Wilson argues that the Authority unjustly discriminated
efficient companies.” Penobscot, 164 F.3d at 723. against it in violation of 49 U.S.C. 47 U.S.C. § 47107(a)(1),
(5), by not offering Wilson the same rental rates, incentives
Likewise, we find that the second and third factors–the risk and abatements that AMR received under the 1998 lease for
of an erroneous deprivation and the administrative burden of General Aviation Building and South Complex. Also, Wilson
additional procedure–weigh in favor of the Administration. argues that the Authority engaged in economic discrimination
The Administration, while limiting its review of the in favor of AMR by allowing AMR to acquire the option
complaint to the pleadings, conducted an extensive review of parcels to its exclusion. Wilson argues that these collectively
the voluminous record and produced a thorough and well- hampered its ability to compete with AMR’s fixed-base
reasoned opinion. In so doing, contrary to Wilson’s operation, resulting in unjust discrimination.
argument, the Administration followed the statutory
procedures and federal regulations for review of a complaint 1. Rental Rates/Incentives/Abatements
brought pursuant to 14 C.F.R. Part 16. Although under the
relevant statutory and regulatory framework the Wilson raises a number of arguments alleging that the
Administration had the authority to require more procedural Authority’s 1998 lease with AMR constituted economic
process in investigating and resolving this complaint, this discrimination against Wilson and in favor of AMR. First,
authority was at the Administration’s discretion to exercise. Wilson argues that AMR’s 1998 lease constituted a new
See 14 C.F.R. §§ 16.11, 16.29. Requiring the Administration leasing agreement and that the rates should have risen to
to do more than it has done in this case would not only reflect Wilson’s rates. Second, Wilson argues that the
constrain the Administration’s discretion in resolving Authority charged AMR less than the appraisal value for the
complaints brought pursuant to 14 C.F.R. Part 16, but it six-acre taxiway. Third, Wilson argues that the rental rate
would also “force the [Administration] to over-invest that the Authority charged AMR for the General Aviation
procedurally in claims that might be assessed just as Building ($.0189 per square foot) as compared to the rental
accurately without,” requiring more procedural process. rate it offered to lease the Northwest Airlink building for
Penobscot, 164 F.3d at 724. Thus, under these facts, we hold ($6.00-$6.50 per square foot) demonstrates that the Authority
that there was no violation of the due process clause. engaged in unjust economic discrimination. Relatedly,
Wilson argues that the rental rate that the Authority charged
C. Unjust Economic Discrimination for the General Aviation Building and the one-year rent
abatement that the Authority offered AMR was unjustified
Finally, Wilson argues that the Authority engaged in
prohibited economic discrimination. An airport receiving
funds under the Airport Improvement Program cannot engage
in unjust discrimination, 49 U.S.C. § 47107(a)(1), (5).7 written assuranc es, satisfacto ry to the S ecretary, that--
(1) the airport will be availab le for public use on reasonable
7
conditions and w ithout unjust discrimination; . . .
Section 47107(a)(1), (5) provide:
(5) fixed-base operators similarly using the airpo rt will be
(a) General written assurances. –The Secretary of Transportation subje ct to the sa me charges . . . .
may approve a project grant application under this subchapter
for an airport development project only if the Secretary receives 49 U .S.C. § 471 07(a)(1), (5).
No. 01-4037 Wilson Air Center v. FAA 19 20 Wilson Air Center v. FAA No. 01-4037
and constituted economic discrimination. Wilson argues that acre taxiway, the Airport’s reconfiguration made the taxiway
the fact that AMR was required to expend considerable sums property unusable to others beside AMR. Although access to
of money for renovating these areas does not justify the low taxiways are generally free, the Authority assessed a rental
rental rates. Specifically, Wilson argues that these rental rates value for that property because of AMR’s exclusive use. The
allowed AMR to avoid having to do the repairs itself, because Administration found that the rate charged for AMR’s
AMR was able to keep its rent low for its subtenants, exclusive taxiway use was comparable to the rates that the
allowing for the subtenants to make the improvements. Authority charged Wilson and was the “then going rate for
Wilson essentially argues that this constituted unjust improved land.” Wilson fails to offer any serious challenge
discrimination because under its lease rates it could not to this reasoning. We hold that the Administration’s findings
reduce its subtenants’ rent to a point that “would make it of fact are supported by substantial evidence and its
economical for them to” make required capital improvements. determination is not arbitrary, capricious or otherwise not in
Each argument will be addressed in turn. accordance with the law.
First, when the Authority negotiated the 1998 AMR lease, Third, the Administration determined that the rental rates
it preserved the rental rates for the South Complex that were and one-year rent abatement for the General Aviation
provided in the 1979 lease through the original expiration Building were justified by its dilapidated condition and the
date of the 1979 lease–2005. The Administration found that requirement that AMR expend a considerable amount of
the Authority was “justified in choosing to live up to its prior, money to recondition the building. We agree. Simply put,
valid contractual agreements (i.e., the 1979 Lease) in an the buildings were not similarly situated. As the Director
amended or ‘new’ lease document.” The Administration noted, the buildings varied in age, location, condition,
reasoned that the fact that the rate differences would be potential uses and needed improvements. The statute
effectively eliminated in 2005, when AMR’s 1979 lease was prohibits only unjust discrimination, not all discrimination in
set to expire, demonstrated that the Authority was honoring rates. 49 U.S.C. 47107(a)(1). The Administration
its previous agreement. Thus, the Administration concluded determined that the Authority is not statutorily prohibited
that to the extent that any rate disparities existed, they were from offering different lease terms for dissimilar properties.
not the result of economic discrimination, but rather were a See FAA Order 5190.6A § 4-14(d)(1)(c) (“[A] sponsor may
consequence of the fact that the leases were negotiated at charge different rates to similar users of the airport if the
different times. See Penobscot, 164 F.3d at 726 (reasoning differences can be justified as nondiscriminatory and such
that different rental rates were justified by the different charges are substantially comparable.”). This determination
circumstances under which each lease was negotiated); City is “consistent with applicable agency guidelines and not in
of Pompano Beach v. FAA, 774 F.2d 1529, 1544 (11th Cir. violation of the statute.” Penobscot, 164 F.3d at 726.
