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.