1985) (“[O]ur affirmance of the hearing officer’s findings and
order is not a signal to cities and potential lessees of Finally, we address Wilson’s argument that although AMR
municipal property that all municipal leases must be was required to expend considerable sums of money under the
identical.”). We hold that this finding is supported by 1998 lease to make renovations to the General Aviation
substantial evidence and is not arbitrary or capricious. Building, this did not justify the low rental rates that the
Authority charged AMR. Wilson essentially argues that these
Second, with respect to Wilson’s argument concerning the low rental rates constituted unjust discrimination because it
rental rate charged to AMR for the exclusive use of the six- allowed AMR to avoid paying for the required capital
No. 01-4037 Wilson Air Center v. FAA 21 22 Wilson Air Center v. FAA No. 01-4037
improvements under the 1998 lease while the rate that the arbitrary or capricious nor “otherwise not in accordance with
Authority charged Wilson made it impossible to similarly law.” See 5 U.S.C. § 706(2)(A).
avoid making capital improvements. Under its lease with the
Authority, Wilson argues, it was unable to pass on low rental 2. Option Parcels/Land Allocation
rates to its subtenants that would make it economical for the
subtenants to make any improvements that Wilson’s lease Additionally, Wilson argues that the Authority engaged in
with the Authority required. We find this argument unjust discrimination when it granted AMR the option
unpersuasive. parcels. Wilson argues that the evidence does not
demonstrate that these parcels were given to AMR in
This argument essentially reiterates an argument that we exchange for its relinquishment of its leasehold in the North
have already addressed–namely, that the 1998 lease should Complex and as the reasonably equivalent replacement of its
not have continued the rental rates as established in the North Complex investments. To this end, Wilson argues that
original lease agreements through the original expiration of the evidence demonstrates that AMR, itself, desired to be
those agreements. As we have already found, the released from its lease in the North Complex, which suggests
Administration’s determination that the Authority was that the Authority was under no obligation to provide AMR
justified in honoring its past contractual obligations with with the option parcels in order to secure AMR’s release.
AMR is supported by substantial evidence and is not arbitrary Moreover, Wilson argues that it was unjustly denied land to
or capricious. Moreover, while we reject Wilson’s argument, permit its expansion. Wilson argues that because AMR had
we note Wilson’s failure to present convincing evidence that no current need for the option acres, whereas Wilson has such
AMR was able to pass on all of the costs to its subtenants to a need, the exclusion of Wilson from these parcels constituted
make the required improvements. While Wilson points to unjust discrimination. Furthermore, Wilson argues the
evidence suggesting that AMR’s subtenants paid for the comparison between the land allocation that the Authority has
construction of the two new hangers as the 1998 lease granted to AMR, as opposed to those parcels offered to it,
required, our review of the record did not reveal that Wilson demonstrates that the Authority has engaged in unjust
similarly presented evidence that AMR was able to pass on discrimination. Specifically, Wilson compares the option
the costs to its subtenants for the millions of dollars that AMR parcels that were given to AMR and the Hurricane Creek
was also required to expend under the 1998 lease to make parcel that it was offered. Wilson argues that the Hurricane
improvements to the General Aviation Building. Finally, we Creek parcels are essentially unusable without the
note that the Authority’s willingness to give Wilson similar construction of a paved ramp across the parcel, and that it
abatements if it made capital improvements to the Northwest does not have the resources to undertake this costly project.
Airlink building seriously undermines Wilson’s argument on
this point. The Administration determined that the evidence reflected
that the option parcels were indeed given to AMR in
In sum, we find Wilson’s arguments regarding the rental exchange for its release from the North Complex lease and
rates, abatements and incentives contained in AMR’s 1998 that Wilson requested access to these parcels only after the
lease to be unconvincing. The Administration engaged in a Authority had already granted them to AMR. Indeed the
searching and thorough review of the record. The Administration noted: “AMR was not granted a preferential
Administration’s findings of fact are supported by substantial right to additional land. Rather, the Option Parcels were in
evidence, and we hold that its determinations are neither exchange for land released in the North Complex.”
No. 01-4037 Wilson Air Center v. FAA 23
Additionally, the Administration determined that from the
record it could not find that Wilson “was unjustly denied
access to additional land for its [fixed-based operation]
expansion purposes.” As the Administration noted, the
Authority offered Wilson additional land and even offered to
shoulder some of the costs associated with making this land
usable to Wilson by offering to pay for FedEx’s relocation
from this parcel. Moreover, the Administration determined
that AMR’s desire to relocate was not particularly relevant to
the question of whether the Authority provided the option
parcels in exchange for AMR’s release of its North Complex
holdings. We uphold these determinations.
Again, the Administration throughly reviewed the record
and Wilson’s arguments in rendering its decision. Based on
this thorough review and comprehensive opinion, we
conclude simply by noting that we find that Administration’s
findings are supported by substantial evidence and its
determinations are not arbitrary or capricious.
CONCLUSION
Based on the foregoing, we AFFIRM the decision of the
Federal Aviation Administration.